TIDMCRS
RNS Number : 4131W
Crystal Amber Fund Limited
22 December 2021
22 December 2021
Crystal Amber Fund Limited
("Crystal Amber Fund", the "Company" or the "Fund")
Update re proposals following 2021 Continuation Vote
Dividend declaration
Crystal Amber Fund provides an update following the result of
its 2021 annual general meeting ("AGM") where the resolution that
the Company continue as constituted received a majority of votes,
but did not achieve the required 75% majority of votes cast and
accordingly was not passed. By way of background, and as announced
in 2013 on the basis it was never intended that the Fund would be
evergreen, the Fund proposed that the 2021 AGM continuation vote
should be subject to an extraordinary resolution, which would
require a 75% majority.
The Board of Crystal Amber Fund believes it is in the interests
of shareholders as a whole for the Fund to adopt a strategy of
maximising capital returned to shareholders by timely disposals,
including trade sales of the Fund's strategic holdings, where
appropriate.
The Fund has accumulated several strategic holdings: since 2013,
the Fund has been a shareholder in Hurricane Energy plc (currently
28.9% holding); since 2016, it has been a shareholder in Equals
Group plc (currently 20.5% holding); since 2017, it has been a
shareholder in Allied Minds (currently 18.2% holding); since 2018,
it has been a shareholder in De La Rue plc (currently 9.2% holding)
and it has been a shareholder in Sutton Harbour plc for more than a
decade (currently 12.1% holding). Given the substantial progress
achieved by the Fund with its activist strategy to date on these
holdings, the Fund expects to have realised these investments
within 24 months. Within this timescale, the Fund also anticipates
selling its holding in Board Intelligence plc, an unquoted company
where it has been a shareholder since 2018.
The Fund has a track record of returning cash to shareholders
via share buybacks and dividends: since the change to the Articles
in 2013, GBP60 million has been returned to shareholders. The Fund
intends to return all net proceeds from its holdings in Hurricane
Energy plc, Allied Minds plc, Equals Group plc, De La Rue plc,
Sutton Harbour plc and Board Intelligence, after providing for
ongoing operational costs as necessary. The Fund previously
announced, based on the Investment Manager's assessment of the
status and timing of anticipated corporate transactions, that it is
targeting additional shareholder returns of at least GBP40 million
or 50p a share before 30 June 2022. Whilst the Fund is confident
that this as achievable, after consulting with a number of
shareholders, it is no longer considered to be in the interests of
the Fund to impose a fixed deadline but will be keeping it as a
target.
The Fund will not make any new investments and will only make
further opportunistic investments in existing holdings where, in
the view of the Board and Investment Manager, such investment is
considered necessary to protect the interests of shareholders
and/or provide the Investment Manager with additional influence to
maximise value and facilitate and accelerate an exit. Any such
investment will require the prior approval of the Board and will
only be permitted where it is not expected to compromise the
timescale for realisations.
The Board also believes that it is in the interests of
shareholders to incentivise the Investment Manager to maximise the
realisation value of the investment portfolio in a timely manner.
Accordingly, the Board will be engaging with the Investment Manager
to put in place a revised remuneration and incentivisation
agreement, which will be conditional on shareholder approval.
GI Dynamics
In 2014, the Fund began to accumulate a shareholding in GI
Dynamics. GI Dynamics is the developer of the EndoBarrier, a
minimally invasive therapy for the treatment of Type 2 diabetes and
obesity. EndoBarrier is a temporary bypass sleeve that is
endoscopically delivered to the duodenal intestine. It offers
similar effects to the surgical gastric bypass, without the risks
of a major surgical procedure.
During the year to June 2021, GI Dynamics delisted from the
Australian stock exchange. Its board and CEO were replaced with new
executives and directors with medical device experience. As part of
a $10 million investment in preferred stock, the Fund's senior
secured loan was converted, and warrants were cancelled. The Fund
currently owns 81.3% of the fully diluted share capital of GI
Dynamics together with a $4.9 million convertible loan note.
After delays due to the COVID-19 surge in India, the I-STEP
application for a randomised clinical trial (to be conducted in
conjunction with Apollo Sugar Clinics) was reviewed by regulators
in India in June 2021. The Fund is pleased to report that earlier
this month, regulators approved the commencement of this trial.
The global pandemic has reaffirmed the importance of gaining
control of the significant risk factors associated with Type II
diabetes and obesity. More than ever, medical professionals and
patients alike are seeking minimally invasive and effective
therapies to help control and resolve these chronic conditions. GI
Dynamics is preparing to meet this large unmet clinical need.
The Fund believes that because of its intensive activism, the
investment in GI Dynamics now has considerable strategic value.
This was recently evidenced by two approaches from US trade parties
that have expressed an interest in making a significant investment
in GI Dynamics. The Fund looks forward to continuing to work with
the company to achieve its operational milestones and to further
develop the pathway to maximise shareholder value. In due course,
the Fund will consult with investors about the longer-term plans
for GI Dynamics to realise value for its shareholders. Given the
anticipated value accretive milestones, the Fund believes it is
appropriate that it gives GI Dynamics the time it requires to
maximise shareholder returns.
Dividend declaration
The Fund is pleased to declare an interim dividend of 10p pence
per share in respect of the financial year ending 30 June 2022.
This dividend will be payable to shareholders on the register as at
14 January 2022 with an associated ex-dividend date of 13 January
2022 and a payment date on or around 9 February 2022.
The Board intends to write to shareholders in January 2022 to
convene an extraordinary general meeting at which shareholders will
be asked to approve the strategy set out above and the revised
remuneration and incentivisation agreement with the Investment
Manager.
For further enquiries please contact:
Crystal Amber Fund Limited
Chris Waldron (Chairman)
Tel: 01481 742 742
Allenby Capital Limited - Nominated Adviser
David Worlidge/Liz Kirchner
Tel: 020 3328 5656
Winterflood Securities - Broker
Joe Winkley/Neil Langford
Tel: 020 3100 0160
Crystal Amber Advisers (UK) LLP - Investment Adviser
Richard Bernstein
Tel: 020 7478 9080
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END
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