Juridica Investments Limited Winding up, Delisting & Notice of General Meeting (1428I)

TIDMJIL

RNS Number : 1428I

Juridica Investments Limited

22 November 2018

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN

22 November 2018

Juridica Investments Limited

(the "Company")

Winding up, Delisting & Notice of General Meeting

The Company announces its proposed wind-up, de-listing and liquidation.

In accordance with the AIM Rules, the Company hereby notifies the proposed cancellation of the admission of its Ordinary Shares to trading on AIM (the "Delisting"), subject to Shareholder approval at a General Meeting to be held at 11 a.m. on 20 December 2018 at 11 New Street, St Peter Port, Guernsey, GY1 2PF, Channel Islands. If the relevant resolution is passed, the expected date of the Delisting will be 21 December 2018.

An explanatory circular (the "Circular") further detailing the Proposals (including the Delisting and appointment of the Liquidators) will be posted to Shareholders shortly, together with a notice convening the General Meeting.

The Circular will set out details of the Proposals and explain why the Directors consider the proposed liquidation and the other Proposals to be in the best interests of the Company and Shareholders as a whole. Such details are also set out in this announcement.

Expected timetable of principal events

 
 Announcement of proposed winding             7.00 a.m. on 22 November 
  up and Delisting                                                2018 
 Publication of the Circular                          28 November 2018 
 Latest time and date for receipt            11.00 a.m. on 18 December 
  of Forms of Proxy and CREST Proxy                               2018 
  Instructions for the General Meeting 
 Record time for those Shareholders           6.00 p.m. on 18 December 
  on the Register of Members entitled                             2018 
  to attend or vote at the General 
  Meeting 
 Latest time and date for dealings             Close of business on 19 
  in Ordinary Shares prior to cancellation               December 2018 
 Suspension of Ordinary Shares from           8.00 a.m. on 20 December 
  trading on AIM                                                  2018 
 General Meeting                             11.00 a.m. on 20 December 
                                                                  2018 
 Appointment of Liquidators(2)                        20 December 2018 
 Cancellation of admission to trading         7.00 a.m. on 21 December 
  on AIM(2)                                                       2018 
 

(1) All references in this announcement are to London times unless otherwise stated. The dates and times given are indicative only and are based on the Company's current expectations and may be subject to change. If any of the times and/or dates above change, the revised times and/or dates will be notified to Shareholders by announcement through a regulatory information service.

   (2)    Conditional on the passing of the Resolutions at the General Meeting. 

Reasons for proposed Delisting

As announced on 6 September 2018, the Board continues to believe that the costs to shareholders of continuing the Company in operation and maintaining an AIM listing are now outweighed by the benefits of winding-up, de-listing and liquidation.

The Board explained the Company's run-off strategy in its 2016 Annual Report. The Board remains committed to realising the Company's few remaining investments in an efficient and reasonably expeditious manner mindful that litigation investments depend on the administrative/decision timings within court systems, and reasonably balancing a trade-off between the speed and proceeds of monetising illiquid investments. In the context of where the Company's run-off strategy has now reached, the Board believes that the costs to Shareholders of continuing the Company in its current form and maintaining an AIM listing are now outweighed by the benefits of completing the Delisting and operating the Company on a reduced cost basis until the Company's remaining investments are realised, at which point it is intended the Company would be wound up by the Liquidators (subject to the passing of the Resolutions). The Liquidation Resolutions are conditional on the passing of the Delisting Resolution.

The Board has determined that the Proposals represent the most efficient and cost-effective method of realising the Company's assets before proceeding with a liquidation of the Company.

The cost savings achieved by the Proposals would be substantial and would include (without limitation):

-- the investment management fee payable to the Investment Manager being reduced (as described further below);

-- running costs being reduced following the proposed resignation of the Chairman and John Kermit Birchfield as Directors and the termination of the appointments of other service providers (as described further below);

-- costs of preparing audited year end accounts (which would not be required to comply with disclosure requirements applicable to AIM-listed companies) being reduced;

-- the Company no longer being required to bear the costs of maintaining a nominated adviser for the purposes of the AIM Rules; and

-- the Company no longer being required to pay listing fees to the London Stock Exchange in respect of its AIM listing.

