RNS Number : 2417U
JZ Equity Partners PLC
12 May 2008
Not for release in the United States. This information is not for publication or distribution to persons in the United States of
America.
JZ Equity Partners plc
12 May 2008
Recommended proposals for the voluntary winding-up of JZ Equity Partners Plc (the "Company") and the roll-over of shareholders'
interests into a new Guernsey incorporated company, JZ Capital Partners Limited
Introduction
The board has been considering the merits of a change in domicile of the Company for some time. As announced on 21 April 2008, the board
has now concluded that it would be in the best interests of shareholders as a whole if the Company were to be re-domiciled in Guernsey.
The Company has today published a circular (the "Circular") to provide details of the proposals that the Company be so re-domiciled (the
"Proposals") and of the mechanics proposed to effect such re-domicile, and to seek shareholder approval for the implementation of the
Proposals. Terms used in this announcement shall have the same meaning as those set out in the Circular.
The mechanics proposed to effect the re-domicile of the Company involve, in summary, the winding up of the Company and the transfer of
its assets, after providing for its liabilities, to JZ Capital Partners Limited ("New JZEP") pursuant to a scheme under section 110 of the
Insolvency Act 1986 (the "Scheme"), the newly-formed Guernsey-incorporated closed-ended investment company which will be the successor to
the Company if the Proposals are approved and implemented. JZ Capital Partners Limited has today published a prospectus in respect of the
proposals. The shareholders of the Company at the date that the Scheme becomes effective (other than those, if any, who validly dissent from
the Scheme) will receive one new JZEP ordinary share for each existing ordinary share that they hold and one New JZEP zero dividend
preference share ("New ZDP Share") for each existing ZDP share that they hold, which shares will be admitted to the Official List and to
trading on the London Stock Exchange's main market for listed securities.
In order to assist the Company to comply with US securities laws in connection with the Scheme, it is proposed that, as a preliminary
matter, the articles of association of the Company be, amended to provide that only shareholders who make certain representations to the
Company will be entitled to vote at the second extraordinary general meeting or the third extraordinary general meeting convened in
connection with the Proposals. In addition, all shareholders have been sent with the Circular a questionnaire issued under article 43.4 of
the Company's articles of association. All shareholders, whether or not they are US Persons, are required to read this questionnaire and
complete and return the same in accordance with the instructions printed thereon by no later than 28 May 2008. Whether or not the Scheme
proceeds, the directors intend to exercise their right under article 43.5 of the Company's articles of association to direct any shareholder
who completes the questionnaire indicating that he or she is a US Person but not a qualified purchaser to dispose of the shares held by that shareholder and, in default of the shareholder complying
with such direction, to arrange for the sale, in the market, of the shares concerned. Where a shareholder does not complete and return the
questionnaire in accordance with the instructions printed thereon by 28 May 2008 (or such later date as the directors may allow in
individual cases), if the board has not been able to conclude, reasonably, that the shareholder is not a US Person and the shareholder
appears to the board not to be a qualified purchaser, then, again, whether or not the Scheme proceeds, the directors intend to direct the
shareholder to dispose of the shares held by him or her and, in default of the shareholder complying with such direction, to arrange for the
sale, in the market, of the shares concerned.
Implementation of the Proposals is conditional, inter alia, upon the passing of various shareholder resolutions. To this end,
extraordinary general meetings of the Company to approve the Proposals and to implement the same are being convened for 16 June 2008 and 26
June 2008. Implementation of the Proposals will also require the separate approval of the holders of the ZDP shares and the ordinary shares,
in each case given by way of an extraordinary resolution passed at a separate class meeting of the holders of such shares. Accordingly,
class meetings of the holders of the ZDP shares and the holders of the ordinary shares are also being convened for 16 June 2008.
Background
The Company is resident in the United Kingdom for tax purposes and has historically been approved as an investment trust under the
Income and Corporation Taxes Act 1988. UK companies which qualify for tax purposes as investment trusts are exempt from UK corporation tax
on realised capital gains. However, the Company is liable to UK taxation on the revenue profits it receives at the rate of 28 per cent. per
annum (reduced from 30 per cent. per annum with effect from 1 April 2008). This tax charge therefore makes a significant and recurring
impact on distributable revenues and hence reduces ordinary shareholder returns.
Furthermore, the Company has the burden of complying with certain restrictions in order to maintain its status as an investment trust
under the Income and Corporation Taxes Act 1988.
The board is thus of the view that, were the Company being established today, it would serve shareholders' interests best if the Company
were to be incorporated off-shore from the United Kingdom. The Proposals seek to achieve a similar result.
New JZEP will have the same corporate objective as that of the Company, namely to create a portfolio of investments in businesses
primarily in the United States, providing a superior overall return comprised of a current yield and significant capital appreciation.
Benefits of the Proposals
Unlike the Company, New JZEP will not be subject to UK corporation tax. This should have the benefit of increasing significantly net
distributable income, thereby enhancing total returns.
