Kubera Cross-Border Fund Limited Notice of Extraordinary General Meeting (9000U)

TIDMKUBC

RNS Number : 9000U

Kubera Cross-Border Fund Limited

27 November 2019

27 November 2019

Kubera Cross-Border Fund Limited

(the "Company")

NOTICE OF EXTRAORDINARY GENERAL MEETING

The Company announces that an Extraordinary General Meeting ("EGM") of the Company will be held at 10.00 a.m. on 12 December 2019 at IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP to consider the proposed cancellation of Admission of the Shares to Trading on AIM.

Copies of the EGM Circular and the associated Form of Proxy have been sent to shareholders. The full text of the Chairman's letter contained in the EGM Circular is given below.

The Notice of EGM and the associated Form of Proxy will be available on the Company's website at: www.kuberacrossborderfund.com

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.

For more information, contact:

Grant Thornton UK LLP (Nominated Adviser) Philip Secrett/ Jamie Barklem/ Niall McDonald

Tel.: [phone]

Email: p [e-mail]

Numis Securities Limited (Broker)

David Benda, Managing Director

Tel.: [phone]

Email: d [e-mail]

FIM Capital Limited (Administrator, Registrar & Secretary)

Philip Scales, Director

Tel.: [phone]

Email: p [e-mail]

LETTER FROM THE CHAIRMAN

Dear Shareholder

Proposed Cancellation of Admission of the Shares to Trading on AIM, Changes to the Board, Reduction of Operating Costs and Notice of Extraordinary General Meeting

   1.    INTRODUCTION 

The Company announced on 26 September 2019 that the Directors were evaluating a range of cost-reduction measures, including the Cancellation of admission of its shares trading on AIM. Following consultation with Shareholders on the matter, the Directors have concluded that it is in the best interests of the Company and its Shareholders to cancel the admission of the Shares to trading on AIM.

Pursuant to Rule 41 of the AIM Rules, the Cancellation is conditional on the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at the EGM,

notice of which is set out in Part 2 of this document.

If the Resolution is approved at the EGM, it is expected that the Cancellation will become effective at 7.00 a.m. on 30 December 2019.

The purpose of this document is to seek Shareholders' approval of the Resolution; to provide you with the information on the background and reasons for the Cancellation; to explain the principal effects of the Cancellation; the Directors' strategy for the Company should the Cancellation become effective, and why the Directors unanimously consider the Cancellation and the associated proposals contained in this document to be in the best interests of the Company and its Shareholders as a whole.

   2.    REASONS FOR THE CANCELLATION 

The Directors have conducted a review of the benefits and drawbacks to the Company and its Shareholders of retaining the admission of the Shares to trading on AIM and believe that the Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching this conclusion, the Directors have considered the following key factors:

-- The current investment objective and policy of the Company is to realise its investments in an orderly fashion and return the net proceeds to Shareholders. The Board remains committed to achieving this objective and will continue to do so should the Cancellation become effective. The Company has only two remaining investments which the Board considers to have material value, further details of which are set out in paragraph 3.

-- The considerable cost, management time and the legal and regulatory requirements associated with maintaining the admission of the Shares to trading on AIM are, in the Directors' opinion, now disproportionate to the benefits to the Company and not conducive to maximising distributions to Shareholders. The Directors are cognisant of the level of the Company's operating costs relative to the progress being made with regard to completing the receipt of the remaining realisation proceeds from the disposals of investments. In addition to seeking the Cancellation, which will deliver direct cost reductions for the Company from ceasing the obligation to pay admission related fees, additional reductions in operating costs are expected, which are set out in paragraph 4. The Board estimates that the reduction in operating costs following the Cancellation and the other changes will amount to, in aggregate, approximately USD 170,000 annually.

   3.    THE COMPANY AND ITS REMAINING INVESTMENTS 

The Company was incorporated as an exempted company with limited liability in the Cayman Islands in 2006 and whose Shares were admitted to trading on AIM on 27 December 2006. The Company's investment objective was to seek to achieve returns by making capital investments through the Group in India-centric cross-border businesses.

On 17 January 2013, Shareholders voted to amend the Fund's investment objective and policy such that the Company makes no new investments and becomes a realisation vehicle, whose objective is to realise its investments in an orderly fashion and return the net proceeds to Shareholders.

During the first five years of the Fund's life, investments were made in nine companies, deploying USD 129.50 million of the Fund's capital. To date, eight investments have been sold, liquidated or written off and USD 61.45 million has been distributed to Shareholders.

