AcenciA Debt Strategies Limited Notice of EGM (9589Q)

TIDMACD

RNS Number : 9589Q

AcenciA Debt Strategies Limited

05 September 2014

AcenciA Debt Strategies Limited (the "Company")

Continuation Proposals

5 September 2014

Introduction

Further to the Company's announcement of 21 August, in which it was noted that plans were being formulated to allow for investors to maintain their investment in the Company after 31 December 2014 (by which date the Company is currently required by its articles of incorporation to have entered into liquidation), the Board of Directors is pleased to announce that those proposals have now been finalised. A circular is being sent today to all Shareholders setting out the full terms of the proposals and convening a General Meeting of the Company on 25 September 2014 at which approval will be sought from Shareholders for implementation of the proposals.

The Proposals

Under the terms of the proposals:

- The Company's articles will be amended to remove the requirement for a winding-up vote to be held this year, and to include a provision that a winding-up vote must instead be held in September 2017 for the Company to be wound up with effect from 31 December 2017

- The continuing vehicle will amend its investment policy and strategy to allow the Manager to run a more high-conviction and concentrated portfolio, and to remove the currency hedging currently employed

- The continuing vehicle will have an amended fee structure, with the performance fee calculated (i) on the basis of a US Dollar per Share NAV rather than a Sterling per Share NAV, (ii) by reference to the lower of NAV and market capitalisation (rather than solely by reference to NAV as at present) and (iii) by reference to a five per cent. compounding hurdle (rather than the current hurdle of three per cent. over the immediately preceding accounting period)

- The continuing vehicle will implement a new discount control policy, adopting a maximum discount target of 5 per cent.; undertaking share buybacks to support this target; and putting forward a continuation vote at each annual general meeting

- Those Shareholders not wishing to maintain their full investment in the ongoing vehicle will be able to tender all or some of their shares for repurchase pursuant to a tender offer which the Company will undertake. The tender price will be the Company's NAV per Share as at 31 December 2014 less 0.05 per cent. of such NAV to reflect a fair contribution to the costs of the proposals

- If more than 78,000,000 of the Company's 114,061,949 Shares in issue are tendered by Shareholders in the tender offer, the Company will instead move straight to a winding-up

Further details are set out in the Appendix to this announcement.

Expected Timetable

 
 Circular and Notice of                      5 September 2014 
  Extraordinary General 
  Meeting sent to Shareholders 
 Tender Offer opens                          5 September 2014 
 Latest time and date for             10 a.m. on 23 September 
  receipt of Form of Proxy                               2014 
  for the Extraordinary 
  General Meeting 
 Closing Date - latest                 1 p.m. on 24 September 
  time and date for receipt                              2014 
  of 
  Tender Forms and TTE Instructions 
 Record Date for participation         5 p.m. on 24 September 
  in the Tender Offer                                    2014 
 Extraordinary General                10 a.m. on 25 September 
  Meeting                                                2014 
 Tender Date and results              by close of business on 
  of EGM announced and                      25 September 2014 
  take up level under the 
  Tender Offer 
 CREST accounts credited                on or around the week 
  with Tender Offer                     commencing 26 January 
  consideration in respect                               2015 
  of uncertificated Shares 
  sold under the Tender 
  Offer 
 Despatch of cheques for                on or around the week 
  Tender Offer                          commencing 26 January 
  consideration in respect                               2015 
  of certificated Shares 
  sold under the Tender 
  Offer 
 
 

Enquiries

 
 Praxis Fund Services 
  (Company Secretary)         [phone] 
---------------------------  ----------------- 
 Saltus Partners LLP 
  Jon Macintosh               [phone] 
---------------------------  ----------------- 
 Canaccord Genuity Limited 
  David Yovichic              [phone] 
---------------------------  ----------------- 
 Kepler Partners LLP 
  Hugh van Cutsem             [phone] 
---------------------------  ----------------- 
 

Appendix

1. Introduction

As part of a package of discount control measures approved by Shareholders in 2009, the Board undertook to hold a vote for the Company to be wound up in 2011. In September 2011, the Shareholders voted against the 2011 Winding-up Vote and instead approved the continuation proposals then put to them. These included amending the articles of incorporation of the Company so that the Board was required to hold a vote in September 2014 for the Company to be wound up with effect from 31 December 2014, with votes on such resolution being weighted such that if any Shareholder votes in favour of winding up, the resolution will be passed.

