TIDMTHAL
RNS Number : 8974O
Thalassa Holdings Limited
10 November 2016
10 November 2016
Thalassa Holdings Ltd
(Reuters: THAL.L, Bloomberg: THAL:LN)
("Thalassa" or "the Company")
Thalassa requisitions General Meeting of The Local Shopping REIT
PLC ("LSR")
Thalassa announces that on 9 November 2016 it exercised its
rights as a holder of 23.48 per cent. of the issued share capital
of LSR to requisition the convening of a general meeting of LSR to
remove from its board of directors Stephen East and Nicholas Vetch
and to appoint to its board Duncan Soukup, Chairman of Thalassa,
John Hutchinson and Toby Burgess. Thalassa also provided a
statement (limited to 1,000 words) to be circulated to the
shareholders of LSR, which appears in full below.
The board of Thalassa notes LSR's announcement of 27 October
2016 in which it is stated that "the proposals indicated by Mr
Soukup would be highly detrimental to the interests of shareholders
in general, would destabilise relationships with critical
stakeholders and would be very disruptive of the programme that the
Board has in hand for executing the strategy approved by
shareholders".
For the reasons set out in the requisition letter, the Thalassa
board believes this statement to be ill conceived, specifically
because:
1. Had the liquidation process proceeded in a reasonable time
frame, Thalassa would not be involved as the asset liquidation
would have been completed and cash distributed to shareholders.
2. If the board of LSR suggests, as they have to the Thalassa
board, that a faster liquidation of assets was not possible due to
market conditions, why then is the bonus scheme so favourable to
Internos (see below) and so unfavourable to shareholders?
In addition, LSR's articles (article 96) clearly state that the
board should be constituted of a minimum of three directors,
however since April 2016, LSR has been operating with only two
members.
Duncan Soukup, Chairman of Thalassa, stated: "The board of
Thalassa is of the firm view that the ill-advised comments made on
its proposals by the board of LSR, before receipt of our official
requisition letter or under any circumstances, is a poor attempt to
mask LSR's disastrous performance since inception. "
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
Investor Enquiries:
Thalassa Holdings Ltd
Duncan Soukup, Chairman +33 (0)6 78 63 26 89
WH Ireland Limited (Nominated Adviser and Broker)
Chris Fielding, Head of Corporate Finance +44 (0)207 220 1650
Press Enquiries:
Square1 Consulting (Public Relations)
David Bick +44 (0)207 929 5599
www.thalassaholdingsltd.com
The text of the requisition notice is as follows:
"The Directors
The Local Shopping REIT plc
65 Grosvenor Street
London
W1K 3JH
8 November 2016
Dear Sirs
THE LOCAL SHOPPING REIT PLC (THE "COMPANY")
REQUISITION OF MEMBERS PURSUANT TO SECTION 303 OF THE COMPANIES
ACT 2006 (THE "ACT") AND REQUIREMENT TO CIRCULATE A STATEMENT TO
MEMBERS PURSUANT TO SECTION 314 OF THE ACT
We, the undersigned, being a member of the Company holding at
the date of the deposit of this requisition not less than 5% of
such of the paid up capital of the Company as carries the right of
voting at general meetings of the Company (excluding any paid--up
capital held as treasury shares) (the "Requisitioning Member"),
require you, pursuant to section 303 of the Act, immediately to
proceed to convene a general meeting of the Company (the "General
Meeting") for the purpose of considering the appointment and
removal of directors of the Company and accordingly (if thought
fit) passing the following resolutions:-
1. THAT Stephen East be and is hereby removed from the office of
director of the Company with immediate effect.
2. THAT Nicholas Vetch be and is hereby removed from the office
of director of the Company with immediate effect.
3. THAT Duncan Soukup, having indicated his willingness to act,
be and is hereby appointed a director of the Company with immediate
effect.
4. THAT John Hutchinson, having indicated his willingness to
act, be and is hereby appointed a director of the Company with
immediate effect.
5. THAT Toby Burgess, having indicated his willingness to act,
be and is hereby appointed a director of the Company with immediate
effect.
We, the Requisitioning Member, also require you, pursuant to
section 314 of the Act, to circulate the following statement with
the notice of General Meeting:
Name Shareholding Signature
----------------------- ------------- ----------
Pershing Nominees
Limited acting as
nominee for Thalassa
Holdings Ltd 23.14%
----------------------- ------------- ----------
THALASSA STATEMENT
Dear Shareholder,
Thalassa Holdings Ltd (Thalassa) (through two different
nominees) recently acquired 23.48% of The Local Shopping REIT plc
(LSR). We have a successful track record of unlocking value in
underperforming assets and believe that with owner management,
shareholder value could be realised more efficiently and faster
than by third-party managers with no vested interest.
