Aida Fund Proposals
June 25 2009 - 3:09AM
UK Regulatory
TIDMAIDP TIDMAIDU TIDMAIDE
RNS Number : 4836U
Aida Fund Limited
25 June 2009
Not for release, publication or distribution, in whole or in part, in or into or
from Australia, Canada, Japan, South Africa or the United States or any other
jurisdiction where such release, publication or distribution would constitute a
violation of the relevant laws or regulations of such jurisdiction
25 June 2009
The Aida Fund Limited
Preliminary announcement of proposals to establish an open ended fund, improve
the liquidity profile of the portfolio and restructure the Aida Fund
Introduction
* The Aida Fund is developing proposals to reflect the change in market
conditions and circumstances since it was first listed. The proposals will
improve the liquidity profile of the portfolio and provide eligible investors
with the choice of holding their investment in an open ended or a closed ended
format.A circular providing full details of the proposals and requisitioning the
necessary shareholder meetings is expected to be posted within 30 days.
General
* The Aida Fund continues to offer an attractive investment proposition, providing
access for investors to a diversified portfolio of some of the best investment
funds in the market whilst enforcing a rigorous and disciplined approach to risk
management and fund selection.
* The portfolio comprises investments in substantial hedge funds with strong long
term track records across a broad range of investment strategies.
* The Aida Fund has been reducing the leverage used for investment purposes since
December 2008. It is expected that such leverage will have been eliminated by 30
June 2009 and will not be reinstated.
* The estimated year to date performance to the end of May of the Aida Fund's US
Dollar denominated share class is (0.10) per cent.
Overview of the Proposals
* The proposals, which are subject to regulatory approval, include
providing eligible investors with choice as to how they can hold their
investment by the formation of a new open ended vehicle which will be called The
Aida Open Ended Fund Limited in addition to the existing closed ended Aida Fund.
* The core existing assets of the Aida Fund will be transferred to the Aida Open
Ended Fund which will make all future investments. The investment policy will be
substantially in line with the existing investment policy of the Aida Fund.
* The Aida Open Ended Fund will only invest in underlying funds which have, at a
minimum, an annual liquidity opportunity at the time the investment is made.
* Those investments within the current portfolio that are not expected to meet the
new liquidity criteria will be transferred to a separate 'side-pocket'.
* Eligible existing shareholders will be provided with an opportunity to elect to
transfer their investment in the Aida Fund to the Aida Open Ended Fund.
* A shareholder in the Aida Open Ended Fund will be able on a quarterly basis to
elect to redeem all or a proportion of their investment at realisable net asset
value (being the cash received from the underlying investments) less applicable
costs. On receipt of a redemption request, Aida Capital will partition a
pro-rated share of the underlying investments, redeem the investments and return
cash to the redeeming shareholder in stages once received from redeeming the
investments. The directors will have the discretion to provide shareholders
with monthly rather than quarterly elections.
* The existing Aida Fund will continue as a closed ended fund and will become a
feeder into the Aida Open Ended Fund for those shareholders for whom there are
advantages in investing in such a structure. It is intended that it will
continue to be listed and traded on the London Stock Exchange. Its name will be
changed to The Aida Closed Ended Fund Limited. The Aida Closed Ended Fund will
invest all or substantially all of its investment funds in shares in the Aida
Open Ended Fund.
* The Aida Open Ended Fund and the Aida Closed Ended Fund will only offer a US
Dollar currency class and the existing Euro and Sterling share classes in the
Aida Closed Fund will be converted to the US Dollar share class. The investment
portfolio is invested in US Dollars. Currency hedging attributable to the Euro
and Sterling currency share classes results in the potential requirement to
convert the most liquid assets in the investment portfolio into cash to settle
currency hedging commitments. Such hedging activity therefore has the potential
to affect the balance and liquidity profile of the investment portfolio.
* There will be a flat management fee (charged only at the Aida Open Ended Fund
level and not at the Aida Closed Ended Fund level) and no performance fee.
Further details of the Aida Open Ended Fund.
The Aida Open Ended Fund's principal investment objective will be to achieve
capital growth through investment in a diverse series of investment funds and
will be substantially in line with the Aida Fund's current investment policy.
Key characteristics of the Aida Open Ended Fund will include:
An enhanced underlying liquidity profile
The Aida Open Ended Fund will only invest in underlying funds which have, at
least, an annual liquidity opportunity.
