Local Shopping REIT (The) PLC Notice of GM (7670P)

TIDMLSR

RNS Number : 7670P

Local Shopping REIT (The) PLC

22 November 2016

The Local Shopping REIT plc

Publication of Circular and Notice of General Meeting

The Local Shopping REIT plc responds to the Resolutions proposed by Thalassa Holdings Ltd

Following the announcement made by The Local Shopping REIT plc ("LSR" or the "Company") on 10 November 2016 confirming receipt of a notice requisitioning a general meeting of the Company from Thalassa Holdings Ltd ("Thalassa") acting by its nominee, Pershing Nominees Limited, the Company is today publishing a circular to LSR Shareholders containing a letter from the Chairman to LSR Shareholders. The letter details the Board's response to Thalassa's Requisition and explains the Board's views on the Requisition in order that LSR Shareholders are fully informed and able to make their voting decisions on that basis.

The Resolutions will be put before LSR Shareholders at the Company's forthcoming General Meeting at 10.00 a.m. on 8 December 2016 at the offices of Eversheds LLP, One Wood Street, London, EC2V 7WS.

The Requisition Notice proposes resolutions that Stephen East and Nicholas Vetch be removed as directors and that Duncan Soukup, John Hutchinson and Toby Burgess be appointed to the Company's Board (the "Requisition Resolutions"). Separately, the Board is also proposing a resolution to reduce the minimum number of Directors required to two Directors pursuant to articles 96 and 116 of the Company's articles of association (the "Director Resolution").

The Board unanimously recommends that shareholders vote against the Requisition Resolutions and in favour of the Director Resolution.

For further discussion of the background to the Requisition and for a detailed explanation of the reasons for the Board's recommendation that LSR Shareholders vote against the Resolutions, please refer to the Circular and to the Letter from the Chairman set out in the Appendix to this announcement.

All terms used within this announcement will have the same meaning as applied within the Circular and are defined at the end of this announcement.

The Circular will be posted to LSR Shareholders today, 22 November 2016. A copy of the Circular will be submitted to the National Storage Mechanism and will shortly be available for inspection at: www.hemscott.com/nsm.do and on the Company's website at www.localshoppingreit.co.uk/investor-relations.

The timetable for the General Meeting is as follows:

 
 Event                                                  Date 
 
 Latest time and date               10.00 a.m. on 6 December 
  for receipt of Form of                                2016 
  Proxy from LSR Shareholders 
 
 Voting Record Time for              6.30 p.m. on 6 December 
  the General Meeting                                   2016 
 
 Time, date and location            10.00 a.m. on 8 December 
  of the General Meeting                                2016 
                                 at the offices of Eversheds 
                                                         LLP 
                                     One Wood Street, London 
                                                    EC2V 7WS 
 

For more information please contact:

The Local Shopping REIT plc

Tel: [phone]

Bill Heaney, Director and Company Secretary

Further Information:

If in any doubt about any of the contents of this announcement, independent professional advice should be obtained.

This announcement is not an offer to sell or a solicitation of any offer to buy the securities of The Local Shopping REIT plc (the "Company") in the United States, Australia, Canada, Japan, the Republic of South Africa or in any other jurisdiction where such offer or sale would be unlawful.

This announcement cannot be relied on for any investment contract or decision. No person has been authorised to give any information or make any representation and, if given or made, such information or representation must not be relied upon as having been so authorised by the Company or the Directors.

Note regarding forward-looking statements:

This announcement includes statements that are, or may be deemed to be, "forward-looking statements" including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations or statements relating to expectations in relation to dividends. These statements can be identified by the use of forward-looking terminology, including statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "estimates", "intends", "plans", "projects", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. These forward-looking statements include all statements that are not matters of historical fact. They appear in a number of places throughout this announcement and include, but are not limited to, statements regarding the Directors' and/or the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial position, prospects, growth, strategies and the industry in which it operates.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance, achievements of or dividends paid by the Company to be materially different from the results, performance or achievements, or dividend payments expressed or implied by such forward-looking statements. Such forward-looking statements are not guarantees of future performance and are based on numerous assumptions regarding the Company's net asset value, present and future business strategies and income flows and the environment in which the Company will operate in the future. In addition, even if the results of operations, financial position and the development of the markets and industry in which the Group operates in any given period are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. A number of factors could cause results and developments to differ materially from those expressed or implied by forward-looking statements contained in this announcement, including, without limitation, general economic and business conditions, industry trends, competition, changes in regulation, regulatory activity, currency fluctuations, changes in business strategy, political and economic uncertainty and other factors. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue or are likely to continue.

