TIDMIMPT
RNS Number : 6169Q
Industrial Multi Property Trust PLC
01 December 2016
Industrial Multi Property Trust PLC
Notice of Members' Requisition of Extraordinary General
Meeting
Further to the announcement on 14 November 2016, Industrial
Multi Property Trust PLC (the "Company") announces that it is today
posting a circular (the "Circular") to Shareholders convening an
Extraordinary General Meeting to be held at the offices of FIM
Capital Limited, IOMA House, Hope Street, Douglas, Isle of Man, IM1
1AP at 11.00 a.m. on 19 January 2017.
The EGM is to allow Shareholders to vote on:
(i) the Requisitioned Resolutions proposed by Alpha Real Trust
seeking the removal of Jonathan Clague and Donald Lake from their
positions as independent directors of the Company; and
(ii) the Independent Directors' Resolution to give the Company
flexibility to sell the Company's portfolio.
The Independent Directors believe that voting AGAINST the
Requisitioned Resolutions is a vote for:
- rejecting a highly geared and risky refinancing proposal supported by Alpha Real Trust;
- maintaining a strong, independent Board who are best placed to
take key decisions free from conflicts of interest; and
- ensuring all options for a refinancing or otherwise maximising
value for Shareholders as a whole are properly considered.
The Independent Directors believe that voting FOR the
Independent Directors' Resolution is a vote for:
- ensuring that a potential sale of the Company's valuable
portfolio gets proper consideration; and
- providing the Company with flexibility to execute a sale
should the Independent Directors believe it is in the interests of
Shareholders as a whole to do so.
The letter from the Chairman, as contained in the Circular, is
set out below.
Terms used and not defined in this announcement bear the meaning
given to them in the Circular.
"Dear Shareholder
Notice of Extraordinary General Meeting
Unanimous Recommendation of the Independent Directors to
VOTE AGAINST THE REQUISITIONED RESOLUTIONS
VOTE FOR THE INDEPENT DIRECTORS' RESOLUTION
INTRODUCTION
The Company announced on 14 November 2016 that it had received
notice from Alpha Real Trust, who holds approximately 18.7 per
cent. of the share capital of the Company, requisitioning an
extraordinary general meeting of the Company to propose resolutions
to remove two of the Independent Directors (the "Requisitioned
Resolutions").
The Independent Directors believe that the proposals put forward
by Alpha Real Trust are not in the best interests of the Company
and Shareholders as a whole and unanimously recommend that you vote
AGAINST the Requisitioned Resolutions at the Extraordinary General
Meeting.
This letter provides Shareholders with details of the
Requisitioned Resolutions which the Company is required to put to
Shareholders at the Extraordinary General Meeting to be held at the
offices of FIM Capital Limited, IOMA House, Hope Street, Douglas,
Isle of Man, IM1 1AP on 19 January at 11.00 a.m.
The letter also provides Shareholders with the background to the
Independent Directors' assessment of options for a refinancing of
the Company and alternative ways to improve Shareholder value. The
Independent Directors believe that to provide the Company with
additional flexibility the Company's objectives should be amended
to permit the sale of the investment portfolio at a value which is
not less than a valuation by an independent valuer within three
months prior to any sale. An additional resolution (the
"Independent Directors' Resolution") is therefore also proposed at
the EGM.
The Independent Directors believe that having the flexibility to
sell the portfolio is in the best interests of the Company and
Shareholders as a whole and unanimously recommend that you vote FOR
the Independent Directors' Resolution at the Extraordinary General
Meeting.
WHAT ARE THE REQUISITIONED RESOLUTIONS WHICH HAVE BEEN PUT
FORWARD BY ALPHA REAL TRUST?