The Aida Open Ended Fund will operate guidelines with respect to limits on the
liquidity profile of its portfolio of underlying funds as follows:
* a minimum of 30 per cent by value will offer redemption opportunities within 30
days of notice being given to the underlying fund; and
* a minimum of a further 30 per cent by value will offer redemption
opportunities within 90 days of notice being given to the underlying fund; and
* the balance will offer redemption opportunities on at least an annual basis.
It is expected that the guidelines will be met by the first quarter of 2010.
Providing shareholders with the opportunity on a quarterly basis to convert to a
redemption share class
Holders of ordinary shares in the Aida Open Ended Fund will be able to convert
some or all of their ordinary shares into redemption shares on a quarterly basis
(or monthly at the discretion of the directors) upon giving not less than 45
days notice and subject to a minimum value of redemption elections being
received.
On any quarter date on which ordinary shares are converted into redemption
shares the pro-rata proportion of the Aida Open Ended Fund's portfolio of assets
attributable to such ordinary shares will be notionally allocated to the
redemption shares to be issued on that date.
Aida Capital will then redeem the underlying assets attributable to
such redemption shares. Upon cash being received by the Aida Open Ended Fund
from the realisation of these assets it will be paid to the holders of
such redemption shares net of costs and expenses. The first such payment will be
made after approximately 45 days of such redemption shares being issued.
Payments will be made thereafter on a staged basis as the underlying assets are
realised.
To the extent that the Aida Open Ended Fund receives subscription money from
investors wishing to acquire ordinary shares as well as redemption notices from
investors seeking to dispose of ordinary shares Aida Capital may use such
subscription money to redeem such ordinary shares at net asset value less costs.
Similarly Aida Capital may allocate an amount of subscription money equal to the
net asset value of the assets attributable to a redemption class less costs and
reallocate the assets to the ordinary shares.
At the absolute discretion of the directors and the investment manager and
subject to the agreement of the underlying funds a shareholder may request via
the redemption process that upon the relevant redemption date the portion of the
Aida Open Ended Fund's assets relating to the ordinary shares that they have
elected to convert to redemption shares will be transferred to them. If this is
not possible they will receive the appropriate number of redemption shares.
The directors will have the discretion to provide shareholders with the ability
to elect to convert ordinary shares to redemption shares on a monthly rather
than quarterly basis.
Separation of assets that are not expected to satisfy the new liquidity criteria
Investments within the current portfolio that are not expected to meet the new
liquidity criteria as outlined above will be transferred to a
separate side-pocket and a class of shares attributable to such side-pocket
which will held by investors who are shareholders in the Aida Open Ended Fund
(including the Aida Closed Ended Fund) when the proposals are implemented.
Shareholders will not be entitled to redeem their side-pocket shares, or to
convert such side-pocket shares into redemption shares. However as the assets in
the side-pocket class are realised side-pocket shares will be converted into
ordinary shares.
Aida Capital estimates that, initially, assets representing approximately 20 per
cent of the net asset value of the Aida Fund will be held within the side-pocket
share class. It is estimated that these assets will be redeemed as to 20 per
cent by June 2010, 40 per cent by June 2011 and the balance by 2015.
Single currency class
To ensure that the funds do not become unbalanced due to currency movements and
the potential requirement to liquidate assets to make payments in connection
with such currency hedging the Aida Open Ended Fund will only have US Dollar
denominated shares in issue.
Transfer to the Aida Open Ended Fund from the Aida Closed Ended Fund
Eligible shareholders who wish to transfer their investment from the Aida Closed
Ended Fund to the Aida Open Ended Fund (by redeeming their shares in the Aida
Closed Ended Fund in return for a transfer to them of shares in the Aida Open
Ended Fund) will be provided with an opportunity to do so upon or shortly after
the proposals become effective.
Subsequent to this eligible shareholders may request that, at the absolute
discretion of the directors, they be permitted to convert their shareholding
from the Aida Closed Ended Fund to the Aida Open Ended Fund.
Transfer to the Aida Closed Ended Fund from the Aida Open Ended Fund
Shareholders may elect to transfer their shareholding from the Aida Open Ended
Fund to the Aida Closed Ended Fund on any quarter day by giving not less than 45
days notice.
Listing
The Aida Open Ended Fund will seek a listing on the Channel Islands Stock
Exchange.
