TIDMPTF
RNS Number : 4547Y
Phaunos Timber Fund Limited
21 August 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY (IN WHOLE OR IN PART), IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
THAT JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A TAKEOVER
OFFER OR AN OFFER OF SECURITIES.
21 August 2018
Phaunos Timber Fund Limited ("Phaunos" or the "Company")
Response to Stafford
The Company notes the announcement made by Stafford Capital
Partners Limited ("Stafford") on 16 August 2018 in response to the
Company's publication on 14 August 2018 of its response (the
"Response Circular") to the unsolicited cash offer made by Stafford
to acquire the entire issued and to be issued share capital of the
Company (the "Offer"). Unless otherwise stated, defined terms used
but not defined in this announcement have the meanings set out in
the Response Circular.
Nothing in the announcement made by Stafford on 16 August 2018,
changes the Board's view that Stafford's Offer does not provide an
attractive exit opportunity for Shareholders and that the Asset
Realisation Process is the best strategy for maximising shareholder
value over a reasonable timeframe.
Accordingly the Board reiterates:
-- its Updated Asset Realisation Range of US$0.54 - 0.60 per
Share(1) , representing a 10% to 22% upside to Stafford's
Offer;
-- its confidence in the expectation that the sale of all the
assets which are subject to a sale process under the Asset
Realisation Process would complete within 6 to 9 months, which
would cover the sale of assets comprising 92% of the Portfolio
Value; and
-- its recommendation that Shareholders should take no action in
relation to Stafford's Offer and that you should not sign any
document which Stafford or its advisers send to you.
Further, the Board considers that some of the statements made by
Stafford in its announcement dated 16 August 2018 are misleading.
The Board therefore seeks to clarify certain matters to
Shareholders.
1. Stafford is misleading Shareholders by comparing its Offer to
the Updated Break-Up NAV(2) ; the relevant comparable metric is the
Updated Asset Realisation Range
The Updated Break-Up NAV, as described under Appendix II of the
Response Circular, is based on values derived from third party
appraisers. Shareholders will appreciate that the realisation
values of portfolio assets being sold in the Asset Realisation
Process may vary from those values derived from third party
appraisers.
Accordingly, the Updated Asset Realisation Range of US$0.54 -
0.60 per Share(1) is the relevant comparable metric as it takes
into account the values that are being offered for its assets by
bidders that, in the view of the Board and its advisers, are
well-capitalised and highly credible international investors in
timber assets.
By comparing its Offer to the Updated Break-Up NAV the Board
believes that Stafford is being disingenuous. It is comparing its
Offer to an accounting measure, when it should be comparing its
Offer to the Updated Asset Realisation Range.
In its response announcement, Stafford states: "The Break-Up NAV
of US$0.51 per Phaunos Share does not take into account the time
value of money, nor the fees and expenses of approximately
GBP2,985,000 - GBP3,590,000 associated with advisory and legal
costs in responding to Stafford's Offer."
Shareholders should note that the Updated Asset Realisation
Range takes into account an assessment by the Board of the
estimated revenue and general operating costs of Phaunos as well as
costs associated with the Asset Realisation Process (including the
fees and expenses aforementioned by Stafford) through to the full
liquidation of Phaunos (as per the estimated timing described in
the Response Circular). In particular, the Board has made an
assessment of:
-- Break-up costs such as selling costs, realisation taxes and
provisions for litigation and liquidation costs included in the
calculation of the Updated Break-Up NAV; and
-- Matariki distributions, reduced by other costs including
among others, ongoing management and operational costs, audit,
directors' remuneration including directors' fees, additional
consultancy fees and any other fees, costs or expenses payable to,
or incurred by, the Phaunos Board (including the aforementioned
fees and expenses associated with advisory and legal costs in
responding to Stafford's Offer).
