14 Nov 2012 07:00
VinaLand Limited
VinaLand Board update on corporate strategy proposal
As announced last month, the Board of VinaLand Limited (VNL, the 'Company') has convened an extraordinary general meeting (EGM) to be held on Wednesday 21 November 2012 to seek shareholder support for the proposed reorganisation of VNL. The details of this proposal were announced on 23 October 2012 and have been posted to company shareholders by way of a circular. The Board would like to remind all shareholders of the proposal presented and reiterate the importance of voting at the EGM to be held in one week's time.
During the past 15 months the VNL Board has sought extensive feedback from shareholders through various meetings and forums as part of its consultations on the Company's future strategy. This feedback has been used to formulate the proposal which the Board has recommended that shareholders vote in favour of at the EGM.
In summary, the proposal is:
·; During the three year period (Cash Return Period) the Company will make no new investments, save that it can invest in existing projects within its existing portfolio of assets. The Company will instead adopt a new realisation strategy whereby the Company's existing assets will be developed (if necessary) and/or divested in a controlled, orderly and timely manner.
·; Net proceeds of these realisations will be returned to shareholders, subject to the Board's discretion and consideration in respect of the Company's working capital requirements, the need to invest in existing projects and the cost/tax efficiency of such transactions/distributions.
·; Once the Cash Return Period has ended, shareholders will be given the opportunity to reassess the strategy of the Company through another continuation resolution.
·; The fees payable to the Investment Manager shall be amended as follows:
o the management fee shall be reduced from 2 per cent. of the NAV to fixed annual amounts for each year ($8.25 million in year one, $7.5 million in year two and $6.5 million in year three);
o the Investment Manager's entitlement to performance fees has been cancelled; and
o the payment of accrued but unpaid performance fees (approximately $28.2 million) to the Manager is conditional on the distributions being made to the shareholders. Failure to make such realisations may lead to the Manager foregoing up to $23.2 m.
·; The Company will implement a new system of corporate governance including publishing further details of its policies in respect of Board tenure and appointment, convening an annual general meeting in 2013 and every year thereafter, reducing the Board's membership from seven to five on or before the first annual general meeting in 2013 and reviewing its disclosure policies.
The VNL Board believes the proposal is a balanced compromise, which was arrived at after extensive consultations with shareholders and long negotiations with the Manager and which should deliver the outcome sought by the majority of shareholders.
In the event that the Board proposal is not approved, shareholders should be aware that this could result in a number of undesirable outcomes:
·; Ongoing uncertainty as to the direction of the fund;
·; Continued uncertainty for potential acquirers of portfolio assets;
·; Delay in returning capital to shareholders;
·; If no agreement with the manager can be reached:
i. Sourcing and engaging a new manager with appropriate property development experience in Vietnam is likely to be very difficult.
ii. The accrued $28.2 million performance fee owed to the Manager will become payable immediately in cash.
iii. A potential liquidation of the fund, which the board believes would be value destructive.
The Board believes that the proposal aligns the interests of the Manager and shareholders. The Board therefore reiterates its recommendation that Shareholders vote AGAINST the Continuation Resolution and FOR the Reorganisation Resolution to be proposed at the EGM.
Enquiries:
David Dropsey
VinaCapital Investment Management Limited
Investor Relations/Communications
+84 83 821 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