TIDMQWIL
RNS Number : 1647R
Queen's Walk Investment Limited
17 August 2010
17 August 2010
QUEEN'S WALK INVESTMENT LIMITED
PROPOSED PLACING AND OPEN OFFER, BONUS ISSUE OF PREFERENCE SHARES AND CHANGE OF
INVESTMENT POLICY
Queen's Walk Investment Limited (the "Company") today announces plans for a
capital raising of approximately EUR26.64 million (EUR24.88 million net of expenses)
by way of a Placing and Open Offer at EUR2.00 per New Ordinary Share. Qualifying
Open Offer Shareholders are being given the opportunity to apply to subscribe
for 1 New Ordinary Share for every 2 Existing Ordinary Shares held at the close
of business on 13 August 2010. Each of the Directors intends to take up his pro
rata entitlement to New Ordinary Shares under the Open Offer.
Placees procured by Liberum Capital have conditionally committed to subscribe
for all the New Ordinary Shares at the Offer Price subject to clawback to
satisfy valid applications by existing Qualifying Open Offer Shareholders under
the Open Offer.
After close of the first day of trading of the New Ordinary Shares, the Company
also proposes to make a Bonus Issue to Qualifying Bonus Issue Shareholders of
fixed income Preference Shares on the basis of 1.25 Preference Shares for every
1 Ordinary Share held at the close of business on 16 September 2010. The
Preference Shares will be issued free of subscription costs to Qualifying Bonus
Issue Shareholders and confer the right to a preferential cumulative Preference
Dividend (which is an amount in Sterling equal to 8 per cent. per annum of the
Preference Share Notional Value) payable quarterly in arrear.
The Company will shortly be publishing a Prospectus and Circular in connection
with the Placing and Open Offer and Bonus Issue.
The Company, on the advice of its investment manager, Cheyne Capital Management
(UK) LLP (the "Investment Manager"), believes that there is an opportunity for
it to benefit from investment in the European real estate debt market. Going
forward the Company intends to re-direct the focus of its investments on
discounted real estate debt including residential mortgage backed securities and
commercial mortgage backed securities. Accordingly, the Company is proposing to
change its investment policy with the result that the Company's primary focus
for new investments will be Real Estate Debt Investments. The net proceeds of
the Placing and Open Offer will be invested in accordance with the proposed
investment policy.
The Placing and Open Offer, the Bonus Issue and the change to the Company's
investment policy are conditional on Ordinary Shareholders approving certain
resolutions to be proposed at an Extraordinary General Meeting to be convened at
Dorey Court, Admiral Park, St. Peter Port, Guernsey GY1 3BG at the registered
office of the Company at 11.00 a.m. on 15 September 2010.
Summary
· The Company intends to raise EUR26.64 million (EUR24.88 million net of
expenses), by way of a Placing and Open Offer of New Ordinary Shares.
· The Company intends to utilise the proceeds of the Placing and Open Offer
to invest in discounted real estate debt, including residential mortgage backed
securities and commercial mortgage backed securities, which the Investment
Manager considers are suffering price dislocation. The Company is proposing to
amend its investment policy in connection with its intention to focus on
investment in Real Estate Debt Investments in the future. The Investment Manager
believes that Real Estate Debt Investments offer a favourable risk-return
profile, greater liquidity and improved price transparency than the Residual
Income Positions.
· On completion of the Placing and Open Offer, the Company will undertake a
Bonus Issue of fixed income Preference Shares to Ordinary Shareholders. The
Preference Shares confer the right to a preferential cumulative Preference
Dividend equivalent to 8 per cent. per annum, payable quarterly in arrear.
· Cheyne ABS Opportunities Fund LP (the "Investing Fund") has agreed in
writing to not take up its Open Offer Entitlement and may also seek to dispose
of its holding of Preference Shares on or shortly following Bonus Issue
Admission.
· The Company intends to change its name, conditional on the approval of
Shareholders at the EGM, to "Real Estate Credit Investments Limited".
· The Company has convened an extraordinary general meeting at which
Shareholders will be asked to approve, inter alia, the Placing and Open Offer,
the Bonus Issue and the change to the Company's investment policy.
Investment objective
The Board believes that it is now in the best interests of Ordinary Shareholders
as a whole for the Company's investment policy to be amended.
The Company's proposed investment policy will permit the Company to invest
primarily in Real Estate Debt Investments. As at 17 August 2010, the Investment
Portfolio includes a number of Residual Income Positions and as a result, in
order to avoid inadvertent breaches of the proposed investment policy, the
proposed investment policy will, if adopted, require at least 70 per cent. of
the NAV of the Company to be invested in Real Estate Debt Investments and
Residual Income Positions. However, if the proposed investment policy is
adopted at the EGM, the Company does not currently intend to actively increase
existing Residual Income Positions or invest in other Residual Income Positions
with the current intention that eventually Real Estate Debt Investments will
form a majority of the Investment Portfolio.
The Placing and Open Offer
Conditional on the Required Resolutions being approved by Ordinary Shareholders
at the EGM and Open Offer Admission occurring, 13,322,328 New Ordinary Shares
are being issued pursuant to the Placing and Open Offer.
Qualifying Open Offer Shareholders are being given the opportunity to apply to
subscribe for New Ordinary Shares in proportion to their existing holdings at
the Offer Price (payable in full on application) on the following basis: 1 New
Ordinary Share at EUR2.00 per New Ordinary Share for every 2 Existing Ordinary
Shares registered in the name of Qualifying Open Offer Shareholders at the Open
Offer Record Date and so in proportion for any other number of Existing Ordinary
Shares then registered.
Valid applications by Qualifying Open Offer Shareholders will be satisfied in
full up to the amount of their individual Open Offer Entitlement.
Placees procured by Liberum Capital have agreed to subscribe for all the New
Ordinary Shares at the Offer Price conditional upon the passing of the Required
Resolutions at the Extraordinary General Meeting and Open Offer Admission,
subject to clawback in respect of valid applications by Qualifying Open Offer
Shareholders at the Offer Price under the Open Offer.
Not all holders of Existing Ordinary Shares will be Qualifying Open Offer
Shareholders. Shareholders of the Company who are located or resident in, or who
are citizens of, or who have a registered address in an Excluded Territory or
are US Persons (regardless of the number of Existing Ordinary Shares that they
hold) will not qualify to participate in the Open Offer.
The Bonus Issue
The Preference Shares, which will be denominated in Sterling, will be issued
free of subscription cost to Qualifying Bonus Issue Shareholders.
The Bonus Issue is conditional on the Required Resolutions being passed and
Bonus Issue Admission becoming effective by not later than 8.00 a.m. on 17
September 2010.
Qualifying Bonus Issue Shareholders will, subject to the conditions of the Bonus
Issue, be issued Preference Shares on the basis of 1.25 Preference Shares for
each Ordinary Share held as at the Bonus Issue Record Date.
