VNL.L Regulatory News (VNL)

23 October 2012

VinaLand Limited

Update on Corporate Strategy - posting of shareholder circular

The Board of Directors ("the Board") of VinaLand Limited ("the Company" or "VNL"), the AIM-quoted investment vehicle established to target strategic segments within Vietnam's emerging real estate market, announces that it has today posted to the Company's shareholders ("Shareholders") a circular putting forward proposals for the future of the Company (the "Circular").

Introduction

The Company's Admission Document dated 16 March 2006 stated that the Board intended to convene an extraordinary general meeting of the Company before 23 March 2013 where a special resolution would be proposed that the Company continue as presently constituted.

Further to the Company's announcement of 10 September 2012 (available at the Company's website: www.vinacapital.com/vnl) and following consultation with the Company's Investment Manager, corporate advisers and major shareholders, the Board is now putting forward the Proposals (more particularly described below) in order to provide certainty as to the direction of the Company for the next three years.

The purpose of the Circular is to explain the Proposals and to convene the EGM at which the Resolutions necessary to implement the Proposals will be put to Shareholders.

The Continuation Resolution

The Company's Admission Document stated that: "shareholders should have the opportunity to review the future of the Company at appropriate intervals. Accordingly, the Board intends to convene an extraordinary general meeting of the Company in 2013 where a special resolution will be proposed that the Company continue as presently constituted."

The Admission Document also stated that: "Shortly before the seventh anniversary of Admission, the Board will convene a Shareholders meeting at which a resolution will be proposed to continue the Company."

The Continuation Resolution, which shall be proposed as a special resolution, shall be proposed at the EGM. In the event that the Continuation Resolution is passed, the Company will continue as presently constituted and the Company will continue to be managed in accordance with its existing investment objective and investing policy set out in the Admission Document. Furthermore, a similar continuation resolution will be proposed by the Company before the end of 2015. If the Continuation Resolution is passed, the Reorganisation Resolution (details of which are set out below) will not be put to Shareholders at the EGM.

Following the process of consultation noted above, the Board does not believe that continuation of the Company as presently constituted is in Shareholders' best interests and is recommending that Shareholders vote AGAINST the continuation of the Company. If, as the Board recommends, the Continuation Resolution is not passed at the EGM, Shareholders will then have the opportunity to vote on the Reorganisation Resolution.

The Reorganisation

In the event that the Continuation Resolution is not passed, the Board proposes to restructure the Company: including changes to the Company's investment policy, distribution policy, the remuneration structure for the Investment Manager and corporate governance. The Reorganisation is conditional on the approval of the Reorganisation Resolution at the EGM.

The Reorganisation comprises the following elements:

Change of investing policy and distribution policy

For a period of up to three years following the EGM (the "Cash Return Period") the Company will make no new investments (save that it may invest in, or advance additional funds to, existing projects within the Company's property portfolio to maximise value and assist in their eventual realisation). The Company will adopt a new realisation strategy whereby the Company's existing property portfolio of assets will be developed (where necessary) and/or divested in a controlled, orderly and timely manner. Further details of the Company's proposed investing policy is set in of Part 2 of the Circular. Board approval will be required for all divestments of property assets to be made by the Company.

During the Cash Return Period the net proceeds of all portfolio realisations will be returned to Shareholders, at the Board's discretion, having regard to requirements to invest further funds in existing projects within the Company's property portfolio to enhance or preserve exit values; the Company's working capital requirements (including the fees payable under the Amended and Restated Investment Management Agreement) and the cost and tax efficiency of individual transactions and/or distributions.

Shareholders will be provided with an opportunity to reassess the investing policy and distribution policy at the end of the Cash Return Period. To that end, a further special resolution for the Company's continuation will be proposed at an extraordinary general meeting to be convened at the end of the Cash Return Period (the "Second Continuation Vote").

