EGP Egypt Trust

 
TIDMEGP 
 
 

For immediate release on 10 February 2012

The Egypt Trust

Publication of circular

The Board of The Egypt Trust (the "Fund") announces that it has today published a circular containing details of proposals to liquidate the Fund and to cancel the listing of the Fund's ordinary shares on the Official List of the UK Listing Authority and the Luxembourg Stock Exchange and to cancel trading of such shares on the London Stock Exchange and the Luxembourg Stock Exchange. An EGM has been convened to seek shareholder consent to the proposals at 10.00 a.m. Luxembourg time on 24 February 2012.

The text of the Chairman's letter extracted from the circular is set out below.

"Dear Shareholder

Recommended proposals for the liquidation of the Fund

Introduction

The Fund announced on 19 July 2011 that the Board had received indications from the Fund's two largest Shareholders, National Bank of Egypt and Banque Misr, representing between them approximately 92 per cent. of the issued Share capital of the Fund, that they wished to seek an exit for their respective investments in the Fund. The Directors are today putting forward proposals to the Shareholders to commence a liquidation of the Fund. The purpose of this document is to provide you with the background to and reasons for the proposed winding-up of the Fund and to seek your approval for:

 
 
    -- the Liquidation Resolution required to place the Fund into liquidation 

pursuant to the Law, to appoint KPMG Luxembourg S.àr.l., represented

by Mr. Zia Hossen, as Liquidator and to define the powers and

remuneration of the Liquidator and to authorise the Liquidator to make

in specie distributions or distributions in cash of the liquidation

proceeds in accordance with the Proposals detailed in this document;

and

 
    -- the Cancellation Resolution required to approve the cancellation of 

the listing of the Shares on the Official List of the UK Listing

Authority (pursuant to the Listing Rules) and the Luxembourg Stock

Exchange (pursuant to the rules and regulations of the Luxembourg

Stock Exchange) and of the trading of the Shares on the London Stock

Exchange and on the Luxembourg Stock Exchange, to authorise the

Liquidator to cause such cancellation to be effected and to do and/or

procure to be done all such acts and/or things as it may consider

necessary or desirable in connection therewith.

The Resolutions will be proposed at an Extraordinary General Meeting of the Fund to be held on 24 February 2012 at 10.00 a.m. (Luxembourg time) at the Fund's registered office, being 11, rue Aldringen, L-1118 Luxembourg.

If the quorum is not reached for the Liquidation Resolution at the Extraordinary General Meeting, the Liquidation Resolution will be proposed at a Reconvened EGM of the Fund to be held on 2 April 2012 at 10.00 a.m. (Luxembourg time) at the registered office of the Fund.

If the Liquidation Resolution is approved, the Fund will be placed into liquidation and the surplus assets of the Fund, after settlement of all liabilities to creditors, will be distributed to the Shareholders in accordance with their respective entitlements as detailed in this document. If the Cancellation Resolution is passed, the Fund will apply to the UK Listing Authority and the Luxembourg Stock Exchange to cancel the listings of itsShares.

Background

The Fund was incorporated in Luxembourg on 23 July 1996 as a closed-ended investment corporation and qualifies as a société d'investissement à capital fixe under the laws of Luxembourg. The Fund does not have a fixed life.

The Fund's investment objective is to achieve medium to long-term capital growth through investments principally in equity securities of Egyptian companies listed on the EGX as well as other exchanges. The Fund's annualised long-term performance, since inception to 31 December 2011, has been as follows:

 
                    1 year     3 year    5 year     Inception 
Net Asset Value     -42.47%    -5.21%    -7.34%     +4.79% 
S&P IFC Egypt       -49.84%    -8.68%    -12.53%    +2.00% 
 
 

On 16 June 2010, the Fund announced that it had become aware that, as a result of the quarterly share redemptions offered by the Fund, two of its Shareholders (National Bank of Egypt and Banque Misr) had a combined holding of 92.7 per cent. of the Fund's issued share capital. The Fund also confirmed that it had informed the UK Listing Authority that, given the size of the combined shareholdings, it was not able to comply with the Listing Rule requirement that at least 25 per cent. of its issued share capital be held in public hands (the Listing Rules provide that shares held by any person or persons in the same group or persons acting in concert who have an interest in 5 per cent. or more of the shares are not deemed to be in public hands). Consequently, the Fund stated that it would be considering all possible and appropriate options for redressing the Fund's free float position.