Fees
The will be no performance fees charged. The fee structure for the Aida Open
Ended Fund will comprise management fees based on net asset value.
Further details of the Aida Closed Ended Fund - the existing corporate entity
The Aida Closed Ended Fund will act solely as a feeder fund for the Aida Open
Ended Fund and, hence, will invest all of its investment funds in the shares of
the Aida Open Ended Fund.
Investment policy
The investment policy of the Aida Closed Ended Fund will be to invest all or
substantially all of its assets in the Aida Open Ended Fund to gain exposure to
the Open Ended Fund's investment strategy, which will be substantially similar
to the Aida Fund's existing investment policy.
Side-pocket shares
As noted above, the Aida Closed Ended Fund will as a result of the
implementation of the proposals hold side-pocket shares (as well as ordinary
shares) in the Aida Open Ended Fund. Accordingly, existing shareholders in the
Aida Closed Ended Fund will also following implementation of the proposals hold
ordinary shares and side-pocket shares in the Aida Closed Ended Fund.
Continuation vote
The articles of incorporation will be amended to require the Directors to
convene an extraordinary general meeting of the Aida Closed Ended Fund, the
first of which will be held at the end of 2015 (or earlier if such an
extraordinary general meeting is requisitioned by shareholders holding not less
than 10 per cent of the issued share capital of the Aida Closed Ended Fund), and
thereafter at five yearly intervals, at which a resolution will be put to
shareholders to continue the Aida Closed Ended Fund.
This will replace the Aida Closed Ended Fund's existing discount floor
provision, which requires a continuation vote to be put to shareholders if the
shares in the Aida Closed Ended Fund trade below a certain discount during its
financial year, and will thereby provide what the board believes to be a more
flexible and appropriate basis for the continued operation of the Aida Closed
Ended Fund following implementation of the proposals.
Liquidity
Shareholders in the Aida Closed Ended Fund will continue, as now, to have no
right to require redemption of their shares. Shareholders who wish to realise
their ordinary shares otherwise than pursuant to the winding up of the Closed
Ended Fund may be able to do so by selling their ordinary shares in the open
market. The directors may also elect to buy back ordinary shares at such price
and on such terms as they may in their absolute discretion determine, provided
always that the purchase price for an ordinary share is lower than the then
prevailing net asset value per ordinary share.
Side-pocket shares in the Aida Closed Ended Fund will not be listed or traded on
the London Stock Exchange. Such side-pocket shares will be converted into
ordinary shares in the Closed Ended Fund as side-pocket shares in the Aida Open
Ended Fund held by the Aida Closed Ended Fund are converted into ordinary shares
in the Aida Open Ended Fund.
Eligible shareholders may request that, at the absolute discretion of the
directors, they be permitted to convert their shareholding from the Aida Closed
Ended Fund to the Aida Open Ended Fund.
Conversion to a single currency class
To ensure that the Aida Closed Ended Fund does not become unbalanced due to
currency movements and the potential requirement to liquidate assets to make
payments in connection with such currency hedging both the Euro and Sterling
shares will be converted into US Dollar denominated shares which will be the
only class in issue.
Listing
It is intended that the ordinary shares of Aida Closed Ended Fund will continue
to be listed and traded on the London Stock Exchange.
Circular to shareholders
The directors and their advisers are continuing to develop the proposals to
enable them to be put to shareholders. A circular outlining the proposals and
containing notices convening the relevant shareholder meetings is expected to be
posted to shareholders within 30 days.
Takeover Code considerations
The UK Takeover Code (the "Code") applies to the Aida Closed Ended Fund. Under
Rule 9 of the Code, any person who acquires an interest (as such term is defined
in the Code) in shares which, taken together with shares in which he and persons
acting in concert with him are interested, carry 30 per cent. or more of the
voting rights of a company which is subject to the Code is normally required to
make a general offer to all of the remaining shareholders to acquire their
shares. Similarly, when any person, together with persons acting in concert with
him, is interested in shares which in aggregate carry not less than 30 per cent.
but does not hold shares carrying more than 50 per cent. of the voting rights of
such company, a general offer will normally be required if any further interests
in shares are acquired by any such person. Such an offer would have to be made
in cash at a price not less than the highest price paid by him, or by any member
of the group of persons acting in concert with him, for any interest in shares
in the company during the 12 months prior to the announcement of the offer.
