TIDMSEQI
RNS Number : 0728E
Sequoia Economic Infra Inc Fd Ld
03 May 2017
THIS ANNOUNCEMENT IS NOT FOR RELEASE, DISTRIBUTION OR
PUBLICATION, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED
STATES (INCLUDING TO U.S. PERSONS, AS SUCH TERM IS DEFINED UNDER
REGULATION S OF THE U.S. SECURITIES ACT OF 1933, AS AMED, THE
"SECURITIES ACT"), CANADA, AUSTRALIA, NEW ZEALAND, JAPAN OR THE
REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH
PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
3 May 2017
Sequoia Economic Infrastructure Income Fund Limited (the
"Company")
Publication of Circular
Ordinary Share Issue, Placing Programme and Proposed Amendment
to the Investment Policy
Further to the earlier announcement by the Company and the
publication of the Company's Prospectus, the Board announces that
it has published a Circular in relation to the Company's proposed
Ordinary Share Issue, Placing Programme and Amendment to the
current Investment Policy.
On 24 April 2017, the Board announced that it was considering
raising new capital in order to take advantage of the growing set
of attractive investment opportunities accessible to the Company
which would be to the benefit of existing investors. The Board
values the support provided to it from its existing Shareholders
and as such it intends to have a material element of pre-emption in
the equity issue.
The Company has today announced that it intends to proceed with
the Open Offer, Ordinary Share Placing and Offer for Subscription
for a target size of GBP125 million at an Issue Price of 105.5
pence per Ordinary Share (the "Issue"). Under the terms of the Open
Offer, up to approximately 119.2 million Ordinary Shares will be
made available to existing Qualifying Shareholders on the basis of
1 new Ordinary Share for every 5 existing Ordinary Shares held. The
Directors may, at their discretion, issue up to a maximum number of
approximately 151.7 million Ordinary Shares pursuant to the Issue
if the Directors, in consultation with the Investment Adviser and
Stifel, believe that appropriate opportunities exist for the
deployment of additional Issue proceeds, although there is no
certainty that the maximum number of Ordinary Shares will be
issued, even if sufficient investor demand exists. In the event
that applications for the Ordinary Shares are in excess of the
target amount, the Company may scale back applications made in such
manner as it shall determine in its discretion (in consultation
with Stifel).
The minimum size of net proceeds of the Issue for the Issue to
proceed is GBP60 million. The Company will seek admission of the
new Ordinary Shares to be issued under the Issue to the premium
segment of the Official List and to trading on the Main Market.
Further details of the Issue are included in the Prospectus.
The Company also intends to implement a Placing Programme of up
to 200 million ordinary shares. The Placing Programme allows the
Company the flexibility to raise further capital to take advantage
of attractive opportunities should it wish to do so. The Placing
Programme Shares will be issued at an issue price calculated by
reference to the prevailing Net Asset Value per Ordinary Share at
the time together with a premium intended to cover, at a minimum,
the costs and expenses of the relevant placing of Ordinary Shares
(including, without limitation, any placing commissions). It is the
intention of the Directors, however, that no Placing Programme
Shares will be issued prior to 85 per cent. of the proceeds of the
Issue being invested or committed.
Benefits of the Issue
The Board believes that proceeding with the Issue will have the
following benefits:
(A) provide the Company with additional capital to take
advantage of the currently available pipeline of opportunities
which should enable the Group to further diversify its existing
portfolio;
(B) create the potential to enhance the NAV per Ordinary Share
of existing Ordinary Shares through new share issuance at a premium
to NAV per Ordinary Share, after the related costs have been
deducted;
(C) grow the Company, thereby spreading the Company's fixed
running costs across a wider base of shareholders, and benefiting
from the reducing scale of charges for the Investment Adviser,
thereby reducing the total expense ratio;
(D) a greater number of Ordinary Shares in issue and a wider
base of shareholders is likely to improve liquidity in the
market;
(E) increase the size of the Company which should help make the
Company more attractive to a wider base of investors; and
(F) the availability of Ordinary Shares to new investors under
the Ordinary Share Placing and Offer for Subscription, offers the
prospect of a wider and more diversified shareholder base, and an
increased opportunity to grow the Company with the benefits of
scale and liquidity for existing Shareholders.