Change of Investment Manager's remuneration

The Company and the Investment Manager have, conditionally upon the approval of the Reorganisation Resolution at the EGM, entered into the Amended and Restated Investment Management Agreement which amends the fees payable to the Investment Manager as follows:

·; the management fee shall be reduced from 2 per cent. of the NAV of the Company (calculated on a monthly basis) to fixed annual amounts payable for each year of the Cash Return Period of U.S.$8.25 million (equal to 1.47 per cent. of the NAV of the Company as at 30 June 2012) in the first year, U.S.$7.5 million in the second year and U.S.$6.5 million in the third year. These amounts have been approved by the Board based on operating cost estimates provided by the Investment Manager for each of the years. This will reduce the management fee payable during the first year of the Cash Return Period by approximately U.S.$3.0 million (reducing the total expense ratio of the Company from approximately 2.35 per cent. per annum to approximately 1.80 per cent. per annum.);

·; the Investment Manager's entitlement to future performance fees shall be cancelled; and

·; the payment by the Company to the Investment Manager of the currently accrued but unpaid performance fees, which total approximately U.S.$28.2 million, is conditional on distributions by the Company to Shareholders. Under the Amended and Restated Investment Management Agreement, the Investment Manager is entitled to receive Realisation Fees equal to the accrued but deferred performance fees (up to approximately U.S.$28.2 million), equalling in aggregate 20 per cent. of the net proceeds of realisations distributed during the Cash Return Period or, in certain circumstances, received by the Company within the 12 month period following the expiry of the Cash Return Period. Except in certain limited circumstances, the Investment Manager will be required to use 50 per cent. of each Realisation Fee it receives to make market purchases of Ordinary Shares. The Investment Manager will be restricted from dealing in any Ordinary Shares so acquired for the Restricted Period except in certain standard limited circumstances (including circumstances where the Company consents to such transfer).

The Amended and Restated Investment Management Agreement has also been updated in order to reflect current best practice for investment management agreements. Further details of the Amended and Restated Investment Management Agreement are set out in Part 2 of the Circular.

The Board, having consulted with the Nominated Adviser, believe the entry into the Amended and Restated Investment Management Agreement is fair and reasonable insofar as the Shareholders are concerned.

Corporate governance

The Board recognises the evolution of corporate governance standards since the Company's admission to AIM and, in order to align its arrangements with best practice in this area, following the EGM the Board will:

·; publish further details of its policies regarding Board tenure and the appointment of new Directors;

·; convene an annual general meeting in 2013 and in each subsequent year;

·; rationalise the Board by reducing its membership from seven Directors to five on or before the first annual general meeting to be held in 2013; and

·; review its disclosure policies with a view to enhancing transparency for Shareholders.

Illustrative realisation and distribution profile

The Investment Manager has prepared an illustration of the Company's potential realisation and distribution profile over the period to the Second Continuation Vote. 

The Investment Manager has estimated that over the three year period to the Second Continuation Vote the Company may be capable of realising gross cash proceeds of approximately U.S.$250 million. After deduction of estimated management fees, operating expenses, further commitments to current portfolio assets and accrued performance fee, this would equate to approximately U.S.$140 million being available for distribution to Shareholders. Under the terms of the Amended and Restated Investment Management Agreement, approximately U.S.$112 million will need to have been distributed to Shareholders in order for the Investment Manager to receive payment of the full approximately U.S.$28.2 million of its accrued but unpaid performance fees.

The detail of this illustrative analysis, including the specific assumptions, is set out in the presentation to Shareholders available for viewing on the Company's webpage (www.vinacapital.com/vnl). The presentation also contains further details on the status of current pipeline divestments where negotiations are well advanced. There are five potential transactions with either signed share purchase agreements or memoranda of understanding with a total estimated divestment value over the next 12 months of approximately U.S.$40 million.

These figures, and those in the presentation, are illustrative estimates only. Due to various risks and uncertainties, actual events or results or the actual performance of the Company or any investment discussed in the presentation may differ materially from those reflected or contemplated in such illustrative estimates. Any projections, market outlooks or illustrative estimates are forward-looking statements and are based upon certain assumptions. Other events which were not taken into account may occur and may significantly affect the performance of the Company or any investment. Any outlooks and assumptions should not be construed to be indicative of the actual events which will occur.

Additional information

Your attention is drawn to the information set out in Part 2 (Further details of the reorganisation) and Part 3 (Risk factors) of the Circular.

Extraordinary General Meeting

The Resolutions will be proposed at the EGM to be held at the Storchen Hotel, Weinplatz 2, 8001 Zurich, Switzerland at 10.00 a.m. (Swiss time) on 21 November 2012.Shareholders are requested to complete and return their Form of Proxy in accordance with the instructions printed thereon, regardless of whether Shareholders attend the EGM.