The notice from Alpha Real Trust dated 11 November 2016
requested an Extraordinary General Meeting to consider the
following two resolutions (the "Requisitioned Resolutions"):
- That Jonathan Clague is removed as a Director of Industrial Multi Property Trust PLC
- That Donald Lake is removed as a Director of Industrial Multi Property Trust PLC
The Board currently comprises five directors:
Jonathan Clague (Chairman)
Geoffrey Black
Donald Lake
Philip Scales
Mark Rattigan
The first four directors are considered independent and bring a
wealth of experience to the Board through being actively involved
in other listed and private property holding companies. Mark
Rattigan is not considered independent in light of his position as
Chief Operating Officer of Alpha Real Capital, the investment
adviser and manager to the Company.
Alpha Real Capital is also the investment manager of Alpha Real
Trust, the Company's largest Shareholder and the provider of an
unsecured subordinated loan facility to the Company. Mark Rattigan
has therefore not taken part in the deliberations regarding the
Extraordinary General Meeting.
The Independent Directors have been evaluating options for a
refinancing of the Company and have recently been in discussions
with representatives of Alpha Real Trust regarding refinancing
options. The Independent Directors all favoured a refinancing
structure which reduced the overall level of debt through an issue
of new Shares, providing existing Shareholders with an opportunity
to participate, and thereby enabling the Company to pay a material
and sustainable dividend. However, during such discussions it
became clear that the only option Alpha Real Trust (supported by
Alpha Real Capital) was prepared to consider was a risky, highly
leveraged debt refinancing of the Company which, if implemented,
would have led to the Company:
- Ending up with a higher level of debt than the Company has at present
- Having a debt to property valuation ratio of over 75 per cent.
- Incurring arrangement fees and other costs of well over GBP1 million
- Being liable for expensive penalties in the event of
prepayment of certain facilities for the following 18 months
- Accepting new banking covenants at higher levels than at
present and, therefore, presenting a higher risk that they could be
breached
The Independent Directors unanimously agreed that such a way
forward was not in the interests of ALL Shareholders. While they
were prepared to enter into discussions regarding other options
they are all disappointed that Alpha Real Trust decided instead to
requisition an EGM to vote on removing two of the Independent
Directors.
WHY SUPPORT THE RECOMMATION TO VOTE AGAINST THE REQUISITIONED
RESOLUTIONS?
THESE RESOLUTIONS ARE IMPORTANT AND GO TO THE HEART OF WHO RUNS
YOUR COMPANY
- Listed investment funds typically have an independent board
for very good reasons. Such a Board appoints all service providers
and takes key decisions free from any conflicts of interest.
- Alpha Real Capital is the investment manager of Industrial
Multi Property Trust and the investment manager of Alpha Real Trust
- the Company's largest Shareholder and provider of mezzanine
finance to the Company.
- Alpha Real Trust should not be dictating the removal of half
of the Independent Directors in light of such material conflicts of
interests.
THE INDEPENT DIRECTORS ARE REQUIRED TO ACT IN THE INTERESTS OF
SHAREHOLDERS TAKEN AS A WHOLE - NOT JUST ONE DOMINANT PARTY
- Since the overwhelming majority of Shareholders are private
individuals, the Independent Directors are well aware of the
importance of dividend income together with the ability of the
Company to deliver Shareholder value, not only in net asset value
terms but also in price terms.
- The Independent Directors have consistently confirmed their
objective of targeting a refinancing of the portfolio and to
continue to review alternative ways to improve Shareholder value if
a refinancing is not possible or not in the best interest of
Shareholders.
- The Independent Directors also recognise the significant
discount at which the Company's Shares trade to net asset value and
believe that decisions taken in relation to any refinancing or
other initiatives should seek to assist in further discount
narrowing.
THE COMPANY HAS A VERY IMPORTANT DECISION TO MAKE REGARDING ITS
FUTURE STRUCTURE AND STRATEGY
- The current debt facilities were put in place during the
difficult refinancing conditions of 2013. Although the facilities
run to 2018, there is now an opportunity to refinance as early
repayment penalties fall away.
- It is important that any refinancing lowers the Company's
finance costs materially, yet is also stable enough to withstand a
range of sensitivities which may occur over the medium-term.
