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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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JZ Equity | LSE:JZE | London | Ordinary Share | GB0002904810 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 111.25 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number : 2417U JZ Equity Partners PLC 12 May 2008 Not for release in the United States. This information is not for publication or distribution to persons in the United States of America. JZ Equity Partners plc 12 May 2008 Recommended proposals for the voluntary winding-up of JZ Equity Partners Plc (the "Company") and the roll-over of shareholders' interests into a new Guernsey incorporated company, JZ Capital Partners Limited Introduction The board has been considering the merits of a change in domicile of the Company for some time. As announced on 21 April 2008, the board has now concluded that it would be in the best interests of shareholders as a whole if the Company were to be re-domiciled in Guernsey. The Company has today published a circular (the "Circular") to provide details of the proposals that the Company be so re-domiciled (the "Proposals") and of the mechanics proposed to effect such re-domicile, and to seek shareholder approval for the implementation of the Proposals. Terms used in this announcement shall have the same meaning as those set out in the Circular. The mechanics proposed to effect the re-domicile of the Company involve, in summary, the winding up of the Company and the transfer of its assets, after providing for its liabilities, to JZ Capital Partners Limited ("New JZEP") pursuant to a scheme under section 110 of the Insolvency Act 1986 (the "Scheme"), the newly-formed Guernsey-incorporated closed-ended investment company which will be the successor to the Company if the Proposals are approved and implemented. JZ Capital Partners Limited has today published a prospectus in respect of the proposals. The shareholders of the Company at the date that the Scheme becomes effective (other than those, if any, who validly dissent from the Scheme) will receive one new JZEP ordinary share for each existing ordinary share that they hold and one New JZEP zero dividend preference share ("New ZDP Share") for each existing ZDP share that they hold, which shares will be admitted to the Official List and to trading on the London Stock Exchange's main market for listed securities. In order to assist the Company to comply with US securities laws in connection with the Scheme, it is proposed that, as a preliminary matter, the articles of association of the Company be, amended to provide that only shareholders who make certain representations to the Company will be entitled to vote at the second extraordinary general meeting or the third extraordinary general meeting convened in connection with the Proposals. In addition, all shareholders have been sent with the Circular a questionnaire issued under article 43.4 of the Company's articles of association. All shareholders, whether or not they are US Persons, are required to read this questionnaire and complete and return the same in accordance with the instructions printed thereon by no later than 28 May 2008. Whether or not the Scheme proceeds, the directors intend to exercise their right under article 43.5 of the Company's articles of association to direct any shareholder who completes the questionnaire indicating that he or she is a US Person but not a qualified purchaser to dispose of the shares held by that shareholder and, in default of the shareholder complying with such direction, to arrange for the sale, in the market, of the shares concerned. Where a shareholder does not complete and return the questionnaire in accordance with the instructions printed thereon by 28 May 2008 (or such later date as the directors may allow in individual cases), if the board has not been able to conclude, reasonably, that the shareholder is not a US Person and the shareholder appears to the board not to be a qualified purchaser, then, again, whether or not the Scheme proceeds, the directors intend to direct the shareholder to dispose of the shares held by him or her and, in default of the shareholder complying with such direction, to arrange for the sale, in the market, of the shares concerned. Implementation of the Proposals is conditional, inter alia, upon the passing of various shareholder resolutions. To this end, extraordinary general meetings of the Company to approve the Proposals and to implement the same are being convened for 16 June 2008 and 26 June 2008. Implementation of the Proposals will also require the separate approval of the holders of the ZDP shares and the ordinary shares, in each case given by way of an extraordinary resolution passed at a separate class meeting of the holders of such shares. Accordingly, class meetings of the holders of the ZDP shares and the holders of the ordinary shares are also being convened for 16 June 2008. Background The Company is resident in the United Kingdom for tax purposes and has historically been approved as an investment trust under the Income and Corporation Taxes Act 1988. UK companies which qualify for tax purposes as investment trusts are exempt from UK corporation tax on realised capital gains. However, the Company is liable to UK taxation on the revenue profits it receives at the rate of 28 per cent. per annum (reduced from 30 per cent. per annum with effect from 1 April 2008). This tax charge therefore makes a significant and recurring impact on distributable revenues and hence reduces ordinary shareholder returns. Furthermore, the Company has the burden of complying with certain restrictions in order to maintain its status as an investment trust under the Income and Corporation Taxes Act 1988. The board is thus of the view that, were the Company being established today, it would serve shareholders' interests best if the Company