Miscellaneous

RNS Number : 8742H

Atlantis Japan Growth Fund Ld

01 March 2010

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO AUSTRALIA, CANADA, JAPAN, OR THE UNITED STATES OF AMERICA OR ANY JURISDICTION IN WHICH THE SAME COULD BE UNLAWFUL OR TO U.S. PERSONS

Atlantis Japan Growth Fund Limited (the "Company")

1 March 2010

The Company announces proposals, inter alia, for a Bonus Issue of Subscription Shares to Qualifying Shareholders, a proposed subdivision, reclassification and redenomination of Shares, amendments to the Memorandum and the adoption of the New Articles. The Company has today sent a prospectus (the "Prospectus") to Shareholders containing details of these Proposals. Terms used in this announcement have the same meaning as set out in the Prospectus. 

In compliance with the Articles and with the Companies Law, the Proposals are conditional on the passing of the Resolution to be proposed at the EGM of the Company to be held on 1 April 2010, as well as the admission of the Subscription Shares to the Official List and to trading on the main market of the London Stock Exchange.

The Proposals and Rationale

Subdivision, Reclassification and Redenomination of Shares

In conjunction with its advisers, the Board has been reviewing the Company's current share capital structure with a view to making the Existing Ordinary Shares eligible for inclusion in the UK national indices.

The Board is also conscious of the limited number of Shares in the capital of the Company that are in issue and the level of the current share price.

As a result of such review and with a view to making the Shares more marketable, the Board proposes that each Existing Ordinary Share be divided into ten Redenominated Shares.  At present, each Existing Ordinary Share has a nominal value of US$0.01.  However, in order to qualify for inclusion in the UK national indices, the Board is advised that it would be necessary to convert the currency of the Shares into Sterling.  Conversion of 1/10^th of US$0.01 into Sterling will, in the opinion of the Board, give rise to an unnecessarily complicated nominal Sterling equivalent.  Instead, the Board proposes to redesignate the Existing Ordinary Shares as shares with no par value.

If the Resolution is approved by Shareholders at the EGM, then the result will be that, for each Existing Ordinary Share of US$0.01 each currently in issue, a Shareholder will instead hold ten Ordinary Shares of no par value.  The nominal value of the issued share capital at present shown separately in the balance sheet of the Company will cease to exist and an equivalent value will be added to the Company's reserves.

Such subdivision and redenomination will have no effect upon the aggregate NAV of each Shareholder's interest in the capital of the Company.  The Proposals will, however, increase the number of Ordinary Shares in the Company that are in issue.  This will impact upon the price per Ordinary Share quoted in the Official List of the London Stock Exchange.  Initially at least, when the subdivision and redenomination becomes effective, the price of an Ordinary Share would be one-tenth of the price of each Share before the subdivision occurs.

The Board believes that the increase in the number of Ordinary Shares in issue will assist the marketability of the Shares and this may have a beneficial impact upon the share price.  Assuming the Proposals are approved, trading in the Redenominated Shares will commence on 6 April 2010.  The Redenominated Shares have been provisionally allocated a new ISIN code GG00B61ND550.  Shareholders who hold Shares in certificated form will be issued replacement share certificates within 10 Business Days of the passing of the Resolution.

Following the redenomination of the Company's share capital and the adoption of the New Articles, the Board is advised that, subject to the Company meeting liquidity requirements, the Redenominated Shares would be eligible for inclusion in the UK national indices.  The Board believes that admission of the Shares to such indices will further improve the marketability of the Shares.  In order to further aid qualification for such admission, the Board will procure that the price of the Redenominated Shares will be quoted on the Official List of the London Stock Exchange in Sterling rather than in US Dollars as at present.

The Bonus Issue

The Company is proposing to issue Subscription Shares to Qualifying Shareholders on the basis of one Subscription Share for every five Redenominated Shares held on the Record Date.  The Subscription Shares will be issued by way of a Bonus Issue to Qualifying Shareholders and will be listed on the Official List and tradable on the main market for listed securities of the London Stock Exchange.  The ISIN of the Subscription Shares is GG00B61CQB91 and the ticker is AJGS.

