AXA Property Trust Notice of EGM and Circular

 
TIDMAPT 
 
AXA Property Trust Limited 
 
                       LEI Number: 213800AF85VEZMDMF931 
                                (The "Company") 
 
                          NOTICE OF EGM AND CIRCULAR 
 
                                 10 June 2019 
 
Further to the Company's announcements on 3 April 2019 and 18 April 2019 
regarding a change of investment policy and a change of name (the "Proposals"), 
the Company on Friday 7th June 2019 posted a circular to shareholders (the 
"Circular") seeking approval at an extraordinary general meeting (the "EGM") 
for such changes. 
 
BACKGROUND 
 
Following consultation with Shareholders, the Board is pleased to propose that 
AXA Property Trust Limited become an investor in undervalued British quoted 
securities. In connection with this, Worsley Associates LLP ("Worsley") has 
been appointed as the Company's new investment advisor. 
 
The Board believes that, if implemented, the new investment policy will provide 
an attractive alternative to the Company's current policy of winding-down its 
portfolio and distributing the realisation proceeds to Shareholders. 
 
Worsley's investment strategy allies the taking of influential holdings in 
British quoted securities of smaller companies priced at a deep discount to 
their intrinsic value (as determined by a comprehensive and robust research 
process) with the employment of activism as necessary to drive highly 
favourable outcomes. UK small cap activism is a specialist discipline and 
Worsley has very few competitors, none of which have comparable experience. The 
UK environment is highly favourable for activism, with minority shareholders 
enjoying a multitude of advantageous rights and protections not generally 
available in other jurisdictions. There are more than 1,000 smaller companies 
whose shares trade on the London Stock Exchange and they receive relatively 
limited attention from market participants, with the result that deep value 
opportunities routinely present themselves across all market cycles. 
 
Worsley has an absolute return focus and believes that the acquisition of a 
portfolio of investments at a large discount to estimated values provides a 
margin of safety which can substantially mitigate the likelihood of an overall 
permanent loss of capital. 
 
The Board believes that Worsley's appointment as the Company's investment 
advisor will provide an excellent basis from which to launch the proposed new 
investment policy. In particular, Worsley has: 
 
·      a proven ability to undertake transactions, providing know-how and 
dependability of execution; 
 
·      a successful investment track record, underpinned by proven operating 
and technical expertise; and 
 
·      a differentiated and rigorous approach to listed equity investments 
through its activist equity strategy. 
 
THE PROPOSALS 
 
Subject to Shareholder approval, it is proposed that: 
 
(i)   the New Investment Objective and Policy be adopted with immediate effect; 
and 
 
(ii)  the Company's name be changed from "AXA Property Trust Limited" to 
"Worsley Investors Limited". 
 
The Proposals are subject to the approval of Shareholders, and the Circular 
contains Notice of the Extraordinary General Meeting, to be held on 28 June 
2019, at which the Resolutions to approve the Proposals will be considered. 
 
NEW INVESTMENT OBJECTIVE AND POLICY 
 
Under the Proposals, the New Investment Objective and Policy would be adopted 
in the place of the current investment policy of managed wind-down, as approved 
at an extraordinary general meeting of the Company on 26 April 2013. 
 
New Investment Objective 
 
The Company's investment objective is to provide Shareholders with an 
attractive level of absolute long-term return, principally through the capital 
appreciation and exit of undervalued securities. The existing real estate asset 
of the Company will be realised in an orderly manner, that is with a view to 
optimising the disposal value of such asset. 
 
New Investment Policy 
 
The Company aims to meet its objectives through investment primarily, although 
not exclusively, in a diversified portfolio of securities and related 
instruments of companies listed or admitted to trading on a stock market in the 
British Isles (defined as the United Kingdom of Great Britain and Northern 
Ireland; (ii) the Republic of Ireland; (iii) the Bailiwicks of Guernsey and 
Jersey; and (iv) the Isle of Man). The majority of such companies will also be 
domiciled in the British Isles. Most of these companies will have smaller to 
mid-sized equity market capitalisations (the definition of which may vary from 
market to market, but will in general not exceed GBP600 million). It is intended 
to secure influential positions in such British quoted securities with the 
deployment of activism as required to achieve the desired results. 
 