For reference, the Matariki distributions for the year ended 31
December 2017 represented US$0.03 per Share. In light of Matariki's
current trading, cash generation and dividend policy, the Board
expects Matariki to remain a strong contributor to Phaunos's
revenue whilst Matariki remains in the asset portfolio. The Board
expects Phaunos's 2018 revenue contribution from Matariki to remain
broadly in line with that of 2017.
Further, in its response announcement, Stafford states: "The
asset realisation values presented by the Phaunos Board in the
Defence Document are based on non-binding indicative bids for part
of the portfolio. They are subject to due diligence, foreign
exchange movements, confirmation of financing and regulatory
approval."
Although non-binding and subject to the conditions set out in
the Response Circular (as Shareholders would expect at this stage
of the process), it is important to note that the Indicative Bids
have been informed by a review of preliminary information including
information memoranda, appraisal reports and other relevant
forestry and financial information. The Board also confirms it has
received several bids for the entire portfolio of assets in South
America (excluding Aurora Forestal).
The Board of Phaunos also notes that the Updated Asset
Realisation Range of US$0.54 - 0.60 per Share:
-- is based on Indicative Bids that were received and will be paid for in US dollars; and
-- represents a 10% to 22% upside to Stafford's Offer.
2. Stafford's response announcement does not change the Board's
assessment of the Asset Realisation Process timing
The Board has worked hard to minimise the disruption caused by
Stafford's Offer, and is greatly encouraged by the pricing and
executability of the Indicative Bids received to date.
With respect to 92% of the Portfolio Value, the Board confirms
the following:
-- Completion for the sale of Matariki (74% of the Portfolio
Value), assuming binding offers are received in Q4 2018 and a
further 3-6 months to complete the OIO process, expected between Q1
and Q2 2019; and
-- Completion for the sale of the Latam Assets (18% of the
Portfolio Value), assuming a process of 60-120 days, expected
between Q4 2018 and Q1 2019.
The Board's expectation regarding timing is based on a review of
the Indicative Bids, the timelines provided by bidders as part of
the process and active discussions with the Company's asset sales
adviser, Pöyry.
All bidders for Matariki have indicated to the Board that they
are expecting the OIO process to take between 3 and 6 months. They
are experienced in dealing with the OIO and have a detailed
understanding of what is required to effectively navigate the
consent process.
The Board also notes the new overseas investment rules applying
to forestry transactions were passed by the New Zealand parliament
last week and will come into effect by around mid to late October
2018. The Board has been advised by its New Zealand legal counsel
that the new rules should result in an easier and quicker OIO
consent pathway for prospective bidders who meet the new
criteria.
Accordingly, the Board remains confident that the 6 to 9 months
period set out in the Response Circular, is an accurate estimate of
the time to complete the sale of all the assets which are subject
to a sale process under the Asset Realisation Process.
With respect to the other 8% of the Portfolio Value, the Board
reiterates that:
-- it is pursuing its discussions with Aurora Forestal's
majority shareholder to negotiate a possible disposal of its equity
interest in Aurora Forestal (5% of the Portfolio Value) and has
exercised its rights to initiate a voluntary exit pursuant to the
Aurora Forestal shareholder agreement;
-- on 27 July 2018, the Company's interest in NTP was realised
at marginally above its reported NAV as at 31 December 2017;
and
-- the disposal of the Company's interest in GTFF (4% of the
Portfolio Value) is subject to a separate liquidation
procedure.
The Board of Phaunos is committed to returning all sales
proceeds from the Asset Realisation Process as they are received,
after allowing for cash reserves to wind down the Company.
Stafford's announcement on 16 August 2018 does not change this
assessment.