- The Independent Directors are conscious that the Company
remains highly geared and they all believe that the level of
gearing should be reduced from the current high level to enable the
Company to pay a material and sustainable dividend.
- The Independent Directors also recognise that there are
alternative ways to deliver Shareholder value, including a sale of
the portfolio.
ALPHA REAL TRUST HAS STATED IT WISHES ANY REFINANCING TO
MAINTAIN VERY HIGH LEVELS OF DEBT
- Alpha Real Capital proposed an all debt refinancing comprising
both senior and mezzanine debt.
- This proposed refinancing structure, supported by Alpha Real
Trust, would have led to the Company's total debt being higher than
it is at present.
- The terms sheets from Alpha Real Trust's proposed providers of
finance required more onerous covenant provisions than exist at
present and risk being breached as a result of relatively small
changes in the portfolio valuation.
- While an all debt refinancing may enable the payment of a
modest dividend, the Independent Directors do not agree that a
structure is appropriate if it does not appear to be stable enough
to withstand a range of sensitivities which may occur over the
medium term and thereby putting such a dividend at risk.
- Alpha Real Trust may be happy for its investment to bear
similarities to a highly geared warrant, but the Independent
Directors do not consider such a structure suitable for
Shareholders as a whole, the majority of whom bought their Shares
for income.
THE INDEPENDENT DIRECTORS DO NOT WISH TO RULE OUT A PORTFOLIO
SALE
- The Company's portfolio has delivered strong growth over the
last few years with the most recent valuation as at 30 September
2016 reporting a value of GBP85.3 million.
- The letter from Jones Lang LaSalle on page 11 of this Circular
confirms the strength of market demand for a portfolio such as the
Company's and the likely appetite for the portfolio, should it be
marketed.
- To provide additional flexibility, the Company's objectives
are proposed to be amended to permit the sale of the investment
portfolio at a value which is not less than a valuation by an
independent valuer within three months prior to any such sale.
WHY SUPPORT THE RECOMMENDATION TO VOTE FOR THE INDEPENDENT
DIRECTORS' RESOLUTION?
THE COMPANY HAS A VERY VALUABLE PORTFOLIO
- The value of the Company's property portfolio amounted to
GBP85.3 million as at 30 September 2016 and, (adjusted for sales),
has increased by approximately 12 per cent. over the last two
years.
- The letter from Jones Lang LaSalle on page 11 of this Circular
confirms that the portfolio is likely to be attractive to a
potential acquirer.
THE OPTION TO POTENTIALLY SELL THE PORTFOLIO NEEDS TO GET PROPER
CONSIDERATION
- Only a truly independent Board can assess objectively whether
a portfolio sale is an option to be pursued and this is put at risk
through the attempt to remove half of the Independent
Directors.
- Alpha Real Capital and Alpha Real Trust (which is also managed
by Alpha Real Capital), both have a conflict of interest in
relation to considering a sale.
THE COMPANY SHOULD HAVE FLEXIBILITY TO EXECUTE A SALE SHOULD THE
INDEPENDENT DIRECTORS BELIEVE IT IS IN THE INTERESTS OF
SHAREHOLDERS TO DO SO
- Although the Company is not required to seek the approval of
Shareholders in relation to significant transactions or changes to
its objectives, the Independent Directors believe that it is good
corporate governance for Shareholders to have a vote on a potential
sale.
- Assuming Shareholders approve the Independent Directors'
Resolution the Company will have flexibility to sell the portfolio
if the Independent Directors believe it is in the interests of
Shareholders to do so.
THE INDEPENDENT DIRECTORS' RESOLUTION IS TO CHANGE THE COMPANY
OBJECTIVES AS FOLLOWS:
Objectives
Industrial Multi Property Trust plc (the "Company" or together
with its subsidiaries the "Group") was incorporated in the Isle of
Man on 10 June 2002 as a closed-ended investment company. The
Company and its subsidiaries invest in higher yielding UK
commercial property. The key objectives of the Company are:
- Increase earnings and cash flow - increase occupancy in the portfolio and reduce expenses.
