TIDMUTL TIDMECIT
RNS Number : 4704X
Utilico Limited
06 December 2010
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES OR INTO OR FROM
CANADA, JAPAN OR AUSTRALIA
For immediate release
6th December 2010
Utilico Limited
("Utilico")
Recommended proposals for amendments to Utilico's investment policy, the
acquisition of the assets of Eclectic Investment Company plc ("Eclectic"), the
acquisition of certain assets from General Provincial Life Pension Fund (L)
Limited ("GPLPF"), cancellation of share premium account, increase of authorised
share capital and change of name to Utilico Investments Limited
Introduction
Utilico is today posting a Circular (and accompanying Prospectus) which convenes
the necessary shareholder meetings to implement proposals for a change in
Utilico's investment policy and to seek shareholder approval for this and other
associated matters.
The Utilico Board has concluded that the current investment policy, restricted
predominantly to the infrastructure and utilities sectors, no longer offers long
term attractions for Shareholders. This has arisen as a result of a number of
changes to these sectors over recent years.
The Board is therefore proposing a new investment objective and policy that will
allow the Company to invest across all sectors and markets. To reflect these
changes it is also proposed that Utilico will change its name to Utilico
Investments Limited.
The change in the Company's investment policy would give rise to a potential
conflict for Utilico's manager, ICM, as Ingot, Utilico's former manager and an
affiliate of ICM, manages Eclectic Investment Company plc, which has a similar
investment mandate. As Eclectic's investment portfolio contains a number of
attractive assets that would comply with Utilico's proposed new investment
policy, the Board considers that the most appropriate way to resolve this
potential conflict, as well as allowing Utilico to acquire an attractive and
diversified portfolio of assets, is for the Company to acquire Eclectic's
investment portfolio through a scheme of reconstruction and winding up of
Eclectic. This would also lead to potential efficiency savings as the asset
base of the Company would increase by the value of the assets acquired.
Pursuant to the Scheme and related transactions, Utilico will acquire all of
Eclectic's investment portfolio in consideration for a cash payment to Eclectic
and the issue of New Utilico Shares to certain Eclectic Shareholders. As a
result of this transaction, Utilico's Gross Assets will increase by
approximately GBP14.0m.
It is also proposed that Utilico acquires 19,965,369 Resolute Mining Limited
ordinary shares from GPLPF (having a value, based on their closing bid price on
30 November 2010 and a A$/sterling exchange rate of 1.6238 on that date, of
GBP15.0 million) in exchange for New Utilico Shares. The Board and the Manager
believe that Resolute is an attractive investment and that it is advantageous to
the Company to take this opportunity to increase its holding in this company.
This also has the benefit of increasing Utilico's asset base further, which is
particularly positive for ZDP Shareholders as it will provide additional ZDP
Cover. The New Utilico Shares will be issued to GPLPF at the Utilico FAV per
Share as at the Calculation Date with the Resolute ordinary shares being
acquired being valued at their closing bid price on the same day translated into
sterling at the prevailing A$/sterling exchange rate.
Applications will be made for the New Utilico Shares to be admitted to a premium
listing of the Official List and to trading on the main market for listed
securities of the London Stock Exchange. The New Utilico Shares will be issued
in registered form and may be held either in certificated form and settled
through CREST. The New Utilico Shares will be transferable and will rank pari
passu in all respects with each other and the existing Utilico Shares save in
respect of any distribution made or declared on the existing Utilico Shares
prior to the Effective Date.
As previously announced to the market, despite having positive revenue earnings
in addition to revenue reserves, under Bermuda law, Utilico has been unable to
pay a dividend to Shareholders as a result of having negative capital reserves
since March 2008. Whilst the bonus issue mechanism used in April this year
allowed for some profits representing income to be returned to Shareholders, the
Board believes that a more permanent solution is needed. To this end, the
Company is proposing to cancel the amount standing to the credit of the
Company's share premium account, which will allow it to resume dividend
payments. Any such dividends will only be paid out of existing and future
revenue profits, which will ensure that the interests of ZDP Shareholders are
not prejudiced thereby and will be made in accordance with Bermuda law.
