TIDMERE
RNS Number : 8364L
Eredene Capital PLC
16 August 2013
Date: 16 August 2013
On behalf of: Eredene Capital plc ("Eredene", "Eredene Group"
or "the Company")
Embargoed until: 0700hrs
Eredene Capital Plc
Tender Offer
1. Introduction
The Board has today announced the intention to propose a tender
offer for up to 32% of the Company's issued shares at 17.2 pence
per Share (the "Tender Offer") totalling GBP20m. A circular (the
"Circular") explaining the terms of the Tender Offer and providing
notice of a General Meeting to be held on 12 September 2013 has
today been posted to Shareholders.
2. Background
In July 2012, Eredene announced as part of its final results
that the Company was embarking on a new phase to concentrate on
realising value from its existing investments and that it would
make no further investment in new projects. Consequently, the
Company made an initial return of GBP15.3m of surplus capital by
way of a tender process in August 2012.
In the final results announced on 16 July 2013, the Company
again confirmed its commitment to an orderly process of realising
its investments in India and returning capital to shareholders. To
that end, a post year-end sale of Eredene's stake in Ocean Sparkle
Ltd, India's leading port operations and marine services company,
was achieved for GBP8.2m at a gross premium over investment cost of
39% in Indian Rupee terms. Advisers have been appointed to handle
the sale of further significant parts of the Group's logistics
investments, and negotiations continue for the disposal of
Eredene's stakes in a low-cost housing development near Mumbai.
The Board, taking into account the level of surplus capital
following the Ocean Sparkle disposal, therefore intends to make a
second return of capital to shareholders, by way of a tender offer
at 17.2 pence per Share, being the net asset value per Share as at
31 March 2013.
In addition, the Board, being mindful of the increasing impact
of fixed costs as its investment portfolio reduces in size, has
undertaken a review of all ongoing operating costs with a view to
reducing these to a level in keeping with its reducing operations.
As a consequence, measures have been identified which will reduce
the ongoing operating costs by more than 50 per cent. to
approximately GBP1.3m per annum over the next 12 months. Such
measures include a reduction in the size of the Board from seven to
five. Further details of the proposed Board changes are set out in
the notice of Annual General Meeting available at
www.eredene.com.
3. The Tender Offer
Introduction
The Tender Offer is designed to enable those Shareholders (other
than certain Overseas Persons) who wish to realise Shares or their
beneficial interest in Shares (as the case may be) to do so.
Shareholders who successfully tender their Shares will receive 17.2
pence per Share. Further details of the Tender Offer are set out in
Part IV of the Circular.
Benefits of the Tender Offer
The Board believes that proposing the Tender Offer on the terms
set out here and in Part IV of the Circular is in the interests of
Shareholders as a whole because:
-- A tender offer for up to 32% of the Shares in issue provides
an opportunity for an exit for those Shareholders who wish to
receive cash; and
-- A tender offer conducted at 17.2 pence provides an uplift to
the prevailing share price of 11.875 pence as at 14 August 2013
(being the latest practicable date prior to the publication of this
document).
Shareholders are not obliged to tender any Shares and, if they
do not wish to participate in the Tender Offer, Shareholders should
not complete or return their Tender Form.
Under the terms of the Tender Offer, Shareholders (other than
certain Overseas Persons) will be entitled to tender up to 32% of
the Shares they hold as at the Record Date of 11 October 2013
(their "Basic Entitlement"). Such Shareholders will be able to
tender additional Shares but such excess tenders will only be
satisfied to the extent that other Shareholders tender less than
their aggregate Basic Entitlements, and will be satisfied on a pro
rata basis. Tenders will be rounded down to the nearest whole
number of Shares.
The Tender Offer is being made by Numis Securities. Numis
Securities will purchase the Shares tendered as principal and,
following the completion of all such purchases, will sell the
relevant Shares on to the Company pursuant to the Repurchase
Agreement at the Tender Price by way of a market transaction.
