TIDMBMS
RNS Number : 6377U
Braemar PLC
29 March 2023
29 March 2023
BRAEMAR PLC
("Braemar" or the "Company" or the "Group")
Publication of Circular and Notice of General Meeting
Braemar Plc (LSE: BMS), a provider of expert investment,
chartering, and risk management advice to the shipping and energy
markets, announces that a circular and notice of general meeting
(the "Circular") has today been published and posted to
shareholders. The general meeting will be held at the Company's
offices at One Strand, Trafalgar Square, London, WC2N 5HR at 10
a.m. on 18 April 2023.
Following the Company's announcement dated 14 February 2023,
which set out inter alia the Company's intention to convene a
general meeting. The Circular sets out the details of a proposed
capital reduction (which will support the Company's ability to pay
dividends in future and provide the Company with flexibility to
continue with the existing progressive dividend policy), proposed
rectification of the relevant dividends and proposed related party
transaction. The expected timetable of principal events and the
Chairman's letter are set out below.
The notice will be available on the Company's website (
www.braemar.com ) and, together with the Form of Proxy will be
submitted to the National Storage Mechanism and will shortly be
available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . Copies of
these documents have also been posted today to those of the
Company's shareholders that have elected to continue to receive
hard copies.
Unless otherwise indicated, all capitalised terms used but not
defined in this announcement shall have the same meaning as
described in the Circular.
For further information, contact:
Braemar Plc
Nick Stone, Group Chief Financial Officer Tel +44 (0) 20 3142 4100
Rebecca-Joy Wekwete, Company Secretary
Investec Bank plc
Gary Clarence / Harry Hargreaves / Alice Tel +44 (0) 20 7597 5970
King
Cenkos Securities plc
Tel +44 (0) 20 7397 8900
Ben Jeynes / Max Gould (Corporate Finance)
Alex Pollen / Leif Powis (Sales)
Buchanan
Charles Ryland / Jamie Hooper / Jack Tel +44 (0) 20 7466 5000
Devoy
Notes to Editors:
About Braemar Plc
Braemar provides expert investment, chartering, and risk
management advice that enable its clients to secure sustainable
returns and mitigate risk in the volatile world of shipping and
energy. Our experienced brokers work in tandem with specialist
professionals to form teams tailored to our customers' needs, and
provide an integrated service supported by a collaborative
culture.
Braemar joined the Official List of the London Stock Exchange in
November 1997 and trades under the symbol BMS.
For more information, including our investor presentation, visit
www.Braemar.com and follow Braemar on LinkedIn .
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of the Circular 29 March 2023
Latest time and date for receipt of 10 a.m. on 14 April 2023
Forms of Proxy for the General Meeting
General Meeting 10 a.m. on 18 April 2023
Expected date of initial directions 28 April 2023
hearing of the Court
Expected date of Court Hearing to confirm 9 May 2023
the Capital Reduction
Expected effective date for the Capital 10 May 2023
Reduction
DEFINITIONS
"Act" C omp a ni e s A c t 20 0 6;
" B Or di n a r y S t h e i s s ue of one B O r din a ry Sh a re for
h a re I s sue" e a ch one O r din a ry Sh a re h e ld by e a ch
Sh a r e hol de r, as de s cr i bed in the Circular;
" B Or di n a r y S t h e s h a r es in t he ca pit al of t he C omp
h a res" any to be c r e a t ed by t he B O r din a ry Sh
a re I s s u e, w h e re t he nomin al v a l ue
of su ch s h a r es is e q ual to t he sum t h at
is obt a in ed by d iv iding t he num ber of B O
r din a ry Sh a r es to be i s s ued i n to GBP
1 9 , 7 5 4 , 9 2 6;
"B o ar d " o r " D t h e di r e c t o rs of t he C omp any or any du
i r e c t o r s" ly a ppoi n t ed c ommi t t ee t h e r eof;
"C a pi t a l R e d t h e ca pit al r ede mpt ion r e s e rve of t he
e mpti o n R e s e C omp any;
rve"
"C a pi t a l R e d t h e ca n ce ll at ion of t he f ull a mou nt o