Benefits of the Placing Programme
The Directors believe that instituting the Placing Programme
will:
(A) create the potential to enhance the NAV per Ordinary Share
of existing Ordinary Shares through new share issuance at a premium
to NAV per Ordinary Share, after the related costs have been
deducted;
(B) grow the Company, thereby spreading operating costs over a
larger capital base, and benefiting from the reducing scale of
charges for the Investment Adviser, which should reduce the total
expense ratio;
(C) partially satisfy market demand from time to time for
Ordinary Shares and improve liquidity in the market for Ordinary
Shares; and
(D) enable the Company to raise additional capital quickly, in
order to take advantage of investment opportunities that have been
identified and which may be identified in the future.
Related Party Transaction
To the extent that an existing Shareholder holds or, in the
previous 12 months has held, Ordinary Shares representing 10 per
cent. or more of the current issued share capital of the Company,
such a Shareholder is considered a related party of the Company for
the purposes of the Listing Rules. As a substantial shareholder of
the Company, SEB Pensionsforsikring A/S (which holds 11.12 per
cent. of the voting rights as at 2 May 2017) and/or any of its
Associates is considered a Related Party. Whilst the Related Party
has not yet agreed to participate in the Issue or the Placing
Programme, in the event that the Related Party participates in the
Ordinary Share Placing, Offer for Subscription and/or the Placing
Programme its participation would be expected to be treated as a
related party transaction for the purposes of the Listing Rules.
Consequently, should the Related Party wish to participate in the
Issue and/or the Placing Programme above certain amounts, its
participation will be dependent upon the prior approval of the
independent Shareholders of the Company.
Proposed Amendment to the Investment Policy
The Company is seeking approval from Shareholders to adopt an
amended investment policy for the Company in order to (amongst
other clarificatory changes) increase the jurisdictional
diversification limit with respect to the United States from 50 per
cent. to 60 per cent. of the Company's total assets.
The Investment Adviser is seeing a growing number of attractive
opportunities in the U.S. due to a combination of macroeconomic and
political factors. The immediate asset pipeline contains GBP100
million equivalent worth of North American investment
opportunities. These projects are spread across Telecommunication,
Media and Technology Infrastructure, Power and other infrastructure
sectors of the Investment Policy. Currently, the Investment Adviser
has limited the number of investments in the United States in the
Company's pipeline due to the current 50 per cent. maximum
constraint contained in the Investment Policy, and the Directors
believe an increase to 60 per cent. would benefit the portfolio by
allowing the Company to access a wider range of transactions, with
attractive risk/return profiles.
This proposed change is considered to constitute a material
change to the Company's published Investment Policy. Therefore, in
accordance with Listing Rule 15.4.8R, the Company is required to
obtain prior approval by Shareholders at the EGM.
Accordingly and in compliance with the Companies Law and the
Listing Rules, the Board is seeking Shareholder approval in
connection with certain matters relating to the proposed Issue and
Placing Programme. An EGM of the Company is being convened at which
Shareholders will be asked to:
(A) approve the potential Issue Related Party Transaction, that
may arise with respect to the Related Party if it wishes to
participate in the Ordinary Share Placing and/or Offer for
Subscription ("Resolution 1");
(B) approve the potential Placing Programme Related Party
Transaction/s which may arise with respect to the Related Party if
it wishes to participate in the Placing Programme ("Resolution
2");
(C) approve the disapplication of pre-emption rights in respect
of up to approximately 151.7 million Ordinary Shares for the
purposes of the Issue and up to 200 million Ordinary Shares for the
purposes of the Placing Programme ("Resolution 3");
(D) approve certain amendments to the existing Articles in order
to provide the Board with the requisite authority to implement a
scrip dividend programme should it choose to do so and if
authorised by an ordinary resolution of the Company ("Resolution
4"); and
(E) approve the adoption of an amended investment policy for the Company ("Resolution 5").
