Circ re mandatory redemption and voluntary winding-up

 
TIDMAIDU 
 
2 July 2010 
 
                      The Aida Closed-Ended Fund Limited 
 
  Recommended proposals for the mandatory redemption of shares and voluntary 
                           winding-up of the company 
 
SUMMARY 
 
The Board of the Company has resolved that a liquidation of the Company would 
be in the best interests of the Company and shareholders as a whole, taking 
into account the continued discount since the restructuring of the Company in 
2009; the average month end discount of the shares of the Company to Net Asset 
Value has been around 28 per cent. for the first five months of 2010. A 
circular has today been sent to shareholders proposing a voluntary winding-up 
of the Company preceded by a mandatory redemption of shares. Should 
shareholders approve the proposal it is expected that shareholders will see an 
increase in the realisable value of their investment (estimated to be in the 
region of 33 per cent. per Ordinary Share) from the significant discount at 
which the price of the Ordinary Shares currently trade. This is because 
shareholders in The Aida Open-Ended Fund Limited are able to elect to move to a 
redeeming shares class at net asset value and realise their shareholdings in 
cash as the underlying assets are realised over time. 
 
The following has been extracted from the circular: 
 
INTRODUCTION 
 
For the five months to 31 May 2010 (being the most recent period for which 
financial information is available) the average month end discount to Net Asset 
Value for the Ordinary Shares has been 28 per cent.. The Board has considered 
the position of the Company in light of the continued discount since the 
restructuring of the Company in 2009 and has concluded that it is appropriate 
to put proposals to Shareholders to wind up the Company. Accordingly, the Board 
is convening class meetings and an extraordinary general meeting on 5 August 
2010 to consider, inter alia, the distribution of the Company's assets (being 
the Open-Ended Fund Shares) in specie to Shareholders by way of a mandatory 
redemption and the winding up of the Company. 
 
Should Shareholders approve the Proposal, it is expected that Shareholders will 
see an increase in the realisable value of their investment from the 
significant discount at which the price of the Ordinary Shares currently trade. 
This increase in realisable value is estimated to be in the region of 33 per 
cent. per Ordinary Share. This is because shareholders in The Aida Open-Ended 
Fund Limited (the "Open-Ended Fund") are able to elect to move to a redeeming 
shares class at net asset value and realise their shareholdings in cash as the 
underlying assets are realised over time. Shareholders will also be able to 
remain invested in the Open-Ended Fund if they so wish, subject to complying 
with Guernsey anti-money laundering legislation. 
 
The business of the Class Meetings and the EGM will be to approve by special 
resolution the mandatory redemption of the Shares and, after an adjournment of 
the EGM, a voluntary winding-up of the Company, each special resolution 
requiring a 75 per cent. majority for the resolution to be passed. 
 
The Board believes that the passing of the Resolutions and the approval of the 
Proposal at the Class Meetings and the EGM are in the best interests of the 
Company and the Shareholders as a whole. 
 
THE PROPOSAL 
 
Subject to Shareholder approval, the Proposal involves a mandatory redemption 
of the Shares after which the Company will be placed into a voluntary 
winding-up. Shareholders will receive an in specie redemption distribution 
comprising Open-Ended Fund Ordinary Shares and Open-Ended Fund Side-Pocket 
Shares as described in more detail below (the "First Distribution"). Following 
their appointment as joint liquidators of the Company and the satisfaction of 
the liabilities of the Company by the Liquidators, it is expected that a 
liquidation distribution of cash and Open-Ended Fund Shares will be made by the 
Liquidator to Shareholders in the fourth quarter of 2010 described in more 
detail below (the "Second Distribution"). The Proposal is conditional upon 
Shareholder approval of the Resolutions, which is required under Guernsey law. 
 
Mandatory redemption 
 
The Proposal involves a mandatory redemption by the Company of the Shares prior 
to the Company being placed in a voluntary winding up. As the Articles do not 
provide for redemption in this manner, an amendment to the Articles is required 
to permit this, which requires Shareholder approval as a matter of Guernsey 
law. If the Resolutions are consented to at the Class Meetings and passed at 
the EGM, the EGM will be adjourned and the First Distribution made to 
Shareholders. The Resolutions also involve the appointment of the Directors as 
the agents of the Shareholders to assist with effecting the First Distribution. 
 
