Circ re. Extraordinary General Meeting

RNS Number : 4413O

Aurora Russia Limited

08 February 2016

 

8 February 2016

Aurora Russia Limited (the "Company")

Extraordinary General Meeting and Voluntary Liquidation

The Company announced on 22 December 2015 that it had entered into sale arrangements relating to its one residual investment, a minority interest in OJSC Unistream Commercial Bank ("Unistream").  In that same announcement the Board advised that they intended as soon as reasonably practicable following completion of the sale of Unistream to convene an extraordinary general meeting (the "EGM") to consider proposals to include, inter alia, measures to facilitate the distribution to Shareholders of substantially all of the Company's net realised cash, in a cost effective, tax efficient and timely manner.  The Company then announced on 29 December 2015 that the proceeds of USD 4.975 million had been received and that completion of the sale of Unistream had occurred.  The Board now intends to effect the distribution of cash by procuring that the Company's shareholders vote the Company into a members' voluntary liquidation (the "Liquidation").

The Company therefore announces that the Board has today convened an EGM of shareholders to consider proposals for an ex gratia payment to the Company's chairman, to cancel its admission to trading on AIM, to vote the Company into members' voluntary liquidation and thereafter to return available cash to shareholders. 

A circular convening the EGM, containing full details of the proposals and setting out the timetable for the return of capital has today been published, such EGM to be held on 9 March 2016 to consider such proposals.

The text of the Expected Timetable and Chairman's letter extracted from the circular and containing a recommendation from the Board that shareholders vote in favour of the proposals is set out below.

Expected Timetable:

Latest time and date for receipt of Proxy Appointments for the Extraordinary General Meeting	11:00 a.m. on 7th March 2016
Closing of the Company's register and Record Date for participation in liquidation distributions	6:00 p.m. on 8th March 2016
Suspension of the listing of the Shares	7:30 a.m. on 9th March 2016
Extraordinary General Meeting and, if approved, the appointment of the Liquidator	11:00 a.m. on 9th March 2016
Announcement of the result of the Extraordinary General Meeting	9th March 2016
Interim liquidation distribution	On or around 16th March 2016
Cancellation of the listing of the Shares	7:00 a.m. on 17thMarch 2016

All references to time in this document are to the time in London.

Dear Shareholder,

1.         Introduction

The Company has today announced proposals for an additional ex gratia payment to the Chairman, followed by its voluntary winding-up in accordance with the Companies Law and the cancellation of admission of its Ordinary Shares to trading on AIM (the "Proposals"). I am writing to provide you with details of these Proposals, which are subject to Shareholders' approval, and to explain why your Board is recommending that you vote in favour of the resolutions to be proposed at an extraordinary general meeting of the Company to be held at 11:00 a.m. on 9^th March 2016 (the "Extraordinary General Meeting"). Notice of the Extraordinary General Meeting is set out at the end of this Circular.

2.         Background to the Proposals

The Company's articles of incorporation required the Directors to propose a resolution at the Company's last annual general meeting on 23^rd December 2015 that the Company continue its investment activities (the "Continuation Resolution"). The Board was at the time of publication of the notice of that annual general meeting in November 2015 negotiating the disposal of the Company's one residual investment, a minority interest in OJSC Unistream Bank, and recommended that Shareholders vote in favour of the Continuation Resolution to give further time to complete the disposal. The resolution was duly passed by Shareholders.

The Company announced on 22^nd December 2015 that it had entered into sale arrangements relating to Unistream and, notwithstanding the passing of the Continuation Resolution, the Board intended as soon as reasonably practicable to convene an extraordinary general meeting to consider proposals to include, inter alia, measures to facilitate the distribution to Shareholders of substantially all of the Company's net realised cash in a cost effective, tax efficient and timely manner.

Your Board has therefore now completed its previously announced disposal programme and under the AIM Rules the Company is now classed as an investing company. The Board has considered a number of proposals to continue the Company's existence by way of a reverse transaction and has canvassed the opinions of its major Shareholders, but has concluded that it would be in the best interests of Shareholders as a whole to wind up the Company and return its net available cash to Shareholders as soon as practicable.