Each Subscription Share will confer the right (but not the obligation) to subscribe for one Ordinary Share upon exercise of the Subscription Share Rights and on payment of the Subscription Price, as set out below.

Notice to exercise the Subscription Share Rights may be given quarterly on each of 31 January, 30 April, 31 July and 31 October between 30 April 2010 and 31 July 2017 (both dates inclusive) or, if any such day is not a Business Day, then the next Business Day, after which the Subscription Share Rights will lapse.

Qualifying Shareholders' entitlements will be assessed against the Register on the Record Date, which is expected to be close of business on 1 April 2010.

Subscription Shares will rank equally with each other and will not carry the right to receive any dividends from the Company or the right to attend and vote at general meetings of the Company.

The Subscription Price will be equal to a 1 per cent. premium to 1/10^th of the published NAV per Ordinary Share as at 5.00 p.m. on the day immediately prior to the date of the EGM, converted into Sterling at the prevailing exchange rate as quoted on Bloomberg at the same time as the calculation of the published NAV and rounded up to the nearest whole penny.

The New Articles provide that the Subscription Price is subject to adjustment upon the occurrence of certain corporate events by or affecting the Company before 31 July 2017.  The relevant corporate events include pre-emptive offers of securities to Ordinary Shareholders, takeover offers and the liquidation of the Company.  Such adjustments serve to protect either the intrinsic value or the time value of the Subscription Shares or both.

The percentage premium applying upon exercise and the resulting Subscription Price reflect the Board's confidence in the Company's medium to long term prospects and its hope that holders of Subscription Shares will be able to exercise their Subscription Share Rights and acquire Ordinary Shares on favourable terms in the future.

It is expected that an announcement setting out the Subscription Price will be made on 1 April 2010.  Fractions of Subscription Shares will not be issued and entitlements will be rounded down to the nearest whole number of Subscription Shares.

Rationalefor the Bonus Issue

The Directors propose the Bonus Issue because they believe that the Bonus Issue of Subscription Shares will have the following advantages:

(a)        Subscription Shares should represent an attractive way for Qualifying Shareholders to participate in any future NAV growth of the Company through conversion into Ordinary Shares at a predetermined price;

(b)        Qualifying Shareholders will receive securities with a monetary value which may be traded in a similar fashion to their Existing Ordinary Shares or converted into Ordinary Shares;

(c)        on any exercise of the Subscription Share Rights, the capital base of the Company will increase, allowing operating costs to be spread across a larger number of Ordinary Shares, and this may cause the Total Expense Ratio to fall;

(d)        following the exercise of any Subscription Share Rights, the Company will have an increased number of Ordinary Shares in issue, which may improve the liquidity in the market for its Ordinary Shares; and

(e)        the Subscription Shares that Qualifying Shareholders will receive are securities which are qualifying investments for the purposes of a stocks and shares ISA and permitted investments for the purposes of a SIPP.

Authority to Repurchase Subscription Shares

In order to allow the Company to repurchase Subscription Shares, the Resolution to be proposed at the EGM will grant the Company authority to buy back up to 14.99 per cent. of the total number of Subscription Shares in issue following Admission.

Repurchases of Subscription Shares will be made at the discretion of the Board, and will only be made when market conditions are considered to be appropriate and only when there are sufficient cash resources to do so and in accordance with applicable law and regulations including the Companies Law and the Listing Rules.  Purchases through the market will not be at prices that exceed the higher of (i) 5 per cent. above the average of the middle market quotations (as derived from the Official List) for the five consecutive dealing days ending on the dealing day immediately preceding the date on which the purchase is made and (ii) the higher of the price quoted for (a) the last independent trade of, or (b) the highest current independent bid for, any number of Subscription Shares on the trading venue where the purchase is carried out.  Any Subscription Shares repurchased by the Company will be cancelled and will not be held in treasury for reissue or resale.

It is anticipated that authorisation for repurchases of Subscription Shares will be sought at the Company's AGM in 2010 and beyond.