Those Shares which the Company acquires from Numis Securities
will be cancelled on acquisition. The repurchase of Shares by the
Company under the Tender Offer will be funded from the Company's
cash resources, using the special reserve created by the
Court-approved reduction of share capital carried out by the
Company in November 2007 together with part of the new special
reserve to be created by the Reduction of Capital.
Conditions
Implementation of the Tender Offer will require approval by
Shareholders at the General Meeting, which is to be held at 12.30
p.m. on 12 September 2013. The Tender Offer is also conditional
upon completion of the Reduction of Capital (which must itself be
approved by Shareholders and by the Court) and Numis Securities
being satisfied that the Company has sufficient funds available to
meet its obligations under the Repurchase Agreement. In addition,
the Tender Offer may be postponed or terminated in certain other
circumstances as set out in paragraph 2 of Part IV of the
Circular.
4. Reduction of Capital
Reasons for, and background to, the Reduction of Capital
The Company may only make distributions to shareholders from its
distributable reserves. The Company's share premium account and
capital redemption reserve are non-distributable reserves and the
Company is therefore unable to use the amounts standing to the
credit of these accounts for that purpose. However, the Companies
Act 2006 permits the Company (subject to the approval of
Shareholders and of the Court) to cancel its share premium account
and capital redemption reserve and credit the resulting amounts to
the Company's profit and loss account.
As at 31 March 2013, the Company had the sum of GBP16,267,580.95
standing to the credit of the Company's share premium account and
the sum of GBP8,491,227.20 standing to the credit of the Company's
capital redemption reserve.
The Company is proposing to cancel the entirety of these
balances to create additional distributable reserves. The Reduction
of Capital will only become effective if the Cancellation
Resolution is approved by Shareholders, the Court approves the
Reduction of Capital and the order of the Court confirming the
Reduction of Capital is delivered to, and registered by, the
Registrar of Companies for England and Wales.
Court approval
Subject to the passing of the Cancellation Resolution, the
Company intends to apply to the Court for an order approving the
cancellation of its share premium account and capital redemption
reserve. In order to approve the Reduction of Capital, the Court
will need to be satisfied that the interests of the Company's
creditors will not be prejudiced as a result of the Reduction of
Capital and will consider such matters at a preliminary hearing
scheduled to be held on 26 September 2013.
It is for the Court to determine whether any protection is
required for creditors and, if so, what form it should take. If
required to do so, the Company will put in place such form of
creditor protection as the Court determines and which is acceptable
to the Company. Such protection may include, amongst other things,
giving an undertaking to the Court to create a special
non-distributable reserve equal to the amount owed to creditors to
remain in place until the relevant creditors of the Company who are
not protected at that date by any other means have been otherwise
protected or discharged. The Board reserves the right at any time
before the Reduction of Capital becomes effective not to proceed
with the Reduction of Capital.
If the Court approves the Reduction of Capital at the final
hearing scheduled for 9 October 2013, it is expected that such
cancellation will take effect no later than 11 October 2013.
Effect of the Reduction of Capital
If the Reduction of Capital becomes effective, the amounts
resulting from the cancellation of the share premium account and
the capital redemption reserve will be credited to the Company's
profit and loss account (subject to the Court's confirmation and
any special non-distributable reserve referred to above) to create
additional distributable reserves. The Reduction of Capital does
not involve any distribution or repayment to Shareholders. The
principal effect of the Reduction of Capital will be to enable the
Company to lawfully purchase its own shares (including by way of
the Tender Offer) and/or pay dividends out of distributable
reserves to a greater extent than it would otherwise be able
to.
The Directors will determine the question of future
distributions to Shareholders in accordance with the best interests
of the Company, from time to time.
5. Overseas Persons
The making of the Tender Offer to persons outside the United
Kingdom may be prohibited or affected by the relevant laws of the
relevant overseas jurisdictions.
Shareholders with registered or mailing addresses outside the
United Kingdom or who are citizens or nationals of, or resident in,
a jurisdiction other than the United Kingdom should read carefully
paragraph 9 of Part IV of the Circular.