Since that time, the Fund has examined a number of different options to restore its free float position above the 25 per cent. requirement. Unfortunately, this time coincided with a period of significant turbulence in both Egyptian and global markets. Not only did the concerns over sovereign defaults in Europe in the second half of 2010 overshadow positive economic and corporate earnings data in Egypt resulting in high levels of volatility in the EGX, but the revolution that took place in Egypt on 25 January 2011 changed the political and social landscape in the country and had significant consequential effects on the wider Middle East. The EGX remained closed for most of the first quarter of 2011. Following resumption of trading and initial falls in prices, the Egyptian market began to recover slowly at the start of the second quarter of 2011 reflecting renewed optimism during the transitional period. However, this optimism was short-lived as the Egyptian market fell once more to levels last seen during February 2009 post the global financial crisis. The Fund reported in August 2011 that politics continued to dominate market movements during the second quarter and that it was expected to continue to do so until the elections which are due to take place during March or April 2012.

In light of this background and the indications by the Fund's two largest Shareholders that they wished to seek an exit for their investments, the Board, in consultation with the Manager, considers that it would be in the best interests of Shareholders as a whole to put forward proposals for the liquidation of the Fund and to appoint the Liquidator to distribute the assets of the Fund to all Shareholders. Accordingly, the Board is proposing the Liquidation Resolution to enable Shareholders to vote on the liquidation of the Fund.

In light of the above, the Board is therefore also proposing the Cancellation Resolution to approve the cancellation of the listing of the Fund's Shares on both the Official List of the UK Listing Authority and the Luxembourg Stock Exchange and of the trading of the Shares on the London Stock Exchange and on the Luxembourg Stock Exchange.

The Board has received written notifications from Shareholders holding approximately 92 per cent. of theissued Shares that they intend to irrevocably vote in favour of the Resolutions.

The Proposals

If approved by Shareholders, under the Proposals:

 
 
    -- the Fund will be put into liquidation and the Liquidator appointed; 
 
    -- the Liquidator shall set aside a pool of cash and other assets of the 

Fund estimated by the Liquidator to be sufficient to meet the

outstanding and contingent liabilities of the Fund (including the

costs of the Proposals);

 
    -- out of the remaining assets of the Fund, the Liquidator will commence 

steps to make a first interim liquidation distribution to all

Shareholders, who will be entitled to elect to receive such

distribution by way of an in specie distribution or a cash

distribution;

 
    -- the in specie distribution will comprise a pro rata transfer of 

portfolio assets, constituted of securities listed on the EGX,

directly to those Shareholders who have validly elected for the In

Specie Distribution Option;

 
    -- such transfer must be effected on the EGX and, accordingly, the 

Liquidator will be required to apply to the PSC to effect the in

specie distributions by way of a Protected Trade;

 
    -- assuming that the PSC Approval is obtained, those Shareholders who 

have elected for the In Specie Distribution Option will be entitled to

have transferred to them those listed securities at a deemed price

equal to the closing price of such shares as at the date that the PSC

Approval is obtained, which shall be the Calculation Date;

 
    -- those Shareholders who have been deemed to have elected for the Cash 

Distribution Option (i.e. all Shareholders who have not elected for

the In Specie Distribution Option) will receive an amount in cash per

Share that is equivalent to the value per Share of those listed

securities that have been transferred to Shareholders by way of the in

specie distribution;

 
    -- these first interim liquidation distributions to all Shareholders 

shall be effected on the same date, which is expected to be on or

around 30 March 2012; and

 
    -- any further liquidation distributions made by the Liquidator following 

the first interim liquidation distributions will be made to all

Shareholders in cash regardless of which option they choose (or have

been deemed to have chosen) for the first interim liquidation

distribution.

