TIDMPACL
RNS Number : 4210K
Pacific Alliance China Land Limited
24 June 2014
24 June 2014
Pacific Alliance China Land Limited
(the "Company")
Proposed changes to investment policy and introduction of
mechanisms to return capital
1. Introduction
The Company has today published a circular to Shareholders
providing notice of a forthcoming extraordinary general meeting to
be held on 25 July 2014.
In light of the 2015 Continuation Vote, the Board commissioned
an extensive shareholder consultation earlier this year. Following
that consultation process it is proposed that the Company cease
making new investments and focus instead on realising existing
investments, maximising the IRR from its portfolio and returning
realisation proceeds to Shareholders. The Company will continue to
develop and, if incrementally profitable and in the best interests
of Shareholders, invest additional funds to complete existing
investments. Finally, the Company will utilise its RMB cash assets
in China and subject to exchange control restrictions, to make low
risk short-term investments pending repatriation as US Dollars.
In order to maximise the IRR for the benefit of Shareholders,
the proposed changes to the investment policy have been designed to
allow the Investment Manager an element of discretion in realising
the investment portfolio so as to achieve an optimal combination of
price and speed in relation to the orderly realisation of the
Company's investments.
In conjunction with the proposed changes to the investment
policy, certain changes to the Articles are also being proposed.
Details of these proposed changes are set out in this document and
will be put to Shareholders at the EGM.
The Board has convened the EGM at which three resolutions will
be proposed. In summary, the Resolutions seek:
1. Shareholder approval to amend the Company's investment policy
to restrict new investment solely to support existing investments,
to protect, preserve or enhance such investments, including to
complete development projects, to utilise the Company's RMB cash
assets in China and, subject to exchange control restrictions, to
make low risk short-term investments and to focus future investment
management efforts on the realisation of the Company's portfolio
and the return of net realisation proceeds to Shareholders;
2. Shareholder approval of changes to the Articles that seek to
facilitate the orderly realisation of the Company's portfolio and
to provide mechanisms for returning net realisation proceeds to
Shareholders by converting the issued Shares into redeemable
ordinary shares and to allow the Company to perform compulsory
redemptions of shares as a mechanism for returning net realisation
proceeds to Shareholders; and
3. Shareholder approval to convert all issued Shares into redeemable ordinary shares.
Resolution 1 is classified as an ordinary resolution requiring
majority Shareholder approval of Shareholders present and voting.
Resolutions 2 and 3 are classified as special resolutions,
requiring a Shareholder approval threshold of 66.67% of
Shareholders present and voting. In addition, Resolution 2 is
conditional on Resolution 1 being passed to become effective, and
Resolution 3 is conditional on Resolutions 1 and 2 being passed to
become effective.
Shareholders holding 77,599,166 Shares representing 59.47% of
the total voting rights have informed the Company they intend to
vote in favour of the Resolutions.
2. Investment Policy Changes
The Board is proposing to amend the Company's investment policy
to restrict new investment solely:
a. to support existing investments, for the purpose of
protecting, preserving or enhancing such investments, including to
complete development projects; and
b. to utilise the Company's RMB cash assets currently in China
and subject to exchange control restrictions, for low risk
short-term investments;
and to focus future investment management efforts on the
realisation of the Company's portfolio and the return of net
realisation proceeds to Shareholders. As a result, the Company's
distribution policy in effect since February 2011 will be
superseded because distributions will no longer be limited to 50%
of the Company's net realised profit from realised investments and
principal will be returned instead of being available for
reinvestment.
The Company's investment portfolio includes direct property
holdings; land; private and listed companies as detailed in the
Company's quarterly newsletter. As such the Manager anticipates
that the majority of the Company's investments will be realised
within two years from July 2014, and the realisation of the
Company's remaining investments within three to five years.
3. Proposed changes to the Articles and conversion of issued Shares
The Board is proposing to amend the Articles to facilitate the
orderly realisation of the Company's investment portfolio and
provide mechanisms for returning the net realisation proceeds to
Shareholders.
