TIDMIRIS
RNS Number : 3802L
DCG IRIS Limited
09 August 2013
This announcement is an advertisement and not a prospectus and
investors should not subscribe for or purchase any shares referred
to in this announcement except on the basis of information in the
prospectus published by DCG IRIS Limited on 12 November 2012 and
the supplementary prospectuses dated 13 December 2012 and 30
January 2013 in connection with the admission of the Placing Shares
to the Official List of the UK Listing Authority and the main
market of the London Stock Exchange plc. This announcement is not
for release, publication, or distribution, directly or indirectly,
in whole or in part, to US persons or into or within the United
States (including its territories and possessions, any state of the
United States and the District of Columbia), Australia, Canada,
Japan, or any other jurisdiction where to do so would constitute a
violation of the relevant laws or regulations of such
jurisdiction.
9 August 2013
DCG IRIS Limited
Proposals for a continuation vote, redemption offer and further
placing of shares in the Company.
The Company is today publishing a circular (the "Circular") in
connection with the proposals outlined in its announcement dated 18
July 2013 concerning a Continuation Vote, a Redemption Offer and a
further Placing of Shares in the Company.
Summary
-- The Company is convening an Extraordinary General Meeting for
10.30 a.m. on 5 September 2013 to consider an ordinary resolution
pursuant to the Articles to approve the continuation of the
Company. The Board is recommending that Shareholders vote in favour
of continuation;
-- The Company is proposing a further placing of Shares under
the Placing Programme, expected to close on or around 23 September
2013;
-- The Company is putting forward the Redemption Offer to enable
those Shareholder who wish to exit some, or all of their
Shareholding to do so at NAV less the costs of the Redemption
Offer, whilst permitting continued investment in the Company for
Continuing Shareholders;
-- The Company is proposing amendments to the Articles,
including to provide greater flexibility in relation to C Shares.
The proposed amendments are subject to Shareholder authority at the
Extraordinary General Meeting; and
-- The Company is seeking independent Shareholder approval at
the Extraordinary General Meeting for certain related party
transactions, described in more detail below.
Introduction
The Company was launched on 27 June 2012 with Sterling Shares in
issue and having total initial net assets of GBP39.5 million.
Having regard to the benefits of enlarging the Company the
Directors announced on 1 October 2012 that the Company planned to
proceed with a series of share offerings. Accordingly, the Company
commenced the Placing Programme, with the first Placing of
GBP11.025 million of Sterling C Shares gaining Admission on 20
December 2012. The Sterling C Shares were converted into Sterling
Shares by reference to their respective net asset values as at 31
January 2013 and the new Sterling Shares gained Admission on 8
March 2013. On 22 May 2013 and 15 July 2013, the Company issued
GBP9.277 million and GBP1.175 million of Sterling Shares,
respectively, also pursuant to the Placing Programme. The Directors
and Investment Manager are aware that investors wish to see the
Company grow in size. Accordingly, the Company proposes making
further Placings under the Placing Programme, with the next Placing
expected to close on or around 23 September 2013.
Notwithstanding the Board's efforts to enlarge the Company at 30
June 2013, the net asset value of the Company was approximately
GBP60 million. The Articles incorporate provisions requiring a
continuation vote to be proposed by way of ordinary resolution
where the net asset value of the Company, as at 30 June 2013, is
less than GBP150 million.
Accordingly, the Board is required under the Articles to propose
the Continuation Resolution, details of which are set out in the
Circular.
In addition, at the time of the launch of the Placing Programme
in November 2012 the Directors made the commitment that, if they
were required to propose a resolution for the continuation of the
Company based on its net asset value as at 30 June 2013, then they
would, either at the same time or prior to such continuation vote,
also consider proposing a redemption offer for the entire issued
share capital of the Company. The Circular sets out further details
of the proposed redemption offer which is conditional upon, inter
alia, the passing of the Continuation Resolution.
