TIDMOPP TIDMOPPP
RNS Number : 1209J
Origo Partners PLC
07 September 2016
7 September 2016
Origo Partners PLC
("Origo" or the "Company")
Posting of Circular, Proposed Restructuring, Notice of Meetings
and Restoration of Trading
On 19 August 2016 the Company announced that, following
extensive discussions with its key shareholders and further to the
proposed restructuring of the Company's share capital set out in
the circular sent to shareholders in January 2016, a revised set of
proposals, which would restructure the Company's convertible zero
dividend preference shares ("CZDPs"), had been agreed which would
be put to shareholders for their approval.
Origo now announces that a circular is today being posted to
Shareholders (the "Circular"), providing details of the proposed
restructuring of the Company's share capital together with notices
convening: (i) a general meeting of the Company to be held at 33-37
Athol Street, Douglas, Isle of Man, IM1 1LB at 12.30 p.m. on 26
September 2016 (the "General Meeting"); (ii) a CZDP class meeting
to be held at 33-37 Athol Street, Douglas, Isle of Man, IM1 1LB at
1.30 p.m. on 26 September 2016 (the "CZDP Class Meeting"); and
(iii) an ordinary share class meeting to be held at 33-37 Athol
Street, Douglas, Isle of Man, IM1 1LB at 2.00 p.m. on 26 September
2016 (the "Ordinary Share Class Meeting" and together with the
General Meeting and the CZDP Class Meeting, the "Meetings").
The Proposals, if approved by Shareholders, would also serve to
settle the ongoing disputes with Brooks Macdonald.
The Meetings are being convened for the purpose of seeking
shareholder approval for the Proposals. A copy of the circular
being sent to shareholders will be available on the Company's
website (www.origoplc.com) shortly.
Further details of the Proposals are set out below.
Capitalised terms used and not otherwise defined in this
announcement have the meanings given in the Circular.
As further explained in paragraph 8 below, and following, inter
alia, the publication of the Circular (which contains full details
of the Proposals and the likely implications for the Company should
the Proposals be rejected), the Company also announces that that
trading in the Company's securities on AIM is expected to resume at
7.30 a.m. on 7 September 2016.
For further information about Origo please visit
www.origoplc.com or contact:
Origo Partners plc
Niklas Ponnert niklas@origoplc.com
Nominated Adviser
Smith & Williamson Corporate Finance Limited
Azhic Basirov
Ben Jeynes +44 (0)20 7131 4000
Public Relations
Aura Financial
Andy Mills +44 (0)20 7321 0000
1. Introduction
In November 2014, the Company's Shareholders approved a revised
Investing Policy, under which the Company is now, through an
orderly realisation programme, seeking to divest its entire
portfolio by November 2018 at such time and under such conditions
as the Board may determine in order to maximise value on behalf of
the Company's Shareholders.
Since the implementation of the revised Investing Policy, the
Company has made initial progress in delivering on a number of
objectives and the Company remains confident of the implementation
of its Investing Policy. However, and as announced by Origo on 4
July 2016, continued economic uncertainty in China and the
concomitant turbulence in commodities markets have impeded the
Company's ability to realise assets at attractive prices.
As a result, the Company was not in a position to redeem 12
million CZDPs on 8 March 2016 (as provided, subject to compliance
with the Act, by the Articles). The Company remains under a
continuing obligation (under the current Articles) to undertake the
redemption of 12 million CZDPs as and when it is legally able to do
so.
Notwithstanding this, the Company is pleased to have reported,
since March 2016, positive developments at some portfolio
companies, which indicate that there is potential to realise value
for shareholders in due course.
The Company is now seeking Shareholder approval for the
Proposals, which would restructure the Company's share capital and
would provide Origo with greater flexibility to implement its
Investing Policy. The Proposals, if approved by Shareholders, would
also serve to settle the ongoing disputes with Brooks
Macdonald.
In order to be implemented, the Proposals require the approval
of Shareholders at a general meeting and at separate class meetings
of CZDP Shareholders and of Ordinary Shareholders, in the case of
the General Meeting and the Ordinary Share Class Meeting by way of
a majority of 75 per cent. or more of the votes cast by those in
attendance and exercising their vote and in the case of the CZDP
Class Meeting by way of a majority of 75 per cent. or more of the
then issued and outstanding CZDPs.
The purpose of the Circular is to convene the General Meeting
and the Class Meetings, to provide Shareholders with information on
the Proposals, to explain the reasons why the Directors consider
the Proposals to be in the best interests of the Company and to
recommend that you vote in favour of the Resolutions at the
Meetings, as the Directors intend to do at the relevant Meetings in
respect of their own beneficial holdings of Ordinary Shares,
representing approximately 1.06 per cent. of the Company's issued
ordinary share capital.
The Board considers that the effect of the Resolutions not being
passed by Shareholders would be seriously adverse for the Company.
Shareholders' attention is drawn to paragraph 15 below which sets
out the likely consequences for the Company in the event that the
Resolutions are not passed.
2. Principal Benefits of the Proposals
The Directors consider that the Proposals provide a number of
significant benefits to the Company and its Shareholders,
namely:
-- more closely aligning the existing rights of the CZDPs,
approved by Shareholders in March 2013, with the Investing Policy
adopted by the Company in November 2014. This is expected to
provide Origo with greater flexibility in the implementation of the
Investing Policy with a view to maximising Shareholder value;
-- allowing Ordinary Shareholders to receive a proportion of all
future Distributions alongside CZDP Shareholders (subject to
certain exceptions explained further in paragraph 4 below); and
-- settlement of the ongoing disputes with Brooks Macdonald.