Due to restrictions under the securities laws of the Excluded Territories,
Restricted Shareholders will not qualify to participate in the Bonus Issue and
will not be eligible to receive certificated Preference Shares or have their
securities account in CREST credited with entitlements to Preference Shares.
Subject to applicable law and regulation, the Preference Shares confer the right
to a preferential cumulative Preference Dividend (which is an amount in Sterling
equal to 8 per cent. per annum of the Preference Share Notional Value) payable
quarterly on each Payment Date.
On a return of capital on liquidation or otherwise of the Company (other than by
way of a repurchase or redemption of Shares in accordance with the provisions of
the Articles and the Companies Law) the assets of the Company available for
distribution among the Shareholders shall be applied first to the Preference
Shareholders in proportion to their holdings for an amount equal to the
Repayment Amount in respect of each Preference Share.
Proposed change to the Company's investment policy and the fund raising
Having managed the Investment Portfolio through the credit crisis of 2008 and
2009, the Company, on the advice of the Investment Manager, believes that there
is an opportunity for it to benefit from investment in the European real estate
debt market.
Accordingly, the Company is proposing, subject to the approval of Ordinary
Shareholders at the Extraordinary General meeting, to:
· change its investment policy with the result that the Company's primary
focus for new investments will be Real Estate Debt Investments; and
· undertake a Placing and Open Offer of New Ordinary Shares to raise gross
proceeds of EUR26.64 million to invest in accordance with the proposed investment
policy.
The Company also proposes, subject to the approval of the Required Resolutions,
to make a Bonus Issue to Qualifying Bonus Issue Shareholders of fixed income
Preference Shares.
The Placing and Open Offer and the Bonus Issue are conditional, amongst other
things, upon the approval of the following resolutions at the Extraordinary
General Meeting:
· the special resolution to amend the Articles to accommodate the
Preference Share rights, approve the Placing and Open Offer and the Bonus Issue
and approve each modification, variation or abrogation of the rights of Ordinary
Shares;
· the ordinary resolution to amend the Company's investment policy; and
· the ordinary resolution to approve the Offer Price of the New Ordinary
Shares being EUR2.00 which is a discount of more than 10 per cent. to the middle
market price of the Ordinary Shares at close on 16 August 2010.
The Board believes that the proposed change to the investment policy of the
Company, the Placing and Open Offer and the Bonus Issue will result in a number
of benefits for the Company. The Directors, on the advice of the Investment
Manager, believe that Real Estate Debt Investments offer attractive returns
relative to the risk of such investments. Further, the Company is mindful of the
need to balance its best interests to raise capital against the interests of
Ordinary Shareholders. The Board believes that the structure of the Placing and
Open Offer balances appropriately the interests of Existing Ordinary
Shareholders with new investors in that it offers Existing Ordinary Shareholders
the opportunity to not suffer, or limit the, dilution that will occur upon the
issue of New Ordinary Shares.
Tom Chandos, Chairman of Queen's Walk Investment Limited, said:
"The fundraising will allow the Company to re-focus its investment strategy on
real-estate debt investments and, through the bonus issue of the preference
shares will give investors an attractive and stable income return. The increased
liquidity, price transparency and favourable risk-reward profile of the
Company's new investments should benefit investors and further our aims to
increase NAV and reduce the discount to NAV at which the ordinary shares trade."
-ENDS-
For further information:
+----------------------------+----------------------------------------+
| Queen's Walk Investment | |
| Limited | |
| Shamez Alibhai | |
| +44 (0)20 7031 7450 | |
| | |
+----------------------------+----------------------------------------+
| Liberum Capital (Sponsor, Financial Adviser and Bookrunner) |
| Chris Bowman / Tom Fyson / Richard Bootle |
| Tel: +44 (0)20 3100 2000 |
| |
+----------------------------+----------------------------------------+
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Background to the proposed change to the Company's investment policy and the
fund raising
Since its inception in 2005 the Company has invested primarily in a diversified
portfolio of subordinated tranches of asset-backed securitisations. These
subordinated tranches of ABS will, in most cases, be below investment grade or
unrated and will, in many cases, represent the residual income typically
retained by the originator of a securitisation transaction as the "equity" or
"first loss" position ("Residual Income Positions").
During the course of 2007, the asset-backed securities market experienced rapid
and significant deterioration as part of the global credit crisis. As a result,
the Company's assets with exposure to underlying real estate in the United
Kingdom and the United States suffered heavy losses, although losses incurred by
the Company were mitigated by the Investment Manager's active management of the
Investment Portfolio throughout the course of 2007.
During the calendar year 2007, the Company sold approximately 75 per cent. and
40 per cent. (by number of investments) of its Residual Income Positions exposed
to the mortgage market in the United States and the United Kingdom,
respectively, and replaced the Company's repo financing facility with term
facilities that had no mark-to-market test. Since December 2005, the Company has
returned in excess of EUR70 million to Ordinary Shareholders through buybacks and
tenders of Ordinary Shares and has paid EUR2.45 per Ordinary Share in aggregate
dividends. The Company focused on improving financial stability through 2008 and
2009 and has now fully repaid its EUR45 million debt facility, while continuing to
pay a dividend on Ordinary Shares. The Company currently intends to continue to
sell down and/or amortise its portfolio of Residual Income Positions.
Having managed the Investment Portfolio through the downturn, the Company, on
the advice of the Investment Manager, believes that there is an opportunity for
it to benefit from investment in the European real estate debt market. Subject
to approval of the Required Resolutions, the Company intends to focus future
investments on real estate debt including residential mortgage backed securities
("RMBS") and commercial mortgage backed securities ("CMBS").
Accordingly, the Company is proposing, subject to the consent of Ordinary
Shareholders at the Extraordinary General Meeting, to:
· undertake a Placing and Open Offer of New Ordinary Shares to raise gross
proceeds of EUR26.64 million to invest in accordance with the proposed investment
policy; and
· change its investment policy with the result that the Company's primary
focus for new investments will be Real Estate Debt Investments.
The Company also proposes, subject to Ordinary Shareholder consent, to make a
bonus issue to Ordinary Shareholders of fixed income Preference Shares pro rata
to their holdings of Ordinary Shares at the close of the first day of trading of
the New Ordinary Shares on a 1.25:1 basis (the "Bonus Issue"). Subject to
applicable law and regulation, the Preference Shares will confer the right to a
preferential cumulative Preference Dividend equal to 8 per cent. per annum of
the Preference Share Notional Value of GBP1.00, payable quarterly on each
Payment Date.
The Company currently intends that in the event Preference Shares are issued
pursuant to the Bonus Issue, the Company's dividend policy will be amended so
that available income is first used to pay any Preference Dividend that is due
and payable and then, if the Directors in their sole discretion so resolve, to
pay dividends to Ordinary Shareholders. It is expected that any future
dividends payable to Ordinary Shareholders, following payment of any Preference
Dividend, will be substantially reduced as compared to the dividends that have
been previously paid in respect of the Ordinary Shares. However, the Directors
do currently intend that the Company continues to pay a dividend to Ordinary
Shareholders when it is able and appropriate to do so.