were to be incorporated off-shore from the United Kingdom. The Proposals seek to achieve a similar result. New JZEP will have the same corporate objective as that of the Company, namely to create a portfolio of investments in businesses primarily in the United States, providing a superior overall return comprised of a current yield and significant capital appreciation. Benefits of the Proposals Unlike the Company, New JZEP will not be subject to UK corporation tax. This should have the benefit of increasing significantly net distributable income, thereby enhancing total returns. In addition, New JZEP will not have to provide for tax in respect of accrued preference share income. The Company is currently required to provide for such tax, with the provision only being released if the entitlement to accrued income is sold with the underlying share rather than realised as income; if the accrued income is received by the Company as income, the tax becomes payable. Thus the deferred tax provision reserved in the accounts of the Company (estimated by the board to be £820,045 as at 31 March 2008) will not be carried forward into the accounts of New JZEP and New JZEP will not be obliged to continue to make such a provision. The Company's total net tax charge for the year ended 31 March 2007 was some £4.07 million (2006: £5.81 million), representing 4.17p per ordinary share (2006: 5.62p per ordinary share). For the six month period ended 30 September 2007, it was some £1.44 million, representing 1.47p per ordinary share. Of the amount for the year ended 31 March 2007, some £3.96 million (2006: £5.43 million) was UK corporation tax which would not have been payable had the Company been incorporated and resident offshore. The balance, some £111,000 (2006: £177,000), represents irrecoverable taxes deducted at source on income received from companies in the Company's investment portfolio. The effective emigration of the Company to Guernsey is expected to result in an increase in such irrecoverable taxes (to double the current level of withholdings), but this is not considered by the directors to be substantial in the context of the saving in UK corporation tax. Accordingly, the board estimates that the net saving in tax, had the Company been incorporated and resident in Guernsey for the year ended 31 March 2007 would have been some £3.85 million (2006: £5.26 million), representing 3.95p per ordinary share (2006: 5.39p per ordinary share), which would have resulted in a 27.19 per cent. increase in the Company's net income available for distribution to holders of ordinary shares (2006: 39.01 per cent.). The board of New JZEP has stated that it expects to continue the Company's policy of distributing substantially all of the net income (excluding capital gains) of the Company (after payment of expenses and taxation). As shown above, the net saving in tax as a result of the effective emigration of the Company to Guernsey is expected to be substantial. It is expected that the annual running costs of New JZEP will not be greater than those for the Company. Impact of the Proposals on shareholders If the Proposals are approved and implemented, the Company's assets will be transferred to New JZEP and the shareholders of the Company at the date that the Scheme becomes effective (other than those, if any, who validly dissent from the Scheme) will receive one new ordinary share in New JZEP for each existing ordinary share in the Company that they hold and one new ZDP share in New JZEP for each existing ZDP share in the Company that they hold. The board has been advised that shareholders who are resident for tax purposes in the United Kingdom and who own five per cent. or less of the issued ordinary shares and/or ZDP shares should be able to roll-over their investment in the Company into New Ordinary Shares and New ZDP shares, free from tax. This exemption will not apply to shareholders who are resident for tax purposes in the United Kingdom but who own more than five per cent. of the issued ordinary shares and/or ZDP shares (that is, more than 4,876,441 ordinary shares and/or 2,285,000 ZDP shares). Your board has also been advised that all shareholders who are resident for tax purposes in the United States should be able to roll-over their investment in the Company into New Ordinary Shares and New ZDP shares, free from tax. Ordinary shareholders would, in the future, receive dividends from New JZEP. In the case of some holders of ordinary shares who are resident for tax purposes in the United Kingdom, such dividends will be subject to a higher rate of tax than is currently payable on dividends received from the Company. Holders of ordinary shares who are resident for tax purposes in the United States would be unaffected. Notwithstanding the increase in tax that will be payable by some UK residents, your board believes that, taking ordinary shareholders as a whole, the expected increase in dividends available for distribution to holders of New Ordinary Shares by New JZEP will more than compensate for the increase in tax payable. The rights attaching to the New Ordinary Shares and the New ZDP Shares will, in economic terms, be substantially the same as, respectively, those attaching to the existing ordinary shares and ZDP shares. Summary of the Scheme In order to give effect to the Proposals, your approval is sought to implement a scheme of reconstruction whereby the Company will be placed into members' voluntary liquidation. Following the Company entering members' voluntary liquidation, the Company's investments and other assets, after providing for its liabilities (including contingent liabilities and the costs incurred by the Company in relation to the Proposals), will be transferred by the liquidators to New JZEP. As stated above, the shareholders of the Company at the date that the Scheme becomes effective (other than those, if any, who validly dissent from the Scheme) will then receive