The mandatory redemption will comprise a partial redemption of Ordinary Shares 
with Shareholders expected to have approximately 19 Ordinary Shares redeemed 
for every 20 Ordinary Shares held. A Shareholder's actual entitlement to 
Open-Ended Fund Ordinary Shares upon the mandatory redemption will be 
proportional to its holding of Ordinary Shares. The number of Ordinary Shares 
that will not be redeemed represents the amount estimated to be required for 
the winding up of the Company; the Ordinary Shares not subject to the mandatory 
redemption will be left in issue for the time being until the Liquidators 
determine to wind up the Company. No fractions of Open-Ended Fund Ordinary 
Shares will be distributed and any fractional entitlements arising will accrue 
to the benefit of the Open-Ended Fund. 
 
The mandatory redemption will also comprise a complete redemption of 
Side-Pocket Shares, with the result that a Shareholder is expected to receive 
one Open-Ended Fund Side-Pocket Share for each Side-Pocket Share it holds. 
 
The Ordinary Shares and Side-Pocket Shares that are the subject of the 
mandatory redemption will be redesignated as an exiting share class (the " 
Termination Shares") for UK tax reasons prior to their redemption. The 
Termination Shares will only have rights to participate in the First 
Distribution and will have no rights as to income and capital. The 
redesignation requires a change to the Articles, which requires Shareholder 
approval as a matter of Guernsey law, and Shareholders are accordingly 
requested to approve these amendments. 
 
Subject to the Resolutions being consented to at the Class Meeting and approved 
at the EGM, each Shareholder will have the relevant number of his Ordinary 
Shares and all of his Side-Pocket Shares redeemed and will in return receive an 
in specie redemption distribution of the relevant number of Open-Ended Fund 
Ordinary Shares and Open-Ended Fund Side-Pocket Shares. Shareholders should 
note that they will be required to provide evidence of their identity to the 
Open-Ended Fund Administrator to ensure compliance with applicable Guernsey 
anti-money laundering legislation. Shareholders that fail to comply will be 
placed in a class of Open-Ended Fund Redemption Shares, at the first available 
opportunity and will therefore, over time, receive cash. 
 
Winding up of the Company 
 
Subject to Shareholder approval as required by Guernsey law, the Company will 
be placed into a voluntary winding-up upon the conclusion of the EGM. Any 
surplus assets of the Company following satisfaction of the Company's 
liabilities will be returned to Shareholders by the Liquidator; it is expected 
that such assets will be comprised of cash and Open-Ended Fund Shares. The 
Resolutions therefore include an authority for the Liquidator to make 
distributions in specie in accordance with the Articles. 
 
Subject to Shareholder approval, Ashley Charles Paxton and Robert James Kirkby 
will be appointed as joint liquidators to the Company and their remuneration 
shall be determined by the Company. Upon the appointment of the Liquidators, 
all powers of the Board will cease and the Liquidators will be responsible for 
the affairs of the Company until it is wound up. The Liquidators will wind up 
the Company, in accordance with Guernsey law, discharge the liabilities of the 
Company and, following satisfaction of all the creditors of the Company, will 
distribute the surplus assets of the Company among the Shareholders according 
to their respective rights and interests in the Company. 
 
Subject to the prior rights of the creditors of the Company, the Board 
anticipates that the Second Distribution will be made in the fourth quarter of 
2010. A Shareholder's entitlement to the assets of the Company upon the Second 
Distribution will be in proportion to the size of its holding of Ordinary 
Shares at that time. The proportion of cash to Open-Ended Fund Shares is not 
known as at the date of this Circular but is expected to be approximately 40:60 
cash to Open-Ended Fund Shares and will be at the Liquidators' discretion. 
 
No fractions of Open-Ended Fund Shares will be distributed and any fractional 
entitlements arising will accrue to the benefit of the Open-Ended Fund. 
 
