TIDMELTA
RNS Number : 5469M
Electra Private Equity PLC
14 October 2016
Electra Private Equity PLC
Result of Strategic Review - Phase I
London 14 October 2016
The Board of Electra Private Equity PLC (the "Company") today
announces the outcome of the first phase ("Phase I") of the review
announced on 25 January 2016 ("the Review"). The principal object
of the Review is to maximise long-term shareholder value by
assessing the Company's investment strategy and policy and its
structure.
The key outcomes of Phase I are as follows:
-- On 26 May 2016 the Company announced that it had served
notice of termination of the contracts under which the Company had
wholly and exclusively outsourced all of the Company's activities
to Electra Partners LLP ("Electra Partners"), with termination
becoming effective on 31 May 2017
-- The Company will create a robust and sustainable corporate
governance structure by returning control of all executive and
investment functions to the Board from June 2017
-- The Company is developing internal resources to assume all
operating responsibilities from June 2017
-- The Company intends to migrate from a listed investment trust
to a "corporate" structure over time as it believes this could
result in reduced expenses and reduced discounts to underlying
portfolio value
-- A review of the Company's portfolio ("Phase II") will
commence in June 2017, or earlier with the consent of Electra
Partners
-- Initial GBP200 million return of capital by way of tender
offer launched during Q4 2016, which will be subject to shareholder
approval
-- The Company will commence a consultation with shareholders on
a new capital allocation strategy
-- Subsequent shareholder approvals, as required, including for
migration to a corporate structure, to be sought during Phase
II
Phase I result
The Board has conducted a thorough review of the Company's
investment strategy and policy and its structure. As part of the
Review, the Board evaluated a number of possible options to
increase shareholder value, including (i) continuing the exclusive
delegation of all executive and investment functions to Electra
Partners and (ii) returning control of all executive and investment
functions to the Board with the migration to a corporate structure
and related consolidated financial reporting.
After due consideration, the Board has concluded that
significant value can potentially be captured for shareholders by
internalising all management functions and by migrating the Company
from an investment trust structure to a "corporate" structure.
The Board believes that the above actions would result in:
-- Recurring expense savings in excess of GBP25 million per
annum;
-- Elimination of carried interest (on investments from June
2017), which totalled GBP80 million in the last 12 months;
-- Reduction of share price discounts to the portfolio's
underlying value;
-- A flexible capital allocation policy focused on shareholder
returns;
-- Improved capability to generate portfolio operating
improvements;
-- Increased transparency of underlying earnings and dividend
paying capability; and,
-- improved share liquidity and valuation through a broader
shareholder base.
Return of capital
The Company will shortly begin the process for an initial GBP200
million return of capital to shareholders by way of a tender offer.
This return of capital will require shareholder approval and is a
first step to improving the Company's capital allocation
policy.
Phase II of the Review
Termination of the contracts with Electra Partners will become
effective on 31 May 2017. Phase II of the Review will begin in June
2017, or earlier should Electra Partners agree to grant the Company
access to the portfolio companies' financial information and
management teams.
Phase II will maintain the principal objective of maximising
long-term shareholder value by, inter alia, undertaking a detailed
operating review of the portfolio companies then held, establishing
the new capital allocation policy, and implementing a compensation
plan to align management interests with the return on shareholders'
capital.
Additionally, the Board will set out a timetable for migration
to a new corporate structure. Shareholder approval for this and
other items will be sought, as required.
Neil Johnson, Chairman of the Company, said today:
"We have made significant progress in the Review of Electra, and
I am delighted that we are now at a point where we can update
shareholders on the outcome of Phase I. I believe that by returning
control of all functions to the Board we will put in place a more
effective, transparent corporate governance structure. A much
lower-cost executive team, fully accountable to the Board and
shareholders, will then pursue a strategy of portfolio company
improvement and value enhancement, creating maximum value for our
shareholders.
We believe that it is important that we move investment
management responsibilities to the Board, in line with the new
strategic direction of the Company, to adopt a corporate structure
with more typical financial reporting and transparency.
On behalf of the Board, I would like to thank Electra Partners
for the role they have played as investment manager."
This announcement contains inside information.
- Ends -
Electra Private Equity PLC will host a conference call with
investors and analysts at 10:00am BST today. Dial-in details are as
follows:
Dial-in (UK): 0800 694 0257
Dial-in (Intl.): +44 (0)1452 555566
Conference ID: 99718831
A Company presentation for investors: Strategic Review - Phase
1, is available at: www.electraequity.com.
For further information:
On behalf of Electra Private Equity PLC
Brunswick Group LLP 020 7404 5959
Gill Ackers/Kim Fletcher Electra@brunswickgroup.com
Gavin Manson
Chief Financial Officer
Electra Private Equity PLC
This information is provided by RNS
The company news service from the London Stock Exchange
END
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