Any forward-looking statements speak only as of the date of this announcement. Subject to the requirements of the FCA and the London Stock Exchange (and/or any other applicable regulatory requirements) or applicable law, each of the Company and the Directors expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto, any new information or any change in events, conditions or circumstances after the date of this announcement on which any such statements are based, unless required to do so by law or any appropriate regulatory authority.

This summary should be read in conjunction with the full text of the announcement which follows.

APPIX

LETTER FROM THE CHAIRMAN

   1.       INTRODUCTION 

On 27 October 2016, the Board announced that it had been informed by Thalassa Holdings Ltd ("Thalassa"), which through two different nominees holds 23.48% of the LSR Shares, that Thalassa was considering the requisition of a general meeting of the Company to remove the existing directors of the Company and to replace them with certain individuals identified by Thalassa. No formal requisition was served on the Company at this point.

On 10 November 2016, the Board announced that, after close of business on 9 November 2016, it had received a notice (the "Requisition Notice") from Thalassa, requiring the Board to convene a general meeting of the Company's shareholders to consider resolutions to remove the Company's Non-executive Chairman, Stephen East and the Company's Senior Independent Director, Nicholas Vetch, and to replace them with the three Thalassa Nominees, being Duncan Soukup, John Hutchinson and Toby Burgess (the "Requisition"). The full text of the Requisition Notice and the accompanying explanatory statement served by Thalassa on 9 November 2016 is included as a schedule to the Circular.

The Board is required to convene a general meeting within 21 days of the receipt of the Requisition Notice, with such meeting being required to be held on a date not more than 28 days after the date of the notice convening it, and accordingly the Circular contains notice of a General Meeting, which is to be held at 10.00 a.m. on Thursday 8 December 2016 at the offices of Eversheds LLP, One Wood Street, London EC2V 7WS, at which the Resolutions will be considered.

The purpose of the Circular is to explain the Board's views on the Requisition in order that shareholders are properly informed and able to make their voting decision on that basis.

   2.       BACKGROUND REGARDING THE CURRENT POSITION OF THE COMPANY 

Since the change of strategy approved by shareholders in July 2013, GBP95.7 million of property has been sold (55.4% by value of the July 2013 portfolio), the Group's debt has been reduced by GBP92.2 million and the swap and fixed rate debt breakage liability, which was GBP19.2 million at 31 March 2013, has been eliminated. Capital gearing (net debt/total equity) has also reduced, from a peak of 384% during 2013 to 114% as at 31 March 2016. Since the cancellation of the Group's interest rate hedging arrangements in January 2016, the Company now enjoys positive operating cashflow and, in view of the extension of its loan facilities, as described in section 5 below, the Board believes the Company has the latitude to complete what it has set out to achieve as stated in the investment policy approved by shareholders in July 2013.

The optimum route for selling the remainder of the Company's properties as speedily and efficiently as possible consistent with the protection of value would have been via a sale of the Company's property-holding subsidiaries; however, this has not been achievable on terms acceptable to the Board. The sale process has incurred considerable management time and professional fees, and, whilst it was in train, greatly restricted the Company's ability to execute sales on a property by property basis.

The Board and Internos are now refocused on selling assets individually and, to that end, a programme of auction and private treaty sales is in hand. In the absence of the distracting process of a portfolio sale, the Company has increased the pace of individual property sales and continuing this acceleration is a key priority for the Board. The Company sold 10 properties in October 2016 for a total consideration of GBP1.0 million, representing a 2.8% premium to their most recent valuation. Shareholders should, however, be aware that undertaking a disposal process with multiple individual sales will be a laborious and time-consuming process. The portfolio, comprising over 300 properties, contains many small assets, with 50% of the assets

remaining being valued at GBP120,000 or less, and there is a limit on how many properties of the type owned by the Company the market can absorb at any one time without materially affecting price.

A detailed roadmap of how the Board intends to complete the task of turning property into cash will be set out in the results for the financial year ended 30 September 2016, which will be published in early December.