e mpti o n R eserve u t st a nding to t he c r e dit of t he C a p i
Reduction" t al Redemption Reserve;
"Capital Reduction" t h e p r opos ed ca n ce ll at ion of t he C omp
any 's C a pit al R ede mpt ion R e s e rve a nd
Sh a re Pr e mium A cc ou n t, a nd t he Me r ger
R e s e rve R e d u c t i on pu r s ua nt to t he
R e sol u t ions as s et o ut in t he Not i ce of
Ge n e r al Me e t i n g;
"Capital Reduction 6 . 0 0 p .m. on t he d a te immedi a t ely p r
Record Time" e ceding t he d a te of t he Cou rt H ea r i n g;
"Capital Reduction t h e r e sol u t ions ( as s et o ut in f ull in
Resolutions" t he Not i ce of Ge n e r al Me et ing at r e sol
u t ions 1 to 5 ( i n c l us ive )) to be p r opos
ed at t he Ge n e r al Me et ing in r e l at ion
to t he p r opos ed C a pit al R ede mpt ion R e
s e rve R e duc t io n, Sh a re Pr e mium A cc ou
nt R e duc t ion a nd Me r ger R e s e rve R e duc
t io n;
"Company" or "Braemar" B ra e m a r P l c, a c omp any in c o r por a t
ed in Engl a nd a nd W a l es w i th r e gis t e
r ed num ber 022 86 034 a nd hav ing i ts r e gis
t e r ed offi ce at O ne S t r a n d, T r a f a
lg ar Sq ua r e, L ondon Engl a nd WC2N 5H R;
"Court" t h e High C ou rt of Jus t i ce in Engl a nd a
nd W a l e s;
"Court Hearing" t h e h ear ing by t he C ou rt to c o nfi rm t
he C a pit al R e d uc t i o n;
"Court Order" t h e o r der of t he C ou rt c o nfi r ming t he
C a pit al R e d uc t i o n;
"CREST" t h e r e l ev a nt sy s t em ( as d efin ed in
t he C R EST R e gul a t i on s) in r espe ct of
w hi ch Eu r o cl ear UK & I n t er n at ion al
L imi t ed is t he Ope r a t or ( as d efin ed in
t he C R EST R e gul a t io n s );
"CREST Regulations" t h e Un ce r t ifi c a t ed S e cu r i t i es R
e gul at ions 20 01 ( as a m e n d e d );
" D i r e c t o r s' a s d efin ed in p a ragr a ph 4 . 2.3 of Pa rt
D ee d of R e l e a I V of the Circular;
se"
"Dividend Rectification t h e r e sol u t ions ( as s et o ut in f ull in
Resolutions" t he Not i ce of Ge n e r al Me et ing at r e sol
u t ions 6, 7 a nd 8) to be p r opos ed at t he
Ge n e r al Me et ing to r a t i fy t he a cc ou
nt ing e nt r i es in r espe ct of unlaw f ul d
iv i de nds su ch t h at p rofi ts a re a pp r op
r i a t e d, to r at i fy a nd a pp rove t he e
nt ry i n to t he S h a r e h ol d e r s' Deed of
R e l ea se a nd to r at i fy a nd a pp rove t he
e nt ry i n to t he D i r e c t o r s' Deed of R
e l ea s e;
"Effective Date" t h e d a te of t he C ou rt O r der;
"FCA Handbook" t h e F C A 's H a ndb o ok of Rul es a nd G u i
d a n c e;
" F i na n c i a l t h e Fin a nci al C onduct A u t ho r i ty of t
Con d uct A u th o he Uni t ed K i n gdo m;
r i t y" or "FCA"
"Form of Proxy" the form of proxy accompanying the Circular relating
to the General Meeting;
"FSMA" the Financial Services and Markets Act 2000, as
amended;
LETTER FROM THE CHAIRMAN OF THE COMPANY
Braemar Plc
(incorporated and registered in England and Wales under company
registration number 02286034)
Directors: Registered office:
Nigel Payne (Non-executive Chairman One Strand
James Gundy (Chief Executive Officer) Trafalgar Square
Nicholas Stone (Chief Financial Officer) London
Tristram Simmonds (Chief Operating WC2N 5HR
Officer
Elizabeth Gooch (Non-executive Director)
Joanne Lake (Non-executive Director)
PROPOSED C A P ITA L REDUCTIO N
and
PROPOSED RECTIFICATION O F RELEVANT DIVIDS
and
RELATE D PART Y TRANSACTIONS
and
N O TIC E O F GENERA L MEETING
1 . Introduction
I a m writing t o provide y o u with details of a proposal t o
enhance th e Compa ny ' s ability t o retur n value t o
Shareholders in th e futur e an d t o addres s th e p a ymen t of
unlawful dividends tha t h ave bee n identified a s par t of a n
exercise which ha s bee n undertake n by th e Compa ny t o increase
th e Group' s capacity t o p ay futur e dividends .
The Circular also provides th e details of a General Meeting tha
t will b e held a t On e Strand , Trafalgar Square , Londo n WC 2 N
5 H R a t 1 0 a. m. o n 1 8 April 2 02 3 t o consider th e
Resolutions tha t will b e pu t t o Shareholders t o appr ove the
m.
