TIDMOPF
RNS Number : 5415C
Off-Plan Fund Limited (The)
08 March 2011
AIM: OPF 8 March 2011
THE OFF-PLAN FUND LIMITED
(the "Company")
Redemption of Participating Shares, Proposed Continuation Vote,
Approval of New Investing Policy and Change of Name
The Company announces that it has today posted a circular to
Members detailing the proposed redemption of a substantial majority
of the Company's cash balances (the "Circular"). The Circular
contains notice of an extraordinary general meeting (the "EGM"), at
which resolutions will be proposed to give Members the option to
vote on whether the Company should continue as an investing company
(with a new investing policy) or whether the Company should be
wound-up and its admission to AIM cancelled.
Save where the context requires otherwise, defined terms used in
this announcement have the same meaning as given in the Circular.
Shareholders of the Company are urged to read full details of the
Proposals contained in the Circular. This announcement contains
only a summary of the key terms.
Introduction
Having undertaken an orderly disposal of its assets, to date the
Company has returned approximately GBP6 million to Participating
Shareholders, following compulsory partial redemptions of
Participating Shares in October 2009 and April 2010. Following the
redemption in April 2010, the Company's only assets were its cash
balances and the benefit of an insurance claim to recover a GBP1.1
million deposit paid in respect of Canon House, Wallington. The
claim was settled in full and the proceeds received in November
2010. It is now intended that either all or a substantial majority
of this cash, which is expected to be approximately GBP1.6 million
on 28 March 2011 (being the date of the EGM), be returned to
Members.
Rather than immediately seeking to wind up the Company, and
following consultation with certain Members, the Board is inviting
Members to decide whether the Company should continue or be wound
up. If the Company is to continue, up to 94 per cent of its cash
will be distributed amongst members through the Redemption, leaving
a cash balance for the Company's reduced working capital
requirements. The Company's objective on continuation would be to
undertake an acquisition or acquisitions which would constitute a
reverse takeover under the AIM Rules. Members beneficially holding
37.2 per cent. of the Company's share capital have irrevocably
undertaken to the Company that they will vote in favour of the
Continuation Resolution and related Resolutions.
The Proposals
In order for the Company to be able to continue, two thirds of
Participating Shareholders either present in person or by proxy at
the EGMmust vote in favour of the Continuation Resolution and
certain other resolutions required to facilitate the continuation
of the Company. In addition, the consent of the JFSC is required to
allow the Company to continue as an operating company so the
Proposals are conditional on JFSC consent.
If the Continuation Resolution and related Resolutions are not
passed, or if they are passed but JFSC consent is not received, the
Directors will, conditional on shareholder approval, take steps to
wind-up the Company. In order for the Company to be wound up and
its admission to AIM cancelled, three quarters (i.e. 75% or more)of
Participating Shareholders either present in person or by proxy at
the EGM must vote in favour of the Winding-up Resolution. The
Winding-up Resolution, if passed, is conditional on either: (i) any
of the Continuation Resolution and related Resolutions not being
passed; and (ii) JFSC consent to the Proposals being refused. In
the event that the Winding-up Resolution is passed and become
effective, the Company will be wound up as soon as practically
possible through a full redemption of all of the Participating
Shares in issue, as described below.
Members should note that the in the absence of sufficient votes
being received, there is a risk that neither the Continuation
Resolution and related Resolutions nor the Winding-Up Resolution is
passed. In such circumstances, the Company will proceed with the
Alternative Redemption as detailed below and will in due course
convene another meeting to consider the winding up of the Company
and cancellation of its admission to trading on AIM.
Continuation
If the relevant Resolutions are passed and the JFSC's consent is
obtained, it is proposed that the Company will distribute (subject
to the election of Members, as described below) up to 94 per cent.
of the Company's cash balance to Members (approximately
GBP1,488,000) by way of a partial redemption of Participating
Shares. Following the passing of the relevant Resolutions, up to 94
per cent. of Participating Shareholders' existing holding(s) in the
Company will be redeemed at the Effective Price (the "Maximum
Redemption"). The Maximum Redemption, however, is not compulsory
and Members can elect to have a lower proportion of their holding
redeemed should they wish to retain a greater interest in the
Company following the Effective Date. The potential outcomes in the
case of the Continuation Resolution (and related Resolutions) being
passed, the Winding-Up Resolution being passed or neither being
passed are set out below:
Redemption Upon winding Alternative
upon continuation up Redemption
Expected available cash as
at 28 March 2011 (being
the date of the EGM) GBP1,590,000* GBP1,600,000 GBP1,600,000
Approximate no. of
Participating Shares to
be redeemed 2,096,799 2,230,637 2,183,098
Redemption price 71p 69.5p 71p
Aproximate resulting cash
redemption GBP1,488,000 GBP1,550,000 GBP1,550,000
Approximate percentage of
Fund's cash assets
distributed 94% 97% 97%
Approximate remaining cash GBP112,000** GBP50,000 GBP50,000
assets of the Fund /
Retention for winding up
costs
* GBP10,000 deduction for contingency purposes.