The Proposals

The Proposals are comprised of the following principal elements:

   --                 the Delisting; 
   --                 the appointment of the Liquidators; 
   --                 a reduction in the management fees payable to the Investment Manager; 

-- the resignation of the Chairman and John Kermit Birchfield as Directors and the termination of the appointments of the Company's service providers (other than the Investment Manager and the Registrar); and

-- the realisation of the Company's remaining investments before the Company is wound up.

Delisting

Rule 41 of the AIM Rules requires an AIM company that wishes to cancel admission of its securities to trading on AIM to notify such intended cancellation to the public and separately to inform the London Stock Exchange of its preferred cancellation date. That rule also requires that, unless the London Stock Exchange otherwise agrees, the Delisting must be conditional upon the consent of not less than 75 per cent. of votes cast by the Shareholders, given in a general meeting.

Subject to Shareholder approval at the General Meeting, it is expected that the admission of the Ordinary Shares to trading on AIM will be cancelled with effect from 7.00 a.m. on 21 December 2018.

Shareholders should also be aware that trading in the Ordinary Shares on AIM will be suspended from 8.00 a.m. on 20 December 2018, in advance of the General Meeting, as the Company would no longer be considered to be an appropriate company for AIM on the commencement of a liquidation process.

The Delisting may have taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult an appropriate professional adviser.

Upon cancellation of the Ordinary Shares to trading on AIM, Cenkos will cease to be the Company's nominated adviser and joint broker and the Company will no longer be required to comply with the AIM Rules.

Appointment of the Liquidators

Conditionally on the passing of the Resolutions, Linda Johnson and Ashley Paxton of KPMG Channel Islands Limited have agreed to act as the liquidators. The Liquidators will charge the Company on a time cost basis estimated at GBP15,000 per annum provided that, in the event that the engagement of the Liquidators becomes more complex than anticipated, this amount will be greater on the basis of the additional work to be performed.

Pursuant to their engagement, the Liquidators have agreed to do all things necessary to facilitate the winding up of the Company, including:

-- to work alongside the Investment Manager to realise the Company's residual assets and to wind down the Company's affairs;

-- to arrange for the transfer of the Company's funds to a liquidation bank account;

-- to retain sufficient funds to discharge all known and contingent liabilities to include the costs of the liquidation;

-- to make a final distribution to Shareholders once all assets have been realised, all costs and liabilities have been settled and all clearances have been obtained; and

   --                 to finalise and close the liquidation following the final distribution. 

From the passing of the Liquidation Resolutions, the Company will be controlled by the Liquidators.

If the Resolutions are passed by the requisite majorities, it is proposed that the Chairman and John Kermit Birchfield will resign as Directors. Richard Battey intends to remain as a Director until the Company is finally wound up. The Company intends to terminate the appointments of the Company's other service providers, in accordance with the terms of such appointments, other than the Investment Manager and the Registrar.

In the event that the Delisting is approved but the Liquidation Resolutions are not approved at the General Meeting, the Board and the Investment Manager intend to continue to manage the Company on a reduced-cost basis until the Company's outstanding investments are realised, following which the Board would put forward further proposals to appoint liquidators and wind up the Company.

Reduced management fee arrangements

With effect from the appointment of the Liquidators, the Company and the Investment Manager have agreed that the Investment Manager will work with the Liquidators to realise the Company's residual assets in accordance with the Company's run-off strategy.

The Company and the Investment Manager have separately agreed that, with effect from 1 January 2019 (whether or not the Resolutions are approved at the General Meeting), the management fees payable to the Investment Manager will decrease from US$125,000 per quarter to US$45,000 per quarter. The notice period for terminating the Investment Management Agreement will also be reduced to two days.

