TIDMPTF TIDMTTM
RNS Number : 6758X
Phaunos Timber Fund Limited
14 August 2018
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT CONSTITUTES
INSIDE INFORMATION. NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY (IN WHOLE OR IN PART), IN, INTO OR FROM ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF THAT JURISDICTION. THIS ANNOUNCEMENT DOES NOT
CONSTITUTE A TAKEOVER OFFER OR AN OFFER OF SECURITIES.
14 August 2018
Phaunos Timber Fund Limited ("Phaunos" or the "Company")
Rejection of Stafford's Offer, Publication of Response Circular
and
Updated Asset Realisation Range
Further to the Company's announcement on 3 July 2018, the board
of Phaunos (the "Board") announces that it is today publishing its
response circular (the "Response Circular") in connection with the
unsolicited cash offer made by Stafford Capital Partners Limited
("Stafford") to acquire the entire issued and to be issued share
capital of the Company (the "Offer").
The Board of Phaunos is also today publishing an Updated Asset
Realisation Range of US$0.54 - 0.60 per Share.
In light of the Indicative Bids received, the Board expects the
sale of all the assets which are subject to a sale process under
the Asset Realisation Process to complete within 6 to 9 months,
which would cover the sale of assets comprising 92% of the
Portfolio Value.
The Board of Phaunos reiterates that it is committed to
returning all sales proceeds from the Asset Realisation Process as
they are received, after allowing for cash reserves to wind-down
the Company
A letter from the Chairman of Phaunos to Phaunos Shareholders,
as set out in the Response Circular, has been extracted below.
Letter to Phaunos Shareholders from the Chairman of Phaunos
Registered office:
Ground Floor, Dorey Court
Admiral Park, St Peter Port
Guernsey, GY1 2HT
info@phaunostimber.com
www.phaunostimber.com
14 August 2018
Dear Shareholder,
Thank you for taking the time to read this document. It contains
important information with regards to your shareholding in Phaunos.
As you are aware, on 3 July 2018 Stafford made an unsolicited cash
offer for Phaunos which values the Company at US$0.49 per Share. It
is the Board's belief that this Offer is inadequate and not in the
best interests of Shareholders. This document explains why.
Stafford's Offer undervalues Phaunos: There is significant
upside from the Asset Realisation Process compared to Stafford's
Offer
Since August 2017, the Company has been focused on the Asset
Realisation Process, which was formally launched earlier this year.
Indicative Bids were received in late June 2018 from various
parties for each of the assets included in the sale process within
the Asset Realisation Process and were subsequently confirmed in
late July and early August this year.
The Board of Phaunos is pleased with the progress made to date
with its Asset Realisation Process and is today publishing an
Updated Asset Realisation Range of US$0.54 - 0.60 per Share(1) .
This Updated Asset Realisation Range, based on Indicative Bids
received in US dollars, represents a 10% to 22% upside to
Stafford's Offer.
The Updated Asset Realisation Range is primarily based on the
outcome of Indicative Bids received for all assets which are
subject to a sale process under the Asset Realisation Process:
-- All bidders have been provided with preliminary information
including information memoranda, appraisal reports and other
relevant forestry and financial information
-- All bidders are highly credible and well-capitalised
international investors in timber assets
-- Takes into account the nature of the bids received, the
current performance of the assets in the portfolio and other
ongoing discussions forming part of the Asset Realisation Process
initiated in August 2017
The Board's strategy from hereon is to seek to execute binding
purchase and sale agreements with those parties that have provided
Indicative Bids which, when taken together, comprise the top end of
the Updated Asset Realisation Range. The lower end of the Updated
Asset Realisation Range should therefore be regarded as reflecting
the risk that it does not prove possible to complete transactions
with the "high" bidders at or above the price set out in their
Indicative Bids.
