Duke Royalty Limited Proposed Placing and Subscription (7429Z)

TIDMDUKE

RNS Number : 7429Z

Duke Royalty Limited

16 March 2017

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICE AT THE OF THIS ANNOUNCEMENT.

The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material set forth herein is for information purposes only and is not intended, and should not be construed, as an offer of securities for sale in the United States or any other jurisdiction.

This announcement is not a prospectus and investors should not purchase any Ordinary Shares referred to in this announcement except on the basis of information to be published in the Admission Document.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia), Australia, Canada, South Africa or Japan. 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 restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

Any purchase of Ordinary Shares in the proposed placing should be made solely on the basis of the information contained in the Admission Document to be issued by the Company in connection with the Placing and Admission. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company's board of directors' current beliefs and expectations about future events. These forward-looking statements may be identified by the use of forward- looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, the results of operations, financial condition prospects, growth and dividend policy of the Company and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance.

These forward-looking statements and other statements contained in this announcement regarding matters that are not historical facts involve predictions. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. Forward looking statements speak only as of the date of this announcement.

Duke Royalty Limited

("Duke Royalty", "Duke" or the "Company")

Proposed Placing and Subscription to raise up to GBP15.0 million and re-admission to AIM

Duke Royalty Limited (AIM: DUKE), the royalty financing company, announced on 11 January 2017 its intention to undertake an equity placing in order to provide the Company with the capital to build a diversified portfolio of royalty finance and associated financial opportunities. In addition it announced it would seek the re-admission of the Company to AIM by producing an Admission Document, to be issued shortly.

Duke is pleased to announce a proposed conditional placing to raise up to GBP15.0 million, before expenses, by way of a Fundraising (comprising the Placing and the Subscription) of up to 37.5 million New Shares at a price of 40 pence per share. The net proceeds of the Fundraising (expected to be approximately GBP13.8 million) will allow the Company, inter alia, to commence investing in its pipeline of royalty financing opportunities.

The Placing will be conducted by way of an accelerated bookbuild process which will be launched immediately following this announcement, in accordance with the terms and conditions set out in the Appendix to this announcement. Cantor Fitzgerald and Mirabaud are acting as joint bookrunners in connection with the Placing. A Placing Agreement has been entered into today between the Company, the Directors of the Company, Cantor Fitzgerald, Mirabaud and Grant Thornton in connection with the Fundraising.

The Issue Price represents a discount of approximately 15.8 per cent. to the price of 47.5 pence per Existing Ordinary Share, being the Closing Price on the business day prior to the announcement of the Fundraising.

The final number of Placing Shares will be agreed by Cantor Fitzgerald, Mirabaud and Duke Royalty at the close of the bookbuild, and the result of the Placing will be announced as soon as practicable thereafter. The timing for the close of the bookbuild and allocation of the Placing Shares shall be at the discretion of Cantor Fitzgerald and Mirabaud, in consultation with the Company. The Placing is not underwritten. On closing of the Fundraising the Company will publish an Admission Document and a further announcement will be made in due course.

The Fundraising is conditional, inter alia, on admission of the Placing Shares and the Subscription Shares to trading on AIM becoming effective. Application will be made to the London Stock Exchange for the New Shares to be admitted to trading on AIM ("Admission"). It is expected that Admission will become effective and that dealings in the New Shares, will commence at 8.00 a.m. on 23 March 2017.

Background to and reasons for the Fundraising

The Directors believe that royalty finance is an attractive funding opportunity for privately owned businesses, with the potential to generate attractive returns uncorrelated to general equity market performance. The Directors believe that there is a substantial addressable market for royalty finance and that the Company will benefit from the combined talent and experience of the Board and executive team, coupled with the exclusive collaboration that the Company has with Oliver Wyman to assist it to source and assess royalty financing opportunities.

The Directors' strategy is to build a diversified portfolio of royalty streams from companies ("Royalty Partners"), focusing on income growth through the deployment of the proceeds of the Fundraising to take advantage of a pipeline of near term royalty opportunities in the SME market. It is an objective of the Company to pay a significant proportion of its free cash flow from the royalty revenues it receives to Shareholders as dividends.

Duke will provide its Royalty Partners with long term financing which is expected to have a term of between 25 and 40 years (or even, in certain circumstances, a perpetual term). The contemplated terms of the royalty agreements are such that in the first year, the Royalty Partner would typically pay Duke a monthly distribution or royalty (typically 12-15 per cent. per annum of the financing amount). In the second year, and each year going forward, the monthly distribution would then be linked to the year on year growth in the revenue of the Royalty Partner collared at six per cent. per year of the total increase or decrease in revenue over the prior year.

The Directors envisage that royalty financing will be an attractive alternative source of capital to potential Royalty Partners in transactions which include:

   --     growth capital; 
   --     acquisition financing; 
   --     minority, management or private equity shareholder buy-out; 
   --     balance sheet recapitalisation / debt refinancing; 
   --     estate planning; and 
   --     take-private transactions. 

The Company's royalty financing structure is designed to attract potential Royalty Partners by offering finance at a reasonable cost of capital that is both non-dilutive to their existing owners and which does not result in refinancing risk. In addition, the Company's royalty finance model allows current owners and managers to stay in control of their businesses due to passive management involvement by Duke. Furthermore, the royalty financing from Duke would be repaid by the Royalty Partner over the long term, usually 25 - 40 years (thereby minimising short or medium term refinancing risk). Duke would be provided with monthly operating and financial reports from the Royalty Partners but typically funding would have fewer covenants compared to debt. In addition, unlike private equity financing, it is expected that there will be no pressure imposed by the Company to exit the financing arrangement but Royalty Partners would typically retain a buyback option during the life of the royalty finance agreement to redeem up to 100 per cent. of the royalty provided by Duke to the Royalty Partner. Duke expects that this buyback payment will typically be the greater of (i) a pre-determined fixed amount specified in the royalty

financing agreement and (ii) a multiple of the annualised royalty payment from the Royalty Partner to Duke on the date of exercise of the buyback option.