The proposed amendments are designed to convert the Company's
existing Shares into redeemable ordinary shares and to create a
mechanism under the Articles to allow the compulsory redemption of
ordinary shares by the Company as an efficient method of returning
net realisation proceeds to Shareholders. Any compulsory redemption
will be subject to the pricing parameters specified under the
Articles which require the price per share be no less than net
asset value per Share.
4. Return of Capital
The Board expects to return net realisation proceeds to
Shareholders as the orderly realisation of the Company's investment
portfolio progresses. The Board anticipates the Company will use a
number of mechanisms for making such distributions, depending on
the circumstances at the time including the amounts to be returned;
the Share price discount relative to the net asset value; secondary
market liquidity and the size of the remaining portfolio. As part
of any Share buyback or tender offer the Board may consider making
available a matching facility to give those Shareholders, who wish
to do so, the opportunity to increase their holding in the Company
by matching off repurchased Shares against such orders.
4.1. Share Buybacks
Following the Shareholder consultation process earlier this
year, the Board anticipates initially using substantial secondary
market share buybacks as the main method of distributing net
realisation proceeds to Shareholders, taking into account the Share
price discount relative to the net asset value and secondary market
liquidity. Such Share buybacks will be announced in advance and
will be open to all Shareholders, and will be conducted by the
Company's broker Edmond de Rothschild Securities (UK) Limited.
4.2. Redemptions and/or Tender Offers
The Board may also invite Shareholders to redeem all or part of
their Shares on terms set by the Board at the time, or also declare
mandatory redemptions so that all Shareholders will have part of
their Shareholding redeemed on prescribed terms and at a price
equal to net asset value per Share. The Board expects to use
redemptions or tender offers when it believes it is inappropriate
to conduct an on-market Share buyback.
4.3. Dividends
The Board may also consider declaring a dividend as an
alternative means of distributing net realisation proceeds. The
Board is aware, however, that the receipt of dividends may not be
an attractive means of receiving distributions for certain
Shareholders. Accordingly, dividends are unlikely to be the main
method the Board uses to distribute the net realisation
proceeds.
5. Risk Factors
5.1. Investment Policy Changes
Even if Shareholders approve the proposed changes to the
Company's investment policy, there can be no certainty that the
Investment Manager will be able to realise the Company's investment
portfolio at the current valuations or at valuations which the
Company would find attractive, nor can there be any assurance as to
the timing of realisations.
Changes to the legal, regulatory or tax environment in China may
impact the Company's ability to maximise the realisation of the
Company's investment portfolio.
5.2. Changes to the Company's Articles
Even if Shareholders approve the proposed changes to the
Articles there can be no certainty that minority Shareholders will
be fully protected from Shareholders seeking a rapid realisation of
the Company's investment portfolio, or a change in the alignment of
interests between the Investment Manager and all Shareholders.
6. Extraordinary General Meeting
The Resolutions will be proposed at the EGM to be held at the
Four Seasons Hotel Macau, Cotai Strip, Estrada da Baia de N.
Senhora da Esperanca, S/N Taipa, Macau at 2:00 p.m. (Macau time)on
25 July 2014.
7. Recommendation
The Directors consider the Resolutions proposed at the EGM to be
in the best interests of the Company and Shareholders as a
whole.
The Directors unanimously recommend Shareholders vote in favour
of the Resolutions proposed at the EGM.
Shareholders holding 77,599,166 Shares representing 59.47% of
the total voting rights have informed the Company they intend to
vote in favour of the Resolutions. This includes the Directors who
intend to vote in favour of the Resolutions in respect of their
aggregate shareholdings of 1,817,400 Shares, representing 1.39% of
the Company's total voting rights.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
EGM Record Date 5:00 p.m. (Jersey
time) on Wednesday
25 June 2014
Latest time and date for receipt of 7:00 a.m. (Jersey
Forms of Proxy time) on Wednesday
23 July 2014
Time and date of EGM 2:00 p.m. (CST)
on Friday 25
July 2014
Announcement of results of EGM Friday 25 July
2014
If any of the above times and/or dates change, the revised times
and/or dates will be notified to Shareholders by announcement
through a Regulatory Information Service.