I continue to be grateful and extend my thanks to the excellent Internos staff working on the LSR account who, through their consistent efforts, have ensured stability at the Company. Thalassa's and Mr Soukup's intervention are inevitably unsettling and I hope, therefore, that this can be resolved as rapidly as possible.

Whilst I and my fellow directors have a clear view on what needs to be done, the Board does not claim a monopoly on the best way of prosecuting this endeavour. However, there is nothing in Thalassa's and Mr Soukup's proposal that in the Board's view assists with an expeditious implementation of the strategy approved by shareholders in July 2013.

In Thalassa's announcement of 12 September 2016, following the increase of its shareholding in the Company, it was stated that it was Thalassa's intention to review and change the Company's investment policy approved in July 2013. The Board notes that the statement supplied by Thalassa in relation to the Requisition makes no mention of this aim and gives no further detail as to how it proposes to amend the investment policy. The Board believes that this raises considerable uncertainty regarding Thalassa's intentions for the Company should it gain control of the Board.

Thalassa's statement appears to indicate that its ambitions are limited to cutting costs, reducing property vacancies, accelerating asset liquidations and reducing debt whilst failing to provide any detail on how to implement these points. Whilst highly desirable, they are all actions with which, as summarised above, your Board has already made considerable progress and on which it continues to work. For reasons set out in this announcement and the Circular, the Board considers it unlikely that Thalassa can make any material improvements in these areas and, indeed, that Thalassa's proposals, if implemented, may well have a significant adverse impact.

The Board is, therefore, of the opinion that Thalassa's actions constitute, in effect, an attempt to gain control of the Company via the back door and, as such, should be rejected. It is, of course, open to Thalassa to make a formal offer for the Company, which in the Board's view is a more appropriate manner of seeking control of a listed company (if that is indeed Thalassa's aim). Should such a formal offer be forthcoming, the Board would, of course, consider it in light of the Directors' duties and their obligations under the City Code on Takeovers and Mergers, including obtaining competent independent financial advice on its terms, before expressing the Board's views on any such offer. However, in principle, this would coincide with the Board's desire to provide a cash exit for shareholders as quickly as possible.

3. REASONS FOR THE BOARD'S RECOMMATION TO VOTE AGAINST THE REQUISITION RESOLUTIONS AND IN FAVOUR OF THE DIRECTOR RESOLUTION

The Board unanimously recommends that shareholders vote against the Requisition Resolutions and in favour of the Director Resolution for the reasons set out below.

Thalassa has made various statements regarding the performance of the Company which either refer to the period before the change of strategy approved by members in July 2013 (and were fully discussed by shareholders at that time) or are irrelevant or incorrect. The Directors therefore do not propose to comment further on those statements other than as set out in section 4 below.

3.1 Removal of Stephen East and Nicholas Vetch as directors of the Company and appointment of the Thalassa Nominees

The overriding aim of the current Board is to execute the strategy approved by shareholders in 2013, being to dispose of the property portfolio and return the net proceeds to shareholders as speedily and efficiently as possible, consistent with the protection of value. In this, the Board must act in the interests of the full body of the Company and its shareholders as a whole and their stewardship of the Company may not be influenced by any single interest. The Board finds it difficult to believe that their replacement by persons nominated solely by Thalassa can be in the interests of the wider body of shareholders.

The Board believes that the appointment of the Thalassa Nominees and the removal of the current directors would be highly detrimental to the interests of shareholders in general. The Board also considers that the proposed changes in Board membership would destabilise relationships with critical stakeholders and would be very disruptive of the programme that the Board has in hand for executing the strategy approved by shareholders.

In that respect, the Company's investment manager, Internos, has indicated that, whilst it would, as a matter of course, honour its contractual obligations, it would resign its investment management role in the event that Mr Soukup and his associates take control of the Board. In that event the Company would be exposed to additional costs in selecting and appointing a new investment manager and in the transfer of administration and management systems.

LSR Shareholders should note the provisions contained in the terms of the Loans in relation to the appointment of the Company's investment manager. These provisions, which replaced similar provisions in the original loan terms respecting the Company's property managers, were highlighted in the circular to shareholders of July 2013 and continue to apply to the Loans. Under these, the appointment by the Company of a new asset manager or investment advisor requires the prior written consent of HSBC Bank Plc. If such consent is not granted, then any such change would be an act of default under the terms of the Loans.

