TIDMQOGT
RNS Number : 2225Q
Quorum Oil and Gas Tech. Fund Ld
30 July 2010
Not for release, publication or distribution in, or into, the United States,
Canada, Australia or Japan.
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| Press Release | 30 July 2010 |
+------------------------------+------------------------------+
Quorum Oil and Gas Technology Fund Limited
(the "Company")
Proposals for the approval of the appointment of SGW Capital Managers Limited as
investment manager and the change of name of the Company to Global Oil & Gas
Technology Fund Limited
and
Notice of Extraordinary General Meeting
The Directors of Quorum Oil and Gas Technology Fund Limited (LSE:QOGT), a
registered closed-ended investment company incorporated in Guernsey, announces
that the Company is to seek shareholder approval for a series of proposals
including the appointment of SGW Capital Managers Limited as the Company's
investment manager and the change of the Company name to Global Oil & Gas
Technology Fund Limited, at an Extraordinary General Meeting ("EGM").
The Company announced on 2 July 2010 that the replacement investment manager
would be named Arch Capital Managers LLP, but a decision has subsequently been
taken by David Sefton and Michael Goffin to incorporate the entity as SGW
Capital Managers Limited. SGW Capital Managers will be a closed ended
investment company limited by shares and will be incorporated under the laws of
Guernsey and authorised by the Guernsey Financial Services Commission.
The EGM is to be convened for 2 p.m. on Thursday 19 August 2010 at Ogier House,
St Julian's Avenue, St. Peter Port, Guernsey GY1 1WA.
Copies of the Circular will be posted to Shareholders and will be available from
QOGT's website www.q-ogtfund.com.
- Ends -
For further information:
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| Corporate Broker | |
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| Numis Securities | |
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| Nathan Brown, Corporate Broking | Tel: +44 (0) 20 |
| | 7260 1426 |
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| n.brown@numiscorp.com | |
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Media enquiries:
+----------------------------------------+-------------------------+
| Abchurch | |
+----------------------------------------+-------------------------+
| Henry Harrison-Topham / Mark Dixon | Tel: +44 (0) 20 |
| | 7398 7702 |
+----------------------------------------+-------------------------+
| mark.dixon@abchurch-group.com | www.abchurch-group.com |
+----------------------------------------+-------------------------+
Notes to editors:
Quorum Oil and Gas Technology Fund Limited ("Q-OGT") is a registered
closed-ended investment company incorporated in Guernsey to provide expansion
capital to companies which own and/or are developing proven proprietary
technology which may have a potentially significant effect on the oil and gas
industry. Q-OGT was admitted to the Official List of the UK Listing Authority
and to trading on the London Stock Exchange on 7 January 2008. Its stock market
EPIC is QOGT.L. Further information can be found at www.q-ogtfund.com.
The following information is an excerpt from the circular to Shareholders (the
"Circular") posted today. Copies of the Circular will be available from QOGT's
website www.q-ogtfund.com. Definitions used in the Circular apply in this
announcement unless the context otherwise requires.
Proposals for the approval of the appointment of SGW Capital Managers Limited as
investment manager and the change of name of the Company to Global Oil & Gas
Technology Fund Limited
and
Notice of Extraordinary General Meeting
Introduction
The purpose of the Circular is to explain the reasons for and seek shareholders'
approval of the appointment of SGW Capital Managers Limited (SGW Capital
Managers) as the investment manager of the Company and the change of name of the
Company to Global Oil & Gas Technology Fund Limited (together the Proposals).
Background
The Company announced on 2 June 2010 that it had been made aware of an ongoing
dispute between Sefton Partners LLP (Sefton Partners, formerly Quorum European
Partners LLP) and QOGT Inc. (together the Former Investment Managers), which
were engaged by the Company under an investment management and advisory
agreement dated 27 December 2007 (the Original IMAA). On 28 May 2010,
Christopher Hill and Tom Price (the Independent Directors) gave the Former
Investment Managers 30 days' notice to resolve the dispute to the Company's
reasonable satisfaction and to demonstrate that they had re-established a proper
working relationship and could work together constructively in the Company's
best interests as required under the terms of the Original IMAA to ensure that
the investments of the Company were again managed in accordance with the
Original IMAA.
