TIDMCAT
RNS Number : 8219W
CATCo Reinsurance Opps Fund Ltd
03 January 2014
CATCo Reinsurance Opportunities Fund Ltd. ("the Company")
Proposed Return of Value to Shareholders of US$0.20 per Existing
Ordinary Share, Share Capital Consolidation and Notice of Special
General Meeting
To: SFM, London Stock Exchange Date: 3 December 2014
and Bermuda Stock Exchange
Further to the announcement of the 6(th) December 2013, the
Board are pleased to announce its intention to make a return of
value to Shareholders of US$0.20 per Existing Ordinary Share,
equivalent to approximately US$74 million in aggregate (the "Return
of Value"). Based on the closing middle market price of US$1.112
per Existing Ordinary Share on 31 December 2013 (being the latest
practicable date prior to posting of the Circular), the proposed
Return of Value to Shareholders equates to approximately 18 per
cent. of the Company's market capitalisation at that date.
A Circular has today been published which provides further
details of a proposal which will provide greater flexibility in how
Shareholders can receive the proposed Return of Value, for which
approval is being sought at the Special General Meeting to be held
at 10.00 a.m. (Bermuda time) on 27 January 2014. However, if the
Return of Value is not approved or does not otherwise become
unconditional, the Directors intend to declare a special dividend
of US$0.20 per Existing Ordinary Share on or around 28 February
2014.
The proposed Return of Value is to be made using a B Share
scheme with associated Share Capital Consolidation. This method of
return has been chosen as it allows all Shareholders to be treated
equally on a pro rata basis and gives the potential for
Shareholders (other than Restricted Shareholders) to receive the
return as either income or capital (as further described in the
Circular).
Shareholders will also be offered the opportunity to remain
invested for a proportion or all of their share of the Return of
Value, subject to an aggregate maximum of US$25 million remaining
invested.
Reasons for, and background to, the Return of Value
With no significant insured losses incurred on the 2013
investment portfolio the Company has concluded a successful year
with the net asset value benefitting from approximately 20 cents
per Ordinary Share of net insurance premiums earned over the full
year.
As at 1 January 2014, the Master Fund has deployed
collateralised retrocession reinsurance capacity at rates in excess
of the Company's target returns.
The Directors remain mindful of the need to maintain a
disciplined investment approach with regards to risk while
remaining focused on the Company's investment objective which is to
target an internal rate of return in excess of LIBOR plus 12 per
cent. to 15 per cent. per annum. To that end, the Directors believe
that there is an optimum level of capital required to achieve these
aims beyond which they may start to become impaired.
The Directors are therefore proposing to return up to
approximately US$74 million by way of the proposed Return of Value,
or if the Return of Value is not approved by Shareholders simply by
way of a dividend.
For the avoidance of doubt, the Return of Value is separate and
in addition to the target annual distribution of an amount equal to
LIBOR plus 5 per cent. of the Net Asset Value at the end of each
Fiscal Year. The Directors currently expect to declare this annual
distribution in the week commencing 6 January 2014.
The Directors, as advised by the Investment Manager and
following consultation with certain Shareholders, have determined
that the Return of Value is in the best interests of the Company
and the Shareholders as a whole as:
-- It better enables the Company to maintain a disciplined
investment approach and to target an internal rate of return in
excess of LIBOR plus 12 per cent. to 15 per cent. per annum.
-- It provides Shareholders with the opportunity to realise a
significant portion of the net insurance premiums since launch.
-- It gives all Shareholders (with the exception of Restricted
Shareholders) the choice as to how they receive their share of the
Return of Value, which is intended to afford UK tax resident
Shareholders flexibility in the tax treatment of their
proceeds.
-- Subject to an aggregate maximum of US$25 million of the total
Return of Value remaining invested, it allows Shareholders (with
the exception of Restricted Shareholders) to elect to remain
invested in respect of a proportion or all of the monies that would
have otherwise be returned to them.
-- It treats all Shareholders equally relative to the size of
their existing shareholdings in the Company.
