TIDMPTF TIDMTTM
RNS Number : 9194Z
Phaunos Timber Fund Limited
06 September 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.
6 September 2018
Phaunos Timber Fund Limited ("Phaunos" or the "Company")
Response to Stafford AGM Questions
The board of directors of Phaunos (the "Board") notes the
announcement made on 4 September 2018 by Stafford relating to the
14 questions it is asking Phaunos to answer at the forthcoming
annual general meeting of the Company.
Phaunos would like to reiterate its view that Stafford's Offer
of US$0.49 per Phaunos share does not provide an attractive exit
opportunity for Phaunos shareholders. The Asset Realisation Process
is progressing well and is the best strategy for maximising
shareholder value over a reasonable timeframe. The view of the
Board, as mentioned in the Response Circular, is unchanged:
Stafford's Offer significantly undervalues Phaunos and you should
take no action in relation to Stafford's Offer and you should not
sign any document which Stafford or its advisers send to you.
The Board has an agenda for the upcoming AGM and will only reply
to questions from Stafford or its advisers if it judges that
answering those would be in the best interest of Shareholders (see
Appendix A for Phaunos's responses). The Board does not believe it
is in the best interest of Shareholders however for Phaunos to
answer each of the 14 questions asked by Stafford as:
-- many questions have already been answered in the Response
Circular and subsequent announcements; and
-- other questions could put value at risk for Phaunos
Shareholders - Phaunos has no intention of disclosing confidential
information that may prejudice the Asset Realisation Process or its
ongoing legal dispute with Rayonier.
As a result, other than the update on the timing of the disposal
of Matariki provided under Appendix A, the Board does not intend to
comment further on the Asset Realisation Process or Rayonier's
claims at this time. Shareholders will however be kept informed of
any material developments in accordance with its legal and
regulatory obligations and after appropriate consultation with the
UK Takeover Panel should these happen following Day 39 (or 8
September 2018) of the Offer Period.
Unless otherwise stated, defined terms used but not defined in
this announcement have the meanings set out in the Response
Circular.
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.
Appendix A - Response to Stafford's questions ahead of Phaunos
2018 Annual General Meeting
(A) General
1. Have the potential bidders in the Asset Realisation Process
been through more than one round of indicative offers? Have the
bidders already commenced their due diligence and what is the
deadline for binding offers?
Answer: We refer you to the announcement from Phaunos published
on 5 September 2018 for an update on the status of the Asset
Realisation Process.
2. In the Phaunos 2017 Annual Report, Ernst & Young LLP
("EY") stated that one of the judgements that Phaunos management
has made is the anticipation that "the realisation of the assets
will take between fourteen to twenty months from the date of this
report [30 April 2018], although there are material uncertainties
inherent in the disposal process which may result in this time
period being extended".
Have EY been consulted on the updated timetable for the Asset
Realisation Process given the statement by Phaunos in its defence
circular to the Offer (the "Defence Circular") that the Phaunos
Board "expects the sale of all the assets to complete within 6 to 9
months, which would cover the sale of assets comprising 92% of the
Portfolio Value"?
Answer: EY's scope of work has never covered timing of the Asset
Realisation Process and the timing referred to in the Phaunos 2017
Annual Report is out of date.
The Board's view and basis for making the statement on timing it
made in its Response Circular have been clearly described in the
announcement made by Phaunos on 21 August 2018.
In its Response Circular, the Board estimated that completion of
the Matariki disposal would be between Q1 and Q2 2019. As announced
on 28 August 2018, the Board intends to defend itself vigorously
against the claims brought by Rayonier, which it continues to
believe are without merit. It will endeavour to have a Court deal
with these claims urgently, including by taking a pre-emptive step
such as a strike out application if necessary. The Board's view (on
advice) is that depending on what steps are taken, the matter could
take between two and seven months to reach a judgment in the Court
(assuming the Court treats the matter with urgency). Phaunos notes
that it is a very early stage in the litigation process and that
these timings are inherently uncertain. However, in light of the
guidance received, the Board now estimates that completion of the
Matariki disposal may extend to Q3 2019.
3. Do the Phaunos Directors intend to pay themselves an
incentive fee associated with the sale of assets in the Phaunos
portfolio in addition to their annual remuneration and their
additional fees charged at GBP300 per hour per Phaunos Director for
time spent which is in excess of their monthly minimum hours?
Answer: Please note that no incentive fee associated with the
sale of assets in the Phaunos portfolio is currently in place. As
mentioned in the Response Circular, any such a fee, if agreed
during the Offer Period will need to be approved by Shareholders.
The Phaunos Directors' remuneration for the period ending 30 June
2018 will be disclosed in the interim financial results to be
published shortly after the AGM. These are paid according to the
Directors' respective service contract (under the terms disclosed
in the Response Circular) and there is no reason for Phaunos to
make any additional disclosure.
4. Has the OIO given the Phaunos Board written assurances that
it is able to process applications in the timeframe indicated by
the Phaunos Board in its Defence Circular?
Answer: As mentioned in the Response Circular and in subsequent
announcements from Phaunos, 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 month 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.