Finally, it is necessary to increase the authorised share capital of the Company
to create sufficient additional New Utilico Shares to implement the Proposals,
whilst leaving a degree of headroom for the future.
Investment objective and policy
Background to change of investment objective and policy
The Board and ICM have reviewed and discussed at length the merits of the
current investment policy. This review concluded that the infrastructure and
utilities sectors in emerging markets remain attractive. However, in developed
markets this is not the case and in such markets these asset classes face a
number of challenges, namely the following:
· Low growth. GDP growth in certain developed markets is likely to be
depressed for a number of years. This arises from various factors, including
declining populations, ageing populations and significant capital requirements
to reduce both personal and sovereign debt levels exacerbated by current
financial market pressures.
· High debt. A number of utility and infrastructure investment
opportunities require significant debt finance. The ability to roll this debt
over into the next cycle will be challenging given the increased margin and
asset cover requirements that many lenders have imposed following the recent
credit crisis. Further, many lenders are likely to need to reduce their loan
books to meet regulatory requirements and reduce risk. This poses an additional
risk to equity investors.
· Uncertain political environment. Governments are under severe constraints
to redress sovereign debt concerns. In Europe this is being met by the
imposition of severe austerity measures in a number of countries, which is
likely to result in a reduction in government spending on infrastructure and
related projects, and an increase in protectionist tax and regulation. This was
illustrated by the Spanish response to the solar industry where the Spanish
Government has unilaterally reduced the feed-in tariffs for new solar energy
projects and has publicly considered that this decision should have
retrospective effect.
· Smaller investment universe. The strength of Utilico's manager, ICM, has
been in exploiting quoted investments and ICM's investment team is structured to
focus on this. However, the pool of listed utility and infrastructure
investments in the developed markets has reduced significantly in recent times.
In the UK, a number of utility and infrastructure companies have been taken
private, including BAA and many of the water and power generation and supply
companies. The reduced pool of listed investments limits ICM's investment
flexibility. While there is a requirement for significant investment in this
sector the Board believes that this is likely to be through public private
finance initiatives or in the private equity arena, which is not ICM's core
strength.
The Board is therefore proposing a new investment objective and a new investment
policy, which will allow the Company to invest across all sectors and markets.
This will position Utilico as an absolute return fund, utilising strengths in
infrastructure and utilities investment as well as in the wider market. The
Board expects the investment outlook to change as the world's economies are
rebalanced and that the wider flexibility offered by the new investment policy
will be beneficial to Utilico's Shareholders and indirectly ZDP Shareholders.
Proposed new investment objective and investment policy
If all of the Resolutions to be proposed at the SGM and the Class Meetings and
the Eclectic Resolutions are passed by the requisite majorities, the Company's
new investment objective and investment policy will be as follows:
Proposed investment objective
Utilico's investment objective will be to maximise shareholder returns by
identifying and investing in investments where the underlying value is not
reflected in the market price.
Proposed investment policy
Utilico will seek to invest in undervalued investments and under its proposed
investment policy will have the flexibility to make investments in a wide range
of sectors and markets worldwide.
The Company will identify and invest in opportunities where the underlying value
is not reflected in the market price. This perceived undervaluation may arise
from any number of factors including technological, market motivation,
prospective financial engineering opportunities, competition or shareholder
apathy.
In the short to medium term it is anticipated that the Company will continue to
have a significant proportion of its Gross Assets invested in developed markets
in existing utilities and related stocks, including (but not limited to) water
and sewerage companies, waste, electricity, gas, telecommunications, ports,
airports, service companies, rail, roads, any business with essential service or
monopolistic characteristics and in any new utilities which may arise. The
Company may also invest this segment of its portfolio in businesses which supply
services to or otherwise support the utilities and related sectors.