one New Ordinary Share for each existing ordinary share that they hold and one New ZDP share for each existing ZDP share that they hold. These New JZEP Shares will be listed on the Official List and admitted to trading on the main market of the London Stock Exchange, in the same way that the existing JZEP shares are currently listed and admitted to trading. JZEP will be placed into members' voluntary liquidation on the passing of the first special resolution to be proposed at the third extraordinary general meeting, if all of the resolutions to be proposed at the first extraordinary general meeting, at the class meetings of the holders of the ZDP shares and the ordinary shares and at the second extraordinary general meeting have been passed and the directors have not exercised their right not to proceed with the Scheme prior to the third extraordinary general meeting. The Scheme will become effective on completion of the Transfer Agreement, pursuant to which the Company's assets (other than the Liquidation Fund which will be used to meet anticipated liabilities of the Company) will be transferred to New JZEP upon the admission of the New JZEP Shares issued pursuant to the Scheme to the Official List and to trading on the London Stock Exchange and such admissions becoming effective. The New JZEP Shares The New Ordinary Shares and the New ZDP Shares will have substantially the same rights and be subject to substantially the same restrictions as, respectively, the existing ordinary shares and the existing ZDP shares save that (a) for the reasons given under "US securities laws issues" below, the New ZDP Shares will carry the right to vote on resolutions concerning the appointment and removal of directors and (b) at the expiry of the term of the New ZDP Shares (24 June 2009), New JZEP will be under an obligation to redeem the New ZDP Shares rather than to return the capital value of such shares by putting New JZEP into liquidation or by any other means; only if for some unforeseen reason it should not be possible to redeem the New ZDP Shares would New JZEP be wound up. No shareholder approval will be necessary to effect the redemption of the New ZDP Shares. Your board has been advised that the redemption of the New ZDP Shares (rather than the repayment of the same on a winding up of New JZEP) should be tax neutral for UK resident and US resident holders of the existing ZDP shares. Unless a shareholder elects otherwise, dividends will be paid by New JZEP in US dollars rather than in sterling. The redemption monies in respect of the New ZDP Shares will, however, be paid in sterling. Special dividends In order to maintain the Company's investment trust status should the Scheme become effective, your directors intend to declare: * a special interim dividend (in lieu of a final dividend in respect of the year ended 31 March 2008), of 8.5p per ordinary share; and * a further special interim dividend in respect of the financial period of the Company which commenced on 1 April 2008 and will expire on the Company entering members' voluntary liquidation, expected to be not less than 2.5p per ordinary share, in each case to be paid on 20 June 2008 to those holders of ordinary shares on the register of members of the Company at the close of business on 6 June 2008. The ex-dividend date will be 4 June 2008. A further announcement as regards the final figure for the further special dividend will be made in due course. The board of New JZEP has stated that it expects to continue the Company's policy of distributing substantially all of the net income (excluding capital gains) of New JZEP (after payment of expenses and taxation). As stated under "Benefits of the Proposals" above, the net saving in tax as a result of the effective emigration of the Company to Guernsey is expected to be substantial. Arrangements with Jordan/Zalaznick Advisers, Inc. If the Scheme becomes unconditional, the existing investment advisory agreement made between the Company and Jordan/Zalaznick Advisers, Inc. will thereupon terminate. In full and final satisfaction of the incentive fee payable by the Company to JZAI under such agreement, the Company will pay US$4.92 million (£2.52 million when translated at the exchange rate prevailing on 8 May 2008) to JZAI forthwith upon the Scheme becoming effective. This amount has been calculated in accordance with the principles regarding the incentive fee payable by the Company pursuant to the existing investment advisory agreement and equates to 20 per cent. of the net capital gains realised by the Company to date in respect of those investments to which the incentive fee arrangements relate, grossed up for the tax benefit to the Company as a result of the deductibility, for tax purposes, of the incentive fee. As at 31 March 2008, the Company had accrued a provision of some £5.56 million in its accounts in respect of the incentive fee. The balance of this provision, net of tax and the termination fee referred to above, (£3.04 million) will be released to the capital reserve of the Company and will not be carried forward, as a reserve or otherwise, into the accounts of New JZEP. JZAI will be appointed to act as investment adviser and manager of New JZEP pursuant to a new investment advisory and management agreement. In consideration of the services to be provided by JZAI to New JZEP, New JZEP will agree to pay JZAI a base management fee and an incentive fee. The base management fee will be calculated at an annual rate of 1.5 per cent. of the Company's gross assets and shall be payable quarterly in arrears. The incentive fee has two parts: an income incentive fee and a capital gains incentive fee. The income incentive fee will be calculated based on New JZEP's net investment income for each quarter and shall be payable quarterly in arrears in an amount equal to up to 20 per cent. of the net investment income for the quarter provided that such income exceeds an