TIDMRSS
RNS Number : 1117H
RAB Special Situations Company Ltd
27 November 2015
27 November 2015
RAB SPECIAL SITUATIONS COMPANY LIMITED
("RSS" OR "THE COMPANY")
Notice of Extraordinary General Meeting
relating to the Continuation of the Company
RAB Special Situations Company Limited wishes to announce that a
circular dated 27 November 2015 (the "Circular") has today been
posted to shareholders of the Company to enable shareholders to
vote on the future of the Company. Included within the Circular is
a notice of an extraordinary general meeting to be held on 17
December 2015.
A copy of the Circular will shortly be available on the
Company's website at the following URL:
www.rabspecialsituations.com
Capitalised terms and expressions used in this announcement
shall have the same meanings as those attributed to them in the
Circular.
Certain extracts from the Circular are set out below.
For further information please visit www.rabspecialsituations.com
or contact:
Elysium Fund Management RAB Capital Limited Panmure Gordon
Limited No. 1 Adam Street (UK) Limited
PO Box 650 London One New Change
1(st) Floor WC2N 6LE London
Royal Chambers EC4M 9AF
St Julian's Avenue David Hince
St Peter Port Tel: +44 207 389 Richard Gray /
Guernsey 7000 Andrew Potts /
GY1 3JX Adam James
Tel: +44 207 886
Tel: +44 1481 810 100 2500
e-mail: elysium@elysiumfundman.com
......................................................................................................................................................
Expected Timetable of Events
Dispatch of the Circular 27 November 2015
Latest time and date for 10.00 a.m. on 15 December
receipt of Forms of Proxy 2015
Date and time of EGM 10.00 a.m. on 17 December
2015
Part I - Letter from the Chairman of RAB Special Situations
Company Limited
Dear Shareholder
Continuation of the Company
1 Introduction
Notice of the forthcoming EGM of the Company to be held at 10.00
am on 17 December 2015 at 1st Floor Royal Chambers, St. Julian's
Avenue, St Peter Port, Guernsey, GY1 3JX is set out at the end of
the Circular.
As first announced by the Company on 27 September 2013, and
latterly referenced in the annual report for the period ending 31
December 2014 and the interim report to 30 June 2015, the Board
believes it is appropriate to give Shareholders the opportunity to
consider the life of the Company. Accordingly at the EGM which has
been convened an ordinary resolution ("Resolution 1") will be
proposed that the Company continue as an investment company.
In the event that Resolution 1 is not passed, the Company is
proposing a further ordinary resolution ("Resolution 2") to approve
a new investing policy, which if approved will allow the Board to
realise the Company's existing investment, being 100 per cent. of
the Sterling Guernsey Share Class of the Master Fund (the "Existing
Investment"). Further details of the Company's proposed new
investing policy (the "New Investing Policy") are set out in
paragraph 3 below and in Part II.
The New Investing Policy is required because notwithstanding the
passing of Resolution 1, the Company will continue to be an
"investing company" for the purposes of the AIM Rules. Rule 8 of
the AIM Rules requires an investing company to state and to follow
an investing policy and to seek the prior consent of its
Shareholders at a general meeting for any material change to such
policy. The adoption of the New Investing Policy represents a
material change from its Current Investing Policy, and as such
requires the prior approval of Shareholders.
The Company's sole investment (other than in short dated cash or
near cash equivalent securities) is the Existing Investment. At 31
October 2015, this Sterling Guernsey Share Class accounted for
34.10 per cent. of the net assets of the Master Fund.
If Resolution 2 is approved by Shareholders, the Company will
serve notice on the Master Fund to redeem its Existing Investment
with a view to distributing the proceeds to Shareholders in due
course. Such notice is to be given for redemption of the Existing
Investment to take place on 1 July 2016 which the Board believes
should allow the Master Fund adequate time to realise a sufficient
amount of its investments in an orderly fashion for the purposes of
meeting such redemption. It should be noted that the constitution
of the Master Fund contains provisions to permit the Master Fund to
refuse or delay redemption in exceptional circumstances.