As announced on 18 July 2013, subject to the passing of the
Continuation Resolution, the Company proposes to undertake a
further placing of Shares.
Ericsson, one of the Company's current shareholders, has
indicated that it may subscribe for Shares under the Placing
Programme. As explained below, the further issue of Shares to
Ericsson would constitute a related party transaction for the
purpose of the Listing Rules and accordingly is conditional on
Independent Shareholder approval.
The Company is also seeking Shareholder approval for Dexion
Capital plc to be able to acquire Shares as principal under the
Placing Programme on an ongoing basis in its capacity as a market
maker for the Company. As Dexion is part of the Investment
Manager's group this will also constitute a related party
transaction for the purposes of the Listing Rules and is also
conditional on Independent Shareholder approval.
As part of the Proposals the Company is also proposing to amend
its Articles to alter the requirement on the Company to propose a
continuation vote in certain circumstances and to make certain
minor amendments to the mechanics of the C Shares.
Continuation Resolution
The Directors and Investment Manager continue to believe that
the Company offers a unique and attractive proposition for
investing in insurance-linked strategies. The Board believes it is
in the best interests of Shareholders for the Company to continue
and therefore recommends that Shareholders vote in favour of the
Continuation Resolution. Since launch in June 2012, the Company has
delivered an annualised NAV total return to 2 August 2013 of 5.68
per cent., which includes total dividends of 4.75 pence per
Sterling Share. In addition, the Company has conducted three
further share issues since launch, attracting GBP21.5 million from
new and existing investors and the Company's net asset value is now
approximately GBP61 million.
The Directors and Investment Manager are aware that investors
wish to see the Company grow in size. Accordingly, provided the
Continuation Resolution is passed, it is proposed that the Company
undertake a placing of Sterling Shares, to close on or around 23
September 2013.
If the Continuation Resolution is not passed, the Board is
required to put forward proposals for an orderly winding up or
reconstruction of the Company, which for the avoidance of doubt,
shall include an option to allow Shareholders to realise their
entire holding for cash at the then Net Asset Value less any costs
associated with such realisation.
Redemption Offer
On 18 July 2013, the Company announced that, in recognition of
the commitment made at the time of the launch of the Placing
Programme in November 2012, at the same time as the Continuation
Resolution was proposed, the Board would put forward proposals to
enable Shareholders to redeem some or all of their Shares in the
Company.
The Redemption Offer is structured to enable those Shareholders
who wish to exit some, or all of their shareholdings to do so,
whilst permitting continued investment in the Company for
Continuing Shareholders.
In implementing the Redemption Offer, the Investment Manager
will allocate to a separate Redemption Portfolio assets of the
Company worth in aggregate (as at the Portfolio Split Date) an
amount equal to the Net Asset Value (as at the same date) of the
Redeemed Shares. Except as explained below, it is expected that the
proportion of each asset (including cash) and each liability
allocated to the Redemption Portfolio would be pro rata to the
aggregate NAV of the Redemption Portfolio compared to that of the
Continuing Portfolio.
To the extent that the Company issues Shares in the next
Placing, which is due to close on or around 23 September 2013,
additional cash (and correspondingly fewer Master Fund Shares) may
be allocated to the Redemption Portfolio than as per the pro rata
proportions described above. Such an additional allocation of cash
could accelerate the first payment to Shareholders in satisfaction
of valid acceptances of the Redemption Offer to October 2013.
It is expected that a further payment (or, absent such
arrangements as set out immediately above, the first payment) to
Shareholders in satisfaction of valid acceptances of the Redemption
Offer would be made in late January or early February 2014 based on
the value of the Redemption Portfolio as at 31 December 2013 (being
the first date by reference to which the Company may redeem Master
Fund Shares held in the Redemption Portfolio).