Having been given 30 days to remedy the position, the Former Investment Managers
did not satisfy the Independent Directors that they had done so. Accordingly,
the Company announced on 2 July 2010 that it had terminated the Original IMAA
with effect from 1 July 2010.
Interim appointment of Sefton Partners as sole investment manager
With effect from 1 July 2010, the Company has appointed Sefton Partners, an
entity authorised and regulated by the Financial Services Authority, to provide
sole discretionary investment management services on an interim basis, pending
the appointment of a replacement investment manager. The interim appointment is
for a fixed period until the end of the extraordinary general meeting (EGM) to
be held at 2 p.m. on 19 August 2010 at which shareholders will consider the
appointment of the replacement investment manager. The interim appointment may
also be terminated on one month's written notice by either party to the other,
and in certain limited circumstances without notice.
Exclusive responsibility for the management of Sefton Partners rests with its
managing member, Arch Capital Partners LLP, whose sole members are David Sefton
and Michael Goffin, both of whom have been involved with the management of the
Company since its inception in 2007. Details of Messrs Sefton and Goffin's
experience are set out below.
Under the interim appointment, Sefton Partners is entitled to a management fee
equivalent to 1.0 per cent. of the Company's net asset value but is not entitled
to charge transaction fees on any investments in investee companies.
Proposed appointment of SGW Capital Managers as investment manager
Subject to shareholder approval at the EGM, the Company intends to appoint SGW
Capital Managers as the Company's replacement investment manager, with effect
from the end of the EGM. The Company announced on 2 July 2010 that the
replacement investment manager would be named Arch Capital Managers LLP, but a
decision has subsequently been taken by David Sefton and Michael Goffin to
incorporate the entity as SGW Capital Managers Limited.
SGW Capital Managers will be a closed ended investment company limited by shares
and will be incorporated under the laws of Guernsey and authorised by the
Guernsey Financial Services Commission.
The directors of SGW Capital Managers will be David Sefton, Michael Goffin,
Roland Wessel and a Guernsey resident individual with appropriate experience in
the investment management industry.
SGW Capital Managers will initially be controlled by David Sefton and Michael
Goffin. It is proposed that Roland Wessel will become a shareholder of SGW
Capital Managers as soon as certain regulatory formalities in Guernsey have been
completed.
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| · | David Sefton has over 10 years of experience in |
| | advising on, executing and implementing cross-border |
| | investments throughout Europe. As a partner of |
| | Sefton Partners, one of the Former Investment |
| | Managers, David has been involved with the management |
| | of the Company since its inception in 2007. David |
| | started his professional career as a lawyer at |
| | Cleary, Gottlieb, Steen & Hamilton, where he was a |
| | senior associate based in the London and New York |
| | offices, and subsequently became the chief legal |
| | officer at Lukoil Financial Services Limited. David |
| | has extensive experience of transactions across the |
| | whole of Europe, including Eastern Europe and Russia, |
| | and the Middle East, and has particular sectoral |
| | expertise in the Oil and Gas, Financial, |
| | Telecommunications and Technology sectors and their |
| | related services. David holds BA (Hons), MA (Hons) |
| | and BCL degrees from Oxford University, and is an |
| | approved person by the FSA. In addition to roles |
| | arising from his work with the Company, David also |
| | sits as a non-executive director on a number of |
| | boards of companies. |
| | |
+----+-------------------------------------------------------+
| · | Michael Goffin has over 14 years of investment, |
| | accounting and corporate financial experience. As a |
| | former officer of QOGT Inc., one of the Former |
| | Investment Managers, Michael has been involved with |
| | the management of the Company since its inception in |
| | 2007. Prior to joining the Quorum Group he held |
| | various progressive financial positions in the |
| | service industry and manufacturing sector. Michael's |
| | primary focus is on the management of portfolio |
| | investments, financial structuring, strategic |
| | modelling and due diligence. Michael has experience |
| | serving on advisory boards of private investment |
| | funds and companies and has held board positions on |
| | several publicly listed companies. Michael graduated |