The Return of Value
The proposed Return of Value comprises a special distribution to
Shareholders of US$0.20 per Existing Ordinary Share, being
approximately US$74 million in aggregate. To give Shareholders
flexibility in how they receive their share of the Return of Value,
it is proposed that the Return of Value is to be implemented by way
of a B Share scheme under which each Shareholder will receive one B
Share for every Existing Ordinary Share held at the Record Time
(such entitlement being the "B Share Entitlement") and each
Shareholder will be entitled to elect how the Company treats their
B Shares from the three alternatives set out below (the "B Share
Alternatives").
Shareholders who do not make a valid election, and all
Restricted Shareholders, will be deemed to have elected for the
Income Alternative and will automatically receive their share of
the Return of Value in cash by way of the B Share Dividend.
Shareholders are not entitled to split their B Share Entitlement
between the B Share Alternatives.
Shareholders should also note that the Return of Value is
conditional upon the passing of Resolution 1 at the Special General
Meeting.
Alternative 1 - The Reinvestment Alternative
Under the Reinvestment Alternative, conditional upon admission
of the Ordinary Shares to be issued (the "Reinvestment Ordinary
Shares") to trading on the Specialist Fund Market and the BSX and
subject to the potential scaling back outlined below, Shareholders
will be entitled to elect for all (but not part of) of their B
Share Entitlement to remain invested in the Company by way of
conversion of their B Shares into Reinvestment Ordinary Shares on
28 January 2014, free of all dealing expenses and commissions, at a
price per Reinvestment Ordinary Share based on the average of the
middle market prices of Ordinary Shares for 20 January 2014 and the
four subsequent dealing days (the "Reference Share Price").
The Reinvestment Alternative is limited to an aggregate maximum
of US$25 million being reinvested and, in the event of
oversubscription, Shareholders' elections will be scaled back pro
rata to the number of Existing Ordinary Shares elected for the
Reinvestment Alternative by each Shareholder at the Election
Deadline. B Shares that are not converted into Reinvestment
Ordinary Shares due to the operation of scaling back or the
Reinvestment Alternative not becoming unconditional will, at the
election (or deemed election) of the Shareholder, be treated as
being subject to the Capital or the Income Alternative.
On conversion, Shareholders will receive their pro rata share of
such number of Reinvestment Ordinary Shares as is equal to US$0.20
(being the amount of the Return of Value per B Share)/Reference
Share Price multiplied by the aggregate number of B Shares being
converted, rounded down to the nearest whole Reinvestment Ordinary
Share, with fractional entitlements being treated as described in
Part 4 of the Circular.
Alternative 2 - The Capital Alternative
Those Shareholders who elect for the Capital Alternative in
respect of all (but not part of) of their B Share Entitlement will
have those B Shares redeemed by the Company, free of all dealing
expenses and commissions, and then cancelled. The redemption
proceeds will equal US$0.20 per B Share (with the aggregate
entitlement of each holder being rounded down to the nearest cent)
(the "Capital Repayment") and will be sent by cheque or credited
through your CREST account by 7 February 2014.
The amounts received under the Capital Alternative should
generally be taxed as capital for UK tax purposes. Alternative 3 -
The Income Alternative (B Share Dividend)
Those Shareholders who elect (or who are deemed to elect) for
the Income Alternative in respect of their B Share Entitlement will
receive a dividend of US$0.20 per B Share (the "B Share Dividend"),
which will become payable on each B Share on 28 January 2014. Such
dividend (with the aggregate entitlement of each holder being
rounded down to the nearest cent) will be sent by cheque or
credited through your CREST account by 7 February 2014.
The amounts received under the Income Alternative should
generally be taxed as income for UK tax purposes.
Shareholders who elect for the Reinvestment Alternative or the
Capital Alternative will be deemed to have waived any entitlement
to the B Share Dividend on their B Shares (save in respect of B
Shares that are not reinvested as a result of any scaling back of
the Reinvestment Alternative and are not elected to the Capital
Alternative).