The Resolutions
Issue Related Party Transaction (Resolution 1)
The approval of the Issue Related Party Transaction by
Shareholders is required pursuant to Chapter 11 of the UK Listing
Authority's Listing Rules. As a substantial shareholder of the
Company, the Related Party is a related party for the purposes of
the Listing Rules and the Board anticipates that it may potentially
wish to subscribe for Ordinary Shares.
Therefore, any participation by the Related Party in the
Ordinary Share Placing and/or Offer for Subscription would be
treated as an Issue Related Party Transaction and would require the
approval of independent Shareholders, to the extent that such
participation breaches, in terms of size, certain specified
thresholds under the Listing Rules.
Although the Related Party has not yet agreed to participate in
the Issue, it is proposed that the Related Party will be able to
subscribe for Ordinary Shares issued pursuant to the Ordinary Share
Placing and/or Offer for Subscription, provided that their
shareholding in the Company, in aggregate with any shareholding in
the Company of any relevant concert parties (as defined in the City
Code) following their individual participation in the Issue,
represents no more than 29.99 per cent. of the issued share capital
of the Company following Admission. Should the Related Party choose
to participate in the Ordinary Share Placing and Offer for
Subscription, its participation will be on the same terms as other
subscribers (i.e. it shall pay 105.5 pence per Ordinary Share for
which it subscribes). In the event that applications under the
Ordinary Share Placing and/or Offer for Subscription cannot be
satisfied in full, applications from the Related Party will be
scaled back under the same methodology as is applicable to other
investors in each of the Ordinary Share Placing and the Offer for
Subscription. The participation by the Related Party in the
Ordinary Share Placing and/or Offer for Subscription may dilute the
percentage holding of an existing Shareholder to the extent that
the existing Shareholder does not participate in the Issue.
The Directors believe that the approval of the Issue Related
Party Transaction is beneficial to the overall Issue.
Shareholders will be asked to approve the Issue Related Party
Transaction through Resolution 1, which is to be proposed as an
ordinary resolution at the EGM.
The Company will ensure that the Related Party does not vote on
Resolution 1, and will take all reasonable steps to ensure that the
Related Party's Associates do not vote on Resolution 1.
The Issue is not conditional on the passing of Resolution 1.
If Resolution 1 is not passed, the Related Party may still
participate in the Issue via the Open Offer. The Related Party will
have the same pro rata entitlements as the other Shareholders to
subscribe for Ordinary Shares under the terms of the Open
Offer.
Placing Programme Related Party Transaction/s (Resolution 2)
The approval of the Placing Programme Related Party
Transaction/s by Shareholders is required pursuant to Chapter 11 of
the UK Listing Authority's Listing Rules. As a substantial
shareholder of the Company, the Related Party is a related party
for the purposes of the Listing Rules and the Board anticipates
that it may potentially wish to subscribe for Placing Programme
Shares.
Therefore, any participation by the Related Party in the Placing
Programme would be treated as a Placing Programme Related Party
Transaction/s and would require the approval of independent
Shareholders, to the extent that such participation breaches, in
terms of size, certain specified thresholds under the Listing
Rules.
Although the Related Party has not yet agreed to participate in
the Placing Programme, it is proposed that the Related Party will
be able to subscribe for Ordinary Shares pursuant to the Placing
Programme, provided that their shareholding in the Company, in
aggregate with any shareholding in the Company of any relevant
concert parties (as defined in the City Code) following their
individual participation in the Issue and Placing Programme,
represents no more than 29.99 per cent. of the issued share capital
of the Company following the applicable Placing Programme
Admission. Should the Related Party choose to participate in the
Placing Programme, its participation will be on the same terms as
other subscribers. The participation by the Related Party in the
Placing Programme may dilute the percentage holding of an existing
Shareholder to the extent that the existing Shareholder does not
participate in the Placing Programme. Participation in the Placing
Programme may be through one or multiple issues of Ordinary
Shares.
The Directors believe that the approval of the Placing Programme
Related Party Transaction/s is beneficial to the overall Placing
Programme.
Shareholders will be asked to approve the Placing Programme
Related Party Transaction/s through Resolution 2, which is to be
proposed as an ordinary resolution at the EGM.