It should be noted that if the PSC Approval is not obtained, the Liquidator will not be permitted to effect the Protected Trade and the Liquidator shall consider how best to proceed with the liquidation and shall inform Shareholders accordingly. In such circumstances, the first interim liquidation distribution might be effected later than anticipated in the expected timetable on page 3 of this document.

Risks

Shareholders should note that in the event of neither the Liquidation Resolution nor the Cancellation Resolution being passed, in the absence of proposals acceptable to the UK Listing Authority to restore the Fund's free float position above the 25 per cent. requirement, there is a risk that the Fund's listing on the Official List of the UK Listing Authority and of the trading of the Shares on the London Stock Exchange would be cancelled in any event. Realisation of the Shareholders' investment may then be difficult. The Fund has received written notifications from Shareholders holding approximately 92 per cent. of the issued Shares that they intend to vote irrevocably in favour of the Resolutions. Accordingly, the Directors expect that the Extraordinary General Meeting will be quorate and that the Resolutions will be passed.

Shareholders deciding to elect for the In Specie Distribution Option should note that the in specie distribution will comprise a pro rata transfer of portfolio assets, constituted of securities listed on the EGX. Shareholders should note that, depending on the size of the Fund's shareholding in an investee company and the Shareholder's own shareholding in the Fund, the in specie distribution to a Shareholder may be constituted of a number of small shareholdings in the Fund's investee companies which may be difficult to realise and uneconomic to hold. The decision for Shareholders as to whether to elect for the In Specie Distribution Option is a matter for each Shareholder and will be influenced by its financial and tax circumstances and investment objectives. The Directors cannot, and do not, offer any advice or recommendation to Shareholders as to whether to make an election for the In Specie Distribution Option. If you need advice, you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser without delay.

Shareholders opting for the In Specie Distribution Option

Those Shareholders who wish to elect for the In Specie Distribution Option should contact the Registrar to request a Form of Election to complete and return to Ms Maddy Roose of Kredietrust Luxembourg S.A by email (maddy.roose@kbl-bank.com) or by fax (+352 4797 73910) AND by post to Kredietrust Luxembourg S.A., 11, rue Aldringen, L-2960 Luxembourg, as soon as possible but, in any event, so as to be received no later than 10.00 a.m. (Luxembourg time) on 22 February 2012. Forms of Election, once submitted, will be irrevocable unless the Directors (at their sole discretion) determine otherwise.

Shareholders should note that shares traded on the EGX must be held by a custodian licensed by the Egyptian Financial Supervisory Authority. Accordingly, in order to receive the In Specie Distribution Option, Shareholders must provide details of a custodian licensed by the Egyptian Financial Supervisory Authority in their Form of Election as well as their account details in order for the Form of Election to be treated as valid.

Shareholders should also note that, under the Capital Markets Law, if a person acquires a certain percentage shareholding in a company listed on the EGX, such acquisition may trigger a disclosure obligation on such person or, in certain circumstances, an obligation to undertake an offer for the remainder of the issued share capital of that company. Shareholders considering electing for the In Specie Distribution Option should consider their obligations under the Capital Markets Law and consider the effect of aggregating the Fund's portfolio holdings with their own existing interests in the Fund's investee companies.

Shareholders who are resident in, or citizens or nationals of, a jurisdiction outside Luxembourg are responsible for informing themselves about and observing any legal requirements in that jurisdiction. No action has been taken or will be taken in any jurisdiction where action is required to be taken to permit the distribution of this document and/or the Form of Election. Accordingly, such documents may not be used for the purpose of, and do not constitute, an offer or solicitation by anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation.