5. When will Phaunos release its interim financial statements
for the period ended 30 June 2018 and will these statements
disclose the additional fees that the Phaunos Directors have
received over and above the quarterly fees and quarterly
supplementary fees that the Phaunos Directors receive?
Answer: It is the Board's intention to release the interim
financial statements for the period ended 30 June 2018 shortly
after the AGM.
(B) Matariki dispute
6. Is Phaunos able to enter into binding agreement(s) for the
sale of the Matariki Interest whilst the proceedings issued by
Rayonier Canterbury LLC ("Rayonier") in the Auckland High Court are
on-going?
7. Has the Phaunos Board received legal advice relating to the
expected duration of the proceedings issued by Rayonier?
8. In its announcement on 28 August 2018, the Phaunos Board
states that "Rayonier has also written to Phaunos purporting to
serve in accordance with the terms of the Shareholders Agreement an
Acquisition Notice on Phaunos in response to the alleged
breach".
What other rights or remedies may be available to Rayonier
pursuant to the shareholders agreement in relation to Matariki that
could impact on the timing of any proposed disposal of
Matariki?
9. If Rayonier were to be entitled to purchase the Matariki
Interest for NZD 225 million, it is estimated(1) that Phaunos'
Updated Break-Up NAV (as such term is used in the Defence Circular)
would fall from US$0.51 to US$0.43 per Phaunos Share and the
Updated Going Concern NAV (as such term is used in the Defence
Circular) would fall from US$0.58 to US$0.51 per Phaunos Share.
Would the Phaunos Board like to comment on this?
Answer: The Board has received legal advice from UK and New
Zealand counsel in relation to the proceedings issued by Rayonier
and reiterates that it believes Rayonier's claims are without merit
and the acquisition notice purported to be served by Rayonier is
invalid. The Board does not intend to comment further on the
dispute at this time, but will of course keep shareholders informed
of any material developments in accordance with its legal and
regulatory obligations and after appropriate consultation with the
UK Takeover Panel should these happen following Day 39 (or 8
September 2018) of the Offer Period.
(C) Potential inaccuracy
10. In the Phaunos 2017 Annual Report, revenue from timber
operations for the year ended 31 December 2017 was shown as
US$6.535 million from Mata Mineira (note 4 to the accounts).
Stafford previously questioned whether this figure represents a
potentially significant inaccuracy relative to the actual revenues
for this period. Please could the Phaunos Board confirm that
revenue received from the timber operations of Mata Mineira did
indeed amount to US$6.535 million for the year ended 31 December
2017?
Answer: Stafford is indeed correct in their assertion that the
revenue from timber operations contained an inaccuracy. The
inaccuracy, however, relates to the accounting treatment employed
by Stafford in prior years, whereby sales were accounted for on a
cash received basis, as opposed to the accruals basis required
under IFRS and generally accepted accounting practice. The result
of this treatment was an accumulation of unreported sales and
under-stated trade receivables, totalling US$2.7m for prior years.
This was corrected in the 31 December 2017 Financial Statements, in
agreement with the Company's auditors. Timber sales of $3.6m were
recorded in 2017, with $1.8m harvested in 2017 and $1.8m accrued at
year end. The appraised biological value for Mata Mineira was
adjusted to reflect this change, with the NAV remaining flat as a
result.
It should be noted, with the exception of 2015, timber sales
were immaterial in prior years and were thus not subject to audit.
EY performed an analytical review at year end 2017 and, in
discussions with Phaunos, determined revenues were
under-stated.
Offer Document
In addition, the following questions for the Phaunos Board which
were included in the Offer Document have not been specifically
addressed in the Defence Circular.
11. Will there be any cash distribution this year?
Answer: As mentioned in the Response Circular and subsequent
announcements from Phaunos, cash will be distributed as assets are
sold under the timeline provided by the Board.
12. When will the Phaunos Board publish its estimates of the
general running costs and costs of the Asset Realisation Process
through to its completion, including:
a. ongoing management and operational costs;
b. audit, valuation, sales agents and other professional fees;
c. directors' remuneration, including directors' fees,
additional consultancy fees and any other fees, costs or expenses
payable to, or incurred by, the Phaunos Board; and what these costs
will be if the Offer is accepted; and
d. liquidators' fees?
Answer: As mentioned in its Response Circular and in a further
announcement on 21 August 2018, the Board has confirmed that these
costs had been assessed and taken into account in the computation
of the Asset Realisation Range.
13. What are the Phaunos Board's estimates of the retentions
required following the disposals under the Asset Realisation
Process and the future cash costs of maintaining those assets not
included in this process?
Answer: This is not material in the context of the Updated Asset
Realisation Range
14. What are the Phaunos Board's estimates of the timing and
costs of the eventual liquidation of Phaunos?
Answer: Please refer to the Response Circular, which provides an
update on timing for full liquidation of the fund structure.
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
RSPLLFSTAAIEIIT
(END) Dow Jones Newswires
September 06, 2018 02:00 ET (06:00 GMT)
Phaunos Timber (LSE:PTF)
Historical Stock Chart
From Jun 2024 to Jul 2024
Phaunos Timber (LSE:PTF)
Historical Stock Chart
From Jul 2023 to Jul 2024