3. Background to and reasons for the Proposals
Since the implementation of the revised Investing Policy in
November 2014, the Company has made initial progress in delivering
on a number of objectives and the Company remains confident of the
implementation of its Investing Policy. However, and as announced
by Origo on 4 July 2016, continued economic uncertainty in China
and the concomitant turbulence in commodities markets have impeded
the Company's ability to realise assets at attractive prices.
The Company's Articles currently provide for the Company
(subject to the Act) to redeem 12 million CZDPs on 8 March 2016
(the "March 2016 Redemption"). As the Board considered it likely
that the Company would not be in a position to undertake the March
2016 Redemption in compliance with the Act, the Company issued a
circular to Shareholders on 19 January 2016 seeking their approval
to an initial set of proposals in relation to a restructuring of
the Company's share capital to (amongst other things) remove the
requirement to undertake the March 2016 Redemption (the "Initial
Proposals"). However, the Initial Proposals (which had been
negotiated between the Company and the main CZDP Shareholders
(Brooks Macdonald)) did not receive the necessary approval of at
least a 75 per cent. majority of votes cast at the general meeting
and the ordinary share class meeting held on 4 February 2016 and
therefore the Initial Proposals could not be implemented.
The Company subsequently announced on 8 March 2016 that it was
not in a position to undertake the
March 2016 Redemption in compliance with the Act. The Company
remains under a continuing obligation to undertake the redemption
of 12 million CZDPs as and when it is legally able to do so.
On 9 March 2016, Brooks Macdonald issued a claim before the Isle
of Man Court seeking the winding up of the Company on just and
equitable grounds and for unfair prejudice (further details of
which are set out in paragraph 3 of Annex 1).
Following the rejection by Shareholders of the Initial Proposals
and the Winding-up Claim being brought, the Company has worked with
Brooks Macdonald and PAX (the Company's single largest Ordinary
Shareholder) to form the Proposals which would restructure the
CZDPs and, amongst other things, remove all obligations of the
Company in respect of the redemption of at least 12 million CZDPs,
remove any final CZDP redemption and/or maturity date, remove the
CZDP conversion provisions and allow the Company more flexibility
as to the timings of redemptions, which would not be the case if
the Proposals are rejected.
Importantly, the Proposals have been negotiated between the
Company, Brooks Macdonald and the PAG Entities and each of Brooks
Macdonald and PAX have given the Company irrevocable undertakings
to vote in favour of the Resolutions on the terms described more
fully in paragraph 14.
The Proposals, if implemented, would also serve to settle the
Company's ongoing disputes with Brooks Macdonald in accordance with
the terms of the Settlement Deed. Brooks Macdonald has commenced
proceedings in the Isle of Man Court against the Company in two
separate matters (being the Conversion Claim and the Winding-up
Claim, further details of which are set out in Annex 1). Brooks
Macdonald has agreed to take all required steps to discontinue such
proceedings in the event that the Resolutions are passed. Brooks
Macdonald has also intimated a further complaint that it may bring
against the Company in the event that the Proposals are not
approved (being the CZDP Complaints, further details of which are
set out in Annex 1). The Company has been actively engaged in
dealing with the complaints raised and proceedings brought by
Brooks Macdonald, which has required a significant amount of
management time and incurring of significant costs. The Company
estimates that, to date, its legal and other related expenses in
relation to the disputes with Brooks Macdonald are in excess of
US$3.5 million.
Details of the Settlement Deed between Origo, PAX, PAGAML and
Brooks Macdonald are set out in
paragraph 5 below.
4. Proposals
The principal terms of the Proposals are:
-- the removal of all obligations of the Company in respect of
the redemption of at least 12 million CZDPs and the removal of any
final CZDP redemption and/or maturity date;
-- the reset of the accreted principal amount per CZDP to US$1.0526;
-- that all distributions made to CZDP Shareholders shall upon
receipt by CZDP Shareholders operate to redeem the relevant whole
number of issued CZDPs (pro rata as between CZDP Shareholders in
direct proportion to the numbers of CZDPs which they respectively
hold);
-- that no rate of return on the CZDPs will begin to accrete
until 1 January 2018 and, in respect of each CZDP still in issue on
1 January 2018, its principal amount of US$1.0526 shall be subject
to the accretion of a rate of return equal to 4 per cent. per annum
from (and including) 1 January 2018 to (and including) the date on
which such CZDP is redeemed, with such return accruing on a simple
and not compound basis;
-- that the current liquidation preference of the CZDPs shall be
removed, except if a winding up of the Company is commenced within
365 days of the Settlement Date (other than such a winding up which
is initiated in breach of the BM Undertaking or otherwise initiated
by Brooks Macdonald or any of its group entities), as further
explained below;
-- that the rights attaching to the CZDPs and the Ordinary
Shares will be amended such that, other than on a winding up (other
than any such winding up which is initiated in breach of the BM
Undertaking or which is otherwise initiated by Brooks Macdonald or
any entity or person which controls or is controlled by or is under
common control with any Brooks Macdonald entity) commencing within
365 days of the Settlement Date, Ordinary Shareholders shall
receive a proportion of all future distributions alongside CZDP
Shareholders on the following basis (pro rata within the respective
classes of shares):
o in respect of the first US$15 million of distributions, 80 per
cent. (i.e. US$12 million) to the CZDP Shareholders and 20 per
cent. (i.e. US$3 million) to the Ordinary Shareholders;
o in respect of distributions in excess of the first US$15 million:
- until such time as all CZDPs have been redeemed in full, 44 per cent. to the CZDP
Shareholders and 56 per cent. to the Ordinary Shareholders;
- thereafter, 100 per cent. to the Ordinary Shareholders;
-- that until such time as all CZDPs have been redeemed in full:
o distributions on Ordinary Shares will be made solely in the
proportions set out above, and at the same time as distributions
are made to the CZDP Shareholders, after which time former CZDP
Shareholders will no longer be entitled to receive any further