Costs of implementing the Proposals

Each of the Manager and the Investment Adviser has agreed to terminate their agreement with the Fund with effect from the Effective Date without compensation in lieu of notice. The Fund's Registrar, Kredietrust Luxembourg S.A., will be retained by the Fund in the liquidation period for the purposes of maintaining the register of Shareholders and making the distributions required under these Proposals.

The aggregate costs to be incurred by the Fund in connection with the Proposals are estimated to be approximately US$320,000. The costs of the Proposals (including fees levied by the EGX on the transfer of securities by way of a Protected Trade, clearing, depository and registry fees, broker fees and those charged by the Egyptian Financial Supervisory Authority in relation to the in specie distributions) shall be borne by all Shareholders.

The Liquidator shall meet the current and future, actual and contingent, liabilities of the Fund, including the costs and expenses of liquidation, out of the remaining assets of the Fund.

Entitlements of Shareholders on a winding-up

The Calculation Date for determining the value of the Cash Distribution Fund and the In Specie Distribution Fund is expected to be on or around 23 March 2012 when it is anticipated that the PSC Approval will be granted.

It is expected that all Shareholders will receive a first interim liquidation distribution (whether in cash or by way of an in specie distribution of investments held by the Fund as at the Effective Date) by no later than 30 March 2012 (although the actual date for making these distributions will be dependent on the date of the PSC Approval (if granted) and will, ultimately, be determined by the Liquidator).

Any surplus remaining in the Liquidation Fund after the settlement of all liabilities will be distributed to all Shareholders (including Shareholders that have elected for the In Specie Distribution Option) as one or more cash distributions. This final distribution, if any, will not be made until the Liquidator has completed its statutory duties to seek out, adjudicate and pay creditors' claims. The precise timing of the final distributions (if any) will depend on the progress of the liquidation, the Liquidator's assessment of the value and recoverability of any contingent assets (in particular, the agreement and settlement of any contingent or unknown liabilities) and the receipt by the Liquidator of confirmation from the tax authorities that the Fund has no outstanding tax liabilities. However, it is expected that final distributions (if any) will be made on or around 31 May 2012.

Cheques will be sent to Shareholders in respect of cash distributions. In the event that any Shareholder's entitlement on a distribution is less than US$5.00, such amount will not be distributed to Shareholders but instead will be donated to a charity to be selected by the Board.

Stock exchange dealings

The Register will be closed at 6.00 p.m. on 23 February 2012. Applications will be made to the UK Listing Authority and to the Luxembourg Stock Exchange for suspension of listing of the Shares on the Official List of the UK Listing Authority and on the Luxembourg Stock Exchange and applications will be made to the London Stock Exchange and the Luxembourg Stock Exchange for suspension in trading in the Shares at 8.30 a.m. on 24 February 2012. The last day for dealings in the Shares on the London Stock Exchange and the Luxembourg Stock Exchange on a normal rolling three day settlement basis will be 20 February 2012. After 20 February 2012, dealings should be for cash settlement only and will be registered in the normal way if the transfer, accompanied by the documents of title, is received by the Registrar by 22 February 2012. Transfer requests received after that time will be returned to the person lodging them.

Shareholders will retain their Shares. Although the Shares will remain listed on the Official List of the UK Listing Authority and the Luxembourg Stock Exchange until cancellation of listing procedures have been completed, trading in the Shares will be suspended following the Effective Date. The Liquidator will not register changes in ownership.

After the liquidation of the Fund and the making of the final distribution to Shareholders (if any), existing certificates in respect of the Shares will cease to be of value.

Liquidator's liability

Nothing in these Proposals shall impose any personal liability on the Liquidator.

Completion of the winding-up

Towards completion of the liquidation process, Shareholders will receive a notice for a second extraordinary general meeting during which the Liquidator will present to the Shareholders its report on the liquidation. During this extraordinary general meeting, the Shareholders will receive the report from the Liquidator, grant discharge to the directors of the Fund for the performance of their duties for the period from 16 August 2011 until the Effective Date and approve the annual accounts of the Fund for the period from 1 April 2011 until the Effective Date. A report drawn up by the Fund's approved statutory auditor will be presented during this second extraordinary general meeting. Finally, at that extraordinary general meeting, Shareholders will resolve on the discharge of the Liquidator, on the closure of the liquidation and designate the place where the books and corporate documents of the Fund will be deposited and held for at least 5 years and will decide upon the deposit of non-distributed proceeds.

