TIDMJZCP TIDMJZCC TIDMJZCN
JZ CAPITAL PARTNERS LIMITED (the "Company" or "JZCP")
(a closed-end collective investment scheme incorporated with limited liability
under the laws of Guernsey with registered number 48761)
LEI: 549300TZCK08Q16HHU44
Recommended Proposals to approve:
The Company's proposed reduction of its commitments to Spruceview Capital
Partners
Amendments to the Company's investment policy
and
Notice of Extraordinary General Meeting
15 July 2020
Unless otherwise defined herein, capitalised terms used in this announcement
have the meanings given to them in the Circular of the Company dated 15 July
2020.
On 27 November 2019, the Company announced its interim results for the six
month period ended 31 August 2019, in which it was explained that the Company's
Investment Adviser, Jordan/Zalaznick Advisers, Inc. ("JZAI"), was working with
the Board to reduce the Company's commitments and future subscription
obligations to certain managed funds. The Board is now pleased to announce
that, as foreshadowed in the Company's annual results for the year ended 29
February 2020, it has secured agreement with David W. Zalaznick and John (Jay)
Jordan II (together, being the "JZAI Founders", who are the founders and
principals of JZAI) (or their respective affiliates) for the proposed reduction
of the Company's commitments to its investments in Spruceview Capital Partners
("Spruceview") in the amount of approximately US$8.640 million. Accordingly,
the Board is now requesting approval from Shareholders for such proposed
reduction of the Company's commitments to Spruceview (the "Spruceview Proposal"
). The Spruceview Proposal would be considered a Related Party Transaction of
the Company thereby requiring Shareholder approval to be sought and obtained.
In addition, as also set out in the Company's annual results, it remains the
case that the JZAI Founders have also agreed to relieve the Company of certain
of its commitments to the Orangewood Fund by each of them assuming the
obligation of US$2 million and with the balance of the Company's remaining
commitments of US$20 million intended to be transferred to third parties. The
Company will make further announcements as required in relation to the status
of its commitments to the Orangewood Fund as matters progress.
Separately, on 22 April 2020, the Company announced a proposed change to its
investment policy, pursuant to which the Company will make no further
investments except in respect of which it has existing obligations or to the
extent that investment is applied to support certain selected existing
investments (the "Investment Policy Amendment Proposal" and together with the
Spruceview Proposal, the "Proposals"). The intention of the change is to
realise the maximum value of the Company's investments and, after repayment of
all debt, to return capital to Shareholders. The Board is now also pleased to
announce that, as previously indicated, including most recently in the
Company's annual results, it is requesting approval from Shareholders for the
proposed amendments to, and restatement of, its investment policy.
Further details of the Proposals are set out in the sections of this
announcement below.
Notice of Extraordinary General Meeting
The Company is today posting a Circular to Shareholders containing details of
the Proposals and convening an Extraordinary General Meeting of the Company in
order for Shareholders to consider and, if thought fit, approve the Proposals.
The Extraordinary General Meeting of the Company is being convened to be held
at 1.15 p.m. on 12 August 2020 (or as soon thereafter as the Annual General
Meeting of the Company convened for the same day and place has been concluded
or adjourned). The Extraordinary General Meeting will be held at the offices of
Northern Trust International Fund Administration Services (Guernsey) Limited,
Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3QL, Channel Islands.
The Notice convening the Extraordinary General Meeting, which contains the
Resolutions to be proposed at that meeting concerning the Proposals, is set out
at the end of the Circular being posted to Shareholders.
Attendance at the Extraordinary General Meeting
The Company has been closely monitoring the evolving situation relating to the
outbreak of Coronavirus (COVID-19), including the current guidance and
restrictions on travel and public gatherings and social distancing. The
priority of the Company's Board at this time is the health, safety and
wellbeing of all Shareholders and Directors.
With effect from 20 June 2020, the States of Guernsey implemented Phase 5 of
its transitional plan to ease the stay at home and travel restrictions
originally introduced on 25 March 2020 in light of COVID-19. Whilst
restrictions within Guernsey have been eased, permitting gatherings to take
place within Guernsey, any persons arriving into Guernsey are presently
required to self-isolate for a period of 14 days upon arrival.