In addition, New JZEP will not have to provide for tax in respect of accrued preference share income. The Company is currently required
to provide for such tax, with the provision only being released if the entitlement to accrued income is sold with the underlying share
rather than realised as income; if the accrued income is received by the Company as income, the tax becomes payable. Thus the deferred tax
provision reserved in the accounts of the Company (estimated by the board to be £820,045 as at 31 March 2008) will not be carried forward
into the accounts of New JZEP and New JZEP will not be obliged to continue to make such a provision.
The Company's total net tax charge for the year ended 31 March 2007 was some £4.07 million (2006: £5.81 million), representing 4.17p
per ordinary share (2006: 5.62p per ordinary share). For the six month period ended 30 September 2007, it was some £1.44 million,
representing 1.47p per ordinary share. Of the amount for the year ended 31 March 2007, some £3.96 million (2006: £5.43 million) was UK
corporation tax which would not have been payable had the Company been incorporated and resident offshore. The balance, some £111,000
(2006: £177,000), represents irrecoverable taxes deducted at source on income received from companies in the Company's investment
portfolio. The effective emigration of the Company to Guernsey is expected to result in an increase in such irrecoverable taxes (to double
the current level of withholdings), but this is not considered by the directors to be substantial in the context of the saving in UK
corporation tax.
Accordingly, the board estimates that the net saving in tax, had the Company been incorporated and resident in Guernsey for the year
ended 31 March 2007 would have been some £3.85 million (2006: £5.26 million), representing 3.95p per ordinary share (2006: 5.39p per
ordinary share), which would have resulted in a 27.19 per cent. increase in the Company's net income available for distribution to holders
of ordinary shares (2006: 39.01 per cent.).
The board of New JZEP has stated that it expects to continue the Company's policy of distributing substantially all of the net income
(excluding capital gains) of the Company (after payment of expenses and taxation). As shown above, the net saving in tax as a result of the
effective emigration of the Company to Guernsey is expected to be substantial.
It is expected that the annual running costs of New JZEP will not be greater than those for the Company.
Impact of the Proposals on shareholders
If the Proposals are approved and implemented, the Company's assets will be transferred to New JZEP and the shareholders of the Company
at the date that the Scheme becomes effective (other than those, if any, who validly dissent from the Scheme) will receive one new ordinary
share in New JZEP for each existing ordinary share in the Company that they hold and one new ZDP share in New JZEP for each existing ZDP
share in the Company that they hold.
The board has been advised that shareholders who are resident for tax purposes in the United Kingdom and who own five per cent. or less
of the issued ordinary shares and/or ZDP shares should be able to roll-over their investment in the Company into New Ordinary Shares and New
ZDP shares, free from tax. This exemption will not apply to shareholders who are resident for tax purposes in the United Kingdom but who own
more than five per cent. of the issued ordinary shares and/or ZDP shares (that is, more than 4,876,441 ordinary shares and/or 2,285,000 ZDP
shares). Your board has also been advised that all shareholders who are resident for tax purposes in the United States should be able to
roll-over their investment in the Company into New Ordinary Shares and New ZDP shares, free from tax.
Ordinary shareholders would, in the future, receive dividends from New JZEP. In the case of some holders of ordinary shares who are
resident for tax purposes in the United Kingdom, such dividends will be subject to a higher rate of tax than is currently payable on
dividends received from the Company. Holders of ordinary shares who are resident for tax purposes in the United States would be unaffected.
Notwithstanding the increase in tax that will be payable by some UK residents, your board believes that, taking ordinary shareholders as a
whole, the expected increase in dividends available for distribution to holders of New Ordinary Shares by New JZEP will more than compensate
for the increase in tax payable.
The rights attaching to the New Ordinary Shares and the New ZDP Shares will, in economic terms, be substantially the same as,
respectively, those attaching to the existing ordinary shares and ZDP shares.
Summary of the Scheme
In order to give effect to the Proposals, your approval is sought to implement a scheme of reconstruction whereby the Company will be
placed into members' voluntary liquidation. Following the Company entering members' voluntary liquidation, the Company's investments and
other assets, after providing for its liabilities (including contingent liabilities and the costs incurred by the Company in relation to the
Proposals), will be transferred by the liquidators to New JZEP.
As stated above, the shareholders of the Company at the date that the Scheme becomes effective (other than those, if any, who validly
dissent from the Scheme) will then receive one New Ordinary Share for each existing ordinary share that they hold and one New ZDP share for
each existing ZDP share that they hold. These New JZEP Shares will be listed on the Official List and admitted to trading on the main market
of the London Stock Exchange, in the same way that the existing JZEP shares are currently listed and admitted to trading.