Taxation

The receipt by Shareholders of cash or in specie distributions under the Proposals may constitute a disposal for the purposes of the taxation of chargeable gains of the relevant Shares and may give rise to a liability to the taxation of chargeable gains depending on the particular circumstances of the Shareholder concerned. Depending upon the price at which Shares were purchased, some Shareholders may have suffered a capital loss on their investment in the Shares which may be available to be offset against other taxable capital gains realised by them. If you are in any doubt about your tax position you should consult your professional adviser immediately.

Action to be taken

Form of Proxy

Shareholders will find enclosed with this document a Form of Proxy for use in connection with the Extraordinary General Meeting. Shareholders who are unable to attend the Extraordinary General Meeting are requested to complete and return the Form of Proxy. A Form of Proxy completed for use in connection with the Extraordinary General Meeting will remain valid for the Reconvened EGM unless expressly revoked.

Shareholders are requested to complete and return their Form of Proxy as soon as possible. To be valid, the Form of Proxy must be completed and returned in accordance with the instructions printed thereon to the Fund's Registrar, Kredietrust Luxembourg S.A., as soon as possible and in any event no later than close of business (Luxembourg time) on 22 February 2012 and, for use in connection with the Reconvened EGM, so as to arrive no later than close of business (Luxembourg time) on 29 March 2012. Any proxies received after this time will not be taken into account.

The return of the completed Form of Proxy will not affect your right as a Shareholder to attend the Extraordinary General Meeting or the Reconvened EGM (if applicable) and to vote in person if you wish to do so. If you wish to participate at the meeting in person, we kindly ask you to inform the Registrar at the latest on 22 February 2012 for the Extraordinary General Meeting or at the latest on 29 March 2012 for the Reconvened EGM, by fax at the following number +352 4797 73910.

If you are in any doubt as to the action you should take, you should immediately consult your stockbroker, solicitor, accountant, bank manager or other appropriately qualified independent financial adviser.

For more information, please contact Ms Maddy Roose of the Fund's Registrar, Kredietrust Luxembourg S.A. on +352 4797 4550.

Quorum

The Liquidation Resolution to be proposed at the Extraordinary General Meeting requires the holders of 50 per cent. of the issued Share capital to be present (by person or by proxy) for the meeting to be quorate. The Liquidation Resolution requires a majority of two-thirds of the votes cast to be cast in favour in order for it to be passed.

The Cancellation Resolution carries no quorum requirement. The Cancellation Resolution will be passed if approved by 75 per cent. of the votes cast at the meeting.

In the event that the Extraordinary General Meeting is not quorate for the purposes of the Liquidation Resolution, a Reconvened EGM will be convened by the Board by way of separate notices published in accordance with Luxembourg law at which no quorum will be applicable. At the Reconvened EGM, the Liquidation Resolution will require the majority referred to above, with abstentions and invalid votes not being taken into account.

Shareholders' intentions

he Fund has received written notifications from Shareholders holding approximately 92 per cent. of the issued Shares that they intend to vote irrevocably in favour of the Resolutions and to elect for the In Specie Distribution Option. Accordingly, the Directors expect that the Extraordinary General Meeting will be quorate and that the Resolutions will be passed.

Further information

Your attention is drawn to Part 2 of this document, which sets out further details of the Proposals.

Recommendation

The Board of the Fund considers that the Proposals are in the best interests of the Shareholders as a whole. Accordingly, the Board unanimously recommends all Shareholders to vote in favour of the Resolutions as they intend to do in respect of their own beneficial holdings in the Fund's Shares. The Directors' interests amount in aggregate to 2,500 Shares (representing approximately 0.14 per cent. of the total number of issued Shares in the capital of the Fund).