** Assuming all Participating Shareholders elect for the Maximum
Redemption.
The Election Process
Members will be able to complete an election card to indicate
the proportion of their holding they wish to be redeemed if the
Continuation Resolution and related Resolutions are passed and the
Redemption takes place. Members will have the following two
options:
-- Members can elect for the Maximum Redemption; or
-- Members can elect for the Company to redeem a smaller portion
of their holding, by indicating the exact number of shares they
wish to have redeemed.
In the event that Members do not make an election and the
Redemption takes place, they will be automatically deemed to have
elected for the Maximum Redemption. Detailed instructions for both
certificated and CREST Members are contained the Circular.
The Maximum Redemption
In light of the possibility of continuing as an investing
company, the Board has considered the minimum prudent working
capital requirements of the Company. If the Continuation Resolution
is passed, the Board will put in place arrangements to
significantly reduce the ongoing working capital requirements of
the Company which, in the absence of entering into a transaction,
will be not greater than GBP100,000 per annum. These arrangements
will be put in place immediately following the EGM should the
relevant Resolutions be approved by Members. Therefore, the Company
would have sufficient working capital for 12 months following the
EGM; however, it is proposed that the Company would seek to raise
additional funds after the Effective Date, as described below.
The Directors will need to be able to confirm the cashflow
solvency of the Company for a period of one year after the
Redemption in order to comply with the relevant provision of Jersey
Law.
Proposed Subscription
Following completion of the election process, the Directors may
conclude that it would be advantageous to increase the Company's
cash balances. Subject to investor demand and the passing of the
relevant Resolutions, the Company may issue new ordinary shares by
way of a subscription or placing immediately following conclusion
of the Extraordinary General Meeting. There can be no guarantee
that any such proposed subscription or placing will be successful.
Certain Resolutions being proposed at the EGM will give the
Directors authority to issue up to 4,000,000 ordinary shares
following the Effective Date and Admission without the new
pre-emption rights contained in the new Articles applying. The
level of authorities to be granted pursuant to these Resolutions
are greater than standard market practice, however, the Directors
consider the proposed subscription as a one-off event in connection
with the potential continuation of the Company. They also consider
that the Company should have maximum flexibility to raise funds by
way of an equity subscription.
Capital Reorganisation
In structuring the Redemption, the Board considers that should
the Redemption proceed, it would be more appropriate for the Fund
to have a higher number of shares in issue and, therefore, a lower
share price following the Effective Date. Therefore, a capital
reorganisation is being proposed under Resolution 3 which, if
passed and conditional upon the Continuation Resolution being
passed, will have the effect of replacing each share in issue with
10 new shares, and accordingly reducing the net asset value per
share on a pro rata basis. If Resolution 3 is passed, the resulting
capital reorganisation will be effected immediately following the
Redemption.
Proposed investing policy
Conditional upon the Continuation Resolution and other relevant
resolutions being passed at the Extraordinary General Meeting, the
Company will continue as an "investing company" for the purposes of
the AIM Rules but will have a new objective which would be to make
an acquisition or acquisitions which would constitute a reverse
takeover under Rule 14 of the AIM Rules within 12 months of the
Effective Date. As such and conditional upon the Continuation
Resolution and other relevant resolutions being passed, it is
proposed that the Company adopts a new investing policy.
Background
The Board believes that growth in the generation of household
and industrial waste has created an increasing waste disposal
problem, with associated environmental and public health issues.
Environmental legislation is becoming ever more stringent and the
UK government has introduced fiscal legislation in the form of
landfill tax to make landfill less economic and alternative
disposal and treatment technologies price competitive. Accordingly,
the Board believes that companies providing other treatment
solutions, often using new technologies to handle the remaining
waste residues could offer solutions for which there will be strong
demand. Owing to the relatively high calorific value of much of the
residual waste, many of these solutions and technologies focus on
either the conversion of waste into a fuel or the recovery of
energy from waste which may be used to create higher value products
such as power, steam, hydrogen and basic chemicals.
The Board's view is that fully developed and commercially viable
waste treatment processes can generate significant value, as they
contribute to both solving the waste problem and reducing reliance
on imported fossil fuels. Waste is increasingly considered as a
sustainable and renewable source of energy, or feed stock, rather
than a problem for disposal.