Subject to compliance with the Listing Rules in force from time to time, Utilico
may invest in other investment funds or vehicles, including any managed by the
Manager, where such investment would be complementary to the Company's
investment objectives and policy.
The Company will continue to have the flexibility to invest in any instrument
appropriate to the particular opportunity under consideration, including shares,
bonds, convertibles, options, warrants, futures and debt securities and to
invest in unlisted securities. The Company may use derivative instruments for
the purposes of efficient portfolio management and to obtain investment
exposure, such as contracts for difference, financial futures, call and put
options and warrants. The Company may from time to time seek to actively
protect the Company's portfolio and balance sheet from major market corrections.
This may include foreign currency hedges, interest rate hedges, stock market
index options and similar instruments.
The Company will have the flexibility to invest in markets worldwide although
investments in the utilities and infrastructure sectors will principally be made
in the developed markets of Australasia, Western Europe and North America, as
Utilico's exposure to the emerging markets utilities and infrastructure sectors
will primarily be through its holding in Utilico Emerging Markets Limited.
Utilico will have the flexibility to invest directly in these sectors in
emerging markets with the prior agreement of Utilico Emerging Markets Limited.
The Company believes it is appropriate to support investee companies with their
capital requirements while at the same time maintaining an active and
constructive shareholder approach through encouraging the organisation of
capital structure and business efficiencies. The Manager's investment team will
maintain regular contact with investee companies and Utilico may often be among
the largest shareholders. There are no limits on the proportion of an investee
company that Utilico may hold and Utilico may take legal or management control
of a company from time to time.
The Company aims to maximise value for Shareholders through a relatively
concentrated portfolio of investments. There will be no fixed limits on the
allocation of investments between sectors and markets, however the following
investment limits will apply:
· investments in unlisted companies will, in aggregate, not exceed 20% of
the Gross Assets at the time that any new investment is made; and
· no single investment will exceed 30% of Gross Assets at the time such
investment is made, save that this limit shall not prevent the exercise of any
warrants, options or similar convertible instruments acquired prior to the
relevant investment reaching the 30% limit.
Under the Bye-laws, the Group is permitted to borrow an aggregate amount equal
to 100% of the Group's Gross Assets. Borrowings will be drawn down in any
currency appropriate for the portfolio.
As required by the Listing Rules, there will be no material change to the
investment policy without prior approval of Shareholders. Any such change would
also require the consent of ZDP Shareholders in accordance with the Subscription
Agreement.
The Scheme
The Board has reached agreement with Eclectic to acquire the investment
portfolio of Eclectic through the Scheme.
The Scheme will result in Eclectic Shareholders who elect to do so receiving New
Utilico Shares, valued at the Utilico FAV per Share as at the Calculation Date,
issued by the Company in exchange for the transfer to the Company of certain
investments held by Eclectic. The Scheme will also provide for Eclectic
Shareholders who do not elect for New Utilico Shares to receive a cash exit in
respect of their investment in Eclectic equal to 95 per cent. of the Eclectic
FAV per Share on the Calculation Date. Eclectic Shareholders who do not make an
election under the Scheme will be deemed to have elected for the Cash option. In
order to provide sufficient cash to fund the Cash Option and the costs of
Eclectic's liquidation, Utilico has agreed to purchase certain assets from
Eclectic shortly before the Scheme becomes effective pursuant to the Sale and
Purchase Agreement.
Eclectic is an investment company with a broad investment policy, which permits
Eclectic to make investments worldwide across all sectors and in a variety of
financial instruments without having to focus on any country, sector or
industry. As at 30 November 2010, Eclectic had unaudited net assets of GBP19.3
million. The ten largest investments in Eclectic's portfolio constituted 86.0
per cent. of the portfolio.
The majority of the assets of Eclectic to be acquired by the Company pursuant to
the Scheme would fall outside the scope of the Company's existing investment
policy. The Scheme is therefore conditional, inter alia, on the amendment of
the Company's investment policy.
The Scheme will not result in any changes to the management arrangements or the
management and performance fees currently paid by Utilico to ICM.
