RNS Number:2341Q
Dexion Absolute Limited
26 September 2003

26 September 2003

DEXION ABSOLUTE LIMITED (the "Company" or "Dexion Absolute")

Introduction


The board of Dexion Absolute ("Board" or "Directors") has today written to
shareholders in respect of proposals for the placing of up to 64,000,000 C
Shares (the "Placing"). The purpose of this announcement is to set out the
background to and reasons for the Placing of C Shares. The Placing and the
commencement of dealings in C Shares is conditional, inter alia, on the passing
of the resolution ("Resolution") at the extraordinary general meeting to be held
on 20 October 2003 ("Extraordinary General Meeting" or "EGM").


Background to and Reasons for the Placing of C Shares


The Company's existing issued share capital comprises 34,000,000 ordinary shares
("Ordinary Shares") which were listed on the official list of the UK Listing
Authority on 19 December 2002. In the period from launch on 19 December 2002 to
31 July 2003, the net asset value of the Company has appreciated by 7.0 per
cent. (in sterling terms), consistent with its stated investment objective of a
US dollar annualised return of 12 per cent. to 15 per cent.+ in any three to
five year period.


+ These returns take no account of the expenses of the Placing or the original
issue of Ordinary Shares.


Against the background of positive asset performance and ongoing secondary
market demand, which has resulted in the Company's Ordinary Shares trading at a
premium to their net asset value, the Board has concluded that there is both
existing and new investor demand that is not being satisfied in the secondary
market. The Placing of C Shares is also being made to enable certain investors,
who would not otherwise have been able to invest in the Company to the extent
they wish, to make an investment.


An issue of C Shares is designed to overcome the potential disadvantages for
both existing and new investors which could arise out of a conventional fixed
price issue of further Ordinary Shares for cash. In particular:

X       the assets representing the net proceeds of the Placing will be accounted for as a distinct pool of
        assets until the date of conversion. It is expected that opportunities to invest in accordance with
        the Company's existing investment policy may be limited in the period immediately following admission.
        However, Harris Associates L.P. (the "Investment Adviser") anticipates that the net proceeds will be
        substantially invested or committed to be invested on 1 January 2004. By accounting for the net
        proceeds separately, holders of existing Ordinary Shares ("Ordinary Shareholders") will not be exposed
        to a portfolio containing a substantial amount of uninvested cash before the calculation time;

X       the net asset value of existing Ordinary Shares will not be diluted by the expenses associated with
        the Placing, which will be borne by the subscribers for C Shares and not by existing Ordinary
        Shareholders; and

X       the basis upon which the C Shares will convert into new Ordinary Shares is such that the number of
        Ordinary Shares to which holders of C Shares will become entitled will reflect the relative investment
        performance and value of the pool of new capital raised by the Placing up to the calculation time as
        compared to the assets of the existing Ordinary Shareholders at that time. As a result, neither the
        net asset value attributable to the existing Ordinary Shares nor the net asset value attributable to
        the C Shares will be adversely affected by conversion.


The net proceeds of the Placing will be managed as a separate pool until they
have been 85 per cent. invested or committed to be invested (or, if earlier,
until 30 April 2004) at which point (on the basis of the Company's net asset
value on the NAV calculation date on or immediately preceding that date) the
conversion ratio for C Shares into Ordinary Shares will be calculated. Once such
conversion ratio has been calculated (which may take up to 30 business days) the
C Shares will convert into new Ordinary Shares on the basis referred to above.
Pending full investment, the proceeds of the Placing will be invested in
short-term money market instruments (including gilts) and cash with institutions
which are rated A1 (or above) by Standard & Poor's or an equivalent rating
agency. Fractions of new Ordinary Shares arising on conversion will not be
allocated to holders of C Shares but will be aggregated and sold for the benefit
of the Company.


The Ordinary Shares issued on conversion will rank pari passu with the existing
Ordinary Shares in issue.


Benefits of the Placing


The Directors believe that the Placing will confer the following benefits on
Ordinary Shareholders and the Company:

(a)       provide the Investment Adviser with the opportunity to allocate the
net proceeds among both existing hedge fund investments and new attractive 
investment opportunities in accordance with the Company's existing investment 
policy, further diversifying the Company's investment base;

(b)       allow those investors who would not otherwise have been able to invest 
in the Company to the extent they wish, to make an investment;

(c)       provide a larger asset base through which the fixed costs of the 
Company may be spread, thereby reducing the Company's total expense ratio; and

(d)       provide a larger company with the potential for greater liquidity, a 
wider shareholder base and an increased investor awareness of the Company's 
activities.


