TIDMPMEA
RNS Number : 7876M
PME African Infrastructure Opps PLC
01 August 2017
1 August 2017
PME African Infrastructure Opportunities plc
("PME" or the "Company")
(AIM: PMEA.L)
Notice of EGM, Circular and Current Tender Offer
PME African Infrastructure Opportunities plc confirms that a
notice convening an Extraordinary General Meeting ("Notice") to be
held at 10.00 a.m. (UK time) on 6 September 2017 at the offices of
Galileo Fund Services Limited, Millennium House, 46 Athol Street,
Douglas, Isle of Man IM1 1JB, is to be sent to Shareholders
today.
Accompanying the Notice is a circular (the "Tender Offer
Document") which sets out the Company's proposal ("Proposal") to
renew Shareholder authority for the Company to return capital to
Shareholders via a series of Tender Offers (which require approval
under the Isle of Man Companies Acts 1931 to 2004 (as amended)) and
sets out details of a current tender offer (the "Current Tender
Offer"). The Tender Offer Document will shortly be available from
the Company's website at www.pmeinfrastructure.com.
Under the Current Tender Offer, the Board is proposing to return
up to approximately US$3.4 million of cash through the purchase by
the Company of up to 16,389,294 existing Ordinary Shares from
Eligible Shareholders, representing approximately 40.0 per cent. of
the Ordinary Shares in issue at the Record Time at the Tender Offer
Price of US$0.21 per Ordinary Share.
Eligible Shareholders are entitled to have accepted in the
Current Tender Offer valid tenders of up to a maximum of 40.0 per
cent. of their holding of Ordinary Shares at the Record Time at the
Tender Price, subject to the terms and conditions of the Current
Tender Offer.
This represents 2 Ordinary Shares for every 5 Ordinary Shares
held by the Eligible Shareholder at the Record Time.
In addition, Eligible Shareholders may tender Ordinary Shares in
excess of their Basic Entitlement. Such Excess Applications will be
satisfied (subject to scaling back as described in the Tender Offer
Document) to the extent that other Eligible Shareholder do not
tender the full amount of their Basic Entitlements and to the
extent that there are Overseas Shareholders in Restricted
Territories who cannot participate in the Current Tender Offer.
Capitalised terms used but not defined in this announcement have
the meanings given to them in the Tender Offer Document referred to
above.
Background to and reasons for the Tender Offer
The Company's investing policy is to realise the remaining
assets of the Company at a time and under such conditions as the
Directors may determine in order to maximise value on behalf of the
Shareholders of the Company, and to return both existing cash
reserves and the proceeds of realisation of the remaining assets to
Shareholders. Since 2012 the Company has returned a total of
approximately US$26.7 million to Shareholders.
As first announced by the Company on 17 April 2015, the Company
agreed the sale to PCF Investments of 100 per cent. of the equity
of Sheltam (Mauritius), the entity which held the Group's 50 per
cent. interest in Sheltam, together with certain intercompany
loans, and of seven C30 locomotives then owned by PME Locomotives,
for an aggregate cash consideration of US$11.5 million (the
"Disposal"). The Disposal completed on 5 May 2015.
Following the Disposal, the Group owned three C30 locomotives
and a commercial property in Dares-
Salaam, Tanzania (the "Dar-es-Salaam Property"). The three C30
locomotives were being used in South Africa on short term contracts
and this produced additional rental income for the Company
The three C30 locomotives were held through the Company's wholly
owned subsidiary PME Locomotives. On 2 February 2017, PME
Locomotives exercised a put option (the "Option") granted under a
Put Option Agreement dated 17 April 2015 between PME Locomotives
and Sheltam (Mauritius), as amended on 2 February 2017 and as
further amended on 12 June 2017, requiring the
Company's former subsidiary, Sheltam (Mauritius), to purchase
the three locomotives for US$1,416,666 per locomotive and
US$4,249,998 in total (the "Option Price"), plus interest payable
to PME Locomotives in consideration of its agreement, as announced
on 2 February 2017, to extend the completion date for the sale of
the locomotives under the Option . The purchase of the locomotives
by Sheltam (Mauritius) pursuant to the Option completed on 29 June
2017 for a total consideration of US$4,412,998, made up of the
Option Price plus interest.
The Dar-es-Salaam Property, which is managed by a local
Tanzanian managing agent, was 54 per cent. let as at 31 December
2016 (increasing to 63 per cent. from 15 February 2017) and
continues to
trade profitably notwithstanding that further renovations to the
building have been carried out during
the period.
In 2010, a subsidiary of the Company acquired the Dar-es-Salaam
Property from Dovetel (T) Limited
("Dovetel"), the Company's former telecommunication investee
company in Tanzania. Dovetel was also a tenant of part of the
Dar-es-Salaam Property but was in default on the payment of rent.
As previously reported to shareholders, the Company served a
winding-up petition on Dovetel in January 2013 and has separately
been pursuing proceedings to evict Dovetel from the Dar-es-Salaam
Property. On 24 May 2016 Dovetel's lease on the property expired
and the Directors have appointed
an experienced operator to carry out the eviction process. This
process is ongoing.
