Brookwell Limited Circ re. Voluntary Winding Up (9071I)

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RNS Number : 9071I

Brookwell Limited

09 July 2013

BROOKWELL LIMITED

RECOMMENDED PROPOSAL FOR VOLUNTARY WINDING UP AND CANCELLATION OF ADMISSION AND TRADING ON AIM

On 10 June 2013 the Company announced that the Board would be putting forward proposals for the Company to be put into a voluntary winding up. The Company is today posting a circular convening an Extraordinary General Meeting of the Company, to be held at 9.00 a.m. on 30 July 2013, at which D Shareholders will be asked to approve a resolution to wind up the Company and to appoint James Robert Toynton and Alan John Roberts of Grant Thornton Limited as the Joint Liquidators to wind up the Company and settle the Company's liabilities. If the Resolution is passed, the Company's admission to trading on AIM will be cancelled with effect from 7 August 2013. The Joint Liquidators will be appointed with effect from Cancellation.

Under the AIM Rules the Company is required to obtain the approval of at least 75 per cent. of D Shareholders voting at a general meeting for the cancellation of trading on AIM.

BACKGROUND

The Company was launched in June 2008 with the objective of providing value and liquidity for shareholders from a portfolio of investments which were acquired in exchange for A Shares issued at GBP1 per share. The A Share portfolio was realised and the proceeds returned to the holders of A Shares over the period to December 2010.

In February 2009 the Company launched the B Share class as a separate class from the A Shares. The B Share portfolio was realised and the proceeds returned to the holders of B Shares over the period to March 2011.

In February 2011 the Company launched the D Share class and 16,424,372 D shares were issued in exchange for 76 investments with a market value at bid price at acquisition of GBP16.4 million.

At 5 July 2013 (the latest practicable date prior to this announcement) the Company had net assets of GBP2.8 million, comprising five remaining investments with a book value of GBP2.7 million and net current assets of GBP0.1 million, after setting aside an amount to cover the remaining expenses of the Company and liquidation costs. The net assets are equivalent to 51.56p per Share. The aggregate of the amount returned to D Shareholders (including the 28 June 2013 redemption) and the latest net asset value is GBP10.7 million. This is equivalent to 65 per cent. of the initial gross assets of the D Class Fund.

At the time of the launch of the D Shares the Directors stated that, at an extraordinary general meeting to be held in the third quarter of 2014, D Shareholders would be invited to consider the future of the Company. The Directors and the Investment Manager expect that the realisation of the remaining investments may take up to June 2014. Given the level of the on-going costs in comparison to the net asset value, the Directors and the Investment Manager consider that the best outcome for D Shareholders will be achieved through a managed realisation as part of a solvent liquidation. Accordingly, as set out below, the Directors recommend that D Shareholders vote in favour of the Proposal to put the Company into voluntary liquidation. As part of this process the Investment Manager will be engaged to assist in the realisation of the remaining investments.

D CLASS FUND

As noted above the D Class Fund has five investments at 5 July 2013 (the latest practicable date prior to this announcement). These comprise three holdings which are carried at valuation (see below) and two which are carried at nil value.

 
 Company                        Trading status       Percentage of   Carrying value 
                                                  relevant capital        at 5 July 
                                                             owned             2013 
                                                                 %             GBPm 
 Northern Investors Company 
  plc                                   Listed                6.5%              2.3 
 Private & Commercial 
  Finance Group plc                 AIM traded                8.9%              0.3 
 Squarestone Brasil Limited           Delisted                1.7%              0.1 
 

The investments in Northern Investors Company plc and Private & Commercial Finance Group plc are carried at bid price. Squarestone Brasil Limited is carried at the Directors' estimate of fair value based on net asset value with a liquidity discount applied.

The Company also hold two unlisted investments, Orchid Developments Group Limited, which is in liquidation, and Trans Balkan Investments Limited. Both investments are valued at nil.

REVISED INVESTMENT MANAGEMENT AGREEMENT

The Directors consider that the Investment Manager with its knowledge of the remaining investments should assist the Joint Liquidators in the realisation of those investments, with its remuneration based on such realisation. The Investment Management Agreement would automatically terminate on the liquidation of the Company. The Company has therefore entered into the Revised Investment Management Agreement which will become effective from Cancellation.

The Investment Manager is entitled under the existing Investment Management Agreement to receive a monthly management fee equal to one twelfth of one per cent. of the net asset value at 30 June 2013. Under the terms of the Revised Investment Management Agreement the Investment Manager will be entitled to a fee equal to one per cent. of the proceeds of any realisations of the investments in the period from 1 July 2013 to 30 June 2014. Any fees in respect of realisations of the investments will be payable in the month following the realisation. If Cancellation is effective, this fee arrangement will apply from 1 July 2013 and no amount will be payable in respect of that period under the existing Investment Management Agreement.