distributions or other amounts from the Company;
o the CZDPs will have priority in respect of the balance of
their accreted principal amount over the Ordinary Shares on a
winding up of the Company (other than any such winding up which is
initiated in breach of the BM Undertaking, or which is otherwise
initiated by Brooks Macdonald or any entity or person which
controls or is controlled by or is under common control with any
Brooks Macdonald entity) provided such winding up commences within
365 days of the Settlement Date;
-- that the CZDP conversion provisions will all be removed;
-- that the Articles also be amended so that any single person
holding the greatest number of Ordinary Shares and any single
person holding the greatest number of CZDPs shall each have the
right to nominate an independent person to be appointed as a
non-executive director of the Company, such appointment being
subject to relevant regulatory requirements;
-- that the rights attaching to the CZDPs will be amended such
that, for so long as there are CZDPs in issue, the Company shall
not, and shall procure that no member of the Group shall:
o without CZDP Majority Shareholder Consent:
- undertake or permit or incur (i) any borrowings (or enter into
or vary any contracts for financial indebtedness or arrangements
for financial indebtedness), or (ii) any other financial
indebtedness on the part of any member of the Group, other than in
each case for the purposes of discharging liabilities of any member
of the Group existing as at 19 August 2016 towards fees or
disbursements of professional advisers (excluding the fees and
disbursements of OAL), but which in any event shall not exceed GBP2
million in aggregate;
- without prejudice to the obligation of the directors of the
Company to have due regard to the interests of all shareholders as
a whole, cease to have due regard to the interests of the CZDP
Shareholders as a class and do anything materially prejudicial to
them;
- change the terms of engagement or appointment or the fees
payable to any investment manager (including OAL) of any member of
the Group;
- if any CZDPs remain in issue on 1 January 2019, extend the
Asset Realisation Support Agreement (further details of which are
set out in paragraph 7 below) beyond that date;
- enter into, or permit the entry into of, any transaction or
arrangement between any member of the Group on the one hand and any
PAG Entity and/or any affiliate of any PAG Entity who or which is a
"related party" (as defined in the AIM Rules for Companies) of the
Company and/or any agent of any PAG Entity or such affiliate
thereof (including, without limitation, any fund manager) and/or
any shareholder of the Company from time to time owning more than
10 per cent. of the voting rights of the Company and/or persons
acting in concert with any of them, on the other hand save in
respect of issues of any further Ordinary Shares in the Company
issued on bona fide arm's length terms; and
- allot or issue any shares or securities or rights to subscribe
for or to convert or exchange any securities into shares or
securities or reclassify any shares or permit any of the foregoing
by any member of the Group (other than (i) issues of Ordinary
Shares made to the Company or any wholly owned subsidiary of it;
and (ii) issues of any further Ordinary Shares in the Company in
every case issued on bona fide arm's length terms); and
without CZDP Ordinary Consent, make or permit any change in its
Investing Policy;
The Proposals, if implemented, would also serve to settle the
Company's ongoing disputes with Brooks Macdonald.
In determining the levels of cash available for Distribution to
the Company's shareholders, the Board will take into account 24
months of reasonable working capital requirements for Distributions
made on or before 31 December 2016, but not more than 12 months of
reasonable working capital requirements for Distributions
thereafter.
The Company may only make Distributions or redeem CZDPs if it
will, immediately thereafter, be able to pay its debts as they
become due in the normal course of business and the value of its
assets exceeds the value of its liabilities (in accordance with
section 49 of the Act).
The Company is also taking the opportunity to make a number of
administrative changes to the Articles. These changes include,
inter alia, the removal of Article 45 - which seeks to replicate
certain provisions of the City Code. The City Code has applied to
the Company since 30 September 2013 and Article 45 is now therefore
redundant.
To more accurately reflect the revised structure of the CZDPs it
is proposed that the CZDPs will be renamed 'Redeemable Preference
Shares' on implementation of the Proposals.
In connection with the Proposals, Brooks Macdonald has given the
BM Undertaking, further details of which are set out in paragraph
6.
5. Settlement Deed
In connection with the Proposals, on 19 August 2016 the Company
entered into the Settlement Deed with Brooks Macdonald and the PAG
Entities.
The Settlement Deed is conditional on (amongst other things) the
Proposals being approved by Shareholders and the passing of the
Resolutions on or before 30 September 2016. Accordingly, the
Settlement Deed will only have effect if the Proposals are approved
and the Resolutions are passed and provided that such approval and
the passing of the Resolutions occurs on or before 30 September
2016.
Once it becomes effective, the Settlement Deed disposes of the
legal claims pursued and/or intimated by Brooks Macdonald to date
(subject as set out below) and Brooks Macdonald has agreed to take
all required steps to discontinue the proceedings it has brought in
respect of the Conversion Claim and the Winding-up Claim.
Shareholders should note, however, that: (i) the Settlement Deed
is only binding in relation to Brooks
Macdonald and not all of the CZDP Shareholders; (ii) Brooks
Macdonald Asset Management (International) Limited and Brooks
Macdonald Asset Management Limited hold CZDPs and/or Ordinary
Shares through certain nominee companies (including, amongst
others, Brooks Macdonald Nominees Limited and Secure Nominees
Limited) on behalf of beneficial owners and those beneficial owners
are not bound by this Settlement Deed; (iii) although Brooks
Macdonald Nominees Limited and Secure Nominees Limited have agreed
not to bring any claims of their own initiative in respect of the
ongoing disputes under the Settlement Deed, they may nevertheless
be required by the beneficial owners of CZDPs and/or Ordinary
Shares to bring claims in certain circumstances; and (iv) certain
other entities hold CZDPs for which Brooks Macdonald performs
management activities but are not a party to, and accordingly will
not be bound by, the Settlement Deed.
