TIDMAURR
RNS Number : 3269L
Aurora Russia Limited
29 July 2011
Posting of notice of Requisitioned Extraordinary General Meeting
and unanimous Board recommendation to vote AGAINST the proposed
Resolutions and announcement of resignation of Directors
-- Aurora Russia (the "Company") is today posting a circular
convening a Requisitioned Extraordinary General Meeting ("EGM") at
2.00pm on 24 August 2011 at the request of Timothy Slesinger.
-- Timothy Slesinger has proposed the removal of the Chairman,
Dan Collinson Koch, and three other independent Directors, namely,
Grant Cameron, John Richard Whittle and Alexandr Dumnov.
-- Mr Slesinger has proposed the appointment of Peregrine
Moncreiffe and Timothy Slesinger as new Directors.
-- These resolutions would result in the removal of four
independent Directors and the appointment of two individuals who
represent significant shareholders.
-- Timothy Slesinger holds in excess of 10 per cent of the
capital of the Company and Peregrine Moncreiffe serves on the
management board, and is a director, of two funds managed by Metage
Capital Limited which holds 7.2% of the Company's shares.
Changes to the Board
-- Having held extensive further discussions with Shareholders
and in accordance with the Board's undertaking to consider a
reduction in the number of Directors, Dan Collison Koch and
Alexandr Dumnov have today tendered their resignations as
Directors. This will thereby reduce the number of Directors from
seven to five.
-- Geoff Miller, one of the newly appointed Non-Executive
Directors, will take over as Non-Executive Chairman.
The Board believes that it is NOT in the interests of
Shareholders as a whole that the remaining Requisitioned
Resolutions be approved, namely:
-- the removal of Grant Cameron and John Whittle, two of the
Independent Directors; and
-- the appointment of Timothy Slesinger and Peregrine
Moncreiffe, two individuals who if appointed would not be wholly
Independent Directors as they represent significant
Shareholders.
The Board firmly believes that maintaining independence from
both the Manager and from control of the major shareholders gives
the Company as strong a hand as possible in negotiating
transactions to optimise returns for all shareholders and for its
dealings with the Manager.
Geoff Miller, Independent Director and Chairman elect, said:
"The Board has undertaken extensive consultations with
Shareholders, including Mr Slesinger and has implemented a number
of significant actions to meet shareholders' requests. This has
included recently reinforcing the Board's independence. The
resolutions undermine this and are not in the best interests of the
Company or its shareholders as a whole. Consequently, the Board is
unanimously recommending that shareholders vote AGAINST the
proposed resolutions."
For further information please contact:
Aurora Russia
Geoff Miller +44 (0) 74 0883 0719
Numis Securities
Hugh Jonathan
Nominated Adviser +44 (0) 20 7260 1263
Rupert Krefting / Nathan Brown
Corporate Broking +44 (0) 20 7260 1435/1426
Financial Dynamics
Ed Gascoigne-Pees +44 (0) 20 7269 7132
Jack Hickey +44 (0) 20 7269 7196
Below is the full text of the circular to shareholders:
1. Notice of Requisitioned Extraordinary General Meeting
I am writing to give you the notice of a Requisitioned
Extraordinary General Meeting of the Company, which is to be held
at the registered office of the Company, Trafalgar Court, Admiral
Park, St. Peter Port, Guernsey, GY1 2JA at 2.00p.m. on 24 August
2011.
This letter provides Shareholders with details of the
resolutions that are to be put to Shareholders at the Requisitioned
Extraordinary General Meeting and sets out the Board's response to
the Requisitioned Resolutions.
The Board believes that the Requisition is not in the best
interests of the Company and Shareholders as a whole and is
recommending that you vote against a number of the resolutions to
be proposed at the Requisitioned Extraordinary General Meeting.
You will find set out at the end of this document the Notice of
the Requisitioned Extraordinary General Meeting, at which such
resolutions will be proposed. Each of the Requisitioned Resolutions
will be proposed as ordinary resolutions, which would require a
simple majority of those Shareholders voting to be passed.
2. Background
As announced on 11 July 2011, on 8 July 2011 the Company
received a requisition from Timothy Slesinger requiring the
Directors to convene a general meeting of the Company to propose
resolutions which if passed would:
-- remove Dan Koch, Grant Cameron, John Whittle and Alexandr
Dumnov as Independent Directors; and
-- appoint Peregrine Moncreiffe and Timothy Slesinger as new
Directors.
This would result in the removal of four Independent Directors
and the appointment of two individuals who represent significant
Shareholders.