The Placing and Open Offer and the Bonus Issue are conditional on the approval
of the following resolutions at the Extraordinary General Meeting:
- the special resolution to amend the Articles to accommodate the
Preference Share rights, approve the Placing and Open Offer and the Bonus Issue
and approve each modification, variation or abrogation of the rights of Ordinary
Shares;
- the ordinary resolution to amend the Company's investment policy as
described below; and
- the ordinary resolution to approve the Offer Price of the New
Ordinary Shares being EUR2.00 which is a discount of more than 10 per cent. to the
middle market price of the Ordinary Shares at close on 16 August 2010,
such resolutions being the "Required Resolutions".
In the event that any one of the Required Resolutions is not passed by the
required majority of Shareholders attending and voting at the EGM (whether in
person or by proxy), the Placing and Open Offer and the Bonus Issue will not
take place.
Shareholders should note that the Placing and Open Offer and the Bonus Issue are
not conditional on the resolutions proposed at the EGM making certain amendments
to the Articles (other than the insertion of the rights of the Preference
Shares), approving the amendment to the Management Fee payable to the Investment
Manager, granting authority to the Directors to buy back Preference Shares or
disapplying the pre-emption rights, which are referred to below, being approved.
Details of the Placing and Open Offer and the Bonus Issue
Placing and Open Offer
Conditional on the Required Resolutions being approved by Ordinary Shareholders
at the EGM and Open Offer Admission occurring, up to 13,322,328 New Ordinary
Shares are being issued pursuant to the Placing and Open Offer.
Qualifying Open Offer Shareholders are being given the opportunity to apply to
subscribe for New Ordinary Shares in proportion to their existing holdings at
the Offer Price (payable in full on application) on the following basis:
1 New Ordinary Share at EUR2.00 per New Ordinary Share for every 2 Existing
Ordinary Shares
registered in the name of Qualifying Open Offer Shareholders at the Open Offer
Record Date and so in proportion for any other number of Existing Ordinary
Shares then registered. Fractions representing New Ordinary Shares which would
otherwise have arisen will not be allotted to Qualifying Open Offer
Shareholders, but will be aggregated and subscribed for under the Placing for
the benefit of the Company. The New Ordinary Shares will rank equally with
Existing Ordinary Shares following their issue.
Valid applications by Qualifying Open Offer Shareholders will be satisfied in
full up to the amount of their individual Open Offer Entitlement. Qualifying
Open Offer Shareholders should be aware that the Open Offer is not a rights
issue. As such, Qualifying Certificated Open Offer Shareholders should note that
their Application Form is not a negotiable document and cannot be traded.
Qualifying CREST Open Offer Shareholders should note that, although their Open
Offer Entitlement will be credited to their CREST accounts, the Open Offer
Entitlements will not be tradable or listed.
The Placees have agreed to subscribe for all the New Ordinary Shares at the
Offer Price subject to Open Offer Admission and the passing of the Required
Resolutions at the Extraordinary General Meeting, subject to clawback in order
to satisfy all valid applications by Qualifying Open Offer Shareholders under
the Open Offer.
Not all holders of Existing Ordinary Shares will be Qualifying Open Offer
Shareholders. Shareholders of the Company who are located or resident in, or who
are citizens of, or who have a registered address in an Excluded Territory or
are US Persons (regardless of the number of Existing Ordinary Shares that they
hold) will not qualify to participate in the Open Offer.
Full terms and conditions of the Open Offer will be set out in Part IV of the
Prospectus and (for Qualifying Certificated Open Offer Shareholders only) the
accompanying Application Form.
On the assumption that 13,322,328 New Ordinary Shares are issued pursuant to the
Placing and Open Offer, the initial gross proceeds of the Placing and Open Offer
will be EUR26.64 million, the expenses payable by the Company will be
approximately EUR1.764 million (based on the prevailing exchange rates as at 16
August 2010) and the net proceeds of the Placing and Open Offer will be
approximately EUR24.88 million.
Bonus Issue
The Preference Shares, which will be denominated in Sterling, will be issued
free of subscription cost to Qualifying Bonus Issue Shareholders.
The Bonus Issue is conditional on the Required Resolutions being passed and
Bonus Issue Admission becoming effective by not later than 8.00 a.m. on 17
September 2010.
Qualifying Bonus Issue Shareholders will, subject to the conditions set out in
more detail in the Prospectus, be issued Preference Shares on the basis of 1.25
Preference Shares for every 1 Ordinary Share held as at the Bonus Issue Record
Date.
Subject to applicable law and regulation, the Preference Shares confer the right
to a preferential cumulative Preference Dividend (which is an amount in Sterling
equal to 8 per cent. per annum of the Preference Share Notional Value) payable
quarterly on each Payment Date.
Due to restrictions under the securities laws of the Excluded Territories,
Restricted Shareholders will not qualify to participate in the Bonus Issue and
will not be eligible to receive certificated Preference Shares or have their
securities account in CREST credited with entitlements to Preference Shares. The
Investing Fund may seek to dispose of all or part of its holding of Preference
Shares immediately following the Bonus Issue.
Benefits of the Proposals
The Board believes that the proposed change to the investment policy of the
Company, the Placing and Open Offer and the Bonus Issue will result in a number
of benefits for the Company.
Given the volatile market conditions since 2007, the Company has taken steps to
improve its financial stability and the Directors, on the advice of the
Investment Manager, now believe that there is an opportunity for the Company to
invest in Real Estate Debt Investments. The Company intends to utilise the net
proceeds of the Placing and Open Offer primarily in RMBS and CMBS investments
with underlying assets in the United Kingdom and Western Europe. The Directors,
on the advice of the Investment Manager, believe that this asset class offers
attractive returns relative to the risk of such investments. In addition, the
Real Estate Debt Investments, and in particular the MBS, offer better liquidity
and price transparency than the Residual Income Positions. This is consistent
with the Company's actions in its financial year ended 31 March 2010 in which it
focused on growing its Real Estate Debt Investments portfolio and selling
Residual Income Positions. Assuming that: immediately following Open Offer
Admission (i) the net proceeds of the Placing and Open Offer are approximately
EUR26.64 million; (ii) such net proceeds are immediately invested in Real Estate
Debt Investments; and (iii) the valuation of the Residual Income Positions is
unchanged from the announced NAV on 31 March 2010 and the valuation of the Real
Estate Debt Investments is unchanged from 30 June 2010, Real Estate Debt
Investments would account for approximately 42.5 per cent. of the Investment
Portfolio by NAV as compared to approximately 14.4 per cent. of the Investment
Portfolio by NAV as at 31 March 2010 (source: Annual Report, management
accounts, unaudited). This calculation is for illustrative purposes only. In
particular, Shareholders and investors should be aware that the Company will not
be able to invest all of the net proceeds of the Placing and Open Offer
immediately following Open Offer Admission.