JZEP will be placed into members' voluntary liquidation on the passing of the first special resolution to be proposed at the third
extraordinary general meeting, if all of the resolutions to be proposed at the first extraordinary general meeting, at the class meetings of
the holders of the ZDP shares and the ordinary shares and at the second extraordinary general meeting have been passed and the directors
have not exercised their right not to proceed with the Scheme prior to the third extraordinary general meeting. The Scheme will become
effective on completion of the Transfer Agreement, pursuant to which the Company's assets (other than the Liquidation Fund which will be
used to meet anticipated liabilities of the Company) will be transferred to New JZEP upon the admission of the New JZEP Shares issued
pursuant to the Scheme to the Official List and to trading on the London Stock Exchange and such admissions becoming effective.
The New JZEP Shares
The New Ordinary Shares and the New ZDP Shares will have substantially the same rights and be subject to substantially the same
restrictions as, respectively, the existing ordinary shares and the existing ZDP shares save that (a) for the reasons given under "US
securities laws issues" below, the New ZDP Shares will carry the right to vote on resolutions concerning the appointment and removal of
directors and (b) at the expiry of the term of the New ZDP Shares (24 June 2009), New JZEP will be under an obligation to redeem the New ZDP
Shares rather than to return the capital value of such shares by putting New JZEP into liquidation or by any other means; only if for some
unforeseen reason it should not be possible to redeem the New ZDP Shares would New JZEP be wound up. No shareholder approval will be
necessary to effect the redemption of the New ZDP Shares. Your board has been advised that the redemption of the New ZDP Shares (rather than
the repayment of the same on a winding up of New JZEP) should be tax neutral for UK resident and US resident holders of the existing ZDP shares.
Unless a shareholder elects otherwise, dividends will be paid by New JZEP in US dollars rather than in sterling. The redemption monies
in respect of the New ZDP Shares will, however, be paid in sterling.
Special dividends
In order to maintain the Company's investment trust status should the Scheme become effective, your directors intend to declare:
* a special interim dividend (in lieu of a final dividend in respect of the year ended 31 March 2008), of 8.5p per ordinary share;
and
* a further special interim dividend in respect of the financial period of the Company which commenced on 1 April 2008 and will
expire on the Company entering members' voluntary liquidation, expected to be not less than 2.5p per ordinary share,
in each case to be paid on 20 June 2008 to those holders of ordinary shares on the register of members of the Company at the close of
business on 6 June 2008. The ex-dividend date will be 4 June 2008. A further announcement as regards the final figure for the further
special dividend will be made in due course.
The board of New JZEP has stated that it expects to continue the Company's policy of distributing substantially all of the net income
(excluding capital gains) of New JZEP (after payment of expenses and taxation). As stated under "Benefits of the Proposals" above, the net
saving in tax as a result of the effective emigration of the Company to Guernsey is expected to be substantial.
Arrangements with Jordan/Zalaznick Advisers, Inc.
If the Scheme becomes unconditional, the existing investment advisory agreement made between the Company and Jordan/Zalaznick Advisers,
Inc. will thereupon terminate. In full and final satisfaction of the incentive fee payable by the Company to JZAI under such agreement, the
Company will pay US$4.92 million (£2.52 million when translated at the exchange rate prevailing on 8 May 2008) to JZAI forthwith upon the
Scheme becoming effective. This amount has been calculated in accordance with the principles regarding the incentive fee payable by the
Company pursuant to the existing investment advisory agreement and equates to 20 per cent. of the net capital gains realised by the Company
to date in respect of those investments to which the incentive fee arrangements relate, grossed up for the tax benefit to the Company as a
result of the deductibility, for tax purposes, of the incentive fee.
As at 31 March 2008, the Company had accrued a provision of some £5.56 million in its accounts in respect of the incentive fee. The
balance of this provision, net of tax and the termination fee referred to above, (£3.04 million) will be released to the capital reserve of
the Company and will not be carried forward, as a reserve or otherwise, into the accounts of New JZEP.
JZAI will be appointed to act as investment adviser and manager of New JZEP pursuant to a new investment advisory and management
agreement. In consideration of the services to be provided by JZAI to New JZEP, New JZEP will agree to pay JZAI a base management fee and an
incentive fee. The base management fee will be calculated at an annual rate of 1.5 per cent. of the Company's gross assets and shall be
payable quarterly in arrears. The incentive fee has two parts: an income incentive fee and a capital gains incentive fee. The income
incentive fee will be calculated based on New JZEP's net investment income for each quarter and shall be payable quarterly in arrears in an
amount equal to up to 20 per cent. of the net investment income for the quarter provided that such income exceeds an amount equal to 2 per
cent. of the average of the net asset values of New JZEP as at the end of the quarter and as at the end of the preceding quarter (the
"hurdle"). The income incentive fee will be adjusted at the end of each financial year to reflect an annual hurdle of 8 per cent. per annum, with any shortfall being paid by New JZEP and any excess fee being
set off against future income incentive fees earned. The capital gains incentive fee will be payable for each financial year of New JZEP and
will equal 20 per cent. of all realised capital gains of New JZEP, if any, on a cumulative basis in respect of the period from the date on
which the Scheme becomes effective through to the end of the relevant financial year, computed net of all realised capital losses of New
JZEP, if any, again on a cumulative basis in respect of the period from the date on which the Scheme becomes effective through to the end of
the relevant financial year, less the aggregate amount of all capital gains incentive fees previously paid by New JZEP to JZAI. The legacy
investments of New JZEP which were originally made by the Company prior to the existing investment advisory agreement made between the
Company and JZAI coming into effect (that is, before 22 July 2002) will be excluded from the calculation of both the income incentive fee and the capital gains incentive fee.