For the avoidance of doubt, the Return of Value is separate and
in addition to the target annual distribution of an amount equal to
LIBOR plus 5 per cent. of the Net Asset Value at the end of each
Fiscal Year. The Directors currently expect to declare this annual
distribution in the week commencing 6 January 2014.
The Share Capital Consolidation
The Directors believe that the Existing Ordinary Shares, like
those of other closed-ended investment funds, are generally valued
in the market by reference to the Net Asset Value per Ordinary
Share. Accordingly, in connection with the Return of Value, the
Directors are also proposing a Share Capital Consolidation, the
objective of which is to seek to ensure that the Net Asset Value
per Ordinary Share is the same before and after the Return of
Value.
In order to effect the Share Capital Consolidation, immediately
following the issue of B Shares all of the Existing Ordinary Shares
will be sub-divided and consolidated into a smaller number of New
Ordinary Shares, with the New Ordinary Shares having the same Net
Asset Value per New Ordinary Share as the Net Asset Value per
Existing Ordinary Share on 31 December 2013 as adjusted downwards
to reflect the declaration of the Company's annual dividend (which
is expected to be declared in the week commencing 6 January 2014
with a record date prior to the implementation of the Share Capital
Consolidation).
The Net Asset Value will not be recalculated for the purposes of
the Share Capital Consolidation and will be based upon the 31
December 2013 Net Asset Value adjusted as appropriate to reflect
the Company's annual dividend and the Return of Value. Accordingly,
the number of New Ordinary Shares to be issued in place of the
Existing Ordinary Shares and hence the conversion ratio will be
determined by dividing the Net Asset Value of an Existing Ordinary
Share immediately following the issue of the B Shares, which will
equal the 31 December Net Asset Value adjusted downwards to reflect
the annual dividend and the Return of Value, by the Net Asset Value
of an Existing Ordinary Share as at 31 December 2013, adjusted
downwards to reflect the Company's annual dividend.
The effect of the Share Capital Consolidation will be to reduce
the number of issued Ordinary Shares to reflect the overall change
in the Company's Net Asset Value resulting from the Return of
Value, but Shareholders will own the same proportion of the Company
as they did previously, subject to fractional entitlements and not
taking into account the ability of Shareholders to reinvest other
than on apro rata basis under the Reinvestment Alternative.
Special General Meeting
The Return of Value is conditional upon the passing of
Resolution 1 and the Share Capital Consolidation is conditional
upon the passing of Resolution 2 (which is also conditional on the
passing of Resolution 1 and Admission), both of which will be put
to Shareholders at the Special General Meeting.
The Special General Meeting will be held at Crawford House, 50
Cedar Avenue, Hamilton HM11, Bermuda at 10.00 a.m. (Bermuda time)
on 27 January 2014. Notice of the Special General Meeting is set
out in Part 8 of the Circular.
Recommendation
The Directors are of the opinion that the Return of Value, the
Share Capital Consolidation and the Resolutions to be proposed at
the Special General Meeting are in the best interests of the
Company and the Shareholders as a whole. The Directors unanimously
recommend that Shareholders vote in favour of the Resolutions as
the Directors intend to do for their respective individual
beneficial holdings of, in aggregate, 490,555 Existing Ordinary
Shares, representing approximately 1.33 per cent. of the current
total issued share capital of the Company.
The Board makes no recommendation to Shareholders in relation to
the elections for the B Share Alternatives. Shareholders need to
take their own decision in this regard and are recommended to
consult their own independent professional adviser.
Unless otherwise defined, capitalised words and phrases in this
announcement shall have the meaning given to them in the
Circular.