As reported in the most recent Annual Report and Audited Financial Statements, 2013 was another successful year for the Company. The strong performance generated in the period validated the Company's investment strategy of holding a concentrated portfolio which focuses on establishing investment partnerships with superior hedge fund managers tasked with finding a multitude of multi-strategy credit and event driven opportunities.

The successful trend of 2013 has continued through the first half of 2014 as reported in the Company's statement of interim results for the six months ended 30 June 2014. As previously reported, your Board believes that the opportunity set remains compelling. As a result, while remaining committed to providing a full cash exit to any Shareholder who so wishes in early 2015, the Board intends to put forward proposals for the continuation of the Company in response to the requests of a number of Shareholders who have expressed an interest in remaining invested.

To that end the Directors are pleased to recommend to Shareholders the Continuation Proposals which they believe offer Shareholders wishing to exit a quicker and greater return than would be achieved on a winding-up, while giving a continuation option for Shareholders wishing to take advantage of the investment opportunity beyond the Company's current investment period.

The purpose of the circular being sent today to Shareholders is to:

(a) make the Tender Offer for the return of capital to Shareholders who wish to exit the Company,

conditional on approval by Shareholders at the Extraordinary General Meeting;

(b) provided that the level of acceptance of the Tender Offer does not exceed the Maximum Acceptance Threshold, put to Shareholders new proposals in relation to the Company at the Extraordinary General Meeting including:

(i) to amend the articles of incorporation of the Company to remove the requirement to hold a winding up vote in September 2014 and to replace it with a requirement to hold a vote in September 2017 for the Company to be wound up with effect from 31 December 2017;

(ii) to approve and adopt the Investment Policy and Strategy;

(iii) to approve the Tender Offer;

(iv) to approve a renewal of the Company's authority to make market purchases of its own

Shares; and

(v) to approve a waiver under Rule 9 of the Takeover Code;

(the "Continuation Proposals"); and

(c) where either (i) the level of acceptance of the Tender Offer is in excess of the Maximum Acceptance Threshold or (ii) any of the Continuation Resolutions are not passed, put to Shareholders an ordinary resolution for the winding up of the Company at the Extraordinary General Meeting (the

"Winding-up Resolution").

The Continuation Resolutions are being proposed at the Extraordinary General Meeting as their

implementation requires Shareholder approval as a matter of Guernsey company law and pursuant to the Listing Rules and the Takeover Code.

2. Features of the continuing vehicle

Investment Objective and Policy

The Board intends that the Company will continue to operate under its current investment objective, but with certain amendments to its Investment Policy and Strategy, as described in paragraph 3 below, for a further three years to 31 December 2017 with a view to an ordinary resolution being passed to wind up the Company with effect from that date (with votes being weighted such that if Shareholders holding not less than 25 per cent. of the votes cast on such resolution vote in favour of winding-up, the resolution will pass).

The Board anticipates the Company being wound up with effect from 31 December 2017 (the "Proposed Wind-up Date") and intends to manage the Company's assets in the interim in accordance with its amended investment policy and strategy. The Company will place such redemption notices as are necessary ahead of the Proposed Wind-up Date to enable the Company's liquidator to return cash to Shareholders as soon as reasonably practicable after the Proposed Wind-up Date and will not, in the interim, make any new investments in funds which have lock-up or capital commitment periods beyond the Proposed Wind-up Date. It is anticipated that substantially all of the Company's assets will be capable of being distributed to Shareholders during the first quarter of 2018 although there may be some amounts, for example residual illiquid positions (if any) and audit hold back amounts, which will take longer to return. The Board does not anticipate that these will be material or that the costs of winding up the Company will be material.