| | from the University of Toronto with a Bachelor of |
| | Arts degree in Economics and Environmental Management |
| | in 1994 and holds a Certified General Accountant |
| | ("CGA") professional designation. |
| | |
+----+-------------------------------------------------------+
| · | Roland Wessel has 25 years of operational and |
| | managerial experience in the oil and gas industry. |
| | Roland is a geology graduate from London University |
| | with over 25 years' experience in the oil and gas |
| | industry. The majority of Roland's career has been |
| | spent in the drilling services sector and he has |
| | undertaken managerial assignments in most of the |
| | active oil and gas regions of the world including |
| | West Africa, the Middle East, the North Sea, and |
| | North and South America. He has twice founded |
| | start-up oil and gas companies, obtained backing from |
| | private equity groups and grown them through to |
| | successful exits. The first was Integrated Drilling |
| | Services Ltd, a drilling services company, and most |
| | recently Roland co-founded Star Energy in 1999, which |
| | is the UK's second largest onshore producer and which |
| | has also developed a significant gas storage |
| | business. Star Energy was admitted to AIM and |
| | subsequently sold to the Malaysian national oil |
| | company, Petronas Berhad. |
+----+-------------------------------------------------------+
Subject to being appointed to act as the sole manager of the Company at the EGM,
SGW Capital Managers proposes to strengthen further its team by the appointment
of a finance director. SGW Capital Partners has already identified individuals
with appropriate experience for that role.
SGW Capital Managers will be entitled to an annual management fee of 1.5 per
cent. of the Company's net asset value, with each unrealised investment valued
at its cumulative acquisition cost, adjusted to reflect any write downs and with
publicly quoted securities valued at mid market (rather than the prevailing
valuation of the directors of the Company which was used under the Original
IMAA). This proposed new annual management fee compares favourably with an
annual fee under the Original IMAA of 2 per cent. of the Company's net asset
value.
SGW Capital Managers will also be entitled to charge the relevant investee
company a transaction fee of 3 per cent. on new investments made by the Company,
with 50 per cent. of those fees being rebated to the Company. This transaction
fee also compares favourably with a transaction fee under the Original IMAA of 3
per cent. on all investments made by the Company, payable to the Former
Investment Managers.
The proposed appointment of SGW Capital Managers will be for an initial fixed
period of 12 months and will continue after the initial period, subject to
termination by either party on 6 months' notice. The appointment is also
terminable with immediate effect in certain circumstances, including on a
winding-up of the Company and if any one of David Sefton, Michael Goffin, and
Roland Wessel ceases to be a full time director or employee of SGW Capital
Managers.
The appointment of SGW Capital Managers is conditional on the necessary
regulatory authorisations being in place to enable it to provide its investment
management and advisory services to the Company.
SGW Capital Managers anticipates that it will seek advice from one or more
entities established outside Guernsey which are controlled by one or more of its
directors: David Sefton, Michael Goffin and Roland Wessel. SGW Capital Managers
will pay for this advice out of its own resources. Any adviser will comply with
any regulatory requirements to which it is from time to time subject.
Benefits of the proposed appointment
The Board believes that the proposed appointment of SGW Capital Managers is in
the best interests of shareholders and in particular brings the following
benefits:
Investment approach - the Board believes that it is appropriate at this stage of
the Company's development that the focus should move to achieving successful
exits from some or all of the current portfolio investments. The Board has
therefore directed Sefton Partners and will in due course direct SGW Capital
Managers that until further notice no investments should be made in companies
unconnected with existing investees, and that any follow-on investments in
existing investees should be made only where the investment can be shown to add
to the potential near to medium term realisation value.
The Board has notified SGW Capital Managers that it will determine in the
future, following consultation with major shareholders, whether the proceeds of
any successful exits be distributed to shareholders or reinvested in growth
stage companies. The Board is pleased that SGW Capital Managers entirely agrees
with this investment approach.