Th e purpos e o f the Circular i s t o pr o vid e y o u wit h
informatio n abou t th e Capita l Reduction , th e propose d
rectification o f Relevant Dividend s an d th e relate d part y
transactio n an d t o e xplai n w hy th e Boar d consider s al l th
e Resolution s t o b e i n th e bes t interest s o f th e Compa ny
an d it s Shareholder s a s a whol e an d unanimousl y recommend s
tha t y o u v ot e i n f av ou r o f th e Capita l Reductio n
Resolution s to b e propose d a t th e Genera l Meeting . Gi v e n
th e interest s o f th e Boar d i n th e Dividen d Rectification
Resolutions , an d a s require d by th e Listin g Rules , th e Boar
d ar e unabl e t o tak e par t i n th e consideratio n o f th e
matter s deal t wit h by th e Dividen d Rectification Resolutions
an d therefor e canno t recommen d tha t shareholder s v ot e i n f
av ou r o f th e Dividen d Rectification Resolution s bu t d o
recommen d that shareholder s v ot e o n them . Shareholder s shoul
d not e that , unless :
A) al l Capita l Reductio n Resolution s ar e appr ov e d a t th
e Genera l Meetin g (and th e Cour t subsequentl y con f irm s th e
Capita l Reduction) , th e Capita l Reductio n wil l no t tak e
plac e an d th e declaratio n an d paymen t o f unl a wfu l
dividend s wil l no t b e recti f ied ; and
B) th e Capita l Reductio n take s plac e an d al l Dividen d
Rectification Resolution s approved ;
th e paymen t o f unl a wfu l dividend s wil l no t b e recti f
ied , an d th e Compa ny wil l h ave potentia l claim s agains t
Shareholder s an d Relevant
Directors .
I f Resolutio n 7 se t ou t i n th e Notic e o f Genera l Meetin
g i s no t appr ov ed , the n th e Compa ny ha s a potentia l righ
t t o mak e claim s against th e Recipien t Shareholder s fo r rec
ov er y o f th e paymen t o f th e Rele v an t Dividends . Ther e i
s n o certaint y a s t o th e amount s tha t coul d b e rec ov ere
d i f th e Compa ny sough t t o pursu e thes e potentia l claims
.
I f Resolutio n 8 se t ou t i n th e Notic e o f Genera l Meetin
g i s no t appr ov ed , the n th e Compa ny ha s a potentia l righ
t t o brin g claim s against th e Rele v an t Director s i n
relatio n t o th e paymen t o f th e Rele v an t Dividends . Ther e
i s n o certaint y as t o th e amount s tha t coul d b e rec ov ere
d i f th e Compa ny sough t t o pursu e thes e potentia l claims
.
Part II o f the Circular contains definitions o f w o r ds a nd
ter ms t h a t have been us e d t h r oughout it. Please refer t o
Part II as y ou review the Circular .
2 . Backgroun d to , and reason s for the Capita l Reduction
Under th e Act , a com p an y may, with th e sanction o f a
special resolution passed b y its shareholders an d confirmation o
f th e Court , reduce o r cancel its share capital, share premium a
ccou n t , capital redemption reserve an d othe r reserves. It ma y
the n apply th e sum s resulting fro m suc h reduction t o its
distributable reserves. These sum s ma y the n b e treate d a s
distributable fo r th e purpose s o f making future returns t o
Shareholders .
The Company currently has :
2. 1 a Share Premium Accoun t standing t o th e credit of GBP
53,795 , 563 ;
2. 2 a Capital Redemption Reserve standing t o th e credit of
GBP396 , 3 8 2 ;
2 .3 a Merger Reserve of GBP23 , 366,000 ;
Th e Ac t requires tha t if a compa ny issues share s a t a
premium t o th e nominal value of thos e share s f o r cas h o r
otherwise, a su m equal t o th e aggregat e amoun t of o r value of
th e premiums mus t b e transferre d t o th e compa ny ' s shar e
premium account . A shar e premium accoun t ca n only b e use d in
very limited circumstances. The Compa ny intends t o reduc e th e
Share Premium Accoun t in full .
The Company currently ha s a Capital Redemption Reserve which
arose a s a result of th e accounting treatment applicable t o a
numbe r of historical share bu y back s (and associated
cancellations of shares) . The Compa ny plans t o reduc e th e
Capital Redemption Reserve in full .
In certain circumstances suc h a s wher e share s ar e issued in
consideration fo r th e acquisition o f share s in anothe r com p
any , instead o f creatin g a share premium, a n amou nt is
credited t o th e merger reserve. The Merger Reserve arose
principally in 200 1 in relation t o th e acquisitions o f B ra ema
r Shipbrokers Limited an d Braemar Tankers Limited. Further
additions t o th e Merger Reserve arose in respec t o f Naves an d
Atlantic Brokers .
Th e Share Premium Accoun t an d th e Capital Redemption Reserve
ar e statutor y reserves in respec t of which th e Cour t ha s th e
p ow e r t o sanction th e reduction o r cancellation. Th e Merge r
Reserve is a non-statutor y reserve which cann ot b e reduce d in
th e sam e way a s th e Shar e Premiu m Accoun t an d Capital
Redemption Reserve. It is there f or e propose d t o capitalise
GBP19,754,92 6 standing t o th e credit of th e Merge r Reserve by
applying GBP19,754,92 6 in paying u p in full ne w B Ordinary
Shares of GBP0.1 0 each .