As at 30 September 2019, the net assets of the Fund amounted to USD 12.50 million. The Company continues to hold two investments with material value (excluding investments written down to nil as at 30 September 2019):

   --    Synergies Castings Limited ("SCL") 

At 30 September 2019, the Company held a 35.42 per cent. equity interest in SCL and loans, which together had a fair value of USD 7.84 million.

Kubera Cross Border Fund (Mauritius) Limited ("Kubera Mauritius") entered into a share purchase and loan assignment agreement in 2017 with a private buyer for the disposal of its entire equity and debt interests in SCL. The consideration is payable to Kubera Mauritius in four tranches, the first two of which have been received. The Board understands that the buyer is in the process of raising funds to satisfy the remaining two tranches of consideration and the Board continues to work with the buyer to complete the sale of Kubera Mauritius' remaining interest in SCL as soon as practicable.

   --    NeoPath Limited ("Neopath") 

Kubera Mauritius sold its equity interest in a payment processing business in 2010. The acquirer deducted withholding tax of INR 748.36 million (equivalent to USD 10.59 million at 30 September 2019), which was deposited with the Indian tax authority and is held through Neopath, of which 46.95 per cent., or USD 4.52 million, is ultimately attributable to Kubera Mauritius.

In accordance with the relevant provisions of the India-Mauritius Double Taxation Avoidance Convention, NeoPath is in the process of claiming a refund of the Indian withholding tax. In the opinion of Neopath's Indian tax counsel, the entire amount of INR 748.36 million is fully recoverable. The timing of the finalisation and receipt of the tax refund remains uncertain. At 30 September 2019, the fair value of the receivable was USD 4.15 million.

Although the timing of the receipt of the remaining disposal proceeds is outside the control of the Company, the Directors believe that the net proceeds to be distributed to Shareholders in due course will be maximized by continuing the current strategies to accelerate the receipt of the remaining disposal proceeds and reducing the operating costs following the Cancellation.

   4.    Reduction in Operating Costs following THE Cancellation 

As the number of investments and the Fund's net assets have declined, the Board has gradually reduced the Group's operating costs. At 30 September 2019, the Company held cash net of liabilities of USD 0.50 million; and investments with an estimated net asset value of USD 11.99 million.

Conditional on the Cancellation becoming effective, the Company will benefit from direct cost reductions as there will be no further obligation to pay admission related fees, including nominated adviser and broker fees.

Conditional on the Cancellation becoming effective, additional operating cost reductions are expected from:

-- Reduction of and changes to the composition of the Board. Conditional on the Cancellation becoming effective, each of Martin Adams and Michael Tyler has expressed his intention to resign (a) as a Director; and (b) from each of the boards of the Company's subsidiaries. They will be replaced on the Board by a senior executive of the Administrator, Graham Smith, who has agreed to become a Director. Graham Smith is a graduate of Cambridge University, a chartered accountant and is FIM's chief executive officer. He has over thirty-five years' financial management experience, predominantly in the life assurance and investment fund sectors. The Board will then comprise two unremunerated Directors: Ramanan Raghavendran and Graham Smith, neither of whom are considered to be independent.

-- Simplified oversight and out-of-pocket expenses. It is the intention that the Company will no longer produce and publish a quarterly NAV; quarterly newsletters; or half-yearly reports and financial statements. Annual financial statements and information on significant events and developments relating to the Company will be available to all Shareholders through the Fund's website and can be sent electronically to Shareholders if they provide their email address to FIM at [e-mail]. Corporate documents will no longer be available to Shareholders in printed form. Accordingly, there will be a reduction in the fees charged by the Administrator and other third party administrative service providers in Mauritius and India.

The Board estimates that the aggregate reduction in operating costs following the Cancellation will amount to approximately USD 170,000 annually.

   5.    PRINCIPAL EFFECTS OF THE CANCELLATION 

The principal effects of the Cancellation include:

-- There will be no formal market mechanism enabling the Shareholders to trade Shares and no other recognised market or trading facility is intended to be put in place to facilitate the trading of the Shares.

-- While the Shares will remain freely transferrable, it is likely that the liquidity and marketability of the Shares will, in the future, be significantly reduced and the secondary market value of the Shares may be adversely affected as a consequence.

-- In the absence of a formal market and quote, it will be more difficult for Shareholders to determine the market value of their investment in the Company at any given time. There is no guarantee that Shareholders will be able to realise their investment following the Cancellation; of the future value of the Company's remaining investments; or of the price at which Shares may be bought or sold.

-- The regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply to the Company. Shareholders will no longer be afforded the protections provided by the AIM Rules and the Market Abuse Regulation, such as the requirement to be notified of certain events, or to vote on certain substantial transactions. In particular, the Company will not be bound to make any public announcements of material events, or to announce financial results, although, following the Cancellation, the Company will continue to maintain its website, through which it will make available certain information, as set out in paragraph 4.