Either party may terminate the new investment advisory and management agreement on not less than 24 months' prior notice (or such lesser
period as may be agreed by the other) to the other, without cause provided that no such notice may be served until after the expiry of the
second anniversary of the date on which the Scheme becomes effective. Either party may also terminate the agreement (i) upon not less than
60 days' prior notice to the other if the other commits any material breach with respect to its obligations under the agreement and fails
(in the case of a breach capable of rectification) to make good such breach within 30 days of receipt of notice from the other requiring it
to do so; (ii) forthwith upon written notice to the other if (w) the other is dissolved or goes into liquidation (other than solely for the
purposes of a solvent amalgamation or reconstruction); (x) the other is unable to pay its debts as they fall due or makes any compromise
with its creditors generally or any proposals with regard to such a compromise or otherwise commits any act of bankruptcy; (y) a receiver is appointed over all or a substantial portion of
its assets; or (z) the other ceases to hold any licence, permission, authorisation or consent necessary for the performance of its duties
under the agreement.
The current letter of undertaking from Jay Jordan, David Zalaznick and The Jordan Company to the Company (entered into in connection
with the existing investment advisory agreement between the Company and JZAI) will also terminate on the Scheme becoming effective and will
not be replaced as it is now, in the main, historic.
Audited accounts and net asset value
If the Company is placed into members' voluntary liquidation as proposed, it will be under no obligation to produce or file audited
accounts as regards the year ended 31 March 2008. New JZEP will produce audited accounts, expressed in US dollars, in the ordinary course in
respect of the financial period which commenced on incorporation of New JZEP and will expire on 31 March 2009.
The net asset value of the Company as at 31 March 2008, as announced by the Company on 8 May 2008 was £181.8 million (186.4p per
existing ordinary share).
JZ Capital Partners Limited
Investment policy
New JZEP will have the same corporate objective as that of the Company, namely to create a portfolio of investments in businesses
primarily in the United States, providing a superior overall return comprised of a current yield and significant capital appreciation.
The present investment strategy of New JZEP will also be substantially the same as the Company's strategy has been, namely to maintain
and build its portfolio by investing primarily in four areas:
* micro-cap buyouts which historically have been the main engine of the Company's capital growth;
* mezzanine loans and high yield securities, which are intended to provide current income sometimes with the potential for capital
appreciation through equity participations;
* senior secured debt and second lien loans, which in most cases provide income only; and
* other debt and equity opportunities, including distressed debt, structured financings, derivatives and opportunistic purchases of
publicly traded securities.
Board composition
After over 21 years of service and six and a half years of service as Chairman, Andrew Withey has decided to stand down. In addition,
John Green-Armytage and Michael Sorkin have also decided to retire from the board if the Proposals are implemented. However David
Macfarlane, who joined the board of the Company in November 2006, has agreed to serve as Chairman of New JZEP. James Jordan, who has been a
director of the Company for some 21 years, and Tanja Tibaldi, who joined the board of the Company in January 2005, have also joined the
board of New JZEP together with two new Guernsey resident directors, David Allison and Patrick Firth.
Investment adviser and manager, administrator and other service providers
As stated under "Arrangements with Jordan/Zalaznick Advisers, Inc." above, the Company's existing investment adviser, Jordan/Zalaznick
Advisers, Inc., will act as investment adviser and manager of New JZEP.
New JZEP has appointed Butterfield Fund Services (Guernsey) Limited as its administrator and as registrars. It has also appointed
Equiniti Limited (the Company's current registrars) as UK transfer agent and HSBC Bank USA, N.A. (the Company's current custodian) as
custodian.
Ernst & Young LLP (the Company's current auditors) has been appointed as auditors to New JZEP.
Corporate governance
New JZEP will be subject to the Listing Rules (as the Company is currently) and, in addition, will obtain consent from the Guernsey
Financial Services Commission pursuant to its framework relating to Registered Closed-ended Investment Funds. As New JZEP is a Channel
Islands company, The City Code on Takeovers and Mergers will apply to New JZEP in the same way as it does to the Company. New JZEP has
confirmed that it will comply with the Combined Code on Corporate Governance published by the Financial Reporting Council and the Code of
Corporate Governance issued by the Association of Investment Companies, in the same way as the Company currently does, and with the Guernsey
Financial Services Commission Guidance Note on Corporate Governance in the Financial Sector in Guernsey dated 10 December 2004.