In addition to the terms of the Settlement Deed:
-- Brooks Macdonald Group Plc has confirmed that, absent a
takeover offer in respect of the Company being made, it shall not
and, to the extent that it is able and it would be lawful and in
compliance with its regulatory and legal obligations, it shall
ensure that any entity or person which it controls or is controlled
by or is under its common control with it, and its clients, shall
not commence proceedings against the Company prior to the date of
the Meetings; and
-- Brooks Macdonald Asset Management Limited, Brooks Macdonald
Asset Management (International) Limited, Brooks Macdonald Nominees
Limited and Secure Nominees Limited have confirmed that, absent a
takeover offer in respect of the Company being made and, to the
extent that they are able and it would be lawful and in compliance
with their regulatory and legal obligations, they shall not, and
they shall ensure that their clients shall not, commence
proceedings against the Company prior to the date of the
Meetings.
6. Undertakings
In connection with the Proposals:
-- Brooks Macdonald Group Plc has undertaken that it shall not
and to the extent that it is able and it would be lawful and in
compliance with its regulatory and legal obligations, it shall
ensure that any entity or person which it controls or is controlled
by or is under its common control with, and their clients, shall
not commence, participate in, fund, voluntarily aid, prosecute or
cause to be commenced, any complaint, claim, action, suit, cause of
action or other proceeding for the purpose of winding up the
Company within 365 days of the Settlement Date, provided that if
the Settlement Deed does not become unconditional then this
undertaking will lapse on the earlier of (i) 30 September 2016 and
(ii) the vote upon the Resolutions having been taken.
-- Brooks Macdonald Asset Management Limited, Brooks Macdonald
Asset Management (International) Limited, Brooks Macdonald Nominees
Limited and Secure Nominees Limited have undertaken that to the
extent that they are able and it would be lawful and in compliance
with their regulatory and legal obligations, they shall not and
they shall ensure that any entity or person which controls or is
controlled by or is under its common control with it, and their
clients, shall not commence, participate in, fund, voluntarily aid,
prosecute or cause to be commenced, any complaint, claim, action,
suit, cause of action or other proceeding for the purpose of
winding up the Company within 365 days of the Settlement Date,
provided that if the Settlement Deed does not become unconditional
then this undertaking will lapse on the earlier of (i) 30 September
2016 and (ii) the vote upon the Resolutions having been taken;
-- PAX and PAGAML have undertaken that neither they nor their
affiliates nor any person with which they (or their affiliates) are
acting in concert will make, propose or effect a takeover bid for
the Company or for the Ordinary Shares as a result of which they,
their affiliates or persons acting in concert with them would hold
shares carrying in aggregate 50 per cent. or more of the voting
rights of the Company if the bid were completed or became effective
during the period from the date of the undertaking (being 19 August
2016) to the earlier of (i) 30 September 2016; and (ii) the date
shareholders of the Company vote down any of the Resolutions (the
"Effective Period"). Rule 2.8 of the Takeover Code applies to this
undertaking such that PAX, PAGAML, their affiliates and any person
with which they (or their affiliates) are acting in concert would
not be prevented from proposing, making or effecting a takeover bid
for the Company or for the Ordinary Shares in the event that: (i)
shareholders of the Company vote down any of the Resolutions; or
(ii) the Effective Period otherwise ends. For these purposes,
"affiliate" means any entity or other person which controls, or is
under the control of, or under common control with, another person
or entity of which it is an affiliate, where "control" means the
ability whether by means of ownership or other means to direct the
conduct of the affairs of the entity or person which is under
control, and the directors of any such entities; and
-- the Company has undertaken that, to the extent permitted by
law and/or applicable regulatory
requirements, it will not take any step that would trigger any
conversion provisions in Article 4.17 prior to the earliest of (i)
30 September 2016, (ii) the Settlement Date; and (iii) the date the
Proposals are voted down by Shareholders.
Voting undertakings have also been provided by Brooks Macdonald
and PAX and PAGAML in respect of the Resolutions, as further
described in paragraph 14.
7. Asset Realisation Support Agreement
The Company and OAL are party to an asset realisation support
agreement (the "Asset Realisation
Support Agreement"), the terms of which were approved by
Shareholders on 20 November 2014. The Asset Realisation Support
Agreement became effective on 13 January 2015.
Pursuant to the Asset Realisation Support Agreement, OAL was
appointed as a consultant to the Group to provide to the Group: (i)
management and investment realisation support services, including
support services on the disposal of assets and the provision (if
required by the Company) of the services of Chris Rynning and
Niklas Ponnert as Directors to the Company; and (ii) general
administrative services, including accounting, treasury, and
corporate secretarial services.
On 6 September 2016 the Company entered into an amendment
agreement with OAL to the Asset Realisation Support Agreement (the
"Amendment Agreement") which, conditional on the Resolutions being
passed on or prior to 30 September 2016, will amend the Asset
Realisation Support Agreement as follows:
-- the aggregate annual fees payable to OAL for the provision of
services pursuant to the Asset Realisation Support Agreement will
be reduced as follows:
o US$1.6 million (currently US$1.8 million) in respect of the
second year of the Asset Realisation Support Agreement (i.e. the
year commencing on 13 January 2016);
o US$1.2 million (currently US$1.6 million) in respect of the
third year of the Asset Realisation Support Agreement (i.e. the
year commencing on 13 January 2017);
o US$1 million (currently US$1.05 million) in respect of the
fourth year of the Asset Realisation Support Agreement (i.e. the
period commencing on 13 January 2018 and ending on 31 December
2018);
-- the Existing Performance Hurdle (as defined below) will be
removed and instead OAL shall be entitled to receive the
performance fee under the Asset Realisation Support Agreement only
if the Company has made aggregate Distributions in excess of US$90
million to Shareholders during the period from the date on which
the Proposals are approved until the termination of the Asset
Realisation Support Agreement (the "New Performance Hurdle");
and
-- the term of the Asset Realisation Support Agreement will be a
fixed term expiring on 31 December 2018 and will be subject to
termination for cause.