LSR Shareholders should note that William Heaney, who was appointed as a director of the Company on 10 November 2016, has informed the Company that he will resign from his position as a director of the Company in the event that the resolutions described above are passed by the Company.

3.2 Reduction of the minimum number of Directors required to two Directors pursuant to articles 96 and 116 of the Company's articles of association

Article 116 of the Company's articles of associations allows the Company to reduce the minimum number of Directors required to be appointed at any given time pursuant to article 96 to a number lower than three.

In light of the Company's current strategy, the Directors believe that that appointment of a third director is not required and would not be cost-efficient on the basis that, given the Company's stated investment policy, two directors are capable of carrying out the necessary functions and exercising the appropriate level of oversight without incurring the costs of recruiting and retaining a third director.

Accordingly, the Board is proposing resolution 6 in the Notice attached to the Circular, which will have the effect of reducing the number of Directors required to two.

LSR Shareholders should note that William Heaney, who was appointed as a director of the Company on 10 November 2016, has informed the Company that he will resign from his position as a director of the Company in the event that this resolution is passed by the Company.

   4.       RESPONSE TO THALASSA'S STATEMENT 
   4.1     The performance of the Company 

Since the change of strategy approved by shareholders in July 2013, GBP95.7 million of property has been sold (55.4% by value of the July 2013 portfolio), the Group's debt has been reduced by GBP92.2 million and the swap and fixed rate debt breakage liability, which was GBP19.2 million at 31 March 2013 has been eliminated. Capital gearing (net debt/total equity) has also reduced, from a peak of 384% during 2013 to 114% as at 31 March 2016. Since the cancellation of the Group's interest rate hedging arrangements in January 2016, the Company now enjoys reasonable and positive operating cashflow.

   4.2     The cost base of the Company 

As the Directors explained to Mr Soukup in a meeting held on 21 September 2016, the nature of LSR's investment portfolio and tenant base means that, for its size, it is a complex and highly management intensive property business. As at this date, the Company has over 1,000 commercial and residential units in over 300 properties, giving rise to a constant stream of new lettings, lease renewals, rent reviews, repair and maintenance needs, rent arrear collections etc. The process of selling the properties is, of itself, time consuming and laborious, particularly where properties involve a multiplicity of occupational interests that are often subject to statutory notification and enfranchisement provisions.

Eight members of Internos staff are engaged on LSR's account with involvement of the wider Internos team as needs arise. Importantly, the majority of the team working on the Company's behalf were previously employed by LSR and have therefore provided considerable continuity and a deep knowledge of the assets.

The Board has made a concerted effort to bear down on recurring administration costs which are anticipated to have dropped by 49% from GBP2.9 million in the financial year ended 30 September 2012 (i.e. the year immediately prior to the change of strategy) to an anticipated GBP1.5 million for the financial year ended 30 September 2016. As with all listed companies, there is an element of fixed overhead cost, but the Board endeavours to make further savings wherever possible.

   4.3     The appointment of Internos 

Internos was appointed in 2013 following a transparent and open process conducted in two stages, with the assistance of the Company's corporate broker JP Morgan Cazenove. The appointment was made on the key criterion of competency with regard to the Company's property, banking and corporate needs and a financially acceptable proposal. In addition, and equally importantly, Internos satisfied the Board as to its ability to assimilate the staff of the Company to ensure operational continuity, including taking on certain mandatory TUPE liabilities arising in connection with the transfer of staff. It was an important further consideration that Internos was (and continues to be) regulated by the Financial Conduct Authority. Critically, Internos was acceptable both to HSBC Bank plc, lender to two of the Company's subsidiaries, and to Capita, managers for the securitised debt of the two other subsidiaries, both of whose consent was required under the various lending agreements.