amount equal to 2 per cent. of the average of the net asset values of New JZEP as at the end of the quarter and as at the end of the preceding quarter (the "hurdle"). The income incentive fee will be adjusted at the end of each financial year to reflect an annual hurdle of 8 per cent. per annum, with any shortfall being paid by New JZEP and any excess fee being set off against future income incentive fees earned. The capital gains incentive fee will be payable for each financial year of New JZEP and will equal 20 per cent. of all realised capital gains of New JZEP, if any, on a cumulative basis in respect of the period from the date on which the Scheme becomes effective through to the end of the relevant financial year, computed net of all realised capital losses of New JZEP, if any, again on a cumulative basis in respect of the period from the date on which the Scheme becomes effective through to the end of the relevant financial year, less the aggregate amount of all capital gains incentive fees previously paid by New JZEP to JZAI. The legacy investments of New JZEP which were originally made by the Company prior to the existing investment advisory agreement made between the Company and JZAI coming into effect (that is, before 22 July 2002) will be excluded from the calculation of both the income incentive fee and the capital gains incentive fee. Either party may terminate the new investment advisory and management agreement on not less than 24 months' prior notice (or such lesser period as may be agreed by the other) to the other, without cause provided that no such notice may be served until after the expiry of the second anniversary of the date on which the Scheme becomes effective. Either party may also terminate the agreement (i) upon not less than 60 days' prior notice to the other if the other commits any material breach with respect to its obligations under the agreement and fails (in the case of a breach capable of rectification) to make good such breach within 30 days of receipt of notice from the other requiring it to do so; (ii) forthwith upon written notice to the other if (w) the other is dissolved or goes into liquidation (other than solely for the purposes of a solvent amalgamation or reconstruction); (x) the other is unable to pay its debts as they fall due or makes any compromise with its creditors generally or any proposals with regard to such a compromise or otherwise commits any act of bankruptcy; (y) a receiver is appointed over all or a substantial portion of its assets; or (z) the other ceases to hold any licence, permission, authorisation or consent necessary for the performance of its duties under the agreement. The current letter of undertaking from Jay Jordan, David Zalaznick and The Jordan Company to the Company (entered into in connection with the existing investment advisory agreement between the Company and JZAI) will also terminate on the Scheme becoming effective and will not be replaced as it is now, in the main, historic. Audited accounts and net asset value If the Company is placed into members' voluntary liquidation as proposed, it will be under no obligation to produce or file audited accounts as regards the year ended 31 March 2008. New JZEP will produce audited accounts, expressed in US dollars, in the ordinary course in respect of the financial period which commenced on incorporation of New JZEP and will expire on 31 March 2009. The net asset value of the Company as at 31 March 2008, as announced by the Company on 8 May 2008 was £181.8 million (186.4p per existing ordinary share). JZ Capital Partners Limited Investment policy New JZEP will have the same corporate objective as that of the Company, namely to create a portfolio of investments in businesses primarily in the United States, providing a superior overall return comprised of a current yield and significant capital appreciation. The present investment strategy of New JZEP will also be substantially the same as the Company's strategy has been, namely to maintain and build its portfolio by investing primarily in four areas: * micro-cap buyouts which historically have been the main engine of the Company's capital growth; * mezzanine loans and high yield securities, which are intended to provide current income sometimes with the potential for capital appreciation through equity participations; * senior secured debt and second lien loans, which in most cases provide income only; and * other debt and equity opportunities, including distressed debt, structured financings, derivatives and opportunistic purchases of publicly traded securities. Board composition After over 21 years of service and six and a half years of service as Chairman, Andrew Withey has decided to stand down. In addition, John Green-Armytage and Michael Sorkin have also decided to retire from the board if the Proposals are implemented. However David Macfarlane, who joined the board of the Company in November 2006, has agreed to serve as Chairman of New JZEP. James Jordan, who has been a director of the Company for some 21 years, and Tanja Tibaldi, who joined the board of the Company in January 2005, have also joined the board of New JZEP together with two new Guernsey resident directors, David Allison and Patrick Firth. Investment adviser and manager, administrator and other service providers As stated under "Arrangements with Jordan/Zalaznick Advisers, Inc." above, the Company's existing investment adviser, Jordan/Zalaznick Advisers, Inc., will act as investment adviser and manager of New JZEP. New JZEP has appointed Butterfield Fund Services (Guernsey) Limited as its administrator and as registrars. It has also appointed Equiniti Limited (the Company's current registrars) as UK transfer agent and HSBC Bank USA, N.A. (the Company's current custodian) as custodian. Ernst & Young LLP (the Company's current auditors) has been appointed as auditors to New JZEP. Corporate governance New JZEP will be subject