Expected Timetable of Principal Events
Event Time and/or date,
2014
Latest time and date for receipt of Forms 10.00 a.m. (Bermuda
of Direction or CREST Proxy Instructions time) on 22 January
from the Depositary Interest Holders for
the Special General Meeting
Election Deadline: latest time and date 1.00 p.m. on 24
for receipt of: (i) TTE Instructions from January
Depositary Interest Holders in relation
to the B Share Alternatives; and (ii)
Forms of Election from certificated Shareholders
in relation to the B Share Alternatives
Latest time and date for receipt of Forms 10.00 a.m. (Bermuda
of Proxy for the Special General Meeting time) on 25 January
Special General Meeting 10.00 a.m. (Bermuda
time) on 27 January
Latest time and date for dealings in Existing 5.00 p.m. on 27
Ordinary Shares. Existing Ordinary Share January
register closed and Depositary Interests
in respect of Existing Ordinary Shares
disabled in CREST
Record Time for the Share Capital Consolidation 5.00 p.m. on 27
and entitlement to B Shares January
B Shares issued As soon as practicable
after 8.00 a.m.
on 28 January
Share Capital Consolidation Immediately after
the B Shares are
issued on 28 January
New Ordinary Shares admitted to trading 28 January
on the Specialist Fund Market and the
BSX. Dealings commence in New Ordinary
Shares
CREST accounts for Depositary Interests As soon as practicable
in respect of New Ordinary Shares credited after 8.00 a.m.
on 28 January
B Share Dividend becomes payable on B 28 January
Shares issued pursuant to the Income Alternative;
outstanding B Shares or which B Share
Dividend has been paid automatically reclassified
as Deferred Shares
Redemption of B Shares 28 January
Conversion of B Shares into Reinvestment Following the payment
Ordinary Shares of the B Share
Dividend, the conversion
of B Shares into
Deferred Shares
and the redemption
and subsequent
cancellation of
B Shares on 28
January
Reinvestment Ordinary Shares admitted 29 January
to trading on the Specialist Fund Market
and the BSX
CREST Accounts credited for Depositary As soon as practicable
Interests in respect of Reinvestment Ordinary after 8.00 a.m.
Shares issued on 29 January
Despatch of share certificates in respect 7 February
of the New Ordinary Shares and Reinvestment
Ordinary Shares
Despatch of cheques, or if Depositary 7 February
Interests held in CREST, CREST accounts
credited in respect of proceeds under
the Capital Alternative
Despatch of cheques, or if Depositary 7 February
Interests held in CREST, CREST accounts
credited in respect of proceeds under
the Income Alternative
For further information, please contact:
Jason Bibb
CATCo Investment Management Ltd
Telephone: +1 (441) 531 2227
Email: jason.bibb@catcoim.com
David Benda / Hugh Jonathan
Numis Securities Limited
Telephone: +44 (0) 20 7260 1000
John Whiley
Prime Management Ltd
Tel: +1 (441) 295 0329
Copies of the following documents will be available for
inspection at the registered office of the Company, Crawford House,
50 Cedar Avenue, Hamilton HM11, Bermuda during normal business
hours until the conclusion of the Special General Meeting: (i) the
existing Bye-Laws of the Company; (ii) the Bye-Laws of the Company
proposed to be adopted at the Special General Meeting, showing the
amendments to the Company's existing Bye-Laws; and (iii) a copy of
the Circular.
None of the B Shares, Depositary Interests. New Ordinary Shares,
Reinvestment Ordinary Shares or Deferred Shares have been or will
be registered under the US Securities Act or the state securities
laws of the United States and none of them may be offered or sold
in the United States unless pursuant to a transaction that has been
registered under the US Securities Act and the relevant state
securities laws or that is not subject to the registration
requirements of the US Securities Act or such laws, either due to
an exemption therefrom or otherwise.
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law and therefore
persons in such jurisdictions into which this announcement is
released, published or distributes should inform themselves about
and observe such restrictions.
This announcement does not constitute, or form part of, an offer
to sell or the solicitation of an offer to subscribe for any
securities, nor the solicitation of any vote or approval in any
jurisdiction, nor shall there be any sale, issue or transfer of the
securities referred to in this announcement in any jurisdiction in
contravention of applicable law.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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