From a Royalty Partner's perspective, the royalty financing model typically carries a lower cost of capital than equity and is designed to better align the interests of the Company with the Royalty Partner due to the long-term nature of a royalty financing agreement

Further information on Duke's royalty financing model can be found in the announcement by the Company made on 11 January 2017.

Dividend Policy

Following Shareholders' approval of the new Investing Policy in June 2015, Duke's focus has been on bringing royalty investing to the European market with the objective of generating predictable and stable cash flows from royalty agreements with a view of paying an attractive, growing and sustainable cash dividend yield for Shareholders.

Although the Company has never paid a dividend, it is the Directors' intention to start paying dividends in the financial year ending 31 March 2018 and that the Company will, in normal circumstances, pay out approximately 80 - 100 per cent. of its free cash flow to its shareholder in the form of dividends. With the proceeds of the Fundraising, the Company is targeting an annualised dividend yield of between 7 and 8 per cent. once fully invested with a minimum targeted dividend yield of at least 5 per cent in the financial year to 31 March 2018*. It is intended that, any dividend paid by the Company will be paid on a quarterly basis on or around, the end of each calendar quarter.

* This is a target only and not a profit forecast. There can be no assurance that the target can or will be met in this timescale or at all and should not be taken as an indication of the Company's expected or actual future results. Accordingly, potential investors should not place any reliance on this target in deciding whether or not to invest in the Company or assume that the Company will make any distributions at all and should decide for themselves whether or not the target dividend yield is reasonable or achievable

Use of Proceeds

It is intended that the proceeds from the Fundraising will be used to capitalise on a number of already identified near term opportunities for royalty financing. Over the last 15 months, the Company has been evaluating a number of late stage royalty financing opportunities and from that work the Company has managed to build a near-term pipeline of six potential royalty financing transactions across a number of sectors ranging from leisure through to industrials, healthcare and IT. The aggregate investment value of this near-term pipeline amounts to approximately GBP75m thus providing the Company with a good number of possible royalty financing opportunities that it will look to close post-completion of the proposed Fundraising. Whilst there can be no assurance that any of these pipeline royalty financings will close as they remain subject to negotiation, definitive documentation and final due diligence, in the absence of unforeseen circumstances the Board anticipates that the net proceeds of the Fundraising should be fully invested (or committed to be invested) within 12 months of Admission. However, there is no fixed period within which the Company would be required to conclude royalty agreements or return funds to Shareholders.

It is the intention of certain Directors of the Company to participate in the Fundraising,

For further information, please contact:

 
 Duke Royalty Limited        Neil Johnson / Charlie Cannon-Brookes 
                             [phone] 
 
 
 Grant Thornton UK LLP       Colin Aaronson / Samantha 
  (Nominated Adviser)         Harrison / Jamie Barklem/ 
                              Carolyn Sansom 
                             [phone] 
 
 Cantor Fitzgerald Europe    Marc Milmo / Catherine Leftley 
  (Joint Broker)              / Callum Butterfield 
                             [phone] 
 
 Mirabaud Securities         Peter Krens / Edward Haig-Thomas 
  LLP (Joint Broker) 
                             [phone] 
 

This Announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notice" section below.

The Appendix to this Announcement (which forms part of this Announcement) sets out the terms and conditions of the Placing. Persons who have chosen to participate in the Placing, by making an oral or written offer to acquire Placing Shares, will be deemed to have read and understood this Announcement in its entirety (including the Appendix) and to be making such offer on the terms and subject to the conditions herein, and to be providing the representations, warranties, agreements, acknowledgements and undertakings contained in the Appendix.

About Duke Royalty

Headquartered in Guernsey, Duke Royalty Limited provides alternative financing solutions to a diversified range of businesses in Europe and abroad. Duke Royalty's experienced team and exclusive partnership provide financing solutions to private companies that are in need of capital but whose owners wish to maintain equity control of their business. Duke Royalty's royalty investments are intended to provide robust, stable, long term returns to its shareholders.

Duke Royalty is listed on the AIM market under the ticker DUKE. For more information, visit dukeroyalty.com.

Expected Timetable of Principal Events

 
 Announcement of the proposed                      16 March 
  Fundraising                                       2017 
 Announcement of the result                        17 March 
  of the Fundraising                                2017 
 Admission and commencement        8.00 a.m.       23 March 
  of dealings in New Shares                         2017 
 New Shares in uncertificated      As soon as      23 March 
  form expected to be credited      possible        2017 
  to accounts in CREST              after 8.00 
                                    a.m. 
 Despatch of definitive            Within 10 business days 
  share certificates for            of Admission 
  the New Shares in certificated 
  form 
 

DEFINITIONS

The following definitions apply throughout this Announcement, unless the context otherwise requires:

 
 