The Company will ensure that the Related Party does not vote on
Resolution 2, and will take all reasonable steps to ensure that the
Related Party's Associates do not vote on Resolution 2.
The Placing Programme is not conditional on the passing of
Resolution 2.
Pre-emption rights (Resolution 3)
The Articles contain pre-emption rights in respect of the
allotment or sale for cash of "equity securities" (which include
Ordinary Shares or rights to subscribe for or to convert securities
into Ordinary Shares), which can be disapplied by way of a special
resolution. The pre-emption rights have been disapplied up to an
aggregate amount not exceeding 10 per cent. of the Ordinary Shares
from time to time in issue until the conclusion of the next annual
general meeting of the Company in 2017 (the "General
Disapplication"). The Directors intend to request that the General
Disapplication is renewed at the next annual general meeting of the
Company and, thereafter, at each general meeting of the Company.
Resolution 3 proposes that the pre-emption rights are disapplied in
accordance with the Articles in respect of up to 200 million
Ordinary Shares to be issued pursuant to the Issue. Resolution 3
will not affect the General Disapplication.
Notwithstanding the disapplication of pre-emption rights, the
Directors recognise the importance of existing Shareholders'
protections and consequently the Issue is being structured to
include a material element of pre-emption via the Open Offer on the
basis of 1 new Ordinary Share for every 5 Ordinary Shares (which,
if fully subscribed, would represent approximately 78.6 per cent.
of the Ordinary Shares available under the Issue, assuming a
maximum number of 151,658,768 Ordinary Shares are issued pursuant
to the Issue).
Resolution 3 also proposes that the pre-emption rights are
disapplied in accordance with the Articles in respect of up to 200
million Ordinary Shares for the purposes of the Placing Programme.
To the extent that a Shareholder does not participate in any such
issue of Ordinary Shares under the Placing Programme, their
existing shareholding may be diluted. Where 151,658,768 Ordinary
Shares are issued pursuant to the Issue (being the maximum number
of Ordinary Shares available under the Issue) and 200 million
Placing Programme Shares are issued pursuant to the Placing
Programme (being the maximum number of Placing Programme Shares
available under the Placing Programme), and the Shareholder does
not participate in the Issue or the Placing Programme, there would
be a dilution of approximately 37.1 per cent. in existing
Shareholders' voting control of the Company.
The allotment of Placing Programme Shares is at the discretion
of the Directors and may take place at any time prior to the final
closing date of 2 May 2018. An announcement of each issue of
Placing Programme Shares pursuant to the Placing Programme will be
released through a Regulatory Information Service, including
details of the number of Placing Programme Shares issued and the
applicable Placing Programme price.
Amendments to Existing Articles (Resolution 4)
Resolution 4 will be proposed as a special resolution to make
amendments to the existing Articles in order to provide the Board
with the requisite authority to implement a scrip dividend
programme should it choose to do so and if authorised by an
ordinary resolution of the Company. To the extent that the Board
decides to implement a scrip dividend programme, implementation
will be notified to Shareholders in the future through the
publication of an RIS and a separate scrip dividend circular. The
proposed amendments to the Articles include provisions to determine
the basis on which the entitlement to new shares pursuant to the
scrip dividend is calculated, to make arrangements for the new
shares to be paid up and to deal with fractional entitlements. The
full text of the proposed amendments is set out in Resolution 4 in
the notice of EGM.
Amendment to Investment Policy (Resolution 5)
Resolution 5 will be proposed as an ordinary resolution to
approve the adoption of an amended Investment Policy for the
Company in order to (amongst other clarificatory changes) increase
the jurisdictional diversification limit with respect to the United
States from 50 per cent. to 60 per cent. of the Company's total
assets.
Shareholder resolutions
The proposed Issue and Placing Programme are only conditional
upon, amongst other things, the Company obtaining Shareholders'
approval of Resolution 3.