Investment realisations and subsequent winding up

Progress on non-litigation investments

The Company's remaining active non-litigation investments comprise four special purpose vehicles, all of which relate to the patent sector, with a combined fair value of US$1.0 million as at 30 June 2018. Monetisation of these non-litigation investments continues to be actively pursued by the Investment Manager and discussions are ongoing with a number of interested parties. These interested parties are at various stages of the review process. The Investment Manager intends to contact additional potential buyers.

Progress on outstanding litigation investment

The Company remains invested in only one outstanding active case (Case 1410).

This case completed its non-jury trial during 2011 and judgment was entered in 2012, which was positive on liability, but damages awarded were far less than expected. Cross appeals on liability and a plaintiffs' appeal on damages were filed after the ruling. In early 2016, the plaintiffs' appeal received a favourable appeals court ruling overturning the trial court's damages award and, in early 2017, the trial court judge added punitive damages to the award. Although the total award has increased, the plaintiffs and their counsel still believe damages should be higher. Both parties filed further legal appeals in 2017 and are awaiting an opinion. Although risk remains, especially with regards to timing, the Investment Manager believes there is the possibility of a new award on damages.

Conclusion of two litigation investments

The Company provides the following updates on two litigation investments which have recently concluded:

-- Case 5009-S: This case completed its trial by jury during 2015. Although the plaintiff fully won on liability, the jury only awarded an amount of damages which will result in proceeds to the Company of approximately US$2.0 million as compared to an investment of approximately US$3.5 million. Both sides filed post-trial motions for a new trial with the plaintiff requesting a new trial on damages only and the defendant requesting a new trial on all issues as well as dismissal of the case due to lack of standing by the plaintiff. These motions were decided in favour of the defendant; however, the plaintiff appealed this adverse decision of the trial court and was successful on the lack of standing issue.

During 2017, a request filed by the plaintiff for a new trial on damages was denied. The plaintiff requested judgement and approval of its revised prejudgment interest calculation and the defendant sought a decision on a remaining issue and approval of a revised interest calculation. The trial court denied the remaining issue of the defendant's motion and confirmed the plaintiff's preferred prejudgment interest calculation and judgement in favour of the plaintiff was entered in August 2018. Case 5009-S is therefore fully resolved, delivering a total of US$1,395,000 to the Company in September 2018.

-- Case 2709-E: In March 2009, the Company approved this investment to fund litigation related to three patents against three defendants. The ultimate investment totalled US$1.9 million. After a protracted re-examination, one patent was abandoned. During 2016, an unexpected event occurred which severely impacted one of the remaining patents and resulted in partial settlements relating to this patent. These proceeds were reinvested into the case to further the legal proceedings on the remaining patent. A Markman hearing on the remaining patent completed during 2016 with the plaintiff prevailing on validity but losing on infringement. The plaintiff filed an appeal which was lost during 2017. During the year ended 31 December 2017, Case 2709-E was fully resolved and delivered a total of US$181,000 to the Company, far below the Company's expectation when the Company made its investment in 2009.

Escrow Reserve

The Company holds an interest in an escrow reserve of US$3.0 million held by an appointed escrow agent. The escrow was established to cover certain potential contingencies stemming from the Company's investment in Investment 3608-A. Proceeds from this reserve, valued at US$1.6 million as at 30 June 2018, after contingent payments, if any, are expected to be remitted to the Company by, or shortly after, September 2020.

Cash

The Company currently holds a cash pool amounting to approximately US$3.3 million.