-- In order to reduce the operating costs as a private company, following the Cancellation, the Company will no longer produce and publish a quarterly NAV; quarterly newsletters or half-yearly reports and financial statements. Shareholders should be aware that in voting in favour of the Resolution they will also, in effect, be voting in favour of this policy.

-- The levels of transparency and corporate governance will not be equivalent to those for a company quoted on AIM.

   --          The Company will cease to have an independent nominated adviser and broker. 
   --          The Company will cease to have any independent Directors. 

-- Whilst the Company's CREST facility will remain in place immediately following the Cancellation, the Company's CREST facility may, if the Board so determines, be cancelled in the future in order to save the associated costs. Although under such circumstances the Shares will remain transferable, they will cease to be transferable through CREST. In this instance, Shareholders who hold Shares in CREST will receive share certificates.

-- The Cancellation may have taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

The above considerations are not exhaustive and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

The Directors are aware that certain Shareholders may be unable or unwilling to hold Shares following the Cancellation. Such Shareholders should consider selling their Shares in the market prior to the Cancellation.

   6.    TRANSACTIONS IN THE SHARES FOLLOWING THE CANCELLATION 

The Board is aware that following the Cancellation, it will be more difficult for Shareholders to buy and sell Shares.

FIM will make arrangements to provide a Matched Bargain Facility, to assist Shareholders to trade in the Shares, to be put in place following the Cancellation. Under the Matched Bargain Facility, Shareholders wishing to acquire or dispose of Shares will be able to leave an indication with FIM through their stockbroker (FIM is unable to deal directly with members of the public), of the number of Shares that they are prepared to buy or sell at an agreed price. In the event that sell and buy instructions can be matched, FIM will contact both parties (via their stockbrokers) who can then effect the bargain. Where necessary in order to comply with regulatory requirements in the Cayman Islands and/ or the Isle of Man, FIM will conduct anti-money laundering checks, in respect of which an administration charge may be levied by FIM on the buyer and/or seller as appropriate (in either case via their stockbroker).

Shareholders should note that there can be no guarantee that orders for the disposal or acquisition of Shares will be capable of being matched using the Matched Bargain Facility which will be provided at the sole discretion of FIM. The Board is not making any recommendation as to whether or not Shareholders should buy or sell Shares and the Company will not act as an intermediary in relation to the provision of the Matched Bargain Facility. Once the Matched Bargain Facility has been put in place, details will be made available to Shareholders on the Company's website (www.kuberacrossborderfund.com). This is expected to be available following the Cancellation.

If Shareholders wish to buy or sell Shares on AIM they must do so prior to the Cancellation. If Shareholders approve the Cancellation, it is expected that the last day of dealings in the Shares on AIM will be 27 December 2019 and that the effective date of the Cancellation will be 30 December 2019. The Board is not making any recommendation as to whether or not Shareholders should buy or sell Shares.

   7.    STRATEGY AND CORPORATE GOVERNANCE SHOULD THE CANCELLATION BECOME EFFECTIVE 

Following the cancellation, the Company will continue to implement the Fund's investment objective and policy such that the Company makes no new investments and completes the receipt of the remaining realisation proceeds from the disposals of its investments as soon as practicable and returns the net proceeds to Shareholders.

Following the Cancellation, the Company will continue to maintain its website http://www.kuberacrossborderfund.com through which it will make annual financial statements available to all Shareholders and provide information on significant events and developments relating to the Company. However, there will be no obligation on the Company to include all of the information required by AIM Rule 26 or to update the website as required by the AIM Rules. Following the Cancellation, the Board intends that access to the website will be password protected.

Shareholders who wish to access the Company's website, as well as those who wish to receive electronic copies of annual financial statements and information on significant events and developments relating to the Company, following the Cancellation becoming effective, should inform FIM at [e-mail].

Following the Cancellation becoming effective, the Company will remain (and will comply with all regulatory requirements to remain) registered as an exempted Company in the Cayman Islands and will also remain subject to the provisions of the Articles, pursuant to which Shareholder approval is required for certain matters. FIM, as an independent company, regulated by the Isle of Man Financial Services Authority and the UK Financial Conduct Authority will continue to provide oversight of the Company to ensure that the Company maintains appropriate corporate governance standards.

Additionally, in 2018, the Company adopted, pursuant to AIM Rule 26, the Quoted Companies Alliance Code (the "QCA Code"). Although the Company will no longer be subject to the AIM rules following the Cancellation, the Board intends to take appropriate measures to ensure that the Company complies with the QCA Code to the extent practicable and commensurate with the size and operations of a private company. Further details will be contained on the website.