The Investment Manager will arrange for the NAV of the D Shares to be published quarterly on the Company's website www.brookwelllimited.com until all or substantially all of the investments are realised.

VOLUNTARY WINDING UP

The liquidation of the Company, which will be a solvent liquidation in which all creditors will be paid in full, will involve the passing of the Resolution to approve the Voluntary Winding Up of the Company and to appoint the Joint Liquidators. The appointment of the Joint Liquidators will become effective immediately upon Cancellation. At this point, the powers of the Directors would cease and the Joint Liquidators would assume responsibility for the winding up of the Company, including the payment of fees, costs and expenses, the discharging of the liabilities of the Company and the realisation and distribution of the remaining assets.

The net asset value of GBP2.8 million as at 5 July 2013 (the latest practicable date prior to this announcement) is stated after setting aside an amount to cover the remaining expenses of the Company and liquidation costs (including the fees due to the Investment Manager).

Under the terms of appointment the Joint Liquidators will be paid at their normal rates until all surplus funds have been realised and distributed to D Shareholders. The Joint Liquidators' fees are expected to be approximately GBP23,000 based on the assumption that the realisation of the investments and return of funds to D Shareholders is completed within a year from the date of appointment.

The Directors propose that James Robert Toynton and Alan John Roberts be appointed as Joint Liquidators. They have agreed to accept the appointment in the event that the Resolution is passed.

The Joint Liquidators will begin the process of settling the Company's liabilities as soon as practicable after Cancellation. The Joint Liquidators will make distributions to D Shareholders as the investments are realised over the period of the liquidation.

DEALINGS AND SETTLEMENT

In the event that D Shareholders approve the Resolution, it is expected that the last day for dealing in the D Shares will be 6 August 2013 and that the Cancellation will become effective on 7 August 2013.

If any of the proposed times or dates outlined above should above change an announcement will be made through a Regulatory Information Service (as defined in the AIM Rules).

PROCESS OF CANCELLATION AND ITS EFFECTS

In accordance with Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange of the intention to cancel the admission to AIM. Under the AIM Rules it is a requirement that the Cancellation is approved by not less than 75 per cent. of the votes cast by D Shareholders (in person or by proxy) at the Extraordinary General Meeting. Accordingly the Resolution seeks approval of the D Shareholders for the Cancellation. Subject to the Resolution being passed at the Extraordinary General Meeting, it is anticipated that trading in the D Shares on AIM will cease at the close of business on 6 August 2013 with Cancellation taking effect at 7.00 a.m. on 7 August 2013.

Following the cancellation of trading in the D Shares on AIM the D Shares will not be traded on any public market and the CREST facility, through which Uncertificated transactions are settled, will be cancelled from the close of business on 6 August 2013.

Following the Cancellation Deloitte will cease to be the nominated adviser and Marshall Securities Limited will cease to be broker to the Company. The Company will no longer be required to comply with the rules and corporate governance requirements to which companies admitted to trading on AIM are subject, including the AIM Rules.

The services of the Northern Trust Company as custodians to Brookwell will be retained until all of the assets are realised and/or deemed to be of negligible value and abandoned. The services of Capita Registrars will be maintained to manage the shareholder register.

RECOMMENDATION

The Board believes that the Proposal is in the best interests of D Shareholders as a whole and recommends that all D Shareholders vote in favour of the Resolution.

EXPECTED TIMETABLE

 
                                                           2013 
 Circular and Form of Proxy posted to                    9 July 
  D Shareholders 
 Last time and date for receipt of Forms   9.00 a.m. 
  of Proxy                                     on       28 July 
 Extraordinary General Meeting of the      9.00 a.m. 
  Company                                      on       30 July 
 Proposed cancellation of admission        7.00 a.m.   7 August 
  to trading on AIM                            on 
 

If any of the details contained in the timetable above should change, the revised times and dates will be notified to Shareholders by means of an announcement through a Regulatory Information Service (as defined in the AIM Rules). All events listed in the above timetable following the General Meeting are conditional on the passing of the Resolution at the General Meeting and assume that the General Meeting is not adjourned.

All of the times referred to in this announcement refer to London time.

Except where the context otherwise requires, capitalised terms in this announcement have the meaning set out in the definitions contained in the circular, a copy of which will be available on the Company's website www.brookwelllimited.com.

For further information please contact:

Brookwell Limited

Tom Lancaster-King Tel: [phone]

Progressive AIM Realisation Limited (Investment manager)

Robert Legget Tel: [phone]

Deloitte Corporate Finance (Nominated adviser)

James Lewis / Paul Zimmerman Tel: [phone]

Marshall Securities Limited (Broker)

John Webb Tel: [phone]

9 July 2013

Website: www.brookwelllimited.com

This information is provided by RNS

The company news service from the London Stock Exchange

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