If the Continuation Proposals are approved, the Company's primary investment objective will continue to be to provide annual returns in excess of three month LIBOR plus five per cent. over a rolling three year period, and annual standard deviation of under five per cent.

Changes to the Investment Management Agreement

In consequence of these it is further intended, if the Continuation Proposals are approved, to:

- restate the Investment Management Agreement so that the performance fee, which is currently calculated based on the Sterling value of the Shares, is instead calculated on the basis of a calculated parallel US Dollar per Share NAV each month and to calculate it based upon the lower of NAV and market capitalisation; and

- revise the basis on which the performance fee is calculated to disapply the current three per cent. annual trigger and to make the performance fee subject to a five per cent. compounding hurdle as adjusted for dividends, but otherwise on terms as at present.

Your Board considers these changes will better align the interests of Shareholders and the Investment Manager, Sub-Manager and Investment Adviser and that such changes should result in a lower performance fee than would otherwise be payable.

Repurchase of remaining illiquid assets

Sandalwood is the investment manager of certain underlying funds in which the Company invests and has indicated to the Company that if the Continuation Proposals are approved it intends to procure that an entity under its control will offer to buy certain illiquid assets at par from underlying funds in which the Company is invested during the first three months of 2015. These assets, which are categorised as illiquid because they (a) are held in vehicles in respect of which redemptions have been suspended, (b) are held within side pockets or (c) are held within other specially created liquidation SPVs, are currently estimated to represent approximately 12 per cent. of the Company's NAV (as at 31 July 2014). The Board believes that if such assets were to be sold by the relevant underlying funds in which the Company is invested, the Company would benefit from a high quality asset portfolio with less performance drag and illiquidity issues than at present.

Sandalwood's ability to do this will be restricted in part by its fiduciary and other duties and the regulatory formalities associated with such funds, so it can give no guarantee that it will be able to effect such purchases. If the Continuation Proposals are not approved and the Shareholders vote to wind up the Company, Sandalwood will be unable to commit to offer to purchase such illiquid assets due to overall liquidity constraints. However, in that case, Sandalwood intents to procure an offer to buy out such illiquid assets at par based on the 30 June 2015 NAV, in the third quarter of 2015.

(These statements are predicated on the assumption that there is no significant worsening of market

liquidity nor higher than normal levels of fund redemptions which in turn cause a significant level of

"gating" or redemption suspensions by underlying managers.)

Maximum Acceptance Threshold

The Board accepts that many Shareholders will wish to exit the Company in early 2015. Therefore, the Company is undertaking the Tender Offer to give those Shareholders wishing to exit the opportunity to tender all or some of their Shares.

In formulating the Continuation Proposals the Board, in conjunction with the Sub-Manager, has had regard to the minimum size at which the Company may reasonably continue to be viable as an independent entity. Accordingly the Maximum Acceptance Threshold has been set at 78 million Shares (representing 68.38 per cent. of the Company's existing issued share capital).

As at close of business on the Latest Practicable Date, the Company had 114,061,949 Shares in issue.

Accordingly if Qualifying Shareholders were to accept the Tender Offer up to the Maximum Acceptance Threshold, the Company would have 36,061,949 Shares in issue following the Tender Offer (and assuming no further purchases of its own Shares are made by the Company pursuant to the general authority to be renewed at the EGM).

If the Maximum Acceptance Threshold is exceeded the Continuation Proposals will fail and the Winding-up Resolution will be put to the EGM; such resolution would then be guaranteed to be passed by reason of voting undertakings in that regard given by Saltus.

On the basis of the information available to the Board and Saltus, following informal consultation with certain Shareholders conducted by Kepler Partners LLP, the Board does not believe the Maximum Acceptance Threshold will be exceeded.

