TIDMSQB
RNS Number : 4863T
Squarestone Brasil Limited
07 December 2011
7 December 2011
SQUARESTONE BRASIL LIMITED
("Squarestone Brasil", the "Company" or "the Group")
Proposed cancellation of trading on AIM
Notice of Extraordinary General Meeting
and
Notice of Meeting of Warrant Holders
The Company today announces that it intends to apply to cancel
the trading of its Shares and Warrants on AIM. Accordingly, the
Board is proposing to convene an Extraordinary General Meeting and
a Meeting of Warrant Holders to put to Shareholders a special
resolution and to put to Warrant Holders an extraordinary
resolution to cancel admission of the Company's Shares and Warrants
to trading on AIM respectively.
Pursuant to the AIM Rules for Companies, the Cancellation of
each of the Shares and Warrants is conditional upon, (i) the
approval of not less than 75 per cent. of the votes cast by
Shareholders (whether present in person or by proxy) at the
Extraordinary General Meeting; and (ii) the approval of not less
than 75 per cent. of the votes cast by Warrant Holders (whether
present in person or by proxy) at the Meeting of Warrant
Holders.
In the event that Shareholders and Warrant Holders each approve
the Cancellation, it is anticipated that the last day of dealings
in the Shares and Warrants will be 13 January 2012 and that the
effective date of the Cancellation will be 16 January 2012.
BACKGROUND TO AND REASONS FOR THE CANCELLATION
The Company will have to raise further funds to continue to take
advantage of the opportunities in the Brazilian shopping mall
market. The outlook for raising new equity funding for the
foreseeable future through the AIM market remains extremely bleak,
given continuing concerns over the European sovereign debt crisis
and uncertain global macroeconomic conditions. This removes one of
the key attractions for maintaining a quotation on AIM.
Conversely, through the marketing activities undertaken by the
Company, it is clear that private equity investors remain focused
on the Brazilian market and, in particular, the retail sector.
However, it is clear that major private equity investors are not
interested in investing in public equities (such as the Shares),
but wish to make direct investments into Brazil at the underlying
asset level. The Company's public quotation on AIM has therefore
proved to have little practical value for many potential investors
approached by the Company and has been a hindrance.
The Board believes that the medium term outlook for Brazil and,
in particular, the retail sector within the country, remains
positive. With a population of 194 million people, an
under-provision of retail facilities and a rapidly growing middle
class, with disposable income and an appetite for consumer goods,
the Board is confident that growth in the retail sector will
continue. This is underlined by The Westfield Group's recent
announcement about entering the Brazilian shopping mall market and
many other overseas investors are seeking to do likewise. The Board
believes that good value remains to be realised from the Golden
Square Mall Project, as the project gets closer to opening and as
the project is thereby de-risked. The Board also believes that
there is value in the Company's development and operating
platform.
The Company will require additional operational working capital
and the Company will be seeking the support of its existing
Shareholders in the short-term. The Board feels that, taking into
account the apparent lack of value attributed to the AIM quotation,
and the size and revenues of the Company, the ongoing costs and
regulatory requirements of a quotation on AIM can no longer be
justified, and that greater Shareholder value will ultimately be
derived by operating the Company's business without this burden. In
addition, as noted above, the Board believes that the Cancellation
will provide the Company with greater flexibility to seek private
equity investment in the short to medium term.
The Board has accordingly concluded that it is in the best
interests of Shareholders and Warrant Holders as a whole that the
Cancellation be approved.
CANCELLATION
The Company has applied to the London Stock Exchange pursuant to
Rule 41 of the AIM Rules for Companies for the Cancellation and it
is expected that, subject to the approval of Shareholders at the
Extraordinary General Meeting and Warrant Holders at the Meeting of
Warrant Holders, the Cancellation will become effective on 16
January 2012. It is not the intention of the Company to support any
off-market or matched bargain facilities in the Shares or the
Warrants although certain stockbrokers or market intermediaries may
be able to offer such services to Shareholders and Warrant
Holders.
If the resolution to cancel the trading of the Shares is passed
but the resolution to cancel the trading of the Warrants is not
passed, it is likely that the Company's nominated adviser would
consider that the Warrants were no longer appropriate for trading
on AIM (as the underlying Shares were no longer admitted to trading
on AIM) and accordingly would resign on the cancellation of the
trading of the Shares. In such circumstances, pursuant to the AIM
Rules for Companies, trading in the Warrants would be suspended
with cancellation of admission occurring one month later if a
replacement nominated adviser had not been appointed in the
meantime.
If the Cancellation becomes effective, it is the intention of
the Board to maintain the Company's CREST facility post-delisting,
at least for an interim period. Following the Cancellation becoming
effective Shareholders and Warrant Holders will, therefore, be able
to maintain their holdings of Shares and Warrants via the
facilities of the CREST system. The Company may canvas the views of
Shareholders and Warrant Holders following the Cancellation to see
if the CREST facility can be cancelled in order to further reduce
the overhead expenses of the Company.