The immediate plan of SGW Capital Managers is to work with the investee
companies to refocus them on core activities and ensure that all become cashflow
positive as soon as reasonably possible. Following on from that, SGW Capital
Managers plans to rebalance the investment portfolio to focus on upstream oil
services and in particular companies and technologies that increase overall
recovery rates, optimise the reservoir, increase production rates and/or lower
production costs.
Improved commercial terms - the Board has negotiated improved commercial terms
for the Company under the proposed new investment management agreement. The
principal improvements are (i) a reduction in the management fee percentage (1.5
per cent. per annum of the Company's net asset value rather than 2.0 per cent.);
(ii) a revised charging basis (the fee will be calculated based on the
cumulative acquisition cost of unrealised assets (adjusted to reflect any write
downs and with publicly quoted securities valued at mid market) rather than the
prevailing valuation of the directors); (iii) significantly improved notice
period provisions (including an ongoing 6 month notice period (after an initial
fixed period of 12 months) and no notice period on a winding-up of the Company);
and (iv) a 50 per cent. rebate to the Company on any transaction fees charged to
investee companies by SGW Capital Managers.
Independent investment management - SGW Capital Managers is an independent
investment management firm and, initially, its sole client will be the Company.
The Company is a co-investor in a number of the investee companies with two
private equity funds managed by the Quorum Group and the Board believes that
there is a benefit to shareholders in SGW Capital Managers being the sole
manager of the Company and managing the Company's assets without any potential
conflicts of interest.
In addition, SGW Capital Managers will undertake that it, its directors and its
clients (including any funds under its management) will not directly or
indirectly co-invest with the Company or any investee company of the Company
without the Board's consent.
Administration - the arrangements with SGW Capital Managers will involve Ogier
Fiduciary Services (Guernsey) Limited, the Company's secretary and
administrator, undertaking direct responsibility for all administrative
functions relating to the Company, which the Board believes is in line with best
market practice for listed investment companies.
Performance related remuneration
As a result of the termination of the Original IMAA, the existing options to
subscribe for shares in the Company (the Options) granted to the Former
Investment Managers have become immediately exercisable and remain exercisable
until the tenth anniversary of their respective grant dates. These Options were
issued to the Former Investment Managers as part of the Company's fundraisings
and amounted to 20 per cent. of the fully diluted share capital of the Company
in issue as at 31 December 2009. The exercise price of the Options is the issue
price of the shares in the Company to which they relate (ranging from $9.59 to
$10.35), each increasing by 8 per cent. per annum, with that increase being
reduced on a US$ for US$ basis in respect of any distributions paid by the
Company.
The shareholders of SGW Capital Managers hold in aggregate 141,223 Options,
which are exercisable as stated above.
The Company has yet to issue any Options pursuant to the placings in February
and March 2010 and the exercise of warrants in April 2010, which together
increased the number of shares in issue by 969,638. Subject to Board approval,
the Company intends to issue to SGW Capital Managers or its shareholders a
further 242,410 Options in respect of the issue of these shares.
Costs of Termination of Original IMAA
The Original IMAA could be terminated without notice for, among other things,
material breach by any party of its terms, conditions and provisions if that
breach, if capable of remedy, was not remedied within 30 days of a written
request to do so. The Company terminated the Original IMAA on 1 July 2010 for
material breach, having given on 28 May 2010 the Former Investment Managers 30
days' notice to remedy the material breach.
The fees of the Former Investment Managers up to the date of the termination for
material breach of the Original IMAA are payable together with any outstanding
expenses due to them.
The Board has noted the statements by QOGT Inc. dated 2 and 8 July 2010.
On 2 July 2010, QOGT Inc. stated, among other things, that it had "been forced
to consider its position with its legal advisers and reserves all its rights,
including to claim damages from the [Company] for unlawful termination of the
[Original IMAA], or alternatively to serve its own notice of termination of the
[Original IMAA] with 3 years' notice, should it decide to affirm the [Original
IMAA] and not accept the [Company]'s repudiatory conduct. It is also the Quorum
Group's intention to bring legal proceedings against Mr. Sefton personally in
connection with the sums owed to it by him."