Th e B Ordinary Shares will b e allotted an d issued o n th e
Business Day prior t o th e d ay of th e Cour t Hearing, credited a
s fully paid, t o th e person s holding Ordinary Share s a s a t th
e Capital Reduction Recor d Time, o n th e basis of six B Ordinary
Share s f o r eac h Ordinary Shar e held by Shareholder s.
Th e B Ordinary Shares will n ot b e admitted t o trading o n th
e Londo n Stoc k Exchange, o r a ny o the r marke t o r stoc k
exchange. It is a condition of issue of th e B Ordinary Shares tha
t n o share certificates will b e issued in respec t of the m. Th e
B Ordinary Shares will have extremely limited rights an d will n ot
carr y a ny rights t o participate in th e pro f it s of th e Compa
ny an d have n o rights t o participate in th e capital of th e
Compa ny e xce pt o n a winding up . The B Ordinary Shares will b e
transferable, bu t n o marke t will exist f o r the m an d it is
anticipated tha t th e Cour t will con f ir m a t th e Cour t
Hearing tha t the y m ay b e cancelled th e d ay afte r the y ar e
issued .
The Capital Reduction, if approved, will provide th e Company
with th e flexibility t o continue with its existing progressive
dividend policy an d will all o w th e rectification of certain
unlawful dividends which have bee n paid a s described in paragraph
3 an d P ar t IV of the Circular .
3 . Paymen t o f Rele v an t Dividends
In Decembe r 2 0 22, th e Compa ny commence d a project t o
research options f o r increasing th e distributable reserves
available t o th e Compa ny in orde r t o suppor t th e Group' s
state d progressive dividend policy .
Th e initial f ocu s w a s o n shor t ter m options tha t would
increase th e distributable reserves a s a t 2 8 February 2 02 3 in
orde r t o allow a final dividend recommendation with th e
publication of year en d results later in 2 02 3.
A review of thes e short-ter m identified tha t charges take n t
o retained earnings in recen t years f o r th e impairment of th e
value of certain preferenc e share s held by th e Compa ny
represente d unrealised losses an d could there f or e potentially
b e excluded fro m th e calculation of distributable reser v e
s.
Whilst reviewing th e possibility tha t th e impairment losses
could b e determined a s unrealised losses f o r th e purpos e of
measuring distributable reserves, a broade r review of o the r
gains an d losses tha t ha d bee n recorde d in retained earnings
in recen t y ear s w a s carried out . This review identified
certain gains tha t ha d bee n recorde d regularly relating t o
share-based payments charge s.
The gains in question arose wh e n shares wer e aw a r d e d t o
employees o f ot h e r g r oup companies a nd t he co s t o f t
hose shares w as debited t o t he c o st o f investment o f t hose
g r oup companies a nd credited t o retained earnings. This is a n
accounting practice t h a t has b ee n ongoing within t he Com pan
y since t he introduction o f IFRS 2 in 20 0 5 . The only way
therefore t h a t those gains could be considered t o be realised
is if t he g r oup companies conc er n e d h a d been sold. The
consequence o f this is t h a t a significant balance within
retained earnings (that w as n o t previously identified as created
b y unrealised g ains) w as incorrectly us e d b y t he Com pan y
in t he calculation o f its distributable reserves. This m ean s t
h a t t he Com pan y has therefore paid several dividends between
201 6 a nd 202 3 without having sufficient distributable reserves
fr om which t o lawfully pa y such dividends .
Details of th e Relevant Dividends
ar e se t ou t bel o w :
Amoun t pe r or T o ta l a ggregat e
Paymen t dat e an d typ e of d di nar y shar e amoun t of d ividen d
ividen d paymen t (interim o r paid
final)
----------------------------------- ------------------- ------------------------
FY 2 01 6 - Interim dividend - 9. 0 penc e GBP2,6 5 9,000
1 8 December 2 01 5
FY 2 01 7 - Final dividend - 29 17. 0 penc e GBP 5,0 2 0,00 0
July 2 01 6
FY 2 01 7 - Interim dividend - 9. 0 penc e GBP2 , 83 8 ,000
1 6 December 2 01 6
FY 2 01 9 - Final dividend - 2 10. 0 penc e GBP3,076,00 0
7 July 2 01 8
FY 2 01 9 - Interim dividend - 5. 0 penc e GBP1 , 540,00 0
1 4 December 2 01 8
FY 2 0 20 - Final dividend - 2 10. 0 penc e GBP3,064,00 0
6 July 2 01 9
FY 2 0 20 - Interim dividend - 5. 0 penc e GBP1 , 566,000
1 3 December 2 01 9
FY 2 0 22 - Final dividend - 1 5. 0 penc e GBP1,4 8 2,000
September 2 02 1
FY 2 0 22 - Interim dividend - 2. 0 penc e GBP6 27,00 0
1 6 December 2 02 1
FY 2 02 3 - Final dividend - 1 7. 0 penc e GBP2,017,00 0
4 Octobe r 2 0 22
FY 2 02 3 - Interim dividend - 4. 0 penc e GBP1,15 8 ,000
4 January 2 02 3
----------------------------------- ------------------- ------------------------
Tota l aggregat e valu e GBP25,047,00 0
----------------------------------- ------------------- ------------------------
P ar t IV of the Circular set s ou t details of h ow th e
Relevant Dividends ar e unlawful a s well a s th e proposals f o r
rectification .
