TIDMQIF
RNS Number : 3113C
Qatar Investment Fund PLC
15 October 2015
15 October 2015
Qatar Investment Fund PLC
("QIF" or the "Company")
Tender Offer to purchase up to 14.0 per cent. of the Company's
issued share capital
A circular explaining the terms of a Tender Offer for up to 14.0
per cent. of the issued Share Capital of the Company and a notice
of an Extraordinary General Meeting to be held on 12 November 2015
has today been posted to Shareholders (the "Circular").
1. Introduction
The Company's Annual General Meeting has been convened for 12
November 2015. The Company's Articles of Association require the
Board to put to Shareholders a resolution at the Annual General
Meeting that the Company cease to continue in existence (the
"Discontinuation Resolution"). Shareholders holding at least
fifty-one per cent. of the Shares must vote in favour of the
Discontinuation Resolution for it to be passed. The Company's first
discontinuation resolution was proposed at the annual general
meeting of the Company in 2012 and was not passed. Pursuant to the
Articles, if the Discontinuation Resolution is not passed at the
Annual General Meeting to be held on 12 November 2015, the Board is
obliged to propose the same resolution at every third annual
general meeting thereafter.
The Board is unanimously recommending that Shareholders vote
against the Discontinuation Resolution at the Annual General
Meeting and the Directors intend to vote their Shares accordingly.
Shareholders are referred to the report of the Directors in the
annual report and accounts for the year ended 30 June 2015
(incorporating the notice of Annual General Meeting) for a full
explanation of the reasons why the Board is unanimously
recommending that Shareholders vote against the Discontinuation
Resolution at the Annual General Meeting.
As announced by the Company on 13 April 2015, the Directors
resolved to put forward a proposal to implement a tender offer in
the fourth quarter of 2015, being a graduated tender offer of up to
15 per cent. of the Company's issued Share Capital at the Record
Date (excluding treasury shares). The final size of the Tender
Offer is determined by the average discount to NAV per Share at
which the Shares trade in the twelve month period from 9 October
2014 to 8 October 2015, assuming it is in excess of 10 per cent.,
and capped at 15 per cent. Further details about this graduated
tender offer are set out in paragraph 3 of this announcement.
2. The Company's Performance and Prospects
The Company is a closed-ended investment company which was
incorporated in the Isle of Man on 26 June 2007. The investment
objective of the Company is to invest primarily in Qatari equities
and in listed companies in other GCC countries.
As at 14 October 2015, being the latest practicable date prior
to the publication of this document, the unaudited Net Asset Value
per Ordinary Share was US$1.4635 and the closing mid-market Share
price was US$1.27.
The Company's NAV per Share has decreased from US$1.6571 at 9
October 2014 to US$1.4635 at 8 October 2015, which is equal to a
decrease of 11.68 per cent. This compares to the 15.01 per cent.
decrease in the QE Index over the same period.
During this period, Shareholders received a dividend of 3.5
cents per Share which was paid in March 2015 and the Directors have
declared a dividend for the 2015 financial year of 4.0 cents per
Share payable in 2016 after completion of the Tender Offer.
According to the Ministry of Development and Planning, Qatar's
GDP increased 4.1 per cent. in Q1 2015 compared to Q1 2014 (using a
new base year of 2013) driven by non-hydrocarbon growth. Compared
to Q4 2014, GDP grew by 3.4 per cent.
During Q1 2015, the hydrocarbon sector contracted by 0.1 per
cent. compared to Q1 2014, while the non-hydrocarbon sector
increased by 8.9 per cent. as a result of a rise in construction,
trading, hospitality and financial sector activity and an increase
in Qatar's population in Q1 2015. Construction rose by 11.4 per
cent. on a year-on-year basis, helped by major public investments.
The financial sector (which includes finance, insurance, real
estate and business services) rose by 9.8 per cent. while the
trade, hotels and restaurants sectors (combined) grew by 9.3 per
cent. in Q1 2015 when compared to Q1 2014.
The Investment Adviser believes that these factors should
continue supporting non-hydrocarbon growth. Additional output from
the Barzan Gas project should further help GDP growth.
Qatar's population increased by 4.9 per cent. from January to
June 2015 to a total of 2.34 million. Population growth is expected
to remain strong as infrastructure spending attracts expatriate
workers. The Investment Adviser believes that the rise in
population should drive consumption growth which will benefit local
consumer companies.
