TIDMDIAM
RNS Number : 8461S
Diamond Circle Capital Plc
05 December 2012
Diamond Circle Capital Plc
Notice of EGM
5 December 2012
1. Introduction
The Company announces that it will today post a circular to
Shareholders (the "Circular") including a notice of an
Extraordinary General Meeting of the Company, to be held at 11.00
a.m. on 28 December 2012 at IOMA House, Hope Street, Douglas, Isle
of Man, IM1 1AP at which a special resolution will be proposed to
wind up the Company (the "Proposal").
The Proposal is subject to Shareholder approval at the EGM. The
purpose of the Circular is to provide Shareholders with details of
the Proposal and of the Resolution and to recommend that
Shareholders vote in favour of the Resolution.
2. Background
Earlier this year the Company was the subject of an unsolicited
cash offer from Mr Abdallah Chatila (the "Offer") at US$3.50 per
Ordinary Share. As part of its defence the Board stated that it
believed that in undertaking a managed portfolio liquidation it
would be possible to realise and return to Shareholders greater
value in cash than would have been received under the Offer. The
Board therefore resolved that it would, as soon as practicable
following the lapsing of the Offer and subsequent Shareholder
consultation, put proposals to Shareholders for the managed
realisation of the Company's portfolio of diamonds and the
distribution of such proceeds to Shareholders. At that time the
Board indicated that based on 30 April 2012 valuations and
adjusting for the estimated discount and costs associated with the
disposal of the portfolio over a three month period and liquidation
of the fund the terminal asset value could be in the region of
US$45.5 million, equivalent to US$6.12 per Ordinary Share.
The Offer closed on 15 June 2012 with Mr Chatila declaring an
interest in 62.29 per cent. of the Ordinary Shares and following
constructive discussions with the Board, Mr Chatila indicated his
support for the proposal to return value to Shareholders by way of
a managed realisation of the portfolio. On 12 July 2012
Shareholders approved an amendment to the Company's investment
objective and policy in order to allow it to be managed with a view
to realising its existing portfolio of diamonds in an orderly and
timely manner.
Following this change in policy the Board engaged, as part of
the initial phase of the realisation strategy, a leading
international auction house to undertake a private auction process.
This decision was made in the belief that it was the best strategy
to liquidate a greater proportion of the portfolio in the timeliest
manner at a point when the diamond market was softening. On 23
August 2012, and as a direct result of the private auction process,
the Company announced that it had sold five out of the Company's
portfolio of eleven diamonds for an aggregate gross consideration
of $10.2 million. The net aggregate proceeds after all selling
commission and costs amounted to $9.7 million. The results were
somewhat disappointing in terms of both the volume and valuation of
the sales achieved.
With the private auction process complete the Board continued to
explore and consider, together with its investment adviser, AUM
Asset Management Limited, opportunities to realise the remaining
portfolio of diamonds in an orderly and timely manner. On 12
October 2012 the Company announced that it had sold a further three
diamonds for an aggregate consideration of $20.8 million and on 5
November 2012 announced that it had sold the final three remaining
diamonds for an aggregate consideration of $5.9 million. Of these
final three diamonds, two were sold at what the Board believes were
good prices however the third was a considerable disappointment. In
accepting the price offered for this final diamond, the Board
considered the
discount in the context of the softening diamond market and the
costs associated with continuing to run the fund for a potentially
prolonged period while attempting to achieve an improved price.
Throughout the period following the end of the Offer the
polished diamond market continued to experience considerable
weakness. The traditional summer recess did not contribute to
bringing back buyers to a market that persisted in being highly
selective and price-sensitive and where diamond dealers strived to
keep inventories at minimum levels. Quite crucially, Indian and Far
East demand remained subdued, as was apparent at the Hong Kong
Jewellery and Gem Fair held in September. The Polished Prices
Diamond Index retreated 8.7 per cent. from 30 April to 30
October.
To date the Board has made two capital distributions totalling
approximately US$38 million equivalent to US$5.11 per Ordinary
Share. These capital distributions have been made by way of a
cancellation of paid up share capital of the Company equal to the
amount being returned.
Now that the entire diamond portfolio has been realised the
Board is proposing that the Company be placed into solvent
liquidation and the surplus assets of the Company, after settlement
of all liabilities to creditors, be distributed to the
Shareholders.
3. The Proposal
Liquidation of the Company
The process to liquidate the Company commences with a board
meeting at which the Directors make a statutory declaration (the
"Statutory Declaration") that they have made a full inquiry into
the affairs of the Company and that, in their opinion, the Company
will be able to pay its debts in full within a period not exceeding
12 months from the commencement of the Company's winding up. The
board meeting has now been held and the signed Statutory
Declaration has been filed with the Isle of Man Registrar of
Companies.
An extraordinary general meeting of the Company is then held
(notice of which is set out in the Circular) in order to pass a
special resolution to approve, amongst other things, the voluntary
winding up of the Company and the appointment of a liquidator. The
voluntary winding up is deemed to commence at the time of the
passing of this resolution. The Company will then cease to carry on
its business (except as required for the winding up), but will
retain its corporate state and powers until dissolution. Within 7
days of the Resolution being passed, the Resolution shall be
advertised in two newspapers circulating in the Isle of Man.
Following the settlement of the Company's outstanding
liabilities the liquidator will distribute the Company's surplus
assets to Shareholders pro rata to their shareholdings.
A final general meeting will be convened by the liquidator (on
at least one month's notice which must be advertised in two
newspapers circulating in the Isle of Man) at which the liquidator
will give his account of how the winding up was conducted.
