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
REDUCTION OF
COMMITMENTS TO ORANGEWOOD
Smaller Related Party Transaction
17 September
2020
On 15 July 2020, the Company
announced that David W. Zalaznick
and John (Jay) Jordan II (together,
being the "JZAI Founders", who are the founders and
principals of the Company's investment adviser, Jordan/Zalaznick
Advisers, Inc. ("JZAI")) had agreed in principle to relieve
the Company of certain of its commitments to Orangewood Partners
II-A, L.P. (the "Orangewood Fund") by each of them assuming
the obligation of approximately US$2
million of those commitments.
Further to that announcement, the Company is now pleased to
report that it has yesterday entered into an agreement with the
JZAI Founders (or their respective affiliates) for the reduction of
the Company's commitments to its investments in the Orangewood Fund
in the amount of US$4.25 million (the
"Orangewood Transaction"). The Orangewood Transaction is
considered to be a smaller related party transaction of the Company
pursuant to chapter 11 of the listing rules made by the Financial
Conduct Authority pursuant to section 73A of the Financial Services
and Markets Act 2000, as amended (the "Listing Rules")
(insofar as they apply to the Company by virtue of its voluntary
compliance with the same).
Prior to the Orangewood Transaction, the Company had capital
commitments to the Orangewood Fund of US$23.25 million, of which approximately
US$7.85 million had been funded (the
"JZCP Funded Commitments") and approximately US$15.40 million remained as being unfunded (the
"JZCP Unfunded Commitments").
Consistent with the Company's previously announced desire to
reduce its commitments and future subscription obligations in
accordance with its recently amended investment policy, the Company
has therefore reduced its commitments to the Orangewood Fund by
US$4.25 million pursuant to the
Orangewood Transaction, with such commitments being taken over by
the JZAI Founders (or their respective affiliates). Specifically,
the reduction in the Company's commitments to the Orangewood Fund
has been effected by the JZAI Founders (or their respective
affiliates) having:
- sold, transferred and assigned to them approximately
US$1.43 million of the JZCP Funded
Commitments (the "Transferred JZCP Funded Commitments");
and
- assumed approximately US$2.82
million of the commitments, liabilities, duties,
responsibilities and obligations in respect of the JZCP Unfunded
Commitments (the "Transferred JZCP Unfunded
Commitments").
The price payable by the JZAI Founders (or their respective
affiliates) to the Company for the transfer of their commitments is
approximately US$1.51 million, which
is equivalent to the Transferred JZCP Funded Commitments of
US$1.43 million plus interest accrued
thereon at a rate of 8 per cent. per annum from the date such
commitments were funded to 15 September
2020. The Company intends to utilise the proceeds received
in connection with the Orangewood Transaction in accordance with
the Company's recently revised investment policy.
The resultant effect of the Orangewood Transaction is that the
Company has had its commitments to the Orangewood Fund reduced by
US$4.25 million, with the Company
receiving an amount of approximately US$1.51
million in cash, less expenses associated with the
Orangewood Transaction. In addition, the Company is being relieved
of its obligations to fund in cash commitments of approximately
US$2.82 million relating to the
Transferred JZCP Unfunded Commitments.
JZAI is the Company's investment adviser pursuant to an
investment advisory and management agreement dated 23 December 2010 between the Company and JZAI, as
amended from time to time, and, under the Listing Rules, would
therefore be considered a "Related Party" of the Company (as
defined in the Listing Rules insofar as they apply to the Company
by virtue of its voluntary compliance with the same). 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 Orangewood Transaction, which involves the
JZAI Founders as Related Parties of the Company, would be
considered to involve arrangements between the Company and its
Related Parties. The Orangewood Transaction does however fall
within Listing Rule 11.1.10 R and is
a smaller related party transaction under the Listing Rules
(insofar as they apply to the Company by virtue of its voluntary
compliance with the same). The Company has obtained written
confirmation from J.P. Morgan Securities plc (which conducts its UK
investment banking business as J.P. Morgan Cazenove) that the terms
of the Orangewood Transaction are fair and reasonable as far as the
shareholders of the Company are concerned. This announcement is
made in accordance with Listing Rule 11.1.10 R (c).
In addition to the Orangewood Transaction, the Company is
pleased to announce that it intends to enter into an agreement with
a third party institutional investor to effect a further reduction
of the Company's commitments to its investments in the Orangewood
Fund in the amount of US$5 million.
Pursuant to this agreement, if entered into and completed, the
Company would reduce its commitments to the Orangewood Fund by a
further US$5 million, of which
approximately US$1.69 million would
represent funded commitments and approximately US$3.31 million would represent unfunded
commitments to the Orangewood Fund. The price that would be payable
by the relevant third party institutional investor to the Company
for the transfer of these commitments would be approximately
US$1.78 million, which is equivalent
to the funded commitments of US$1.69
million plus interest accrued thereon at a rate of 8 per
cent. per annum from the date such commitments were funded to the
date of closing. This agreement would be subject to certain
conditions to closing and upon being entered into would be expected
to close and become effective on or about 21
September 2020.
Following completion of the Orangewood Transaction and this
other agreement with the third party investor (assuming it is
entered into and completed on the terms described above), the
Company's remaining commitments to the Orangewood Fund would amount
to US$14 million, of which
approximately US$4.72 million would
represent funded commitments and approximately US$9.28 million would represent unfunded
commitments. The Company's intention with respect to any remaining
commitments to the Orangewood Fund is still, as previously
announced, to further reduce them such that the balance of its
commitments are if and to the extent possible transferred in
full.
For further information:
Ed Berry
FTI Consulting |
+44 (0) 20 3727 1046 |
David Zalaznick
Jordan/Zalaznick Advisers, Inc. |
+1 (212) 485 9410 |
Sam Walden
Northern Trust International Fund Administration Services
(Guernsey) Limited |
+44 (0) 1481
745385 |