The Investment Adviser believes Qatar's long term infrastructure
spending will continue, driven by low gearing, accumulated budget
surpluses and Qatar having one of the lowest break even oil prices
for its oil production in the region. Notwithstanding investment
related to the FIFA World Cup, the Investment Adviser believes that
Qatar's GDP would continue to grow above 5 per cent. annually.
Looking ahead, the Investment Adviser believes that the Qatari
market is expected to perform well over the long term as a result
of strong fundamentals such as infrastructure spending, on-time
projects completion, non-hydrocarbon economic growth and a rising
population. The Qatari government is set to continue with its
infrastructure spending programme irrespective of the FIFA World
Cup as the majority of these projects were planned before the World
Cup was awarded to Qatar in 2010. Infrastructure spend is expected
to support economic growth of over 6 per cent. per annum until
2017.
3. The Tender Offer
The Board is aware that the Shares are tightly held and that
therefore liquidity in the Shares can, at times, be limited. This
Tender Offer is designed to enable those Shareholders (other than
Restricted Shareholders) who wish to realise a portion of their
holding of Shares to have the opportunity to do so.
As announced by the Company on 13 April 2015, the Directors
resolved to put forward a graduated tender offer for up to 15 per
cent. of the Company's issued Share Capital at the Record Date
(excluding treasury shares). The final size of the Tender Offer is
determined by the average discount to NAV per Share at which the
Shares trade in the twelve month period from 9 October 2014 to 8
October 2015, assuming it is in excess of 10 per cent. and capped
at 15 per cent., as set out in the table below.
12 month average Tender offer
discount size
------------------ -------------
Less than 10% Nil
10.00% -10.99% 10.0%
11.00% -11.99% 11.0%
12.00% -12.99% 12.0%
13.00% - 13.99% 13.0%
14.00% - 14.99% 14.0%
15% or greater 15.0%
Notwithstanding the improvement in the NAV per Share performance
of the Company during 2015, the average discount to NAV per Share
at which the Shares have traded for the past 12 month period has
been 14.7 per cent. (from 9 October 2014 to 8 October 2015), and
has therefore exceeded 10 per cent.
Accordingly, the Directors have put forward to Shareholders a
tender offer for up to 14.0 per cent. of the Company's issued Share
Capital (excluding treasury shares). The total number of Shares to
be purchased under the Tender Offer will not exceed 19,333,165
Shares, representing 14.0 per cent. of the Company's issued Share
Capital (excluding treasury shares) as at 14 October 2015 (being
the latest practicable date prior to the publication of this
announcement).
The Tender Price will be an amount equal to a discount of one
per cent. to Formula Asset Value as at the Calculation Date,
calculated in accordance with paragraph 3 of Part III. The Record
Date for the Tender Offer is 5.30 p.m. on 20 October 2015.
The Tender Offer will be conditional, inter alia, on the
Discontinuation Resolution not being passed at the Annual General
Meeting and the passing of the Resolution to be proposed at the
Extraordinary General Meeting. The Tender Offer will also be
conditional on the Company satisfying the distributable profits
requirements under Isle of Man law at the time of the Tender
Offer.
The Board has proposed the Resolution at the Extraordinary
General Meeting which, if passed, will provide the Board with
authority to repurchase Shares in order to implement the Tender
Offer. All Shares tendered will be cancelled.
Key points of the Tender Offer
The key points of the proposed Tender Offer are as follows:
-- the Tender Offer is for up to 14.0 per cent. of the Company's
issued Share Capital (excluding treasury shares) as at the Record
Date;
-- Shareholders (other than Restricted Shareholders) on the
Register on the Record Date will be able to tender a number of
their Shares, up to the maximum of that Shareholder's Basic
Entitlement;
-- Shareholders (other than Restricted Shareholders) on the
Register on the Record Date will also be entitled to tender
additional Shares in excess of their Basic Entitlement;
-- the Tender Price will be the price per Share which represents
an amount equal to a discount of one per cent. to Formula Asset
Value as at the Calculation Date;
-- continuing Shareholders should receive an uplift to their NAV
per Share as the Tender Price is being calculated to a discount of
one per cent. to Formula Asset Value (which includes the costs of
the Tender Offer (including the costs of associated portfolio
realisations));
-- the Tender Price will be paid to Shareholders in US Dollars
and will be effected by the despatch of cheques drawn on an account
of a branch of a United Kingdom clearing bank, or the crediting of
CREST accounts as appropriate; and
-- any Shares tendered will be cancelled.
