TIDMRC2
RNS Number : 9155R
Reconstruction Capital II Ltd
01 November 2023
1 November 2023
Proposed Cancellation of Admission to Trading on AIM
and
Notice of Annual General Meeting
Reconstruction Capital II Limited ("RC2", the "Company" or the
"Group"), a closed-end investment company incorporated in the
Cayman Islands admitted to trading on the AIM market of the London
Stock Exchange, today announces that it has posted a circular to
shareholders (the "Circular") in connection with a proposal for the
cancellation of admission of the ordinary shares in the Company
(the "Ordinary Shares") to trading on AIM (the "Cancellation"),
pursuant to Rule 41 of the AIM Rules for Companies (the "AIM
Rules"), a proposal for the adoption of new memorandum and articles
of association and continuation of the life of the Company.
The Circular will include a notice of the Annual General Meeting
("AGM") of the Company which is being convened for 10.00 a.m. on 29
November 2023, at the offices of Apex Group Fiduciary Services
Limited at IFC 5, St Helier, Jersey JE1 1ST, for the purposes of
considering and, if thought fit, passing the requisite shareholder
resolutions to approve the Cancellation. In accordance with the
requirements of the AIM Rules, the Cancellation is conditional upon
the approval of not less than 75 per cent. of the votes cast by
shareholders (whether present in person or by proxy) at the
AGM.
Extracts of the Circular are set out in the Appendices of this
announcement without material amendment or adjustment.
For further information, please contact:
Reconstruction Capital II Limited
Cornelia Oancea / Luca Nicolae
Tel: +40 21 3167680
Grant Thornton UK LLP (Nominated Adviser)
Philip Secrett
Tel: +44 (0) 20 7383 5100
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of the UK law by virtue of the European
Union (Withdrawal) Act 2018. The information is disclosed in
accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.
APPICES - EXTRACTS FROM THE CIRCULAR TO SHAREHOLDERS
APPIX I - LETTER FROM THE CHAIRMAN
Proposed Cancellation of admission of Ordinary Shares to trading
on AIM, proposed Adoption of new Memorandum and Articles of
Association, Continuation of the Life of the Company and Annual
General Meeting
1 INTRODUCTION
1.1 At the Company's general meeting in 2018, Shareholders voted
to extend the life of the Company, so that the next continuation
vote would be held in 2023, and every two years thereafter. The
Directors have concluded that given the slow process of selling the
investments, exacerbated by the Covid-19 crisis followed by the war
in Ukraine and resulting cost of living crisis, which has had a
significant impact on the main investee company Policolor and on
Mamaia Resort Hotels, it is in the best interests of the Company to
further extend its life.
1.2 T he Directors have also concluded that it is in the best
interests of the Company and its Shareholders to seek Shareholder
approval for the cancellation of the admission of the Ordinary
Shares to trading on AIM. The Cancellation is conditional, pursuant
to Rule 41 of the AIM Rules, upon the approval of not less than 75
per cent. of the votes cast by Shareholders (whether present in
person or by proxy) at the General Meeting, notice of which is set
out on page 12 of this document.
1.3 Given the proposed Cancellation, the Directors are also
proposing to amend the Articles to reflect the Cancellation and
also so that Shareholders will continue to be informed about the
status of the Company with certain information rights.
1.4 The Board is aware that the proposed Cancellation, should it
be approved by the Shareholders at the General Meeting, would make
it more difficult for Shareholders to buy and sell Ordinary Shares.
The Company, therefore, intends to make arrangements for a "matched
bargain facility" to be established post Cancellation in order to
assist Shareholders wishing to trade in the Ordinary Shares post
Cancellation, assuming the Cancellation Resolution is passed. It is
envisaged that the Matched Bargain Facility would be in place for
at least twelve months post Cancellation.
1.5 The Company is seeking Shareholders' approval of the
Cancellation, of the proposed changes to the Articles as a
consequence thereof, and of the proposal to continue the life of
the Company at the General Meeting, which has been convened for 29
November 2023. Finally, the Company is laying the balance sheet and
auditors' report for the period ending 31 December 2022 before
Shareholders and seeking the ratification of the same documents for
the previous periods ending 31 December 2021. If the Cancellation
Resolution is passed at the General Meeting, it is anticipated that
the Cancellation will become effective at 7.00 am on 19 December
2023.