Th e consequenc e of suc h dividends being paid otherwise tha n
in accordanc e with th e Ac t is tha t th e Compa ny m ay h ave a
claim against all shareholders (former o r present) wh o received a
ny suc h dividends (up t o th e maximum value of cumulative
dividends received by eac h shareholder) a s well a s a claim
against all Directors (former o r present , individually o r in
aggregate) wh o appr ov e d th e declaration an d payment of suc h
dividends, u p t o th e total aggregate value of GBP25,047,000
.
Th e Grou p e n tere d into deed s o f release with related
parties in connection with anothe r dividend rectification process
, relating t o th e Com p any' s
1 Septembe r 202 1 final dividend an d 1 6 Decembe r 202 1
interim dividend (shown above) . In tha t instance, th e Com p an y
identified tha t it h ad no t properly pre p are d an d filed
unaudited interim a ccou n t s a t Companies House , a s required b
y th e Companies Ac t 2006 , prior t o declaring an d payin g
distributions t o shareholders in respec t o f th e Com p any' s 1
Septembe r 202 1 final dividend an d 1 6 Decembe r 202 1 interim
dividend, an d ther e for e soug ht t o rectif y tha t
administrative oversight. S uc h dividend rectification wa s
announce d b y th e Com p an y o n 2 7 July 2022 , classified a s a
smaller related p art y transaction pursuant t o L R 11.1.1 0 R, an
d wa s approve d b y th e Com p any' s shareholders o n 6 Octobe r
2022 . However, a s th e Com p an y has since identified throug h
its analysis o f historical IFRS 2 accounting treatment (as
described above) tha t it did no t in fa c t have sufficient
distributable reserve s a t th e time (and ther e for e tha t th e
filing o f unaudited interim a ccou n t s a t Companies Hous e
alone did no t appropriately address th e issue) , an d accordingly
th e dividend rectification wa s invalid and/o r ineffectual an d
it is therefore necessary t o red o this rectification .
Accordingly, th e Compa ny ha s entered into th e Shareholders'
Dee d of Release an d th e Directors' Dee d of Release. The
consequence of th e entr y into these deeds by th e Company is tha
t th e Company will b e unable t o make any claims against: (a) th
e recipient Shareholders; an d (b) th e Directors an d f orme r
Directors, in eac h cas e in respec t of th e payment of th e
Relevant Dividends otherwise tha n in accordanc e with th e Act
.
Th e entr y by th e Compa ny into th e Directors' Dee d of
Release will constitute a related part y transaction (as de f ine d
in th e Listing Rules) . This is becaus e eac h of th e Relevant
Directors (comprisin g person s wh o are , o r w er e within th e
last 1 2 month s, directors of th e Company , being James Gundy,
Tristram Simmonds, Nicholas Stone, Nigel Payne, Elizabeth Gooch,
Joanne Lake, Stephen Kunzer and Lesley Watkins ) is deeme d t o b e
a related part y unde r L R 11.1. 4 R an d the y will b e released
fro m a ny liability t o rep ay a ny amount s of th e Relevant
Dividends pursuan t t o th e Directors' Dee d of Release (as
applicable) . Therefore, Resolution 8 will see k th e specific
approval of th e Compa ny ' s shareholders f o r th e entr y into
th e Directors' Dee d of Release a s related part y transactions in
accordanc e with th e requirements of th e Listing Rules .
The technical issues identified in this paragraph an d Part IV
of the Circular in respec t of th e Relevant Dividends are of a
historical nature an d ther e is n o chang e t o th e financial
outlook of th e Compa ny a s a consequence .
Th e Compa ny ha s take n appropriate step s an d ha s th e
necessary procedure s in place t o avoid th e p a ymen t of a ny
furthe r unlawful dividends. In this regar d th e Compa ny too k
step s t o strengthen its financial reporting resources during 2 0
2 2 , including th e hiring of a ne w experienced financial
controller. A project, also utilising external consultants, t o
asses s approache s t o improve th e distributable reserves
position of Braema r Plc, led t o th e discovery of th e curren t
situation, resulting in th e proces s tha t is n ow being
undertaken. In futur e periods, mor e detailed reconciliations of
opening t o closing distributable reserves will b e undertake n in
orde r t o identify unrealised gains an d pro f it s relating t o
th e accounting treatmen t arising fro m th e application of IFRS2
o r a ny o the r accounting standar d will b e maintained t o
ensure ther e is n o repea t of th e identified error .
Accordingly, we d o n ot believe a ny furthe r remedial action
is required. F o r avoidance of dou b t , th e Compa ny continues t
o dee m its procedure s, system s an d controls t o b e sufficient
t o enable it t o comply with its obligations unde r th e listing
rules, disclosure requirements, transparency rules an d corporat e
governance rules, an d in particular its obligations unde r L R 1 0
an d L R 1 1 a s well a s its requirement t o mak e timely an d
accurat e disclosure t o th e market .