Accordingly, it is proposed that the Company adopts the
following new investing policy:
"The Directors intend to seek to acquire a company/business or
companies/businesses in the waste/waste to energy sector in
exchange for the issue of Ordinary Shares. Such acquisition(s) will
constitute a reverse takeover under Rule 14 of the AIM Rules and be
completed within 12 months of the Effective Date. Suitable targets
could be companies/businesses which have one or more of the
following characteristics:
(a) established and reliable access to waste feedstock;
(b) transfer stations and/or treatment plants which have
significant waste volume throughputs or the ability to process
suitable volumes and types of waste; and/or
(c) the ability to operate successfully as suppliers of feed
stock to the emerging new generation of plants that will depend on
renewable sources of fuel.
Owing to changes in regulation, which have become more onerous
over the last decade, the Board believes that following any initial
transaction, the Company may be able to use a combination of cash
and/or shares to acquire other complementary businesses creating
economies of scale.
However, these criteria are not intended to be exhaustive and
the Company may make an investment which does not fulfill all of
the investment criteria or indeed may fall into the wider
environment or resource sectors, if the Directors believe it is in
the interests of Members as a whole to proceed with such an
investment."
Any such acquisition by the Company will be required to be put
to Members for their approval at the appropriate time.
Neither the Company nor any of its advisers are in discussions
with any potential acquisition targets and there is no guarantee
that the Company will make a successful acquisition. Under the AIM
Rules, the Company will have to complete an acquisition or
acquisitions constituting a reverse takeover within 12 months of
the date on which the Company completed its divestment of all of
its property assets (i.e. the date of the receipt of funds pursuant
to the insurance claim for deposits paid in respect of Canon House,
Wallington announced on 24 November 2010) or trading in the
Participating Shares on AIM will be suspended for up to six months.
If a reverse takeover has not been completed on the expiry of that
6 month period, the Company's admission to AIM will be cancelled.
However, in the absence of there being a reasonable prospect of
completing an acquisition by the date of the cancellation, the
Directors will put in place arrangements for the immediate winding
up of the Company. In such circumstances Members may receive
little, if any, cash from the liquidation.
Change of name
In order to reflect the change in its activities, and
conditional upon the Continuation Resolution and other relevant
resolutions being approved, it is proposed that the Company's name
is changed to Cholet Investments plc.
Status of the Company
The Company is currently structured as a CIF, under the
Collective Investment Funds (Jersey) Law, 1988, and therefore
regulated by the JFSC. However, the Directors believe that the
Company would prove more attractive to potential reverse takeover
candidates if it was to be deregulated and therefore reclassified
as a Jersey registered ordinary operating company. Accordingly, and
subject to JFSC consent, as part of the Proposals Members are being
asked to approve the Reclassification.
There are no guarantees that the JFSC will consent to the
Proposals and if they do not consent, the Directors will redeem all
outstanding Participating Shares and effect an orderly winding-up
of the Company.
Articles of Association
Subject to Members' approval of the Reclassification and the
relevant Resolutions at the Extraordinary General Meeting, new
articles of association will be adopted to reflect the updated
status of the Company as an ordinary operating company. A summary
of the proposed Articles can be found in the Appendix to this
document.
Board changes and consultancy arrangements
Should the relevant Resolutions be passed at the Extraordinary
General Meeting, as described above the operating costs of the
Company will be significantly lower than those currently incurred.
It is intended that in the event that such Resolutions are passed,
Donald Reid will step down as a director of the Company but Roger
King will continue as Non-executive Chairman and Roger Maddock will
continue as a Non-executive Director. In addition, conditional on
such Resolutions being passed and certain other conditions, the
Board intends to appoint Brian Howard to the Board as a
Non-executive Director.
Mr. Howard has held senior positions in the waste management and
recycling industry for over 25 years. This included fifteen years
as the Managing Director of Thames Waste Management Limited, a
subsidiary of Thames Water Plc and then RWE A.G. the German
multi-utility company, and nine years with Cleanaway Limited. Prior
to this, having obtained a degree in Civil Engineering from
University College London and a masters degree in Structural
Engineering from Imperial College, he held appointments in both
civil engineering consultancy and contracting companies.
More recently he has worked with the private equity group,
Englefield Capital, researching and negotiating possible
acquisitions and investments in this sector. Two companies were
acquired successfully which had a combined annual turnover of over
GBP40 million. He is a member of both the Institution of Civil
Engineers and the Chartered Institute of Waste Management and has
an MBA from the City University. Mr. Howard will be paid a fee of
GBP10,000 per annum.
Consultancy arrangements with DCML
Subject to the passing of the Resolutions, the Company also
proposes to enter into a consultancy agreement with Development
Capital Management Limited ("DCML"). Pursuant to this agreement
DCML will provide certain services aimed at helping the Company to
achieve its investing policy.
DCML will seek to identify and deal with prospective reverse
takeover candidates on behalf of the Company and more specifically,
(i) to carry out initial due diligence in relation to such parties
(ii) to conduct negotiations with such parties in accordance with
instructions from the Company and (iii) to work with appropriate
third party professional advisers appointed by the Company in
relation to any specific transaction(s).