The majority shareholder in Eclectic, NLPL, is controlled by the ultimate
beneficial owner of GPLPF, the majority shareholder in Utilico. This means that
Eclectic is a related party of Utilico for the purposes of the Listing Rules.
As a result, the entry into the Transfer Agreement and the Sale and Purchase
Agreement pursuant to the Scheme constitute related party transactions for
Utilico, which must be approved by the Utilico Shareholders, excluding GPLPF and
any of its associates.
The Scheme is also conditional, inter alia, on the approval of Eclectic
shareholders at two separate general meetings.
Benefits of the Scheme
The Board believes that the Scheme represents a good opportunity for the Company
to attract new shareholders and to increase the size of the Company. The main
benefits of the Scheme for Shareholders and ZDP Shareholders are that:
· the Company will acquire a portfolio of assets which are, in the Manager's
opinion, attractive investments;
· Eclectic will cease to exist, which will eliminate a potential source of
conflict of interest for ICM and Ingot as affiliates and investment managers of
two funds with similar investment policies;
· the Company's asset base will increase, which should have a beneficial
effect on the Company's total expense ratio; and
· ZDP Cover will be improved through the increase in the Company's Gross
Assets.
Valuations for the Scheme
New Utilico Shares will be issued to Eclectic Shareholders who elect to receive
New Utilico Shares under the Scheme on the basis of the Eclectic FAV per Share
and the Utilico FAV per Share as at the Calculation Date. The Eclectic FAV and
the Utilico FAV will be based on the Net Asset Values of Eclectic and Utilico as
calculated in accordance with their normal accounting policies (which are
substantially similar) but adjusted as follows.
· by deducting from the net asset value of the Eclectic Shares (i) all
known costs of the Scheme and of its liquidation incurred or to be incurred by
Eclectic and all other known liabilities of Eclectic and (ii) the Liquidators'
retention (expected to be GBP50,000) to cover unknown liabilities; and
· by deducting from the net asset value of the Utilico Shares all
known costs of the Proposals incurred or to be incurred by Utilico.
Illustrative financial effects of the Scheme
For illustrative purposes only, if the Scheme had become effective at close of
business on 30 November 2010 and based on the assumptions set out in the notes
below, the Eclectic FAV per Share would have been 107.66 pence and the Utilico
FAV per Share would have been 204.31 pence. Based on the assumptions set out
below, an electing Eclectic Shareholder would receive approximately 0.526 New
Utilico Shares in respect of each Eclectic Share held.
On this basis, an Eclectic Shareholder would receive New Utilico Shares with an
aggregate market price of GBP798.21 for every 1,000 Eclectic Shares held, which
have an aggregate market price of GBP855.00, based on the closing share price of
an Eclectic Share as at 30 November 2010. On this basis, Utilico would issue up
to 6,668,737 New Utilico Shares, representing 7.7 per cent. of the existing
issued Ordinary Shares.
It should be noted that these figures are given for illustrative purposes only
and should not be regarded as a forecast of the actual Eclectic FAV per Share or
the actual Utilico FAV per Share to be calculated on the Calculation Date.
Assumptions
1. As at close of business on 30 November 2010, the middle market share price
of an Eclectic Share was 85.5 pence and of a Utilico Share was 151.75 pence;
2. As at close of business on 30 November 2010, the unaudited NAV per Eclectic
Share and the unaudited Eclectic FAV per Share were 109.51 pence and 107.66
pence respectively;
3. As at close of business on 30 November 2010, the unaudited NAV per Utilico
Share and the unaudited Utilico FAV per Share were 205.03 pence and 204.31pence
respectively;
4. Shareholders holding 71.83 per cent. of the Eclectic Shares validly elect
for New Utilico Shares in respect of their entire holdings (being those who have
given irrevocable undertakings to roll-over their investment);
5. Current period revenue reserves are included within the relevant NAV
calculations;
6. Eclectic's total costs in implementing the Proposals are GBP275,000;
7. The retention proposed by the Liquidators to cover unknown liabilities of
Eclectic is GBP50,000;
8. Utilico's total costs in implementing the Scheme and associated matters are
GBP625,000;
9. Completion of the Proposals as described in herein; and
10. No account of the Warrants is taken in calculating the Utilico FAV per
share.