In order to be passed, the Resolutions to be proposed at the EGM
will require:
-- in the case of Resolutions 1, 2 and 5 which are to be
proposed as ordinary resolutions, the approval of Shareholders
representing more than 50 per cent. of the votes cast at the EGM;
and
-- in the case of Resolutions 3 and 4 which are to be proposed
as special resolutions, the approval of Shareholders representing
at least 75 per cent. of the votes cast at the EGM.
Copies of the Articles (including the existing Articles and a
form of the Articles as amended pursuant to Resolution 4) and the
monthly NAV announcements are available for inspection at: (i) the
registered office of the Company at Sarnia House, Le Truchot, St
Peter Port, Guernsey, GY1 1GR; and (ii) the offices of Jones Day at
21 Tudor Street, London, EC1V 8BR during normal business hours on
any Business Day from the date of this document until the
conclusion of the EGM, and at the place of the EGM for at least 15
minutes prior to, and during, the EGM
Expected EGM timetable
Latest time and date for receipt of forms of proxy 9.30 a.m. on
17 May 2017
Extraordinary General Meeting 9.30 a.m. on 19 May 2017
A copy of the Circular has been submitted to the National
Storage Mechanism and will shortly be available for inspection at:
www.morningstar.co.uk/uk/nsm. A copy of the Circular is also
available on the Company's website at
http://www.seqifund.com/downloads.
Defined terms used in this announcement shall (unless the
context otherwise requires) have the same meaning as set out in the
Company's Circular and Prospectus dated 3 May 2017.
For further information please contact:
Sequoia Investment Management
Company
Steve Cook
Dolf Kohnhorst
Randall Sandstrom
Greg Taylor +44 (0)20 7079 0480
Stifel Nicolaus Europe
Limited
Neil Winward
Mark Bloomfield
Gaudi Le Roux +44 (0)20 7710 7600
Praxis Fund Services
Limited (Company Secretary)
Shona Darling +44 (0) 1481 755528
About the Company
Sequoia Economic Infrastructure Income Fund Limited is a
Guernsey-incorporated closed-ended investment company whose
Ordinary Shares are traded on the Main Market of the London Stock
Exchange. The Company's investment objective is to provide its
shareholders with regular, long-term distributions by generating
exposure to senior and subordinated economic infrastructure debt
and related and/or similar assets across a diversified range of
jurisdictions, sectors and sub-sectors. The Company's Ordinary
Shares were admitted to trading on the Main Market of the London
Stock Exchange on 3 March 2015.
IMPORTANT NOTICES
Neither this announcement nor the information contained herein
is for release, publication or distribution, directly or
indirectly, in or into the United States, the Republic of South
Africa, Canada, Australia, New Zealand or Japan or any other
jurisdiction where to do so might constitute a violation of the
relevant laws or regulations of such jurisdiction. The securities
referred to herein have not been and will not be registered under
the relevant securities laws of any such excluded territory.
This announcement does not contain, constitute or form part of
an offer for sale of, resale of, transfer of or delivery of or the
solicitation of an offer to purchase directly or indirectly,
securities in the United States or to, or for the account or
benefit of a U.S. Person (as defined in Regulation S of the
Securities Act). The securities referred to herein have not been,
and will not, be registered under the Securities Act or any other
applicable securities laws of, or with any securities regulatory
authority of, any state or other jurisdiction of the United States,
and may not be offered, sold, resold, transferred or delivered,
directly or indirectly, in the United States or to, or for the
account or benefit of, any U.S. Person absent registration or an
applicable exemption from the registration requirements of the
Securities Act. The Company has not been and will not be registered
under the U.S. Investment Company Act of 1940, as amended, and
neither International Fund Management (the "Investment Manager")
nor Sequoia Investment Management Company (the "Investment
Adviser") will be registered as an investment adviser under the
U.S. Investment Advisers Act of 1940, as amended. Consequently,
investors will not be entitled to the benefits and protections of
the U.S. Investment Company Act of 1940, as amended or the U.S.
Investment Advisers Act of 1940, as amended. The shares of the
Company will be offered and sold only to non-U.S. Persons outside
the United States in reliance on Regulation S under the Securities
Act. There will be no offer of the Company's securities in the
United States. The distribution of this document may also be
restricted by law in other jurisdictions.
