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Altern Asset Opps Ld (TLI)

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Friday 20 June, 2014

Altern Asset Opps Ld

Proposed conditional return of capital

RNS Number : 1597K
Alternative Asset Opps PCC Ltd
20 June 2014
 



 

Alternative Asset Opportunities PCC Limited

 

Proposed conditional return of capital

 

Alternative Asset Opportunities PCC Limited (the "Company") today announces a return of capital conditional on a proposed amendment to the Company's Articles of Incorporation which requires the approval of Shareholders at an Extraordinary General Meeting ("EGM") to be held on 24 July 2014.

 

If the Resolution at the EGM is passed, the Board intends to make an initial capital return to Shareholders of 2.0p per Share (approximately £1.4 million in aggregate). This will be paid on 8 August 2014 to those Shareholders on the register at the close of business on 1 August 2014.  The Shares will be marked ex on 30 July 2014.

 

The Company is today publishing a circular (the "Circular"), following approval by the UK Listing Authority, in respect of the proposed return of capital. A copy of the Circular will be sent to Shareholders and submitted to the National Storage Mechanism.

 

The Chairman's Letter, as contained in the Circular, is set out below.

 

Terms used and not defined in this announcement bear the meaning given to them in the Circular to be published today.

 

"Dear Shareholder         

Proposal for amendment to the Company's Articles of Incorporation and conditional return of capital to Shareholders

INTRODUCTION

In my last two Chairman's statements accompanying our results announcements I have commented that, with the Company on a sounder financial footing and with a continuing flow of policy maturities, the Company could be in a position to start to return funds to Shareholders. 

Following a very satisfactory flow of funds from recent policy maturities, the Company now wishes to seek Shareholder approval to put in place a mechanism that will enable the Company to make capital returns to Shareholders.

The purpose of this document is (a) to provide you with details of and the background to the proposed amendment to the Company's Articles to facilitate returns of capital to Shareholders; (b) to convene an EGM to seek the approval of Shareholders, in accordance with the Listing Rules; and (c) to notify Shareholders that, conditional on the passing of the Resolution, the Board proposes to make an initial capital return to Shareholders shortly after the EGM amounting to a sum of 2.0p per share (approximately £1.4 million in aggregate).

Background to and reasons for the Proposal

Following the placing and open offer in November 2012 the borrowings of the Company were reduced significantly, thereby enabling the Company to continue its policy of seeking to hold its policies to maturity rather than procuring early asset sales which the Board did not consider to be in the long term interests of Shareholders.  The level of maturities experienced in the financial year ending 30 June 2014, at $17.4 million, has been the highest in the Company's history and as at 18 June 2014 the Company's cash balances amounted to $3.7 million and the proceeds from 2 announced maturities not yet received amounted to an additional $1.35 million. 

The bank facility, which was renewed with Allied Irish Banks plc at the time of the placing and open offer, expired on 31 March 2014 and was replaced by a new revolving loan facility with AIB Group (UK) PLC of up to $10 million which is intended to enable the Company to continue to fulfil its obligations, including the payment of premiums, until the expiry of the facility on 31 March 2016.  The current facility is on substantially similar terms to the previous facility but at a reduced interest rate of 3.25 per cent. per annum above LIBOR and a reduced commitment fee.  In addition, unlike the previous facility, the current facility will permit the Company to make capital distributions to Shareholders, assuming (a) no default is occurring, (b) no loans are outstanding under the facility and (c) the Company is not in breach of the asset cover requirement set out therein.

Given the terms of the current facility, the current level of cash balances and the continuing flow of maturities, the Board believes that it is appropriate to put in place a mechanism to enable the Company to make capital returns to Shareholders in a cost effective manner.

The Proposal will involve a change to the Company's Articles to include new provisions that will enable the Directors of the Company to distribute cash to Shareholders through the issue and redemption of B Shares.  Each time the Board resolves to make such a distribution, the Company will announce a bonus issue of B Shares on a pro rata basis.  Immediately upon being issued, fully paid, the B Shares will be redeemed for the amount paid up and the cash proceeds will then be paid to Shareholders.

conditional return of capital following the egm 

If the Resolution at the EGM is passed, the Board intends to make an initial capital return to Shareholders, through the issue and redemption of B Shares paid up out of the Company's share premium reserves, amounting to a sum of 2.0p per Share (approximately £1.4 million in aggregate). This will be paid on 8 August 2014, on a pro rata basis, to those Shareholders on the register at the close of business on 1 August 2014.  The Shares will be marked ex on 30 July 2014.

Any future capital distributions by way of B Share issue will be declared by the Board, having taken into account the flow of maturities, working capital requirements and the cash resources of the Company.  As at 31 May 2014, the Company had 90 policies on 79 lives in its portfolio with a face value of $142.9 million and valuation of $50.2 million.  The average age of the individuals covered by the policies in the portfolio was 90.3 years.

key features AND BENEFITS of b shares

As stated above, the Articles of Incorporation, as amended, would provide for a new class of redeemable B Shares that can be issued, fully paid up, from amounts standing to the credit of the Company's share premium account from time to time to Shareholders entitled to distributions of such amounts. Such B Shares would, upon issue, be compulsorily redeemed, at the discretion of the Directors and subject always to any applicable laws (including the satisfaction of any solvency laws).

