Tender Offer and Annual Redemption Facility
February 18 2009 - 3:54AM
UK Regulatory
TIDMFCAP
RNS Number : 4999N
FRM Credit Alpha Limited
18 February 2009
FRM Credit Alpha Limited (the "Company")
18 February 2009
Tender Offer and Introduction of Annual Redemption Facility
THIS COMMUNICATION IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO
THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND IS NOT AN OFFER
TO SELL OR A SOLLICITATION OF ANY OFFER TO BUY ANY SECURITIES IN THE UNITED
STATES OR IN ANY OTHER JURISDICTION.
In common with many other UK listed fund of hedge funds, the Company's shares
have now traded at a substantial discount to net asset value ("NAV") per share
for several months.
Under the terms of the Company's prospectus dated 1 September 2008 (the
"Prospectus"), the Board has absolute discretion to implement a tender offer of
up to 25 per cent. of a class of shares where such class of shares has, in any
12 months preceding the last NAV calculation date, traded at an average discount
in excess of 5 per cent. of the NAV of that share class.
The Board has resolved, having considered a range of proposals with its advisers
and taken account of the Company's current level of cash and the liquidity of
its underlying holdings, to take the following actions (together the
"Proposals"):
1. The Board proposes to make a tender offer of up to 20 per cent. of the
Company's shares based on the 30 June 2009 NAV, with payment expected by 30
September 2009. The tender is expected to be at the 30 June 2009 NAV less costs.
The size of the tender offer will be dependent on preserving sufficient cash
reserves to meet the Company's foreign currency hedging requirements as well as
sufficient cash being available from the redemption of the Company's underlying
portfolio.
The terms and conditions for the proposed tender offer will be set out in a
circular to be published within the next three months.
2. Following the completion of the tender offer, the Board proposes to replace
the existing tender offer provisions with an annual redemption facility, to be
offered at the absolute discretion of the Directors. The Manager, the
Investment Adviser and the Board all believe that it is preferable for the
Company to have a definitive liquidity event that can be planned for, rather
than the current tender offer arrangements triggered by a rolling discount.
The Board therefore proposes to allow up to 20% of the Company's shares to be
redeemed on an annual basis, at the absolute discretion of the Board.
Redemptions would be made at the relevant NAV less costs. Redemptions would be
required to be submitted by 30 June in any year, commencing June 2010. It is
expected that redemption value would be calculated based on the following
December NAV and payment would be made six weeks after the calculation date.
Depending on the liquidity within the portfolio at the time redemption requests
close, the redemption proceeds may be paid in two tranches. The first tranche
would be based on the December NAV, as set out above. The second tranche, if
required, would be based on the March NAV of the following year. It is expected
that payment in respect of the second tranche would be made within six weeks of
the March calculation date.
An announcement would be made by 31 October in each year setting out whether the
annual redemption would be made through one or two tranches.
3. At the Company's annual general meeting to be held in November 2011,
shareholders will have the opportunity to vote on the Company's continuation.
The Proposals would not affect the existing Distribution Facility, described in
the Prospectus.
The Proposals described above will be set out in a circular to be sent to
shareholders within the next 3 months.
The Board believes the Proposals will bring the Company onto a more flexible
capital basis, are a positive step to address some of the structural issues
facing certain closed-ended funds, particularly funds of hedge funds, and should
narrow the discount at which the Company's shares trade.
The Proposals described above are subject to shareholder approval and all
applicable laws and regulations.
Additional information on the Company is available at www.frmcredit.com.
Enquiries:
Greg Taylor/Luke Burdess, Financial Risk Management 020 7968 6000
Darren Willis, Winterflood Investment Trusts 020 3100 0258
Unless otherwise defined, terms used in this announcement have the same meaning
as in the prospectus relating to FRM Credit Alpha Limited dated 1 September
2008.
This announcement is an advertisement and not a prospectus and is not an offer
to sell or a solicitation of any offer to buy any securities in the United
States or in any other jurisdiction.
The issuer has not been and will not be registered under the US Investment
Company Act of 1940, as amended (the "Investment Company Act"). In addition, the
shares have not been and will not be registered under the US Securities Act of
1933, as amended (the "Securities Act"). Consequently, the shares may not be
offered, sold or otherwise transferred within the United States or to, or for
the account or benefit of, US persons except in accordance with the Securities
Act or an exemption therefrom and under circumstances which will not require the
issuer to register under the Investment Company Act. No offering of the shares
will be made in the United States.
Neither this document nor anything contained herein shall form the basis of, or
be relied upon in connection with, any offer or commitment whatsoever in any
jurisdiction.
This communication is issued in the UK by Financial Risk Management Limited
which is authorised and regulated by the Financial Services Authority and whose
office is at 15 Adam Street, London WC2N 6AH.
This communication is directed only at (i) persons outside the United Kingdom,
or (ii) persons having professional experience in matters relating to
investments who fall within the definition of "investment professionals" in
Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (the "Order") or (iii) high net worth companies,
unincorporated associations and partnerships and trustees of high value trusts
as described in Article 49(2) (a) to (d) of the Order. Persons within the United
Kingdom who receive this communication (other than persons falling within (ii)
and (iii) above) should not rely on or act upon this communication.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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