   4.4     Internos fee structure 

The agreement negotiated with Internos in 2013 was structured with a view to simultaneously incentivising Internos to manage the portfolio and the Company efficiently, whilst selling assets as expeditiously as possible for the best prices achievable. Accordingly, the agreement provided for an Asset Management Fee of 0.7% of the gross value of the Company's assets, together with an Annual Performance Fee, fees for the sale of properties and a Terminal Fee dependent on the achievement of a hurdle which was set at 36.1 pence per share in 2013 and escalates by 8% per annum. The current hurdle of 45.5 pence per share is 62% above the Company's share price at close of trading on 21 November 2016 (being the latest practicable date prior to the publication of this announcement) and 6% above the Company's Net Asset Value as at 31 March 2016. The Asset Management Fee was subject to a minimum floor which reduces over the first four years, thus reflecting the considerable upfront cost incurred by Internos in meeting the applicable TUPE obligations and the not inconsiderable endeavour and cost of migrating the Company's management and accounting systems. The minimum fee floor will cease to apply in July 2017, in accordance with the terms of the 2013 agreement, and, as the Asset Management Fee will inevitably reduce in line with the disposal of the portfolio, the fees derived by Internos will become increasingly reliant on its performance in selling the properties. The Board is, therefore, entirely satisfied that the quantum and structure of the fees currently payable to Internos are in the best interests of shareholders.

The Board notes that Thalassa's statement suggests that it will cut the Company's cost structure, but provides no detail on how it would do so. The Board firmly believes that Mr Soukup and his associates would not be able to materially improve on costs without degrading the performance of the Company's properties and impairing its ability to sell the several hundred of properties that need to be sold, many of which are widely geographically dispersed. Any degradation in the operational performance is likely to result in an increase in the void rate across the portfolio, which will be reflected in a diminution in capital value.

Given that the fee arrangements with Internos were designed to reflect a shorter property disposal period than has proved possible, these may need to be revisited at some point in the future. Any material amendments to the fee arrangements that may be necessary will, of course, be the subject of separate consultation with shareholders before these are implemented, in accordance with the Company's obligations under the Listing Rules.

   4.5     The credentials of Mr Duncan Soukup 

Mr Soukup has set out his credentials in the Thalassa statement. On 30 October 2013 Thalassa announced that it had raised GBP18.1m by way of an equity issue at GBP2.50 per share. It should be noted that at the close of markets on 21 November 2016, Thalassa's share price was 43p, a reduction of 83% on the equity issue price for the October 2013 placing. The Board will not comment further on Mr Soukup's credentials, but shareholders will no doubt wish to carry out their own research.

   5.       EXTENSION OF BORROWING FACILITIES 

Earlier today, the Company announced that it has extended the term of the two cross-collateralised loan facilities provided to the Company's property-holding subsidiaries NOS 4 Limited and NOS 6 Limited by HSBC Bank plc (initially in April 2006 and September 2008, and subsequently restructured in July 2013 and in April 2015) (the "Loans") by an additional 20 months. The Company has thereby secured bank funding through to 31 December 2019.

The amendment of the Loans will also allow the Company to extend the timeline initially envisaged for the implementation of its current investment strategy, which had been approved in July 2013. This will permit the Board to continue with the sale of the Company's property portfolio in an orderly manner, and in a way which maximises shareholder value. As part of the revised terms the balance of the Loans will be reduced by GBP7 million on 30 November 2016 through the release of cash held by the Company (derived from the sale of properties and operational income). As a result, the balance of the Loans outstanding on 30 November 2016 will be approximately GBP43.5 million.

Under the terms of the extension of the facilities, further property assets valued at GBP1 million will be added to the existing security pool. The interest margin will be 2% above 3 month LIBOR and an arrangement fee of 0.5% has been paid on the outstanding balance of the Loans. The loan to value ratio default covenant is 70%, the cash sweep covenant is 65% and the income cover ratio covenant is 120%.

Capital repayments of the Loans will be made at the rate of 1% per quarter for the next 24 months, falling to 0.25% per quarter thereafter until the balance of the Loans falls below GBP36m. Under the terms of the extension of the facilities, the proceeds of sales of properties within the security pool (net of sales costs) are to be applied to reducing the balance of the Loans. No other material changes have been made to the loan agreements.

As at the date of this Circular the loan to value ratio in respect of assets charged under the Loans is 61.0%. This will be further reduced to 60.2% following the contribution of the additional assets. The Company's net debt to value ratio on all its property assets is 52.4%. The Company has no debt finance liabilities other than the Loans and will continue to hold a cash reserve (expected to be approximately GBP4.1 million at 30 November 2016) to cover its working capital requirements.

The extension of the Company's borrowing facilities until 31 December 2019 has placed the Company in a stronger and more secure position, enabling the Board to continue with confidence the execution of the investment strategy approved by shareholders.