The New Articles would require any such bonus issue of B Shares to be allotted to entitled Shareholders pro rata to their holdings of Shares as at the time of issue of the B Shares.

Save for an entitlement to a nominal fixed annual dividend of 0.0001p, the B Shares would carry no rights to dividends or other distributions out of the profits of the Company. Holders of B Shares will not be entitled to any surplus assets of the Company apart from distributions of capital paid up on the B Shares.  The B Shares will not be listed, will not carry any right to receive notice of, or attend or vote at, any general meeting of the Company and will not be transferable.

The attention of Shareholders is drawn to Part III of this Circular which sets out a general guide to certain aspects of the tax treatment of Shareholders on an issue and redemption of the B Shares. Such redemption should allow most UK taxpayers to receive the return in the form of a capital receipt. Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the UK should consult an appropriate professional adviser.

THE RESOLUTION

This document includes a Notice of Extraordinary General Meeting, at which a special resolution will be proposed for the adoption of the Company's New Articles.

The Resolution, which will be proposed as a special resolution and require the approval of not less than 75 per cent. of those Shareholders present and voting at the EGM (in person or by proxy), will ask Shareholders to approve the Company's New Articles. The principal amendments are as set out in Part II of this document.

Risk associated with the proposal

In considering your decision in relation to the Proposal, you are referred to the risk that the Proposal is designed to facilitate the return of capital to Shareholders and will therefore reduce the cash resources of the Company each time a distribution is made.  Although the Board will take careful account of the working capital requirements of the Company prior to declaring a capital return, Shareholders should note that the level of cash resources available to the Company to meet future premium payments and other operating expenses will be lower following each distribution.

Shareholders should read this Circular carefully and in its entirety and, if you are in any doubt about the contents of this Circular or the action you should take, you are recommended to seek immediately your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000.

EXTRAORDINARY GENERAL MEETING

Set out at the end of this document is a notice convening an Extraordinary General Meeting of the Company to be held at 11.00 a.m. at 199 Bishopsgate, London EC2M 3TY on 24 July 2014 at which a special resolution will be proposed to adopt the Company's New Articles.

All Shareholders of the Company are entitled to attend and vote at the Company's EGM. In accordance with the Company's Articles of Incorporation, each Shareholder present in person (or, if a corporation, by a representative) shall upon a show of hands have one vote and upon a poll shall have one vote for every Share held. Two Shareholders present in person (or by proxy) holding 5 per cent. of the issued share capital between them (excluding any Shares held as treasury shares) will constitute a quorum.

ACTION TO BE TAKEN

You will find enclosed with this document a Form of Proxy for use at the EGM. Whether or not you propose to attend the EGM in person, you are asked to complete the Form of Proxy and return it to Capita Asset Services, at PXS1, 34 Beckenham Road, Beckenham, Kent BR3 4ZF so as to arrive as soon as possible, but in any event so as to be received not later than 11.00 a.m. on 22 July 2014. Completion and return of a Form of Proxy will not preclude you from attending and voting at the EGM in person if you wish.

If you are in any doubt as to what action you should take, you are recommended to seek your own personal financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 immediately.

DOCUMENTS AVAILABLE FOR INSPECTION

A draft of the Company's New Articles proposed for adoption at the EGM will be available for inspection at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2HS during normal business hours on any Business Day from the date of this document until the conclusion of the EGM. The draft New Articles will also be available for inspection 15 minutes prior to, and during, the EGM at 199 Bishopsgate, London EC2M 3TY.

CONSEQUENCES OF THE PROPOSAL NOT BEING APPROVED AT THE EGM

If the Proposal is not approved at the EGM, the Articles will remain unamended and the Board will consider alternative methods for the distribution of cash to Shareholders.

RECOMMENDATION

In the Board's opinion, the Proposal and the Resolution to be put forward at the Extraordinary General Meeting are in the best interests of the Company and its Shareholders as a whole.

Accordingly, your Board unanimously recommends that Shareholders vote in favour of the Resolution, as they intend to do in respect of their own beneficial holdings which amount to, in aggregate, 1,602,454 Shares (representing 2.2 per cent. of the existing issued Share capital of the Company as at 19 June 2014, the last practicable day prior to publication of this document). 

Yours faithfully

 

 

Charles Tracy

Chairman"

 

 

Enquiries

 

Peter Ingram                                                                                                    020 7065 1467

Company Secretary                                                       

 

Westhouse Securities Limited

Alastair Moreton/Hannah Young/Darren Vickers                             020 7601 6118


This information is provided by RNS
The company news service from the London Stock Exchange
 
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