The Requisitioning Shareholder has informed the Board that he
holds in aggregate 14,310,977 Ordinary Shares, representing in
excess of 10 per cent of the capital of the Company that carries
voting rights at general meetings of the Company. Peregrine
Moncreiffe serves on the management board, and is a director, of
two funds managed by Metage Capital Limited which holds 7.2% of the
Ordinary Shares.
Biographies of the Independent Directors and biographies
supplied by the proposed new Directors are set out in Part II of
this document.
The Requisitioned Resolutions are subject to there being a
minimum number of two directors and the majority of the Directors
not being resident in the United Kingdom for the purposes of United
Kingdom taxation, at the conclusion of the general meeting at which
such resolutions are proposed.
The Board is required under Guernsey law to convene an
extraordinary general meeting within 21 days of receipt of the
Requisition.
3. Board's response to the Requisition
The Board and the Manager are committed to seeking realisations
of the Company's assets and the Manager is actively engaged in
detailed discussions with a number of parties about transactions
involving some of the investments in the portfolio including
detailed discussions on a potential exit.
The Board remains committed to ensuring that it maximises value
for all Shareholders and is open to considering any recommendations
which will benefit all Shareholders.
In advance of and subsequent to the passing of the continuation
resolution of the Company at the 2010 Annual General Meeting, the
Board undertook extensive consultations with Shareholders,
including the Requisitioning Shareholder, and the Board has taken
significant actions to meet Shareholders' requests:
-- The Board has recently reinforced its independence and
strongly believes that it is in the Company's best interests that
the Board remains independent in accordance with best standards of
corporate governance;
-- In June of this year, the Board appointed two new Independent
Directors, Gilbert Chalk and Geoffrey Miller. They bring combined
expertise in private equity, in Russia and other emerging markets
and in the investment company arena. They have already held
discussions with a number of Shareholders and other interested
parties;
-- John McRoberts and James Cook, who represented the Manager,
no longer serve on the Board and as a result there are no remaining
representatives of the Manager on the Board;
-- The Board has undertaken to consider a reduction in the
number of Directors.
-- The annual management fee payable to the Manager has been
reduced from 2% to 1.5% of the Company's net asset value;
-- A new incentive scheme has been implemented to better align
the Manager with Shareholders' wishes that the Company realise its
assets; and
-- The Board has resolved to exit one of the Company's
investments, Kreditmart, in order to stop its cash burn. The most
recent management accounts for Kreditmart show a loss before
depreciation of GBP0.4 million in the calendar year to end of June
2011.
The Board has repeatedly discussed with the Manager Kreditmart's
disappointing financial performance. More fundamentally the Board
has also repeatedly questioned Kreditmart's prospects; in
particular that Kreditmart has not made sufficient inroads into the
Russian mortgage markets to a level that will allow a sustainable
profit without either the introduction of new capital or the
injection of a new business. The Board reached the conclusion that
Kreditmart is unlikely to be a sustainable business model on its
own in the foreseeable future. The Board's decision to exit
Kreditmart was contrary to the wishes of James Cook, but was
supported by the remaining Directors and members of the Manager.
The optimal method of exiting Kreditmart continues to be
investigated, but the Board's priority is to stop the cash burn and
enable the Manager to focus on investments that are capable of
generating a substantial cash return for Shareholders.
Having held extensive further discussions with Shareholders and
in accordance with the Board's undertaking to consider a reduction
in the number of Directors, Alexandr Dumnov and I have today
tendered our resignations as Directors. These will take effect from
1 August 2011, thereby reducing the number of Directors from seven
to five. Geoff Miller will take over as Non-Executive Chairman.
The Board will as required propose all of the Resolutions at the
Requisitioned Extraordinary General Meeting, but clearly the
resolutions to remove Alexandr Dumnov and me will have no effect if
passed.
The Board considers that it is not in the interests of
Shareholders as a whole that the remaining Requisitioned
Resolutions be passed, namely:
-- the removal of Grant Cameron and John Whittle, two of the
Independent Directors; and
-- the appointment of Timothy Slesinger and Peregrine
Moncreiffe, who if appointed would not be wholly independent as
they represent significant Shareholders.
Having consulted extensively with Shareholders since the
Requisition, the Board acknowledges that there are concerns amongst
Shareholders as to the method, timing and value of realisations,
although the Board believes that such concerns are not based on
valid underlying facts.
To address these concerns the Board intends to ensure as open a
dialogue as is possible with Shareholders and the wider market in
the future to communicate the approach being taken, regarding the
individual investments and the overall corporate strategy.