 Admission                  the admission of the New Shares 
                             to trading on AIM 
 AIM                        AIM, the market of that name 
                             operated by the London Stock 
                             Exchange 
 AIM Rules                  the AIM Rules for Companies 
                             published by the London Stock 
                             Exchange from time to time 
                             (including, without limitation, 
                             any guidance notes or statements 
                             of practice) and those other 
                             rules of the London Stock 
                             Exchange which govern the 
                             admission of securities to 
                             trading on, and the regulation 
                             of AIM 
 Articles                   the articles of incorporation 
                             of the Company in force at 
                             the date of this announcement 
 Board or the Directors     the board of Directors of 
                             the Company 
 Cantor Fitzgerald          Cantor Fitzgerald Europe, 
  or Cantor                  Joint Broker to the Company 
 certified or in            in relation to a share or 
  certificated form          other security, a share or 
                             other security that is not 
                             in uncertificated form, that 
                             is not in CREST 
 Closing Price              the closing middle market 
                             price of an Ordinary Share 
                             as derived from the AIM Appendix 
                             to the Daily Official List 
                             on 15 March 2017 (being the 
                             last day prior to this announcement); 
 Company                    Duke Royalty Limited 
 CREST                      the relevant system (as defined 
                             in the CREST Regulations) 
                             in respect of which Euroclear 
                             is the Authorised Operator 
                             (as defined by the above mentioned 
                             regulations) in accordance 
                             with which securities may 
                             be held and transferred in 
                             uncertificated form 
 CREST Regulations          the Uncertified Securities 
                             (Guernsey) Regulations 2009, 
                             as amended 
 Euroclear                  Euroclear UK & Ireland Limited, 
                             the operator of CREST 
 Existing Ordinary          the 7,877,459 Ordinary Shares 
  Shares                     in issue as at the date of 
                             this announcement being the 
                             entire issued share capital 
                             of the Company prior to the 
                             Fundraising 
 FCA                        the Financial Conduct Authority 
                             of the UK 
 FSMA                       the Financial Services and 
                             Markets Act 2000 (as amended) 
 Fundraising                together the Placing and the 
                             Subscription 
 Grant Thornton             Grant Thornton UK LLP, the 
                             nominated adviser to the Company 
 Issue Price                40 pence per New Share 
 London Stock Exchange      London Stock Exchange plc 
 Mirabaud Securities        Mirabaud Securities LLP, Joint 
  or Mirabaud                Broker to the Company 
 New Shares                 up to 37,500,000 new Ordinary 

                             Shares to be issued pursuant 
                             to the Fundraising 
 Ordinary Shares            ordinary shares of no par 
                             value in the capital of the 
                             Company having the rights 
                             and being subject to the restrictions 
                             contained in the Articles 
 Placees                    any person who has agreed 
                             to subscribe for Placing Shares 
 Placing                    the placing by Cantor Fitzgerald 
                             and Mirabaud Securities, as 
                             agents of and on behalf of 
                             the Company, of Placing Shares 
                             at the Issue Price on the 
                             terms and subject to the conditions 
                             in the Placing Agreement 
 Placing Agreement          the conditional agreement 
                             to be dated 16 March 2017 
                             between the Company, the Directors 
                             of the Company, Cantor Fitzgerald, 
                             Mirabaud and Grant Thornton 
                             (UK) LLP 
 Placing Shares             the New Shares to be issued 
                             subject to the Placing 
 Restricted Jurisdictions   the United States, Australia, 
                             Canada, Japan, the Republic 
                             of South Africa and any other 
                             jurisdiction where the extension 
                             or availability of the Fundraising 
                             would breach any applicable 
                             law 
 Securities Act             the United States Securities 
                             Act of 1933, as amended 
 Shareholders               registered holders of Ordinary 
                             Shares 
 Subscription               the direct subscription by 
                             certain investors for New 
                             Shares pursuant to separate 
                             subscription agreements between 
                             the Company and each such 
                             investor 
 Subscription Shares        The New Shares to be issued 
                             subject to the Subscription 
 UK or United Kingdom       the United Kingdom of Great 
                             Britain and Northern Ireland 
 UKLA                       the UK Listing Authority, 
                             being the FCA acting as the 
                             competent authority for the 
                             purposes of Part VI of the 
                             FSMA 
 uncertificated or          a share recorded on the register 
  in uncertificated          of members of the Company 
  form                       as being held in uncertificated 
                             from in CREST and title to 
                             which, by virtue of the CREST 
                             Regulations, may be transferred 
                             by means of CREST 
 US or United States        the United States of America, 
                             its territories and possessions, 
                             any state of the United States 
                             and the District of Columbia 
 

A reference to GBP is to pounds sterling, being the lawful currency of the UK.

IMPORTANT NOTICE

This announcement, including the Appendix (together, the "Announcement"), and the information contained herein is not for release, publication or distribution, directly or indirectly, in whole or in part, in or into or from the United States, Canada, Australia, Japan or the Republic of South Africa, or any other jurisdiction where to do so might constitute a violation of the relevant laws or regulations of such jurisdiction (the "Restricted Jurisdictions"). The New Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act") or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration under the Securities Act except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. No public offering of the New Shares is being made in the United States. The New Shares are being offered and sold outside the United States in "offshore transactions", as defined in, and in compliance with, Regulation S under the Securities Act. Persons receiving this Announcement (including custodians, nominees and trustees) must not forward, distribute, mail or otherwise transmit it in or into the United States or use the United States mails, directly or indirectly, in connection with the Placing. This Announcement does not constitute or form part of an offer to sell or issue or a solicitation of an offer to buy, subscribe for or otherwise acquire any securities in any jurisdiction including, without limitation, the Restricted Jurisdictions or any other jurisdiction in which such offer or solicitation would be unlawful. This Announcement and the information contained in it is not for publication or distribution, directly or indirectly, to persons in a Restricted Jurisdiction unless permitted pursuant to an exemption under the relevant local law or regulation in any such jurisdiction.