Discount control mechanism and future Share buy-backs

The Board is committed to ensuring that the market price of the Shares is as close as possible to the NAV per Share at all times, and in particular to ensure that the Shares do not trade at a significant discount to NAV. In this regard they will implement a new discount control policy if the Continuation Resolutions are passed, effective from 1 January 2015, as follows:

   -      to adopt a maximum discount target of 5 per cent.; 

- to undertake share buy-backs to support this target and to put forward a resolution to renew the annual 14.99 per cent. buy-back authority at each annual general meeting;

- to put forward a continuation vote at each annual general meeting, regardless of the level of

the discount;

- to put forward a winding-up resolution at an extraordinary general meeting to be held in September 2017 with weighted voting rights so that if 25 per cent. or more of the votes are cast in favour of a winding-up, the resolution will be carried, and if it is not carried (i.e. less than 25 per cent. of Shareholders vote in favour of winding-up) to hold a tender for up to 25 per cent. of the Shares, favouring Shareholders who voted for a winding-up.

3. Amendment of the Investment Policy and Strategy

The Company is proposing to amend its Investment Policy and Strategy as part of the Continuation

Proposals. The Directors consider the changes to the Investment Policy and Strategy are in the best

interests of Shareholders as a whole.

By way of summary the key changes are:

   -      the Company plans to run a more high-conviction and concentrated portfolio; and 

- the Company will no longer use currency hedging so as to avoid the cash drag and costs which that has historically entailed.

4. Tender Offer

If the Continuation Proposals are approved, the Board will place redemption notices on sufficient underlying assets to finance payment pursuant to the Tender Offer. The Tender Price is the Company's NAV per Share as at 31 December 2014 less 0.05 per cent. of such NAV to reflect a fair contribution to the costs of the Continuation Proposals. The Directors have set the Tender Price on this basis to guard against the potential impact of market movements which would occur if the Tender Price were a fixed sum and which could cause unfairness between tendering Shareholders and Shareholders who remain invested.

As the Company's investments are held exclusively in open-ended funds, the calculation of the NAV is a calculation involving no discretion or opinion on the part of any individual.

The Directors believe that the Tender Offer will be attractive to tendering Shareholders relative to a winding-up for three key reasons: quantum of proceeds; time value of money; and, relative price certainty. As to quantum of proceeds, the Directors believe that the Tender Price compares favourably to the price which tendering Shareholders would otherwise receive if the Company were to be wound-up in 2014, because while such price reflects a contribution to the costs of the Continuation Proposals, such costs are lower than the total costs would be if the Company were to be wound-up in 2014. In addition, as to time value of money, the Directors believe that tendering Shareholders will receive payment pursuant to the Tender Offer more quickly than they would if the Company were to be wound up in 2014.

The Board has sought to ensure that those Shareholders who wish to do so are able to participate in the return of capital whilst allowing Shareholders individually to choose whether to participate in the Tender Offer or not. Sahreholsers can decide either to tender all or some of their Shares or none of them under the Tender Offer. In accordance with the terms of the Tender Offer, any Shares which are tendered will not be subject to scaling back and will either be bought back by the Company in full or retained by the Shareholder.

If valid acceptances are received in respect of the Tender Offer in excess of the Maximum Acceptance Threshold, then the Tender Offer will lapse and the Winding-up Resolution will be put to the EGM. As stated above, such resolution would then be guaranteed to be passed. The Company will cancel all Shares bought back and such Shares will not be held in treasury.

Following the proposed Tender Offer, the Board believes that the Company will remain in a net cash position with a strong balance sheet.

The Tender Offer is only available to Qualifying Shareholders on the register of members of the Company on the Record Date and in respect of the Shares held by them on the Record Date.

Qualifying Shareholders can choose to tender all or some of their Shares or none of their Shares under the Tender Offer. Qualifying Shareholders are not obliged to tender any of their Shares if they do not wish to do so.