The Directors have considered various options in relation to the ongoing management of the Company and its remaining investments should the Cancellation become effective and believe that the structure and arrangements set out in this document will maximise the net proceeds to be distributed to Shareholders in due course.

   8.    Effect on the Company should the Cancellation not beCOME EFFECTIVE 

If the Resolution is not approved at the EGM and the Cancellation does not become effective, the admission of the Shares to trading on AIM will be maintained and the Company's investment objective and strategy will remain unchanged. However, the Company will then be unable to deliver the reduction in operating costs set out in paragraph 4.

   9.    Process for THE Cancellation 

Under the AIM Rules, it is a requirement that the Resolution proposing the Cancellation must be approved by not less than 75 per cent. of votes cast by its shareholders given in a general meeting. Accordingly, the Notice of Extraordinary General Meeting to be held at IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP at 10:00 a.m. on 12 December 2019 is set out in Part 2 of this document.

Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the London Stock Exchange to cancel the admission of its shares to trading on AIM to notify shareholders and to separately inform the London Stock Exchange of its preferred cancellation date at least 20 business days prior to such date. Additionally, the Cancellation will not take effect until at least 5 clear business days have passed following the approval of the Resolution.

In accordance with AIM Rule 41, the Company (via its Nominated Adviser) has notified the London Stock Exchange of the Company's intention, conditional on the Resolution being approved at the EGM, to cancel the Company's admission of the Shares to trading on AIM at 7.00 a.m. on 30 December 2019. If the Resolution is approved, the Cancellation will become effective at 7.00 a.m. on 30 December 2019. After the Cancellation becomes effective, the appointment of the Nominated Adviser will cease and the Company will no longer be required to comply with the AIM Rules.

10. Extraordinary General Meeting

The EGM will be held at 10.00 a.m. on 12 December 2019 at IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP, British Isles. The Notice of the EGM is provided in Part 2 of this document.

The Resolution will be an extraordinary resolution requiring at least 75 per cent. of the voting rights cast at the EGM to be in favour of the Resolution that the admission of the Shares to trading on AIM be cancelled.

11. Action to be Taken

A Form of Proxy for use at the EGM is provided with this document. Whether or not you propose to attend the EGM in person, you are requested to complete and sign the Form of Proxy as soon as possible and in any event no later than 10.00 a.m. on 10 December 2019 and send the completed and signed form to the Company's registrars at IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP.

Completion and return of a Form of Proxy will not prevent you from voting in person at the EGM should you so wish.

12. Recommendation

The Directors consider the Cancellation and the reduction in operating costs resulting from the changes described in this document to be in the best interests of the Company and Shareholders as a whole and therefore unanimously recommend that Shareholders vote in favour of the Resolution, as the Chairman intends to do in respect of his own beneficial holdings of Shares amounting, in aggregate, to 150,000 Shares (representing approximately 0.14 per cent. of the Shares in issue at the date of this document).

DEFINITIONS

 
 Administrator or FIM       FIM Capital Limited 
 AIM Rules                  the AIM rules for companies whose 
                             securities are admitted to trading 
                             on AIM as published by the London 
                             Stock Exchange from time to time 
 Articles                   the articles of association of 
                             the Company 
 Board                      the board of Directors 
 Cancellation               the proposed cancellation of 
                             admission of the Shares to trading 
                             on AIM, currently intended to 
                             take place at 7.00 a.m. on 30 
                             December 2019 
 Company or Fund            Kubera Cross-Border Fund Limited 
 CREST                      the operator of an electronic 
                             settlement system that is used 
                             to settle the Company's shares 
 Director                   a director of the Company 
 EGM                        the extraordinary general meeting 
                             of the Company convened for 10.00 
                             am on 12 December 2019 
 Form of Proxy              the form of proxy for use in 
                             connection with the EGM 
 Group                      the Company and its subsidiaries 
 London Stock Exchange      London Stock Exchange plc 
 Matched Bargain Facility   the Matched bargain trading facility 
                             to be put in place following 
                             the Cancellation, conditional 
                             on the passing of the Resolution 
                             as described in paragraph 6 
 Nominated Adviser          Grant Thornton UK LLP 
 Resolution                 the resolution to be proposed 
                             at the EGM 
 RIS                        Regulatory Information Service 
 Shareholders               holders of Shares 
 Shares                     ordinary shares of USD 0.01 in 
                             the capital of the Company 
 

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 27, 2019 11:21 ET (16:21 GMT)