The Company is mindful of the need to balance its best interests to raise
capital against the interests of Ordinary Shareholders. The Board believes that
the structure of the Placing and Open Offer balances appropriately the interests
of Existing Ordinary Shareholders with new investors in that it offers Existing
Ordinary Shareholders the opportunity not to suffer, or to limit, the dilution
which will occur upon the issue of New Ordinary Shares.
The Board believes that the issue of New Ordinary Shares pursuant to the Placing
and Open Offer at an Offer Price of EUR2.00 per New Ordinary Share and the Bonus
Issue of Preference Shares with a Preference Dividend equal to 8 per cent. per
annum of the Preference Share Notional Value represents an attractive investment
opportunity to both Existing Ordinary Shareholders and new investors. In
particular, the Board believes that there is the potential for capital
appreciation in the Investment Portfolio as the Company's financial position is
stabilised and the Investment Portfolio is restructured, that the right to the
Preference Dividend will appeal to certain investors and that there will be
renewed appeal to investors as a result of the Company's revised capital
structure.
The Directors further believe that the Placing and Open Offer will allow the
Company to broaden its Shareholder base which should improve liquidity in the
market for its Ordinary Shares. The Investing Fund, which holds 15,773,804
Ordinary Shares representing 59.2 per cent. of the Existing Ordinary Shares in
the Company, has agreed in writing not to take up its Open Offer Entitlement.
Assuming that 13,322,328 New Ordinary Shares are issued pursuant to the Placing
and Open Offer, the Investing Fund will hold 39.47 per cent. of the Ordinary
Shares in issue immediately following Open Offer Admission.
Proposed investment policy
Asset Allocation
In order to achieve its investment objective, the Company will invest primarily
in debt secured by commercial or residential properties in Western Europe and
the United Kingdom ("Real Estate Debt Investments"). The Real Estate Debt
Investments may take different forms but will likely be: (i) securitised
tranches of secured real estate related debt securities, for example, RMBS and
CMBS, together MBS; and (ii) secured real estate loans, debentures or any other
form of debt instrument.
The Company will generally invest, either directly, through SPVs or
subsidiaries, in new Real Estate Debt Investments on a buy-to-hold basis based
on an analysis of the credit worthiness of the underlying assets in the
applicable investment. Therefore, the total return from any given investment
will be driven by actual performance of the underlying real estate loans rather
than by market prices. However, the Company will actively manage the Investment
Portfolio, and may from time to time dispose of an investment prior to its
maturity if the Company so decides for reasons including, but not limited to,
the price offered being sufficiently attractive, the credit view of the
underlying assets changing or superior alternative investments being available.
The Company's investments in Real Estate Debt Investments will have some or all
of the following key characteristics:
· investments will be backed, directly or indirectly, by real-estate
primarily located in Western Europe and the UK;
· investments will have a varied weighted average life profile, with the
weighted average life of the individual investments generally ranging from six
months to 15 years;
· investments in securities will be rated by one of Fitch, Moody's,
Standard and Poor's or another recognised rating agency; and/or
· investments in loans must be secured by one or more commercial or
residential properties and loans may not exceed 85 per cent. LTV at the time of
the investment.
For the purposes of the paragraph above, "Western Europe" shall mean Andorra;
Austria; Belgium; Denmark; Finland; France; Germany; Gibraltar; Guernsey;
Iceland; Ireland, Isle of Man; Italy; Jersey; Liechtenstein; Luxembourg; Monaco;
the Netherlands; Norway; Portugal; San Marino; Spain; Sweden; and Switzerland.
As at 17 August 2010 the Investment Portfolio also includes Residual Income
Positions. The Company does not currently intend actively to increase existing
Residual Income Positions within the Investment Portfolio or to invest in other
Residual Income Positions.
While the Company will have the flexibility to invest in assets that do not have
some or all of the characteristics listed above, such as, inter alia, direct
real estate investments, it has adopted a policy which requires that at least 70
per cent. of its Net Asset Value will comprise Real Estate Debt Investments and
Residual Income Positions, measured at the time of, and after giving effect to,
each proposed new or additional investment or at the time of any disposal by
reference to the latest then available Net Asset Value. If upon such a
measurement the Investment Manager determines that less than 70 per cent. of the
Investment Portfolio comprises Real Estate Debt Investments and Residual Income
Positions, the Investment Manager has agreed with the Company to take such
action, including the sale of assets, as would be necessary to correct this
imbalance prior to acquiring any further assets which do not qualify as Real
Estate Debt Investments or Residual Income Positions.
The Company will not take make investments via derivatives unless the Company
has fully collateralised the derivative position or cannot be exposed to margin
calls. However, the Company intends to (but shall not be obliged to) reduce
exposure to interest rate and currency fluctuations through the use of currency
and interest rate hedging arrangements for the purposes of efficient portfolio
management. From time to time, the Company may also enter into derivative
transactions to hedge the value of the Investment Portfolio.
Risk Diversification
At any given time, certain geographic areas, asset types or industry sectors may
provide more attractive investment opportunities than others and, as a result,
the Company's Investment Portfolio may be concentrated in those geographic
areas, asset types or industry sectors. Other than as described above, there are
no restrictions regarding the concentration of the Company's Investment
Portfolio. However, the Company will seek to create a diversified portfolio of
investments. It will regularly monitor the extent to which the Investment
Portfolio is concentrated in any particular country, region or servicer and the
Investment Manager will re-balance the Investment Portfolio as and when it deems
it necessary to do so.
The Board of Directors has adopted general guidelines for investments and
borrowings to the effect that, except in the case of cash deposits awaiting
investment, no more than 20 per cent. of the gross assets of the Group will be
lent to or invested in any one group at the time the investment or loan is made,
no more than 20 per cent. of the gross assets of the Group will be invested in
direct real estate investments, no more than 10 per cent. of the gross assets of
the Group will be invested in other listed investment companies (including
listed investment trusts), except where the investment companies themselves have
stated investment policies to invest no more than 15 per cent. of their gross
assets in other listed investment companies (including listed investment
trusts), no more than 15 per cent. of the gross assets of the Group will be
invested in other listed investment companies (including listed investment
trusts), regardless of their investment policies and the Group will not take
legal control, or seek to take legal control, or be actively involved in the
management of, any companies or businesses in which it invests, except for (i)
any SPVs it may establish and (ii) pursuant to the exercise of rights as a
consequence of the Group taking steps to preserve or enforce its security in
relation to a particular investment. The Company will not, to a significant
extent, be a dealer in investments and neither the Company nor any member of its
Group will conduct a trading activity which is significant in the context of the
Group as a whole.
Leverage
Other than a working capital facility limited to a maximum quantum equivalent to
10 per cent. of the Net Asset Value, the Company shall not, without the prior
approval of the Ordinary Shareholders by ordinary resolution passed at a
separate general meeting of the Ordinary Shareholders, agree to enter into any
credit facility pursuant to which leverage is utilised by the Company.