Conditions of the Tender Offer
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The Tender Offer is conditional, inter alia, upon: (i) the
Discontinuation Resolution not being passed at the Annual General
Meeting; (ii) the Company obtaining the necessary Shareholders'
authority to implement the Tender Offer at the Extraordinary
General Meeting; (iii) the Company satisfying the distributable
profits requirements under Isle of Man law at the time of the
Tender Offer; and (iv) the Repurchase Agreement becoming
unconditional in all respects (save in respect of any condition
relating to the Tender Offer becoming unconditional).
Implementation of the Tender Offer will require approval by
Shareholders at the Extraordinary General Meeting, which is to be
held at 10.30 a.m. on 12 November 2015. The Tender Offer is also
conditional upon Panmure Gordon being satisfied that the Company
has sufficient funds available to meet its obligations under the
Repurchase Agreement. In addition, the Tender Offer may be
postponed or terminated in certain other circumstances as set out
in paragraph 2 of Part III of the Circular.
The number of Shares to be acquired by Panmure Gordon under the
Tender Offer will not in any event exceed 19,333,165 Shares,
representing 14.0 per cent. of the Company's issued Share Capital
(excluding any Shares held in treasury by the Company) as at 13
October 2015 (being the latest practicable date prior to the
publication of this document).
The Company's authority to repurchase its own Shares, to be
proposed at the Company's Annual General Meeting to be held on 12
November 2015 in respect of up to 14.99 per cent. of the Company's
issued Share Capital (excluding treasury shares) as at 29 September
2015 (being 20,720,084 Shares) will, if approved by Shareholders at
the Annual General Meeting, remain in force and will be unaffected
by the Tender Offer.
Options for Shareholders
Shareholders on the Register on the Record Date only can
choose:
-- to continue their full investment in the Company; or
-- save for Restricted Shareholders, to tender their Basic
Entitlement, plus the option to tender additional Shares which may
be purchased if other Shareholders tender less than their Basic
Entitlement.
Shareholders (other than Restricted Shareholders) on the
Register at the Record Date will be entitled to have up to 14.0 per
cent. of their respective holdings purchased under the Tender Offer
(and also the option to tender additional Shares which may be
purchased if other Shareholders tender less than their Basic
Entitlement).
Further details of the Tender Offer
Shareholders (other than Restricted Shareholders) on the
Register on the Record Date are invited to tender for sale some of
their Shares up to each Shareholder's Basic Entitlement to Panmure
Gordon who, as principal, will purchase at the Tender Price the
Shares validly tendered (subject to the overall limits of the
Tender Offer) and, following the completion of all those purchases,
sell the relevant Shares on to the Company at the Tender Price by
way of an on-market transaction, in accordance with the terms of
the Repurchase Agreement. All transactions will be carried out on
the London Stock Exchange.
Shareholders will also have the option to tender additional
Shares which may be purchased by Panmure Gordon to the extent that
other Shareholders tender less than their Basic Entitlement. Any
such excess tenders will be satisfied pro rata in proportion to the
amount tendered in excess of the Basic Entitlement (rounded down to
the nearest whole number of Shares) or otherwise at the discretion
of Panmure Gordon, in consultation with the Board.
The Tender Offer is subject to certain conditions, and may be
terminated in certain circumstances as set out in paragraph 2 of
Part III of the Circular. Further details of the calculation of the
Tender Price are set out in paragraph 3 of Part III of the
Circular.
Shareholders' attention is drawn to the letter from Panmure
Gordon set out in Part II of the Circular and to Part III of the
Circular and, for Shareholders who hold their Shares in
certificated form, to the Tender Form which together constitute the
terms and conditions of the Tender Offer.
Details of how Shareholders will be able to tender Shares can be
found in paragraph 4 of Part III of the Circular.
Shareholders should note that, once tendered, Shares may not be
sold, transferred, charged or otherwise disposed of other than in
accordance with the Tender Offer.
Shareholders are not obliged to tender any Shares and if they do
not wish to participate in the Tender Offer Shareholders should not
complete or return their Tender Form.