1.6 The purpose of this document is to seek Shareholders'
approval for the Resolutions, to provide you with the information
on the background and reasons for the Cancellation and changes to
the Articles, and the proposed continuation of the life of the
Company, and to explain the consequences of the Cancellation and
changes to the Articles, and provide reasons why the Directors
unanimously consider the Cancellation, the amendment to the
Articles, the continuation of the life of the Company and the
laying of the balance sheet and auditors' report for the period
ending 31 December 2022 before Shareholders and the ratification of
the same documents for the previous periods ending 31 December 2021
to be in the best interests of the Company and its Shareholders as
a whole. The Notice of the General Meeting is set out on page 12 of
this document.
1.7 It should be noted that interests directly and indirectly
associated with Ion Florescu as beneficial owner of approximately
60.47 per cent. of the Company's voting share capital, are entitled
to vote on the Cancellation Resolution and he has indicated to the
Directors that such interests shall vote in favour of the
Cancellation Resolution.
2 BACKGROUND TO AND REASONS FOR THE PROPOSALS
2.1 The Directors have conducted a review of the benefits and
drawbacks to the Company and its shareholders in retaining its
admission to trading on AIM and believe that Cancellation is in the
best interests of the Company and its Shareholders as a whole. In
reaching this conclusion, the Directors have considered the
following key factors:
2.1.1 whilst in principle trading on AIM should give the
Shareholders access to liquidity and give them the possibility to
freely trade their shares, in reality, trading in the Company's
shares has been minimal with a low total volume of trades evidenced
over the last 12 months;
2.1.2 the considerable cost, management time and the legal and
regulatory burden associated with maintaining the Company's
admission to trading on AIM are, in the Directors' opinion,
disproportionate to the benefits to the Company and to its size;
and
2.1.3 the Directors believe that the continued admission to
trading on AIM is highly unlikely to provide the Company with
significantly wider access to capital.
2.2 Following careful consideration, the Directors unanimously
believe that it is in the best interests of the Company and
Shareholders, taken as a whole, to seek the proposed Cancellation
at the earliest opportunity.
2.3 Given the slow process of selling the investments,
exacerbated by the Covid-19 crisis followed by the war in Ukraine
and resulting cost of living crisis, which has had a significant
impact on Policolor (delaying its turnaround) and on Mamaia Resort
Hotels, the Board believes that it should continue with its efforts
to maximize the exit value of both investments before putting them
up for sale. Whilst these macro events had a limited negative
effect on the Company's most recent investment, Telecredit, it
remains an early stage small and medium sized enterprise financing
investment.
2.4 In order to continue the work on realising the Company's
investments, the Board considers that the life of the Company
should be extended for a further five years and that the current
requirement to hold a continuation vote every two years would be
inconsistent with this strategy. Accordingly, the Board is
proposing an ordinary resolution that would extend the life of the
Company and amendments to the Articles which would mean that the
next continuation vote would be held in 2028 and then every five
years thereafter. The Board will continue to apply the Company's
existing investing policy approved by Shareholders in February
2018.
3 PROCESS FOR, AND PRINCIPAL EFFECTS OF, THE CANCELLATION
3.1 Under the AIM Rules, it is a requirement that the
Cancellation must be approved by not less than 75 per cent. of
votes cast by Shareholders at a General Meeting. Accordingly, the
Notice of General Meeting set out in Part II of this document
contains a special resolution to approve the Cancellation.
3.2 Furthermore, Rule 41 of the AIM Rules requires any AIM
company that wishes the London Stock Exchange to cancel the
admission of its shares to trading on AIM to notify shareholders
and to separately inform the London Stock Exchange of its preferred
cancellation date at least 20 Business Days prior to such date. In
accordance with AIM Rule 41, the Company's Nominated Adviser has
notified the London Stock Exchange of the Company's intention,
subject to the Resolutions being passed at the General Meeting, to
cancel the Company's admission of the Ordinary Shares to trading on
AIM.
3.3 Accordingly, if the Cancellation Resolution is passed, it is
expected that the Cancellation will become effective at 7:00 a.m.
on 19 December 2023. If the Cancellation becomes effective, Grant
Thornton UK LLP will cease to be nominated adviser of the Company
and the Company will no longer be required to comply with the AIM
Rules. Furthermore, if the Resolution relating to the amendment and
restatement of the Articles is passed, then the amended and
restated Articles will come into effect on or after the
Cancellation.