In light of the restrictions in place from 20 June 2020, whilst Guernsey based
Shareholders are permitted to attend the Extraordinary General Meeting in
person, Shareholders from outside of Guernsey are strongly encouraged to
appoint the Chairman of the meeting or the Company Secretary as their proxy and
provide voting instructions in advance of the Extraordinary General Meeting, in
accordance with the instructions explained in the Notice of Extraordinary
General Meeting set out at the end of the Circular.
Shareholders are strongly encouraged to exercise their voting rights by
completing and submitting a Form of Proxy. It is highly recommended that
Shareholders submit their Form of Proxy as early as possible to ensure that
their votes are counted at the Extraordinary General Meeting.
The Company will continue to closely monitor the situation in the lead up to
the Extraordinary General Meeting and will make any further updates as required
about the meeting on its website at www.jzcp.com.
Spruceview Proposal
As mentioned above, the Board has secured agreement with the JZAI Founders (or
their respective affiliates) for the proposed reduction of the Company's
commitments to its investments in Spruceview in the amount of approximately
US$8.640 million. Spruceview, which is a portfolio investment of the Company,
includes its affiliated funds from time to time, and in particular CERPI.
Spruceview is an asset management business in the United States and aims to
address the demand from corporate pensions, endowments, family offices and
foundations for fiduciary management services through an Outsourced Chief
Investment Officer model as well as specific products per asset class. CERPI is
an investment fund established and managed by Spruceview for its client, a
Mexican retirement fund administrator. As the general partner of CERPI,
Spruceview is required to make co-investments in CERPI which are permitted to
be made by various of its affiliates, including the Company and the JZAI
Founders (or their respective affiliates). The key individuals important to the
Spruceview business are Richard Sabo (Partner, CEO and Co-CIO) and Neetesh
Kumar (Partner).
The Company has previously obtained Shareholder approval for certain
investments in Spruceview jointly with the JZAI Founders (or their respective
affiliates). Such approvals included, in March 2019, the Company increasing its
investment together with the JZAI Founders (or their respective affiliates) in
Spruceview Capital Partners by an additional US$1.475 million from the Company
(with a further US$1.475 million being contributed by the JZAI Founders (or
their respective affiliates)). This increase was considered by the Company not
to be a material change to the terms of the 2015 Spruceview Approval (as
defined in the circular) and, therefore, Shareholder approval was not obtained
for such increase. All of the Company's increased investment of US$1.475
million (being the "2015 Spruceview No Material Change Approval"), was to be
used to support Spruceview's share of the co-investment in CERPI. In addition,
in June 2019, Shareholders approved the Company's proposed joint investment of
US$30 million (with the Company investing US$15 million, and a further US$15
million being contributed by the JZAI Founders (or their respective
affiliates)) (the "2019 Spruceview Approval").
Of the US$1.475 million and the US$15 million approved for investment by the
Company pursuant to the 2015 Spruceview No Material Change Approval and the
2019 Spruceview Approval respectively, approximately US$8.640 million
represents the Company's maximum potential commitments to CERPI, with the
remaining approximately US$7.835 million representing its maximum potential
commitments to Spruceview (excluding CERPI).
With respect to the Company's commitments in CERPI and in light of the
Company's desire to reduce its commitments and future subscription obligations,
it is proposed that the Company will have its CERPI commitments reduced in full
(by approximately US$8.640 million), with such commitments being taken over by
the JZAI Founders (or their respective affiliates). Those commitments also
include an amount of approximately US$969,000 in respect of certain commitments
to CERPI to which the Company did not fully subscribe and were instead
subscribed to by affiliates of the JZAI Founders on an interim basis. The
Company is therefore being relieved of an aggregate amount of approximately
US$8.640 million of commitments.
Shareholders should note that the CERPI commitments comprise funded
commitments, unfunded commitments and potential future commitments, in each
case to CERPI, which are subject to change between 10 July 2020 and the time of
the JZAI Founders (or their respective affiliates) taking over the commitments
(expected to be the later of 14 August 2020 and the second business day
following receipt of Shareholders approving the Spruceview Proposal). The price
payable by the JZAI Founders (or their respective affiliates) to the Company
for the transfer of their commitments will be equal to a price equivalent to
the net asset value of the aggregate funded commitments, which is equal to (a)
the total amount of such funded commitments (being as at 10 July 2020 an amount
equal to approximately US$1.287 million), less (b) the total accumulated net
realised and unrealised capital gains and losses of the Company's wholly owned
subsidiary (which has made the subscriptions) with respect to such commitments
to 31 March 2020 (being the date of their most recent valuation) (and being as
at 10 July 2020 an amount equal to approximately US$4,500). The Company intends
to utilise the proceeds received in connection with the Spruceview Proposal in
accordance with the Company's revised investment policy as further detailed
below.