Cancellation of share premium account
New JZEP has passed a special resolution to reduce its share premium account following Admission. The directors of New JZEP have
confirmed that, subject to the Scheme becoming effective, they intend to apply to the Court in Guernsey for an order confirming such
reduction. Subject to the Court's order and to any undertaking to be given to the Court, the reserve created by the reduction will be
available as a distributable reserve to be used for all purposes permitted by The Companies (Guernsey) Law 1994, as amended, including the
purchase of New JZEP Shares and the payment of dividends. It is intended that the reserve so created, will be applied primarily in redeeming
the New ZDP Shares.
Costs of implementation of the Proposals
The costs and expenses relating to the Proposals are estimated to amount to approximately £1.3 million (including value added tax).
These will all be paid by the Company, save for any costs incurred in connection with the transfer of the assets of the Company to New JZEP
pursuant to the Transfer Agreement. The costs and expenses to be borne by the Company include legal and other professional costs, the costs
of printing the documents and the Prospectus and the costs relating to the liquidation of the Company. To the extent not already paid by the
time that the Company enters members' voluntary liquidation, the costs and expenses payable by the Company will be provided for in, and met
from, the Liquidation Fund.
As mentioned under "Benefits of the Proposals" above, New JZEP will not have to provide for tax in respect of accrued preference share
income (as the Company currently does) and, as mentioned under "Arrangements with Jordan/Zalaznick Advisers, Inc." above, the balance of the
provision reserved in respect of the accrued incentive fee payable to JZAI (net of tax and after payment of the termination fee to JZAI)
will be released to the capital reserve of the Company. Therefore, notwithstanding the costs and expenses relating to the Proposals, net
asset value per ordinary share is expected to be enhanced by implementation of the Proposals by some 2p per ordinary share.
In the event that the conditions to the Scheme are not satisfied, the Scheme will not be implemented but the Company will remain liable
for the costs and expenses already incurred in relation to the Proposals.
ISA, PEP, SIPP and SSAS investors
New JZEP Shares will be eligible for inclusion within the stocks and shares account of an ISA, including an ISA derived from a PEP held
at 6 April 2006. New JZEP Shares will also qualify as an investment that may be held in a SIPP or SSAS. Accordingly, where existing JZEP
shares are held in a PEP, ISA, SIPP or SSAS, New JZEP Shares received by shareholders pursuant to the Scheme in respect of those existing
JZEP shares can be retained (subject to the specific terms applicable to the relevant ISA, SIPP or SSAS) within the ISA, SIPP or SSAS.
Dissenting shareholders
Under section 111(2) of the Insolvency Act 1986, shareholders who do not vote in favour of the special resolution to approve the Scheme
at the second extraordinary general meeting (including any such shareholders who were not entitled to vote at such meeting) may dissent from
the Scheme by notice in writing to the Liquidators at the Company's registered office within seven days after the passing of such special
resolution. Any such dissenting shareholder may require the Liquidators either, at the Liquidators' option, to abstain from carrying the
resolution into effect or to purchase such shareholder's interests at a price to be agreed between them or determined by arbitration.
The Scheme is conditional on the directors not having exercised their right not to proceed with the Scheme in the event that, within
seven days of the second extraordinary general meeting, any one or more shareholders validly exercise their rights under section 111(2) of
the Insolvency Act 1986. The directors propose to exercise such right unless the number of shares held by any dissenters is minimal.
If any shareholders do validly dissent from the Scheme, and the directors do not exercise their right as provided above, the existing
ordinary shares and/or existing ZDP shares held by the dissenter(s) will, with effect from such time as the directors specify (being not
earlier than the expiry of the seven day period specified in section 111(2) of the Insolvency Act 1986 in relation to the Scheme), be
re-classified as, respectively, "D" ordinary shares and "D" zero dividend preference shares. The holders of any such re-classified JZEP
shares will not receive New JZEP Shares but will instead be paid out in cash at the price agreed with the liquidators or determined by
arbitration.
Conditions
The Proposals are conditional upon:
(a) the passing of all of the resolutions to be proposed at the first extraordinary general meeting, the class meeting of the holders
of the ZDP shares, the class meeting of the holders of the ordinary shares, the second extraordinary general meeting and the third
extraordinary general meeting;
(b) the directors not having exercised their right, not to proceed with the Scheme in the event that, within seven days of the second
extraordinary general meeting, any one or more shareholders validly exercise their rights under section 111(2) of the Insolvency Act 1986;
(c) the continuing admission of the re-classified JZEP shares, if any, to the Official List and to trading on the London Stock
Exchange's main market for listed securities; and
(d) the UK Listing Authority agreeing to admit the New JZEP Shares to be issued pursuant to the Scheme to the Official List and the
London Stock Exchange agreeing to admit such shares to trading on its main market for listed securities, and such admissions becoming
effective.