The Dar-es-Salaam Property currently has three tenants (not
including Dovetel). One tenant reduced
the space occupied by it from November 2016 from 1,702 square
meters to 809 square meters, but extended its lease on the
remaining part of the building at a higher rent for a further three
years. The lease with the second tenant to rent 628 square meters
has been extended for five years with rental increases built into
the agreement. The third tenant had originally rented 310 square
meters but has, this year, agreed to increase the rental space to
603 square meters and has also extended the duration of the lease
for a further three years, but at rents lower than had previously
been achieved.
The Directors have increased the carrying value of the
Dar-es-Salaam Property from US$3.8 million as at 31 December 2015
(reflecting the legal uncertainty regarding Dovetel's occupation)
to US$5.0 million as at 31 December 2016. Whilst demand for
Tanzanian high end offices is currently subdued, this valuation is
in line with the Dar-es-Salaam Property value assessed by the local
expert of US$5.0 million as at 31 December 2016 accounting for both
the vacancy levels and the economic climate at that date, (31
December 2015 appraised unencumbered market value of US$6.5
million).
The Directors have recently considered the cash reserves
required to be retained by the Company for
foreseeable working capital purposes. The Directors now propose
to carry out the Current Tender Offer in order to return the
proceeds from completion of the Option, less funds required to be
retained for working capital purposes, to Shareholders.
The Board will continue to review on a regular basis the
continuing requirements of the Company and to the extent that the
Company holds cash in excess of anticipated requirements, the
Directors will seek to return such cash to Shareholders by way of
one or more further Tender Offers.
Details of the Current Tender Offer
The Board is proposing to return up to approximately US$3.4
million of cash through the purchase by the Company of up to
16,389,294 existing Ordinary Shares from Eligible Shareholders.
Once purchased by the Company, those Ordinary Shares will be
cancelled so that such Ordinary Shares will no longer be in issue
but the Company's authorised share capital will remain
unchanged.
The Current Tender Offer is being made by the Company on the
terms and subject to the conditions set out in this Tender Offer
Document and the Tender Form, in respect of up to 16,389,294
Ordinary Shares, representing 40.0 per cent. of the Ordinary Shares
in issue on the Record Time at the Tender Price of US$0.21 per
Ordinary Share. The Tender Price represents a premium of
approximately 100.0 per cent. over the middle market closing price
(as derived from the AIM Appendix to the Daily Official List of the
London Stock Exchange) of US$0.105 per Ordinary Share on 31 July
2017, being the latest practicable date before the publication of
this announcement. The Tender Price has been calculated by
reference to the Net Asset Value per Ordinary Share as at 31
December 2016 of US$0.23.
The Current Tender Offer is only available to Eligible
Shareholders and in respect of the number of Ordinary Shares
registered in those Shareholders' names at the Record Time.
Risks relating to the Tender Offers
The risks described below should be carefully considered by
Shareholders when deciding what action to take in relation to the
Resolution to be proposed at the EGM.
If any Ordinary Shares permitted to be tendered pursuant to the
Tender Offers are tendered, the issued share capital of the Company
will be reduced. As a result, (i) the fixed costs of the Company
would be spread over fewer Ordinary Shares and the Company's total
expense ratio may increase; and (ii) the ability to trade Ordinary
Shares in the secondary market would be likely to be reduced as the
Company's share capital becomes smaller through the execution of
the Tender Offers.
The Tender Offers would contribute to increased asset
concentration and, therefore, increased portfolio risk. The amount
that the Company would be able to return to Shareholders in future
would, therefore, be significantly dependent on the performance of
the remaining investment in the Dar-es-Salaam property and the
proceeds realised from it.
If the Current Tender Offer does not proceed for any reason, the
Company would bear costs in relation to the Current Tender
Offer.
Although the taxation consequences of the Current Tender Offer
are set out in the Tender Offer Document, such tax treatment may
change as a result of changes in the law or HM Revenue &
Customs custom and practice.
Recommendation in respect of the Resolution
The Board unanimously considers that approval of the Resolution
is in the best interests of the Company and its Shareholders as a
whole. The Board unanimously recommends that Shareholders vote in
favour of the Resolution as Lawrence Kearns (being the only
Director who holds an interest in the Company) intends to do in
respect of his own beneficial holding, which amounts to 37,000
Shares representing approximately 0.09 per cent. of the Company's
current issued share capital.
Expected Timetable of Events
Tender Offer Document, Notice of Extraordinary 1 August 2017
General Meeting, Tender Forms and Forms
of Proxy posted
Current Tender Offer opens 1 August 2017
Latest time and date for receipt of Forms 10.00 a.m. on 4 September
of Proxy 2017
Extraordinary General Meeting 10.00 a.m. on 6 September
2017
Latest time and date for receipt of Tender 1.00 p.m. on 13 September
Forms and for settlement of TTE instructions 2017
in respect of the Current Tender Offer
Record Time for the Current Tender Offer 5.00 p.m. on13 September
2017
Announcement of results of the Current 15 September 2017
Tender Offer
CREST accounts credited with Current 19 September 2017
Tender Offer proceeds and holdings of
uncertificated Ordinary Shares revised
Despatch of cheques for Current Tender 19 September 2017
Offer proceeds for
certificated Ordinary Shares and where
applicable balance
certificates
For further information please contact:
Smith & Williamson Corporate Finance Limited
Azhic Basirov / Ben Jeynes +44 20 7131 4000
Stifel Nicolaus Europe Limited
Neil Winward / Tom Yeadon +44 20 7710 7600
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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