Following the final meeting, a copy of account will be filed and a
return made of the meeting by the liquidator with the Isle of Man
Department of Economic Development. Three months thereafter the
Company will be deemed to be dissolved (assuming that all surplus
funds have been distributed and the dissolution has not been
challenged).
Entitlement of Shareholders on a winding up
Based on the cash balances and sundry net assets remaining in
the Company following the distribution noted above and after taking
into account an estimate for the ongoing operating costs up until
liquidation and also an estimate of the liquidation costs, the
terminal asset value of the Company is approximately $1.0 million
equivalent to $0.13 per share. Any final distribution, will not be
made until the Liquidator has completed its statutory duties to
seek out, adjudicate and pay creditors' claims.
Shareholders will receive their final capital distribution
through the CREST system.
Stock exchange dealings
The last day for dealings in the Ordinary Shares on the London
Stock Exchange on a normal three day settlement basis will be 20
December 2012. After 20 December 2012, dealings should be for cash
settlement only and will be registered in the normal way if the
transfer, accompanied by the documents of title, is received by the
Registrar by close of business on 27 December 2012. Transfers
received after that time will be returned to the person lodging
them.
Application will be made to the UKLA for suspension of listing
of the Ordinary Shares, on the Official List of the UKLA and
application will be made to the London Stock Exchange for
suspension in trading in the Ordinary Shares as from 7.30 a.m. on
28 December 2012. The register of members will be closed and the
Ordinary Shares will be disabled in CREST at the close of business
on 28 December 2012. In addition, an application will be made for
the listing and trading of the Ordinary Shares to be cancelled on
the first business day following the passing of the Resolution, 31
December 2012.
After liquidation of the Company and making the final
distribution to Shareholders, existing certificates in respect of
the Ordinary Shares will cease to be of value and any existing
credit of such shares in any stock account in CREST will be
redundant.
4. Risks associated with the Proposal
Material risk factors associated with the Proposal and which are
known to the Company are set out below. Shareholders should
carefully consider all such risk factors (although there may be
others which are of equal or greater magnitude which are not known
to the Company or which the Company deems to be immaterial and
which, accordingly, are not set out in the Circular or which may be
applicable to certain Shareholders or types of Shareholders and of
which the Company is unaware). Further, as the market conditions
change or develop over time, these matters may be subject to risk
factors not currently contemplated. However, the
Board considers the following to be material risk factors
relating to the Proposal:
-- Whether or not the Proposal is approved, the price at which
Shares trade may not fully reflect their underlying net asset
value.
-- The actual amount of the liquidation costs may differ from
the Board's estimate, which may impact the amount of any final
distribution to Shareholders.
5. Extraordinary General Meeting
At the EGM, it is intended that the following will be proposed
as a special resolution for Shareholders' approval:
Special Resolution:
(a) the Company be wound up voluntarily;
(b) Mike Fayle of KPMG LLC be and is hereby appointed as
liquidator (the "Liquidator") for the purposes of winding up the
Company's affairs;
(c) the remuneration of the Liquidator be calculated by
reference to the time properly given by the Liquidator and its
staff in attending to matters arising in the winding-up and the
Liquidator be and is hereby authorised to draw such remuneration
monthly or at such longer intervals as it determines; and
(d) the Company's records and books be held to the order of the
Liquidator until the expiry of 12 months after the date of
dissolution of the Company.
6. Meeting and Resolution
The Proposal is subject to the approval of the Resolution by
Shareholders at the EGM.
All persons holding Ordinary Shares at 11.00 a.m. on 26 December
2012, or if the EGM is adjourned, on the register of members of the
Company 48 hours before the time of any adjourned meeting, shall be
entitled to attend or vote at that meeting and shall be entitled to
one vote per Ordinary Share held.
A quorum consisting of two Shareholders present in person or by
proxy and being entitled to vote is required for the EGM. In order
for the Resolution to be passed, it must be approved by at least 75
per cent. of the votes cast or, if on a poll, by Shareholders
representing at least 75 per cent. of the votes cast, by those
Shareholders present in person or by proxy and being entitled to
vote.
RECOMMENDATION
The Board considers the proposals set out above to be in the
best interests of the Company and its Shareholders as a whole. The
Board therefore recommends that Shareholders vote in favour of the
Resolution as each member of the Board (to the extent that he holds
shares in the Company) intends to do in respect of his own
beneficial holdings, amounting in aggregate to 5,000 Ordinary
Shares, which represents approximately 0.0673 per cent. of the
Company's issued ordinary share capital.
For further information please contact:
Numis Securities Limited
Tel: 020 7260 1000
David Benda / Nathan Brown
Redleaf Polhill
Tel: 020 7566 6700
Emma Kane/Rebecca Sanders-Hewett
Numis Securities Limited, which is authorised and regulated by
the Financial Services Authority, is acting exclusively for Diamond
Circle Capital Plc and for no-one else in connection with matters
referred to in this Circular and will not be responsible to anyone
other than Diamond Circle Capital Plc for providing the protections
afforded to clients of Numis Securities Limited, or for providing
advice in relation to matters referred to in this Circular or any
other matters referred to herein.
Words and expressions defined in the Circular have the same
meanings when used in this announcement unless the context requires
otherwise.
This document contains statements that are or may be
forward-looking with respect to the financial condition, results of
operations and businesses of Diamond Circle Capital Plc. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual
results, valuation, performance or achievements of Diamond Circle
Capital Plc, or the industry in which it operates, to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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