to the Listing Rules (as the Company is currently) and, in addition, will obtain consent from the Guernsey Financial Services Commission pursuant to its framework relating to Registered Closed-ended Investment Funds. As New JZEP is a Channel Islands company, The City Code on Takeovers and Mergers will apply to New JZEP in the same way as it does to the Company. New JZEP has confirmed that it will comply with the Combined Code on Corporate Governance published by the Financial Reporting Council and the Code of Corporate Governance issued by the Association of Investment Companies, in the same way as the Company currently does, and with the Guernsey Financial Services Commission Guidance Note on Corporate Governance in the Financial Sector in Guernsey dated 10 December 2004. Cancellation of share premium account New JZEP has passed a special resolution to reduce its share premium account following Admission. The directors of New JZEP have confirmed that, subject to the Scheme becoming effective, they intend to apply to the Court in Guernsey for an order confirming such reduction. Subject to the Court's order and to any undertaking to be given to the Court, the reserve created by the reduction will be available as a distributable reserve to be used for all purposes permitted by The Companies (Guernsey) Law 1994, as amended, including the purchase of New JZEP Shares and the payment of dividends. It is intended that the reserve so created, will be applied primarily in redeeming the New ZDP Shares. Costs of implementation of the Proposals The costs and expenses relating to the Proposals are estimated to amount to approximately £1.3 million (including value added tax). These will all be paid by the Company, save for any costs incurred in connection with the transfer of the assets of the Company to New JZEP pursuant to the Transfer Agreement. The costs and expenses to be borne by the Company include legal and other professional costs, the costs of printing the documents and the Prospectus and the costs relating to the liquidation of the Company. To the extent not already paid by the time that the Company enters members' voluntary liquidation, the costs and expenses payable by the Company will be provided for in, and met from, the Liquidation Fund. As mentioned under "Benefits of the Proposals" above, New JZEP will not have to provide for tax in respect of accrued preference share income (as the Company currently does) and, as mentioned under "Arrangements with Jordan/Zalaznick Advisers, Inc." above, the balance of the provision reserved in respect of the accrued incentive fee payable to JZAI (net of tax and after payment of the termination fee to JZAI) will be released to the capital reserve of the Company. Therefore, notwithstanding the costs and expenses relating to the Proposals, net asset value per ordinary share is expected to be enhanced by implementation of the Proposals by some 2p per ordinary share. In the event that the conditions to the Scheme are not satisfied, the Scheme will not be implemented but the Company will remain liable for the costs and expenses already incurred in relation to the Proposals. ISA, PEP, SIPP and SSAS investors New JZEP Shares will be eligible for inclusion within the stocks and shares account of an ISA, including an ISA derived from a PEP held at 6 April 2006. New JZEP Shares will also qualify as an investment that may be held in a SIPP or SSAS. Accordingly, where existing JZEP shares are held in a PEP, ISA, SIPP or SSAS, New JZEP Shares received by shareholders pursuant to the Scheme in respect of those existing JZEP shares can be retained (subject to the specific terms applicable to the relevant ISA, SIPP or SSAS) within the ISA, SIPP or SSAS. Dissenting shareholders Under section 111(2) of the Insolvency Act 1986, shareholders who do not vote in favour of the special resolution to approve the Scheme at the second extraordinary general meeting (including any such shareholders who were not entitled to vote at such meeting) may dissent from the Scheme by notice in writing to the Liquidators at the Company's registered office within seven days after the passing of such special resolution. Any such dissenting shareholder may require the Liquidators either, at the Liquidators' option, to abstain from carrying the resolution into effect or to purchase such shareholder's interests at a price to be agreed between them or determined by arbitration. The Scheme is conditional on the directors not having exercised their right not to proceed with the Scheme in the event that, within seven days of the second extraordinary general meeting, any one or more shareholders validly exercise their rights under section 111(2) of the Insolvency Act 1986. The directors propose to exercise such right unless the number of shares held by any dissenters is minimal. If any shareholders do validly dissent from the Scheme, and the directors do not exercise their right as provided above, the existing ordinary shares and/or existing ZDP shares held by the dissenter(s) will, with effect from such time as the directors specify (being not earlier than the expiry of the seven day period specified in section 111(2) of the Insolvency Act 1986 in relation to the Scheme), be re-classified as, respectively, "D" ordinary shares and "D" zero dividend preference shares. The holders of any such re-classified JZEP shares will not receive New JZEP Shares but will instead be paid out in cash at the price agreed with the liquidators or determined by arbitration. Conditions The Proposals are conditional upon: (a) the passing of all of the resolutions to be proposed at the first extraordinary general meeting, the class meeting of the holders of the ZDP shares, the class meeting of the holders of the ordinary shares, the second extraordinary general meeting and the third extraordinary general meeting; (b) the directors not having exercised their right, not to proceed with the Scheme