It is the responsibility of all Overseas Persons to satisfy
themselves as to the observance of any legal requirements in their
jurisdiction including, without limitation, any relevant
requirements in relation to the ability of such persons to complete
and return a Form of Proxy or Tender Form or to make a TTE
Instruction.
The Tender Offer is not being made directly or indirectly in,
into, or from the United States, Australia, Canada, Japan or the
Republic of South Africa, except where permitted by applicable law.
Accordingly, the Tender Form may not be distributed or sent in,
into or from (whether by use of mails or by any means or
instrumentality of interstate or foreign commerce) the United
States, Australia, Canada, Japan or the Republic of South Africa
and doing so may render invalid any purported tender. Any person
(including, without limitation, custodians, nominees and trustees)
who may have a contractual or legal obligation to forward the
Tender Form should read paragraph 9 of Part IV of the Circular
before taking any action.
Any Shareholder who is unable to give the warranties set out in
paragraphs 6.1.9, 6.1.10 and 6.1.11 in Part IV of the Circular will
be deemed not to have tendered their Shares pursuant to the Tender
Offer and their Tender Forms may be rejected.
6. Taxation
The following paragraphs are intended only as a general guide to
certain aspects of current UK tax law and HM Revenue & Customs'
published practice, and do not constitute tax advice. They are of a
general nature and only apply to Shareholders who are resident or
ordinarily resident in the United Kingdom (except where indicated)
and who hold their Shares beneficially as an investment.
Shareholders who sell Shares in the Tender Offer should, subject
to the following, be treated as having sold their Shares in the
normal way and may, depending on their individual circumstances,
incur a liability to taxation on chargeable gains. Individual
Shareholders and trustee Shareholders in the United Kingdom should
be aware that HM Revenue & Customs may seek to treat part of
the disposal proceeds of their Shares as income under the
provisions of Chapter 1 of Part 13 ITA 2007, although it is not
expected that these provisions would apply to sales made for
genuine commercial reasons.
The attention of Shareholders is drawn to Part V of the Circular
which sets out a general guide to certain aspects of current United
Kingdom taxation law and HM Revenue & Customs' published
practice.
Shareholders who are in any doubt as to their tax position or
who are subject to tax in a jurisdiction other than the United
Kingdom should consult an appropriate professional adviser.
7. General Meeting
The Reduction of Capital and the Tender Offer set out in this
document are subject to (i) Shareholder approval at the General
Meeting that has been convened for 12.30 p.m. on 12 September 2013,
at the offices of Numis Securities at 10 Paternoster Square, London
EC4M 7LT and (ii) approval by the Court at a final hearing
scheduled to be held on 9 October 2013. The Resolutions to be
proposed are to approve the Reduction of Capital and to authorise
the Company to make market purchases of its Shares pursuant to the
Tender Offer on the terms set out in the Circular.
8. The Takeover Code
As a United Kingdom public company which has its registered
office and place of central management and control in the United
Kingdom, the Company is subject to the City Code. Under Rule 9 of
the City Code, any person who acquires an interest (as defined in
the City Code) in shares which, taken together with shares in which
he is already interested and which persons acting in concert with
him are interested, carry 30% or more of the voting rights of a
company which is subject to the Code, is normally required to make
a general offer to all the remaining shareholders to acquire their
shares.
Ruffer LLP ("Ruffer") currently holds 96,161,393 Shares and
Caledonia Investments plc ("Caledonia"), a company in which the
Hon. Charles Cayzer is a director and has a beneficial interest,
currently holds 77,441,190 Shares in the Company, representing
26.56% and 21.39% respectively of the Company's current issued
share capital. If the Company were to acquire 32% of its issued
share capital pursuant to the Tender Offer, and Ruffer did not
participate, Ruffer would remain interested in 96,161,393 Shares,
but those Shares would then represent approximately 39.07% of the
reduced issued share capital of the Company. Similarly, if
Caledonia did not participate in the Tender Offer and a full 32% of
the current issued Shares were acquired by the Company, Caledonia
would remain interested in 77,441,190 Shares, but those Shares
would then represent 31.46% of the reduced issued share capital of
the Company. In these circumstances, either Ruffer or Caledonia (as
the case may be) would therefore be required to make a mandatory
offer for the Company under Rule 9 of the Code.