Use of proceeds of the Placing and Open Offer
The Company intends to use the net proceeds of the Placing and Open Offer
primarily to invest in European Real Estate Debt Investments with particular
focus on: (i) RMBS; and (ii) CMBS in accordance with the proposed investment
policy of the Company. The Directors believe, having been so advised by the
Investment Manager, that the primary advantage of raising capital pursuant to
the Placing and Open Offer will be the opportunity for further investment in the
European real estate debt markets, where the Investment Manager believes there
is currently significant price dislocation. To the extent that suitable RMBS
and CMBS investments are not available (which the Directors do not expect to be
the case), the net proceeds of the Placing and Open Offer may also be invested
in other assets that fall within the proposed investment policy to the extent
that the Investment Manager identifies investment opportunities that it believes
offer attractive returns to the Company.
Pending investment of the net proceeds of the Placing and Open Offer in RMBS and
CMBS and other investments in accordance with the Company's investment policy,
the Company may invest the net proceeds in short-term money market funds. The
Company does not intend to apply leverage to these temporary investments.
Dividend policy
If the Required Resolutions are approved, following completion of the Bonus
Issue of Preference Shares, the Company currently intends that available income
is first used to pay any Preference Dividend that is due and payable and then,
if the Directors in their sole discretion so resolve, to pay dividends to
Ordinary Shareholders. It is expected that any future dividends payable to
Ordinary Shareholders, following payment of any Preference Dividend, will be
substantially reduced as compared to the dividends that have been previously
paid in respect of the Ordinary Shares. However, the Directors do currently
intend that the Company continues to pay a dividend to Ordinary Shareholders
when it is able and appropriate to do so. The Company further intends, subject
to the performance of the Investment Portfolio, that the amount of dividends
paid, if any, to Ordinary Shareholders following the change to the dividend
policy should be adjusted from time to time in line with any increase or
decreases in the Investment Portfolio.
Subject to the payment of the Preference Dividend to the holders of the
Preference Shares and the applicable requirements and restrictions contained in
the Companies Law, the Company may consider making interim dividend payments to
Ordinary Shareholders, having regard to the net income remaining after the
payment of the Preference Dividends, potential reinvestment of cash or other
uses of income at a level the Directors deem appropriate, in their sole
discretion, from time to time. There is no fixed date on which it is expected
that dividends will be paid to Ordinary Shareholders and Ordinary Shareholders
should not expect to receive regular interim dividends.
Proposed changes to the Investment Management Agreement
The Company, Trebuchet and the Investment Manager have entered into the
Investment Management Agreement Side Letter pursuant to which, and conditional
upon approval by Ordinary Shareholders at the EGM and on Bonus Issue Admission
occurring, the following amendments will be made to the Investment Management
Agreement:
· adjustments to the Management Fee payable to the Investment Manager;
· agreement that at least 70 per cent. of the Company's Net Asset Value
will comprise Residual Income Positions and Real Estate Debt Investments as
opposed to Primary Target Investments in accordance with the proposed investment
policy; and
· amendments to the Investment Manager's conflicts policy that applies to
its management of the Investment Portfolio.
The Management Fee currently payable to the Investment Manager is an annual fee
equal to 1.75 per cent. of the Net Asset Value. If Preference Shares are
issued, the obligation on the Company to pay the Preference Share Notional Value
on a winding up of the Company or the redemption of the Preference Shares in
accordance with their terms will be classified as a liability for the purposes
of calculating the NAV. The Directors believe that the Bonus Issue of itself
should not lead to a reduction of the Management Fee that would be payable to
the Investment Manager and, as such, have proposed the following amendment. If
approved by the Ordinary Shareholders, the Management Fee payable will, with
effect from Bonus Issue Admission, be equal to 1.75 per cent. per annum of the
Adjusted NAV. No Management Fee will be payable to the Investment Manager in
respect of investments in asset portfolios already managed by the Investment
Manager. The Adjusted NAV will be equal to the prevailing NAV calculated in
accordance with the Company's accounting policies increased by an amount equal
to the Aggregate Preference Share Notional Value.
The Incentive Fee calculation will not be amended pursuant to the Investment
Management Agreement Side Letter.
Expected Timetable of Principal Events
+------------------------------------------------+-----------+
| | 2010 |
+------------------------------------------------+-----------+
| Open Offer Record Date | close of |
| | business |
| | on 13 |
| | August |
| | 2010 |
+------------------------------------------------+-----------+
| Publication of Prospectus and Circular and | 17 |
| despatch of Application Forms | August |
+------------------------------------------------+-----------+
| Existing Ordinary Shares marked "ex" by the | (expected |
| London Stock Exchange | to be) 17 |
| | August |
+------------------------------------------------+-----------+
| Open Offer Entitlements credited to the stock | 18 |
| accounts of Qualifying CREST Open Offer | August |
| Holders | |
+------------------------------------------------+-----------+
| Recommended latest time and date for | 4.30 |
| requesting withdrawal of Open Offer | p.m. on |
| Entitlements from CREST (i.e. if Open Offer | 3 |
| Entitlements are in CREST and the Qualifying | September |
| CREST Open Offer Holder wishes to convert them | |
| into certificated form) | |
+------------------------------------------------+-----------+
| Recommended latest time for depositing an | 3.00 |
| Application Form with the CREST Courier and | p.m. on |
| Sorting Service (i.e. where a Qualifying Open | 6 |
| Offer Shareholder wishes to hold the Open | September |
| Offer Entitlement set out in an Application | |
| Form as Open Offer Entitlements in CREST) | |
+------------------------------------------------+-----------+
| Latest time and date for splitting Application | 3.00 |
| Forms (to satisfy bona fide market claims | p.m. on |
| only) | 7 |
| | September |
+------------------------------------------------+-----------+
| Latest time and date for acceptance, payment | 11.00 |