Expenses


The expenses of the Placing will be 1.75 per cent. of gross funds raised and
will be borne exclusively by the subscribers for C Shares. None of the expenses
of the Placing will be borne by existing Ordinary Shareholders.


Placing Arrangements


Hoare Govett Limited ("Hoare Govett") has agreed to use its reasonable
endeavours to procure subscribers for up to 64,000,000 C Shares pursuant to the
Placing. The Placing is not underwritten and is conditional, inter alia, upon
Admission and on the passing of the Resolution to be proposed at the
Extraordinary General Meeting (or any adjournment thereof) to be held on 20
October 2003.


It is expected that admission will become effective and dealings in the C Shares
will commence on 23 October 2003.


Amendment to the Company's Articles of Association


In order for the Company to effect the issue of C Shares, certain amendments
must be made to the articles of association. Consequently, the Board has called
the Extraordinary General Meeting at which the Resolution to be proposed will,
amongst other things, adopt new articles of association for the Company so that
they include provisions reflecting the rights and restrictions attaching to the
C Shares, and increase the Company's authorised share capital. These, together
with a change to the calculation of NAV (which has the effect of providing that
the C Share issue will have a neutral effect on that calculation) and other
minor consequential changes necessitated by the issue of C Shares, are the only
changes from the existing articles of association.


Amendment to Investment Advisory Arrangements and Performance Fee


As part of an internal reorganisation, Harris Associates LP will, with effect
from 30 September 2003, be assigning all of its rights, duties and obligations
under the investment advisory agreement to its wholly owned subsidiary, Harris
Alternatives LLC. It is expected that Harris Alternatives LLC will subsequently
become a subsidiary of Harris Associates' parent company and, hence, a sister
company to Harris Associates. The Company has consented to this assignment.


In addition, the method of calculating the performance fee paid to the manager
and investment advisor has been amended so that (i) the issue of the C Shares
(and new Ordinary Shares arising on conversion) and any other future share
issues have a neutral effect on the calculation of that fee and (ii) no
performance fee will be payable in respect of the assets attributable to the C
Shares prior to the calculation time and conversely the performance fee will not
be subject to a reduction as a result of the performance of those assets in that
period (although if the calculation time is delayed materially beyond 1 January
2004, the Directors have the discretion to cause the Company to pay a
performance fee in respect of the performance of those assets in such amount as
they consider appropriate and may agree with the manager).


Cancellation of Share Premium Account


On 29 November 2002 the holders of the two issued Ordinary Shares in the Company
passed a written special resolution approving the cancellation of the entire
amount which stood to the credit of the share premium account immediately after
the original issue. An order was made by the Royal Court of Guernsey on 6
December 2002 confirming the reduction of the share premium account. This
cancellation was made to enable the Company to effect purchases of its own
Ordinary Shares.


Conditional on admission, it is proposed, subject to Ordinary Shareholder
approval at the Extraordinary General Meeting and confirmation by the Royal
Court of Guernsey, to cancel the entire amount of the share premium account
arising on the issue of C Shares in order to provide the Company with increased
flexibility to effect future purchases of its own Ordinary Shares.


The Company has no intention of using the special reserve arising on the
cancellation of the share premium account to make market purchases of its own C
Shares. As at 25 September 2003, no purchases of Ordinary Shares have been made
by the Company.


Voting Intentions


The Directors have received indications of intentions to vote in favour of the
Resolution at the EGM from Ordinary Shareholders holding or representing 62.1
per cent. of the existing issued Ordinary Shares.


Recommendation


The Board, which has been advised by Hoare Govett, considers that the Placing is
in the best interests of Ordinary Shareholders as a whole. In providing its
advice, Hoare Govett has relied upon the Directors' commercial assessment of the
Placing.


Accordingly, the Board recommends that Ordinary Shareholders vote in favour of
the Resolution to be proposed at the Extraordinary General Meeting as the
Directors intend to do so in respect of their own beneficial holding of 90,000
Ordinary Shares in aggregate (representing 0.26 per cent. of the Ordinary Shares
in issue).


Enquiries:
Robin Bowie                             Tel: +44(0)20 7520 9036

Dexion Capital plc
Hugh Field                              Tel: +44 (0)207 678 8000

Hoare Govett Limited
Anthony Payne                           Mobile: +44 (0)7930 643 983

Peregrine Communications                Email: apayne@peregrinecommunications.co.uk





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