To assist the Liquidators in realising the portfolio of assets held by the 
Company, it is proposed that Aida Capital Limited, the Company's Investment 
Manager, shall be retained as investment adviser to the Company throughout the 
winding-up process. The Investment Manager will assist with the winding-up to 
the extent reasonably required by the Liquidators to transfer the Company's 
portfolio of assets to Shareholders. The Investment Manager does not receive 
any remuneration for its role as investment manager to the Company and will not 
receive any remuneration for advising the Liquidators. 
 
BENEFITS OF THE PROPOSAL 
 
The Board believes that the Proposal and the Resolutions are in the best 
interests of Shareholders. In particular, the Board believes that the Proposal 
will be attractive to Shareholders for the following reasons: 
 
  * the Open-Ended Fund Ordinary Shares may be redeemed quarterly at their net 
    asset value, less applicable costs, by electing to move to Open-Ended Fund 
    Redemption Shares. The underlying assets attributable to the Open-Ended 
    Fund Redemption Shares are then realised over time. This means that the 
    Shareholders should be able to, over time, realise their investment at a 
    level closer to NAV compared to the discount between the NAV and the 
    realisable value of the Ordinary Shares that Shareholders are subject to at 
    present. 
 
  * Shareholders that wish to retain an exposure to the Company's investment 
    performance may continue to do so directly through a shareholding in the 
    Open-Ended Fund, rather than indirectly through the Company. As the 
    Company's investment policy is to invest in the Open-Ended Fund, the 
    investment policy of the Open-Ended Fund is in effect identical to the 
    Company's existing policy. 
 
RISKS OF THE PROPOSAL 
 
Shareholders should have regard to the following risk factors relating to the 
Proposal: 
 
  * Voting in favour of the Proposal and subsequently receiving Open-Ended Fund 
    Shares may have tax implications for Shareholders. As noted below, 
    Shareholders are strongly advised to consult a suitably qualified 
    professional adviser when determining what action to take in connection 
    with the Proposal. Further United Kingdom taxation considerations are set 
    out below; in particular, Shareholders based in the United Kingdom should 
    note that gains on their shareholdings in the Open-Ended Fund will be 
    treated as income for tax purposes rather than as capital for tax purposes 
    as is the case with shareholdings in the Company. 
 
  * Existing holders of Side-Pocket Shares will receive Open-Ended Fund 
    Side-Pocket Shares if the Proposal is approved by Shareholders. As with the 
    Side-Pocket Shares, Open-Ended Fund Side-Pocket Shares are not admitted to 
    trading on the Main Market of the London Stock Exchange or any other 
    securities exchange. Furthermore, holders of Open-Ended Fund Side-Pocket 
    Shares will not be entitled to request redemption of such Open-Ended Fund 
    Side-Pocket Shares. Consequently, the only way to dispose of a holding of 
    Open-Ended Fund Side-Pocket Shares will be if a third party willing to 
    acquire such Open-Ended Fund Side-Pocket Shares can be identified 
    off-market. There is, therefore, likely to be no, or only very limited, 
    liquidity in the Open-Ended Fund Side-Pocket Shares. The investment 
    represented by such Open-Ended Fund Side-Pocket Shares may not be realised 
    for a significant period of time. 
 
  * Each Shareholder will be required by the Open-Ended Fund Administrator to 
    ensure compliance with Guernsey anti-money laundering legislation before 
    Open-Ended Fund Shares will be registered in the Shareholders' name. A 
    failure to provide such information in a timely manner will result in a 
    delay in Open-Ended Fund Shares being registered in the Shareholder's name. 
 
  * The Ordinary Shares are currently listed on the Official List and admitted 
    to trading on the Main Market of the London Stock Exchange, which is a 
    liquid market that offers the opportunity for investors to sell Shares. 
    Although the Open-Ended Fund Ordinary Shares are admitted to trading on the 
    CISX this should not be taken as implying that there will be a liquid 
    market for the Open-Ended Fund Shares. Accordingly, it may be more 
    difficult to sell a holding of Open-Ended Fund Shares than is currently the 
    case with a holding of Shares. 
 
  * The ability for a shareholder to realise its holding in the Open-Ended Fund 
    at net asset value is subject to a minimum redemption amount for each 
    quarterly redemption opportunity and the timing of such realisations are 
    dependent on the liquidity of the underlying investments of the Open-Ended 
    Fund. A shareholder in the Open-Ended Fund may not therefore receive the 
    full amount of its realised investment for a considerable period of time 
    depending on the liquidity profile of the underlying investments. 
 