Shareholders who are in any doubt as to the contents of this
document or as to the action to be taken should immediately consult
their stockbroker, bank manager, solicitor, accountant or other
independent professional adviser authorised under the Financial
Services and Markets Act 2000 or from an appropriately qualified
independent adviser.
4. Restricted Shareholders and other Overseas Shareholders
The attention of Restricted Shareholders and Overseas
Shareholders is drawn to paragraph 10 of Part III of the Circular.
The Tender Offer is not being made to Shareholders who are resident
in, or citizens of, Restricted Territories. Restricted Shareholders
are being excluded from the Tender Offer to avoid infringing
applicable local laws and regulations relating to the
implementation of the Tender Offer. Accordingly, copies of this
document, the Tender Form and any related documents are not being
and must not be mailed or otherwise distributed in or into
Restricted Territories.
It is the responsibility of all Overseas Shareholders to satisfy
themselves as to the observance of any legal or regulatory
requirements in their jurisdiction, including, without limitation,
any relevant requirements in relation to the ability of such
Overseas Shareholders to participate in the Tender Offer.
5. General Meeting
The Proposal set out in this document is subject to Shareholder
approval at the Extraordinary General Meeting that has been
convened for 10.30 a.m. on 12 November 2015, to be held at the
offices of Galileo Fund Services Limited, Millennium House, 46
Athol Street, Douglas, Isle of Man IM1 1JB. Notice of the
Extraordinary General Meeting is set out at the end of the
Circular. The Resolution to be proposed is to authorise the Company
to make market purchases of its Shares pursuant to the Tender Offer
on the terms set out in the Circular.
The Resolution will be proposed as an ordinary resolution which
requires, on a show of hands, more than 50 per cent. of
Shareholders voting to vote in favour to be passed or, on a poll,
votes in favour to be cast by holders of more than 50 per cent. of
the Shares which are voted on the Resolution. Under the Articles of
Association, two Shareholders entitled to attend and vote on the
business to be transacted, each being a Shareholder present in
person or a proxy for a Shareholder or a duly authorised
representative of a corporation which is a Shareholder, shall
constitute a quorum. Every Shareholder present in person or (being
a corporation) by representative or by proxy shall, on a show of
hands, have one vote and, on a poll, shall have one vote for every
Share held by him.
6. Recommendation
The Board considers that the Proposal is in the best interests
of Shareholders as a whole. Accordingly, the Board recommends that
Shareholders vote in favour of the Resolution to be proposed at the
Extraordinary General Meeting, as those Directors who hold
beneficial interests in Shares intend to do in respect of their own
beneficial holdings of Shares which, in aggregate, amount to 92,071
Shares representing approximately 0.07 per cent. of the issued
Share Capital of the Company (excluding treasury shares) .
The Investment Adviser has indicated its intention to tender its
Basic Entitlement of 3,559,968 Shares pursuant to the Tender Offer.
Each of Nicholas Wilson and Leonard O'Brien, Directors of the
Company, has indicated his intention to tender his Basic
Entitlement of 7,000 Shares and 5,889 Shares, respectively,
pursuant to the Tender Offer.
The Board makes no recommendation to Shareholders as to whether
or not they should tender their Shares. Whether or not Shareholders
decide to tender any of their Shares will depend, among other
things, on their individual circumstances including their tax
position and on their view of the Company's prospects. Shareholders
in any doubt as to the action they should take should consult an
appropriately qualified independent financial adviser, authorised
under the Financial Services and Market Act 2000, without
delay.
7. Expected Timetable of Principal Events
The expected timetable for the Tender Offer is as follows:
Record Date for participation 5.30 p.m. on 20 October
in the Tender Offer 2015
Latest time and date for 1.00 p.m. on 9 November
receipt of Tender Forms 2015
or for settlement of TTE
Instructions in respect
of the Tender Offer
Latest time and date for 10.30 a.m. on 10 November
receipt of Forms of Proxy 2015
in respect of the Extraordinary
General Meeting
Extraordinary General Meeting 10.30 a.m. on 12 November
2015
Calculation Date 5.30 p.m. on 2 December
2015
Results of the Tender Offer 7 December 2015
and Tender Price announced
Settlement date: cheques 14 December 2015
despatched and CREST accounts
credited with proceeds in
respect of successfully
tendered Shares
Balancing certificates despatched from 14 December 2015
and CREST accounts credited
in respect of unsold Shares
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