This announcement does not constitute or form part of any offer
or invitation to sell, or any solicitation of any offer to purchase
or subscribe for any ordinary shares or any other securities nor
shall it (or any part of it) or the fact of its distribution, form
the basis of, or be relied on in connection with, any contract.
The distribution of this announcement may be restricted by law
in certain jurisdictions and persons into whose possession any
document or other information referred to herein comes should
inform themselves about, and observe, any such restrictions. Any
failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction.
Subject to certain exceptions, the securities referred to herein
may not be offered or sold in the United States, the Republic of
South Africa, Canada, Australia, New Zealand or Japan or to, or for
the account or benefit of, any national, resident or citizen of the
United States, Canada, Japan, Australia, New Zealand or the
Republic of South Africa. There will be no offer of the ordinary
shares in the United States, Canada, the Republic of South Africa,
Japan, Australia or New Zealand.
In member states of the European Economic Area (the "EEA"), this
announcement is directed only at (a) persons who are "qualified
investors" ("Qualified Investors"), being persons falling within
the meaning of Article 2(1)(e) of the Prospectus Directive
(Directive 2003/71/EC) (as amended, including by Directive
2010/73/EU, to the extent such amendments have been implemented in
the relevant Member State and including any relevant implementing
measure in the relevant Member State); (b) in the United Kingdom,
Qualified Investors who are persons who (i) fall within article
19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the "Order"); (ii) fall within
Article 49(2)(a) to (d) ("high net worth companies, unincorporated
associations, etc") of the Order; or (iii) are persons to whom it
may otherwise be lawfully communicated (all such persons together
being referred to as "Relevant Persons"). This announcement must
not be acted on or relied on by persons who are not Relevant
Persons. Any investment or investment activity to which this
announcement relates is available only to Relevant Persons and will
be engaged in only with Relevant Persons.
Stifel Nicolaus Europe Limited ("Stifel"), which is authorised
and regulated in the United Kingdom by the Financial Conduct
Authority, is acting exclusively for the Company and no one else in
connection with the potential equity issue. Stifel will not regard
any other person as its client in relation to the potential issue
and will not be responsible to anyone other than the Company for
providing the protections afforded to its clients, nor for
providing advice in relation to the potential issue, the contents
of this announcement or any transaction, arrangement or other
matter referred to herein.
Neither Stifel nor any of its directors, officers, employees,
advisers, affiliates or agents accepts any responsibility or
liability whatsoever for/or makes any representation or warranty,
express or implied, as to the truth, accuracy or completeness of
the information in this announcement (or whether any information
has been omitted from the announcement) or any other information
relating to the Company or its subsidiary, whether written, oral or
in a visual or electronic form, and howsoever transmitted or made
available or for any loss howsoever arising from any use of the
announcement or its contents or otherwise arising in connection
therewith.
The Company is incorporated in Guernsey and has been registered
as a registered closed-ended collective investment scheme under the
Protection of Investors (Bailiwick of Guernsey) Law, 1987, as
amended. It is suitable only for professional or experienced
investors, or those who have taken appropriate professional
advice.
Regulatory requirements which may be deemed necessary for the
protection of retail or inexperienced investors, do not apply to
listed funds. By investing in the Company you will be deemed to be
acknowledging that you are a professional or experienced investor,
or have taken appropriate professional advice, and accept the
reduced requirements accordingly.
You are wholly responsible for ensuring that all aspects of the
Company are acceptable to you. Investment in listed funds may
involve special risks that could lead to a loss of all or a
substantial portion of such investment. Unless you fully understand
and accept the nature of the Company and the potential risks
inherent in it you should not invest in the Company.
Further information in relation to the regulatory treatment of
listed funds domiciled in Guernsey may be found on the website of
the Guernsey Financial Services Commission at
http://www.gfsc.gg/The-Commission/Pages/Home.aspx.
This information is provided by RNS
The company news service from the London Stock Exchange
END
CIRUORURBKAVRAR
(END) Dow Jones Newswires
May 03, 2017 08:11 ET (12:11 GMT)
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