   6.       RECOMMATION 

For the reasons set out above, the Board considers that the Requisition Resolutions:

-- to remove Stephen East, the Company's Non-executive Chairman and Nicholas Vetch, the Company's Senior Independent Director; and

-- to replace them with the three Thalassa Nominees, being Duncan Soukup, John Hutchinson and Toby Burgess,

are, in each case, not in the best interests of the Company or LSR Shareholders, as a whole.

The Board also considers that the Director Resolution to reduce the minimum Board size of the Company required by article 96 of the Company's articles of association to two as permitted by article 116 of Company's articles of association is in the best interests of the Company and its shareholders, as a whole, on the basis that two directors are capable of carrying out the necessary functions under the stated investment policy without incurring the costs of recruiting and retaining an additional director over the longer term.

The Board therefore unanimously recommends that all LSR Shareholders vote:

-- AGAINST the Requisition Resolutions which are set out as resolutions 1 to 5 in the Form of Proxy accompanying the Circular: and

-- FOR the Director Resolution which is set out as resolution 6 in the Form of Proxy accompanying the Circular,

as all the Directors intend to do in respect of their aggregate beneficial holdings of 3,006,745 LSR Shares (representing approximately 3.64% of the issued share capital of the Company).

   7.       ACTION TO BE TAKEN 

LSR Shareholders will find, set out at the end of the Circular, a Notice convening the General Meeting, to be held at 10.00 a.m. on Thursday 8 December 2016 at the offices of Eversheds LLP, One Wood Street, London EC2V 7WS at which the Resolutions will be considered.

The full text of the Resolutions is set out in the Notice attached to the Circular. Voting at the General Meeting will be by poll and not on a show of hands and each LSR Shareholder entitled to attend and who is present in person or by proxy will be entitled to one vote for each LSR Share held.

LSR Shareholders will find enclosed with the Circular a Form of Proxy for use at the General Meeting or any adjournment thereof. Whether or not LSR Shareholders intend to be present at the General Meeting, they are requested to complete and sign the Form of Proxy in accordance with the instructions printed on it so as to be received by the Company's registrars, Equiniti Limited, Aspect House, Spencer Road, Lancing BN99 6DA as soon as possible, and in any event, no later than 10.00 a.m. on Tuesday 6 December 2016 (or, in the case of an adjournment, not later than 48 hours (excluding non-working days) before the time fixed for the holding of the adjourned meeting).

LSR Shareholders who hold their LSR Shares in CREST and who wish to appoint a proxy or proxies for the General Meeting or any adjournment(s) thereof by using the CREST electronic proxy appointment service, may do so by using the CREST proxy voting service in accordance with the procedures set out in the CREST manual.

CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider, should refer to that CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. Proxies submitted via CREST (under CREST ID RA19) must be sent as soon as possible and, in any event, so as to be received by the Company's registrars, Equiniti Limited, by no later than 10.00 a.m. on Tuesday 6 December 2016 (or, in the case of an adjournment, not later than 48 hours (excluding non-working days) before the time fixed for the holding of the adjourned meeting).

Shareholders wishing to complete their paper Form of Proxy in line with the Board's recommendations should place an "X" in the boxes under the heading "Against" alongside Resolutions 1 to 5 in the Form of Proxy enclosed with the Circular (being the Requisition Resolutions) and an "X" in the box under the heading "For" alongside Resolution 6 in the Form of Proxy enclosed with the Circular (being the Director Resolution).

LSR Shareholders who have any questions relating to this announcement, the Circular, the General Meeting and/or the completion and return of the Form of Proxy, should telephone Equiniti Limited on 0371-384-2030. LSR Shareholders who are outside the United Kingdom, should call [phone]. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 8.30 a.m. and 5.30 p.m., Monday to Friday (excluding public holidays in England and Wales). Please note that Equiniti Limited cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.

The completion and return of a Form of Proxy (or the electronic appointment of a proxy) will not preclude LSR Shareholders from attending and voting in person at the General Meeting or any adjournment thereof, if they wish to do so and are so entitled.