A holder of Ordinary Shares must be on the Register (or where Ordinary Shares are held in Euroclear and/or Clearstream, otherwise beneficially entitled to such Ordinary Shares, by) not later than 5.00 p.m. (Hong Kong time) on 19 November 2012. Changes to entries in the Register after that time shall be disregarded in determining the rights of any Shareholder to attend and vote at such meeting (or to provide voting instructions to the relevant Euroclear and/or Clearstream nominee(s)).

The quorum for the EGM is two Shareholders present in person or by proxy and entitled to vote at the meeting. In the event that a quorum is not achieved, the EGM will be adjourned until the same time on 28 November 2012, and the adjourned EGM will be held at the same place as the originally scheduled meeting.

If Shareholders have any queries regarding the completion of the Form of Proxy please contact David Blackhall of VinaCapital Investment Management Limited, by telephone on +848 3821 9930 or by e-mail at david.blackhall@vinacapital.com. Please note that the Investment Manager can only give procedural advice and is not authorised to provide investment advice.

Recommendations

The Board recommends all Shareholders to vote AGAINST the Continuation Resolution to be proposed at the EGM.

If the Continuation Resolution is passed, the Reorganisation Resolution will not be put to Shareholders at the EGM.

In the event that the Continuation Resolution fails, the Board considers the Reorganisation Resolution to be proposed at the EGM to be in the best interests of Shareholders as a whole. Accordingly, if the Continuation Resolution is not passed, the Board recommends all Shareholders to vote FOR the Reorganisation Resolution to be proposed at the EGM.

In the event that the Continuation Resolution and the Reorganisation Resolution fail, the Board will formulate new proposals to be put to Shareholders as soon as reasonably practicable and, in any event, within three months of the date of the EGM.

Expected timetable of principal events

If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through an Regulatory Information Service.

Words and expressions defined in the Circular have the same meanings when used in this announcement unless the context requires otherwise.

Forward-looking statements:

This announcement may contain statements that constitute forward-looking statements that include but are not limited to statements regarding the expected proceeds generated from the divestment of real estate assets owned by the Company or other funds managed by VinaCapital Group ("the Group"). Undue reliance should not be placed on forward-looking statements. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Group and described in the forward-looking statements. These risks and uncertainties include but are not limited to delays in receipt of payments, and unforeseen changes to general economic and business conditions. Forward-looking statements are based on the estimates and opinions of the Group's management at the time the statements are made. The Company and the Group assume no obligation to update forward-looking statements should circumstances or management's estimates or opinions change, except as required by law.

Notes to Editors:

VinaCapital is a leading asset management and real estate development firm in Vietnam, with a diversified portfolio of USD1.6 billion in assets under management. VinaCapital was founded in 2003 and boasts a team of investment professionals who bring extensive international finance and investment experience to the firm. Our mission is to produce superior returns for investors by using our experience and knowledge to identify the key trends and opportunities that emerge as Vietnam continues to develop its economy. To achieve this, VinaCapital has teams with broad experience covering equity markets, fixed income, private equity, venture capital, real estate and infrastructure.

VinaCapital manages three closed-end funds trading on the AIM Market of the London Stock Exchange. These funds are: VinaCapital Vietnam Opportunity Fund Limited (VOF), VinaLand Limited (VNL), and Vietnam Infrastructure Limited (VNI). VinaCapital also co-manages the DFJ VinaCapital L.P. technology venture capital fund with Draper Fisher Jurvetson.

VinaCapital has offices in Ho Chi Minh City, Hanoi, Danang, Nha Trang, Phnom Penh (Cambodia) and Singapore. More information about VinaCapital is available at www.vinacapital.com.

Enquiries:

David Dropsey

VinaCapital Investment Management Limited

Investor Relations/Communications

+84 8 821 9930

david.dropsey@vinacapital.com

Philip Secrett

Grant Thornton Corporate Finance, Nominated Adviser

+44 (0)20 7583 5100

philip.j.secrett@uk.gt.com

Hiroshi Funaki / William Marle

LCF Edmond de Rothschild Securities, Broker

+44 20 7845 5960

funds@lcfr.co.uk

Hugh Jonathan / David Benda

Numis Securities Limited, Broker

+44 (0)20 7260 1000

Mark Walters

FTI Consulting, Public Relations (Hong Kong)

+852 3716 9802

mark.walters@fticonsulting.com

Andrew Walton

FTI Consulting, Public Relations (London)

+44 (0)20 7269 7204

andrew.walton@fticonsulting.com