In the meantime the Board will work with its advisers on
proposals to return cash to Shareholders which may involve a
liquidation of the Company (a "Liquidation Resolution") or other
mechanisms for returning cash to Shareholders as efficiently as
possible. The proposal may also recommend a delisting of the
Company from AIM.
Shareholders should note that the Board has received email
indications from persons, from or on behalf of Shareholders,
representing approximately 48.5 per cent. of the Ordinary Shares of
the Company that they intend to vote against Resolution 1.
Furthermore, RAB Capital Holdings Limited (the holding company
of RAB Capital Limited who hold now hold the beneficial title to
the relevant shares as a result of a reorganisation of group
assets) and Philip Richards (being persons who together in
aggregate hold shares representing approximately 27.2 per cent. of
the voting rights of the issued share capital of the Company) have
indicated that they will abstain from voting on Resolution 1 and 2,
and would not vote against any subsequent Liquidation
Resolution.
2 Recommendation to vote against the continuation of the Company
as an investment company and for the adoption of the New Investing
Policy
2.1 Introduction
The Company was admitted to trading on AIM approximately ten
years ago on 31 May 2005 as a newly incorporated, Guernsey
registered, closed-ended investing company.
The investment objective of the Company is to maximise its total
return primarily through the capital appreciation of its
investments. The Company seeks to achieve its investment objective
by investing up to 100% into the Master Fund through the
acquisition of shares in the Master Fund and by investing any
remaining assets directly in a wide range of securities and other
instruments. The Company seeks to achieve maximum total returns
primarily through the capital appreciation of its investments.
On 27 September 2013, the Board announced that given the poor
performance of the Company, and in line with many other closed
ended investment companies, the Board believed that Shareholders
should be given an opportunity to vote on the future of the
Company, and would put forward proposals to shareholders at the end
of 2015 to enable Shareholders to vote on the life of the
Company.
In the 27 September 2013 announcement, the Board made the
following statement "...The Board is acutely aware that the NAV and
share price of the Company have not performed well in recent years.
The Board acknowledges that this has been a difficult period for
companies in which the Master Fund has made the majority of its
investments, principally being small and medium sized natural
resources companies..."
For the period subsequent to the 27 September 2013 announcement
and up to the date of the Circular, it has continued to be a
difficult period for the Master Fund's investments, the Company's
NAV and more generally the performance of the natural resources
sector.
As at 31 August 2013, the Master Fund's two largest investments
were Falkland Oil and Gas Limited and Royal Nickel Corporation. At
31 October 2015 they are the largest and third largest investments
respectively. For the period 31 August 2013 to 31 October 2015, the
share price performance for each of those companies was a decrease
of 55.7 per cent. and 42.7 per cent. respectively.
From 31 August 2013 to 31 October 2015, the performance of the
Sterling Guernsey share class of the Master Fund was negative in
absolute (-43.7 per cent.) and in relative terms (-8.7 per cent.
against the Bloomberg World Mining Index).
This has resulted in a drop in the NAV per Ordinary Share of the
Company of 18.52 pence to 9.42 pence for the period from 31 August
2013 to 31 October 2015. This 49.1 per cent. decrease was a
significant underperformance compared to one of its benchmark
indices (the FTSE AIM All Share Index), which decreased by 2.0 per
cent. in the equivalent period, but similar to its other benchmark
index (the FTSE AIM Basic Resources Index), which decreased by 43.7
per cent. over that period.
2.2 Board Recommendation
Following discussions with representatives of certain major
Shareholders and the Investment Manager, the Board believes that a
majority of Shareholders will resolve to vote (a) against the
continuation of the Company as an investment company; (b) for the
adoption of the New Investing Policy; and (c) will ultimately
subsequently vote in favour of a voluntary winding up of the
Company. In that regard it has prepared the financial statements as
at 31 December 2014 and 30 June 2015 on a non-going concern basis.
The current NAV calculation incorporates this basis of
accounting.
The Board has also considered the size and ongoing expenses of
the Company, and the continued performance of the Company's
Existing Investment.