The costs associated with or attributable to the Redemption
Offer will be deducted from the Redemption Portfolio. Shareholders
should note that Excess Costs may be payable by the Company, and
allocated to the Redemption Portfolio, in the event that the
Company redeems its shares in the Master Fund in connection with a
redemption offer on or before the seventh anniversary of IPO
Admission. Further details of the Excess Costs are set out in
paragraph 5 of Part 5 of the Circular.
If the side pocket established by the Master Fund in relation to
Hurricane Sandy is not resolved by 31 December 2013, then one or
more further payments of redemption proceeds to Shareholders may be
necessary, as and when the side pocket is resolved.
It is emphasised that following an acceptance of the Redemption
Offer, Redeeming Shareholders will no longer be able to deal in the
Shares that they have tendered to have redeemed on the London Stock
Exchange.
Where Shares are redeemed pursuant to the Redemption Offer,
Redeeming Shareholders will cease to be Shareholders but will
instead have rights as part of the contract formed by the Company's
acceptance of tenders of Shares pursuant to the Redemption Offer.
Accordingly, on or immediately after the Portfolio Split Date, the
Redeemed Shares will be cancelled and Redeeming Shareholders will
become unsecured creditors of the Company in respect of outstanding
and unpaid redemption monies. Such Redemption Rights may not be an
eligible investment for certain Redeeming Shareholders and/or may
not be permitted to be held through certain "wrappers", structured
products or other similar arrangements. The terms of such
Redemption Rights (and hence Redeeming Shareholders' rights against
the Company in respect of unpaid redemption monies) are set out in
Part 2 of the Circular (and in particular paragraph 6 of that Part
2) as part of the terms and conditions on which Redeeming Shares
are to be redeemed and cancelled.
It is not expected that the redemption of Shares under the
Redemption Offer will itself give rise to any uplift in the NAV per
Share for Shareholders who continue to hold Shares, nor should the
Redemption Offer result in any dilution to NAV per Share for those
Shareholders.
Shareholders should note that if as a result of the number of
Shares tendered under the Redemption Offer (but after taking into
account any new Shares to be issued under the Placing Programme)
the Directors determine that the Company would have net assets of
less than GBP50 million (the "Minimum Size Condition"), they will
as soon as practicable put forward proposals in place of the
Redemption Offer for an orderly winding up or reconstruction of the
Company, which for the avoidance of doubt, shall include an option
to allow Shareholders to realise their entire holding for cash at
the then Net Asset Value less any costs associated with such
realisation.
If the Continuation Resolution is passed and the Minimum Size
Condition is met, the Redemption Offer will proceed (subject to the
satisfaction or waiver of certain other conditions as set out in
Part 2 of the Circular). Part 2 of the Circular (together with any
subsequent announcement or announcements which the Company may make
to an RIS) also sets out the terms and conditions on which the
Redemption Offer will be made and the procedure for acceptance by
Shareholders.
Costs of the Redemption Offer
The costs and expenses incurred in relation to the Redemption
Offer are estimated to amount to approximately GBP14,500 in
aggregate. Such costs and expenses will be paid from the Redemption
Portfolio so will reduce the redemption monies payable in respect
of each Redeemed Share on a pro rata basis in accordance with the
number of Redeemed Shares.
Further redemption offers
Subject to the applicable laws including the requirements of the
Companies Law and Guernsey regulatory requirements, the Directors
will consider proposing a further redemption offer for the entire
issued share capital of the Company if the net asset value of the
Company at 30 June 2014 is less than GBP150 million or currency
equivalent.
Shares would be redeemed at the Net Asset Value per Share at the
relevant redemption date, less costs attributable to the redemption
offer (including a proportion of the Excess Costs). Further details
of the Excess Costs are set out in paragraph 5 of Part 5 of the
Circular. If as a result of the number of Shares tendered under any
redemption offer the Directors determine that the Company would be
of uneconomic size they will as soon as practicable put forward
proposals in place of the proposed redemption offer for an orderly
winding up or reconstruction of the Company which, for the
avoidance of doubt, shall include an option to allow Shareholders
to realise their entire holding for cash at the then Net Asset
Value less any costs associated with such realisation.
