TLI Alt. AO. Prfnpv

 
TIDMTLI 
 
Alternative Asset Opportunities PCC Limited 
 
17 June 2009 
 
Trading and corporate update 
 
The Company has recently been notified of a policy maturity. The benefit of 
this, which is expected to amount to approximately 1.1 pence per share, will be 
included in the Company's NAV as at 30 June 2009. 
 
The Company's interim management statement, announced on 19 May 2009, 
highlighted the fact that the Board, together with the Company's professional 
advisers, has been informed of recent US Internal Revenue Service Revenue 
Ruling 2009-14 (the "IRS Ruling") which could potentially have an adverse 
impact on the Company. 
 
The Company has been advised that the effect of the IRS Ruling is that death 
benefits arising from US term life insurance policies purchased by non-US 
persons in the secondary market will be treated by the US Internal Revenue 
Service as US source income. In the event that the predominantly universal life 
insurance policies held in the Company's portfolio are deemed to be treated 
similarly to term life insurance policies, a US withholding tax of 30% may be 
levied by the IRS on any death benefits arising on future portfolio maturities 
which are remitted to the Company. 
 
The Board has been exploring with its advisers whether it is possible to 
mitigate the impact of any potential US withholding taxes on future payments to 
the Company of death benefits, in particular, by taking advantage of the 
relevant double tax treaty between the UK and the United States. The Board has 
concluded that, subject to appropriate tax and regulatory clearances, it will 
benefit the Company if it becomes UK tax resident and becomes classified as a 
UK investment trust in order to avail itself of such treaty protection. 
 
Assuming shareholders agree to this course of action, once the Company has 
become resident in the UK for tax purposes and the requirements under the UK-US 
double tax treaty are fulfilled, the Company would be able to avail itself of 
treaty relief under the UK-US double tax treaty. Treaty relief would then 
enable the maturity proceeds of the policies to be remitted to the Company 
without the imposition of any US withholding tax. 
 
It is not clear, and could be subject to legal challenge, whether the IRS 
Ruling would, in practice, be applied retrospectively to any death benefits 
previously remitted to non-US persons. In the event that any such retrospective 
tax charge were sought to be levied on the Company, the potential liability 
could be in the region of $3.3 million or 5.1p per share (excluding any 
penalties and interest which could be applied by the IRS). 
 
The Company's UK tax accounting period would commence on the date the Company 
becomes UK resident. As part of the proposals, the Board intends to change the 
Company's accounting reference date to ensure that the commencement of the 
Company's UK tax accounting period is aligned with a financial accounting 
period. It is therefore currently proposed that the Company's accounting 
reference date be changed to 31 August in the current year, reverting to 30 
June thereafter. As a result, the current financial accounting period will be 
the 14 months ending 31 August 2009, to be followed by a 10 month financial 
accounting period ending 30 June 2010. 
 
Separately, the Board is seeking shareholders' views as to the appropriateness 
of the existing provisions in the articles of association of the Company 
regarding future share redemptions and the life of the Company. 
 
Further details of the proposals, once finalised, will be set out in a circular 
to shareholders of the Company which is currently expected to be published in 
July 2009. 
 
Enquiries: 
 
Sharon Wrench Tel: 01481 752 591 
 
Kleinwort Benson (Channel Islands) Fund Services Limited 
 
 
 
END 
 

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