Following the sale of the Company's final investment and the return of invested cash to shareholders, all Directors and the investment advisor will be paid incentive fees calculated in accordance with the methodology announced on 31 March 2015 and explained to Shareholders in the Company's subsequent annual and interim reports and accounts.  The Directors will be paid in aggregate circa. £75,000 and Mr Henderson-Stewart will be paid approximately £5,000.  The Board has also resolved to recommend a further ex gratia payment of £15,000 to the Chairman, which will be subject to Shareholders' approval in general meeting and further details of which are given in section 3 below. 

Accordingly the purpose of this Circular is to provide you with details of the Proposals and to seek your approval of them.

The Commission has been notified of the Proposals in accordance with Part 5 of the Rules.

In the event that the voluntary liquidation of the Company is not approved, the AIM Rules for Companies (May 2014) will apply and accordingly if the Company does not make an acquisition or acquisitions which constitute a reverse takeover under Rule 14, or otherwise fails to implement its investing policy to the satisfaction of AIM, within twelve months of 29 December 2015, the trading in the Shares will be suspended.

3.         Liquidity Profile

As at the close of business on 4 February 2016 the Company's unaudited estimated Net Asset Value was £4,648,139.06 which is the equivalent of 12.25p per Share. The unaudited estimated NAV is entirely comprised of cash and cash equivalents.

The Board has further estimated that the terminal NAV of the Company, after deduction of the Joint Liquidators' estimated fees, which have been estimated at £8,500, including £500 of disbursements, a Retention of £50,000, any expenses properly incurred by the Joint Liquidators in connection with the liquidation and provision for all of the Company's other liabilities will be £4,502,834.40, equivalent to 11.87p per Share. This sum will be available for distribution to Shareholders in accordance with the principles stated at section 5 below. To the extent that your Board has over-provided for the Company's liabilities, or any part of the Retention is otherwise unutilised, the Company's remaining assets will also be distributed to Shareholders in accordance with those principles.

On the recommendation of the Company's Remuneration Committee, from whose recent meeting the Chairman absented himself due to his conflict of interest, the Board has also resolved to propose to Shareholders that the Chairman should be granted an additional ex gratia payment of £15,000, in recognition of the significant additional work performed by him over the past financial year, as well as his contributions to and tenacity in the successfully negotiated sale of Unistream at a far higher price than had originally been offered to the Company, all in very difficult market conditions.  Without this commitment, it is doubtful whether the value achieved on the sale would have been obtained.  This payment is subject to the approval of Shareholders at the EGM and those Directors who hold Shares in the Company intend to vote in favour of the proposed resolution.  All Directors have agreed to waive their entitlement to three months' notice of the termination of their appointments.  The financial information included above has been prepared on the basis that the additional ex gratia payment is approved by the requisite majority of Shareholders.

4.         Cancellation OF ADMISSION OF THE ORIDNARY SHARES TO TRADING ON AIM

If the Shareholders vote to approve the liquidation of the Company, it would not be possible for the Company's Ordinary Shares to continue to be admitted to trading on AIM. Accordingly, Shareholders are being asked to approve the Delisting by a majority of not less than 75% of the votes cast at the Extraordinary General Meeting, as required by the AIM Rules.

5.         The Winding-up and distributions to shareholders

If the proposed Special Resolution is approved by Shareholders, the Joint Liquidators will be appointed. The Joint Liquidators will wind up the Company by way of a voluntary solvent liquidation in accordance with the Companies Law.

Following appointment, the Joint Liquidators will provide for the Company's liabilities, including the Joint Liquidators' own fees and expenses, and will establish the Retention, an amount the Joint Liquidators consider appropriate to meet the Company's unascertained or unknown liabilities which may be identified during the course of the liquidation. It is expected that the Retention will be £50,000.  For the avoidance of doubt, the Retention is a provision for creditors which have not yet been identified, so is in addition to the estimated costs and expenses set out in section 3 above, which include the fees of the Joint Liquidators and those of the Company's advisers in connection with the winding-up, as well as other costs and expenses.

The Joint Liquidators are expected to make an interim liquidation distribution to those Shareholders appearing on the register of members as at the Record Date, to be followed by a final distribution to such Shareholders. Distributions are intended to be paid by way of cheques drawn on a UK clearing bank posted to the registered address of each Shareholder as at the Record Date. The Joint Liquidators reserves the right to also make distributions by way of electronic transfers at the cost of the relevant Shareholder. All payments will be made at the sole risk of the Shareholder concerned.