No action has been taken by the Company, Cantor Fitzgerald, Mirabaud Securities or any of their respective directors, officers, partners, agents, employees or affiliates that would permit an offer of the New Shares or possession or distribution of this Announcement or any other publicity material relating to such New Shares in any jurisdiction where action for that purpose is required. Persons receiving this Announcement are required to inform themselves about and to observe any restrictions contained in this Announcement.

This Announcement is directed at and is only being distributed to: (A) persons in member states of the European Economic Area who are "qualified investors", as defined in article 2.1(e) of the Prospectus Directive (Directive 2003/71/EC), as amended (the "Prospectus Directive"), (B) if in the United Kingdom, persons who (i) have 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 (the "FPO") or fall within the definition of "high net worth companies, unincorporated associations etc." in article 49(2)(a) to (d) of the FPO and (ii) are "qualified investors" as defined in section 86 of the Financial Services and Markets Act 2000, as amended ("FSMA") or (C) persons to whom it may otherwise lawfully be communicated (each, a "Relevant Person"). No other person should act on or rely on this Announcement and persons distributing this Announcement must satisfy themselves that it is lawful to do so. By accepting the terms of this Announcement, investors represent and agree that they are a Relevant Person.

The Placing of New Shares has not been and will not be authorised under the Swiss Federal Act on Collective Investment Schemes ("CISA"). The Investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to persons who participate in the Placing.

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 or the Placing relate is available only to Relevant Persons and will be engaged in only with Relevant Persons. As regards all persons other than Relevant Persons, the details of the Placing set out in this Announcement are for information purposes only.

Persons (including, without limitation, nominees and trustees) who have a contractual or other legal obligation to forward a copy of this Announcement should seek appropriate advice before taking any action.

This Announcement is not being distributed by, nor has it been approved for the purposes of section 21 of FSMA by, a person authorised under FSMA. This Announcement is being distributed and communicated to persons in the United Kingdom only in circumstances in which section 21(1) of FSMA does not apply.

No prospectus will be made available in connection with the matters contained in this Announcement and no such prospectus is required (in accordance with the Prospectus Directive) to be published.

The information contained in this Announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this Announcement or its accuracy, fairness or completeness.

Certain statements in this Announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These forward-looking statements, which may use words such as "aim", "anticipate", "believe", "could", "intend", "estimate", "expect" and words of similar meaning, include all matters that are not historical facts. These forward-looking statements involve risks, assumptions and uncertainties that could cause the actual results of operations, financial condition, liquidity and dividend policy and the development of the industries in which the Company's businesses operate to differ materially from the impression created by the forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given those risks and uncertainties, prospective investors are cautioned

not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by the UK Financial Conduct Authority ("FCA"), the London Stock Exchange or applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Any indication in this Announcement of the price at which the Company's shares have been bought or sold in the past cannot be relied upon as a guide to future performance. Persons needing advice should consult an independent financial adviser. No statement in this Announcement is intended to be a profit forecast and no statement in this Announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

Cantor Fitzgerald, which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company and for no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Cantor Fitzgerald or for providing advice in relation to the Placing, or any other matters referred to in this Announcement.

Mirabaud Securities, which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company and for no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Mirabaud Securities or for providing advice in relation to the Placing, or any other matters referred to in this Announcement.

Grant Thornton, which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company and for no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Grant Thornton or for providing advice in relation to the Placing and Subscription, or any other matters referred to in this Announcement.

No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by or on behalf of the Company, Cantor Fitzgerald, Grant Thornton or Mirabaud Securities or by their affiliates or their respective agents, directors, officers and employees as to, or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefor is expressly disclaimed.

The New Shares to be issued pursuant to the Fundraising will not be admitted to trading on any stock exchange other than to trading on AIM.

The Appendix to this Announcement sets out the terms and conditions of the Placing. By participating in the Placing, each person who is invited to and who chooses to participate in the Placing by making or accepting an oral and legally binding offer to acquire Placing Shares will be deemed to have read and understood this Announcement in its entirety and to be making such offer on the terms and subject to the conditions set out in this Announcement and to be providing the representations, warranties, undertakings and acknowledgements contained in the Appendix.

Members of the public are not eligible to take part in the Fundraising and no public offering of New Shares is being or will be made.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this Announcement.

APPIX - TERMS AND CONDITIONS OF THE PLACING

For invited placees only-Important Information

The information contained in this Announcement, including this Appendix, is restricted and is not for publication, release or distribution in or into the United States, any province of Canada, Australia, Japan, the Republic of South Africa or New Zealand.

Each Placee should consult with its own advisers as to legal, tax, business and related aspects in relation to any acquisition of Placing Shares.

Duke Royalty Limited

Proposed Placing of New Ordinary Shares at the Issue Price of 40 pence per Placing Share

The terms and conditions set out in this Appendix (the "Terms and Conditions") do not constitute an offer or invitation to acquire, underwrite or dispose of, or any solicitation of any offer or invitation to acquire, underwrite or dispose of, any Ordinary Shares or other securities of the Company to any person in any jurisdiction to whom it is unlawful to make such offer, invitation or solicitation in such jurisdiction. Persons who seek to participate in the Placing must inform themselves about and observe any such restrictions and must be persons who are able to lawfully receive this document in their jurisdiction (all such persons being "Relevant Persons"). In particular, neither this Announcement, nor these Terms and Conditions constitute an offer or invitation (or a solicitation of any offer or invitation) to acquire, underwrite or dispose of or otherwise deal in any Ordinary Shares or other securities of the Company in the United States, Canada, Australia, Japan, the Republic of South Africa or New Zealand, or in any other jurisdiction in which any such offer, invitation or solicitation is or would be unlawful.