- Protect and enhance asset values - prudent investment in selected portfolio properties.
- Strengthen the balance sheet - reduce bank borrowings
progressively, through rental surplus consistent with the
investment programme for the property portfolio.
The Company may sell the investment portfolio if the Board
believes it is in the interests of Shareholders to do so, provided
that the sale proceeds are higher than a valuation of the
investment portfolio by an independent valuer appointed by the
Board which is undertaken not more than three months prior to the
entry into a sale and purchase agreement.
THE INDEPENDENT DIRECTORS ARE WORKING FOR ALL SHAREHOLDERS
The Independent Directors took the initiative in August 2015
when they announced:
- An objective to return the Company to a position from which it
can resume paying a material and sustainable dividend
- A refinancing of the current capital structure would be the best way for this to be achieved
- Such refinancing could, subject to Shareholder approval,
include an issue of new equity or other financial instrument which
could materially lower the Company's financing charges
- The then Share price of 54p reflected the high gearing and
lack of dividend rather than the quality of the property
portfolio
- If a refinancing is not possible, they would consider
alternative ways to improve Shareholder value, including a sale of
the portfolio
Since 9 August 2015 (the day before the "Shareholder update"
announcement), the Company's Share price and Net Asset Value have
increased significantly:
- Adjusted NAV +25 per cent.
- Share price +317 per cent.
The Independent Directors therefore strongly reject the
Requisitioned Resolutions which, if passed, would result in half
the Independent Board being removed. The Independent Directors are
concerned about the consequences such a move may precipitate since
it is likely to result in undue influence being wielded by a
dominant Shareholder against the interests of Shareholders as a
whole.
ACTION TO BE TAKEN IN RESPECT OF THE EXTRAORDINARY GENERAL
MEETING
Set out at the end of this document is a notice convening the
Extraordinary General Meeting to be held at IOMA House, Hope
Street, Douglas, Isle of Man, IM1 1AP on 19 January at 11.00
a.m.
Shareholders will find enclosed with this document a Form of
Proxy for use in connection with the EGM. Whether or not you intend
to be present at the EGM, you are requested to complete and return
the Form of Proxy so as to reach Capita Asset Services at PXS1, The
Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as
possible and, in any event, not later than 11.00 a.m. on 17 January
2017, being 48 hours before the time appointed for the
Extraordinary General Meeting.
Completion and return of a Form of Proxy will not, however,
prevent you from attending at the Extraordinary General Meeting and
voting in person if you should wish to do so.
If you are in any doubt as to what action you should take, you
are recommended to seek your own personal financial advice from
your stockbroker, bank manager, solicitor, accountant or other
independent financial adviser authorised under the Financial
Services and Markets Act 2000 immediately, or, if outside the
United Kingdom, another appropriately authorised financial
adviser.
If you have any questions regarding the Form of Proxy please
contact Boudicca Proxy Consultants, details of which are set out
below.
RECOMMENDATION
The Independent Directors unanimously consider that the
proposals put forward by Alpha Real Trust are not in the best
interests of the Company and its Shareholders as a whole.
Accordingly, the Independent Directors unanimously recommend
Shareholders to vote AGAINST the Requisitioned Resolutions
(Resolutions 1 and 2) as they intend to do in respect of their own
beneficial Shareholdings.
Furthermore, the Independent Directors believe that having the
flexibility to sell the portfolio is in the best interests of the
Company and Shareholders as a whole, and unanimously recommend that
you vote FOR the Independent Directors' Resolution (Resolution 3)
as they intend to do in respect of their own beneficial
Shareholdings.
Yours faithfully
Jonathan Clague
Chairman"
For further information, please contact:
Philip Scales
Director, Industrial Multi Property Trust PLC
+44 (0) 1624 681250
Alastair Moreton
Financial Adviser and Broker, Stockdale Securities Limited
+44 (0) 20 7601 6118
This information is provided by RNS
The company news service from the London Stock Exchange
END
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