INFORMATION ON THE OPEN-ENDED FUND 
 
The Aida Open-Ended Fund Limited is an open-ended investment company that is 
incorporated with limited liability in Guernsey. The Open-Ended Fund was 
established as part of the restructuring of the Company and its investment 
portfolio comprises, in part, assets that were formerly held by the Company. It 
operates as a fund of investment funds. 
 
The Open-Ended Fund's investment objective is the achievement of superior 
risk-adjusted long term capital growth through investing in an actively 
managed, diversified and balanced portfolio of funds across a range of 
investment strategies. The exact number of funds and strategies will vary over 
time but it is expected that the Open-Ended Fund will be invested in a minimum 
of 15 underlying funds across a range of strategies at any one time. All 
investments, other than those investments transferred from the Company pursuant 
to the restructuring, will be made in investment funds that have, at a minimum, 
an annual liquidity opportunity. The management of the Company's portfolio is 
undertaken by the Investment Manager. 
 
The Open-Ended Fund's share capital is currently comprised of Open-Ended Fund 
Ordinary Shares, Open-Ended Fund Side-Pocket Shares and two classes of 
Open-Ended Fund Redemption Shares. The Company has, or will have, holdings in 
each of these four classes of Open-Ended Fund Shares and Shareholders may 
accordingly receive some Open-Ended Fund Shares from each of these classes. 
Shareholders will be given the opportunity to elect to redeem some or all of 
their Open-Ended Fund Ordinary Shares at the first available opportunity 
following the EGM subject to the Proposal being approved. It is expected that 
the first redemption dealing date for the Open-Ended Fund will be 30 September 
2010. 
 
 
The Open-Ended Fund Ordinary Shares are admitted to listing and trading on the 
Official List of the CISX. The Open-Ended Fund Ordinary Shares are redeemable 
on a quarterly basis, subject to certain conditions. See Part IV of this 
Circular and the enclosed information document for more details on the 
Open-Ended Fund, including on redemption. 
 
EXPECTED TIMETABLE 
 
The anticipated dates and sequence of events in relation to the Proposal are 
set out below: 
 
Latest time for receipt of Forms of Proxy      12.00 p.m. on 3 August 2010 
 
Suspension of listing and trading of the       7.30 a.m. on 5 August 2010 
Shares 
 
Extraordinary general meeting                  12.10 p.m. on 5 August 2010 
 
Expected distribution of Open-Ended Fund       5 August 2010 
Shares to Shareholders 
 
Appointment of liquidator                      5 August 2010 
 
Cancellation of listing of the Shares          8 a.m. on 6 September 2010 
 
Shareholders notified of final number of       by end of August 2010 
Open-Ended Fund Shares pursuant to First 
Distribution 
 
Shareholders notified of final number of       fourth quarter 2010 
Open-Ended Fund Share pursuant to Second 
Distribution 
 
UNITED KINGDOM TAXATION CONSIDERATIONS 
 
The information below, which relates only to United Kingdom taxation, 
summarises the advice received by the Board and is applicable to persons who 
are resident or ordinarily resident in the United Kingdom for taxation purposes 
and who hold shares in the Company as an investment. Certain Shareholders, such 
as dealers in securities, collective investment schemes, insurance companies 
and persons acquiring their shares in connection with their employment may be 
taxed differently and are not considered below. It is based on current law and 
HM Revenue & Customs published practice and is subject to any subsequent 
changes therein. If you are in any doubt about your tax position, or if you may 
be subject to tax in a jurisdiction other than the United Kingdom, you should 
consult your independent professional adviser. 
 
The mandatory redemption of the Termination Shares following the redesignation 
of Shares into Termination Shares, involving the distribution of Open-Ended 
Fund Shares, should constitute a disposal of the Termination Shares for UK 
capital gains tax purposes calculated by reference to the market value of the 
Open-Ended Fund Shares received. The subsequent winding up of the Company 
should constitute a disposal of the Shares for UK capital gains tax purposes. 
The base cost of the Termination Shares will reflect the base cost of the 
original Shares which have been redesignated. 
 