Under Rule 37.1 of the Code, any increase in the percentage holding of a
shareholder which results from a company redeeming its own shares is also
treated as an acquisition for the purposes of Rule 9 of the Code. This would
ordinarily mean that the redemption of shares in the Aida Closed Ended Fund in
exchange for the transfer of shares in the Aida Open Ended Fund pursuant to an
election by an existing shareholder in the Aida Closed Ended Fund to switch his
investment to the Aida Open Ended Fund could (except in the case of a
shareholder who elects to exchange a proportion of his shares at least equal to
the overall proportion of shares in the Aida Closed Ended Fund in respect of
which switching requests are received by the Aida Closed Ended Fund) result in
such shareholder being obliged to make an offer for the remaining shares in the
Aida Closed Ended Fund.
However, the UK Takeover Panel (the "Panel") has confirmed to the Aida Closed
Ended Fund that:
(a)except in the case of a shareholder who is a director or the investment
manager of the Aida Closed Ended Fund (or whose relationship with the investment
manager or any one or more directors is such that the shareholder is, or is
presumed to be, acting in concert for the purposes of the Code with any of the
directors or the investment manager), a shareholder will, subject to (b) below,
not be required to make an offer for the remaining shares in the Aida Closed
Ended Fund if as a result of the implementation of the proposals he holds an
interest in shares in the Aida Closed Ended Fund which carry 30 per cent. or
more of the voting rights in the Aida Closed Ended Fund (although a shareholder
should contact the Panel if this situation occurs); and
(b)A shareholder will not be able to rely on (a) above if he acquires further
interests in shares at a time when he knew or, as a result of public statements
as to the intentions of any other shareholder(s), ought reasonably to have
known, that such acquisition would result in his being interested following
implementation of the proposals in shares carrying 30 per cent or more of the
voting rights in the Aida Closed Ended Fund. In the event of any doubt
shareholders should contact the Panel.
Shareholders who do not elect to exchange all of their shares in the Aida Closed
Ended Fund for shares in the Aida Open Ended Fund should note that subsequent to
the implementation of the proposals, they will be subject, in acquiring further
interests in shares in the Aida Closed Ended Fund, to the provisions of Rule 9
of the Code. For these purposes the percentage of voting rights in which a
shareholder will be interested will be calculated by reference to the number of
shares in the Aida Closed Ended Fund in issue following implementation of the
proposals. Consequently, if as a result of the implementation of the proposals
a shareholder (together with persons acting in concert with him) is interested
in shares in the Aida Closed Ended Fund which in aggregate carry not less than
30 per cent. but does not hold shares in the Aida Closed Ended Fund carrying
more than 50 per cent. of the voting rights in the Aida Closed Ended Fund, and
such shareholder subsequently acquires any further interests in shares in the
Aida Closed Ended Fund, he may be required to make a general offer for the
remaining shares in the Aida Closed Ended Fund pursuant to Rule 9 of the Code.
+-----------------------------------------------+------------------------------+
| Enquiries: | |
+-----------------------------------------------+------------------------------+
| Aida Capital | +44 20 7600 7500 |
| Nicholas Oppenheim | |
| Colin Clark | |
+-----------------------------------------------+------------------------------+
| | |
+-----------------------------------------------+------------------------------+
This press announcement is for information only and should be read in connection
with the full details of the proposals to be published in the circular to be
sent to shareholders before making any investment decision. The proposals will
be subject to the approval of the relevant regulatory bodies.
Any offer contained in this press announcement to exchange shares in the Aida
Closed Ended Fund for shares in the Aida Open Ended Fund is directed only at (i)
persons outside the United Kingdom to whom it is lawful to communicate it; (ii)
persons having professional experience in matters relating to investments who
fall within the definition of "investment professionals" in Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the
"Order"); (iii) high net worth bodies corporate, unincorporated associations and
partnerships and trustees of high value trusts as described in Article 49(2) of
the Order; or (iv) any other person in the United Kingdom to whom it is lawful
to communicate it (each a "Relevant Person"). Any person who is not a Relevant
Person will be unable to exchange shares in the Aida Closed-Ended Fund for
shares in the Aida Open-Ended Fund. Any person applying to exchange shares in
the Aida Closed Ended Fund for shares in the Aida Open-Ended Fund will be
required to represent and agree that they are a Relevant Person.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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