| in full and submission of Application Forms | a.m. on |
| (in respect of Qualifying Certificated Open | 9 |
| Offer Holders) and USE Instructions (in | September |
| respect of Qualifying CREST Open Offer | |
| Holders) to the Receiving Agent | |
+------------------------------------------------+-----------+
| Open Offer Entitlements held in CREST expected | 9 |
| to be disabled | September |
+------------------------------------------------+-----------+
| Latest time and date for receipt of the Form | 11.00 |
| of Proxy for the Extraordinary General Meeting | a.m. on |
| (or receipt of the appropriate CREST message, | 13 |
| in the case of CREST members) | September |
+------------------------------------------------+-----------+
| Extraordinary General Meeting | 11.00 |
| | a.m. on |
| | 15 |
| | September |
+------------------------------------------------+-----------+
| Announcement of results of the Open Offer | 15 |
| | September |
+------------------------------------------------+-----------+
| Admission of the New Ordinary Shares issued | 16 |
| pursuant to the Placing and Open Offer to the | September |
| Official List and commencement of dealings on | |
| the London Stock Exchange | |
+------------------------------------------------+-----------+
| New Ordinary Shares in uncertificated form | 8.00 |
| expected to be credited to accounts in CREST | a.m. on |
| | 16 |
| | September |
+------------------------------------------------+-----------+
| Bonus Issue Record Date for the calculation of | close of |
| the maximum number of Preference Shares to be | business |
| issued to Qualifying Bonus Issue Shareholders | on 16 |
| pursuant to the Bonus Issue | September |
+------------------------------------------------+-----------+
| Ordinary Shares marked "ex" by the London | (expected |
| Stock Exchange | to be) 17 |
| | September |
+------------------------------------------------+-----------+
| Announcement of the number of Preference | 17 |
| Shares to be issued pursuant to the Bonus | September |
| Issue | |
+------------------------------------------------+-----------+
| Admission of the Preference Shares issued | 17 |
| pursuant to the Bonus Issue to the Official | September |
| List and commencement of dealings on the | |
| London Stock Exchange | |
+------------------------------------------------+-----------+
| Preference Shares in uncertificated form | 8.00 |
| expected to be credited to accounts in CREST | a.m. on |
| | 17 |
| | September |
+------------------------------------------------+-----------+
| Despatch of definitive share certificates for | by 23 |
| the New Ordinary Shares in certificated form | September |
+------------------------------------------------+-----------+
| Despatch of definitive share certificates for | by 23 |
| the Preference Shares in certificated form | September |
+------------------------------------------------+-----------+
Definitions
The following definitions apply throughout this announcement unless the context
requires otherwise:
+---------------+----------------+
| Adjusted | the |
| NAV | Net |
| | Asset |
| | Value |
| | of the |
| | Company |
| | calculated |
| | in |
| | accordance |
| | with the |
| | Company's |
| | accounting |
| | policies |
| | increased |
| | by an |
| | amount |
| | equal to |
| | the number |
| | of |
| | Preference |
| | Shares in |
| | issue |
| | (excluding |
| | Preference |
| | Shares |
| | held in |
| | treasury) |
| | multiplied |
| | by the |
| | Preference |
| | Share |
| | Notional |
| | Value |
+---------------+----------------+
| Application | the |
| Forms and | personalised |
| each an | application |
| Application | forms |
| Form | relating to |
| | the Open |
| | Offer being |
| | sent to |
| | Qualifying |
| | Certificated |
| | Open Offer |
| | Shareholders |
| | together |
| | with the |
| | Prospectus, |
| | in respect |
| | of the New |
| | Ordinary |
| | Shares |
+---------------+----------------+
| Articles | the |
| or | Articles |
| Articles | of |
| of | Incorporation |
| Incorporation | of the |
| | Company in |
| | force from |
| | time to time |
+---------------+----------------+
| Board | the |
| of | board |
| Directors | of |
| or | directors |
| Directors | of the |
| or | Company |
| Board | |
+---------------+----------------+
| Bonus | the |
| Issue | issue, |
| | free |
| | of |
| | subscription |
| | cost to |
| | Qualifying |
| | Bonus Issue |
| | Shareholders |
| | of |
| | Preference |
| | Shares on |
| | the basis of |
| | 1.25 |
| | Preference |
| | Shares for |
| | every 1 |
| | Ordinary |
| | Shares held |
| | as at the |
| | Bonus Issue |
| | Record Date |
+---------------+----------------+
| Bonus | admission |
| Issue | of the |
| Admission | Preference |
| | Shares |
| | issued |
| | pursuant |
| | to the |
| | Bonus |
| | Issue to |
| | the |
| | Official |
| | List and |
| | to trading |
| | on the |
| | London |
| | Stock |
| | Exchange's |
| | main |
| | market for |
| | listed |
| | securities |
| | and such |
| | admissions |
| | becoming |
| | effective |
+---------------+----------------+
| Bonus | the |
| Issue | record |
| Record | date |
| Date | for |
| | qualification |
| | for the Bonus |
| | Issue, being |
| | 5.00 p.m. on |
| | 16 September |
| | 2010 |
+---------------+----------------+
| Cheyne | Cheyne |
| Capital | Capital |
| | Management |
| | (UK) LLP |
+---------------+----------------+
| Circular | the |
| | circular |
| | issued |
| | by the |
| | Company |
| | dated 17 |
| | August |
| | 2010 in |
| | connection |
| | with the |
| | Extraordinary |
| | General |
| | Meeting |
+---------------+----------------+
| Companies | The |
| Law | Companies |
| | (Guernsey) |
| | Law, 2008 |
| | (as |
| | amended) |
+---------------+----------------+
| QWIL | Queen's |
| or the | Walk |
| Company | Investment |
| | Limited |
| | and, where |
| | relevant, |
| | its |
| | subsidiaries |
| | and |
| | subsidiary |
| | undertakings |
+---------------+----------------+
| CREST | the |
| | relevant |
| | system |
| | as |
| | defined |
| | in the |
| | CREST |
| | Regulations |
| | in respect |
| | of which |
| | Euroclear |
| | is operator |
| | (as defined |
| | in the |
| | CREST |
| | Regulations) |
| | in |
| | accordance |
| | with which |
| | securities |
| | may be held |
| | in |
| | uncertificated |
| | form |
+---------------+----------------+
| CREST | the |
| Courier | CREST |
| and | Courier |
| Sorting | and |
| Service | Sorting |
| | Service |
| | established |
| | by |
| | Euroclear |
| | to |
| | facilitate, |
| | among other |
| | things, the |
| | deposit and |
| | withdrawal |
| | of |
| | securities |
+---------------+----------------+
| Euro | the |
| or EUR | lawful |
| or EUR | single |
| | currency |
| | of |
| | member |
| | states |
| | of the |
| | European |
| | Communities |
| | that adopt |
| | or have |