Members of the public are not eligible to take part in the Placing. Prospective investors must inform themselves as to: (a) the legal requirements within their own countries for the purchase, holding, transfer, redemption or other disposal of the Ordinary Shares; (b) any foreign exchange restrictions applicable to the purchase, holding, transfer, redemption or other disposal of the Ordinary Shares which they might encounter; and (c) the income and other tax consequences which may apply in their own countries as a result of the purchase, holding, transfer, redemption or other disposal of the Ordinary Shares. In the UK, the Placing and these Terms and Conditions are directed only at persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses and who have professional experience in matters relating to investments falling within the definition of 'investment professionals' in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") or are high net worth body corporates, unincorporated associations or partnerships or trustees of high value trusts as described in Article 49 of the FPO or to whom they may otherwise lawfully be communicated. This announcement (including these Terms and Conditions) does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, Ordinary Shares in any jurisdiction where such offer or solicitation is unlawful or would impose any unfulfilled registration, qualification, publication or approval requirements on the Company or Cantor Fitzgerald or Mirabaud. The offer and sale of the New Shares has not been and will not be registered under the applicable securities laws of Canada, Australia, Japan, New Zealand or the Republic of South Africa. Subject to certain exemptions, the New Shares may not be offered to or sold within Canada, Australia, Japan, the Republic of South Africa or New Zealand or to any national, resident or citizen of Canada, Australia, Japan, the Republic of South Africa or New Zealand.

The New Shares have not been, and will not be, registered under the US Securities Act, or the securities laws of any other jurisdiction of the United States. The New Shares may not be offered or sold, directly or indirectly, in or into the United States (except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the US Securities Act). No public offering of the New Shares is being made in the United States. The New Shares are being offered and sold only outside the United States in "offshore transactions" within the meaning of, and in reliance on, Regulation S. The New Shares have not been approved or disapproved by the United States Securities and Exchange Commission, any state securities commission in the United States or any other regulatory authority in the United States, nor have any of the foregoing authorities passed on or endorsed the merits of the Placing or the accuracy or adequacy of the information contained in the Admission Document (including these Terms and Conditions). Any representation to the contrary is a criminal offence in the United States.

In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), no New Shares have been offered, or will be offered, pursuant to the Placing to the public in that Relevant Member State prior to the publication of a prospectus in relation to the Ordinary Shares which has been approved by the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that offers of New Shares to the public may be made at any time under the following exemptions under the Prospectus Directive, if they are implemented in that Relevant Member State:

A. to any legal entity which is a "qualified investor" (as defined in the Prospectus Directive);

B. to fewer than 150, or, if the Relevant Member State has not implemented the relevant provision of the Prospectus Directive, 100 natural or legal persons (other than "qualified investors") in such Relevant Member State; or

   C.            in any other circumstances falling within Article 3(2) of the Prospectus Directive, 

provided that no such offer of New Shares shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the Prospectus Directive in a Relevant Member State and each person who initially acquires any New Shares or to whom any offer is made under the Placing will be deemed to have represented, acknowledged and agreed that it is a "qualified investor" within the meaning of Article 2(1)(e) of the Prospectus Directive. For the purposes of this provision, the expression "an offer to the public" in relation to any offer of New Shares in any Relevant Member State means a communication in any form and by any means presenting sufficient information on the terms of the offer and any New Shares to be offered so as to enable an investor to decide to purchase or subscribe for the New Shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression the "Prospectus Directive" means Directive 2003/71/EC (as amended), to the extent implemented in the Relevant Member State and includes any relevant implementing measure in each Relevant Member State.

The New Shares may not be publicly offered, sold or advertised, directly or indirectly, in, into or from Switzerland and will not be listed on the SIX Swiss Exchange or on any other exchange or regulated trading facility in Switzerland.

These Terms and Conditions apply to persons who are invited to and who choose to purchase Placing Shares in the Placing (each a "Placee" and the expressions "you" and "your" refer to a Placee). Each Placee hereby agrees with Cantor Fitzgerald, Grant Thornton and Mirabaud to be legally and irrevocably bound by these Terms and Conditions which are the Terms and Conditions on which the Placing Shares will be acquired in the Placing.

The Terms and Conditions must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which the Terms and Conditions set out herein relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

Acceptance of any offer incorporating the Terms and Conditions (whether orally or in writing or evidenced by way of a contract note) constitutes a binding irrevocable commitment by a Placee, subject to the Terms and Conditions set out below, to subscribe and pay for the relevant number of Placing Shares (the "Placing Participation"). Such commitment is not capable of termination or rescission by the Placee in any circumstances except fraud. All such obligations are entered into by the Placee with Cantor Fitzgerald and Mirabaud in its capacity as agent for the Company and are therefore directly enforceable by the Company.

Terms of the Placing

Application will be made to the London Stock Exchange for the admission of the New Shares to be issued pursuant to the Fundraising to trading on AIM. Except as otherwise set forth herein, it is anticipated that dealings in the New Shares will commence on AIM at 8.00 a.m. on 23 March 2017 for normal account settlement and that Admission will become effective on that date. The New Shares will not be admitted to trading on any stock exchange other than AIM. Each Placee will be deemed to have read these Terms and Conditions in their entirety. Cantor Fitzgerald and Mirabaud are acting for the Company only and no one else in connection with the Placing and will not regard any other person (whether or not a recipient of these Terms and Conditions) as a client in relation to the Placing and to the fullest extent permitted by law and applicable FCA rules, none of Cantor Fitzgerald, Grant Thornton or Mirabaud nor any of their affiliates will have any liability to Placees or to any person other than the Company in respect of the Placing.

The New Shares will rank equally in all respects with the Existing Ordinary Shares of the Company on Admission, including the right to receive dividends or other distributions declared on or after Admission, if any.