Investors should note that any redemption offers will be subject
to the normal redemption notice periods of the Master Fund and any
restrictions on redemptions imposed from time to time by the Master
Fund. Further information on the restrictions on redemptions
imposed by the Master Fund are set out under the heading "Deferral
of Redemptions" in Part III of the Prospectus. The information in
the section headed "Deferral of Redemptions" in Part III of the
Prospectus is expressly incorporated by reference into the
Circular.
Amendment to the Articles of Incorporation
The Board is aware that a significant number of Shareholders
currently wish to remain invested in the Company. Accordingly, in
connection with the Proposals, the Company is proposing to adopt
New Articles which are in substantially the same form as the
Company's existing Articles, save that:
(i) the provisions in respect of the obligations of the Board to
propose a continuation vote in circumstances relating to the size
of the Company have been amended, to delete the continuation vote
triggered by the net asset value of the Company as at 30 June 2013.
Under the New Articles, the Directors will only be required, as
before, to propose an ordinary resolution for the continuation of
the Company if the average of the three month end net asset values
of the Company is less than GBP50 million. The New Articles provide
that where such a continuation vote is proposed by the Directors
and is passed, the Directors will not be required to propose
another vote on this basis for a period of one year from the end of
the relevant consecutive three month period; and
(ii) the mechanics for the conversion of the C Shares have been
amended to give the Company greater flexibility to delay converting
C Shares into Ordinary Shares if the Directors resolve that it is
in C Shareholders' best interests to isolate the proceeds of, and
assets attributable to, the C Shares from the assets attributable
to the Ordinary Shares as a result of an event that the Directors
reasonably consider has or could have an impact on the value of the
assets attributable to either of such classes of shares and such
event is expected to be substantially resolved in a reasonable
timeframe. The ability to implement such a delay in the conversion
of C Shares into Ordinary Shares may facilitate, for example, the
issue of C Shares at a time when the Master Fund has created a
"side pocket" in respect of illiquid investments (most typically
following a natural catastrophe that has impacted the portfolio).
In such a situation, new C Shareholders would not be exposed to the
side pocket and conversion of C Shares could be delayed until the
side pocket is (as determined by the Directors at their discretion)
substantially resolved. Under the current Articles, any C Shares
must effectively be converted into Ordinary Shares at the point at
which at least 95 per cent. of the assets attributable to the
relevant C Share class (or such other percentage as the Directors
may decide as part of the terms of issue of the relevant C Share
class) have been invested or committed to be invested in accordance
with the investment policy of the Company. Accordingly, under the
current Articles, the Directors do not have flexibility to extend
the C Shares other than as specified in advance of their issue.
A copy of the existing Articles and the proposed New Articles
marked to show the changes will be available during normal business
hours (Saturdays, Sundays and public holidays excepted) at the
offices of Dickson Minto W.S., Broadgate Tower, 20 Primrose Street,
London EC2A 2EW and the Company's registered office up to and
including close of business on 5 September 2013 and at the venue of
the Extraordinary General Meeting for at least 15 minutes prior to
the start of the meeting and up until the close of the meeting.
Related Party Transactions
Ericsson Related Party Transaction
As noted above, subject to the passing of the Continuation
Resolution at the Extraordinary General Meeting, the Company will
seek to undertake a further issue of Shares under the Placing
Programme. It is anticipated that Ericsson may subscribe for Shares
in the current Placing under the Placing Programme, which is
expected to close on or around 23 September 2013. The amount of
Ericsson's investment will not be known in advance of the closing
date and will depend, inter alia, on the amount subscribed by other
investors; however it will be subject to an overall limit such that
Ericsson will not, as a result of its subscriptions for Shares or C
Shares (on the assumption that they are converted) under the
current Placing, hold more than 22 per cent. of the voting rights
in the Company. The current Placing is open to other investors
alongside Ericsson, and all Placees, including Ericsson will
subscribe on the same terms.