3.4 The principal effects of the Cancellation will be that:
3.4.1 there will be no formal market mechanism enabling the
Shareholders to trade Ordinary Shares, no recognised market or
trading facility is intended to be put in place to facilitate the
trading of the Ordinary Shares post Cancellation (save for the
intended Matched Bargain Facility described in paragraph 4 below,
which will provide a limited mechanism to facilitate the trading of
Ordinary Shares off-market), no price will be publicly quoted for
the Ordinary Shares and the transfer of Ordinary Shares will be
subject to the provisions of the Articles;
3.4.2 while the Ordinary Shares will remain freely
transferrable, it is likely that the liquidity and marketability of
the Ordinary Shares will, in the future, be more constrained than
at present and the value of such shares may be adversely affected
as a consequence;
3.4.3 in the absence of a formal market and quote, it may be
more difficult for Shareholders to determine the market value of
their investment in the Company at any given time;
3.4.4 the Company will no longer be subject to the UK MAR
regulating inside information and other matters;
3.4.5 Shareholders will lose certain protections provided to
minority shareholders by virtue of the Company being subject to the
AIM Rules, and the existing Relationship Agreement with Mr Ion
Florescu will automatically terminate. The Board has, however,
negotiated a new relationship agreement with Mr Ion Florescu in
which he gives the following main undertakings:
(i) that the Company will continue to be managed independently
and for the benefit of the Shareholders as a whole (provided that
nothing shall preclude him and/or his connected persons from
providing loans and advisory services to the Company and its
subsidiaries and exercising all of their rights in respect of such
loans);
(ii) that, at all times, the majority of the Directors will be independent directors.
(iii) that all transactions and relationships between himself
and/or a connected person on the one hand and the Company and/or
any of its subsidiaries on the other hand, will be at arm's length
and on a normal commercial basis.
3.4.6 the Company will no longer be required to seek Shareholder
approval for reverse takeovers and fundamental changes in the
Company's business;
3.4.7 the Company will not be bound to announce material
developments as required by the AIM Rules and MAR, such as interim
results, final results, substantial transactions, related party
transactions, and the information maintained on the Company's
website under AIM Rule 26. However, the Company intends to continue
to maintain its website (http://www.reconstructioncapital2.com) and
the Directors intend to provide quarterly reports and to continue
to publish audited annual accounts of the Company;
3.4.8 Grant Thornton UK LLP will cease to be the Company's
nominated adviser and the Company will cease to have a broker;
and
3.4.9 the Cancellation may have taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax
position should consult their own professional independent tax
adviser.
3.5 There is currently no intention to change the existing
Directors following the Cancellation.
3.6 The Company will continue to be subject to Cayman Islands
law notwithstanding the Cancellation and will also continue to be
bound by the provisions of the Articles, pursuant to which
shareholder approval is required for certain matters.
3.7 Conditional on the Cancellation becoming effective, the
Company proposes to amend and restate its Articles. The form of the
proposed amended and restated Articles can be found on the
Company's website (https://www. reconstructioncapital2.com) and a
copy of the new articles and a redline of the articles showing the
changes from the existing Articles accompany this Circular.
3.8 The amended and restated Articles will be updated and will
not contain certain of the detailed provisions of the current
Articles which are common for AIM-listed companies and which will
not be necessary for the Company following the Cancellation. In
summary, the key proposed amendments are set out below:
3.8.1 the period within which the Company is required to file
its accounts shall be extended from six months (required for most
listed companies) to nine months following the end of the financial
year and certain specific accounts content requirements will no
longer apply;
3.8.2 the requirement to hold annual general meetings shall be removed;
3.8.3 certain restrictions in the Articles relating to the
Company's ability to issue new shares shall be removed (e.g. to
ineligible investors or restrictions requiring the Company to
obtain a valuation report in the case of shares issued for non-cash
consideration);
3.8.4 references to telex and telefax shall be removed;
3.8.5 various historic references shall be removed (e.g.
references to the Company's initial subscribers, admission document
and AIM market buyback programme); and
3.8.6 potentially restrictive "objects" contained in the
Articles shall be removed, along with other general updates
required following changes to applicable laws.
The above considerations are not exhaustive and Shareholders
should seek their own independent advice when assessing the likely
impact of the Cancellation on them.