Under the terms of the Asset Realisation Support Agreement, OAL
is currently entitled to receive an additional performance fee if
the Group has received realised gross cash proceeds from the
realisation of assets in its portfolio (net of repayment of third
party debts, any related hedge or other break costs and any
prepayment fees and penalties, but before any related transactional
costs, fees and expenses and any taxes payable) ("Gross
Realisations") in excess of US$90 million (the "Existing
Performance Hurdle"). The Existing Performance Hurdle will be
amended pursuant to the Amendment Agreement as set out above such
that OAL will be entitled to a performance fee (the quantum of
which reflects the existing terms of the Asset Realisation Support
Agreement) of 20 per cent. of Gross Realisations over the New
Performance Hurdle, subject to the first US$1.7 million of Gross
Realisations over the New Performance Hurdle being payable to
OAL.
8. Restoration of Trading on AIM
Shareholders will be aware that trading in the Company's
securities on AIM has been suspended since 11 March 2016 as a
result of the provisions of section 167 of the Isle of Man
Companies Act 1931 (the "1931 Act").
As announced by the Company on 11 March 2016, section 167 of the
1931 Act states that any disposition of the property of the Company
after the commencement of the winding up by the Isle of Man Court
(which was deemed to have commenced on the presentation of the
Winding Claim) is void unless the Court orders otherwise. The
Company's announcement of 11 March 2016 went on to confirm that,
whilst the Company's daily operations should remain broadly
unaffected, disposals of its assets without Court approval may have
been rendered void and therefore that there were likely to be
challenges in implementing Origo's Investing Policy pending the
outcome of proceedings. In addition, the Company had received legal
advice that the provisions of section 167 of the 1931 Act extended
to any transfer of the Company's shares.
As a result, the Company requested the temporary suspension of
trading of its securities on AIM. In August 2016, with the
agreement of the Company, Brooks Macdonald and PAX, the Isle of Man
Court granted validation orders such that: (i) transfers of the
Company's issued shares shall not be void by virtue of section 167
of the 1931 Act in the event of a winding up order being made (the
"Share Transfer Validation Order"); and (ii) dispositions of the
property of the Company made in the ordinary course of business for
proper value shall not be void by virtue of the provisions of
section 167 of the 1931 Act notwithstanding the presentation of the
Winding-up Claim.
As a result of the Share Transfer Validation Order and the
publication of the Circular, which contains full details of the
Proposals and the likely implications for the Company should the
Proposals be rejected, the Company expects that trading in the
Company's securities on AIM will resume at 7.30 a.m. on 7 September
2016.
9. Articles of Association
In order to give effect to the Proposals, the Board is seeking
to amend and replace the existing Articles.
A summary of the main changes between the proposed new Articles
and the existing Articles is set out in Annex 2. Other changes,
which are of minor, technical or clarifying nature and also some
other minor changes which are incidental, have not been noted in
Annex 2.
Full copies of the proposed new Articles, in both unmarked final
and marked-up formats (with the marked-up copy showing all of the
proposed changes to the existing Articles), are available for
inspection on the Company's website: http://www.origoplc.com ->
Shareholder Communications -> Company Documents, and will be
available during the General Meeting and the Class Meetings. A full
replacement set of Articles, incorporating the proposed amendments,
will be filed at the Isle of Man Companies Registry provided the
Resolutions are passed.
A General Meeting is therefore being convened for 12.30 p.m. on
26 September 2016 at which a resolution requiring the approval of
not less than 75 per cent. of the votes cast by those Shareholders
in attendance and exercising their vote and set out in the Notice
of General Meeting attached to the Circular will be proposed and
voted upon by the Shareholders present and voting at such
meeting.
10. CZDPs
As the Proposals involve an alteration of the share rights
attaching to the CZDPs, the Proposals are also conditional upon the
approval of the holders of not less than 75 per cent. of the CZDPs
then in issue and outstanding of a resolution to amend the terms of
the CZDPs at a separate class meeting of CZDP Shareholders. This
resolution is set out in the Notice of CZDP Class Meeting attached
to the Circular.
The CZDP Class Meeting is therefore being convened for 1.30 p.m.
on 26 September 2016 at which the resolution set out in the Notice
of CZDP Class Meeting attached to the Circular will be proposed and
voted upon by the CZDP Shareholders.
11. Ordinary Shares
The Proposals also involve an alteration of the share rights
attaching to the Ordinary Shares. The Proposals are, therefore,
also conditional upon the approval of not less than 75 per cent. of
the votes cast by the Ordinary Shareholders in attendance and
exercising their vote of a resolution to amend the Articles at a
separate class meeting of Ordinary Shareholders. This resolution is
set out in the Notice of Ordinary Share Class Meeting attached to
the Circular.
The Ordinary Share Class Meeting is therefore being convened for
2.00 p.m. on 26 September 2016 at which the resolution set out in
the Notice of Ordinary Share Class Meeting attached to the Circular
will be proposed and voted upon by the Ordinary Shareholders
present and voting at such meeting.