Adoption of New Articles and Amendment of the Memorandum

The New Articles are proposed to be adopted in order to, inter alia:

(a)        provide for the terms and the rights attaching to the Subscription Shares;

(b)        give the Company the ability to pay up a bonus issue of any shares, including Subscription Shares, by way of capitalisation of reserves;

(c)        include pre-emption rights in favour of Shareholders;

(d)        provide that the Company may by ordinary resolution convert shares with a par value into shares without a par value and to reflect the fact that Ordinary Shares will be of no par value; and

(e)        to include a specific provision as to the basis on which the rights attached to any class of Share may be varied or abrogated.

A summary of the material changes to the Articles which are proposed to be adopted in the New Articles is set out in the Prospectus 

The Memorandum shall be updated, inter alia, to reflect certain changes brought in by the Companies Law, which include:

(a)        that the objects of the Company will be unrestricted;

(b)        to allow the Company to issue an unlimited number of Ordinary Shares and Subscription Shares.

The Company is Guernsey-incorporated.  In order to qualify for inclusion in the UK national indices, the Board has been advised that the Company will be required to acknowledge public adherence to, inter alia, the principles of pre-emption rights.  It is therefore proposed that provisions dealing with pre-emption rights in favour of Shareholders be incorporated in the New Articles. 

The New Articles will be on display at the registered office of the Company from today until the end of the EGM and at the EGM itself for the duration of the meeting and for at least 15 minutes prior to the EGM.

Authority to Repurchase Ordinary Shares

The Company's existing authority to buyback Existing Ordinary Shares (such existing authority having been obtained through the passing of a special resolution at the AGM on 2 October 2009) will require renewal to take into account the subdivision of the Ordinary Share capital. Pursuant to the Resolution, the Company will be unconditionally and generally authorised in accordance with the Companies Law to make market acquisitions of its Shares as follows:-

·     the maximum number of Ordinary Shares authorised to be purchased is 14.99 per cent. of the total number of Ordinary Shares in issue immediately following the passing of the Resolution;

·     the maximum price which may be paid for any such Shares which the Company contracts to purchase on any day shall not exceed the higher of (i) 5 per cent. above the average of the middle market quotations (as derived from the Official List) for the five consecutive dealing days ending on the dealing day immediately preceding the date on which the purchase is made and (ii) the higher of the price quoted for (a) the last independent trade of, or (b) the highest current independent bid for, any number of Subscription Shares on the trading venue where the purchase is carried out;

·     any purchase of Shares will be made in the market for cash at prices below the prevailing NAV per Share;

·     the minimum price which may be paid for a Share is £0.01; and

·     the authority shall expire at the conclusion of the next AGM or, if earlier, on the expiry of 18 months from the passing of the Resolution, unless such authority is renewed, varied or revoked prior to such time.

Repurchases of Ordinary Shares will be made at the direction of the Board and will only be made when market conditions are considered to be appropriate and only when there are sufficient cash resources to do so and in accordance with applicable law and regulation including the Companies Law and the Listing Rules.

Implementation of the Proposals

The proposed implementation of the Proposals requires Shareholders to approve the Resolution to be proposed at the EGM.  If passed, the Resolution will:

(a)        amend the Memorandum to update it in line with the Companies Law;

(b)        approve the adoption of New Articles containing the rights attaching to the Subscription Shares together with other provisions;

(c)        sub-divide, reclassify and redenominate each Existing Ordinary Share into ten Ordinary Shares of no par value each;

(d)        authorise the Directors to allot the Subscription Shares pursuant to the Bonus Issue;

(e)        authorise the capitalisation of sums standing to the credit of any of the Company's reserve accounts, including any share premium account, special reserve, revenue reserve or any other reserve available for the purpose in paying up in full the Subscription Shares to be issued pursuant to the Bonus Issue;

(f)        authorise the repurchase by the Company of Subscription Shares representing up to 14.99 per cent. of the total number of Subscription Shares in issue following Admission; and

(g)        authorise the repurchase by the Company of Redenominated Shares representing up to 14.99 per cent. of the total number of Redenominated Shares in issue immediately following the passing of the Resolution.