in the event that, within seven days of the second extraordinary general meeting, any one or more shareholders validly exercise their rights under section 111(2) of the Insolvency Act 1986; (c) the continuing admission of the re-classified JZEP shares, if any, to the Official List and to trading on the London Stock Exchange's main market for listed securities; and (d) the UK Listing Authority agreeing to admit the New JZEP Shares to be issued pursuant to the Scheme to the Official List and the London Stock Exchange agreeing to admit such shares to trading on its main market for listed securities, and such admissions becoming effective. Risk factors relating to the Proposals The liquidation of the Company is conditional as provided at (a), (b) and (c) under "Conditions" above but not upon the UK Listing Authority agreeing to admit the New JZEP Shares to be issued pursuant to the Scheme to the Official List and the London Stock Exchange agreeing to admit such shares to trading on its main market for listed securities. Accordingly, if the resolutions to be proposed at the first, second and third extraordinary general meetings and at the separate class meetings are all passed and conditions (b) and (c) are satisfied but the Scheme does not become effective, the Company will nevertheless be in members' voluntary liquidation. In this, unlikely, event, the assets of the Company would be realised and the net proceeds distributed to shareholders in accordance with their respective rights. The Company will need to ensure that it remains an investment trust (as defined in section 842 of the Income and Corporation Taxes Act 1988) throughout the whole of the financial period which, by law, commences on the Company entering members' voluntary liquidation. Otherwise, the transfer of the Company's assets by the Liquidator to New JZEP would give rise to chargeable gains or allowable losses for the purposes of the UK taxation of chargeable gains. The directors have been advised that the manner in which it is proposed to carry out the Company's liquidation and to implement the Proposals is such that the Company should remain eligible to obtain approval as an investment trust for the financial period which includes the date on which the Company's assets are transferred to New JZEP pursuant to the Transfer Agreement and, accordingly, the transfer of the Company's assets under the Proposals should not give rise to a liability to UK taxation of chargeable gains for the Company. Settlement and dealings It is expected that dealings in any re-classified JZEP shares on the London Stock Exchange will commence on 25 June 2008. It is also expected that dealings in the existing JZEP shares (including any re-classified JZEP shares) on the London Stock Exchange will be suspended on the following day, 26 June 2008. The Liquidators will apply, in due course, for the listing of the existing JZEP shares (including any re-classified shares) to be cancelled. It is expected that this cancellation will become effective on 27 June 2009. Applications have been made to the UK Listing Authority for the New JZEP Shares to be issued under the Scheme to be admitted to the Official List and to the London Stock Exchange for such shares to be admitted to trading on its main market for listed securities. If the Scheme becomes effective, it is expected that the New JZEP Shares issued pursuant thereto will be admitted to the Official List on, and that the first day of dealings in such shares on the London Stock Exchange will be, 27 June 2008. Shareholder meetings First extraordinary general meeting The first extraordinary general meeting will be held at 10.30 a.m. on 16 June 2008. A special resolution will be proposed at that meeting to amend the articles of association of the Company to provide that shareholders who do not give the confirmations and, if applicable, representations described under "US securities laws issues" above in the manner described under "US securities laws issues" above will not be entitled to vote on any of the resolutions to be proposed at the second extraordinary general meeting or the third extraordinary general meeting (and any votes cast or attempted to be cast by any shareholder who does not give the confirmations and, if applicable, representations will be invalid). In addition, to avoid any technical issues arising in connection with the exercise by the directors of the powers conferred upon them under article 43 of the articles of association of the Company in the manner and to the extent described under "US securities laws issues" above, the special resolution to be proposed at the first extraordinary general meeting will also, if passed and if the same becomes unconditional, operate by way of such further amendments to the articles of association of the Company as may be necessary to authorise the directors to implement the provisions of article 43 in the manner and to the extent so described. The resolution is conditional upon the passing of the extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares. All shareholders are entitled to attend the first extraordinary general meeting and to vote on the special resolution to be proposed thereat, other than any shareholder on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities laws issues" above. Class meeting of the holders of the ZDP shares The class meeting of the holders of the ZDP shares will be held at 10.45 a.m. on 16 June 2008. An extraordinary resolution will be proposed at that meeting which, if passed, will sanction the implementation of the Proposals, including the passing of the special resolutions to be proposed at the first extraordinary general meeting, the second extraordinary general meeting and the third extraordinary general meeting, the winding-up of the Company and the attendant variation of the rights attaching to the existing ZDP shares. Only holders of ZDP shares are entitled to attend the class