The Company and its subsidiary undertakings ("the Group") may make investments 
in listed and unlisted equity and equity-related securities such as convertible 
bonds, options and warrants. The Group may also use derivatives, which may be 
exchange traded or over-the-counter. 
 
The Group may also invest in cash or other instruments including but not 
limited to: short, medium or long term bank deposits in Sterling and other 
currencies, certificates of deposit and the full range of money market 
instruments; fixed and floating rate debt securities issued by any corporate 
entity, national government, government agency, central bank, supranational 
entity or mutual society; futures and forward contracts in relation to any 
other security or instrument in which the Group may invest; put and call 
options (however, the Group will not write uncovered call options); covered 
short sales of securities and other contracts which have the effect of giving 
the Group exposure to a covered short position in a security; and securities on 
a when-issued basis or a forward commitment basis. 
 
The Company pursues a policy of diversifying its risk. Save for the Curno Asset 
until such time as it is realised, the Company intends to adhere to the 
following investment restrictions: 
 
·      not more than 30 per cent. of the Gross Asset Value at the time of 
investment will be invested in the securities of a single issuer (such 
restriction does not, however, apply to investment of cash held for working 
capital purposes and pending investment or distribution in near cash equivalent 
instruments including securities issued or guaranteed by a government, 
government agency or instrumentality of any EU or OECD Member State or by any 
supranational authority of which one or more EU or OECD Member States are 
members); 
 
·      the value of the four largest investments at the time of investment will 
not constitute more than 75 per cent of Gross Asset Value; 
 
·      the value of the Group's exposure to securities not listed or admitted 
to trading on any stock market will not exceed in aggregate 35 per cent. of the 
Net Asset Value; 
 
·      the Group may make further direct investments in real estate but only to 
the extent such investments will preserve and/or enhance the disposal value of 
its existing real estate asset. Such investments are not expected to be 
material in relation to the portfolio as a whole but in any event will be less 
than 25 per cent. of the Gross Asset Value at the time of investment. This 
shall not preclude its subsidiaries from making such investments for 
operational purposes; 
 
·      the Company will not invest directly in physical commodities, but this 
shall not preclude its subsidiaries from making such investments for 
operational purposes; 
 
·      investment in the securities, units and/or interests of other collective 
investment vehicles will be permitted up to 40 per cent. of the Gross Asset 
Value, including collective investment schemes managed or advised by the 
Investment Advisor or any company within the Group; and 
 
·      the Company must not invest more than 10 per cent. of its Gross Asset 
Value in other listed investment companies or listed investment trusts, save 
where such investment companies or investment trusts have stated investment 
policies to invest no more than 15 per cent. of their gross assets in other 
listed investment companies or listed investment trusts. 
 
The percentage limits above apply to an investment at the time it is made. 
Where, owing to appreciation or depreciation, changes in exchange rates or by 
reason of the receipt of rights, bonuses, benefits in the nature of capital or 
by reason of any other action affecting every holder of that investment, any 
limit is breached by more than 10 per cent., the Investment Advisor will, 
unless otherwise directed by the Board, ensure that corrective action is taken 
as soon as practicable. 
 
Borrowing and Leverage 
 
The Group may engage in borrowing (including stock borrowing), use of financial 
derivative instruments or other forms of leverage provided that the aggregate 
principal amount of all borrowings shall at no point exceed 50 per cent. of Net 
Asset Value. Where the Group borrows, it may, in order to secure such 
borrowing, provide collateral or security over its assets, or pledge or charge 
such assets. 
 