Certain Shareholders may be unwilling or unable to hold Ordinary
Shares following the Cancellation and may wish to consider selling
their Ordinary Shares in the market prior to the Cancellation
becoming effective on 19 December 2023. The Board is however making
no recommendation as to whether or not Shareholders should buy,
continue to hold or sell Ordinary Shares.
4 TRANSACTIONS IN THE ORDINARY SHARES POST CANCELLATION
The Board is aware that the proposed Cancellation, should it be
approved by Shareholders at the General Meeting, would make it more
difficult for Shareholders to buy and sell Ordinary Shares should
they wish to do so. Thereafter, the Company is making arrangements
for the Matched Bargain Facility to assist Shareholders to trade in
the Ordinary Shares from the date of Cancellation, if the
Cancellation Resolution is passed. The Matched Bargain Facility
will be provided by J P Jenkins, which is an appointed
representative of Prosper Capital LLP, which is authorised and
regulated by the UK Financial Conduct Authority. Under the Matched
Bargain Facility, Shareholders or persons wishing to acquire or
dispose of Ordinary Shares will be able to leave an indication with
J P Jenkins, through their stockbroker, of the number of Ordinary
Shares that they are prepared to buy or sell and the price at which
they are prepared to do so. In the event that J P Jenkins is able
to match that order with an opposite sell or buy instruction, it
would contact both parties and then effect the bargain (trade).
Should the Cancellation become effective, and the Company puts in
place the Matched Bargain Facility, details will be made available
to Shareholders on the Company ' s website. It should be noted,
however, that there is no guarantee that the Matched Bargain
Facility will be established, or as to the liquidity such a
facility would afford the Ordinary Shares post Cancellation.
Therefore, Shareholders should carefully consider, inter alia, the
effects of the proposed Cancellation set out above and seek their
own independent advice when assessing the likely impact of the
Cancellation.
The Matched Bargain Facility is intended to operate for a
minimum of twelve months after Cancellation. The Directors' current
intention is that it will continue beyond that time but
Shareholders should note that it may not be put in place in the
first instance or, if established, be withdrawn at short notice and
therefore in both instances inhibit Shareholders' ability to trade
the Ordinary Shares. Further details will be communicated to the
Shareholders at the relevant time. If Shareholders wish to buy or
sell Ordinary Shares on AIM, they must do so prior to the
Cancellation becoming effective. As noted above, in the event that
Shareholders approve the Cancellation, it is anticipated that the
last day of dealings in Ordinary Shares on AIM will be 18 December
2023 and that the effective date of the Cancellation will be 19
December 2023 at 7.00 a.m.
5 GENERAL MEETING AND ACTION TO BE TAKEN
The Proposals are subject to the passing of Resolutions 1 to 3
to be proposed at the General Meeting. It is intended that this
meeting should also constitute the Company's annual general meeting
for 2023 and that the Company's balance sheet and auditors' report
for the period ending 31 December 2022 be received, and those
circulated in the previous years up to and including 31 December
2021 be ratified. Page 12 of this Circular contains a notice of the
General Meeting of the Company to be held at 10.00 a.m. on 29
November 2023 when the following resolutions will be proposed:
1. the cancellation of the admission to trading on AIM (the
market of that name operated by London Stock Exchange plc) of the
ordinary shares of EUR0.01 each of the Company be approved;
2. that, in accordance with 138.2 of the Articles, the Company
continues as presently constituted until the next continuation
vote;
3. the adoption of new memorandum of association and articles of
association of the Company in substitution for and to the exclusion
of the existing memorandum of association and articles of
association, conditional on the Cancellation becoming effective;
and
4. the balance sheet and auditors' report for the period ending
31 December 2022 be received and those circulated in the previous
years up to and including 31 December 2021 be ratified.
All votes on the Resolutions will be taken via a poll in
accordance with the Articles.
Resolutions 1 and 3 are each proposed as a Special Resolution.
Resolution 1 requires 75 per cent. of votes cast to be in favour to
be approved and Resolution 3 requires the approval of two thirds of
the total number of votes capable of being cast to be in favour to
be approved.
Resolution 2 will be proposed as an Ordinary Resolution and, in
accordance with the Articles, will be deemed not to have been
passed if the votes against the Resolution constitute a majority
against the Resolution and represent at least 25 per cent. of the
total number of votes capable of being cast on that Resolution.