12. Related Party Transactions
Brooks Macdonald and its affiliates are interested in
approximately 63.93 per cent. of the CZDPs. PAX is interested in
approximately 25.60 per cent. of the Ordinary Shares. Therefore,
under the AIM Rules for Companies, Brooks Macdonald and PAX are
each deemed to be related parties of the Company. As a result, the
entry by the Company into the Settlement Deed, which is conditional
upon the Proposals being implemented, was a Related Party
Transaction.
As announced by the Company on 19 August 2016, the Directors
consider, having consulted with the
Company's nominated adviser, that the terms of the Settlement
Deed are fair and reasonable insofar as the Shareholders are
concerned.
In order to give effect to the amendments to the Asset
Realisation Support Agreement set out in paragraph 7, the Company
entered into the Amendment Agreement with OAL on 6 September 2016.
OAL is deemed to be a related party of the Company. As a result,
entry by the Company into the Amendment Agreement with OAL, which
is conditional upon the Proposals being implemented, is a Related
Party Transaction.
The Independent Directors consider, having consulted with the
Company's nominated adviser, that the terms of the Amendment
Agreement are fair and reasonable insofar as the Shareholders are
concerned.
13. Action To Be Taken
Shareholders will find enclosed with the Circular a Form of
Proxy for the General Meeting and the appropriate Form(s) of Proxy
for the relevant Class Meetings. The Forms of Proxy are
colour-coded for convenience as follows: (a) the Form of Proxy
printed on white paper is the Form of Proxy for the General
Meeting; (b) the Form of Proxy printed on blue paper is the Form of
Proxy for the CZDP Class Meeting; and (c) the Form of Proxy printed
on yellow paper is the Form of Proxy for the Ordinary Share Class
Meeting.
Whether or not you intend to be present at the Meetings, you are
requested to complete, sign and return the Form(s) of Proxy in
accordance with the instructions printed on it. The Form(s) of
Proxy should be returned to Capita Asset Services using the
business reply envelope enclosed or otherwise by post, courier or
hand to Capita Asset Services, PXS, 34 Beckenham Road, Beckenham,
Kent, BR3 4TU as soon as possible and, in any event, so as to
arrive not later than 12.30 p.m. on 24 September 2016 (in the case
of the white Form of Proxy for the General Meeting), 1.30 p.m. on
24 September 2016 (in the case of the blue Form of Proxy for the
CZDP Class Meeting) and 2.00 p.m. on 24 September 2016 (in the case
of the yellow Form of Proxy for the Ordinary Share Class Meeting).
The completion and return of a Form of Proxy will not preclude you
from attending the relevant Meetings and voting in person should
you wish to do so.
14. Irrevocable Undertakings
The Company has received an irrevocable undertaking from Brooks
Macdonald in respect of all the voting rights over CZDPs and
Ordinary Shares which Brooks Macdonald is entitled to exercise
(representing approximately 78.55 per cent. of the CZDPs and 3.83
per cent. of the Ordinary Shares in which Brooks Macdonald and its
affiliates are interested) that it will use reasonable endeavours
insofar as the matters are within its control and in its clients'
best interests to exercise such voting rights in favour of the
Resolutions at the Meetings. Shareholders should note that Brooks
Macdonald is not therefore entitled to exercise voting rights
attaching to 21.45 per cent. of CZDPs and 96.17 per cent. of
Ordinary Shares in which Brooks Macdonald and its affiliates are
interested due to the manner in which such shares are held.
The Company has received an irrevocable undertaking from PAX and
PAGAML in respect of all the voting rights over Ordinary Shares
which PAX is entitled to exercise (representing approximately 25.60
per cent. of the Ordinary Shares) that they will exercise such
voting rights to vote in favour of the Resolutions at the General
Meeting and Ordinary Share Class Meeting.
15. Likely Consequences of Proposals Not Being Passed
If the Resolutions are not passed, then:
-- the Settlement Deed (which seeks to settle the Company's
ongoing dispute with Brooks Macdonald) would not become
unconditional and Brooks Macdonald would no longer be prevented
from bringing proceedings in respect of the various claims that it
has previously made or intimated. It is highly likely that Brooks
Macdonald would seek to continue proceedings in the Isle of Man
Court in respect of the Winding-up Claim and the extant appeal to
the judgment dated 29 July 2016 in respect of the disclosure
hearing relating to the Winding-up Claim ("Disclosure Hearing
Appeal"), both of which are currently stayed. The real likelihood
is that these proceedings would be continued at the next hearing in
the Isle of Man on 7 October 2016 (which has been fixed so the
parties can update the Isle of Man Court). Although the Board
believes that the Winding-up Claim is an abuse of process and is
vigorously defending such claim, it is possible that the Isle of
Man Court would decide that there are grounds to order the Company
to be wound up. It is also possible that Brooks Macdonald may
commence additional legal proceedings in respect of the CZDP
Complaint and continue proceedings in respect of the Conversion
Claim (which is currently stayed). Accordingly, the Company would
expect to be embroiled in time-consuming litigation with Brooks
Macdonald which would inevitably involve significant cost,
management time and risk;
-- as the Articles would not be amended to align the existing
structure of the CZDPs with the Investing Policy, the Company would
not benefit from greater flexibility in the implementation of the
Investing Policy, which would see the Company continuing to
encounter difficulties as regards its working capital requirements
and the restriction on borrowing pursuant to Article 4.23(c).
Furthermore, the Company would remain under a continuing obligation
to undertake the redemption of 12 million CZDPs as and when it is
legally able to do so; and
-- the PAG Undertaking and the BM Undertaking would lapse.
