Funds Update
October 24 2007 - 11:25AM
UK Regulatory
RNS Number:3071G
Absolute Capital Mgmt Holdings Ltd
24 October 2007
Absolute Capital Management Holdings Limited
(the "Company")
Fund Restructuring
APPROVAL PROCESS
The Company announces that it has sent each investor in the Absolute Return
Europe Fund Limited, Absolute European Catalyst Fund Limited, Absolute Octane
Fund Limited and Absolute East West Fund Limited an urgent letter requesting
them to complete and return their proxy forms in order to vote in favour of the
restructuring proposals at the extraordinary general meetings of these funds to
be held on 27 October 2007.
The letter clarifies the following two points:
* Contrary to the belief/statements of some investors and intermediaries, a
failure to vote WILL NOT be taken as a yes vote for the proposals. Receipt
of completed proxy forms or attendance in person at the fund shareholder
meetings are the only actions that can be taken to approve the proposals
* If the proposals are not approved at the funds' shareholders' meetings, it
is likely that the funds will very soon thereafter begin liquidation,
either voluntarily by action of the Company, or in respect of the Absolute
Octane Fund Limited and the Absolute European Catalyst Fund Limited, by
order of the Cayman Islands courts following the hearing of Mr John
Bruhl's petitions requesting the appointment of an interim liquidator
Implementation of the restructuring proposals requires, on a fund by fund basis,
a positive vote of shareholders holding not less than 75% of a fund's shares
represented at its extraordinary general meeting, in person or by proxy. The
quorum requirement for the meetings is 50% of a fund's shares represented in
person or by proxy. If a meeting's quorum requirement is not met, or if the
resolutions to approve the restructuring fail to secure the support of
shareholders holding 75% of the fund's shares represented at its meeting, the
fund cannot implement its restructuring proposal.
The Company believes that nearly all investors with whom it has discussed the
restructuring proposals would prefer to avoid liquidation of the funds as in
such case the funds would be forced sellers of their assets and realisation
values are likely to be significantly reduced. However, the Company is
stressing that unless enough fund investors complete the voting procedures and
vote in favour of the restructuring proposals, immediate liquidation of one or
more of the funds is the likely result.
FUND INVESTORS ARE URGED TO COMPLETE THE PROXY FORMS INCLUDED WITH THE MEETING
MATERIALS SENT ON 17 OCTOBER 2007 AND TO RETURN THE COMPLETED FORMS TO FORTIS
PRIME FUND SOLUTIONS (IOM) LIMITED, FAX +44 (0) 1624 688334, PRIOR TO 4:30 P.M.
(CENTRAL EUROPEAN TIME) ON FRIDAY 26 OCTOBER 2007. INVESTORS WHO WISH TO CHANGE
THEIR VOTE MAY DO SO BY SUBMITTING A NEW PROXY FORM PRIOR TO THAT TIME.
COMPANY UNDERTAKINGS
Whilst the overall framework and principal terms of the restructuring proposals
have not changed from those set out in the Company's circulars sent to
investors on 27 September 2007, in response to investor feedback the Company is
giving certain undertakings regarding the fund restructuring process. The
Company believes that investors will find that these undertakings reflect
significant incremental improvements to the restructuring proposals. The
undertakings are that:
1. the reset of the funds' liquid portfolios' high water marks will be based
on the HIGHER of the funds' liquid portfolios' net asset values on 1
November 2007, 1 December 2007 and 1 January 2008. This undertaking is
being given in response to investor concerns that the Company should not
receive a performance fee for the expected rebound in the funds' portfolio
values following the implementation of the restructuring proposals;
2. the Company shall rebate to the Absolute Octane Fund Limited and the
Absolute European Catalyst Fund Limited on a monthly basis the portion of
any performance fees attributable to an increase in value of the ACMH
shares held by such funds;
3. the Company will, within 30 days of the approval of the restructuring
proposals, engage on an independent basis three investment professionals it
has identified as having expertise in private equity and related valuation
matters to produce an initial report on the status of the illiquid assets
and recommend options for their realisation. Such report will be made
available to investors on a confidential basis (and may be redacted or
summarised in part to the extent its contents could adversely affect the
market for these assets), and is expected to form the basis of the
Company's plan for working out of such assets;
4. in addition to the regular monthly NAV reports, the Company will issue
quarterly status reports to fund investors setting out the progress of the
realisation of the illiquid assets, and should such process proceed ahead
of schedule, the Company will give due consideration to providing investors
with further liquidity from the funds' liquid portfolios prior to November
2008;
5. the Company will, within 30 days of the approval of the restructuring
proposals, engage a third party portfolio risk monitoring firm to produce a
report on the funds' portfolios, which report will be made available
to investors on a confidential basis;
6. the Company will establish an investors' committee to provide a
confidential forum for representatives of fund investors to monitor and
discuss the progress of the workout of the funds' illiquid assets. The
composition, appointment process and terms of reference for the committee
shall be adopted by the Company within 30 days of the implementation of the
fund restructuring proposals;
7. the Company shall ensure that no fund will implement the "redemption gate"
provision present or proposed to be included in the funds' Articles of
Association when the funds resume monthly liquidity in November 2008, and
that no Fund will extend the lock-up period on redemptions beyond November
2008; and
8. the Company shall ensure that no fund will make redemptions in kind of
shares of its side pocket portfolio.
Jonathan Treacher, Chief Executive Officer of ACMH, said "We are confident that
the large majority of investors are broadly supportive of the restructuring
proposals and nearly all are against a liquidation of the funds. We believe
that the undertakings we're giving in respect of the restructuring proposals
will go a long way to allaying any residual concerns investors may have with
the proposed restructuring, and that those investors which have remained
undecided thus far will now support our proposals. Most importantly, we need to
ensure that the funds are not put into liquidation due to investors failing to
participate in the upcoming EGMs, and for this reason we urge all fund
investors to complete and return their proxy forms in advance of the 27 October
2007 meetings."
Enquiries:
Absolute Capital Management +34 (971) 765553
Holdings Limited
Jonathan Treacher, CEO
Panmure Gordon 020 7459 3600
Dominic Morley
Callum Stewart
Cardew Group 020 7930 0777
Tim Robertson
Shan Shan Willenbrock
David Roach
This information is provided by RNS
The company news service from the London Stock Exchange
END
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