Phaunos is also publishing today an Updated Going Concern NAV of
US$0.58 per Share(2) . Reported on a break-up basis, taking into
account adjustments for discounts applied to asset values,
provisions for selling costs and other costs for completion of the
liquidation process, the Updated Break-Up NAV is US$0.51 per
Share(2) . For the avoidance of doubt, neither the Updated Going
Concern NAV nor the Updated Break-Up NAV take into account the
Indicative Bids received for assets which are subject to a sale
process under the Asset Realisation Process. Even then, Stafford's
Offer of US$0.49 per Share represents a discount to both the
Updated Break-Up NAV and Updated Going Concern NAV.
In light of the Indicative Bids received, the Board expects the
sale of all the assets which are subject to a sale process under
the Asset Realisation Process to complete within 6 to 9 months,
which would cover the sale of assets comprising 92% of the
Portfolio Value.
The Company is currently in discussions with Aurora Forestal's
majority shareholder to negotiate a possible disposal of its equity
interest in Aurora Forestal (5% of the Portfolio Value) and has
exercised its rights to initiate a voluntary exit pursuant to the
Aurora Forestal shareholder agreement.
Moreover, the Board is pleased to announce that, on 27 July
2018, the Company's interest in NTP was realised at marginally
above its reported NAV as at 31 December 2017. The disposal of the
Company's interest in GTFF (4% of the Portfolio Value) is subject
to a separate liquidation procedure.
The Board of Phaunos reiterates that it is committed to
returning all sales proceeds from the Asset Realisation Process as
they are received, after allowing for cash reserves to wind-down
the Company.
Stafford's Offer is not Shareholder friendly and appears to be
aimed at disrupting the Asset Realisation Process and taking
advantage of the UK Takeover Code timetable
Stafford's approach has not been made with the best interests of
Shareholders in mind. Stafford was given the opportunity to
participate in the Asset Realisation Process but declined to do so,
opting instead to pre-empt that process with an Offer that
undervalues Phaunos and would, were Stafford to succeed, deprive
Shareholders of the benefits of a competitive process designed to
maximise value.
The timing of Stafford's Possible Offer, made voluntarily, was
four weeks before the end of June - or the 28 days a PUSU period
would last - which is the date at which the Board said it
anticipated receiving Indicative Bids in the Asset Realisation
Process.
You should note that the Board has been advised by its New
Zealand legal counsel that there is no guarantee that the OIO
Ministers would be able to issue their decision with respect to
Stafford's Offer within the timetable required under the UK
Takeover Code. You should also note that the OIO process would only
be applicable to non-New Zealand based parties.
The Board has worked hard to minimise the disruption caused by
Stafford's Offer and is greatly encouraged by the pricing and
executability of the Indicative Bids received to date.
THE BOARD'S RECOMMATION: TAKE NO ACTION
Your Board strongly believes that Stafford's Offer does not
provide an attractive exit opportunity for Shareholders and that
the Asset Realisation Process is the best strategy for maximising
shareholder value over a reasonable timeframe.
Accordingly, and subject to the matters set out above, the
Board, which has been so advised by Evercore, strongly believes
that Stafford's Offer significantly undervalues Phaunos and
recommends that you should take no action in relation to Stafford's
Offer and that you should not sign any document which Stafford or
its advisers send to you. In providing advice to the Board,
Evercore has taken into account the Board's commercial assessments.
Evercore is providing independent financial advice to the Phaunos
Directors for the purposes of Rule 3 of the UK Takeover Code.
We will write to you again during the course of the Offer to
keep you informed of any further developments.
Yours sincerely,
Richard Boléat
Chairman of Phaunos Timber Fund Limited
Notes:
All capitalised terms shall have the meaning ascribed to them in
the Response Circular.
1. See Appendix I of the Response Circular for further details
on how the Updated Asset Realisation Range has been computed as
well as the level of conditionality associated with the Indicative
Bids
2. See Appendix II of the Response Circular for a pro forma
statement of net assets of Phaunos and Matariki Forestry Group
including further details on the Updated Going Concern NAV and
Updated Break-Up NAV
In accordance with Rule 25.1(c)(ii) of the UK Takeover Code, a
copy of the Response Circular will shortly be made available on
Phaunos's website at
http://www.phaunostimber.com/offer-from-stafford/. A copy of the
Response Circular has been submitted to the National Storage
Mechanism and will shortly be made available for inspection at
www.morningstar.co.uk/uk/NSM/.
