RNS Number : 0937D
RAB Capital plc
10 September 2008
RAB Capital plc
("RAB" or "the Company")
Proposed restructuring of the RAB Special Situations strategy
RAB Capital plc announces a restructuring proposal for two vehicles which form part of the
RAB Special Situations strategy, managed by
the Company.
The vehicles are the Cayman incorporated RAB Special Situations Fund Limited and the
Delaware incorporated RAB Special Sits LP ("the
Feeders"). The proposal seeks the commitment of investors' capital in the Feeders for a
longer term and includes reduced fees for RAB.
The background to the proposal includes a very weak market for early stage natural
resources and other development stocks, and poor
liquidity for both the companies in which the Special Situations strategy is invested and for
the Feeders themselves. In August 2008 the
Special Situations strategy fell by an estimated 22% over the month, taking the year to date
estimated reduction to 48%.
In these circumstances, RAB and the boards of the Feeders have concluded that extending
the duration of investors' commitment to the
Special Situations strategy represents the best value proposition for all investors. The
proposal would also ensure equitable treatment of
all investors and provide the strategy with the required stability to seek to retrieve value
for them. Overall RAB believes that there is
considerable potential value in the portfolio of the Special Situations strategy.
The share classes affected by the proposal currently have quarterly redemption cycles, 180
calendar day notice periods, and fees of 2%
p.a and 20% p.a. for management and performance respectively. Under the proposal the next
redemption date will be postponed by three years,
from 1 October 2008 to 3 October 2011. In consideration of the longer-term commitment of
capital, RAB will receive reduced management and
performance fees of 1% p.a. and 15% p.a. respectively.
The proposal does not affect any other single strategy managed by RAB other than the
Special Situations strategy. As at 1 September
2008 the assets under management in the Special Situations strategy were estimated to be $923
million and the total assets under management
of RAB stood at $4.7 billion.
Communications to investors in the Feeders are being sent today, and a final decision by
investors will be voted on by close of business
(Cayman time) on 29 September 2008. At the time of this announcement a number of major
investors in the strategy have indicated their
support for the proposal.
In addition to the proposal, the Feeders will also be closing the affected share classes
to new investment. In May 2008, the Feeders
opened new three-year lock up share classes, which will become the only access to the strategy
for new investors.
The overall effect will be that while reducing fees for RAB, the proposals will ensure the
long-term stability of the strategy so as to
provide a better prospect for the generation of value in the underlying investments and better
provide for the equitable treatment of all
investors.
In the event that the proposal to change the terms of the Feeders is not agreed by
investors and having regard to the above liquidity
issues, the boards of the Feeders, in consultation with RAB, have concluded that proposing a
liquidation of the Feeders would be the only
course of action resulting in an equitable treatment for all investors. This second proposal
would only be considered if the first proposal
to extend investors' commitment is not accepted.
Philip Richards, co-founder of RAB and lead manager of the RAB Special Situations strategy
said:
"We are very disappointed with the performance of Special Situations in 2008 and greatly
regret the impact that the performance will
have on investors. However, we believe that the underlying thesis of investment in early
stage natural resources is one that will repay
patient investors over time."
Stephen Couttie, Chief Executive designate said:
"We think that the proposal put to investors in the Feeders represents the best way to
secure value from their investments over the
longer term as well as achieving the most equitable result for all investors in the Special
Situations strategy."
Enquiries:
RAB Capital plc
Marc Popiolek 020 7389 7116
Tulchan Communications
David Trenchard/Andrew Honnor 020 7353 4200
Nominated Advisor: KBC Peel Hunt 020 7418 8900
Jonathan Marren
This information is provided by RNS
The company news service from the London Stock Exchange
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