| | adopted the |
| | Euro as |
| | their |
| | currency in |
| | accordance |
| | with the |
| | legislation |
| | of the |
| | European |
| | Union |
| | relating to |
| | European |
| | Monetary |
| | Union |
+---------------+----------------+
| Euroclear | Euroclear |
| | UK & |
| | Ireland |
| | Limited, |
| | the |
| | operator |
| | of CREST |
+---------------+----------------+
| Excluded | the |
| Territories | United |
| and each an | States, |
| Excluded | Canada, |
| Territory | Australia, |
| | Japan, New |
| | Zealand |
| | and South |
| | Africa and |
| | any other |
| | jurisdiction |
| | where the |
| | extension or |
| | availability |
| | of the |
| | Placing and |
| | Open Offer |
| | would breach |
| | any |
| | applicable |
| | law |
+---------------+----------------+
| Existing | the |
| Ordinary | Ordinary |
| Shares | Shares |
| | in issue |
| | as at |
| | the date |
| | of the |
| | Prospectus |
+---------------+----------------+
| Extraordinary | the |
| General | extraordinary |
| Meeting or | general |
| EGM | meeting of |
| | the Company |
| | due to be |
| | held on 15 |
| | September |
| | 2010 at which |
| | Shareholders |
| | will validly |
| | vote upon, |
| | amongst other |
| | business, the |
| | Required |
| | Resolutions |
| | in accordance |
| | with Guernsey |
| | law |
+---------------+----------------+
| Group | the |
| | Company |
| | and its |
| | subsidiary, |
| | Trebuchet |
| | Finance |
| | Limited, |
| | and any |
| | other |
| | consolidated |
| | subsidiaries |
| | of the |
| | Company from |
| | time to time |
+---------------+----------------+
| Incentive | the |
| Fee | incentive |
| | fee |
| | payable |
| | by the |
| | Company |
| | to the |
| | Investment |
| | Manager in |
| | accordance |
| | with the |
| | terms of |
| | the |
| | Investment |
| | Management |
| | Agreement |
+---------------+----------------+
| Investing | Cheyne |
| Fund | ABS |
| | Opportunities |
| | Fund LP, |
| | acting by its |
| | general |
| | partner, |
| | Cheyne ABS |
| | Opportunities |
| | General |
| | Partner Inc, |
| | and (as the |
| | context |
| | requires) |
| | such general |
| | partner |
| | itself, which |
| | is an |
| | open-ended |
| | investment |
| | fund managed |
| | by the |
| | Investment |
| | Manager from |
| | whom the |
| | Company |
| | acquired the |
| | Initial ABS |
| | Portfolio |
+---------------+----------------+
| Investment | the |
| Management | investment |
| Agreement | management |
| | agreement, |
| | as amended |
| | from time |
| | to time, |
| | initially |
| | between |
| | the |
| | Company, |
| | Trebuchet |
| | and the |
| | Investment |
| | Manager |
| | dated 8 |
| | December |
| | 2005, and |
| | to which |
| | other |
| | special |
| | purpose |
| | vehicles |
| | may, if so |
| | required, |
| | become |
| | party in |
| | the future |
| | pursuant |
| | to a Deed |
| | of |
| | Adherence |
+---------------+----------------+
| Investment | the |
| Management | side |
| Agreement | letter |
| Side | between |
| Letter | the |
| | Company, |
| | Trebuchet |
| | and the |
| | Investment |
| | Manager |
+---------------+----------------+
| Investment | Cheyne |
| Manager | Capital |
| | Management |
| | (UK) LLP, |
| | a limited |
| | liability |
| | partnership |
| | registered |
| | in England |
| | (registered |
| | number |
| | OC321484). |
| | The address |
| | of the |
| | registered |
| | office of |
| | the |
| | Investment |
| | Manager is |
| | set out in |
| | the section |
| | titled |
| | "Corporate |
| | Information" |
+---------------+----------------+
| Investment | at any |
| Portfolio | time, |
| | the |
| | ABS, |
| | MBS, |
| | RMBS, |
| | CMBS, |
| | Residual |
| | Income |
| | Positions |
| | or other |
| | investments, |
| | rights to |
| | investments, |
| | instruments |
| | and |
| | securities |
| | in which the |
| | Company's |
| | assets are |
| | invested |
+---------------+----------------+
| Liberum | Liberum |
| Capital | Capital |
| | Limited |
+---------------+----------------+
| London | London |
| Stock | Stock |
| Exchange | Exchange |
| | plc |
+---------------+----------------+
| LTV | loan |
| | to |
| | value |
+---------------+----------------+
| Management | the |
| Fee | management |
| | fee |
| | payable by |
| | the |
| | Company to |
| | the |
| | Investment |
| | Manager in |
| | accordance |
| | with the |
| | terms of |
| | the |
| | Investment |
| | Management |
| | Agreement |
+---------------+----------------+
| Net | at any |
| Asset | time, |
| Value | the |
| or NAV | net |
| | asset |
| | value |
| | of the |
| | Company |
| | in |
| | total |
| | or the |
| | net |
| | asset |
| | value |
| | per |
| | Ordinary |
| | Share |
| | (as the |
| | context |
| | requires), |
| | calculated |
| | in |
| | accordance |
| | with the |
| | Company's |
| | accounting |
| | policies |
+---------------+----------------+
| New | Ordinary |
| Ordinary | Shares |
| Shares | issued |
| | pursuant |
| | to the |
| | Placing |
| | and Open |
| | Offer |
+---------------+----------------+
| Notice | the |
| of | notice |
| Extraordinary | contained |
| General | in the |
| Meeting | Circular |
| | convening |
| | the EGM |
| | dated 17 |
| | August |
| | 2010 |
+---------------+----------------+
| Offer | the |
| Price | price |
| | at |
| | which |
| | New |
| | Ordinary |
| | Shares |
| | are |
| | being |
| | offered |
| | pursuant |
| | to the |
| | Placing |
| | and Open |
| | Offer, |
| | being |
| | EUR2.00 |
+---------------+----------------+
| Open | the |
| Offer | invitation |
| | by the |
| | Company to |
| | certain |
| | Qualifying |
| | Open Offer |
| | Shareholders |
| | to apply for |
| | New Ordinary |
| | Shares on |
| | the terms |
| | and subject |
| | to the |
| | conditions |
| | set out in |
| | the |
| | Prospectus |
+---------------+----------------+
| Open | admission |
| Offer | of the |
| Admission | New |
| | Ordinary |
| | Shares |
| | issued |
| | pursuant |
| | to the |
| | Placing |
| | and Open |
| | Offer to |
| | the |
| | Official |
| | List and |
| | to |
| | trading |
| | on the |
| | London |
| | Stock |
| | Exchange |
| | Main |
| | Market |
| | for |
| | listed |
| | securities |
| | and such |
| | admissions |
| | becoming |
| | effective |
+---------------+----------------+
| Open | the |
| Offer | pro |
| Entitlements | rata |
| | entitlements |
| | to subscribe |
| | for New |
| | Ordinary |
| | Shares |
| | allocated to |
| | Qualifying |
| | Open Offer |
| | Shareholders |
| | pursuant to |
| | the Open |
| | Offer |
+---------------+----------------+
| Open | the |
| Offer | record |
| Record | date |
| Date | for |
| | qualification |
| | for the Open |
| | Offer, being |
| | 5.00 p.m. on |
| | 13 August |
| | 2010 |
+---------------+----------------+
| Ordinary | holders |
| Shareholders | of |
| | Ordinary |
| | Shares |