16. Recommendation
Given the merits of the Proposals and the likely consequences of
the Proposals not being passed as set out above, the Directors
unanimously recommend that Shareholders vote in favour of the
Resolutions as they intend to do in respect of their own beneficial
shareholdings, which together amount to 3,811,009 Ordinary Shares,
representing approximately 1.06 per cent. of the Company's issued
Ordinary Shares. Chris Rynning, a former director of the Company,
also intends to vote in favour of the Resolutions in respect of his
beneficial shareholding, which amounts to 14,570,040 Ordinary
Shares, representing approximately 4.06 per cent. of the Company's
issued Ordinary Shares.
ANNEX 1
SUMMARY OF COMPLAINTS
1. CZDP Complaints
Brooks Macdonald has notified the Company of complaints based on
its contention that the Articles should have included an option
exercisable by the holders of the CZDPs to redeem the CZDPs upon a
change of control in respect of the Company. The value of the
claims may be up to the sum paid by Brooks Macdonald for the CZDPs
it holds. These complaints were the subject of an announcement made
by the Company on 7 February 2014. Brooks Macdonald has threatened
to bring this claim in the courts of England and Wales. It is the
Company's view that these claims would be unlikely to succeed.
However, the Company would incur significant costs in defending the
claims. If the Company was not successful in defending the
proceedings, it would be liable to pay the damages claimed (plus
interest) and Brooks Macdonald's costs of the proceedings. In the
event that the Company did successfully defend these claims, it
would be entitled to its costs from Brooks Macdonald but there
would be a proportion of the costs that will be irrecoverable.
2. Conversion Claim
Brooks Macdonald notified the Company of a claim to establish
the correct interpretation of Article 4.17 of the Articles
governing the conversion of CZDPs to Ordinary Shares upon a
Potential Disposal (as defined in Article 4.17). This complaint was
the subject of an announcement made by the Company on 14 July 2015.
On 10 February 2016 Proceedings were commenced by Brooks Macdonald
before the Isle of Man Court on 10 February 2016 seeking a
declaration as to the correct interpretation of Article 4.17 of the
Articles. This claim was the subject of an announcement made by the
Company on 16 February 2016. By consent between the parties, these
proceedings were stayed by the Isle of Man Court on 19 April 2016
pending the outcome of the Winding-up Claim. The stay remains in
force as at the date of this circular. In the event that the
Conversion Claim were to proceed to trial the position regarding
costs is likely to be broadly the same as the CZDP Complaints.
Further, Brooks Macdonald may apply to have its costs paid by the
Company to represent the interests of the CZDP holders (any such
application would be strongly resisted by the Company).
3. Winding-up Claim
On 9 March 2016, Brooks Macdonald issued a claim before the Isle
of Man Court seeking the winding up of the Company on just and
equitable grounds pursuant to the provisions of section 162(6) of
the Companies Act 1931 (applied to the Company pursuant to section
182 of the Companies Act 2006) and/or an order under section
180(2)(f) (winding up under section 165 of the Companies Act 1931
on the grounds that it is just and equitable to do so) and on the
grounds that the affairs of the Company have been, are being, or
are likely to be conducted in a manner that is, likely to be
oppressive or unfairly prejudicial to such member in his capacity
as a member. This claim was the subject of an announcement made by
the Company on 10 March 2016. The Winding-up Claim was listed for
hearing from 22 to 24 August 2016. However, in light of the
Company's entry into the Settlement Deed (which is conditional upon
the Proposals being implemented) on 19 August 2016, the Winding-up
Claim and the extant Disclosure Hearing Appeal were each stayed by
the Isle of Man Court on 22 August 2016 until further order. An
update is to be sent to the Court by 4pm on 30 September 2016 as to
the outcome of the Proposals and/or the status of the Winding-up
Claim and a hearing to update the Court is fixed for 7 October
2016. If the Proposals are not implemented and the Winding-up Claim
continues and the Company was unsuccessful in defending the
proceedings, the Court could issue a winding-up order, forcing the
Company into compulsory liquidation. In this situation the Company
would also be liable for Brooks Macdonald's costs of the
proceedings. In the event that the Company did successfully defend
the Winding-up Claim, it would be entitled to its costs from Brooks
Macdonald but there would be a proportion of the costs that will be
irrecoverable.
It should be noted that Brooks Macdonald was a defendant,
representing the CZDP holders, in declaratory proceedings by the
Company before the Isle of Man Court regarding the correct
interpretation of provisions in the Articles governing the passing
by the Company of "75 per cent. Resolutions". The Company's
interpretation was upheld by the Isle of Man Court as outlined in
the announcement on 10 July 2015. The Company paid a proportion of
Brooks Macdonald's costs of the proceedings on the basis that it
obtained an order that it should act as representative defendant on
behalf of all holders of CZDPs.