In the performance of its services, DCML will be assisted by
Hilary Stone. Hilary is Honorary Research Fellow in waste
management and environmental law, Imperial College London and
Visiting Lecturer in Environmental Law, School of Engineering and
Design Brunel University. She has extensive experience both in
academic and business consultancy work in the environmental and
waste management sectors, lecturing at undergraduate and post
graduate levels on Environmental and Energy law and Health and
Safety law together with environmental business topics including
environmental management and environmental risk management. She is
a Member of the DEFRA Advisory Committee on Hazardous Substances
and Chairs the Gasification and Pyrolysis Group of the Renewable
Energy Association. DCML will be responsible for all fees payable
to Ms Stone.
In return for the provision of such services DCML will entitled
to a fixed annual fee of GBP25,000 (plus VAT), payable quarterly in
advance, over a maximum twelve month term. Subject to the Company
completing a reverse takeover under the AIM Rules, DCML will also
be granted an option to purchase up to three per cent of the issued
share capital of the Company, at the relevant transaction price
i.e. the price at which the Company issues shares pursuant to the
reverse takeover. This option will be exercisable for three years
following completion of the relevant deal and in the event that
DCML identifies the opportunity which results in the reverse
takeover it will be entitled to a fee equal to one per cent of the
value of the enlarged entity, payable in shares.
The entry into of the consultancy arrangements described above
between DCML and the Company is deemed to be a related party
transaction under the AIM Rules. In accordance with Rule 13 of the
AIM Rules, the Directors, with the exception of Roger Maddock, who
is connected with DCML, having consulted with Merchant Securities
Limited, the Company's nominated adviser, consider that the terms
of the consultancy arrangements are fair and reasonable insofar as
Members are concerned.
Orderly winding up of the Company
In the event that the relevant Resolutions are not passed at the
Extraordinary General Meeting and/or the JFSC do not consent to the
Proposals and the Winding-up Resolution is passed, the Board will
undertake an orderly winding-up of the Company. An orderly winding
up of the Company requires the following steps to be taken:
1. All Participating Shares will be redeemed at a price of 69.5
pence per Participating Share;
2. The holders of founder shares shall vote in favour of the
summary winding up of the Company; and
3. The Directors will implement a summary winding up of the
Company.
Assuming a cash balance of approximately GBP1.6 million as at
the date of the EGM, the Board has estimated that the costs of this
winding up process will be not greater than GBP50,000. This sum
will be retained by the Company to fund the winding-up process,
which would result in the majority of Company's cash balances being
returned to Members, equivalent to approximately 69.5 pence per
Participating Share or GBP1,550,000 million in aggregate.
If the Winding up Resolution is passed and becomes effective,
the Directors will exercise their powers pursuant to Article 36.00
of the Company's Articles to redeem the entire participating share
capital of the Company held by those Members on the register at
4.30 p.m. on 6 April 2011. In these circumstances, admission of the
Company's participating share capital to trading on AIM would be
cancelled at 7.00 a.m. on 7 April 2011.
Members should note that the in the absence of sufficient votes
being received, there is a risk that neither the Continuation
Resolution and related resolutions nor the Winding-Up Resolution is
passed. In such circumstances, the Company will proceed with the
Alternative Redemption and will in due course convene another
meeting to consider the winding up of the Company and cancellation
of its admission to trading on AIM.
Irrevocable undertakings
The Directors have irrevocably undertaken to the Company to vote
in favour of the Continuation Resolution and related Resolutions to
be proposed at the Extraordinary General Meeting, in respect of
their aggregate beneficial holdings totalling 5,128 Participating
Shares, representing approximately 0.23 per cent. of the
Participating Shares.
In addition, certain Members representing the two largest
beneficial shareholders of the Company and an additional Member
holding in excess of three per cent. of the Company's issued
capital have irrevocably undertaken to the Company to vote in
favour of the Continuation Resolution and related Resolutions in
respect of their aggregate beneficial holdings totalling 830,457
Participating Shares, representing approximately 37.2 per cent. of
the existing share capital.
Copies of the Circular and EGM Notice
Copies of the Circular and accompanying EGM Notice will be
available to download from the Company's website
(www.offplanfund.com) later today. The EGM has been convened for
10.00 a.m. on 31 March 2011 at the offices of Fairway Group, 8th
Floor, Union House, Union Street, St Helier, JE2 3RF, Jersey.
List of Contacts:
Development Capital Management
Andy Gardiner
Tom Pridmore
020 7355 7600
Merchant Securities Limited
(Nominated Adviser and Broker)
Bidhi Bhoma/Simon Clements
020 7628 2200
This information is provided by RNS
The company news service from the London Stock Exchange
END
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