+---------------+----------------+
| Ordinary | the |
| Shares | shares |
| | of no |
| | par |
| | value |
| | in the |
| | capital |
| | of the |
| | Company |
+---------------+----------------+
| Payment | 31 |
| Date | March, |
| | 30 |
| | June, |
| | 30 |
| | September |
| | and 31 |
| | December |
| | in each |
| | year from |
| | 2010 to |
| | 2017 |
| | inclusive |
| | and the |
| | date of |
| | final |
| | repayment |
| | of the |
| | Preference |
| | Shares |
+---------------+----------------+
| Placees | those |
| | investors |
| | participating |
| | in the |
| | Placing |
+---------------+----------------+
| Placing | the |
| | placing |
| | of the |
| | New |
| | Ordinary |
| | Shares |
| | with the |
| | Placees |
| | subject |
| | to the |
| | clawback |
| | under |
| | the Open |
| | Offer |
+---------------+----------------+
| Preference | an |
| Dividend | amount |
| | in |
| | Sterling |
| | equal to |
| | 8 per |
| | cent. |
| | per |
| | annum of |
| | the |
| | Preference |
| | Share |
| | Notional |
| | Value |
+---------------+----------------+
| Preference | holders |
| Shareholders | of |
| | Preference |
| | Shares |
+---------------+----------------+
| Preference | fixed |
| Shares | income |
| | preference |
| | shares of |
| | no par |
| | value each |
| | in the |
| | capital of |
| | the |
| | Company |
| | designated |
| | as |
| | Preference |
| | Shares |
+---------------+----------------+
| Qualifying | holders |
| Bonus | of |
| Issue | Ordinary |
| Shareholders | Shares |
| | as set |
| | out in |
| | the |
| | Register |
| | on the |
| | Bonus |
| | Issue |
| | Record |
| | Date |
| | with the |
| | exclusion |
| | of (i) |
| | holders |
| | of |
| | Ordinary |
| | Shares |
| | with a |
| | registered |
| | address |
| | in, or who |
| | are |
| | citizens, |
| | residents |
| | or |
| | nationals |
| | of, or are |
| | located in |
| | any |
| | Excluded |
| | Territory |
| | and (ii) |
| | US Persons |
+---------------+----------------+
| Qualifying | holders |
| Open Offer | of |
| Shareholders | Ordinary |
| | Shares |
| | as set |
| | out in |
| | the |
| | register |
| | of |
| | members |
| | of the |
| | Company |
| | on the |
| | Open |
| | Offer |
| | Record |
| | Date |
| | with the |
| | exclusion |
| | of (i) |
| | holders |
| | of |
| | Ordinary |
| | Shares |
| | with a |
| | registered |
| | address |
| | in, or who |
| | are |
| | citizens, |
| | residents |
| | or |
| | nationals |
| | of, or are |
| | located in |
| | any |
| | Excluded |
| | Territory |
| | and (ii) |
| | US Persons |
+---------------+----------------+
| Real | debt |
| Estate | secured |
| Debt | by |
| Investments | commercial |
| | or |
| | residential |
| | properties |
| | within |
| | Western |
| | Europe or |
| | the United |
| | Kingdom |
+---------------+----------------+
| Receiving | Capita |
| Agent | Registrars |
+---------------+----------------+
| Register | the |
| | register |
| | of |
| | members |
| | of the |
| | Company |
+---------------+----------------+
| Regulation | Regulation |
| S | S under |
| | the US |
| | Securities |
| | Act |
+---------------+----------------+
| Repayment | an |
| Amount | amount |
| | equal |
| | to (i) |
| | the |
| | Preference |
| | Share |
| | Notional |
| | Value |
| | increased |
| | by (ii) |
| | any |
| | accrued |
| | but unpaid |
| | Preference |
| | Dividend |
+---------------+----------------+
| Required | means |
| Resolutions | the |
| | special |
| | resolution |
| | proposed |
| | at the EGM |
| | to amend |
| | the |
| | Articles |
| | by |
| | accommodating |
| | the |
| | Preference |
| | Share rights |
| | and certain |
| | other |
| | consequential |
| | amendments to |
| | the Articles, |
| | approve the |
| | Placing and |
| | Open Offer |
| | and the Bonus |
| | Issue and |
| | approve each |
| | modification, |
| | variation or |
| | abrogation of |
| | the rights |
| | attached to |
| | Ordinary |
| | Shares; and |
| | the ordinary |
| | resolutions |
| | proposed at |
| | the EGM to: |
| | (i) amend the |
| | Company's |
| | investment |
| | policy, and |
| | (ii) approve |
| | the issue of |
| | New Ordinary |
| | Shares at the |
| | Offer Price |
| | which is a |
| | discount of |
| | more than 10 |
| | per cent. to |
| | the middle |
| | market price |
| | of the |
| | Existing |
| | Ordinary |
| | Shares at the |
| | time of |
| | announcing |
| | the terms of |
| | the Placing |
| | and Open |
| | Offer |
+---------------+----------------+
| Residual | assets |
| Income | currently |
| Positions | held in |
| | the |
| | Investment |
| | Portfolio |
| | which are |
| | subordinated |
| | tranches of |
| | ABS that |
| | are, in most |
| | cases, |
| | unrated and, |
| | in many |
| | cases, |
| | represent |
| | the residual |
| | income |
| | typically |
| | retained by |
| | the |
| | originator |
| | of a |
| | securitisation |
| | transaction as |
| | the "equity" |
| | or "first |
| | loss" position |
+---------------+----------------+
| Restricted | Ordinary |
| Shareholders | Shareholders |
| | as at the |
| | Open Offer |
| | Record Date |
| | and the |
| | Bonus Issue |
| | Record Date |
| | (as |
| | applicable) |
| | with a |
| | registered |
| | address in, |
| | or who are |
| | citizens, |
| | residents or |
| | nationals of |
| | or are |
| | located in |
| | any Excluded |
| | Territories |
| | or are US |
| | Persons |
+---------------+----------------+
| Shares | the |
| | Ordinary |
| | Shares |
| | and/or |
| | Preference |
| | Shares (as |
| | appropriate) |
+---------------+----------------+
| SPV | special |
| | purpose |
| | vehicle |
+---------------+----------------+
| Trebuchet | Trebuchet |
| | Finance |
| | Limited, |
| | a special |
| | purpose |
| | vehicle |
| | incorporated |
| | in Ireland |
| | on 19 May |
| | 2005 with |
| | registered |
| | number |
| | 402419 |
+---------------+----------------+
| US | the US |
| Investment | Investment |
| Company | Company |
| Act | Act of |
| | 1940, as |
| | amended |
+---------------+----------------+
| US | US |
| Person | person |
| | within |
| | the |
| | meaning |
| | given |
| | to it |
| | in |
| | Regulation |
| | S |
+---------------+----------------+
| US | the US |
| Securities | Securities |
| Act | Act of |
| | 1933, as |
| | amended |
+---------------+----------------+
| Western | means |
| Europe | Andorra; |
| | Austria; |
| | Belgium; |
| | Denmark; |
| | Finland; |
| | France; |
| | Germany; |
| | Gibraltar; |
| | Guernsey; |
| | Iceland; |
| | Ireland, |
| | Isle of |
| | Man; |
| | Italy; |
| | Jersey; |
| | Liechtenstein; |
| | Luxembourg; |
| | Monaco; the |
| | Netherlands; |
| | Norway; |
| | Portugal; San |
| | Marino; Spain; |
| | Sweden; and |
| | Switzerland |
+---------------+----------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCEAFPKFDAEEAF
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