Risk factors relating to the Proposals
The liquidation of the Company is conditional as provided at (a), (b) and (c) under "Conditions" above but not upon the UK Listing
Authority agreeing to admit the New JZEP Shares to be issued pursuant to the Scheme to the Official List and the London Stock Exchange
agreeing to admit such shares to trading on its main market for listed securities. Accordingly, if the resolutions to be proposed at the
first, second and third extraordinary general meetings and at the separate class meetings are all passed and conditions (b) and (c) are
satisfied but the Scheme does not become effective, the Company will nevertheless be in members' voluntary liquidation. In this, unlikely,
event, the assets of the Company would be realised and the net proceeds distributed to shareholders in accordance with their respective
rights.
The Company will need to ensure that it remains an investment trust (as defined in section 842 of the Income and Corporation Taxes Act
1988) throughout the whole of the financial period which, by law, commences on the Company entering members' voluntary liquidation.
Otherwise, the transfer of the Company's assets by the Liquidator to New JZEP would give rise to chargeable gains or allowable losses for
the purposes of the UK taxation of chargeable gains. The directors have been advised that the manner in which it is proposed to carry out
the Company's liquidation and to implement the Proposals is such that the Company should remain eligible to obtain approval as an investment
trust for the financial period which includes the date on which the Company's assets are transferred to New JZEP pursuant to the Transfer
Agreement and, accordingly, the transfer of the Company's assets under the Proposals should not give rise to a liability to UK taxation of
chargeable gains for the Company.
Settlement and dealings
It is expected that dealings in any re-classified JZEP shares on the London Stock Exchange will commence on 25 June 2008. It is also
expected that dealings in the existing JZEP shares (including any re-classified JZEP shares) on the London Stock Exchange will be suspended
on the following day, 26 June 2008.
The Liquidators will apply, in due course, for the listing of the existing JZEP shares (including any re-classified shares) to be
cancelled. It is expected that this cancellation will become effective on 27 June 2009.
Applications have been made to the UK Listing Authority for the New JZEP Shares to be issued under the Scheme to be admitted to the
Official List and to the London Stock Exchange for such shares to be admitted to trading on its main market for listed securities. If the
Scheme becomes effective, it is expected that the New JZEP Shares issued pursuant thereto will be admitted to the Official List on, and that
the first day of dealings in such shares on the London Stock Exchange will be, 27 June 2008.
Shareholder meetings
First extraordinary general meeting
The first extraordinary general meeting will be held at 10.30 a.m. on 16 June 2008. A special resolution will be proposed at that
meeting to amend the articles of association of the Company to provide that shareholders who do not give the confirmations and, if
applicable, representations described under "US securities laws issues" above in the manner described under "US securities laws issues"
above will not be entitled to vote on any of the resolutions to be proposed at the second extraordinary general meeting or the third
extraordinary general meeting (and any votes cast or attempted to be cast by any shareholder who does not give the confirmations and, if
applicable, representations will be invalid). In addition, to avoid any technical issues arising in connection with the exercise by the
directors of the powers conferred upon them under article 43 of the articles of association of the Company in the manner and to the extent
described under "US securities laws issues" above, the special resolution to be proposed at the first extraordinary general meeting will also, if passed and if the same becomes unconditional, operate by way of such
further amendments to the articles of association of the Company as may be necessary to authorise the directors to implement the provisions
of article 43 in the manner and to the extent so described. The resolution is conditional upon the passing of the extraordinary resolutions
to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares.
All shareholders are entitled to attend the first extraordinary general meeting and to vote on the special resolution to be proposed
thereat, other than any shareholder on whom notice is served under article 43.5 of the articles of association of the Company as referred to
under "US securities laws issues" above.
Class meeting of the holders of the ZDP shares
The class meeting of the holders of the ZDP shares will be held at 10.45 a.m. on 16 June 2008. An extraordinary resolution will be
proposed at that meeting which, if passed, will sanction the implementation of the Proposals, including the passing of the special
resolutions to be proposed at the first extraordinary general meeting, the second extraordinary general meeting and the third extraordinary
general meeting, the winding-up of the Company and the attendant variation of the rights attaching to the existing ZDP shares.
Only holders of ZDP shares are entitled to attend the class meeting of the holders of the ZDP shares and to vote on the extraordinary
resolution to be proposed thereat, provided that any holder of ZDP shares on whom notice is served under article 43.5 of the articles of
association of the Company as referred to under "US securities laws issues" above will not be entitled to attend or vote.
