NAM North American

 

TIDMNAM 
 
RNS Number : 7867X 
North American Banks Fund Ltd 
10 December 2010 
 

10 December 2010 
 
                       North American Banks Fund Limited 
 
              Proposed Cancellation of admission to trading on AIM 
 
 
The Board of North American Banks Fund Limited (the "Company") is today sending 
a Circular to Shareholders proposing the Cancellation of the admission of its 
Shares to trading on AIM. 
 
The Circular includes a notice convening a General Meeting to be held at BNP 
Paribas House, 1 St Julian's Avenue, St Peter Port, Guernsey GY1 1WA at 10.00 
a.m. on 6 January 2011 to seek approval for the proposed cancellation of the 
admission of the Ordinary Shares to trading. 
 
 
 
Edited extracts from the Chairman's letter to Shareholders contained in the 
Circular are set out below: 
 
"Introduction 
As you are aware, the Directors have been concerned for some time as to the 
Company's size, the discount at which the Ordinary Shares trade to NAV and the 
cost of the Company remaining quoted on AIM.  The Company has seen limited 
trading volume in the Shares. 
The Investment Portfolio comprises a number of unquoted investments in banks in 
the United States.  As Shareholders are aware, the Company has limited resources 
available to it to provide further support to the Portfolio Investments held and 
it would be very difficult to raise, in the foreseeable future, any further 
funds on AIM. 
Your Directors have discussed the situation with a number of the Company's 
larger Shareholders and consider that the best strategy for the Company is to 
reduce overheads pending realisation of the Investment Portfolio.  Therefore, as 
a first stage in this process, the Directors have decided to seek Shareholder 
approval for the Cancellation. 
Information on the Company and the Portfolio Investments 
NABF is a closed-ended investment company incorporated in Guernsey as a company 
limited by shares which are admitted to trading on AIM. 
NABF raised USD38.0 million in June 2005 by means of a placing to take advantage 
of the then opportunity to invest in de novo banks, predominantly in the South 
Eastern region of the United States.  Following the 2008 banking crisis, the 
prospects for liquidity in the Portfolio have been extended beyond the original 
expected life of the Company. 
As noted above, the Company has limited resources available to it to provide 
further support to the Portfolio Investments held and it would be very difficult 
to raise, in the foreseeable future, any further funds on AIM.  The most recent 
published NAV as at 30 November 2010) was equivalent to approximately USD16.61 
million (equivalent to GBP10.64 million) and the market capitalisation as at 
close of business on 10 December 2010 (the latest practicable date prior to the 
publication of this document) was GBP4.09 million. 
As noted above, the Directors consider that the best strategy for the Company 
therefore is now to reduce overheads pending realisation of the Investment 
Portfolio.  Immediate cost savings from Cancellation are estimated to exceed 12% 
of the Company's annual expenses (excluding investment management fees) 
initially and are expected to increase significantly over time. 
While the various Portfolio Investments are freely transferable there is, in 
practice, little liquidity in any of them and such dealings as take place are 
conducted on a matched bargain basis.  There is no requirement for details of 
the volume traded and price paid to be reported.  This may be one of the factors 
which has led to the Ordinary Shares trading at a significant discount to the 
net asset value (currently 62 per cent. to the 30 November NAV per Share). 
Proposal 
As stated above, the Proposal involves the cancellation of the admission to 
trading of the Ordinary Shares on AIM. Under the AIM Rules the Cancellation can 
only be effected by the Company after it has been approved by a special 
resolution passed by Shareholders at a general meeting. 
The Company has notified the London Stock Exchange of its intention to seek 
Shareholder approval for the cancellation of the admission of the Shares to 
trading on AIM.  If Shareholders pass the Resolution at the GM, it is expected 
that the last day of trading in the Shares on AIM will be 13 January 2011 and 
that Cancellation will take effect at 8.00 a.m. on 14 January 2011. 
The Directors do not intend to put in place any formal mechanism for matching 
potential sellers of Ordinary Shares with potential buyers after the 
Cancellation has taken effect.  Therefore, after Cancellation any dealings would 
be off market at a price to be agreed between the relevant parties and would be 
settled through CREST or registered in the normal way if the transfer, 
accompanied by the documents of title, is received by the Registrars. 
Intentions following Cancellation 
The Directors are aware that there are a number of Shareholders who may be 