The Cash Option
Under the Cash Option, Eclectic Shareholders may elect to dispose of some or all
of their Eclectic Shares for cash equivalent to 95 per cent. of the Eclectic FAV
per Share. Based upon the illustrative ratio given above this would represent a
premium of 19.6 per cent. to the closing share price of an Eclectic Share as at
30 November 2010. If no form of election is received by Eclectic, the relevant
Eclectic Shareholder will be deemed to have elected for the Cash Option in
respect of their entire holding of Eclectic Shares.
If no form of election is received by Eclectic, the relevant Eclectic
Shareholder will be deemed to have elected for the Cash Option in respect of
their entire holding of Eclectic Shares.
Eclectic Shareholders who are resident outside the United Kingdom, the Channel
Islands and the Isle of Man will be deemed to have elected for the Cash Option
under the Scheme. This is subject to the discretion of the Independent
Directors and the Independent Eclectic Directors to allow such Eclectic
Shareholders to elect for New Utilico Shares provided that the Independent
Directors and the Independent Eclectic Directors are satisfied that such
Eclectic Shareholders can be issued New Utilico Shares without breaching any
relevant securities laws or regulations and without the need for compliance on
the part of Utilico or Eclectic with any overseas laws, regulations, filing
requirements or the like.
Funding the Cash Option
The beneficial holders of 71.83 per cent. of the Eclectic Shares have
irrevocably undertaken to elect for New Utilico Shares under the Scheme. If all
other Eclectic Shareholders elect, or are deemed to elect, for the Cash Option,
the maximum aggregate cash required by Eclectic to satisfy those elections would
be approximately GBP5.1million, based upon 95 per cent. of the illustrative
Eclectic FAV per Share shown above. In order to ensure that Eclectic has
sufficient cash, Utilico has agreed to enter into the Sale and Purchase
Agreement shortly before the Second Eclectic GM. Under the Sale and Purchase
Agreement, Utilico will purchase certain investments from Eclectic (valued as at
the Calculation Date in the same manner as if they would be transferred pursuant
to the Scheme) in consideration for a cash payment. These assets will be
investments within Utilico's current investment policy. The amount of assets
sold to Utilico under the Sale and Purchase Agreement will depend on elections
received under the Scheme and Eclectic's other cash requirements and cannot,
therefore, be determined at this time. The Sale and Purchase Agreement is not
conditional upon completion of the Scheme.
Information on Resolute and the GPLPF Subscription
As part of the Proposals, GPLPF has agreed, subject to shareholder approval, to
subscribe for New Utilico Shares in consideration for the acquisition by
Utilico, in accordance with Utilico's proposed investment policy of 19,965,369
Resolute ordinary shares (having a value, based on their closing bid price on 30
November 2010 and a A$/GBP sterling exchange rate on that date of 1.6238, of
GBP15.0 million).
Resolute is incorporated in Western Australia and has its registered office at
4th Floor, The BGC Centre, 28 The Esplanade, Western Australia 6000. Resolute is
a developer and operator of gold projects, with operations in Africa,
principally in Mali and Tanzania, and in Australia. Its ordinary shares,
convertible loan notes and listed options are quoted on the official list of the
Australian Stock Exchange.
Utilico currently has an interest in 25,000,000 ordinary shares, 60,011,871
convertible loan notes, 16,150,491 listed options and 2,250,000 unlisted options
in Resolute. As at 30 November 2010 these assets were valued at GBP70.6 million
in aggregate and represented 19.1% of Gross Assets. Eclectic has an interest in
500,000 ordinary shares and 5,711,667 convertible loan notes in Resolute with an
aggregate value as at the same date of GBP4.8 million.