With respect to the Company's commitments in Spruceview (excluding CERPI), it
is proposed that those commitments (of approximately US$7.835 million) are to
remain in place with the Company continuing to invest together with, and
jointly alongside, the JZAI Founders (or their respective affiliates) on a 50:
50 basis economically and on the same terms and conditions as above for the
2019 Spruceview Approval, albeit limited to Spruceview (excluding CERPI) and
excluding the Company's commitments to CERPI as so taken over by the JZAI
Founders (or their respective affiliates). Specifically, the Company would
propose to continue to invest approximately US$7.835 million (with a further
approximately US$7.835 million to be contributed by the JZAI Founders (or their
respective affiliates)) in Spruceview (excluding CERPI). The proposed joint
investment would, as above, be on the same terms as the joint investment in
Spruceview approved by the 2019 Spruceview Approval, being 50:50 economically
and on the same terms and conditions but with certain structural features
intended to afford each side appropriate US tax protections.
The proposed reduction in the Company's commitments in CERPI and the proposed
joint investments in Spruceview (excluding CERPI), would be considered to be a
material change to the 2019 Spruceview Approval, and would therefore be
considered a Related Party Transaction under Chapter 11 of the Listing Rules
(with which the Company voluntarily complies and insofar as the Listing Rules
are applicable to the Company by virtue of its voluntary compliance). JZAI is
the Company's investment adviser pursuant to the Investment Advisory Agreement
and, under the Listing Rules, would therefore be considered a Related Party of
the Company. As founders and principals of JZAI, the JZAI Founders are
associates of JZAI and would also be considered Related Parties of the Company.
In addition, each of the JZAI Founders are substantial shareholders of the
Company as they are each entitled to exercise or to control the exercise of 10
per cent. or more of the votes able to be casted at a general meeting of the
Company. As such, each of the JZAI Founders are considered to be Related
Parties of the Company on this basis as well. The Spruceview Proposal, which
involves the JZAI Founders as Related Parties of the Company, would be
considered to involve arrangements between the Company and its Related Parties.
Accordingly, the JZAI Founders as Related Parties and the Spruceview Proposal
as arrangements between them would be considered a Related Party Transaction
under Chapter 11 of the Listing Rules, insofar as the Listing Rules are
applicable to the Company by virtue of its voluntary compliance with the same.
As such, the Spruceview Proposal, as a Related Party Transaction of the
Company, requires approval of Shareholders to reduce its commitments in CERPI
by divesting them to the JZAI Founders (or their respective affiliates) and for
the Company to invest jointly together with them in Spruceview (excluding
CERPI).
As such, a Resolution is to be proposed at the Extraordinary General Meeting in
relation to the Spruceview Proposal as a Related Party Transaction of the
Company and is being proposed to seek Shareholder approval for the Company's
proposed reduction of its CERPI commitments and joint investments in Spruceview
(excluding CERPI).
Investment Policy Amendment Proposal
Also as mentioned above, the Company is proposing to amend and restate its
investment policy to enshrine the Company's new strategy of making no further
investments except in respect of which it has existing obligations or to the
extent that investment is applied to support certain selected existing
investments. The intention of the change is to realise the maximum value of the
Company's investments and, after repayment of all debt, to return capital to
Shareholders.
The rationale for this change in policy is that, whilst JZAI, as the Company's
Investment Adviser, has been working assiduously in difficult circumstances to
stabilise the Company's investments, the Board recognises that, as a result of
the disappointing and significant losses in value of its real estate portfolio
and poor performance, and having reviewed all available options, there has to
be a change in investment policy. The policy of making no further investments
(with a limited number of exceptions), whilst representing only a change in
emphasis from the existing investment policy, is nonetheless a significant
change and is considered to be material alteration to the policy.