DEFINITIONS

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

 
 "Board"                       the current board of 
                                directors of the Company 
 "Company" or "LSR"            the Local Shopping REIT 
                                plc, registered in England 
                                and Wales with registered 
                                number 05304743 
 "CREST"                       the relevant system (as 
                                defined in the Regulations) 
                                in respect of which Euroclear 
                                is the operator (as defined 
                                in the Regulations) 
 "CREST Manual"                the CREST manual consisting 
                                of the CREST reference 
                                manual; CREST international 
                                manual; CREST central 
                                counterparty service 
                                manual; CREST rules; 
                                CCSS operations manual 
                                and CREST glossary of 
                                terms available at http://www.euroclear.com 
 "CREST Proxy Instruction"     a properly authenticated 
                                CREST message appointing 
                                and instructing a proxy 
                                to attend and vote in 
                                place of a shareholder 
                                at the General Meeting 
                                and containing the information 
                                required to be contained 
                                in the CREST Manual 
 "Director Resolution"         the ordinary resolution 
                                to be proposed at the 
                                General Meeting other 
                                than the Requisition 
                                Resolutions (and set 
                                out in the Notice contained 
                                in the Circular) to reduce 
                                the minimum Board size 
                                of the Company required 
                                by article 96 of the 
                                Company's articles of 
                                association to two Directors 
                                as permitted by article 
                                116 of Company's articles 
                                of association 
 "Directors"                   the directors of the 
                                Company being Stephen 
                                East, Nicholas Vetch 
                                and William Heaney 
 "Euroclear"                   Euroclear UK & Ireland 
                                Limited 
 "Form of Proxy"               the Form of Proxy enclosed 
                                with the Circular, for 
                                use by shareholders in 
                                connection with the General 
                                Meeting 
 "General Meeting"             the general meeting of 
                                the Company to be held 
                                at 10.00 a.m. on Thursday 
                                8 December 2016 (and 
                                any adjournment thereof) 
                                for the purposes of considering 
                                and, if thought fit, 
                                passing the Resolutions 
 "Group"                       the Company and its Subsidiaries 
 "Internos"                    INTERNOS Global Investors 
                                Limited, the investment 
                                manager of the Company 
                                appointed on 22 July 
                                2013 
 "Loans"                       the loan agreements between 
                                HSBC Bank plc and NOS 
                                4 Limited and NOS 6 Limited 
                                as described in section 
                                5 of the Chairman's letter 
                                as set out in the Circular 
 "LSR Shares"                  the ordinary shares of 
                                20 pence each in the 
                                capital of the Company, 
                                having the rights set 
                                out in the Company's 
                                Articles of Association 
 "LSR Shareholders"            the holders of LSR Shares 
                                from time to time 
 "Notice"                      the notice of the General 
                                Meeting accompanying 
                                the Circular 
 "Regulations"                 the Uncertificated Securities 
                                Regulations 2001 of the 
                                United Kingdom 
 "Requisition"                 has the meaning given 
                                thereto in section 1 
                                of the Chairman's letter 
                                as set out in the Circular 
 "Requisition Resolutions"          each of the ordinary 
                                     resolutions to be proposed 
                                     at the General Meeting 

                                     pursuant to the Requisition 
                                     (and set out in the Notice 
                                     contained in the Circular): 
 
                                      *    to remove the Company's Non-executive Chairman, 
                                           Stephen East, and its Senior Independent Director, 
                                           Nicholas Vetch; and 
 
 
 
                                      *    to replace them with the three Thalassa Nominees, 
                                           being Duncan Soukup, John Hutchinson and Toby Burgess 
 "Resolutions"                 the Director Resolution 
                                and the Requisition Resolutions 
 "Subsidiary"                  has the meaning given 
                                thereto in section 1159 
                                of the Companies Act 
                                2006 
 "Thalassa"                    Thalassa Holdings Ltd 
                                acting by its nominee 
                                Pershing Nominees Limited 
 "Thalassa Nominees"           Duncan Soukup, John Hutchinson 
                                and Toby Burgess 
 "UK" or "United Kingdom"      the United Kingdom of 
                                Great Britain and Northern 
                                Ireland 
 "pence", "pounds sterling",   the lawful currency of 
  "sterling", "GBP" or          the United Kingdom 
  "p" 
 

All times referred to are London time unless otherwise stated.

All references to legislation in this announcement are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation shall include any amendment, modification, re-enactment or extension thereof.

Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender.

This information is provided by RNS

The company news service from the London Stock Exchange

END

NOGUUARRNAAAURA

(END) Dow Jones Newswires

November 22, 2016 02:02 ET (07:02 GMT)