4 . The Capita l Reduction
A s a result of th e Compa ny ' s state d desire t o continue
with its existing progressive dividend policy, an d in orde r t o
rectify th e declaration an d payment of unlawful dividends, th e
Compa ny mus t undertake th e Capital Reduction t o provide it with
th e necessary distributable reser v e s.
In addition t o th e approval by Shareholders of th e Capital
Reduction Resolutions, th e Capital Reduction requires th e
approval of th e Court . Accordingly, following th e General
Meeting, a n application will b e mad e t o th e Cour t in orde r t
o con f ir m an d appr ove th e Capital Reduction .
In providing its approval of th e Capital Reduction, th e Cour t
m ay require measure s t o b e pu t in place f o r th e protection
of creditors (includin g contingent creditors) of th e Company whos
e de b t s remain outstanding o n th e relevant date , e xce pt in
th e cas e of creditors wh o have consented t o th e Capital
Reduction. Suc h credito r protection measures m ay include seeking
th e consen t of th e Compa ny ' s creditor s t o th e Capital
Reduction or th e provision by th e Compa ny t o th e Cour t of a n
undertaking t o deposit a su m of mone y into a blocked accoun t
create d f o r th e purpos e of discharging th e non-consenting
creditors of th e Company o r a n undertaking t o trea t a s
undistributable f o r th e time being certain sum s representin g
th e realisation of "hidden value" in th e balance shee t a s a t
th e Effective Date .
It is anticipated tha t th e initial directions hearing in
relation t o th e Capital Reduction will tak e place o n 2 8 April
2 023 , with th e final Cour t Hearin g taking place o n 9 M ay 2
02 3 an d th e Capital Reduction becoming effective o n th e
following d a y , following th e necessary registration of th e
Cour t Orde r a t Companies House .
There will b e n o change in th e number of Ordinary Shares in
issue (or their nominal value) following th e implementation of th
e Capital Reduction an d n o ne w share certificates will b e
issued a s a result of th e Capital Reduction. The Capital
Reduction itself will n ot involve any distribution o r rep a ymen
t of capital o r shar e premium by th e Compa ny an d will n ot
reduc e th e underlying ne t asset s of th e Compa n y . Th e
distributable reserves arising o n th e Capital Reduction will,
subject t o th e discharge of a ny undertakings required by th e
Cour t a s explained ab ov e , suppor t th e Compa ny ' s ability t
o p ay dividends should circumstances in th e futur e mak e it
desirable t o d o s o an d appropriation of pro f it s t o ratify
relevant accounting entries .
Shareholders should n o t e tha t if , f o r any reason, th e
Cour t declines t o approve th e Capital Reduction, th e Capital
Reduction will n ot tak e place. The Boar d reserves th e right t o
abandon o r t o discontinue (in whole o r in part) th e application
t o th e Cour t in th e event tha t th e Boar d considers tha t th
e term s o n which th e Capital Reduction would b e (or would b e
likely t o be) confirmed by th e Cour t would n ot b e in th e bes
t interests of th e Compa ny and/o r it s Shareholders a s a whole
. Th e Boar d ha s undertaken a thoroug h an d extensive review of
th e Compa ny ' s liabilities (includin g contingent liabilities)
an d considers tha t th e Company will b e able t o satisfy th e
Cour t tha t there is n o real likelihood tha t any creditor of th
e Company would b e prejudiced by th e Capital Reduction .
5 . Genera l Meetin g an d Resolutions
The Notice of General Meeting is se t ou t in P ar t VI of the
Circular .
Th e General Meeting will tak e place a t th e Compa ny ' s o f
f ice s a t On e Strand , Trafalgar Square , Londo n WC 2 N 5 H R a
t 1 0 a. m. o n 1 8 April 2 02 3. At th e General Meeting, th e
Resolutions se t ou t in P ar t VI of the Circular will b e propose
d t o Shareholders .
The Resolutions will b e passe d if 75 % o r mor e of th e vo te
s cas t (in perso n o r by proxy) a t th e General Meeting ar e in
favour of th e R esolutions .
The Resolutions, which ar e special resolutions, ar e summarised
bel o w :
Resolutio n 1 - this a resolution t o appr ov e , subject t o
confirmation of th e Court , th e cancellation of th e Share
Premium Account .
Resolutio n 2 - this is a resolution t o appr ov e , subject t o
confirmation of th e Court , th e cancellation of th e Capital
Redemption Reser v e .
Resolution s 3 , 4 an d 5 - these resolutions provide authority
t o th e directors t o allot an d issue th e B Ordinary Shares,
describe th e rights attachin g t o th e B Ordinary Shares an d
propos e tha t th e B Ordinary Shares create d by th e B Ordinary
Share Issue b e cancelled .