The Tender Offer involves the following:

- all Qualifying Shareholders are being given the opportunity to participate in the Tender Offer on the same terms;

- Qualifying Shareholders may tender such number of Shares under the Tender Offer as they choose and the tendered Shares will either be purchased in full or not at all, i.e. there will be no scaling back;

- Qualifying Shareholders do not have to tender any of their Shares if they do not wish to do so;

   -      Shares will be purchased without commissions and dealing charges and will be cancelled 

upon purchase;

- Qualifying Shareholders are able to tender their Shares up until 1 p.m. on the closing date of the Tender Offer, which is 24 September 2014.

Shareholders who choose not to participate in the Tender Offer and who therefore do not tender their Shares will not receive any cash proceeds in respect of their Shares under the Tender Offer but will benefit from owning a greater percentage of the Shares of the Company as there will be fewer Shares in issue after completion of the Tender Offer than prior to the completion of the Tender Offer.

The Tender Offer is subject to shareholder approval which will be sought at the Extraordinary General Meeting to be held at 10 a.m. on 25 September 2014.

Shares may be traded in the normal way during the period in which the Tender Offer remains open. The purchase from Qualifying Shareholders and the sale of the Shares concerned to the Company will be effected via normal market trades, in accordance with the Rules of the London Stock Exchange. The Tender Offer is only available to Qualifying Shareholders and is not available to Shareholders in Australia, Canada, Japan, South Africa or the United States of America or to Shareholders who are otherwise within an Excluded Territory.

Any rights of Qualifying Shareholders who choose not to tender their Shares will be unaffected.

The Directors reserve the right, at any time prior to the announcement that the Tender Offer has become unconditional in all respects, to decline from proceeding with the Tender Offer if they conclude that its implementation is no longer in the interests of the Company and/or Shareholders as a whole.

5. The Saltus Concert Parties

Depending upon the level of acceptances of the Tender Offer, and upon the extent to which the Share Purchase Authority is utilised Saltus (including the Saltus Responsible Persons and their close relatives and related trusts, each of whom hold Shares in the Company) and Sandalwood (including the Sandalwood Responsible Person and his related trusts, each of whom hold Shares in the Company), together being the Saltus Concert Parties, (who as at the Latest Practicable Date held in aggregate 14.44 per cent. of the Shares) may come under an obligation to make a mandatory offer to acquire the entire issued share capital of the Company pursuant to the Takeover Code. It is estimated that this obligation would be triggered if the Company were to buy back [ ] Shares (representing [ ] per cent. of the Company's issued share capital) from Shareholders other than the Saltus Concert Parties pursuant to the Tender Offer and/or the Share Purchase Authority, and if the Saltus Concert Parties were to continue to hold the same number of Shares as they do at the date of this announcement, in which case the aggregate holding of the Saltus Concert Parties would represent [ ] per cent. of the Shares. At the Maximum Acceptance Threshold the aggregate holding of the Saltus Concert Parties would represent 45.69 per cent. of the Shares in issue.

As a result, under Rule 9 and Rule 37 of the Takeover Code, unless a specific waiver is obtained from

the Panel and approved by Independent Shareholders voting on a poll, the Saltus Concert Parties would normally be obliged to make a mandatory offer for the Company.

Saltus has irrevocably undertaken not to tender any of its Shares under the Tender Offer.

In addition, Saltus has irrevocably undertaken to vote in favour of the Winding-up Resolution if either the Maximum Acceptance Threshold is exceeded or if the Continuation Resolutions are not passed. This means that in circumstances where the Winding-up Resolution is put to the Shareholders at the EGM, it is guaranteed to be passed by reason of the weighted voting rights in the Articles. Weighted voting rights will not apply to the Continuation Resolutions.

It is Sandalwood's intention to retain a holding of no less than GBP8 million in the Company following the Tender Offer if the Continuation Proposals are approved.