The Company has, however, received irrevocable undertakings from
both Ruffer and Caledonia to tender (or procure that the registered
holder tenders) under the Tender Offer, as a minimum, their basic
entitlement in respect of Shares held by them or over which they
exercise discretionary investment management authority, thus
ensuring that their respective interests shall not exceed 30% of
the issued share capital following the Tender Offer. Ruffer and
Caledonia have also both undertaken to vote (or procure that the
registered holder votes) in favour of the Resolution at the General
Meeting.
9. Recommendation
The Board considers that the Reduction of Capital and the Tender
Offer, on which it has received advice from Numis Securities, are
in the best interests of Shareholders as a whole. Accordingly, the
Board recommends that Shareholders vote in favour of the
Resolutions to be proposed at the General Meeting, as those
Directors who directly hold beneficial interests in Shares intend
to do in respect of their own beneficial holdings of Shares which,
in aggregate, amount to 1,954,140 Shares representing approximately
0.5% of the issued share capital of the Company.
Whether or not Shareholders decide to tender any of their Shares
will depend, among other things, on their individual circumstances
including their tax position and on their view of the Company's
prospects. Shareholders in any doubt as to the action they should
take should consult an appropriately qualified independent
financial adviser, authorised under the Financial Services and
Markets Act 2000, without delay.
10. Expected timetable of principal events
Latest time and date for receipt 12.30 p.m. on 10 September
of Forms of Proxy from shareholders 2013
in respect of the General Meeting
-------------------------------------- ---------------------------
General Meeting 12.30 p.m. on 12 September
2013
-------------------------------------- ---------------------------
Preliminary Court Hearing in relation 26 September 2013
to the Reduction of Capital
-------------------------------------- ---------------------------
Final Court Hearing to approve the 09 October 2013
Reduction of Capital
-------------------------------------- ---------------------------
Latest time and date for receipt 1.00 p.m. on 11 October
of Tender Forms from shareholders 2013
in respect of the Tender Offer
-------------------------------------- ---------------------------
Record Date for participation in close of business on
the Tender Offer 11 October 2013
-------------------------------------- ---------------------------
Results of the Tender Offer announced 14 October 2013
-------------------------------------- ---------------------------
Settlement date - cheques despatched 15 October 2013
and CREST accounts credited with
proceeds in respect of successfully
tendered Shares and with unsold
uncertificated Shares
-------------------------------------- ---------------------------
Balance certificates despatched week commencing 14 October
in respect of certificates tendered 2013
-------------------------------------- ---------------------------
Each of the times and dates in the expected timetable may be
extended or brought forward without further notice. If any of the
above times and/or dates change, the revised time(s) and/or date(s)
will be notified to Shareholders by an announcement through a
Regulatory Information Service provider.
All references to times are to London times.
Any defined terms not defined in this announcement are defined
in the Circular.
Copies of the Circular have been submitted to the National
Storage Mechanism and will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM. The Circular will also shortly be
available on the Company's website at www.eredene.com.
For further information:
Eredene Capital PLC
Alastair King (Chief Executive) / Gary Tel: +44 20 7448
Varley (Finance Director) 8000
Numis Securities Limited (Nominated adviser
& broker) Tel: +44 20 7260
Heraclis Economides/David Benda 1000
Redleaf Polhill (Financial PR)
Henry Columbine / David Ison / Hannah Fensome Tel: +44 20 7382
eredene@redleafpolhill.com 4720
Notes to Editors:
-- Eredene Capital PLC is a leading UK-based AIM quoted investor
in infrastructure projects in India. Following the sale of its
stake in OSL, it has a portfolio of eight principal investments in
India, seven in port services, warehousing and logistics and one in
low-cost housing (www.eredene.com).
-- Eredene trades on the Alternative Investment Market ("AIM")
of the London Stock Exchange.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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