Consequently, Shareholders who are resident or ordinarily resident in the 
United Kingdom, or who carry on business in the United Kingdom through a 
branch, agency or permanent establishment with which their investment in the 
Company is connected may, depending on their circumstances, be liable to United 
Kingdom capital gains tax or corporation tax on chargeable gains on the 
distribution of Open-Ended Fund Shares under the mandatory redemption and on 
the subsequent winding-up of the Company. Special rules apply to individual 
Shareholders who are not domiciled in the United Kingdom or who have ceased to 
be resident or ordinarily resident in the United Kingdom for tax purposes for a 
period of less than five years of assessment. 
 
Offshore Fund Rules 
 
Shareholders receiving Open-Ended Fund Shares will be treated as investing in 
an offshore fund for the purposes of The Offshore Funds (Tax) Regulations 2009 
("The Regulations"). The Open-Ended Fund will not seek certification from HMRC 
as a "Reporting Fund". Consequently, gains realised on a subsequent disposal of 
Open-Ended Fund Shares (including redemption or repurchase including switching 
between classes of shares) will normally be taxed as offshore income gains 
under The Regulations rather than capital gains for the purposes of United 
Kingdom taxation. Offshore income gains are charged to income tax on UK 
resident individuals at their marginal rates (40 per cent. for higher rate 
taxpayers, and 50 per cent. for taxpayers with taxable income in excess of GBP 
150,000 for the tax year 2010/2011 onwards) and to corporation tax in respect 
of UK resident companies at the prevailing rate of corporation tax (28 per 
cent. for the tax year 2010/2011 onwards). This contrasts with the capital 
gains tax rates currently applicable to UK resident individuals (18 per cent. 
for basic rate taxpayers and 28 per cent. for higher rate taxpayers). 
 
CANCELLATION OF LISTING AND TRADING OF THE SHARES 
 
The Company will make an application for the listing of the Shares on the 
Official List and dealings on the Main Market of the London Stock Exchange to 
be suspended from 7.30 a.m. on 5 August 2010. Subject to Shareholder approval 
of the relevant resolutions as required by the Listing Rules, the Company will 
also make an application for the listing of its Shares on the Official List and 
for dealings in the Shares on the Main Market of the London Stock Exchange to 
be cancelled with effect from 8.00 a.m. on 6 September 2010. 
 
SHAREHOLDER APPROVAL 
 
The Board has convened a class meeting in respect of the Side-Pocket Shares, a 
class meeting in respect of the Ordinary Shares and the EGM on 5 August 2010 at 
Canada Court, Upland Road, St. Peter Port, Guernsey, GY1 3QE. The business at 
the Class Meetings and the EGM will be to consider and, if thought fit, pass 
special resolutions to: (i) approve amendments to the Articles to permit the 
redesignation of Shares as Termination Shares and mandatory redemption; (ii) 
authorise the redesignation of the Shares and the mandatory redemption 
contemplated pursuant to the Proposal; (iii) appoint the Directors as agents of 
the Shareholders to effect the First Distribution; (iv) appoint the 
Liquidators; and (v) cancel the listing of the Shares on the Official List and 
dealings on the Main Market of the London Stock Exchange. The full terms of the 
proposed amendments to the Articles are contained in the Notices set out at the 
end of the Circular. 
 
The Resolutions to be proposed at the Class Meetings and the EGM will be 
proposed as special resolutions. The EGM Resolutions will be conditional upon 
the approval of the Class Resolutions. 
 
All persons holding Side-Pocket Shares at 12.00 p.m on 3 August 2010, or if the 
First Class Meeting is adjourned, on the register of Shareholders of the 
Company 48 hours before the time of any adjourned Class Meeting, shall be 
entitled to attend or vote at the First Class Meeting and shall be entitled to 
one vote per Side-Pocket Share held. All persons holding Ordinary Shares at 
12.05 p.m on 3 August 2010, or if the Second Class Meeting is adjourned, on the 
register of Shareholders of the Company 48 hours before the time of any 
adjourned Second Class Meeting, shall be entitled to attend or vote at the 
Second Class Meeting and shall be entitled to one vote per Ordinary Share held. 
All persons holding Ordinary Shares at 12.10 p.m on 3 August 2010, or if the 
EGM is adjourned, on the register of Shareholders of the Company 48 hours 
before the time of any adjourned EGM, shall be entitled to attend or vote at 
the EGM and shall be entitled to one vote per Ordinary Share held. 
 