Voting by Saltus and Sandalwood

While the Saltus Concert Parties are presumed by the Panel to be acting in concert, Saltus and Sandalwood act independently of each other when voting their Shares and do so in the interests of their underlying clients on whose behalf such Shares are held and to whom they have fiduciary and other duties.

Notwithstanding the above, Saltus and Sandalwood have both given undertakings that they will not vote their Shares on any resolution of the Company where the Board considers that either has a material conflict of interest.

However, both parties expressly reserve their right to vote on all other matters, including (without limitation) resolutions of the Company relating to the winding up or reconstruction of the Company and changes to the investment policy and strategy or objectives.

6. Waiver of Rule 9 of the Takeover Code

The Company is seeking approval of the Independent Shareholders to the waiver of certain obligations which may arise under the Takeover Code as a result of the Tender Offer and/or of any exercise of the Share Purchase Authority.

The Panel has confirmed that an investment manager or an investment adviser to an investment company will be treated as a director for the purposes of Rule 37.1 of the Takeover Code. Accordingly, Saltus and Sandalwood, which in aggregate are currently interested in 15,166,460 Shares, representing approximately 13.30 per cent. of the issued share capital of the Company, are deemed to be acting in concert for the purposes of Rule 9 and Rule 37.1 of the Takeover Code. In addition, as stated above, the Saltus Responsible Persons, the Sandalwood Responsible Person and their close relatives and related trusts are deemed to be acting in concert.

Thus, if the Company were to purchase any of its Shares from persons other than the Saltus Concert

Parties pursuant to the Tender Offer or the Share Purchase Authority, this could result in the Saltus Concert Party being obliged to make an offer for the Company.

As a result, your Board has consulted with the Panel, which has agreed, subject to the approval of an appropriate resolution on a poll by Independent Shareholders at the Extraordinary General Meeting, to waive any obligation that would otherwise arise, under Rule 9 and Rule 37.1 of the Takeover Code for the Saltus Concert Party, as a result of any purchases of Shares by the Company pursuant to the Tender Offer or the Share Purchase Authority, to make a general offer for the Shares which they do not already hold. The members of the Saltus Concert Party will not be entitled to vote on that resolution at the Extraordinary General Meeting.

On the basis that the issued share capital of the Company is 114,061,949 Shares (being the issued share capital of the Company as at 3 September) and assuming that (i) the relevant resolution is passed at the Extraordinary General Meeting, (ii) the Tender Offer is undertaken at the Maximum Acceptance Threshold and the Share Purchase Authority is subsequently used in full by the Company and (iii) no member of the Saltus Concert Party disposes of any of their Shares pursuant to the Tender Offer or to the exercise of the Share Purchase Authority, the Saltus Concert Party's maximum interest in Shares would increase to 53.74 per cent. of the voting share capital of the Company.

The effect of the potential increase in the interest in Shares of the Saltus Concert Party described in this section would mean that (for so long as members of the Saltus Concert Party continue to be treated as acting in concert) the Saltus Concert Party may be interested in Shares carrying 30 per cent. or more of the Company's voting share capital and potentially may hold more than 50 per cent. of such voting rights and any further increase in that aggregate interest in Shares will be subject to the provisions of Rule 9 of the Takeover Code. In addition, individual members of the Saltus Concert Party's percentage interest in Shares will not be able to increase through or between a Rule 9 threshold without Panel consent.

7. Implications of winding-up of the Company

If the Winding-up Resolution is passed, the Board will immediately place redemption notices on all of the Company's underlying investments in respect of which it has not already done so, and will also call a subsequent meeting of the Company to put resolutions to Shareholders to (i) appoint a liquidator; (ii) fix the terms of appointment of the liquidator and his remuneration; and (iii) authorise an appropriate third party to hold the Company's books. Once a liquidator has been appointed, the powers of the Directors would cease (unless otherwise sanctioned by an ordinary resolution of the Shareholders or by the appointed liquidator) and the liquidator would assume responsibility for the liquidation of the Company, including the payment of fees, costs and expenses, the discharge of the liabilities of the Company, and the distribution of the remaining assets. If the Winding-up Resolution is passed, the Company will prepare a separate circular which will detail the mechanics and timetable for the delisting of the Shares.