Yours faithfully

Alexander E. Zagoreos

Chairman"

Expected timetable

 
                                          2012 
Date from which it is advised that        20 February 
dealings in Shares should only be 
for cash settlement and immediate 
delivery of documents of title 
Latest time and date for receipt          10:00am on 22 February 
of Forms of Election 
in respect of  the In Specie 
Distribution option 
Latest time and date for receipt          close of business on 22 February 
of Forms of Proxy 
for use at the  Extraordinary 
General Meeting 
Latest time and date for delivery to      close of business on 22 February 
Registrar of documents of title 
relating to dealings in Shares 
subject to cash settlement 
Close of Register and Record Date for     6.00 p.m. on 23 February 
participation in the  liquidation 
Suspension of listing of the              24 February 
Shares on the official 
list of the  Luxembourg 
Stock Exchange 
and suspension of trading 
of the Shares 
on  the Luxembourg Stock Exchange 
Suspension of listing                     8.30 a.m. on 24 February 
of the Shares on the 
Official List of the UK 
Listing Authority 
and suspension of trading 
of the Shares 
on the  London Stock Exchange 
Extraordinary General Meeting             10.00 a.m. on 24 February 
If the quorum requirements are met 
for the Liquidation Resolution 
at the Extraordinary General Meeting 
Effective Date for the                    24 February 
commencement of the 
liquidation operations of  the Fund 
Date of cancellation of listing           expected to be on or around 
of the Shares on the Official             9.00 a.m. on 23 March 
List  of the UK Listing Authority 
and the Luxembourg 
Stock Exchange and of  trading 
of the Shares on the London 
Stock Exchange and on the 
Luxembourg Stock Exchange 
Date of PSC Approval                      expected to be on or around 
                                          23 March 
Calculation Date                          expected to be on or around 
                                          5.30 p.m. on 23 March 
Estimated date for in                     30 March 
specie distributions 
to Shareholders 
electing  for the In Specie 
Distribution Option 
and for cash distributions 
to  Shareholders deemed 
to have elected for the Cash 
Distribution Option* 
If the quorum requirements 
are not met 
for the Liquidation  Resolution 
at the Extraordinary General Meeting 
First publication of notice               29 February 
of Reconvened EGM 
Second publication of notice              16 March 
of Reconvened EGM 
Reconvened EGM                            10.00 a.m. on 2 April 
Effective Date for the                    2 April 
commencement of the 
liquidation operations of  the Fund 
Date of cancellation of listing           expected to be on or around 
of the Shares on the Official             9.00 a.m. on 30 April 
List  of the UK Listing Authority 
and the Luxembourg 
Stock Exchange and of  trading 
of the Shares on the London 
Stock Exchange and on the 
Luxembourg Stock Exchange 
Date of PSC Approval                      expected to be on or around 
                                          30 April 
Calculation Date                          expected to be on or around 
                                          5.30 p.m. on 30 April 
Estimated date for in                     7 May 
specie distributions 
to Shareholders 
electing  for the In Specie 
Distribution Option 
and for cash distributions 
to  Shareholders deemed 
to have elected for the Cash 
Distribution Option* 
 
 

* Actual date to be determined by the Liquidator.

Notes

(i)The dates set out in the expected timetable above may be adjusted by the Fund, in which event details of the new dates will be notified to the UK Listing Authority, the London Stock Exchange and the Luxembourg Stock Exchange, and an announcement will be made through a Regulatory Information Service.

(ii)All references to time in this document are to the time in Luxembourg.

Terms used and not defined in this announcement bear the meaning given to them in the circular dated 10 February 2012.

A copy of the circular is being submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.do

Enquiries:

Kredietrust Luxembourg S.A. +352 4797 4550

Maddy Roose

Westhouse Securities Limited 020 7601 6118

Alastair Moreton

Hannah Young