The total number of Shares in issue as at 29 June 2010 (the latest practicable 
date prior to publication of the Circular) is 10,040,174 Ordinary Shares and 
9,756,000 Side-Pocket Shares. 
 
If any of the Class Resolutions or EGM Resolutions are not approved, the 
Proposal will not take effect and the Board will consider further proposals for 
the reorganisation or reconstruction of the Company. 
 
For further information please contact: 
 
Peter Haspel 
 
Nicholas Oppenheim 
 
Aida Capital Limited 
 
020 7600 7500 
 
The information in this announcement should be read in conjunction with the 
full text of the Circular. Capitalised terms used in this announcement shall, 
unless the context otherwise requires, bear the meaning given to them in the 
circular issued by the Company dated 2 July 2010. 
 
Copies of the Circular have been submitted to the UK Listing Authority and will 
shortly be available for inspection at the UK Listing Authority's Document 
Viewing Facility which is situated at: 
 
Financial Services Authority 
 
25 The North Colonnade 
 
Canary Wharf 
 
London 
 
E14 5HS 
 
Tel. [phone] 
 
This document and the information contained herein is not for release, 
publication or distribution (directly or indirectly) in or into the United 
States, Canada, Australia or Japan or to any "US person" as defined in 
Regulation S under the United States Securities Act of 1933, as amended (the 
"Securities Act") or into any other jurisdiction where applicable laws prohibit 
its release, distribution or publication. It does not constitute an offer of 
securities for sale anywhere in the world, including in or into the United 
States, Canada, Australia or Japan. No recipient may distribute, or make 
available, this document (directly or indirectly) to any other person. 
Recipients of this document in jurisdictions outside the UK should inform 
themselves about and observe any applicable legal requirements in their 
jurisdictions. In particular, the distribution of this document may in certain 
jurisdictions be restricted by law. Accordingly, recipients represent that they 
are able to receive this document without contravention of any applicable legal 
or regulatory restrictions in the jurisdiction in which they reside or conduct 
business. 
 
The Company is not and will not be registered under the U.S. Investment Company 
Act of 1940, as amended (the "Investment Company Act") and investors will not 
be entitled to the benefits of that Act. The securities described in this 
document have not been and will not be registered under the Securities Act, or 
the laws of any state of the United States. Consequently, such securities may 
not be offered, sold or otherwise transferred within the United States or to or 
for the account or benefit of U.S. persons (as such term is defined in 
Regulation S under the Securities Act) except pursuant to an exemption from, or 
in a transaction not subject to, the registration requirements of the 
Securities Act, applicable state laws and under circumstances which will not 
require the Company to register under the Investment Company Act. No public 
offering of the securities is being made in the United States. 
 
This communication is directed only at (i) persons outside the United Kingdom 
to whom it is lawful to communicate to, or (ii) persons having professional 
experience in matters relating to investments who fall within the definition of 
"investment professionals" in Article 19(5) of the Financial Services and 
Markets Act 2000 (Financial Promotion) Order 2005 (as amended), or (iii) high 
net worth companies, unincorporated associations and partnerships and trustees 
of high value trusts as described in Article 49(2) of the Financial Services 
and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) provided 
that in the case of persons falling into categories (ii) or (iii), the 
communication is only directed at persons who are also "qualified investors" as 
defined in section 86 of the Financial Services and Markets Act 2000 (each a 
"Relevant Person"). Any investment or investment activity to which this 
communication relates is available only to and will be engaged in only with 
such Relevant Persons. Persons within the United Kingdom who receive this 
communication (other than persons falling within (ii) and (iii) above) should 
not rely on or act upon this communication. You represent and agree that you 
are a Relevant Person. 
 
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO 
 
U.S. PERSONS OR INTO OR IN THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN. 
 
 
 
END