Ericsson currently owns 10,967,000 Sterling Shares, being
approximately 17.84 per cent. of the issued share capital of the
Company. Ericsson is therefore a substantial shareholder and a
related party of the Company under Chapter 11 of the Listing
Rules.
The participation by Ericsson in the Placing Programme is,
pursuant to the Listing Rules, subject to the passing of Resolution
3, as an ordinary resolution, by Independent Shareholders of the
Company. Ericsson will not vote on Resolution 3 at the
Extraordinary General Meeting to approve the Ericsson Related Party
Transaction and it has confirmed that it does not have any
Associates. Resolution 3 requires the approval of more than 50 per
cent. of the votes cast in respect of it by Independent
Shareholders of the Company.
The Board considers that the Ericsson Related Party Transaction
is in the best interests of Shareholders because, as part of the
Placing Programme, it facilitates the growth of the Company's net
asset value. In turn, such growth has the effect of reducing the
fixed costs as a proportion of the Company's net asset value,
raising the Company's profile, and potentially widening the
audience of potential investors in the Company whose investment
criteria for closed-ended investment companies may include
size-based factors. Over time, this may also improve the secondary
market liquidity of the Shares.
Dexion Related Party Transaction
As noted above, in its market making activities Dexion may wish
to acquire Shares in the Company as principal from time to time.
Dexion is part of the same group of companies as the Investment
Manager and is therefore a related party for the purposes of
Chapter 11 of the Listing Rules.
The ongoing acquisition of Shares by Dexion in the Placing
Programme is, pursuant to the Listing Rules, subject to the passing
of Resolution 4, as an ordinary resolution, by Independent
Shareholders of the Company. Dexion will not vote on Resolution 4
at the Extraordinary General Meeting to approve the Dexion Related
Party Transaction and it has undertaken to take all reasonable
steps to ensure that its Associates will not vote on Resolution 4.
Resolution 4 requires the approval of more than 50 per cent. of the
votes cast in respect of it by Independent Shareholders of the
Company.
The Directors consider that the Dexion Related Party Transaction
is in the best interests of Shareholders because, as part of the
Placing Programme, it facilitates the growth of the Company's net
asset value, with the benefits set out above. In addition, the
Board considers that the ability to place new Shares with all
market makers in the Shares (without the need to exclude Dexion)
has the potential for improving secondary market liquidity of the
Shares. Robin Fuller is a director of the Investment Manager (which
is part of the same of group of companies as Dexion). He therefore
has a material interest in the Dexion Related Party Transaction and
has not taken part in the Board's consideration of this matter.
Conditions of the Proposals
The Proposals are subject to, amongst other things, approval at
the Extraordinary General Meeting.
The resolutions which will be proposed at the EGM are as
follows:
-- Resolution 1, an ordinary resolution, on which all
Shareholders may vote, to approve the continuation of the Company
pursuant to the Articles;
-- Resolution 2, a special resolution, on which all Shareholders
may vote, to amend the Articles of Incorporation of the Company, it
being a requirement of Guernsey company law that any such amendment
be approved by special resolution. Further details of the proposed
amendments to the Articles are set out in the section entitled
'Amendment to the Articles of Incorporation' above;
-- Resolution 3, an ordinary resolution, on which only
Independent Shareholders may vote, to approve the issue of Shares
to Ericsson which constitutes a related party transaction under
Chapter 11 of the Listing Rules. Further details of the Ericsson
Related Party Transaction are set out in the section entitled 'The
Related Party Transactions' above; and
-- Resolution 4, an ordinary resolution, on which only
Independent Shareholders may vote, to approve the ongoing issue of
Shares to Dexion which constitutes a related party transaction
under Chapter 11 of the Listing Rules. Further details of the
Dexion Related Party Transaction are set out in the section
entitled 'The Related Party Transactions' above.
