29 Jul 2016 15:36
Terra Capital Plc ('Terra' or 'the Fund')
29 July 2016- Tax Litigation Update
Terra Capital Plc, an AIM quoted investment company focused on investing in value opportunities globally, primarily in frontier markets, announces that it has been advised by the Fund's counsel in Macau that the Administrative Court has decided the pending appeal regarding the total amount of tax demanded by the local authorities in connection with the sale of the AIA tower in favor of the Fund. This means that the Fund is allowed to deduct the accumulated, but not applied, depreciation from the selling price of the AIA Tower, thereby reducing the taxes due by about $1.9 million USD.
The tax for the sale of the AIA Tower (sold as of Jan.1, 2012) was fully provisioned for when the Shareholders voted on the "Tender Offer to Purchase Ordinary Shares at the Tender Price and Restructuring and Amendment to the Directors' Incentive Plan and Change of name to Terra Capital PLC and Notice of Extraordinary General Meeting" on April 30, 2012 (the "Circular") when the Fund converted from being a property fund to an investment fund investing primarily in frontier markets. The end result of this means that if the court's decision becomes final, the NAV of the Fund will increase by approximately 2.8 cents per share.
The counterparty can file an appeal until 15 September 2016 and if no appeal is submitted by this date, the current decision will be deemed final. If an appeal is lodged, an adverse decision by a higher court would not negatively affect the company's NAV since the amount has already been provisioned for. Any addition to the company's published NAV will happen once there is a final, unappealable decision.
The Company undertakes its activities in line with its strategy to generate high absolute returns by investing in what the Investment Manager believes are under-valued companies presenting significant value opportunities. Due to market inefficiencies, the Fund and its Investment Manager, Terra Partners Asset Management Limited believe that frontier markets provide many such prospects.
The information in this release has been prepared from publicly available information provided to the Fund by sources believed to be reliable, and all reasonable precautions have been taken to ensure its accuracy; however, no representation or warranty about the accuracy of the information contained in, or of any omissions from, this document or any supplementary information made available to any interested party or its advisers is implied, and any liability in respect of such information or omissions is hereby expressly disclaimed. The Fund reserves the right to amend the information provided herein, and its opinions, at any time, and undertakes no obligation (express or implied) to provide any recipient with any further information or to correct any inaccuracies or omissions which may subsequently become apparent. Readers are advised that a fund managed by Terra Partners Asset Management ("TPAM"), the Fund's Investment Manager, and some officers and employees of TPAM currently own stock in TCA.
Investments in Emerging and Frontier markets usually suffer from liquidity problems, and are often affected by governmental interference in the free market, local politics and vagaries in commodity and currency prices; therefore, their prices can be very volatile. This means that it can be difficult to acquire and subsequently sell the shares noted in TCA's portfolio. This document is for information purposes only and it is not intended as an offer or solicitation regarding the purchase or sale of any security or investment vehicle.
All solicitations or offers regarding TCA are made and transacted on the public market of the AIM Section of the London Stock Exchange and occur by reference to TCA's Offering Memorandum and Circular noted above, as amended by subsequent resolutions, primarily the one passed at the January 26, 2015 EGM. Documents are accessible on TCA's website www.terracapitalplc.com in the "Investor Centre" tab under the Documents and Announcements section of the file "AIM Rule 26". This website contains important information which may supplement, modify or differ from the information contained herein and no prospective investment decision should be considered before careful reading of documentation found on TCA's website. All current and prospective investors should be aware that PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
By accepting this document, you agree to be bound by the foregoing limitations.