interested in having an opportunity to achieve an early exit while there are 
others who would prefer to remain invested in the Company and to receive their 
due proportion of the sale proceeds from the disposal of the Portfolio 
Investments over time. 
NASCIT, which currently holds 21.1 per cent of the Company's issued Ordinary 
Shares and is a fully listed investment trust whose portfolio is also managed by 
the Investment Manager, has informed the Company that it is, in principle, 
willing to enter into negotiations with the Company after Cancellation with a 
view to granting the Company a put option to require NASCIT to buy the 
Portfolio, or a suitable proportion of it, at a price which would enable the 
Company to generate cash to fund an early exit by way of a share buy back at a 
price of GBP1.60 per Share for those Shareholders who wish to take advantage of 
this.  It would be for Shareholders to decide whether to take advantage of this 
early exit opportunity. While the proposed exit price is above the most recent 
market price for the Shares the purchase price for the acquisition of Portfolio 
Investments by NASCIT would be at a significant discount to their current 
carrying value in the Portfolio. 
The Directors intend to pursue such negotiations following the Cancellation and, 
subject to suitable terms being agreed with NASCIT, to make available an early 
exit opportunity by way of a share buy back for those who wish.  While the 
Directors believe that NASCIT will deliver on its intention to negotiate the 
terms mentioned above, Shareholders should be aware that there is no guarantee 
that the Company will be able to reach an agreement with NASCIT, or any other 
party, on terms that the Directors consider acceptable for the sale of part or 
all of the Portfolio to fund an early exit by way of a share buy back or indeed 
at what price per Share such a buyback would be made. 
Any share buyback will itself require Shareholder approval by special resolution 
at a further general meeting of Shareholders and a further circular would be 
issued after Cancellation if an agreement on suitable terms can be entered into 
with NASCIT, or any other party, which would allow the Board to make available 
to Shareholders an early exit opportunity.  Such circular would give details of 
the arrangements and seek Shareholders' approval to any proposals. 
Shortly following completion of any such buy back (or the Directors deeming it 
not to be feasible to effect a buyback on acceptable terms), the Directors would 
expect to seek Shareholder approval for the Company to be placed into members 
voluntary liquidation.  This would provide a setting in which the Company could 
operate at further reduced cost pending the realisation of the remainder of the 
Portfolio. 
Investment Manager 
North Atlantic Value has confirmed its willingness to continue to act as 
investment manager for the Company notwithstanding the Proposals referred to in 
this document and has confirmed that it will continue to support the Company by 
allowing the Company to continue to defer the payment of management fees due and 
accruing to North Atlantic Value until investments in the Portfolio are 
realised. 
Recommendation 
The Directors consider the Proposal to be in the best interests of the Company 
and the Shareholders as a whole.  Accordingly, the Directors unanimously 
recommend that Shareholders vote in favour of the Resolution to be proposed at 
the General Meeting, as they intend to do in respect of their own personal 
beneficial shareholdings which they can vote, amounting to, in aggregate 180,000 
Ordinary Shares, representing approximately 4.7 per cent. of the current issued 
share capital of the Company." 
 
                                    --ENDS-- 
 
Enquiries: 
 
+------------------------------------+------------------------+ 
| BNP Paribas Fund Services          |                        | 
| (Guernsey) Limited                 |                        | 
+------------------------------------+------------------------+ 
| Sara Bourne                        |     Tel: 01481 750858  | 
+------------------------------------+------------------------+ 
|                                    |                        | 
+------------------------------------+------------------------+ 
| Arbuthnot Securities Limited       |                        | 
+------------------------------------+------------------------+ 
| Hugh Field                         |     Tel: 0207 012 2000 | 
|                                    |                        | 
+------------------------------------+------------------------+ 
 
Definitions used herein have the same meanings as set out in the Circular.  A 
copy of the Circular will be made available shortly on the Company's website at 
www.northamericanbanksfund.co.uk. 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 NOELLFIDFTLILII 
 

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