On 8 July 2010, QOGT Inc. stated that it had "instructed its legal advisors to
give notice of its intention to issue proceedings for damages against [the
Company]..." and that "The damages are likely to be substantial and to include:
damages for failure to give 36 months' contractual notice to QOGT Inc under [the
Original IMAA]; compensation in respect of the damage to QOGT Inc.'s reputation;
and associated legal costs."
The Company does not agree with many of the points made in the statements by
QOGT Inc. The Company's decision to terminate the Original IMAA was made after
full consideration of its contractual rights and obligations in light of the
factual position and with the interests of its shareholders as the paramount
consideration. The Former Investment Managers failed to demonstrate to the
Company's reasonable satisfaction that they had re-established a proper working
relationship and could work together constructively in the Company's best
interests as required by the Original IMAA. Should QOGT Inc. decide to
articulate claims against the Company, the Company will of course vigorously
defend and act consistently with its duties to shareholders in responding to
those claims.
Change of Company Name
Subject to shareholder approval at the EGM, the Company intends to change its
name to Global Oil & Gas Technology Fund Limited.
Board Composition
On 7 July 2010, Ms. Wanda Dorosz, the chief executive officer of the Quorum
Funding Corporation, resigned as a non-executive director of the Company. The
Board would like to thank Ms. Dorosz for her contribution to forming the
Company, its successful IPO and the identification and acquisition of its
investment portfolio.
The Independent Directors are conscious of the need to maintain a Board with an
appropriate mix of skills, independence, time to devote to the Company and
relevant experience. The Independent Directors have in place an appropriate
plan with a view to achieving these goals. As part of this plan, the Independent
Directors are seeking to recruit one, and perhaps two, further non-executive
directors for the Company.
Investment Advisory Committee
The Board intends to make two material changes to the Investment Advisory
Committee after the EGM should the resolutions be passed.
First, the Board intends to request the resignation of any members of the
Investment Advisory Committee who have a conflict or potential conflict of
interest through a material business relationship with SGW Capital Managers, the
Former Investment Managers, or any of the investee companies. The Board would
like to thank any resigning members for their contribution to the Company's
development.
Second, the Board will establish formal terms of reference with the Investment
Advisory Committee. As part of that, the Board proposes that the Investment
Advisory Committee will in future have direct responsibility to the Company in
providing the advice and assistance in relation to potential investments (rather
than indirectly via the discretionary investment manager) and that the Company
will be entitled to appoint and remove members of the Investment Advisory
Committee. The Investment Advisory Committee will continue to have no
discretionary authority to make investment decisions on behalf of the Company.
Extraordinary General Meeting
Shareholders will find at the end of the Circular a notice convening the EGM to
be held at 2 p.m. on 19 August 2010 at Ogier House, St Julian's Avenue, St.
Peter Port, Guernsey GY1 1WA. At the EGM the following resolutions will be
proposed:
Resolution 1, which will be proposed as an ordinary resolution, seeks the
approval of the shareholders to the appointment of SGW Capital Managers as the
Company's replacement investment manager.
Resolution 2, which will be proposed as a special resolution, seeks the approval
of the shareholders to change the name of the Company to Global Oil & Gas
Technology Fund Limited.
Action to be taken
The only action that Shareholders need to take is to complete the form of proxy
for use at the EGM.
Shareholders are asked to complete and return the form of proxy in accordance
with the instructions printed on it so as to be received as soon as possible and
by not later than 2 p.m. on 17 August 2010.
Shareholders are requested to complete and return a form of proxy whether or not
they wish to attend the EGM.
Recommendation
The Board considers that the Proposals and the passing of the resolutions to be
proposed at the EGM are in the best interests of the Company and its
shareholders as a whole. Accordingly, the Board unanimously recommends that the
shareholders of the Company vote in favour of the resolutions to be proposed at
the EGM.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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