Conditions

Each Placing Participation is in all respects conditional upon:

(i) the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and

   (ii)           Admission having become effective, 

in each case by 8.00 a.m. on 23 March 2017 or such later time and/or date as the Company, Grant Thornton, Cantor Fitzgerald and Mirabaud agree, but in any event being no later than 8.00 a.m. on 30 March 2017.

Pursuant to the Placing Agreement, Cantor Fitzgerald and Mirabaud have agreed, on behalf of and as agent for the Company, to use their reasonable endeavours to procure subscribers or purchasers for the Placing Shares at the Placing Price, subject to these Terms and Conditions.

The Placing Agreement contains certain warranties and indemnities from the Company and the Directors, in each case for the benefit of Cantor Fitzgerald, Mirabaud and Grant Thornton. Cantor Fitzgerald, Mirabaud and/or Grant Thornton may, in their absolute discretion, terminate the Placing Agreement if prior to Admission, inter alia, a force majeure event occurs, there is a material breach of any of the undertakings or any fact or circumstance arises which causes a warranty to become materially untrue or inaccurate in any respect. The exercise by Cantor Fitzgerald, Grant Thornton and/or Mirabaud of any right of termination or any right of waiver exercisable by Cantor Fitzgerald, Grant Thornton and/or Mirabaud contained in the Placing Agreement or under the Terms and Conditions set out herein is within the absolute discretion of Cantor Fitzgerald, Grant Thornton or Mirabaud and none of Cantor Fitzgerald, Grant Thornton nor Mirabaud will have any liability to any Placee whatsoever in connection with any decision to exercise, or not exercise, any such rights.

If (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived) or (ii) the Placing Agreement is terminated or (iii) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will not proceed and all funds delivered by you to Cantor Fitzgerald and/or Mirabaud will be returned to you at your risk without interest, and your rights and obligations hereunder shall cease and determine at such time and no claim shall be made by you in respect thereof.

None of the Company, the Directors, Cantor Fitzgerald, Mirabaud or Grant Thornton owes any fiduciary duty to any Placee in respect of the representations, warranties, undertakings or indemnities in the Placing Agreement.

Settlement

The Company has applied for the Ordinary Shares to be held in CREST and settlement of the New Shares will take place in CREST.

Placing Shares will be delivered direct into your CREST account, provided payment has been made in terms satisfactory to Cantor Fitzgerald and Mirabaud and the details provided by you have provided sufficient information to allow the CREST system to match to the CREST account specified. Placing Shares comprised in your Placing Participation are expected to be delivered to the CREST account which you specify by telephone to your usual sales contact at Cantor Fitzgerald or Mirabaud.

If you do not provide any CREST details or if you provide insufficient CREST details to match within the CREST system to your details, Cantor Fitzgerald or Mirabaud may at their discretion deliver your Placing Participation in certificated form provided payment has been made in terms satisfactory to Cantor Fitzgerald or Mirabaud and all conditions in relation to the Placing have been satisfied or waived.

Subject to the conditions set out above, payment in respect of your Placing Participation is due as set out below. You should provide your settlement details in order to enable instructions to he successfully matched in CREST. The relevant settlement details are as follows:

 
 CREST participant ID of Cantor 
  Fitzgerald:. . . . .                                    635 
 CREST participant ID of Mirabaud. 
  . . . . . . . . . . . . . . 
  . .                                                     834 
 Expected Trade date:. . . .                    21 March 2017 
  . . . . . . . . . . . . . . 
  . . . . . . . . . . . . . . 
  . 
 Settlement date:. . . . . .                    23 March 2017 
  . . . . . . . . . . . . . . 
  . . . . . . . . . . . . . . 
  . . . 
 ISIN code for the Placing Shares:               GG00BYZSSY63 
  . . . . . . . . . . . . . . 
  . . . . . . . . . 
 Deadline for you to input instructions    12.00p.m.(UK time) 
  into CREST:. . . . . . . .                 on 22 March 2017 
  . . 
 

In the event that the Placing Agreement does not become unconditional in all respects or is terminated, the Placing will not proceed. Once the Placing Shares are allotted and issued, such Placing Shares will be admitted to CREST with effect from Admission. It is expected that dealings on AIM in the Placing Shares will commence at 8:00 a.m. on 23 March 2017.

Further Terms, Confirmations and Warranties

In accepting the Placing Participation, you make the following confirmations, acknowledgements, warranties and/or undertakings to Cantor Fitzgerald, Grant Thornton or Mirabaud and the Company and their respective directors/ agents and advisers:

You represent and warrant that you have read these Terms and Conditions in its entirety and acknowledge that your participation in the Placing will be governed by the terms, conditions, representations, warranties, acknowledgements, agreements and undertakings of these Terms and Conditions.

You acknowledge and agree that your acceptance of your Placing Participation on the terms of these Terms and Conditions is legally binding, irrevocable and is not capable of termination or rescission by you in any circumstances (save for Admission not having occurred by 8.00 a.m. on 30 March 2017).

