Review of Liquid Resources & Proposed Tender Offer

RNS Number : 2075H

LMS Capital PLC

06 June 2017

 

6 June 2017

LMS Capital plc

Board Review of Liquid Resources and Proposed Tender Offer

In its circular published on 27 July 2016 (the "2016 Circular"), LMS Capital plc (the "Company" or "LMS") proposed two further returns of capital to Shareholders by way of tender offers and associated share repurchases together representing a maximum of 50% of the net proceeds of further disposals of assets in the Company's existing portfolio. The details of these further capital returns are as follows:

-     the first tender offer and associated share repurchases would return up to £6 million to Shareholders (once net realisation proceeds, after 27 July 2016, exceeded £12 million), (the "First Tender");

-     the second tender offer and associated share repurchases would return up to £5 million to Shareholders (once net realisation proceeds, after 27 July 2016, exceeded £22 million in total), (the "Second Tender");

-     both tender offers and associated share repurchases would be priced at a 5% discount to the net asset value of the Company at the relevant time; and

-     the concert party (comprising members of the extended Rayne family and associated trusts together currently holding 36.12% of the issued share capital of the Company) has undertaken not to participate in these tender offers.

As envisaged in the 2016 Circular, the disposal proceeds of the Company's portfolio (as realised and net of the First Tender and Second Tender and amounts required for working capital purposes) will be invested in accordance with the Company's investment policy.

The Company announced on 22 May 2017 that net realisation proceeds since the change in investment policy totalled £12.4 million, exceeding the threshold of net realisations for a First Tender. As at 31 May 2017, net realisation proceeds amounted to £12.8 million.

The Board also announced that it would commence a full review of the Company's liquid resources, future cash requirements, commitments and costs with a view to determining the appropriate amount and timing of a further tender offer. 

The Board has now completed this review, advised where required by the Company's investment manager, Gresham House Asset Management ("GHAM"), and announces the following conclusions:

-     As at 31 May 2017 the Company's liquid resources amounted to £9.2 million comprised of cash and cash equivalents.

-     The Company has uncalled commitments to third party funds of up to approximately £3.5 million - the timing and amount of these potential future calls is unknown.

-     Taking the Company's liquidity levels and liquidity requirements into account, including its ability to realise some of its existing quoted holdings, the Board has concluded that it is able to fulfil its First Tender commitment with a capital return of £6 million. As set out in the 2016 Circular, this will be priced at a 5% discount to the net asset value of the Company at the relevant time. A circular convening a general meeting to consider the resolutions required to effect the First Tender is expected to be sent to Shareholders in July.

-     As set out in the 2016 Circular, the Board intends to return up to a further £5 million to satisfy the Second Tender commitment. At this stage it is not possible to confirm the timing or final amount of the Second Tender. It is possible that liquidity and working capital constraints could lead to a delay in effecting the Second Tender. The Board will update Shareholders as progress is made with realisations from the Company's portfolio and the implementation of the new investment policy.

Following the changes to the Company's investment policy approved by Shareholders in August 2016, LMS focuses predominantly on private equity investment, targeting a return on equity after running costs of between 12% - 15% per annum over the longer term, principally through capital gains and supplemented with the generation of longer term income yield. It is the intention of the Board and GHAM to deliver this revised investment mandate for Shareholders.

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

For further information please contact:

LMS Capital plc
Martin Knight, Chairman	020 7935 3555
Gresham House Asset Management Limited
Graham Bird	020 3837 6270
J.P. Morgan Cazenove  (Corporate Broker)	020 7742 4000
Michael Wentworth-Stanley

 

END

 

 

MSCLELLBDQFFBBX