The Directors, advised by the Manager, believe that these investments, and the
opportunity to acquire further Resolute ordinary shares pursuant to the GPLPF
Subscription, offer counter cyclical diversification through exposure to the
gold sector and that they still remain undervalued with potential for
significant upside.
The 19,965,369 ordinary shares in Resolute to be acquired by the Company from
GPLPF will be valued at closing bid value as at the Calculation Date and the New
Utilico Shares issued in consideration will be valued at the Utilico FAV per
Share on the Calculation Date and applying the A$/GBP sterling exchange rate at
that date. Based upon valuations and the A$/GBP sterling exchange rate as at 30
November 2010, the satisfaction of the consideration would result in the issue
of 7,341,748 New Utilico Shares to GPLPF, representing 8.5 per cent. of the
current issued ordinary share capital and 7.3 per cent. of the enlarged issued
ordinary share capital of Utilico on the assumption that the Scheme is also
implemented and that all Eclectic Shareholders (other than those who have
irrevocably undertaken to elect for New Utilico Shares) elect for, or are deemed
to elect for, the Cash Option pursuant to the Scheme.
GPLPF is interested in 52.6 per cent. of the current issued share capital of
Utilico and accordingly the GPLPF Subscription constitutes a related party
transaction for the purposes of the Listing Rules. It is therefore conditional
on the approval of the Shareholders excluding GPLPF and any of its associates.
If the GPLPF Subscription and the Scheme are both implemented, based on the
assumptions in relation to the Cash Option and the valuations set out above,
GPLPF will be interested in 52,778,632 Utilico Shares representing 52.6 per
cent. of the enlarged issued ordinary share capital of Utilico.
Illustrative financial effects of the Proposals
By way of illustration only, based on the Group's unaudited Net Asset Value of
GBP177.1 million as at 30 November 2010 had the Scheme become effective and the
GPLPF Subscription taken place at the date of this document, the Group's Net
Asset Value would have been increased by 16.0% (such increase representing the
aggregate of (i) the unaudited Net Asset Value of Eclectic of GBP19.3 million
adjusted for the Cash Option (assuming this is taken up by all the Eclectic
Shareholders other than those who have irrevocably undertaken to elect for New
Utilico Shares) and for all expenses in relation to the Scheme and (ii) the
value of the assets acquired pursuant to the GPLPF Subscription of GBP15.0
million.
The Share Premium Cancellation
As previously announced to the market, despite having positive revenue earnings
in addition to revenue reserves, under Bermuda law, Utilico has been unable to
pay a dividend to Shareholders as a result of having negative capital reserves
since March 2008. In light of this position, the Board, in conjunction with its
advisers, has examined alternative ways to enable the Company to make cash
distributions to Shareholders equal to the dividends the Board would otherwise
have declared if they were permitted to do so in accordance with Bermuda law.
This resulted in the bonus issue and buyback of Ordinary Shares on 21 April this
year.
Whilst the bonus issue and buyback mechanism allowed the Company to make a
distribution equivalent to the dividend that would have been paid but for the
Bermuda legal issue, this method is unsatisfactory as a long term solution. It
relies on ZDP Cover exceeding 1.4 times immediately following any bonus issue
and is administratively more complicated than the payment of a cash dividend.
With these concerns in mind, the Board is therefore proposing the Share Premium
Cancellation. This will eliminate the negative capital reserves as the negative
balance is less than the amount standing to the credit of the share premium
account and thereby permit the future payment of dividends out of the Company's
revenue reserves and future revenue profits on both the existing Ordinary Shares
and New Utilico Shares.
As at 30 June 2010, being the last date to which audited accounts have been
prepared, the negative balance on the Company's capital reserve account was
GBP138.0 million, whilst the credit balance on the share premium account
amounted to GBP223.5 million. At the same date, the Company's revenue reserve
was GBP4.1 million.
Both the Scheme and the GPLPF Subscription are conditional on the Share Premium
Cancellation taking place.
