Origo Partners PLC Company Update, Directorate and Adviser Changes (5401L)

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RNS Number : 5401L

Origo Partners PLC

20 April 2018

20 April 2018

Origo Partners plc

("Origo" or the "Company")

New Advisory Agreement, Posting of Circular, Directorate Changes,

Review of Asset Carrying Values, Appointment of Nominated Advisor and Broker

Class Meeting of Redeemable Preference Shares

New Advisory Agreement

Origo's Board of Directors has renegotiated the 2014 Asset Realisation Support Agreement with the Company's investment consultant Origo Advisers Limited ("OAL") and, subject to approval of the Company's preference shareholders, has replaced the 2014 agreement with a new agreement effective 1 January 2018 (the "New ARA").

The New ARA waives OAL's entitlement to a fixed fee of US$1 million for 2018 and any future fixed fees in return for an ongoing fee of 8 per cent. of all cash returned to shareholders with a hold back of 25 per cent. of that amount until all Origo's assets are sold. Board approval is required for any asset sales to ensure realizations are at appropriate prices considering market conditions. The Company can terminate the New ARA without penalty on 90 days' notice following an initial 90-day grace period.

The Company will continue to fund OAL's operating costs incurred in connection with Origo including a modest office share arrangement in Beijing and limited personnel costs. Origo will also pay OAL the remaining money contractually due under the 2014 agreement for the period ending 31 December 2017, which amounts to approximately US$700,000.

The New ARA will shortly be available on the Company's website (www.origoplc.com). The agreement is subject to the approval of the holders of the Company's Redeemable Preference shares at a class meeting to be convened for 8 May 2018. A circular will be posted to the Company's Redeemable Preference shareholders providing details of the New ARA and containing a notice convening a class meeting of the holders of the Company's Redeemable Preference shares to be held at IOMA House, Hope Street, Douglas, Isle of Man, IM1 1AP at 10 a.m. on 8 May 2018.

The class meeting is being convened to approve the terms of the New ARA in accordance with the Company's articles of association. A copy of the circular will be available on the Company's website (www.origoplc.com) shortly.

Origo's directors consider, having consulted with its nominated adviser, that the terms of the New ARA are fair and reasonable insofar as its shareholders are concerned.

John Chapman, Chairman of Origo commented:

The New ARA represents a major step forward in reducing the Company's expenses, shoring up its finances, and incentivizing future asset realizations. The New ARA substantially reduces the Company's fixed costs by eliminating the quarterly fixed advisory fee and replacing it with a compensation structure that is entirely incentive-based. By eliminating the Company's largest fixed expense and settling the interest-bearing debt owed to the advisor, the new advisory agreement will place the Company on a firmer financial footing. By remunerating the investment consultant entirely on a percentage of cash returned to shareholders, rather than on formulaic accounting metrics unrelated to shareholder objectives, the Board has endeavored to align the advisor's interests directly with shareholders' interests. The new incentive structure is designed to promote more expeditious asset sales and returns of capital as well as to provide the Advisor with incentives to reduce expenses further, so additional cash can be returned to shareholders. The Board recognizes the investment consultant's cooperation in working with the Board to renegotiate the 2014 Agreement and agreeing to waive its rights under the 2014 contract to an additional US$1 million fixed fee.

Directorate Changes

Niklas Ponnert has stepped down from the Board with immediate effect. Mr. Ponnert's will continue to direct the Company's realisation strategy as a principal of OAL. OAL will also continue as the Company's investment consultant.

The Board thanks Niklas for his contributions to the Board and will continue to work with Niklas as OAL monetizes assets at appropriate prices, so cash can be returned to shareholders.

The Board of Directors is also pleased to announce the appointment of John Chapman as the Company's Chairman.

Portfolio Review and Asset Valuations

The Company's Board of Directors has undertaken a comprehensive review of the Company's portfolio and has made several trips to Beijing to analyze the portfolio and meet with Company's investment advisor and investee companies. The Board is currently of the view that expected realisation amounts will be significantly less than the Company's last reported net asset value. The Board expects to update shareholders in the Company's 2017 Annual Report, which should be released before the end of June in accordance with the AIM rules.

Change of Nominated Advisor

The Company has appointed Arden Partners plc as its nominated advisor and broker with immediate effect.

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

Ends

For further information about Origo please visit www.origoplc.com or contact:

 
Origo Partners plc              IOMA House 
 Mr. John Chapman                Hope Street 
 Chairman                        Douglas 
                                 Isle of Man IM1 1AP 
Nominated Adviser and Broker 
 Arden Partners plc 
 Chris Hardie 
 Ben Cryer                      [phone] 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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April 20, 2018 02:00 ET (06:00 GMT)