meeting of the holders of the ZDP shares and to vote on the extraordinary resolution to be proposed thereat, provided that any holder of ZDP shares on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities laws issues" above will not be entitled to attend or vote. Class meeting of the holders of the ordinary shares The class meeting of the holders of the ordinary shares will be held at 10.50 a.m. on 16 June 2008. An extraordinary resolution will be proposed at that meeting which, if passed, will sanction the implementation of the Proposals, including the passing of the special resolutions to be proposed at the first extraordinary general meeting, the second extraordinary general meeting and the third extraordinary general meeting, the winding-up of the Company and the attendant variation of the rights attaching to the existing ordinary shares. Only holders of ordinary shares are entitled to attend the class meeting of the holders of the ordinary shares and to vote on the extraordinary resolution to be proposed thereat, provided that any holder of ordinary shares on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities laws issues" above will not be entitled to attend or vote. Second extraordinary general meeting The second extraordinary general meeting will be held at 11.00 a.m. on 16 June 2008. A special resolution will be proposed at that meeting to amend the articles of association of the Company for the purposes of the Scheme (including so as to re-classify the existing ordinary shares and/or existing ZDP shares held by any shareholder who validly dissents from the Scheme as, respectively, "D" ordinary shares and "D" zero dividend preference shares), to approve the Scheme and to authorise the implementation of the Scheme by the Liquidators. This resolution is conditional upon the passing of the special resolution to be proposed at the first extraordinary general meeting and the extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares. If the special resolution to be proposed at the first extraordinary general meeting and the extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares are passed, only those shareholders who give the confirmations and, if applicable, representations described under "US securities laws issues" above in the manner described under "US securities laws issues" above, other than any shareholder on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities laws issues" above, will be entitled to attend the second extraordinary general meeting and to vote on the special resolution to be proposed thereat. (If they give the confirmations and, if applicable, representations described under "US securities laws issues" above in the manner described under "US securities laws issues" above, holders of ZDP shares, as well as holders of ordinary shares, will be entitled to attend the second extraordinary general meeting and vote on the special resolution to be proposed thereat, provided that any shareholder on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities laws issues" above will not be entitled to attend or vote.) If any of the special resolution to be proposed at the first extraordinary general meeting and the extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares is not passed, all shareholders, other than any on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities laws issues" above, will be entitled to attend the second extraordinary general meeting. However, the directors would not proceed to put the special resolution set out in the notice of such meeting to the meeting. Third extraordinary general meeting The third extraordinary general meeting will be held at 10.30 a.m. on 26 June 2008. A special resolution will be proposed at that meeting to wind up the Company voluntarily and to appoint the Liquidators. This resolution, and thus the winding-up of the Company, is conditional upon the passing of the special resolutions to be proposed at the first and second extraordinary general meetings and the extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares. It is also conditional upon the directors not having exercised their right not to proceed with the Scheme. A second special resolution will also be proposed at the third extraordinary general meeting for the purpose of authorising the Liquidators to exercise certain powers for which the express sanction of shareholders is required under the Insolvency Act 1986, such as paying classes of creditors in full. This special resolution is conditional on the passing of the first special resolution to be proposed at the third extraordinary general meeting and such resolution becoming unconditional. If the special resolution to be proposed at the first extraordinary general meeting and the extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares are passed, only holders of ordinary shares who give the confirmations and, if applicable, representations described under "US securities laws issues" above in the manner described under "US securities laws issues" above, other than any holder of ordinary shares on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities laws issues" above, will be entitled to attend the third extraordinary general meeting and to vote on the special resolutions to be proposed thereat. If any of the special resolution to be proposed at the first extraordinary general meeting and the extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares is not passed, all holders of ordinary shares, other than any on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities laws issues" above, will be entitled to attend the third extraordinary general meeting. However, the directors would not proceed to put the special resolutions set out in the notice of such meeting to the meeting. Majority and quorum requirements The majority required for the passing of all resolutions to be put at the first extraordinary general meeting, the class meeting of