The Share Premium Cancellation requires the consent of both Shareholders and ZDP
Shareholders. The Board has considered the interests of ZDP Shareholders and
considers that ZDP Shareholders' interests are not prejudiced by the Share
Premium Cancellation. Any dividends paid to Shareholders will only be paid from
the Company's existing and future revenue reserves, which would not be available
to ZDP Shareholders even on the Company's winding up (as they would constitute
Winding-Up Revenue Profits under the Bye-laws, which are attributable to the
Ordinary Shares only).
In addition, had the GPLPF Subscription and the Scheme taken place prior to the
publication of this document, they would have had the effect of increasing ZDP
Cover from 1.52 times as at 30 November 2010 to 1.63 times. This figure assumes
that both the GPLPF Subscription and the Scheme proceed and that all Eclectic
Shareholders other than those who have irrevocably undertaken to elect for New
Utilico Shares elect for, or are deemed to elect for, the Cash Option pursuant
to the Scheme.
Dividend Policy
If the Share Premium Cancellation takes place, the Directors intend to reinstate
the Company's original dividend policy, under which they anticipate distributing
the majority of net revenue arising from normal income streams (such as
dividends from portfolio companies) less normal costs (such as management fees).
Any dividend payments would be made in accordance with Bermuda law.
Costs and expenses
The costs to be incurred by Utilico in connection with the Proposals are
expected to be approximately GBP625,000 in aggregate (including irrecoverable
VAT but excluding stamp duty).
If any of the Resolutions are not passed at the SGM or at the Class Meetings or
the Proposals do not otherwise proceed it is estimated that the Company would
suffer approximately GBP485,000 of irrecoverable costs.
Related party issues
The Scheme
As at the date of this document, GPLPF owns and is entitled to exercise votes
attaching to 45,436,884 Ordinary Shares, representing 52.6 per cent. of the
issued Ordinary Shares. NLPL owns and is entitled to exercise votes attaching to
9,252,332 Eclectic Shares, representing 52.5 per cent. of the issued Eclectic
Shares (excluding treasury shares). GPLPF and NLPL are ultimately controlled by
the same beneficial owner and as a result Eclectic and Utilico constitute
related parties for the purposes of Chapter 11 of the Listing Rules. The Scheme,
which requires the entry into of the Transfer Agreement and the Sale and
Purchase Agreement, is therefore a related party transaction for the purposes of
the Listing Rules.
The Listing Rules require that a related party transaction of a listed company
must be approved by its shareholders, other than the related party and any of
its associates who are not allowed to vote on the relevant resolutions. The
Scheme is therefore conditional, inter alia, on the passing of a separate
resolution, which will be proposed as an ordinary resolution which will require
the approval of a majority of the Ordinary Shareholders voting on the
resolution. GPLPF and its associates will not vote on this resolution.
The GPLPF Subscription
The GPLPF Subscription is a transaction between the Company and GPLPF (the
Company's majority shareholder) and is a related party transaction for the
purposes of the Listing Rules. As a result, the GPLPF Subscription is
conditional on the passing of a separate resolution, which will be proposed as
an ordinary resolution which will require the approval of a majority of the
Ordinary Shareholders voting on the resolution. GPLPF and its associates will
not vote on this resolution.
Conditions to the Proposals
The Proposals are conditional upon all of the Utilico Resolutions and the
Eclectic Resolutions being passed by the requisite majorities. Accordingly, if
any of the Utilico Resolutions or the Eclectic Resolutions are not passed no
element of the Proposals will be implemented other than the Sale and Purchase
Agreement which may be implemented without the Eclectic Resolutions being passed
at the Second Eclectic GM.
The change to the investment policy and the Share Premium Cancellation are also
conditional upon the approval of the ZDP Shareholders with each of the 2012,
2014 and 2016 ZDP Shareholders voting at separate class meetings.
Irrevocable undertakings
The Board has consulted with its two largest shareholders, GPLPF and Foreign and
Colonial Investment Trust plc ("FCIT"), who hold in aggregate 64.7 per cent. of
the Company's issued Ordinary Shares. GPLPF and FCIT have signed irrevocable
undertakings to vote in favour of the Resolutions to be proposed at the SGM, in
GPLPF's case with the exception of the related party resolutions.