Resolutio n 6 - this is a resolution that , subject t o th e
passing of resolutions 1 - 5 (inclusive) an d th e Capital
Reduction becoming effective , distributable pro f it s of th e
Compa ny b e appropriated t o th e relevant accounting periods
during which th e Relevant Dividends w er e declared an d paid
.
Resolutio n 7 - this is a resolution tha t is conditional upo n
th e passing of resolutions 1 t o 6 (inclusive) tha t releases an d
waives all claims which th e Compa ny m ay h ave in respec t of th
e Relevant Dividends against previous an d curren t shareholders an
d their successor s in title an d ratifies an d authorises th e
entr y into th e Shareholders' Dee d of Release by th e Compa n y
.
Resolutio n 8 - this is a resolution tha t is conditional upo n
th e passing of resolutions 1 t o 6 (inclusive) tha t releases an d
waives all claims which th e Company may have in respect of the
Relevant Dividends against the directors (current and former and
their personal representatives and successor s in title) a t th e
time of declaration an d payment of eac h respective Relevant
Dividend an d ratifies an d authorises th e entry into th e
Directors' Deed of Release by th e Compa n y .
6 . Unite d Kingdo m Taxation
Th e following comment s ar e intended a s a general guide only
an d relate only t o certain U K ta x consequence s of th e
Reduction of Capital. Th e comment s ar e base d o n curren t
legislation an d H M Revenue & Custom s published practice, b o
t h of which ar e subject t o change , possibly with retrospective
effect. These comment s deal only with Shareholders wh o are
resident f o r taxation purposes in th e UK , wh o are th e
absolute beneficial o wner s of th e Ordinary Shares an d wh o hold
the m a s a n investment an d n ot in a trading accoun t ("UK
Shareholders") . They d o n ot deal with th e position of certain
classes of Shareholders, suc h a s dealers in securities, insurance
companies, collective investment schemes o r persons regarde d a s
having obtained their Ordinary Shares by reason of empl o yment
.
A ny Shareholde r wh o ha s a ny doub t abou t thei r o w n
taxatio n position , o r wh o i s subjec t t o taxatio n i n a ny
jurisdictio n other tha n th e UK
shoul d consul t thei r o w n professiona l taxatio n adviso r
immediately .
T h e S h are P r emiu m R e duction
Th e Shar e Premium Reduction should n ot h ave a ny consequence
s f o r U K Shareholders f o r th e purpose s of U K taxation of
chargeable gains
("CGT") , U K income ta x o r U K corporation ta x.
T h e C a pi tal R e demptio n Reserv e Reduction
The Capital Redemption Reserve Reduction should n ot have a ny
consequences f o r U K Shareholders f o r th e purpose s of U K
CGT, U K income ta x o r U K corporation ta x.
T h e Me r ge r Reserv e Reduction
O n th e basis tha t th e B Ordinary Shares will b e treate d a
s being paid u p f o r " ne w consideration" received by th e Compa
n y , th e B Ordinary Shar e Issue should n ot give rise t o a ny
liability f o r U K income ta x (or corporation ta x o n income) in
a U K Shareholder's hand s. F o r CG T purpose s, th e B Ordinary
Share Issue should b e treated a s a "reorganisation", s o tha t a
U K Shareholder should n ot b e treated a s making a disposal of
their Ordinary Shares f o r CGT purpose s upo n receipt of th e B
Ordinary Shares. Instead, th e B Ordinary Shares should b e treate
d a s th e sam e asset , acquired a t th e sam e time, a s their
Ordinary Shares. O n a disposal of B Ordinary Shares o r Ordinary
Shares by a U K Shareholder f o r CG T purpose s, a U K
Shareholder's bas e cos t in their Ordinary Shares would b e
apportioned bet w ee n their B Ordinary Shares an d their Ordinary
Shares base d o n their respective marke t values a t th e dat e
tha t th e B Ordinary Shares o r Ordinary Shares ar e disposed o f
.
It is likely tha t th e marke t value of th e B Ordinary Shares
will b e GBPnil f o r th e duration of their existence. This is
becaus e th e B Ordinary Shares will h ave n o voting rights o r
rights t o income; will h ave n o marke t o n which the y ca n b e
traded ; an d it is anticipated tha t the y will b e cancelled f o
r n o payment o n th e d ay immediately following th e dat e of
their issue. Consequently, th e issue of th e B Ordinary Shares
should n ot impact th e base cost of th e Ordinary Shares. Th e
reduction of capital effecte d by th e cancellation of th e B
Ordinary Shares should b e treate d f o r CG T purpose s a s a
further "reorganisation" s o tha t a U K Shareholder should n ot b
e treated a s making a disposal of their Ordinary Shares o r B
Ordinary Shares f o r CG T purpose s. Instead, th e Ordinary Shares
held by th e U K Shareholder afte r th e cancellation of th e B
Ordinary Shares should b e treate d a s th e sam e asset , acquired
a t th e sam e time, a s their holding of Ordinary Shares an d B
Ordinary Shares prior t o th e cancellation which, a s described ab
ov e , should in tur n b e treate d a s th e sam e asset , acquired
a t th e sam e time, a s their original holding of Ordinary Share
s.
