21 Sep 2012 12:24
Tau Capital PLC
21 September 2012
Tau Capital Plc
("the Company" or "TAU")
Appointment of new Investment Managers and Return of Capital
Following the Company's announcement dated 13 September 2012, the Company is pleased to announce that it has entered into new investment management agreements in respect of the Company's public equity and private equity portfolios. The Board of Directors has also approved the making of an initial return of capital to shareholders
Public equities
The Company has appointed Sturgeon Capital Ltd ("Sturgeon"), of 4 Bourlet Close London W1W 7BJ, England to act as the Investment Manager for the Company's public equity portfolio and the convertible bond investment with effect from 20 September 2012. Sturgeon is a specialist manager of Central Asian investments and it has extensive experience of the stocks currently held by TAU.
Under the terms of this management agreement, Sturgeon shall manage the Fund's public equity portfolio, cash and the convertible bond investment (the "Public Portfolio") on a discretionary basis with the intention to dispose of the liquid portion of the Public Portfolio within 3 months of their appointment, and the remaining non-liquid portion within a further 3-6 months (in line with the Company's investing policy). Sturgeon's appointment is for a minimum of 6 months and may be terminated by either party on 3 months' notice thereafter.
In consideration for such services, TAU has agreed to pay Sturgeon the following fees:
·; a monthly management fee of an amount equal to 0.12% of the net asset value of the Public Portfolio (calculated monthly), such fee to be a minimum of US$375,000 in the first year (or part year if the agreement is terminated earlier than the first anniversary);
·; a performance fee of an amount equal to 20% of any net realisation of any public equity investment provided that such net realisation achieves a hurdle return of 12% per annum; and
·; a performance fee of an amount equal to 20% of any net realisation on the convertible bond instrument (without being required to meet any hurdle return).
The aggregate of the management and performance fees payable to Sturgeon are capped at an absolute maximum of US$750,000. The initial net asset value and base costs of the Public Portfolio for the purposes of the management and performance fees shall be calculated as at 21 September 2012, save that this base net asset value shall not include an amount in respect of the cash that the Company intends to return to shareholders as announced on 13 September 2012.
The Company notes that Sturgeon is currently interested in 4,800,000 Ordinary Shares of the Company, representing approximately 2.2% of its current issued share capital.
Private equity
The Company has appointed Capital Gate Securities Limited ("Capital Gate"), of 22 Zhamakayev Street, B Almaty Kazakhstan, to advise on the two private equity investments with immediate effect. Capital Gate is a licensed securities advisor, with its principal office in Kazakhstan with extensive experience with private equity investments in the country.
Under the terms of this management agreement, Capital Gate shall manage the Fund's investments in Stopharm and Lucent Petroleum (the "Private Portfolio") on a discretionary basis with the intention to dispose of such investments within 12-24 months of their appointment (in line with the Company's investing policy). Capital Gate's appointment is for a period until both investments have been disposed of, save that it may be terminated on 3 months' notice (to expire no earlier than 6 months from the date of appointment).
In consideration for such services, TAU has agreed to pay Capital Gate the following fees:
·; an annual fee equal to 2% of the current aggregate net asset value of Stopharm of Lucent Petroleum;
·; an annual fee equal to 1% of the agreed net asset value of any other assets that the Fund may subsequently transfer from its public equity portfolio to Capital Gate or ask Capital Gate to manage (an "Additional Asset");
·; a success fee equal to 15% of the amount by which the proceeds of the sale of Stopharm or Lucent Petroleum exceeds their current net asset value; and
·; a success fee equal to 15% of the amount by which the proceeds of the sale of any Additional Asset exceeds the net asset value at which such asset is transferred to Capital Gate.
Return of capital
The Board of the Company has also decided to make an initial return of US$0.13 per share to shareholders by way of a tender offer. The circular setting out full details in respect of the tender offer, specifying the number of shares to be bought in and the repurchase price, will be sent to shareholders shortly.
Enquiries:
Numis Securities Ltd Tel: +44 (0) 20 7260 1000
Nominated Advisor
Nick Westlake / Hugh Jonathan
Corporate Broker
Alex Ham
IOMA Fund and Investment Management Limited
Cynthia Edwards +44 (0) 1624 681381