Admission and Dealings

The Subscription Shares, as well as the Redenominated Shares, will be in registered form and may be issued either in certificated or uncertificated form.  No temporary documents of title will be issued.  Pending despatch of definitive certificates, transfers of Subscription Shares in certificated form will be certified against the Register.  All documents or remittances sent by or to Shareholders will be sent through the post at the risk of the Shareholder.

Applications will be made to the UK Listing Authority for the Subscription Shares 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.  It is expected that Admission will occur, and that dealings will commence, on 6 April 2010.  On Admission, the Subscription Shares will confer rights to subscribe for new Ordinary Shares representing, in aggregate, up to 20 per cent. of the then issued Ordinary Share capital of the Company.

The Ordinary Shares resulting from the exercise of the Subscription Share Rights will rank pari passu with the Ordinary Shares then in issue (save for any dividends or other distributions declared, made or paid on the Ordinary Shares by reference to a record date prior to the issue of the relevant Ordinary Shares).

Overseas Shareholders

The issue of the Subscription Shares to persons who have a registered or mailing address in any territory outside of the United Kingdom or Guernsey may be affected by the law or regulatory requirements of the relevant jurisdiction.  Any Shareholder who is in any doubt as to his position should consult an appropriate independent professional adviser without delay.

Excluded Overseas Holders

The Subscription Shares are not being issued to Excluded Overseas Holders and the Prospectus may not be treated as an invitation or offer to any Excluded Overseas Holder.

The Board will allot any Subscription Shares due under the Bonus Issue to Excluded Overseas Shareholders to a market maker who will sell such Subscription Shares promptly at the best price obtainable. The proceeds of sale will be paid to the Excluded Overseas Shareholders entitled to them save that entitlements of less than £5 per Excluded Overseas Shareholder will be retained by the Company for its own account.

Taxation

Shareholders should note that the Subscription Shares are qualifying investments for a stocks and shares ISA and will constitute permitted investments for the purposes of a SIPP. The exercise of Subscription Share Rights may affect the annual subscription limit available for further investment into an ISA in the relevant year.  Shareholders who are in any doubt about their tax position or who may be subject to tax in a jurisdiction other than the United Kingdom should consult their professional adviser.

Estimated Costs of the Proposals

The Company's expenses in connection with the Proposals are estimated to amount to approximately £338,500.  On the basis of 20,435,627 issued Existing Ordinary Shares as at the date of the Prospectus, this equates to a cost of £0.017 per Existing Ordinary Share. These expenses will be borne by the Company.

Net Proceeds from Subscription Shares

Although there can be no certainty as to whether any or all of the Subscription Share Rights will be exercised, if the Bonus Issue proceeds and all of the Subscription Share Rights are exercised, the net proceeds that could arise on such exercise would be approximately £32.3 million, based on a NAV of US$224,887,583 on 23 February 2010, the latest practicable date prior to the publication of the Prospectus, and assuming 40,871,254 Subscription Shares are issued pursuant to the Bonus Issue.  It should be noted, however, that the Subscription Price will be calculated as at the Record Date and therefore the above figures are illustrative only.  Upon the Subscription Share Rights being exercised, the Directors intend to invest the net proceeds of such subscriptions in accordance with the Company's Investment Policy.

Expected Timetable

	2010
Latest time and date for receipt of Forms of Proxy	11.00 a.m. on 30 March
Subscription Price of Subscription Shares calculated	close of business on 30 March
EGM	11.00 a.m. on 1 April
Announcement of the Subscription Price	1 April
Record Date for the Bonus Issue	close of business on 1 April
Admission of the Subscription Shares to the Official List and dealings in the Subscription Shares commence	8:00 a.m. on 6 April
Trading in the Redenominated Shares commence	8:00 a.m. on 6 April
Crediting of CREST stock accounts in respect of the Subscription Shares	6 April

Enquiries

James Alexander Atlantis Investment Management Ltd	020 7638 9192
Angus Gordon Lennox  / William Simmonds J.P. Morgan Cazenove	020 7588 2828

 

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