The Board firmly believes that maintaining independence from
both the Manager and the control of major Shareholders gives the
Company as strong a hand as possible in negotiating transactions to
optimise returns for all Shareholders and for its dealings with the
Manager.
4. Requisitioned Extraordinary General Meeting
You will find set out at the end of this document a notice
convening the Requisitioned Extraordinary General Meeting to be
held at Trafalgar Court, Admiral Park, St. Peter Port, Guernsey GY1
2JA, Channel Islands at 2.00 p.m. on 24 August 2011.
5. Action to be taken
Shareholders will find enclosed with this document a Form of
Proxy for use in connection with the Requisitioned Extraordinary
General Meeting.
Shareholders, whether or not they propose to attend the
Requisitioned Extraordinary General Meeting in person, are
requested to complete, sign and return the enclosed Form of Proxy,
in accordance with the instructions printed thereon, so as to be
received by the registrars of the Company, Capita Registrars, PXS,
34 Beckenham Road, Beckenham, Kent, BR3 4TU, but in any event so as
to be received by Capita Registrars no later than 2.00 p.m. on 22
August 2011. Completion and return of a Form of Proxy will not
preclude Shareholders from attending and voting in person at the
Requisitioned Extraordinary General Meeting should they so
wish.
6. Recommendation
The Board makes no recommendation regarding resolutions 1 and 4
to remove Alexandr Dumnov and me as these resolutions will have no
effect if passed.
The Directors consider that it is not in the best interests of
Shareholders as a whole that the following resolutions be passed at
the Requisitioned Extraordinary General Meeting:
-- the removal of Grant Cameron and John Whittle, two of the
Independent Directors; and
-- the appointment of Timothy Slesinger and Peregrine
Moncreiffe, who if appointed would not be wholly independent as
they represent significant Shareholders.
Accordingly, the Board unanimously recommend that Shareholders
VOTE AGAINST RESOLUTIONS 2, 3, 5 AND 6 to be proposed at the
Requisitioned Extraordinary General Meeting.
The Directors intend to follow the Board's recommendations in
respect of their own shareholdings which in aggregate amount to
925,000 Ordinary Shares, representing 0.8% of the Company's issued
share capital as at the date of this letter.
Yours sincerely
Dan Koch Chairman AURORA RUSSIA LIMITED
PART II
RELEVANT BIOGRAPHIES
DIRECTORS OF THE COMPANY
Dan Collinson Koch (Non-executive Chairman) (UK resident)
Mr Koch retired as Chairman of Deloitte & Touche CIS
(Deloitte, the Firm) in May 2009. He lived and worked in Russia for
11 years having been CEO and Managing Partner and latterly Chairman
of Deloitte during that period. Under Mr Koch's leadership Deloitte
in Russia and the CIS experienced unprecedented success, growing
from a small predominantly audit practice with approximately 150
professionals into a full service, multi functional, multi office
practice with approximately 3,000 professionals.
Mr Koch has over 30 years of public accounting and international
executive experience having been based in Canada prior to his
Russian experience. In Russia Mr Koch had direct overall
responsibility for the Firm's major clients including Norilsk
Nickel, AFK Sistema and MTS.
Grant Cameron (Non-executive Director) (Guernsey resident)
Mr Cameron is Managing Director of Investec Asset Management
Guernsey Limited. He is a member of the South African Institute of
Chartered Accountants and the Financial Planners Association of
South Africa. In 1988 Mr Cameron joined KPMG South Africa and was
transferred in 1991 to KPMG's Miami office, where he held the
position of Manager of Financial Services. Mr Cameron moved to
Investec Group in 1996 and was Operations Director of Investec Fund
Managers SA Limited from January 1996 until February 2001. Mr
Cameron acts as a Director of a number of investment funds, and was
previously chairman of the Guernsey Investment Funds Association.
Mr Cameron is the chairman of Investec Asset Management's Global
Valuation Committee. He graduated with a B.Comm in 1987 and a B.Acc
in 1989 from the University of Witwatersrand.
Gilbert Chalk (Non-executive Director) (UK resident)
Mr Chalk is Chairman of Castle Private Equity AG a leading
Private Equity and Venture Capital Fund of Funds that is managed by
LGT Capital Partners and listed on the Zurich Stock Exchange. In
addition he is a Director of Constantine Group Plc, a substantial
Private Group with interests in Logistics, Manufacturing, Property
and Alternative Energy and Vantage Goldfields Limited, a South
African Gold producing company, listed on the ASX. From 2000 to
2010 he was Chairman of the Baring English Growth Fund and its
Investment Committee. The Fund invested in small and mid cap
buy-outs in the UK. Previously he was the Founder and Managing
Director of Hambro European Ventures, subsequently named Duke
Street Capital. He has served as a Council Member of the British
Venture Capital Association and as Chairman of its Taxation
Committee conceived and formulated Venture Capital Trusts. He has
also worked as Head of Corporate Finance at ABSA Bank (UK) and as a
Corporate Finance executive at Hill Samuel Bank and Brandts
Limited. He holds an M.B.A. from Columbia University, New York.