(MORE TO FOLLOW) Dow Jones Newswires
November 27, 2015 02:00 ET (07:00 GMT)
Taking these matters into consideration, the Board therefore
unanimously recommends that Shareholders vote against Resolution 1
and in favour of Resolution 2.
3 New Investing Policy
The New Investing Policy, the adoption of which is conditional
upon Shareholder approval, includes:
-- The Company will not make any new investments in the Master Fund;
-- Redemption of the Company's Existing Investment on 1 July 2016; and
-- After realisation of the Company's Existing Investment
(either in whole or substantially), a return of capital to
Shareholders.
Full details of the New Investing Policy are set out in Part
II.
4 Implementation of the New Investing Policy
The Board has considered the nature of the Master Fund portfolio
and the resources needed to execute the New Investing Policy, if
adopted. The Board has also considered the Investment Manager's
detailed knowledge and status of each of the Master Fund's
investments, and the strategy to realise a sufficient amount of the
Master Fund's investments in an orderly fashion for the purposes of
meeting the redemption of the Existing Investment, together with
the Investment Manager's knowledge of the natural resources sector.
Taking all of this into consideration, the Board believes that the
Investment Manager has sufficient experience to manage the
realisation of sufficient assets of the Master Fund in order to
meet the redemption of the Existing Investment pursuant to the New
Investing Policy.
Shareholders should be aware that risks and uncertainties will
apply to the implementation of the New Investing Policy. In
particular the timing and quantum of the realisation of sufficient
of the Master Fund's investments in order to meet the Company's
redemption of its Existing Investment, and prevailing market
conditions, may result in such investments being realised at
amounts below the latest reported net asset values.
In accordance with paragraph 5.6 of the AIM Note for Investing
Companies, which forms part of the AIM Rules, where a company
admitted to trading on AIM disposes of all, or substantially all,
of its assets (which would include the redemption of the Existing
Investment), it has a period of 12 months from the date of the
disposal to implement its investing policy. If this is not
fulfilled, the Company's shares will be suspended from trading on
AIM. Accordingly, if the Company has not implemented the New
Investing Policy within 12 months of the date of realisation of the
Existing Investment, the Ordinary Shares will be suspended from
trading on AIM.
5 Expertise of the Directors in respect of the New Investing Policy
The Directors of the Company are independent non-executive
Directors and have experience in securities investment and
international fund administration.
Quentin Spicer (Chairman)
Mr Spicer joined the Board in May 2005. He qualified as a
solicitor with Wedlake Bell in 1968 and became a partner in 1970.
He moved to Guernsey in 1996 as senior partner in Spicer &
Partners Guernsey LLP (previously Wedlake Bell Guernsey),
specialising in United Kingdom property transactions for non-United
Kingdom resident entities, and was a consultant for Spicer &
Partners Guernsey LLP until 31 December 2013. He is Chairman of the
Guernsey Housing Association LBG and F&C UK Real Estate
Investments Limited, is a non-executive director of several other
funds and is a member of the Institute of Directors.
Peter Hodson
Mr Hodson joined the Board in May 2005. He qualified as a
solicitor with Hyman Isaacs Lewis & Mills (now DAC Beachcroft
LLP) in 1975 and became a partner in Masons, Hong Kong in 1985. He
is a qualified solicitor in Hong Kong and in England and Wales and
is also an accredited mediator with the Centre for Effective
Dispute Resolution ("CEDR") in London and with the Hong Kong
International Arbitration Centre. He also holds a Diploma in
Company Direction from the Institute of Directors in London. He
moved to Guernsey in 1998 with Bank of Bermuda as Head of Private
Clients, Europe and since 2002, he has operated as a personal
fiduciary, licensed by the Guernsey Financial Services Commission.
Whilst continuing to have a base in Guernsey, he is also a
consultant with Stephenson Harwood in Hong Kong, where he also has
an office. He has had 28 years' experience in fiduciary services,
including senior executive roles with MeesPierson and Standard
Chartered Bank Trustees, as well as Bank of Bermuda.
