Pershing Square Hldg Pershing Square Holdings, Ltd. Provides Update Regarding Potential Dutch Tender Offer for PSH Shares by ...
January 18 2018 - 2:00AM
UK Regulatory
TIDMPSH
Further to the announcements on 3 January and 4 January 2018
(the "Potential Tender Offer Announcements"), the Board of
Directors of Pershing Square Holdings, Ltd. (the "Company" or
"PSH") (LN:PSH) (NA:PSH) announces that PSCM Acquisition Company
LLC ("PSCMAC") has agreed to increase the price range for its
potential Dutch tender offer (the "Potential Tender Offer") for up
to $300 million of the Company's public shares (the "Public
Shares") from a 24% to 16% discount to net asset value ("NAV") to a
revised range of a 16% to 10% discount to NAV. The revised range,
which represents an 8.1% to 15.8% premium to the average 22.3%
discount to NAV at which PSH traded for the 120 calendar days prior
to the announcement of the Potential Tender Offer, has been agreed
to after discussions between the Board of PSH and PSCMAC.
In addition, the Board proposes to give holders of the Public
Shares ("Shareholders") an opportunity to vote on the removal of
the restriction in the Company's articles of incorporation that no
person may own Public Shares in excess of 4.99% of the value of the
Public Shares (the "Ownership Limit") at its forthcoming annual
general meeting scheduled to be held on 24 April 2018 (the "AGM").
The Ownership Limit is in place because of tax issues relating to
the United States Real Property Holding Company ("USRPHC") rules
under the Foreign Investment in Real Property Tax Act ("FIRPTA")
provisions of the US Internal Revenue Code.
If Shareholders vote to remove the Ownership Limit, PSH will no
longer invest in the common and preferred stocks of USRPHCs without
potentially incurring adverse tax consequences, but will still be
able to obtain economic exposure to USRPHCs by investing in swaps
and similar instruments, which do not have voting rights. Removal
of the Ownership Limit will provide the Company with more
flexibility to return capital to Shareholders as there would no
longer be any limitation on any resulting increase in the
percentage holding of any individual Shareholder exceeding 4.99% of
the Public Shares in issue. The vote to remove the Ownership Limit
will be put as a special resolution at the AGM. Further details
regarding the vote to remove the Ownership Limit will be set out in
the documents accompanying the notice of the AGM.
The Board and its independent financial advisers believe that
the amendment to the price range of the Potential Tender Offer and
the opportunity to vote on the Ownership Limit are in the best
interests of all PSH Shareholders. The Board is supportive of the
Potential Tender Offer as: (1) it gives Shareholders who wish to
sell their Public Shares the option to do so at a narrower discount
to NAV than the discount at which the Public Shares have traded
over the last six months, (2) it preserves the ability of the
Company to recommence its buyback programme after the Potential
Tender Offer is completed, and (3) it represents a substantial
additional investment in the Company by affiliates of Pershing
Square Capital Management, L.P. (the "Investment Manager").
However, the Board will make no recommendation as to whether
individual holders of the Public Shares should participate in the
Potential Tender Offer.
Following feedback and questions from Shareholders, the Board of
PSH also wishes to issue the clarifying comments below:
Buyback Programme : On 2 January 2018, PSH announced it was
suspending its Public Share buyback programme with immediate effect
until the conclusion of the Potential Tender Offer. Following
completion of the Potential Tender Offer, the Company intends to
recommence its Public Share buyback programme. Between 2 May 2017
and 12 January 2018, the Company invested $77.2 million to purchase
5,474,173 Public Shares at an average discount of 20.1% per Public
Share, and has remaining capacity under the current buyback
programme to purchase an additional 6,525,827 (2.78%) of the Public
Shares remaining in issue. The Company will seek shareholder
approval to renew the programme at the AGM.
Other Corporate Actions : The Board and its independent advisers
have undertaken a detailed review of the discount management
options available to the Company following feedback from
Shareholders. Whilst the Board of PSH is committed to addressing
the discount to NAV at which the Public Shares currently trade, it
is mindful of the following factors which are particular to the
Company's investment strategy and current capital structure:
- a tender offer by the Company would require the Company to
announce the sale of portfolio positions, which, in a concentrated
portfolio are small in number and well-publicised, potentially
leading to a further decline in NAV. It could also have a negative
impact on the ability of the Investment Manager to execute its
investment strategy as a result of the premature reduction in the
percentage ownership interests in certain of its portfolio
companies.
- a return of a significant percentage of capital by the Company
would result in an increase in PSH's leverage as a result of the
Company's outstanding bonds and could be viewed negatively by the
bond market and rating agencies. The Board believes there is a
value in maintaining an investment grade rating, and a downgrade
could have a negative impact on the Public Share price.
- whilst a tender offer by the Company to purchase Public Shares
at a discount to NAV would be accretive to NAV, the Directors
believe the benefit of any NAV accretion, particularly at the
discount range of the current Potential Tender Offer, could be
offset by the decline in NAV or price of the Public Shares due to
the considerations above.
Howard Hughes : As announced on 3 January 2018, the Company has
sold its common stock in The Howard Hughes Corporation ("HHC")
(NYSE: HHC). However, PSH retains a 10.3% economic exposure to HHC
through the ownership of total return swaps. In addition, Bill
Ackman is Chairman of the board of directors of HHC. As such, the
Company has retained its economic exposure to Howard Hughes and the
ability to influence the company's strategy and management.
Exemption to Ownership Limit : Unless and until shareholders
have approved a waiver for all holders, the Board will grant an
exemption from the Ownership Limit to any Shareholder who is able
to give the necessary representations and undertakings. PSCMAC and
its members have agreed to give the Company an undertaking that if
PSH provides notice that it intends to invest in the equity of a
USRPHC, PSCMAC and its members will dispose of any interests they
may hold in such USRPHC, or reduce their aggregate ownership of PSH
to below 5%. This would remove any potential adverse impact on the
Company otherwise arising from the Ownership Limit being
exceeded.
Further announcements regarding the launch of the Potential
Tender Offer, which is subject to the receipt of relevant
regulatory permissions, will be made by PSCMAC as soon as
possible.
About Pershing Square Holdings, Ltd.
Pershing Square Holdings, Ltd. (LN:PSH) (NA:PSH) is an
investment holding company structured as a closed ended fund that
makes concentrated investments principally in North American
companies.
This is a press release by Pershing Square Holdings, Ltd
pursuant to the provisions of Section 17 paragraph 1 of the Market
Abuse Regulation and Section 4 paragraph 2 of the Decree on Public
Takeover Bids (Besluit Openbare Biedingen Wft) in connection with a
potential tender offer by PSCMAC for PSH public shares. This
announcement does not constitute an offer, or any solicitation of
any offer, to buy or subscribe for any securities. Any offer will
be made only by means of an offer memorandum. This announcement is
not for release, publication or distribution, in whole or in part,
in or into, directly or indirectly, the United States, Canada or
Japan or in any other jurisdiction in which such release,
publication or distribution would be unlawful.
MEDIAMaitland Seda Ambartsumian, +44 20 7379 5151
Media-pershingsquareholdings@maitland.co.uk
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