Class meeting of the holders of the ordinary shares
The class meeting of the holders of the ordinary shares will be held at 10.50 a.m. on 16 June 2008. An extraordinary resolution will be
proposed at that meeting which, if passed, will sanction the implementation of the Proposals, including the passing of the special
resolutions to be proposed at the first extraordinary general meeting, the second extraordinary general meeting and the third extraordinary
general meeting, the winding-up of the Company and the attendant variation of the rights attaching to the existing ordinary shares.
Only holders of ordinary shares are entitled to attend the class meeting of the holders of the ordinary shares and to vote on the
extraordinary resolution to be proposed thereat, provided that any holder of ordinary shares on whom notice is served under article 43.5 of
the articles of association of the Company as referred to under "US securities laws issues" above will not be entitled to attend or vote.
Second extraordinary general meeting
The second extraordinary general meeting will be held at 11.00 a.m. on 16 June 2008. A special resolution will be proposed at that
meeting to amend the articles of association of the Company for the purposes of the Scheme (including so as to re-classify the existing
ordinary shares and/or existing ZDP shares held by any shareholder who validly dissents from the Scheme as, respectively, "D" ordinary
shares and "D" zero dividend preference shares), to approve the Scheme and to authorise the implementation of the Scheme by the Liquidators.
This resolution is conditional upon the passing of the special resolution to be proposed at the first extraordinary general meeting and the
extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares.
If the special resolution to be proposed at the first extraordinary general meeting and the extraordinary resolutions to be proposed at
the class meetings of the holders of the ZDP shares and the ordinary shares are passed, only those shareholders who give the confirmations
and, if applicable, representations described under "US securities laws issues" above in the manner described under "US securities laws
issues" above, other than any shareholder on whom notice is served under article 43.5 of the articles of association of the Company as
referred to under "US securities laws issues" above, will be entitled to attend the second extraordinary general meeting and to vote on the
special resolution to be proposed thereat. (If they give the confirmations and, if applicable, representations described under "US
securities laws issues" above in the manner described under "US securities laws issues" above, holders of ZDP shares, as well as holders of
ordinary shares, will be entitled to attend the second extraordinary general meeting and vote on the special resolution to be proposed thereat, provided that any shareholder on whom notice is served
under article 43.5 of the articles of association of the Company as referred to under "US securities laws issues" above will not be entitled
to attend or vote.) If any of the special resolution to be proposed at the first extraordinary general meeting and the extraordinary
resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares is not passed, all shareholders,
other than any on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities
laws issues" above, will be entitled to attend the second extraordinary general meeting. However, the directors would not proceed to put the
special resolution set out in the notice of such meeting to the meeting.
Third extraordinary general meeting
The third extraordinary general meeting will be held at 10.30 a.m. on 26 June 2008. A special resolution will be proposed at that
meeting to wind up the Company voluntarily and to appoint the Liquidators. This resolution, and thus the winding-up of the Company, is
conditional upon the passing of the special resolutions to be proposed at the first and second extraordinary general meetings and the
extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and the ordinary shares. It is also
conditional upon the directors not having exercised their right not to proceed with the Scheme.
A second special resolution will also be proposed at the third extraordinary general meeting for the purpose of authorising the
Liquidators to exercise certain powers for which the express sanction of shareholders is required under the Insolvency Act 1986, such as
paying classes of creditors in full. This special resolution is conditional on the passing of the first special resolution to be proposed at
the third extraordinary general meeting and such resolution becoming unconditional.
If the special resolution to be proposed at the first extraordinary general meeting and the extraordinary resolutions to be proposed at
the class meetings of the holders of the ZDP shares and the ordinary shares are passed, only holders of ordinary shares who give the
confirmations and, if applicable, representations described under "US securities laws issues" above in the manner described under "US
securities laws issues" above, other than any holder of ordinary shares on whom notice is served under article 43.5 of the articles of
association of the Company as referred to under "US securities laws issues" above, will be entitled to attend the third extraordinary
general meeting and to vote on the special resolutions to be proposed thereat. If any of the special resolution to be proposed at the first
extraordinary general meeting and the extraordinary resolutions to be proposed at the class meetings of the holders of the ZDP shares and
the ordinary shares is not passed, all holders of ordinary shares, other than any on whom notice is served under article 43.5 of the articles of association of the Company as referred to under "US securities
laws issues" above, will be entitled to attend the third extraordinary general meeting. However, the directors would not proceed to put the
special resolutions set out in the notice of such meeting to the meeting.
Majority and quorum requirements
The majority required for the passing of all resolutions to be put at the first extraordinary general meeting, the class meeting of the
holders of the ZDP shares, the class meeting of the holders of the ordinary shares, the second extraordinary general meeting and the third
extraordinary general meeting is not less than three quarters of the votes validly cast in person or by proxy. On a show of hands, each
shareholder present in person or by proxy and entitled to attend and vote will have one vote and on a poll each shareholder present in
person or by proxy and entitled to attend and vote will have one vote for each ordinary share and/or ZDP share (as relevant) held.