Christopher Wetherhill
Mr Wetherhill joined the Board in May 2005. He founded and was
chief executive officer of Hemisphere Management Limited (now
renamed Citi), a financial services company located in Bermuda,
from 1981 to 2000, when he chose to retire. Mr Wetherhill is a
Fellow of the Institute of Chartered Accountants in England and
Wales, a member of the Canadian and Bermudian Institutes of
Chartered Accountants, a Fellow of the Institute of Directors and a
Freeman of the City of London. He is a Bermudian resident and is a
non-executive director of investment companies of several
jurisdictions.
Nicholas Wilson
Mr Wilson joined the Board in May 2005. He has over thirty-five
years' experience in hedge funds, derivatives and global asset
management. He has run offshore branch operations for MeesPierson
Derivatives Limited, ADM Investor Services International Limited
and several other London based financial services companies. He is
chairman of Qatar Investment Fund Plc, a premium listed company. In
addition, he sits on the boards of other listed companies. He is
resident in the Isle of Man.
6 Experience of the Investment Manager in respect of the New Investing Policy
The Investment Manager is a focused, specialist asset manager
with over ten years' track record and has managed the Master Fund
since April 2005.
Regulatory Status
The Investment Manager is authorised and regulated by the
Financial Conduct Authority.
7 Independence of the Board and the Nominated Adviser
The Company confirms that the Board as a whole, and the
Nominated Adviser, are independent from the Investment Manager.
Furthermore, the Company confirms that the Board as a whole, and
the Nominated Adviser, are independent of any substantial
shareholders (as defined in the AIM Rules), or investments (and any
associated investment manager) comprising over 20 per cent. of the
gross assets of the Company.
Mr Wetherhill is a non-executive director of RAB Partners
Limited, a wholly-owned subsidiary of RAB Capital Limited, and
three other entities managed by RAB Capital Limited (RAB Special
Situations Fund Limited, the Master Fund and Redstream Fund
Limited). Mr Wetherhill is also the Chairman of the RAB Capital
Limited valuation committee, which continues to meet monthly to
ensure that the Investment Manager adheres to the valuation policy
and procedures document adopted by the Master Fund and to review
the rationale for any revaluations in the month. The Board
considers Mr Wetherhill to be independent.
8 Investment Management Agreement
The terms of the Investment Management Agreement between the
Company and the Investment Manager will remain unchanged
irrespective of the outcome of Resolution 1 and Resolution 2.
Investment Management Agreement
The Investment Manager is entitled to an investment management
fee, payable by the Company in arrears, of up to 1/12th of 2.0 per
cent. per month calculated on the NAV of the Company and from which
it may, at its discretion, pay to any person to which it has
delegated any of the functions it is permitted to delegate. Elysium
Fund Management Limited ("Elysium") calculates the investment
management fee. The Investment Manager is also entitled to
reimbursement of certain expenses incurred by it in connection with
its duties.
With effect from 1 January 2014, the Investment Manager reduced
its fees by GBP10,000 per annum.
The Investment Manager may also be entitled to a performance fee
calculated on an aggregate NAV basis in respect of any financial
year if the closing NAV for that financial year exceeds the opening
NAV for the financial year or the high water mark NAV (if higher).
In such circumstances, the performance fee equates to 20.0 per
cent. of the excess of the closing NAV for that financial year over
the opening NAV for that financial year or the high water mark NAV
(as appropriate), less the proceeds of any issues since the
beginning of the financial year or the date on which the high water
mark NAV occurred (as appropriate), plus the cost of any
repurchases since the beginning of the financial year or the date
on which the high water mark NAV occurred (as appropriate). The
adjusted high water mark at 30 June 2015 was GBP120,779,000.
Elysium calculates the performance fee, which is due to the
Investment Manager within ten business days of the end of the
financial year.
The performance fee is calculated based on the estimated NAV at
the year-end, not the actual NAV stated in the condensed statement
of financial position in the financial statements. This is due to
the performance fee being payable within ten business days of the
year-end (as per the Investment Management Agreement), before the
final basic year-end NAV becomes available. Whilst this may result
in a higher performance fee in certain periods, it is equally
likely that the performance fee may be underpaid. The performance
fee will not be amended for any overpayment or underpayment in a
period due to the use of the estimated NAV, instead of the actual
NAV. The opening NAV/high water mark of the subsequent period will
be based on the estimated year-end NAV as applied in the
performance fee calculation at the previous year-end.