You confirm, represent and warrant that you have not relied on, received nor requested, nor do you have any need to receive, any prospectus, offering memorandum, listing particulars or any other document other than the Admission Document the Pathfinder version of which you have seen describing the business and affairs of the Company which has been prepared for delivery to prospective investors in order to assist them in making an investment decision in respect of the Placing Shares. You further confirm, represent and warrant that you are not relying on any information given or any representations, warranties agreements or undertakings (express or implied), written or oral, or statements made at any time by the Company, Cantor Fitzgerald, Grant Thornton or Mirabaud or by any subsidiary, holding company, branch or associate of the Company, Cantor Fitzgerald, Grant Thornton, Mirabaud, or any of their respective officers, directors, agents, employees or advisers, or any other person in connection with the Placing, the Company and its subsidiaries or the Placing Shares and that in making your application under the Placing you will be relying solely on the information contained in the Admission Document the Pathfinder version of which you have seen and these Terms and Conditions and you will not be relying on any agreements by the Company and its subsidiaries, Cantor Fitzgerald, Grant Thornton or Mirabaud or any director, employee or agent of the Company, Cantor Fitzgerald, Grant Thornton or Mirabaud other than as expressly set out in the Admission Document the Pathfinder version of which you have seen and these Terms and Conditions for which none of Cantor Fitzgerald, Mirabaud, Grant Thornton, the Company or any of their directors and/or employees and/or person(s) acting on behalf of any of them shall, to the maximum extent permitted under law, have any liability except in the case of fraud. You further confirm, represent and warrant that you have reviewed the Pathfinder Admission Document, including the sections relating to the conditions of the Placing Agreement, the commission payable to Cantor Fitzgerald and Mirabaud, and the Risk Factors related to the Company, its operations and the New Shares.

You confirm, represent and warrant that you are sufficiently knowledgeable to understand and be aware of the risks associated with, and other characteristics of, the Placing Shares and, among others, of the fact that you may not be able to resell the Placing Shares except in accordance with certain limited exemptions under applicable securities legislation and regulatory instruments.

You confirm, represent and warrant, if a body corporate, that you are a valid and subsisting body corporate and have all the necessary corporate capacity and authority to execute your obligations in connection with your Placing Participation.

You agree that the exercise by Cantor Fitzgerald, Grant Thornton or Mirabaud of any right of termination or any right of waiver exercisable by Cantor Fitzgerald, Grant Thornton or Mirabaud contained in the Placing Agreement or the exercise of any discretion thereunder is within the absolute discretion of Cantor Fitzgerald, Grant Thornton and/or Mirabaud and none of Cantor Fitzgerald, Grant Thornton or Mirabaud will have any liability to you whatsoever in connection with any decision to exercise or not exercise any such rights. You acknowledge that if (i) any of the conditions in the Placing Agreement are not satisfied (or, where relevant, waived) or (ii) the Placing Agreement is terminated or (iii) the Placing Agreement does not otherwise become unconditional in all respects, the Placing will lapse and your rights and obligations hereunder shall cease and determine at such time and no claim shall be made by you in respect thereof.

You acknowledge and agree that none of Cantor Fitzgerald, Grant Thornton or Mirabaud are acting for, and that you do not expect Cantor Fitzgerald, Grant Thornton or Mirabaud to have any duties or responsibilities towards, you for providing protections afforded to their respective customers or clients under the Financial Conduct Authority Conduct of Business Source Book or advising you with regard to your Placing Participation and that you are not, and will not be, a customer or client of Cantor Fitzgerald, Grant Thornton or Mirabaud as defined by the Financial Conduct Authority Conduct of Business Source Book. Likewise, none of Cantor Fitzgerald, Grant Thornton or Mirabaud will treat any payment by you pursuant to these Terms and Conditions as client money governed by the Financial Conduct Authority Conduct of Business Source Book.

You confirm, represent and warrant that you may lawfully acquire the Placing Shares comprising your Placing Participation and that you have complied with and will comply with all applicable provisions of FSMA with respect to anything done by you in relation to the Placing Shares in, from or otherwise involving, the United Kingdom.

You acknowledge and agree that your agreement with Cantor Fitzgerald or Mirabaud to acquire Placing Shares, whether by telephone or otherwise is a legally binding contract and the Terms and Conditions of your Placing Participation and any non-contractual obligation therefrom will be governed by and construed in accordance with, the laws of England and Wales to the exclusive jurisdiction of whose courts you irrevocably agree to submit.

You acknowledge and agree that time shall be of the essence as regards obligations pursuant to these Terms and Conditions.

You acknowledge and agree that it is the responsibility of any person outside of the United Kingdom wishing to subscribe for or purchase Placing Shares to satisfy himself that, in doing so, he complies with the laws of any relevant territory in connection with such subscription or purchase and that he obtains any requisite governmental or other consents and observes any other applicable formalities.

You acknowledge and agree that the Placing Shares have not been and will not be registered under the laws, or with any securities regulatory authority, of any province of Canada, Australia, Japan, the Republic of South Africa or New Zealand and, subject to limited exceptions, the Placing Shares may not be offered, sold, transferred or delivered, directly or indirectly into any province of Canada, Japan, Australia, the Republic of South Africa or New Zealand or their respective territories and possessions.

You warrant that you have complied with all relevant laws of all relevant territories, obtained all requisite governmental or other consents which may be required in connection with your Placing Participation, complied with all requisite formalities and that you have not taken any action or omitted to take any action which will or may result in Cantor Fitzgerald, Grant Thornton, Mirabaud, the Company, or any of their respective directors, officers, agents, employees, affiliates or advisers acting in breach of the legal or regulatory requirements of any territory in connection with the Placing or your application.

You warrant that your acquisition of Placing Shares does not trigger, in the jurisdiction in which you are resident or located: (i) any obligation to prepare or file a prospectus or similar document or any other report with respect to such purchase; (ii) any disclosure or reporting obligation of the Company; or (iii) any registration or other obligation on the part of the Company.

You are acting as principal and for no other person and that your acceptance of the Placing Participation will not give any other person a contractual right to require the issue by Duke Royalty Limited of any Placing Shares.