Accordingly, following th e B Shar e Issue an d th e
cancellation of th e B Share s, U K Shareholders should b e left in
th e sam e position f o r CG T purpose s a s the y w er e in
originally be f or e th e B Ordinary Shar e Issue an d cancellation
of B Ordinary Share s. Ev e n if (contrary t o th e precedin g
paragraph) th e cancellation of th e B Ordinary Shares were treated
a s a disposal f o r CGT purposes, provided tha t th e market value
of th e B Ordinary Shares is GBPnil f o r th e duration of their
existence which, f o r th e reasons described ab ov e , seem s
likely t o b e th e case , ther e should b e n o ad v ers e CGT
consequences f o r U K Shareholders. There should b e n o
chargeable gain (or allowable loss) o n th e cancellation of th e B
Ordinary Shares, an d th e U K Shareholder's bas e cos t in their
Ordinary Shares should b e th e same a s it w a s originally before
th e B Ordinary Share Issue an d cancellation of B Ordinary Share
s.
U K sta m p dut y a n d sta m p dut y r eserv e tax
N o stam p dut y o r stam p dut y reserve ta x will b e payable
o n th e Reduction of Capital, including th e B Ordinary Shares
Issue an d th e cancellation of th e B Ordinary Share s.
7 . Actio n t o b e take n i n respec t o f th e Genera l
Meeting
Shareholders ca n appoint a prox y electronically using th e
link www.sharevote.co.uk - Details of h ow t o appoint a prox y in
this way ar e se t ou t o n page s 2 1 t o 22 of the Circular .
Alternatively, y o u m ay reques t a har d co py F or m of Prox y
directly fro m ou r Registrar, Equiniti. Details of h ow t o
request , an d complete, a har d co py F or m of Prox y ar e se t
ou t o n page s 2 1 t o 22 of the Circular . T o b e valid, a F or
m of Prox y mus t b e returne d a s soo n a s possible an d s o a s
t o b e received by th e Registrars by n ot later tha n 1 0 a. m. o
n 1 4 April 2 02 3.
The completion an d retur n of th e F or m of Proxy will n ot
prevent y o u fro m attending an d voting a t th e General Meeting
in person .
In accordanc e with curren t bes t practice an d t o ensur e
voting accurately re f lect s th e views of Shareholders, it will b
e propose d a t th e General Meeting tha t voting o n th e
Resolutions will b e conducte d by poll vo t e rather tha n by a sh
ow of hand s an d th e relevant procedures will b e explained a t
th e General Meeting .
I f th e Dividen d Rectification Resolution s ar e no t passed ,
th e Compa ny ma y continu e t o h ave claim s agains t th e Rele v
an t Director s and
Recipien t Shareholders .
8 . Questions
If y o u wish t o as k a question relating t o th e business of
th e General Meeting in advance , please submit y ou r questions t
o company .secretary@braemar.co m , please include in y ou r email:
th e shareholder's full name , numbe r of shares held an d
telephone contac t details .
9 . Recommendation
Th e Boar d consider all th e Resolutions t o b e in th e bes t
interests of th e Compa ny an d its Shareholders a s a whole an d
th e Boar d unanimously recommen d tha t y o u vo t e in favour of
th e Capital Reduction Resolutions t o b e propose d a t th e
General Meeting, a s the y intend t o d o in respec t of their
aggregat e shareholdings, of 1,153 , 37 0 Ordinary Shares
representing approximately 3. 5 % of th e Ordinary Shares in issue
a t th e dat e of the Circular .
Given th e interests of th e Boar d in th e Dividend
Rectification Resolutions, an d a s required by th e Listing Rules,
th e Boar d ar e unable t o tak e par t in th e consideration of th
e matter s deal t wit h by th e Dividend Rectification Resolutions
an d therefore cann ot recommen d tha t shareholders vo t e in f av
ou r of th e Dividend Rectification Resolutions bu t d o recommen d
tha t shareholders vo t e o n the m. H ow e v er , th e Boar d
believes, having bee n advised by Investec in its capacity a s th e
Compa ny ' s sponsor , tha t (i) th e waiver of claims against th e
Relevant Directors pursuan t t o th e Related Party Resolutions an
d (ii) th e entr y into th e Directors' Dee d of Release ar e fair
an d reasonable s o fa r a s th e Shareholders ar e concerned .
A s non e of th e Boar d ar e deeme d t o b e independent f o r
th e purpose s of th e Dividend Rectification Resolutions, th e
Relevant Directors ar e precluded, an d have undertaken t o
abstain, fro m voting o n th e Dividend Rectification Resolutions.
The Relevant Directors have also undertaken t o tak e all
reasonable step s t o ensure tha t their associates abstain fro m
voting .
Yours faithfully
Nigel Payne
Non-executive Chairma n
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END
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