(MORE TO FOLLOW) Dow Jones Newswires
November 27, 2015 02:00 ET (07:00 GMT)
The Investment Manager has discretion to waive and rebate all or
part of the performance fee payable in relation to the Company. The
Investment Manager does not receive a management or performance fee
for its role as investment manager of the Master Fund in respect of
the Company's shareholding in the Master Fund. The Investment
Management Agreement is terminable on 90 days' notice by either
party
9 Extraordinary General Meeting
The EGM will be held at 1st Floor Royal Chambers, St. Julian's
Avenue, St Peter Port, Guernsey, GY1 3JX on 17 December 2015 at
10.00 a.m. The Notice of EGM is set out at the end of the Circular
and sets out the business to be considered and the Resolution to be
proposed at the EGM.
At the EGM, an Ordinary Resolution, Resolution 1, will be
proposed that the Company should continue as an investment company.
Resolution 2 will also be proposed to adopt the New Investing
Policy. Each of Resolution 1 and Resolution 2 requires a simple
majority of votes to be cast in favour of it to be passed.
Resolution 2 can only be adopted if Resolution 1 is not passed. The
quorum for the EGM is not less than two Shareholders present in
person or by proxy.
10 Action to be taken
If Resolution 1 is passed then the Company will continue in
existence and operate under its current investing policy, and the
results of Resolution 2 will be disregarded.
If Resolution 1 is not passed, and Resolution 2 is passed, then
the Directors will work with its advisers with a view to putting
proposals to Shareholders to return cash to Shareholders, delist
from AIM and wind up the Company, following realisation of the
Existing Investment.
If both Resolution 1 and Resolution 2 are not passed, then the
Company will not serve notice on the Master Fund to redeem its
Existing Investment, and the Directors will work with its advisers
to put alternative proposals to Shareholders.
11 Documents Available
Copies of the Circular will be available to the public, free of
charge, at the Company's registered office during usual business
hours on any weekday (Saturdays, Sundays and public holidays
excepted) for one month from the date of the Circular. The Circular
will also be available on the Company's website,
www.rabspecialsituations.com.
12 Recommendation
The Directors consider that Resolution 1 is not in the best
interests of the Company and its Shareholders as a whole. The
Directors unanimously recommend that Shareholders vote against
Resolution 1, and in favour of Resolution 2, to be proposed at the
EGM as they intend to do in respect of their own beneficial
shareholdings, which in aggregate amount to 150,000 Ordinary
Shares, representing approximately 0.23 per cent. of the issued
ordinary share capital of the Company (excluding treasury
shares).
Part II - Proposed New Investing Policy
Investing Policy
Investing Strategy - Asset Allocation - geographic focus and
sector focus
The Company's sole investment (other than in short dated cash or
near cash equivalent securities) is 100 per cent. of the Sterling
Guernsey Share Class of the RAB Special Situations (Master) Fund
Limited (the "Existing Investment").
The Board will serve notice on RAB Special Situations (Master)
Fund Limited to redeem its Existing Investment on 1 July 2016.
Assets or companies in which the Company can invest
The Company will not make any new investments in RAB Special
Situations (Master) Fund Limited (the "Master Fund"). However, this
will not preclude the Board (in its absolute discretion) from
making investments in short dated cash or near cash equivalent
securities.
This will also not preclude the Board (in its absolute
discretion) from entering into any contract or other arrangement
with any third party to realise all or any part of its Existing
Investment.
Strategy by which the investing policy will be achieved
It is anticipated that RAB Capital Limited (the "Investment
Manager") will manage the realisation of sufficient assets of the
Master Fund in order to meet the redemption of the Existing
Investment in an orderly manner.
The Board may decide to appoint independent advisers to assist
in the execution of the New Investing Policy, including, but not
limited to, investment banks and stockbrokers.
Whether investments will be active or passive investments
Whilst the Investment Manager will seek to realise assets in the
Master Fund sufficient to redeem the Existing Investment, the
Investment Manager will continue to assume a proactive approach to
every investment held by the Master Fund.