LSR have offered Thalassa one Board seat with conditions
attached, which we have declined and requisitioned a general
meeting to remove the current Board and replace it with the
following nominees:
Mr Duncan Soukup, aged 62
Mr Soukup has over 30 years of investment experience. After 10
years in investment banking, he set up an investment management
business in 1994. In January 2000 Acquisitor plc, a company founded
by Mr Soukup, was admitted to AIM. In 2002, Acquisitor was split
into two: Acquisitor Holdings Ltd and Acquisitor was left as an
investing company, which then acquired Tinopolis plc, an
independent TV production company. In 2006, Acquisitor Holdings
merged with New York Holdings Ltd and Baltimore plc, which was
acquired by Oryx International Limited. Mr Soukup is the Founding
Shareholder and Chairman of Thalassa.
Mr John Hutchinson, aged 54
Mr Hutchinson has been the Managing Partner of Pitmans since
2015. Previously, he was Head of Corporate at Pitmans from 2000 to
2007 working on MBO's, MBI's, M&A and AIM IPO's and building
the team to 6 partners and 15 staff. From 2007 he retained his
partnership at Pitmans but was mainly engaged as a partner in Epi-V
LLP, a private equity fund specialising in oil and gas technology
investment.
Mr Toby Burgess, aged 42
Mr. Burgess is a successful independent private investor,
developer and property consultant with over 20 years experience in
real estate. He started his career at Bride Hall Developments as an
acquisition surveyor. After forming his own company in 2004 he
built a substantial portfolio and liquidated ahead of the global
financial crisis in 2007/08.
Why we seek to replace the current Board
LSR's cost structure must be cut to reflect a company
undertaking asset liquidation.
LSR's performance since admission has been disastrous and the
Board must take substantial responsibility.
The management agreement between LSR and INTERNOS Global
Investors Limited (Internos) (Internos Agreement) appears
inequitable and not in shareholders' best interests:
since its appointment on 22 July 2013, Internos has been paid a
total of GBP3.187m. Total administrative and property costs during
this time of GBP18.5m while the return to shareholders has been
GBPzero;
the Internos Agreement is excessive in comparison to LSR's
revenue and profit and is not performance related (in 2015
Internos' fee was GBP1,016,461, while profit before tax a paltry
GBP20,000);
on 7 August 2014 LSR announced the sale of 235 properties for
GBP79.3m. Under the Internos Agreement, Internos was due a 0.5% fee
on sales in excess of GBP50m (even though the property portfolio
was worth GBP173.9m prior to Internos' appointment) and, by our
calculations, have been paid GBP396,500 (GBP79.3m x 0.5%)
notwithstanding the fact that LSR has incurred cumulative losses in
excess of GBP92m; and
the Internos Agreement is on significantly worse terms than
those entered into by Internos with other clients, such as Invista
European Real Estate Trust (Invista). Invista paid a management fee
of 1.25% on net assets whereas LSR are paying 0.7% on gross assets,
subject to a minimum of GBP1m in years 1 and 2 and GBP950,000 in
year 3. We estimate that this equates to more than twice what
Internos would earn if the Invista formula were applied to LSR.
We are told that the Internos Agreement is not only in the best
interests of shareholders but that it was entered into following a
full and transparent process. In fact the appointment was made with
no shareholder consultation - Steve Faber was appointed to the
board before shareholders were informed about the Internos
Agreement. The 2013 circular states Internos' appointment was not
conditional on shareholder approval of the New Investment Policy -
we conclude that Internos' appointment was clearly not something
the Board wanted shareholders to vote on.
Why does the Internos Agreement include bonus terms for their
core function - which is selling assets - without consideration to
profit or loss and includes a terminal fee of 5.7% cash returned to
shareholders in excess of 36.1p which was below NAV per share of
46p when they were appointed and is below current NAV per share of
43p.
-- Since admission, LSR has incurred cumulative losses totalling
GBP92.023m, including total administrative and property operating
expenses of GBP49.931m. By our calculations, the NAV per share was
164.86p at admission and has fallen 74% to 43p. Based upon the
share price of 28.25p on 7 September 2016 (the day before
Thalassa's first purchase) LSR's share price has declined 72.6% in
that period, even when taking into account net dividends paid
between 2008 and 2012 of 19.42p
What would Thalassa do?
If elected, Thalassa would:
-- review all contractual arrangements with a view to cutting
costs, eliminating duplication, reducing property vacancies, whilst
accelerating asset liquidation and substantially reducing debt;
-- meet shareholders to discuss representation on the Board,
which the current Board has informed us they have in the past (in
the case of Damille Investments Ltd, who requested two seats)
rejected; and
-- improve corporate governance - the current Board is in breach
of the LSR's articles of association which requires a minimum of
three directors. It has therefore been operating in contravention
of the Company's Act 2006 since April 2016. This on-going failure
is worrisome and indicative of potential wider disregard of proper
corporate governance by the current Board. We will be considering
operations during this period and will seek redress on behalf of
LSR, as appropriate.
We are acutely conscious of the sensitivity of key relationships
with other stakeholders in LSR and, as the company's largest
shareholder, we have no interest in destabilising any of them.
Sincerely
Duncan Soukup
Chairman
Thalassa Holdings Ltd"
This information is provided by RNS
The company news service from the London Stock Exchange
END
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