Resolutions 2, 3 and 4 are conditional on the passing of
Resolution 1.
The Circular contains a notice convening the Extraordinary
General Meeting of the Company to be held at 10.30 a.m. on 5
September 2013 at 1 Le Truchot, St. Peter Port, Guernsey GY1 1WD at
which the Resolutions will be proposed. Implementation of the
Redemption Offer is also conditional on the Minimum Size Condition
being met.
Terms used and not defined in this announcement bear the
meanings given to them in the Circular.
Copies of the Circular will shortly be available for inspection
at
http://www.morningstar.co.uk/uk/NSM.
Copies of the Circular are also available in electronic form on
Dexion's website: www.dexioncapital.com/dcg-iris/news/circulars
and, until 5 September 2013, are available for collection from the
registered office of the Company at 3rd Floor, 1 Le Truchot, St.
Peter Port, Guernsey GY1 1WD.
Dexion Capital (Guernsey) Limited
Carol Kilby/Chris Copperwaite 01481 743 940
Dexion Capital plc
Ana Haurie/Robert Peel 020 7832 0900
Important notices
This announcement does not constitute or form part of, and
should not be construed as, any offer for sale or subscription of,
or solicitation of any offer to buy or subscribe for, any share in
the Company or securities in any other entity, in any jurisdiction,
including the United States, Australia, Canada, Japan, nor shall
it, or any part of it, or the fact of its distribution, form the
basis of, or be relied on in connection with, any contract or
investment decision whatsoever, in any jurisdiction. This
announcement does not constitute a recommendation regarding any
securities.
This announcement, and the information contained therein, is not
for viewing, release, distribution or publication in or into the
United States, Canada, Australia or Japan or any other jurisdiction
where applicable laws prohibit its release, distribution or
publication, and will not be made available to any national,
resident or citizen of the United States, Canada, Australia or
Japan. The distribution of this announcement in other jurisdictions
may be restricted by law and persons into whose possession this
announcement comes must inform themselves about, and observe, any
such restrictions. Any failure to comply with the restrictions may
constitute a violation of the federal securities law of the United
States and the laws of other jurisdictions.
The shares to be issued by the Company (the "Securities") have
not been and will not be registered under the US Securities Act of
1933 (the "Securities Act"), or with any securities regulatory
authority of any state or other jurisdiction of the United States.
The Securities may not be offered, sold, resold, pledged,
delivered, distributed or otherwise transferred, directly or
indirectly, into or within the United States, or to, or for the
account or benefit of, US persons (as defined in Regulation S under
the Securities Act). No public offering of the Securities is being
made in the United States. The Company has not been and will not be
registered under the US Investment Company Act of 1940 (the
"Investment Company Act") and, as such, holders of the Securities
will not be entitled to the benefits of the Investment Company Act.
No offer, sale, resale, pledge, delivery, distribution or transfer
of the Securities may be made except under circumstances that will
not result in the Company being required to register as an
investment company under the Investment Company Act.
All investments are subject to risk, including the loss of the
principal amount invested. Past performance is no guarantee of
future returns. All investments to be held by the Company involve a
substantial degree of risk, including the risk of total loss. You
should always seek expert legal, financial, tax and other
professional advice before making any investment decision.
Neither the Company, Dexion Capital plc, their affiliates nor
any other person (including without limitation, the directors,
officers, employees, partners, agents, representatives, members and
advisers of the Company, Dexion Capital plc and their affiliates)
undertakes any obligation to update or revise any statement made in
this announcement (including, without limitation any forward
looking statements), whether as a result of new information, future
events or otherwise.
The information in this announcement contains forward looking
statements. Any statement other than a statement of historical fact
is a forward looking statement. Actual results may differ
materially from those expressed or implied by any forward looking
statement. You should not place undue reliance on any forward
looking statement, which speaks only as of the date of its
issuance.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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