Alexandr Dumnov (Non-executive Director) (Russian resident)
Mr Dumnov is a Russian national and has considerable experience
working for and advising Russian companies. He also has strong
experience serving on the boards of both UK and Russian companies.
Most recently, Mr Dumnov was a member of the Board of Deloitte
& Touche CIS from 1998 to 2007, after which he became a Non
Executive Director of Trans-Siberian Gold plc, until 2009. He also
served as a Non Executive Director of Siberian Mining and
Metallurgical Alliance from 2003 until May 2010 and is presently a
Non Executive Director of MDM Bank.
Geoffrey Miller (Non-executive Director) (Guernsey resident)
Mr. Miller is an investment professional with over twenty years
experience in the investment company industry, and has also worked
in Russia. Now an Executive Director of Greenwich Loan Income Fund
Limited, a Guernsey-based investment company, he has been an
analyst, fund manager and non-executive director of investment
companies since 1987. He has worked in many other areas of
financial services, having been a director of both private client
wealth manager Brewin Dolphin and asset manager Exeter Asset
Management. In the investment banking arena he was Director,
Research of London-based Bridgewell Securities Limited and Head of
Research Marketing at Russian investment bank Troika Dialog in
Moscow. Mr. Miller now sits on the advisory board of
silkroutefinancial, the first emerging markets focused merchant
banking firm dedicated exclusively to the financial services
sector. Mr Miller is a resident of Guernsey.
Ben Morgan (Non-executive Director) (Guernsey resident)
Mr Morgan is a partner with Carey Olsen in Guernsey in the
Corporate Group. He qualified as a solicitor in 1992 and practised
with the City law firm Norton Rose, during which time he spent time
in Russia, before joining Carey Olsen in 1999. Mr Morgan is a
Director of a number of Guernsey investment funds.
John Richard Whittle (Non-executive Director) (Chairman of Audit
and Valuation Committees) (Guernsey resident)
Mr Whittle is a Chartered Accountant and holds the IOD Diploma
in Company Direction. After qualifying in 1978 he joined Price
Waterhouse in London before embarking on a career in business
services, predominantly telecoms. He co-led the business turnaround
of Talkland International (now Vodafone Retail) and was directly
responsible for the strategic shift into retail distribution and
its subsequent implementation; he subsequently worked on the GBP20
million private equity acquisition of Ora Telecom. He has served on
the boards of 3 listed companies. He was until May 2009 Finance
Director of Close Fund Services where he successfully initiated a
restructuring of client financial reporting services and was a key
member of the business transition team.
PROPOSED DIRECTORS OF THE COMPANY
Peregrine David Moncreiffe (not resident in the UK)
For ten years after leaving Oxford, Mr Moncreiffe held various
corporate finance and trading positions in New York, London and
East Asia within the CSFB group ending up as an Executive Director
of CSFB in London in 1982. He held a number of trading management
roles at Lehman Brothers as a Managing Director in New York and
London until 1986 when he joined E F Hutton as Managing Director of
International Capital Markets before it was acquired by Shearson
Lehman in 1988. In 1990 he co-founded Buchanan Partners Ltd, a
proprietary investment company and hedge fund manager. He was
responsible for Russian equity trading and investments. In 1998 he
became Chairman of UA Group, the agricultural services and property
investment business sold to Elphinstone in 2005. He is Chairman of
North Atlantic Smaller Companies Investment Trust.
He lives in Jersey and works for Mazzaro Consultancy Limited,
which advises a number of international investment companies.
He has been on the board of a number of companies with
investments in Russia and has a working knowledge of the Russian
language.
Timothy James Slesinger (UK resident)
Mr Slesinger founded OSG Records Management ZOA in Moscow in
1998. The company grew during the 12 years he was CEO and then
Director to become the market leader in both physical document and
on-line data management in Central & Eastern Europe with
offices in eight countries and 21 cities. OSG's clients ranged from
international Fortune 500 companies, highly regarded businesses
local to the region and governments. The integrity and
confidentiality of the data was an absolute priority and Mr
Slesinger was involved in implementing the systems that safeguarded
it both physically and electronically. He sold OSG to the Company
in 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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