PRINCIPAL EFFECTS OF THE CANCELLATION
The principal effects of the Cancellation, should it be approved
by Shareholders and Warrant Holders, would include (amongst
others):
-- there would be no public stock market on which Shareholders
and Warrant Holders can trade their Shares or Warrants and the
liquidity of the Shares and Warrants will therefore become very
limited;
-- no price would be publicly quoted for the Shares or Warrants;
-- the Company will no longer be subject to the AIM Rules for
Companies after the Cancellation and, accordingly, it will not
(amongst other things) be required to retain a nominated adviser or
to comply with the requirements of AIM in relation to annual
accounts, half yearly reports and the disclosure of price sensitive
information; and
-- the Company will no longer be required to comply with the
rules and corporate governance requirements to which companies
admitted to trading on AIM are subject.
TAKEOVER CODE
Following the Cancellation, the Company will remain subject to
the Takeover Code for a period of ten years on the basis that the
Company's place of central management and control remains in the
UK, the Channel Islands or the Isle of Man. However, if at any time
during that period the Takeover Panel determines that the Company's
place of central management and control is no longer in the UK, the
Channel Islands or the Isle of Man, the Takeover Code would cease
to apply to the Company, and the Company's minority shareholders
would no longer benefit from the protections afforded to them by
the Takeover Code.
AMENDMENT TO WARRANT TERMS
The Company is also taking the opportunity of the Meeting of
Warrant Holders to propose a variation to the terms of the
Warrants. Under the proposed amendment, the period during which the
Warrants can be exercised will be amended with the effect that the
subscription period will expire on the later of, (i) the date being
180 calendar days after the "Project Completion Date", and (ii) 12
April 2013.
The "Project Completion Date" shall mean the date on which, (i)
the construction of the Golden Square Mall Project shall have
achieved substantial completion, as evidenced by the receipt of all
permits required for tenants to occupy and use the space in the
project, and all work to be performed under the construction
contract shall have been satisfied, subject only to punch-list
items and (ii) retail stores representing eighty per cent. (80%) of
the gross leasable area of the project have commenced the payment
of monthly rent under binding leases, which in the aggregate
constitute eighty per cent. (80%) of the projected monthly gross
rental income for the project.
Due to the potential delay in the completion date of the Golden
Square Mall Project as a result of the structural failure of part
of the pre-cast concrete frame, as announced by the Company on the
31 October 2011, it is proposed to extend the subscription period
for the Warrants so that Warrant Holders will have the potential
opportunity to realise value on their Warrants following the
completion of the Golden Square Mall Project.
The amendment of the terms of the Warrants may only be effected
by way of an extraordinary resolution of Warrant Holders.
Resolution 2 to be proposed at the Meeting of Warrant Holders will
implement the changes to the terms of the Warrants outlined
above.
A copy of the amended warrant instrument showing these proposed
changes is available for inspection on the Investor Relations
section of the Company's website at www.squarestone.com.br.
EXTRAORDINARY GENERAL MEETING AND MEETING OF WARRANT HOLDERS
An Extraordinary General Meeting of Shareholders is being
convened for 11.00 a.m. on 6 January 2012 to be held at 1(st)
Floor, Royal Chambers, St. Julian's Avenue, St. Peter Port,
Guernsey GY1 3JX at which a special resolution to approve the
cancellation of admission of the Shares to AIM, will be
proposed.
A Meeting of Warrant Holders is being convened for 11.10 a.m. on
6 January 2012, or as soon thereafter as the Extraordinary General
Meeting shall have concluded, to be held at 1(st) Floor, Royal
Chambers, St. Julian's Avenue, St. Peter Port, Guernsey GY1 3JX at
which an extraordinary resolution to approve, (i) the cancellation
of admission of the Warrants to AIM, and (ii) the amendment to the
terms of the Warrants (as summarised in the document), will be
proposed.
All capitalised terms are as defined in the circular.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
The following dates and times are indicative and may be subject
to change:
Dispatch of this document, the notice of 7 December 2011
Extraordinary General Meeting and the Forms
of Proxy
Latest time and date for the receipt of 11.00 a.m. on 4 January
EGM Forms of Proxy 2012
Latest time and date for the receipt of 11.10 a.m. on 4 January
Warrant Holder Meeting Forms of Proxy 2012
Time and date of Extraordinary General 11.00 a.m. on 6 January
Meeting 2012
Time and date of Meeting of Warrant Holders 11.10 a.m. on 6 January
2012 (or as soon thereafter
as the Extraordinary General
Meeting shall have concluded)
Expected last day of dealing in the Shares 13 January 2012
and Warrants
Expected date of cancellation of the Shares 7.00 a.m. on 16 January
and Warrants from trading on AIM 2012
For further information contact:
Squarestone Brasil Tel: +44 (0) 20 7074 1800
Robert Sloss, interim Joint CEO Email: squarestone@kreabgavinanderson.com
Tim Barlow, interim Joint CEO
Liberum Capital (Nominated Adviser Tel: +44 (0) 20 3100 2000
and Broker)
Chris Bowman
Christopher Britton
Kreab Gavin Anderson (PR Adviser) Tel: +44 (0) 20 7074 1800
James Benjamin Email: squarestone@kreabgavinanderson.com
Natalie Biasin
This information is provided by RNS
The company news service from the London Stock Exchange
END
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