The principal amendment to the Company's existing investment policy relates to
the Company's approach with regard to new investments. The Company's existing
investment policy provides that the Company anticipates that no meaningful
capital will be dedicated to new investments other than honouring its funding
commitments and supporting its portfolio of assets. The Company is now
proposing to alter the emphasis of this concept by amending the policy to
provide that no new investments will be made except in respect of which it has
existing obligations or to the extent that investment is applied to support
certain selected existing investments. The Company's strategy for implementing
the policy will also be changed to realising the maximum value of the Company's
investments and, after repayment of all debt, to returning capital to
Shareholders. The strategy will remove the other existing objectives and will
not be expressed as being limited in duration to the next few years.
Save for those amendments as set out above, the Company is not otherwise
proposing to make any other material changes to its existing investment policy
(including its corporate objective and borrowing policy) and, as such, the
existing investment policy otherwise remains largely unchanged. The Company's
amended and restated investment policy is set out in full in the Circular, with
copies of the same being on display and available for inspection as described
in the Circular.
The Company has previously voluntarily agreed that, in line with Chapter 15 of
the Listing Rules (with which the Company voluntarily complies and insofar as
the Listing Rules are applicable to the Company by virtue of its voluntary
compliance), it would not materially alter its existing investment policy
without the prior approval of Shareholders. The Investment Policy Amendment
Proposal is considered to be a material change to the investment policy and
Shareholder approval is accordingly being sought for the proposed amendments to
the same.
As such, a Resolution is to be proposed at the Extraordinary General Meeting in
relation to the Investment Policy Amendment Proposal and is being proposed to
seek Shareholder approval for the amended and restated investment policy to be
approved and adopted as the investment policy of the Company in substitution
for, and to the exclusion of, the Company's existing investment policy.
Notice of Extraordinary General Meeting and Shareholder Circular
Notice is hereby given that the Extraordinary General Meeting of the Company
will be held at the offices of Northern Trust International Fund Administration
Services (Guernsey) Limited, Trafalgar Court, Les Banques, St Peter Port,
Guernsey GY1 3QL, Channel Islands at 1.15 p.m. on 12 August 2020 (or as soon
thereafter as the Annual General Meeting of the Company convened for the same
day and place has been concluded or adjourned).
Further details of the Proposals are included in the Notice convening the
Extraordinary General Meeting and in the Circular.
The Notice convening the Extraordinary General Meeting is being distributed to
members of the Company and will shortly be uploaded to the Company's website at
www.jzcp.com. Copies of the Circular the Company is posting to Shareholders are
available for viewing, during normal business hours, at the registered office
of the Company at Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3QL
and will shortly be available for viewing at www.morningstar.co.uk/uk/nsm.
The Notice convening the Extraordinary General Meeting is also included within
the Circular.
For further information:
Ed Berry / Kit Dunford +44 (0) 20 3727 1046 / 1143
FTI Consulting
David Zalaznick +1 (212) 485 9410
Jordan/Zalaznick Advisers, Inc.
Sam Walden +44 (0) 1481 745385
Northern Trust International Fund
Administration Services (Guernsey)
Limited
Important Notice
This announcement is not an offering of securities. Any securities offered have
not been and will not be registered under the US Securities Act and may not be
offered or sold in the United States absent registration or an applicable
exemption from registration requirements.
This announcement also includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or comparable
terminology. These forward-looking statements relate to matters that are not
historical facts. By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on circumstances that
may or may not occur in the future. Forward-looking statements are not
guarantees of future performance. The Company's actual investment performance,
results of operations, financial condition, liquidity, policies and the
development of its strategies may differ materially from the impression created
by the forward-looking statements contained in this announcement. In addition,
even if the investment performance, result of operations, financial condition,
liquidity and policies of the Company and development of its strategies, are
consistent with the forward-looking statements contained in this announcement,
those results or developments may not be indicative of results or developments
in subsequent periods. These forward-looking statements speak only as at the
date of this announcement. Subject to their legal and regulatory obligations,
each of the Company, the Investment Adviser and their respective affiliates
expressly disclaims any obligations to update, review or revise any
forward-looking statement contained herein whether to reflect any change in
expectations with regard thereto or any change in events, conditions or
circumstances on which any statement is based or as a result of new
information, future developments or otherwise.
END
(END) Dow Jones Newswires
July 15, 2020 02:00 ET (06:00 GMT)
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