Recommendation

The Board considers the Proposals and the Resolutions to be in the best interests of Shareholders as a whole. Accordingly, the Board recommends that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

Definitions

 
AIM                              the AIM market operated by the 
                                  London Stock Exchange; 
AIM Rules                        the AIM Rules for Companies published 
                                  by the London Stock Exchange, 
                                  as amended or re-issued from 
                                  time to time; 
Board or Directors               the board of directors of the 
                                  Company; 
Cenkos                           Cenkos Securities plc, the Company's 
                                  nominated adviser for the purposes 
                                  of the AIM Rules; 
Circular                         the circular shortly to be posted 
                                  to shareholders including the 
                                  Notice of General Meeting; 
Company                          Juridica Investments Limited; 
CREST                            the relevant system (as defined 
                                  in the CREST Regulations) in 
                                  respect of which Euroclear is 
                                  the Operator (as defined in the 
                                  CREST Regulations); 
CREST Manual                     the CREST manual issued by Euroclear; 
CREST member                     a person who has been admitted 
                                  by Euroclear as a system- member 
                                  (as defined in the CREST Regulations); 
CREST participant                a person who is, in relation 
                                  to CREST, a system participant 
                                  (as defined in the CREST Regulations); 
CREST Proxy Instruction          the instruction whereby CREST 
                                  members send a CREST message 
                                  appointing a proxy for the General 
                                  Meeting and instructing the proxy 
                                  how to vote and containing the 
                                  information set out in the CREST 
                                  Manual; 
CREST Regulations                the Uncertificated Securities 
                                  Regulations 2001 (SI 2001/3755); 
Delisting                        the proposed cancellation of 
                                  the admission of the Ordinary 
                                  Shares to trading on AIM; 
Delisting Resolution             the Resolution relating to the 
                                  Delisting to be proposed at the 
                                  General Meeting; 
Euroclear                        Euroclear UK & Ireland Limited, 
                                  being the operator of CREST; 
General Meeting                  the general meeting of the Company, 
                                  to be held at Company to be held 
                                  at 11 New Street, St Peter Port, 
                                  Guernsey, GY1 2PF, Channel Islands 
                                  on 20 December 2018 at 11.00 
                                  a.m., or any adjournment thereof, 
                                  notice of which is to be included 
                                  in the Circular; 
Investment Management Agreement  the investment management agreement 
                                  between the Company and the Investment 
                                  Manager originally dated 15 October 
                                  2013 and as subsequently amended; 
Investment Manager               Brickell Key Asset Management 
                                  Limited; 
Liquidation Resolutions          the Resolutions relating to the 
                                  winding up of the Company, the 
                                  appointment of the Liquidators, 
                                  the fixing of the Liquidators' 
                                  remuneration and the authority 
                                  of the liquidators to distribute 
                                  the Company's assets in specie 
                                  to be proposed at the General 
                                  Meeting; 
Liquidators                      Linda Johnson and Ashley Paxton 
                                  of KPMG Channel Islands Limited; 
London Stock Exchange            London Stock Exchange plc; 
Notice of General Meeting        the notice of the General Meeting 
                                  which will be included in the 
                                  Circular; 
Ordinary Shares                  the ordinary shares of no par 
                                  value each in the capital of 
                                  the Company; 
Proposals                        the proposed appointment of the 
                                  Liquidators, the Delisting and 

                                  other matters as described in 
                                  this announcement; 
Registrar                        Link Market Services Limited, 
                                  the Company's registrar; 
Resolutions                      the resolutions to be proposed 
                                  at the General Meeting to approve 
                                  the Proposals, to be set out 
                                  in the Notice of General Meeting; 
                                  and 
Shareholders                     holders of Ordinary Shares. 
 

For further information, please contact:

 
 
 
 Brickell Key Asset Management LLC - Manager        +1 (866) 443 
  William Yuen                                              1080 
 Cenkos Securities PLC - Nominated Adviser 
  and Joint Broker                               [phone] 
  Nicholas Wells                                            8900 
 Investec Bank PLC - Joint Broker                [phone] 
  Darren Vickers                                       5970 
 Vistra Guernsey - Company Secretary               [phone] 
  Chris Bougourd                                             145 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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November 22, 2018 02:01 ET (07:01 GMT)