Notes:
1. See Appendix I of the Response Circular for further details
on how the Updated Asset Realisation Range has been computed as
well as the level of conditionality associated with the Indicative
Bids
2. See Appendix II of the Response Circular for a pro forma
statement of net assets of Phaunos and Matariki Forestry Group
including further details on the Updated Going Concern NAV and
Updated Break-Up NAV
Enquiries:
Phaunos Timber Fund Limited
Richard Boléat (Chairman) +44 (0)1534 625522
Evercore Partners International LLP
(Financial Adviser)
Julian Oakley
Julien Baril +44 (0)20 7653 6000
Winterflood Investment Trusts (Corporate
Broker)
Joe Winkley
Neil Langford +44 (0)20 3100 0000
Rule 26.1 Disclosures
In accordance with Rule 26.1 of the UK Takeover Code, a copy of
this announcement will, subject to certain restrictions relating to
persons resident in restricted jurisdictions, be available on
Phaunos's website at
http://www.phaunostimber.com/offer-from-stafford/ by no later than
12 noon (London time) on the business day following the release of
this announcement. The content of the website referred to in this
announcement is not incorporated into and does not form part of
this announcement. The person responsible for arranging for the
release of this announcement on behalf of Phaunos is JTC Fund
Solutions (Guernsey) (acting as Company Secretary).
Important Notices
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or solicitation of any offer
to purchase, otherwise acquire, subscribe for, sell or otherwise
dispose of any securities or the solicitation of any vote or
approval in any jurisdiction. Any offer (if made) will be made
solely by certain offer documentation which will contain the full
terms and conditions of any offer (if made), including details of
how such offer may be accepted. This announcement has been prepared
in accordance with English law and the UK Takeover Code, and
information disclosed may not be the same as that which would have
been prepared in accordance with laws outside of the United
Kingdom. The release, distribution or publication of this
announcement in jurisdictions outside of the United Kingdom may be
restricted by laws of the relevant jurisdictions, and therefore
persons into whose possession this announcement comes should inform
themselves about, and observe, any such restrictions. Any failure
to comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
Evercore Partners International LLP ("Evercore"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as financial adviser for Phaunos
Timber Fund and no one else in connection with the Offer and other
matters set out in this announcement and will not regard any other
person as its client in relation to the Offer and other matters in
this announcement and will not be responsible to anyone other than
Phaunos Timber Fund for providing the protections afforded to
clients of Evercore, nor for providing advice in relation to the
Offer or any other matter referred to herein. Neither Evercore nor
any of its subsidiaries, branches or affiliates owes or accepts any
duty, liability or responsibility whatsoever (whether direct or
indirect, whether in contract or in tort, under statute or
otherwise) to any person who is not a client of Evercore in
connection with the Offer, this announcement or any statement
contained herein or otherwise. Apart from the responsibilities and
liabilities, if any, which may be imposed on Evercore by FSMA, or
the regulatory regime established thereunder, or under the
regulatory regime of any jurisdiction where exclusion of liability
under the relevant regulatory regime would be illegal, void or
unenforceable, neither Evercore nor any of its affiliates accepts
any responsibility or liability whatsoever for the contents of this
announcement, and no representation, express or implied, is made by
it, or purported to be made on its behalf, in relation to the
contents of this announcement, including its accuracy, completeness
or verification of any other statement made or purported to be made
by it, or on its behalf, in connection with Phaunos Timber Fund or
the matters described in this announcement. To the fullest extent
permitted by applicable law, Evercore and its affiliates
accordingly disclaim all and any responsibility or liability
whether arising in tort, contract or otherwise (save as referred to
above) which they might otherwise have in respect of this
announcement or any statement contained therein.
Winterflood Securities Limited ("Winterflood"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as corporate broker to Phaunos Timber
Fund and no one else in connection with the matters set out in this
announcement and will not regard any other person as its client in
relation to the matters in this announcement and will not be
responsible to anyone other than Phaunos Timber Fund for providing
the protections afforded to clients of Winterflood, nor for
providing advice in relation to any matter referred to herein.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
RSPPBMBTMBITBRP
(END) Dow Jones Newswires
August 21, 2018 07:49 ET (11:49 GMT)
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