The board of Eclectic has consulted with certain of its major shareholders,
holding 71.83 per cent. of Eclectic's issued share capital (excluding shares
held in treasury), who have all undertaken to vote in favour of the Scheme and
to elect to receive New Utilico Shares in respect of their entire holding of
Eclectic Shares.
Outline Timetable
+---------------------------------------+---------------------+
| Circular posted to Shareholders and | 6 December 2010 |
| ZDP Shareholders | |
+---------------------------------------+---------------------+
| Latest time for receipt of Forms of | 2pm on 5 January |
| Proxy | 2011 |
| Latest time and date for receipt of | 12 noon on 5 |
| Election Forms | January 2011 |
+---------------------------------------+---------------------+
| Calculation Date | Close of business |
| | on 5 January 2011 |
+---------------------------------------+---------------------+
| Special General Meeting | 10.00am (Bermuda |
| | time) on 7 January |
| | 2011 |
+---------------------------------------+---------------------+
| 2012 ZDP Class Meeting | 10.05am (Bermuda |
| | time) on 7 January |
| | 2011 |
+---------------------------------------+---------------------+
| 2014 ZDP Class Meeting | 10.10am (Bermuda |
| | time) on 7 January |
| | 2011 |
+---------------------------------------+---------------------+
| 2016 ZDP Class Meeting | 10.15am (Bermuda |
| | time) on 7 January |
| | 2011 |
+---------------------------------------+---------------------+
| First Eclectic GM | 12 noon on 7 |
| | January 2011 |
+---------------------------------------+---------------------+
| Announcement of results of the | 17 January 2011 |
| Proposals | |
+---------------------------------------+---------------------+
| Second Eclectic GM | 12 noon on 17 |
| | January 2011 |
+---------------------------------------+---------------------+
| Effective Date of the GPLPF | 17 January 2011 |
| Subscription, the Scheme and Eclectic | |
| in liquidation | |
+---------------------------------------+---------------------+
| Admission and dealings in respect of | 8.00 am on 18 |
| the New Utilico Shares commence | January 2011 |
+---------------------------------------+---------------------+
| CREST accounts credited in respect of | 18 January 2011 |
| Depositary Interests for New Utilico | |
| Shares in uncertificated form | |
+---------------------------------------+---------------------+
| Certificates for New Utilico Shares | on or as soon as |
| in certificated form despatched | practicable after |
| | 18 January 2011 |
+---------------------------------------+---------------------+
| Cheques expected to be despatched and | on or as soon as |
| CREST payments made to Eclectic | practicable after |
| Shareholders in respect of the Cash | 18 January 2011 |
| Option | |
+---------------------------------------+---------------------+
Notes:
(i) The dates set out in the expected timetable above may be adjusted by
the Company, in which event details of the new dates will be notified to the UK
Listing Authority and the London Stock Exchange, and an announcement will be
made through a Regulatory Information Service.
(ii) All references to time in this document are to London time, except
for the time of the Utilico Meetings, which are references to Bermuda time.
Further Information
A Circular is being posted to Shareholders today.
Copies of the Circular and the accompanying Prospectus are available on the
Utilico website www.utilico.bm and maybe obtained from the Company Secretary,
Martin Cassels on +44 131 718 195.
A copy of the Circular and Prospectus has been submitted to the National Storage
Mechanism and is available for inspection at: www.Hemscott.com/nsm.do.
Enquiries
Charles Jillings
Utilico Limited
+44 1372 271 486
Alastair Moreton/Dermot McKechnie
Westhouse Securities Limited
+44 207 601 6100
Definitions
Capitalised terms have the meaning set out in the definitions section of the
Circular unless the sense or context determines otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLLFVTFTLRIII
Eclectic Inv Co (LSE:ECIT)
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Eclectic Inv Co (LSE:ECIT)
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