TIDMCQS TIDMCQSU
RNS Number : 9420Z
CQS Diversified Fund Limited
12 February 2014
12 February 2014
CQS Diversified Fund Limited
Continuation Resolutions
Introduction
The Company is today posting a Circular to Shareholders in
connection with the Continuation Resolutions.
Over the 12 month period ended 4 November 2013, the US Dollar
Ordinary Shares traded, on average, at a discount to NAV of 6.29
per cent. and the Sterling Ordinary Shares traded, on average, at a
discount to NAV of 7.17 per cent. As such, a requirement to hold a
separate Continuation Resolution in respect of each of the US
Dollar and Sterling classes of Ordinary Shares has now arisen.
Notices convening each of the Meetings to be held from 10.10
a.m. on 4 March 2014 are set out in the Circular.
Performance of the Company and Share Price Rating
As at 31 December 2013, the Company had aggregate net assets of
approximately GBP92.2 million. Over the 12 month period to 31
December 2013, the NAV of the Company's Sterling Ordinary Shares
and US Dollar Ordinary Shares had increased by 6.22 per cent. and
5.89 per cent. respectively. This positive trend continued into
January 2014 with the estimated NAV of the Company's Sterling
Ordinary Shares and US Dollar Ordinary Shares increasing by a
further 0.68 per cent. and 0.64 per cent. respectively.
Notwithstanding positive net asset performance over the last 13
months, the Company's Sterling Ordinary Shares and US Dollar
Ordinary Shares continue to trade at a discount to their respective
NAVs of 6.7 per cent. and 4.8 per cent. respectively as at 31
January 2014. Whilst clearly disappointing, this is reflected
across the listed hedge fund sector, with the Company's immediate
peer group of "internally managed" funds of hedge funds trading at
similar, or wider, discount levels.
The Board is mindful of the Company's prevailing discount level
and is cognisant that Shareholders are concerned to ensure that the
gap between the Company's share price and its Net Asset Value is as
narrow as possible. However, in view in particular of the Company's
current size and the concentrated nature of its investor base, the
Board does not believe that the use of share buybacks is likely to
result in a meaningful narrowing of the current level of discount
on the Company's Shares.
In the Board's view, the combination of current more
accommodative market conditions, continued strong positive net
asset performance and the ongoing efforts of CQS and the Company's
advisers to broaden the shareholder base, are the most appropriate
means of narrowing the current level of discount on the Company's
Ordinary Shares.
Dividend and Future of the Company
Following consultation with Shareholders the Board has
determined that should the relevant Continuation Resolutions pass,
subject to compliance with the Companies Laws and the solvency test
set out therein, from July 2014 (in respect of the quarter ending
31 March 2014) it will target paying a quarterly dividend of 1.0p
per Sterling Ordinary Share and 1.0 cent per US Dollar Ordinary
Share. It is intended that dividends will be funded by the disposal
of holdings in DVA and it is also intended that the dividends will
be paid whether or not the NAV performance for that quarter has
been positive.
The Board believes that a quarterly dividend payment will allow
Shareholders to receive part of their returns from the Company in
the form of regular income and should increase the Company's
marketability to certain investors.
Given the source of capital from which dividends would be paid,
the target dividend level stated above for each share class should
not be taken as an indication of the Company's expected future
performance or results over any period. That dividend level is
intended to be a target only and there is no guarantee that it can
or will be realised. Accordingly Shareholders should not place any
reliance on the target figure stated above.
In connection with such dividends, the Board intends to make
available a dividend reinvestment plan run by a third party plan
operator, pursuant to which Shareholders will be able to elect to
have the proceeds of their cash dividends used to purchase Shares
in the secondary market. In due course the Company will issue a
circular notifying Shareholders of the commencement of such
facility, its operator, how elections can be made, the tax
treatment of Shareholders that makes the election and what terms
and conditions will attach to such election. The Company is not in
a position and will not advise Shareholders as to the merits of
participating in such a dividend reinvestment plan. Any Shareholder
in doubt as to whether or not to participate should seek their own
personal financial advice from an appropriately qualified
independent financial adviser at the relevant time.
The Board understands that the Company's current size and
associated secondary market liquidity remains a key constraint for
certain investors. As previously highlighted by the Board, to the
extent that the prevailing discount level on the Company's Shares
can be narrowed, and NAV performance continues to be strong, the
Board and CQS fully intend to take steps to grow the Company
through new share issuance at the earliest opportunity. In the
event that the Company has been unable to grow its net asset value
through a combination of performance and new share issuance to at
least GBP100 million by 31 January 2015, the Company will as soon
as practicable thereafter put forward proposals to enable
Shareholders to realise their holdings at, or close to, net asset
value by means of a reconstruction or winding-up of the
Company.
Recommendation and Voting Intentions
The Board considers the continuance of the US Dollar Share class
and the Sterling Share class to be in the best interests of the
Company and Shareholders as a whole. Accordingly, the Board
recommends that Shareholders vote in favour of the Continuation
Resolutions.
The Directors intend to vote (or, as the case may be, procure
the voting of) their beneficial holdings in favour of the
Continuation Resolutions in respect of their aggregate holding of
385,000 Sterling Ordinary Shares (representing approximately 0.44
per cent. of the Company's issued Sterling Ordinary Shares).
Further Information
Further details of the Continuation Resolutions and other
information which Shareholders should take into consideration in
deciding whether to vote for or against a Continuation Resolution,
including a trading update for DVA, an investment review of 2013
for DVA and DVA investment outlook, are set out in the
Circular.
Expected Timetable
Latest time and date for receipt 10.10 a.m. on 28 February 2014
of Forms of Proxy for the US
Dollar Shareholder Meeting 10.15 a.m. on 28 February 2014
Latest time and date for receipt
of Forms of Proxy for the Sterling
Shareholder Meeting
US Dollar Shareholder Meeting 10.10 a.m. on 4 March 2014
Sterling Shareholder Meeting 10.15 a.m. on 4 March 2014
Enquiries
Craig Cleland
CQS
T: 020 7201 5368
Douglas Mackay
Secretary, Citco Fund Services (Guernsey) Limited
T: 01481 706796
Terms used in this announcement shall, unless the context
otherwise requires, bear the meanings given to them in the Circular
dated 12 February 2014.
A copy of the Circular will shortly be submitted to the National
Storage Mechanism and will shortly be available for inspection at:
www.Hemscott.com/nsm.do
This information is provided by RNS
The company news service from the London Stock Exchange
END
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