BH Global Limited - Mgt Fee Reduction & Mgt Agreement Amendments

THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION

BH Global Limited

(an authorised closed-ended collective investment scheme authorised by the Guernsey Financial Services Commission and established as a non-cellular company limited by shares under the laws of the Island of Guernsey with registration number 48555)

12 April 2017

Management fee reduction and management agreement amendments

The board of directors (the “Board”) of BH Global Limited (“BH Global” or the “Company”) announces that following discussion with the Company’s manager, Brevan Howard Capital Management LP (the “Manager”), the Company and the Manager have agreed a reduction to the Company’s management fee from two per cent. to one per cent. of the Company’s net asset value per annum and other amendments to the Company’s management agreement (the “Management Agreement”). 

The Board believes that the reduction in the management fee is a very positive enhancement for investors and a significant affirmation by the Manager of its ongoing commitment to the Company.  The Company is grateful to the Manager for its constructive help and assistance in agreeing these measures. 

With retrospective effect from 1 April 2017: 

• The management fee payable under the Management Agreement will be reduced from two per cent. per annum to one per cent. per annum.  As announced on 19 October 2016, no management fee will be payable on any performance-related growth of the Company.
• Were the Management Agreement to be terminated by the Company, the management fee would revert to two per cent. of the prevailing net asset value in respect of the notice period, or in respect of any payment in lieu of notice (as is currently the case). 
• The Company may repurchase or redeem shares of either class in each calendar year, including pursuant to the class closure and annual partial capital return provisions contained in the Company’s articles of incorporation (the “Articles”), up to an aggregate number equal to five per cent. of the shares of that class in issue as at 31 December in the prior calendar year (the “Annual Buy Back Allowance”) without making any payment to the Manager. 
• In the event that, in any calendar year, the aggregate number of shares repurchased or redeemed by the Company exceeds the Annual Buy Back Allowance for that class, the Company will be required to pay the Manager an amount equal to two per cent. of the repurchase price of any share that is repurchased or redeemed by the Company in excess of the Annual Buy Back Allowance, including pursuant to the class closure and annual partial capital return provisions contained in the Articles.
• In respect of the 2017 calendar year (and taking into account shares that have already been repurchased by the Company since 1 January 2017), the Annual Buy Back Allowance for the Company’s Sterling share class will be 806,282 Sterling shares and for the US Dollar share class will be 152,269 US Dollar shares.
• The Board has agreed with the Manager that if, on the last business day in March, June, September or December of any year, the net asset value of the Company were to be below US$300 million (on the basis of the prevailing US Dollar/Sterling exchange rate), the Board would convene a general meeting of the Company’s shareholders at which a special resolution proposing the liquidation of the Company would be put forward.  Were the resolution to be passed, the Company would be liquidated and an amount equal to two per cent. of the Company’s net asset value (subject to a deduction in respect of any amount of the Annual Buy Back Allowance for the relevant calendar year that remains unused) would be paid to the Manager in addition to any other fees due to the Manager up to the date of termination of the Management Agreement. 

These arrangements will become effective on execution of an amendment to the Management Agreement, which the Company and the Manager propose to enter into as soon as possible. 

Commenting on the changes, the Chairman of BH Global, Sir Michael Bunbury, said:-

“I am very pleased to be able to report agreement that, with effect from 1 April 2017, the annual management fee has been halved from two per cent. to one per cent.  The annual management fee represents the largest regular expense for the Company, and the reduction will result in an annual saving of some US$4.5 million based on the current size of the Company.

The Company has agreed with the Manager that it may make a partial capital return or buy back up to five per cent. of each class of share in each calendar year free of a payment to the Manager.  Beyond that five per cent., any reduction in the number of shares in each class will trigger a payment to the Manager of two per cent. of the repurchase price of such shares.  The directors are not recommending any partial capital return in 2017 in respect of the 2016 NAV increase.

The directors are mindful of the discount to NAV at which the shares have been trading recently. The Board considers that the positive enhancement to shareholder returns which the reduction in the management fee will bring, coupled with the Board’s intention to maintain a proactive approach to share buybacks, should occasion a re-rating.

Overall the directors are unanimous in their view that this set of changes materially enhances the investment proposition for BH Global as a low volatility diversifier for portfolio construction.  They look forward to the Manager building on the success of 2016 which, as reported in the recently published Annual Report, delivered growth of 6.60 per cent. in the NAV per share of the Sterling share class.”

Enquiries: 

Brevan Howard:

Dan Riggs

020 7022 6236

Canaccord Genuity Limited:

David Yovichic

020 7523 8000

J.P. Morgan Cazenove:

William Simmonds

020 7742 4000

Northern Trust:

Sharon Williams

01481 745436

Important notices

Each of Canaccord Genuity Limited (“Canaccord”), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, and J.P. Morgan Securities plc, which conducts its UK investment banking activities as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), which is authorised by the Prudential Regulation Authority and regulated by the Prudential Regulation Authority and the Financial Conduct Authority in the United Kingdom, is acting exclusively for the Company and no-one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Canaccord or J.P. Morgan Cazenove or for providing advice in relation to any matter referred to herein.

This announcement does not constitute an offer or solicitation to acquire or sell any securities in the Company. 

Notwithstanding the proposals described in this announcement, there is no guarantee that the Company will make any purchases of its own shares or that any liquidation or class discontinuation vote will be held.  Accordingly, investors should not expect that they will necessarily be able to realise, within a period which they would otherwise regard as reasonable, their investment in the Company, nor can they be certain that they will be able to realise their investment on a basis that necessarily reflects the value of the Company’s investment in Brevan Howard Multi-Strategy Master Fund Limited. 

This announcement is not for distribution in or into the United States, Canada, Australia or Japan or any other jurisdiction in which its distribution may be unlawful.  This announcement is not an offer of securities for sale in the United States or elsewhere.  The securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold in the United States unless registered under the Securities Act or pursuant to an exemption from such registration.  The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended, and investors are not entitled to the benefits of that Act.  There has not been and there will be no public offering of the Company’s securities in the United States.

END

Copyright l 12 PR Newswire