CHANGE TO THE COMPANY'S NAME 
 
If the New Investment Objective and Policy is adopted the Company's name will 
no longer be appropriate and in light of that the Board is proposing that the 
name be changed from "AXA Property Trust Limited" to "Worsley Investors 
Limited". 
 
BENEFITS OF THE PROPOSALS 
 
The Directors believe that the Proposals are in the best interests of 
Shareholders and represent a better alternative to the current plan of 
liquidation and distribution for the following reasons: 
 
·      the successful business and investment track records of Worsley combined 
with the proposed New Investment Objective and Policy afford the prospect of 
generating superior risk adjusted returns for Shareholders over the longer 
term; 
 
·      there is no guarantee that the Company will be able to realise the Curno

Asset in the next one to two years at a price which represents best value for 
Shareholders and the New Investment Objective and Policy provides time for the 
Company to realise such asset without the pressure of requiring such 
realisation under its current investment policy, which may reduce the Company's 
negotiating position with counterparties; and 
 
·      the New Investment Objective and Policy will avoid the incurrence of the 
costs of a formal liquidation. 
 
In light of the above, the Board considers that implementing the Proposals is 
in the best interests of the Company and the Shareholders as a whole. 
 
CURNO 
 
Despite concerted efforts since April 2013 to complete an orderly realisation 
of the Company's assets, the Company has not been able to dispose of all of 
them as quickly as originally anticipated at prices which represent best value 
to Shareholders and the Company continues to hold one property asset, a 
multiplex cinema complex, located in Curno, Italy, the sole tenant of which is 
UCI Nord Est S.r.L. ("UCI"). 
 
After an extensive period of negotiation with UCI, which followed it having 
raised trading concerns, a new lease contract was signed on 13 December 2018. 
As at 31 December 2018, the Company's independent asset valuer, Knight Frank 
LLP, valued the Curno Asset at EUR9.5 million, and this was adopted in the 
Company's consolidated accounts for the period then ended. 
 
The marketing process commenced in 2015 and, having failed to elicit sustained 
interest from buyers, was deferred during 2018 whilst the lease terms were 
renegotiated. AXAIM in January resumed marketing and approached a targeted list 
of investor groups considered likely investors for this asset size. 
 
Were the Company to retain its existing strategy of a managed wind-down it 
would be likely to continue to be regarded as a forced seller of the Curno 
Asset and its ability to hold this investment for longer to achieve better 
value would remain diminished. The impact on the value achieved for 
Shareholders from continuing with the realisation strategy would therefore be 
likely to be significantly negative. 
 
By removing the necessity to liquidate the Company's assets in a short time 
frame, the Board believes that it ought to be possible to extract a better 
valuation for the Curno Asset than its current carrying value. 
 
The Group plans to retain the Curno Asset until a disposal can be effected at a 
price which the Board believes properly reflects its prospects. 
 
CONCLUSION 
 
The Board unanimously considers that the Proposals are in the best interests of 
the Company and its Shareholders as a whole. The Directors intend to vote their 
own beneficial holdings in favour of the Resolutions in respect of their 
aggregate holding of 6,188,380 Shares (representing approximately 29.8 per 
cent. of the total voting rights in the Company). Irrevocable undertakings or 
written indications of intent to vote in favour of Resolutions have been 
received from Shareholders representing, in aggregate, a further 15.2 per cent. 
of the Company's issued share capital. 
 
Defined terms used in this announcement have the meanings given in the Circular 
unless the context otherwise requires. 
 
Enquiries: 
Blake Nixon (Director) 
Tel:       020 38732288 
 
Shore Capital (Financial Adviser and Broker) 
Robert Finlay 
Tel:        020 76016100 
 
Northern Trust International Fund Administration Services (Guernsey) Limited 
The Company Secretary 
Trafalgar Court, 
Les Banques 
St Peter Port 
Guernsey 
GY1 3QL 
Tel:        01481 745001 
 
 
 
END

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