the holders of the ZDP shares, the class meeting of the holders of the ordinary shares, the second extraordinary general meeting and the third extraordinary general meeting is not less than three quarters of the votes validly cast in person or by proxy. On a show of hands, each shareholder present in person or by proxy and entitled to attend and vote will have one vote and on a poll each shareholder present in person or by proxy and entitled to attend and vote will have one vote for each ordinary share and/or ZDP share (as relevant) held. The quorum at the first extraordinary general meeting, the second extraordinary meeting and the third extraordinary general meeting is any two shareholders present in person or by proxy and entitled to vote. The quorum at the class meeting of the holders of the ZDP shares and at the class meeting of the holders of the ordinary shares (other than, in either case, an adjourned meeting) is any two shareholders holding or representing by proxy at least one third in nominal value of, respectively, the ZDP shares and the ordinary shares present in person or by proxy and entitled to vote; the quorum at any adjourned class meeting is one person holding shares of the relevant class or his or her proxy. Shareholder support for the Proposals The Company has consulted with its major shareholders, all of whom have indicated their support for the Proposals. EXPECTED TIMETABLE OF PRINCIPAL EVENTS Latest time and date for return of the 5.00 p.m. on 28 May questionnaire enclosed with the Circular 2008 Issue of notices, if any, under article 43.5 of 2 June 2008 the articles of association of the Company Ordinary Shares marked ex-dividend in respect of 4 June 2008 the special dividends proposed to be paid by the Company Record date for the special dividends proposed to 5.30 p.m. on 6 June be paid by the Company 2008 Latest time and date for receipt of forms of 10.30 a.m. on 14 proxy for the first extraordinary general meeting June 2008 Latest time and date for receipt of forms of 10.45 a.m. on 14 proxy for the class meeting of the holders of the June 2008 ZDP shares Latest time and date for receipt of forms of 10.50 a.m. on 14 proxy for the class meeting of the holders of the June 2008 ordinary shares Latest time and date for receipt of forms of 11.00 a.m. on 14 proxy for the second extraordinary general June 2008 meeting First extraordinary general meeting 10.30 a.m. on 16 June 2008 Class meeting of the holders of the ZDP shares 10.45 a.m. on 16 June 2008 Class meeting of the holders of the ordinary 10.50 a.m. on 16 shares June 2008 Second extraordinary general meeting 11.00 a.m. on 16 June 2008 Latest time for the sale by any "non-permitted" 17 June 2008 shareholders of the shares in the capital of the Company held by them, in compliance with any notice from the Company issued under article 43.5 of the articles of association of the Company Cheques despatched and bank accounts credited (as 20 June 2008 appropriate) in respect of the special dividends proposed to be paid by the Company Sale by the directors of any shares in the 20 June 2008 capital of the Company held by any "non-permitted" shareholders and not sold by the relevant shareholder pursuant to any notice from the Company issued under article 43.5 of the articles of association of the Company Latest time and date for receipt of forms of 10.30 a.m. on 24 proxy for the third extraordinary general meeting June 2008 Re-classification of any relevant ZDP shares and 8.00 a.m. on 25 June ordinary shares and the commencement of dealings 2008 in the re-classified JZEP shares (if any) Dealings in the existing JZEP shares (including 7.30 a.m. on 26 June any re-classified JZEP shares) suspended and 2008 share register closed Third extraordinary general meeting (at which the 10.30 a.m. on 26 Company enters members' voluntary liquidation) June 2008 Completion of the transfer of the Company's 8.00 a.m. on 27 June assets (other than the Liquidation Fund) to New 2008 JZEP Dealings commence in the New JZEP Shares 8.00 a.m. on 27 June 2008 Scheme becomes effective 8.00 a.m. on 27 June 2008 CREST accounts of shareholders holding existing 27 June 2008 JZEP shares in uncertificated form credited with New JZEP Shares Share certificates for New JZEP Shares despatched 11 July 2008 to shareholders holding existing JZEP shares in certificated form Cancellation of the listing of the existing JZEP 27 June 2009 shares (including any re-classified JZEP shares) Enquiries David Zalaznick +1 212 572 0812 Jordan/Zalaznick Advisers, Inc.- Investment Adviser Angus Gordon Lennox +44 (0) 20 7588 2828 JPMorgan Cazenove Limited The information herein is not an offer of securities for sale in the United States. No securities may be offered or sold in the United States or to US persons (other than distributors) unless the securities are registered under the Securities Act 1933, or an exemption from registration requirements is available. There is no intention to register any offering in the United States or to conduct a public offering of securities in the United States. The information herein is not an offer to sell (or the solicitation of an offer to buy) nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. This announcement has been issued by and is the sole responsibility of the Company. 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 JP Morgan Cazenove Limited ("JP Morgan Cazenove") or by any of its affiliates 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 is therefore expressly disclaimed. JPMorgan Cazenove is acting for the Company in connection with the proposed scheme of reconstruction and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of JPMorgan Cazenove nor for providing advice in relation to the proposed scheme of reconstruction. This information is provided by RNS The company news service from the London Stock Exchange END CIRFKBKDABKDDPD
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