Enquiries:
Phaunos Timber Fund Limited
Richard Boléat (Chairman) +44 (0)1534 625522
Evercore Partners International LLP
(Financial Adviser)
Julian Oakley
Julien Baril +44 (0)20 7653 6000
Winterflood Investment Trusts (Corporate
Broker)
Joe Winkley
Neil Langford +44 (0)20 3100 0000
Rule 26.1 Disclosures
In accordance with Rule 26.1 of the UK Takeover Code, a copy of
this announcement will, subject to certain restrictions relating to
persons resident in restricted jurisdictions, be available on
Phaunos's website at
http://www.phaunostimber.com/offer-from-stafford/ by no later than
12 noon (London time) on the business day following the release of
this announcement. The content of the website referred to in this
announcement is not incorporated into and does not form part of
this announcement. The person responsible for arranging for the
release of this announcement on behalf of Phaunos is JTC Fund
Solutions (Guernsey) (acting as Company Secretary).
Important Notices
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or solicitation of any offer
to purchase, otherwise acquire, subscribe for, sell or otherwise
dispose of any securities or the solicitation of any vote or
approval in any jurisdiction. Any offer (if made) will be made
solely by certain offer documentation which will contain the full
terms and conditions of any offer (if made), including details of
how such offer may be accepted. This announcement has been prepared
in accordance with English law and the UK Takeover Code, and
information disclosed may not be the same as that which would have
been prepared in accordance with laws outside of the United
Kingdom. The release, distribution or publication of this
announcement in jurisdictions outside of the United Kingdom may be
restricted by laws of the relevant jurisdictions, and therefore
persons into whose possession this announcement comes should inform
themselves about, and observe, any such restrictions. Any failure
to comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
Evercore Partners International LLP ("Evercore"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as financial adviser for Phaunos
Timber Fund and no one else in connection with the Offer and other
matters set out in this announcement and will not regard any other
person as its client in relation to the Offer and other matters in
this announcement and will not be responsible to anyone other than
Phaunos Timber Fund for providing the protections afforded to
clients of Evercore, nor for providing advice in relation to the
Offer or any other matter referred to herein. Neither Evercore nor
any of its subsidiaries, branches or affiliates owes or accepts any
duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract or in tort, under statute or
otherwise) to any person who is not a client of Evercore in
connection with the Offer, this announcement or any statement
contained herein or otherwise. Apart from the responsibilities and
liabilities, if any, which may be imposed on Evercore by FSMA, or
the regulatory regime established thereunder, or under the
regulatory regime of any jurisdiction where exclusion of liability
under the relevant regulatory regime would be illegal, void or
unenforceable, neither Evercore nor any of its affiliates accepts
any responsibility or liability whatsoever for the contents of this
announcement, and no representation, express or implied, is made by
it, or purported to be made on its behalf, in relation to the
contents of this announcement, including its accuracy, completeness
or verification of any other statement made or purported to be made
by it, or on its behalf, in connection with Phaunos Timber Fund or
the matters described in this announcement. To the fullest extent
permitted by applicable law, Evercore and its affiliates
accordingly disclaim all and any responsibility or liability
whether arising in tort, contract or otherwise (save as referred to
above) which they might otherwise have in respect of this
announcement or any statement contained therein.
Winterflood Securities Limited ("Winterflood"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as corporate broker to Phaunos Timber
Fund and no one else in connection with the matters set out in this
announcement and will not regard any other person as its client in
relation to the matters in this announcement and will not be
responsible to anyone other than Phaunos Timber Fund for providing
the protections afforded to clients of Winterflood, nor for
providing advice in relation to any matter referred to herein.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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