The quorum at the first extraordinary general meeting, the second extraordinary meeting and the third extraordinary general meeting is
any two shareholders present in person or by proxy and entitled to vote. The quorum at the class meeting of the holders of the ZDP shares
and at the class meeting of the holders of the ordinary shares (other than, in either case, an adjourned meeting) is any two shareholders
holding or representing by proxy at least one third in nominal value of, respectively, the ZDP shares and the ordinary shares present in
person or by proxy and entitled to vote; the quorum at any adjourned class meeting is one person holding shares of the relevant class or his
or her proxy.
Shareholder support for the Proposals
The Company has consulted with its major shareholders, all of whom have indicated their support for the Proposals.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Latest time and date for return of the 5.00 p.m. on 28 May
questionnaire enclosed with the Circular 2008
Issue of notices, if any, under article 43.5 of 2 June 2008
the articles of association of the Company
Ordinary Shares marked ex-dividend in respect of 4 June 2008
the special dividends proposed to be paid by the
Company
Record date for the special dividends proposed to 5.30 p.m. on 6 June
be paid by the Company 2008
Latest time and date for receipt of forms of 10.30 a.m. on 14
proxy for the first extraordinary general meeting June 2008
Latest time and date for receipt of forms of 10.45 a.m. on 14
proxy for the class meeting of the holders of the June 2008
ZDP shares
Latest time and date for receipt of forms of 10.50 a.m. on 14
proxy for the class meeting of the holders of the June 2008
ordinary shares
Latest time and date for receipt of forms of 11.00 a.m. on 14
proxy for the second extraordinary general June 2008
meeting
First extraordinary general meeting 10.30 a.m. on 16
June 2008
Class meeting of the holders of the ZDP shares 10.45 a.m. on 16
June 2008
Class meeting of the holders of the ordinary 10.50 a.m. on 16
shares June 2008
Second extraordinary general meeting 11.00 a.m. on 16
June 2008
Latest time for the sale by any "non-permitted" 17 June 2008
shareholders of the shares in the capital of the
Company held by them, in compliance with any
notice from the Company issued under article 43.5
of the articles of association of the Company
Cheques despatched and bank accounts credited (as 20 June 2008
appropriate) in respect of the special dividends
proposed to be paid by the Company
Sale by the directors of any shares in the 20 June 2008
capital of the Company held by any
"non-permitted" shareholders and not sold by the
relevant shareholder pursuant to any notice from
the Company issued under article 43.5 of the
articles of association of the Company
Latest time and date for receipt of forms of 10.30 a.m. on 24
proxy for the third extraordinary general meeting June 2008
Re-classification of any relevant ZDP shares and 8.00 a.m. on 25 June
ordinary shares and the commencement of dealings 2008
in the re-classified JZEP shares (if any)
Dealings in the existing JZEP shares (including 7.30 a.m. on 26 June
any re-classified JZEP shares) suspended and 2008
share register closed
Third extraordinary general meeting (at which the 10.30 a.m. on 26
Company enters members' voluntary liquidation) June 2008
Completion of the transfer of the Company's 8.00 a.m. on 27 June
assets (other than the Liquidation Fund) to New 2008
JZEP
Dealings commence in the New JZEP Shares 8.00 a.m. on 27 June
2008
Scheme becomes effective 8.00 a.m. on 27 June
2008
CREST accounts of shareholders holding existing 27 June 2008
JZEP shares in uncertificated form credited with
New JZEP Shares
Share certificates for New JZEP Shares despatched 11 July 2008
to shareholders holding existing JZEP shares in
certificated form
Cancellation of the listing of the existing JZEP 27 June 2009
shares (including any re-classified JZEP shares)
Enquiries
David Zalaznick +1 212 572 0812
Jordan/Zalaznick Advisers, Inc.- Investment Adviser
Angus Gordon Lennox +44 (0) 20 7588 2828
JPMorgan Cazenove Limited
The information herein is not an offer of securities for sale in the United States. No securities may be offered or sold in the United
States or to US persons (other than distributors) unless the securities are registered under the Securities Act 1933, or an exemption from
registration requirements is available. There is no intention to register any offering in the United States or to conduct a public offering
of securities in the United States.
The information herein is not an offer to sell (or the solicitation of an offer to buy) nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful.
This announcement has been issued by and is the sole responsibility of the Company. No representation or warranty express or implied is
or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by JP Morgan Cazenove Limited ("JP
Morgan Cazenove") or by any of its affiliates as to or in relation to, the accuracy or completeness of this announcement or any other
written or oral information made available to or publicly available to any interested party or its advisers, and any liability is therefore
expressly disclaimed.
JPMorgan Cazenove is acting for the Company in connection with the proposed scheme of reconstruction and no one else and will not be
responsible to anyone other than the Company for providing the protections afforded to clients of JPMorgan Cazenove nor for providing advice
in relation to the proposed scheme of reconstruction.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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