ANNEX 2
SUMMARY OF THE MAIN PROPOSED CHANGES TO THE ARTICLES OF
ASSOCIATION
1. Rights attaching to the CZDPs and Ordinary Shares
The rights attaching to the CZDPs and Ordinary Shares are being
amended so that:
-- all obligations of the Company in respect of the redemption
of at least 12 million CZDPs and the removal of any final CZDP
redemption and/or maturity date are removed;
-- the accreted principal amount per CZDP is reset to US$1.0526;
-- all distributions made to CZDP Shareholders shall upon
receipt by CZDP Shareholders operate to redeem the relevant whole
number of issued CZDPs (pro rata as between CZDP Shareholders in
direct proportion to the numbers of CZDPs which they respectively
hold);
-- no rate of return on the CZDPs will begin to accrete until 1
January 2018 and in respect of each CZDP still in issue on 1
January 2018, its principal amount of US$1.0526 shall be subject to
the accretion of a rate of return equal to 4 per cent. per annum
from (and including) 1 January 2018 to (and including) the date on
which such CZDP is redeemed, with such return accruing on a simple
and not compound basis;
-- the current liquidation preference of the CZDPs shall be
removed, except if the winding up of the Company is commenced
within 365 days of the Settlement Date (other than such a winding
up which is initiated in breach of the BM Undertaking or otherwise
initiated by Brooks Macdonald or any of its group entities), as
further explained below;
-- other than on a winding up (other than any such winding up
which is initiated in breach of the BM Undertaking or which is
otherwise initiated by Brooks Macdonald or any entity or person
which controls or is controlled by or is under common control with
any Brooks Macdonald entity) commencing within 365 days of the
Settlement Date, Ordinary Shareholders shall receive a proportion
of all future distributions alongside CZDP Shareholders on the
following basis (pro rata within the respective classes of
shares):
o in respect of the first US$15 million of distributions, 80 per
cent. (i.e. US$12 million) to the CZDP Shareholders and 20 per
cent. (i.e. US$3 million) to the Ordinary Shareholders;
o in respect of distributions in excess of the first US$15 million:
- until such time as all CZDPs have been redeemed in full, 44
per cent. to the CZDP Shareholders and 56 per cent. to the Ordinary
Shareholders;
- thereafter, 100 per cent. to the Ordinary Shareholders;
-- until such time as all CZDPs have been redeemed in full:
o distributions on Ordinary Shares will be made solely in the
proportions set out above, and at the same time as distributions
are made to the CZDP Shareholders, after which time former CZDP
Shareholders will no longer be entitled to receive any further
distributions or other amounts from the Company;
o the CZDPs will have priority in respect of the balance of
their accreted principal amount over the Ordinary Shares on a
winding up of the Company (other than any such winding up which is
initiated in breach of the BM Undertaking, or which is otherwise
initiated by Brooks Macdonald or any entity or person which
controls or is controlled by or is under common control with any
Brooks Macdonald entity) provided such winding up commences within
365 days of the Settlement Date;
-- all rights of conversion of the CZDPs into Ordinary Shares
and obligation to convert on a takeover are removed;
-- (in the case of the CZDPs) for so long as there are CZDPs in
issue, the Company shall not, and shall procure that no member of
the Group shall:
o without CZDP Majority Shareholder Consent:
- undertake or permit or incur (i) any borrowings (or enter into
or vary any contracts for financial indebtedness or arrangements
for financial indebtedness), or (ii) any other financial
indebtedness on the part of any member of the Group, other than in
each case for the purposes of discharging liabilities of any member
of the Group existing as at 19 August 2016 towards fees or
disbursements of professional advisors (excluding the fees and
disbursements of OAL), but which in any event shall not exceed GBP2
million in aggregate;
- without prejudice to the obligation of the directors of the
Company to have due regard to the interests of all shareholders as
a whole, cease to have due regard to the interests of the CZDP
Shareholders as a class and do anything materially prejudicial to
them;
- change the terms of engagement or appointment or the fees
payable to any investment manager (including, without limit, OAL)
of any member of the Group;
- if any CZDPs remain in issue on 1 January 2019, extend the
Asset Realisation Support Agreement beyond that date;
- enter into or permit the entry into of any transaction or
arrangement between any member of the Group on the one hand and any
PAG Entity and/or any affiliate of any PAG Entity who or which is a
"related party" (as defined in the AIM Rules for Companies) of the
Company and/or any agent of any PAG Entity or such affiliate
thereof (including, without limitation, any fund manager) and/or
any shareholder of the Company from time to time owning more than
10 per cent. of the voting rights of the Company and/or persons
acting in concert with any of them, on the other hand save in
respect of issues of any further Ordinary Shares in the Company
issued on bona fide arm's length terms; and
- allot or issue any shares or securities or rights to subscribe
for or to convert or exchange any securities into shares or
securities or reclassify any shares or permit any of the foregoing
by any member of the Group (other than (i) issues of Ordinary
Shares made to the Company or any wholly owned subsidiary of it;
and (ii) issues of any further Ordinary Shares in the Company in
every case issued on bona fide arm's length terms);
o without CZDP Ordinary Consent, make or permit any change in its Investing Policy;
-- Article 10 (the Company's general right to purchase, redeem
or otherwise acquire shares) is being amended to reflect the agreed
payments set out above;
-- the right to distribute assets in specie on a winding up
would require a 75 per cent. Resolution (as defined in the
Articles) of both the Ordinary Shares and of the CZDPs for each
class to be bound;
-- as a result of the changes to the CZDPs they are being
renamed redeemable preference shares.
2. City Code
Since 30 September 2013 the City Code has applied to the
Company. As a result the provisions (save for a number of
definitions) set out in Article 45 are redundant and it is proposed
that they be removed.
3. 75 per cent. Resolution
It is proposed that the definition of 75 per cent. Resolution be
amended to clarify the Isle of Man Court
judgment on its interpretation handed down on 9 July 2015, which
confirmed that a 75 per cent. Resolution requires a majority of 75
per cent. or more of votes cast in favour, and not a majority of 75
per cent. or more of all issued and outstanding shares to have
voted in favour, to be validly passed.
4. Articles 36.4 and 61.2
These Articles are being amended (and applied to the CZDPs) so
that they are consistent with other
provisions in the Articles.
5. New Article 74A
This new Article entitles any single person holding the greatest
number of Ordinary Shares and any single person holding the
greatest number of CZDPs to nominate an independent person to be
appointed as a non-executive director of the Company (such
appointment being subject to relevant regulatory requirements).
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLLFVEAAIRIIR
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