8. Extraordinary General Meeting

In order for the Continuation Proposals to become effective, the Maximum Acceptance Threshold under the Tender Offer must not be exceeded and the Continuation Resolutions must first be approved by Shareholders at the Extraordinary General Meeting. The EGM has been convened for 10 a.m. on 25 September 2014 to be held at Sarnia House, Le Truchot, St. Peter Port, Guernsey GY1 4NA for the purpose of considering and, if thought fit, approving the Continuation Resolutions. Please note that if the Maximum Acceptance Threshold is exceeded the Tender Offer will fail, the Company will make an announcement via an RIS by close of business on 24 September 2014 and the Continuation Resolutions will NOT be put to the EGM. In such circumstances, or if the Continuation Resolutions are not passed, the Winding-up Resolution will be put to the Shareholders at the EGM.

Saltus has irrevocably undertaken to vote in favour of the Winding-up Resolution if either the Maximum Acceptance Threshold is exceeded or if the Continuation Resolutions are not passed. This means that in circumstances where the Winding-up Resolution is put to the Shareholders at the EGM, it is guaranteed to be passed by reason of the weighted voting rights in the Articles. Weighted voting rights will not apply to the Continuation Resolutions.

The Company will propose that the following Continuation Resolutions be approved by Shareholders at the EGM, as set out set out in the Notice of Extraordinary General Meeting:

- to amend the Company's Articles to oblige the Directors to put an ordinary resolution to Shareholders in September 2017 to wind up the Company with effect from 31 December 2017 (with votes on such resolution being weighted such that if Shareholders holding not less than 25 per cent. of the votes cast on such resolution vote in favour of winding up, the resolution will pass);

   -      to approve and adopt the Investment Policy and Strategy; 

- by way of ordinary resolution, to approve the purchase by the Company of up to 78 million Shares (representing approximately 68.38 per cent. of the Company's existing issued Share capital) for the purposes of the Tender Offer; and

- to confirm a general authority to make market purchases of up to 14.99 per cent. of its Shares

(calculated after deduction of the Shares to be acquired pursuant to the Tender Offer) in substitution for the authority conferred at the Company's 2014 annual general meeting

(the above are being proposed as part of a single resolution) ("Resolution 1"); and

   -      to approve the Panel Waiver in relation to the Saltus Concert Parties ("Resolution 2"). 

The general authority to make market purchases will be exercised by the Board to continue the buy-back programme described in the 2013 annual report and audited financial statements to keep the discount to NAV at below 7.5 per cent. and, as stated above, below 5 per cent. with effect from 1 January 2015.

If the Continuation Resolutions are not passed then the Winding-up Resolution will be put to the EGM. If they are passed then the Articles shall be amended so that the obligation to put a winding-up resolution to Shareholders in September 2014 shall have been deleted, so such resolution will not be put to the EGM.

With regard to the Resolutions:

(a) Resolution 1 of the Continuation Resolutions is a Special Resolution, requiring the approval of not

less than 75 per cent. of the Shareholders who vote in person or by proxy at the EGM; and

(b) Resolution 2 of the Continuation Resolutions is an Ordinary Resolution, requiring the approval of

not less than 50 per cent. of the Independent Shareholders who vote in person or by proxy by way of poll at the EGM; and

(c) the Winding-up Resolution is an Ordinary Resolution but requires only one Shareholder to vote in

person or by proxy at the EGM in its favour to be carried by reason of weighted voting rights in the Articles. For the avoidance of doubt the Winding-up Resolution will only be put to Shareholders if the Maximum Acceptance Threshold is exceeded or if the Continuation Resolutions are not passed but in both such circumstances is guaranteed to be passed.

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