The Directors will actively manage the Company's other
investments, which principally consists of cash and cash
equivalents.
Holding period for investments
The Board will exercise all legal rights of the Company in such
manner and on such timescale as the directors of the Company see
fit, with a view to ensuring that returns to Shareholders are
maximised within a reasonable timeframe.
Whilst the Directors anticipate that the Investment Manager will
seek to realise the investments in the Master Fund in order to meet
the redemption of the Existing Investment within the prescribed
timeframe, given the daily traded volumes of certain of the Master
Fund's investments, it is expected that certain of the positions
may potentially take a period of time to realise, assuming that
there is no significant change in market conditions. In addition,
for those investments held by the Master Fund that are in companies
not listed on a stock exchange, it is anticipated that the
Investment Manager will consider all available options in which to
realise such investments.
Spread of investments and maximum exposure limits
The realisation of the Company's Existing Investment will result
in the Company having a reduction in the diversification of
investments. However, the Company does not have a policy in
relation to the spread of its investments or maximum exposure
limits per investment.
Policy in relation to gearing and cross-holdings
The Board (in its absolute discretion) may make prudent use of
leverage to make investments or expenditure consistent with its
investing policy and to satisfy working capital requirements,
although it is not the Board's current intention to make use of
leverage.
Given that the Company is not making any new investments (other
than short dated cash or near cash equivalent securities), the
Company does not currently have any investments in other listed or
unlisted closed-ended investment funds.
Investing restrictions
Given that the Company is not making any new investments but
rather to realise its Existing Investment, the Company does not
have a policy on investing restrictions.
Returns and distribution policy
The Company's investment objective is to realise its Existing
Investment in a manner designed to preserve as much value as
possible for Shareholders with a view to realisation in a
reasonable timeframe.
It is currently expected that a distribution to Shareholders
will only be made after realisation of the Company's Existing
Investment.
The decision to pay any such distribution will be at the sole
discretion of the Board, and in accordance with any applicable
Guernsey solvency tests.
Other matters
Cash management
Pending a distribution to Shareholders, all of the Company's
monies (whether in the form of cash or otherwise) will be kept
under the control of the Board or as it may direct.
Currency hedging
The Company will hedge currency and interest rate risk as and to
the extent that the Board (in its absolute discretion) considers
appropriate.
Management of liabilities
The Company will endeavour, at the direction of the Board (in
its absolute discretion), to manage all actual or potential
material liabilities, risks or exposures of the Company (including,
without limitation, any existing contractual commitments, disputes
(potential or actual) and litigation (threatened or actual) in a
manner consistent with the orderly realisation of the Company's
investments.
Life of the Company
Once the Existing Investment has been realised (either in its
entirety or substantially), the Directors intend to convene an
extraordinary general meeting of the Company at which it is
expected that a special resolution will be put for the voluntary
winding up of the Company, the delisting from AIM and the
appointment of a liquidator, as well as a distribution to
Shareholders.
If this special resolution is passed the winding up of the
Company is expected to take effect immediately. The liquidator will
be appointed to oversee that the Company's remaining investments
available for distribution on a winding up are distributed to
Shareholders. The appointed liquidators will set aside sufficient
assets in a liquidation fund to meet the Company's liabilities. The
liquidators would also provide in the liquidation fund for a
retention, which they consider sufficient to meet any contingent
and unknown liabilities of the Company.
Part III - Definitions
"AIM" the AIM market operated by
the London Stock Exchange;
"AIM Note for Investing the Note for Investing Companies
Companies" as issued by the London Stock
Exchange in June 2009;
"AIM Rules" the AIM Rules for Companies;
"Articles" the Company's articles of
incorporation, as may be amended
from time to time;
"Company" RAB Special Situations Company
Limited, a closed-ended investment
company incorporated in Guernsey
with registration number 43060;
"CREST" the system for paperless settlement
of trades and the holding
of uncertificated securities
administrated through Euroclear;
"Current Investing the Company's investing policy
(MORE TO FOLLOW) Dow Jones Newswires
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