A copy of the Circular is available from the Company's website,
www.pacl-fund.com
For further information, please contact:
MANAGER: LEGAL COUNSEL:
Patrick Boot, Managing Jon Lewis, General Counsel
Partner PAG
Pacific Alliance Real 15/F, AIA Central
Estate Limited 1 Connaught Road
15/F, AIA Central Central, Hong Kong
1 Connaught Road T: (852) 2918 0088
Central, Hong Kong F: (852) 2918 0881
T: (852) 2918 0088 jlewis@pagasia.com
F: (852) 2918 0881
pboot@pagasia.com
------------------------ ----------------------------
FINANCIAL ADVISER AND NOMINATED ADVISER:
BROKER: Philip Secrett
William Marle Grant Thornton Corporate
John Armstrong-Denby Finance
Hiroshi Funaki T: (44) 20 7383 5100
Edmond de Rothschild Philip.J.Secrett@uk.gt.com
Securities
T: (44) 20 7845 5960
F: (44) 20 7845 5961
funds@lcfr.co.uk
------------------------ ----------------------------
MEDIA RELATIONS:
Stephanie Barry
PAG
T: (852) 3719 3375
sbarry@pagasia.com
------------------------ ----------------------------
DEFINITIONS
In this announcement the words and expressions listed below have
the meanings set out opposite them, except where the context
otherwise requires:
2015 Continuation the stated intention of the
Vote Board in the Admission Document
to convene an extraordinary
general meeting of the Company
in 2015 where a special resolution
would be proposed that the Company
continue as presently constituted
Admission Document the Company's AIM admission
document dated 20 November 2007
Articles the articles of association
of the Company
Board of Directors the board of Directors of the
Company
Clearstream the system of paperless settlement
of trades and the holdings of
shares without share certificates
administered by Clearstream
Banking S.A.
Company or PACL Pacific Alliance China Land
Limited
EGM the extraordinary general meeting
of the Company to consider the
Resolutions, convened for Friday
25 July 2014
Euroclear the system of paperless settlement
of trades and the holding of
shares without share certificates
administered by Euroclear Bank
SA
Form of Proxy the proxy form for use in connection
with the EGM, and which accompanies
this document
Investment Policy Investment policy as detailed
in the Admission Document
Investment Manager Pacific Alliance Real Estate
Limited, a company duly incorporated
under the laws of Cayman Islands
PRC or China People's Republic of China
Resolutions the shareholder resolutions
being proposed at the EGM
RMB Renmimbi, the lawful currency
of the People's Republic of
China
Shareholders a holder of Shares (or, where
Shares are held in Euroclear
or Clearstream, the persons
otherwise beneficially entitled
to such Shares) and "Shareholder"
will be construed accordingly
Shares the ordinary shares of US$0.01
each in the capital of the Company
About Pacific Alliance China Land Limited
Pacific Alliance China Land Limited ("PACL") (AIM: PACL) is a
closed-end investment company with net assets of US$296.60 million
as at 30 April 2014. PACL was admitted to trading on the AIM Market
of the London Stock Exchange in November 2007. PACL is focused on
investing in a portfolio of existing properties, new developments,
distressed projects and real estate companies in Greater China.
For more information about PACL, please visit:
www.pacl-fund.com
Pacific Alliance China Land Limited is a member of PAG (formerly
known as Pacific Alliance Group), the Asian alternative investment
fund management group. Founded in 2002, PAG is now one of the
region's largest Asia-focused alternative investment managers, with
funds under management across Private Equity, Real Estate and
Absolute Return strategies.
PAG has a presence across Asia with over 340 staff working in
the region.
For more information about PAG, please visit:
www.pagasia.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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