The Joint Liquidators have indicated that they currently intend to make an initial distribution to Shareholders of £4,502,834.40, equivalent to 11.87p per Share, within approximately one week after the commencement of the winding-up.

After having made the interim liquidation distribution, having advertised for creditor claims, satisfied the claims of creditors of the Company and paid the costs and expenses of the winding-up, it is expected that the Joint Liquidators will make a final distribution of any distributable net proceeds among the Shareholders, according to their respective rights and interests in the Company.

Your Board considers that the distribution of any amount of less than £5 per Shareholder would be nullified by the administrative costs of making such a distribution. Accordingly, any amount of less than £5 that would otherwise be paid to a Shareholder on an interim liquidation distribution shall be retained until the final distribution date, if any, when it would form part of any amount payable to the Shareholder that is in excess of £5. If, at the date of the final liquidation distribution, there remains any amount of less than £5 that would otherwise be paid to a Shareholder, the Board has resolved that such amount will be donated to charity.

The voluntary liquidation would commence on the passing of the Special Resolution. On the appointment of the Joint Liquidators at the Extraordinary General Meeting, all powers of the Board will cease and the Joint Liquidators will be responsible for the affairs of the Company until it is wound up.

As soon as the Company's affairs are fully wound-up, the Joint Liquidators will prepare an account of the winding up in accordance with section 400(1)(a) of the Law and call a further extraordinary general meeting of the Company at which the account will be presented and an explanation given, in accordance with section 400(1)(b) of the Law. Immediately after such meeting the Joint Liquidators will give notice to the Registrar of Companies in Guernsey that such meeting has been held and the date on which it was held. The Company will then be dissolved on the expiration of three months beginning from the date of delivery of such notice.

Subject to the approval of the Special Resolution by Shareholders, Messrs Bridel, Chalk, Moncreiffe and Slesinger intend to resign as Directors at the conclusion of the EGM.  In order to comply with the Companies Law and to facilitate a smooth transfer to the Joint Liquidators, Mr Trott will remain as a Director until the Company is struck off the Register of Companies, which is expected to occur approximately three months following the conclusion of the liquidation.

Investment Advisory Services Agreement

The Investment Advisory Services Agreement was terminated on 31^st December 2015 after the disposal of the Company's last investment, its interest in Unistream. The Company now only holds cash and cash equivalents. The outstanding fees and expenses payable under the agreement are included in the estimate of the Company's costs and expenses set out in section 3 above.

Administration Agreement

On entering liquidation, the Company may terminate the Administration Agreement with immediate effect by giving written notice to the Administrator. If the Resolution is approved, the Company will immediately give written notice to the Administrator and will make payment to the Administrator of all fees and other moneys that have accrued under the Administration Agreement prior to its termination.

The Administrator will continue to hold the books and records of the Company for a period of six years in exchange for a fixed fee of £700 per annum.

6.         Benefits of the Proposals

As mentioned above, now that the Company has disposed of its investments and, in the absence of any suitable alternative proposal, the Board has concluded that it is in the best interests of Shareholders to liquidate the Company and return its net available cash to Shareholders as soon as practicable.

7.         The ResolutionS

The proposed ex gratia payment is the subject of an ordinary resolution, to be put to Shareholders at the Extraordinary General Meeting, which will be passed if a simple majority of Shareholders (by Shares held) vote in favour of the proposed resolution.  If the proposed resolution is not passed, the additional ex gratia payment will not be made, but the incentive fees announced on 31 March 2015 will still be paid.