You warrant that in accepting your Placing Participation you are not applying for registration as, or as a nominee or agent for, a person who is or may be a person mentioned in sections 67 to 72 inclusive and sections 93 to 97 inclusive of the Finance Act 1986.

You confirm that, to the extent applicable to you, you are aware of your obligations in connection with the Criminal Justice Act 1993, the Terrorism Act 2006, the UK Anti Terrorism Crime and Security Act 2001, the Money Laundering Regulations 2007 and the Proceeds of Crime Act 2002, you have identified your clients in accordance with the Money Laundering Regulations 2007 and you have complied fully with your obligations pursuant to those Regulations.

You acknowledge and agree that all times and dates in the Pathfinder Admission Document and these Terms and Conditions may be subject to amendment and Cantor Fitzgerald or Mirabaud shall notify you of any such amendments.

You acknowledge and agree that your agreement with Cantor Fitzgerald or Mirabaud to acquire Placing Shares shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by any of the Company or any affiliate of Cantor Fitzgerald or Mirabaud.

You acknowledge that any of your monies held or received by Cantor Fitzgerald or Mirabaud will not be subject to the protections conferred by the FCA's Client Money Rules.

You acknowledge and agree that the Placing Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States, and are being offered and sold only outside the United States in "offshore transactions" (as defined in Regulation S). Accordingly, the Placing Shares may not be offered, sold, transferred or delivered directly or indirectly in or into the United States, except pursuant to an effective registration statement under the US Securities Act or an exemption from the registration requirements of the Securities Act, and, in connection with any such transfer, the Company will have the right to obtain, as a condition to transfer, a legal opinion of counsel, in form and by counsel reasonably satisfactory to the Company, that no such Securities Act registration is or will be required along with appropriate certifications by the transferee as to appropriate matters. No representation has been made as to the availability of any exemption under the Securities Act for the reoffer, resale, transfer or delivery of the Placing Shares.

You represent and warrant that you have not distributed, forwarded, transferred or otherwise transmitted the Pathfinder Admission Document or any other presentation or offering materials concerning the Placing Shares within the United States, nor will you do any of the foregoing. You understand that the information in the Admission Document, including financial information, may be materially different from any disclosure that would be provided in a registered offering in the United States.

You agree, represent and warrant as follows:

23.1 You are, acquiring the Placing Shares in an "offshore transaction" (as defined in Regulation S);

23.2 You will not offer or sell the Placing Shares in the United States absent registration or an exemption from registration under the Securities Act;

23.3 You are not acquiring the Placing Shares as a result of any form of directed selling efforts (as defined in Rule 902 under the Securities Act); and

23.4 if you are in the United Kingdom, you are a person falling within the exemption contained in Section 86(1)(a) of the FSMA or falling within one or more of the categories of persons set out in Article 19 (Investment Professionals) or Article 49 (High net worth companies, unincorporated associations etc.) of the FPO.

In making an investment decision with respect to the Placing Shares, for yourself and on behalf of any person for whose account you are acquiring the Placing Shares, you represent and warrant that you have:

24.1 not relied on any representation, warranty or statement made by the Company, Cantor Fitzgerald, Grant Thornton or Mirabaud or any of their respective directors, employees, advisers, agents or affiliates;

24.2 the ability to bear the economic risk of your investment in the Placing Shares and have no need for liquidity with respect to your investment in the Placing Shares;

24.3 such knowledge and experience in financial and business matters that you are capable of evaluating the merits, risks and suitability of investing in the Placing Shares, and are able to sustain a complete loss of any investment in the Placing Shares;

24.4 had access to such financial and other information concerning the Company and the Placing Shares as you deem necessary in connection with your decision to purchase the Placing Shares; and

24.5 investigated independently and made your own assessment and satisfied yourself concerning the relevant tax, legal, currency and other economic considerations relevant to your investment in the Placing Shares, including any federal, state and local tax consequences, affecting you in connection with your purchase and any subsequent disposal of the Placing Shares.

You acknowledge that the Company and its financial instruments are subject to the provisions of the Market Abuse Regulation ((EU) No. 596/2014) ("MAR") and that you will observe the provisions of MAR in relation to the Company's financial instruments, including in relation to the control of any inside information.

You undertake to (and to cause any person acting on your behalf to) make payment for the Placing Shares allocated to you in accordance with this Announcement on the due time and date set out herein, failing which the relevant Placing Shares may be placed with other subscribers or sold as Cantor Fitzgerald and Mirabaud may in their sole discretion determine and without liability to you.

You acknowledge that the Company, Cantor Fitzgerald, Grant Thornton, Mirabaud, any transfer agent, any distributors or dealers and their respective affiliates and others will rely on the truth and accuracy of the foregoing warranties, acknowledgements, representations, undertakings and agreements, and you agree to indemnify and hold harmless the Company, Cantor Fitzgerald, Grant Thornton, Mirabaud and any of their respective officers, directors, agents, employees or advisers (the "Indemnified Persons") from and against any and all costs, claims losses, damages, liabilities or expenses, including legal fees and expenses (including any VAT thereon), which an Indemnified Person may incur by reason of, or in connection with, any representation, warranty, acknowledgement, agreement or undertaking made herein not having been true when made, any breach thereof or any misrepresentation. You acknowledge and that the rights and remedies of the Company, Cantor Fitzgerald, Grant Thornton and Mirabaud under these Terms and Conditions are in addition to any rights and remedies which would otherwise be available to each of them and the exercise or partial exercise of one right or remedy will not prevent the exercise of the other rights and/or remedies.

You further agree that these Terms and Conditions shall survive after completion of the Placing and Admission.

This information is provided by RNS

The company news service from the London Stock Exchange

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March 16, 2017 13:03 ET (17:03 GMT)