The voluntary liquidation and cancellation of admission to trading on AIM are the subject of a single Special Resolution, to be put to Shareholders at the Extraordinary General Meeting. Shareholders will be asked to approve, pursuant to the Special Resolution, that:

(a)        the admission of the Company's Ordinary Shares to trading on AIM be cancelled in accordance with Rule 41 (Cancellation) of the AIM Rules for Companies (the "Delisting");

(b)        the Directors of the Company be and hereby are authorised to take any and all steps which are necessary or desirable in order to effect the Delisting;

(c)        the Company be wound up voluntarily pursuant to section 391(1)(b) of the Companies (Guernsey) Law, 2008, as amended, and that Linda Maree Johnson and Ashley Charles Paxton of KPMG Channel Islands Limited be and are hereby appointed as the Joint Liquidators for the purposes of such winding-up, including realising and distributing the Company's assets;

(d)        the remuneration of the Joint Liquidators be determined by reference to the time properly given by the Joint Liquidators and their staff in attending to matters prior to and during the winding-up, and the Joint Liquidators be and are hereby authorised to draw such remuneration as she they may determine and to pay any expenses properly incurred by them, subject always to any prior agreement or quotation made between the Company and the Joint Liquidators;

(e)        after 6 years, or (if earlier) on completion of the liquidation, the Joint Liquidators be and are hereby authorised to donate any distribution, or part distribution, that has been declared but remains unclaimed to charity; and

(f)         the Company's books and records be held by JTC Fund Solutions (Guernsey) Limited, in its capacity as the Company's secretary, to the order of the Joint Liquidators for a period of six years from the date of conclusion of the liquidation.

8.         Extraordinary General Meeting

The Proposals are subject to Shareholders' approval. Under Part XXII of the Companies Law, for the Company to be placed into voluntary liquidation, a special resolution is required to be passed and delivered to the Registrar of Companies.

A Notice convening the Extraordinary General Meeting, to be held at 11:00 a.m. on Wednesday, 9^th March 2016 at Ground Floor, Dorey Court, Admiral Park, St Peter Port, Guernsey GY1 2HT, is set out at the end of this Circular. The Notice includes the full text of the Resolutions.

The quorum for the Extraordinary General Meeting will be two Shareholders present in person or by proxy. If, within half an hour after the time appointed for the Extraordinary General Meeting (or such longer period as the chairman of the Extraordinary General Meeting may think fit to allow), a quorum is not present, or if during the meeting a quorum ceases to be present, the Extraordinary General Meeting shall stand adjourned for seven days at the same time and place or to such other time and place or to such other day and at such other time and place as your Board may determine and no notice of adjournment need be given. At the adjourned Extraordinary General Meeting, those Shareholders who are present in person or by proxy shall be a quorum. 

The Notice of Extraordinary General Meeting containing the Resolutions is set out at the end of this Circular. The ordinary resolution requires approval by a simple majority of the votes cast by those attending and entitled to vote, whether in person, by proxy or by corporate representative, and the special resolution requires approval by at least 75% of the votes cast by those attending and entitled to vote,. If the Special Resolution is so approved, cancellation is expected to take effect at 7:00 a.m. on 17^th March 2016 (being a date at least 20 business days from the date of notification of cancellation as required by the AIM Rules).

9.         Action to be Taken 

Whether or not you intend to be present at the Extraordinary General Meeting, you should ensure that your Proxy Appointment (and any relevant supporting documentation) is completed in accordance with the instructions printed thereon and returned to the Company's Registrar, addressed to Capita Asset Services, PXS 1, 34 Beckenham Road, Beckenham BR3 4ZF as soon as possible, but in any event not later than 11:00 a.m. on 7^th March 2016.

10.       Recommendation

Your Board considers that the Proposals and the Resolutions are in the best interests of Shareholders as a whole. Accordingly, your Board unanimously recommends Shareholders to vote in favour of the Resolutions at the Extraordinary General Meeting, as they intend to do in respect of their beneficial holdings of Shares, amounting to 6,076,323 Shares in aggregate, held as follows:

Gilbert Chalk - 16,855 Shares;

Peregrine Moncreiffe - 381,583 Shares; and

Timothy Slesinger - 4,824,244 Shares.

Neither Mr Bridel nor Mr Trott holds any Shares in the Company.

Yours faithfully

Gilbert Chalk

Chairman

A copy of the circular will be available to view shortly on the Company's website in accordance with AIM Rule 26: www.aurorarussia.com

Enquiries:

Aurora Russia Limited

Gilbert Chalk

[phone]

Numis Securities Limited

[phone]

Nominated Adviser: Hugh Jonathan

Corporate Broking: Nathan Brown

 

END

 

 

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