Resolution 4 will be proposed as an Ordinary Resolution and will
be passed if the votes in favour constitute a majority of the
members entitled to vote present at the meeting.
Shareholders will find enclosed with this Circular a Form of
Proxy to enable you to vote at the General Meeting. Whether or not
you intend to be present at the General Meeting, you are requested
to complete and return the Form of Proxy in accordance with the
instructions printed on it to the Company's Registrars, Apex Group
Fiduciary Services Limited, so as to arrive no later than 10.00
a.m. (London time) on 29 November 2023. Completion and return of
the form of proxy will not affect your right to attend in person
and vote at the Annual General Meeting should you so wish.
6 RECOMMATION AND VOTING INTENTIONS
Your Board considers that the Proposals are in the best interest
of the Company and its Shareholders as a whole and unanimously
recommends Shareholders to vote in favour of all the Resolutions to
be proposed at the General Meeting. Ion Florescu and shareholders
directly and indirectly connected to him have advised the Board
that they intend to vote their aggregate shareholding of 81,985,081
Ordinary Shares, representing approximately 60.47 per cent. of the
issued share capital of the Company, in favour of the
Resolutions.
APPIX II - EXPECTED TIMETABLE OF PRINCIPAL(1) (2)
Announcement of proposed Cancellation and
notice provided to the London Stock Exchange 1 November 2023
Publication and posting of this document 1 November 2023
and Form of Proxy to Shareholders
Latest time and date for receipt of Forms 10.00 a.m. on 29 November
of Proxy in respect of the Annual General 2023
Meeting
Time and date of the Annual General Meeting 10.00 a.m. on 29 November
2023
Expected last day of dealings in Ordinary 18 December 2023
Shares on AIM
Expected time and date of Cancellation 7.00 a.m. on 19 December2023
(3)
Notes:
(1) All of the times referred to in this document and the Form
of Proxy refer to London time, unless otherwise stated.
(2) Each of the times and dates in the above timetable is
subject to change. If any of the above times and/or dates change,
the revised times and/or dates will be notified to Shareholders by
announcement through a Regulatory Information Service.
(3) The Cancellation requires the approval of not less than 75
per cent. of the votes cast by Shareholders at the Annual General
Meeting
APPIX III - DEFINITIONS
In this Circular, unless the context otherwise requires, the
following expressions bear the following meanings:
AIM AIM, the market operated by the London
Stock Exchange;
AIM Rules the rules for AIM companies as published
by the London Stock Exchange from time
to time;
Announcement the Company's announcement relating to
the contents of this Circular, dated 1
November 2023;
Articles the memorandum and articles of association
of the Company as amended from time to
time
Business Day any day which is not a Saturday, Sunday
or public holiday on which banks are open
for business in the City of London;
certificated or a share or other security which is not
in certificated in uncertificated form;
form
Cancellation cancellation of the admission to trading
on AIM of the Ordinary Shares, in accordance
with Rule 41 of the AIM Rules, subject
to passing of the Cancellation Resolution;
Cancellation Resolution Resolution 1 to be proposed at the General
Meeting;
Circular or 'this this circular dated 1 November 2023;
document'
Continuation the continuation of the Company as constituted
and referred to in Resolution 2;
Directors or Board the directors of the Company from time
to time;
Form of Proxy the form of proxy for use at the General
Meeting, which accompanies this document;
General Meeting the annual general meeting of the Shareholders,
or Annual General notice of which is set out on page 12 at
Meeting the end of this document;
J P Jenkins the trading name of InfinitX Limited (Company
Number: 11551708), a company incorporated
in England & Wales;
London Stock Exchange London Stock Exchange plc;
Mamaia Resort Hotels Mamaia Resort Hotels SRL, a company that
owns and operates a hotel on the Black
Matched Bargain Sea coast in Romania;
Facility the trading facility operated by J P Jenkins
to facilitate trading in the Ordinary Shares
on a matched bargain basis following Cancellation,
details of which are set out in this Circular;
NEC New Europe Capital SRL, the Company's investment
adviser;
Notice of General the notice of the Annual General Meeting,
Meeting which is set out on page 12 at the end
of this document;
Ordinary Shares ordinary shares of EUR0.01 par value each
in the Company;
Policolor Policolor S.A. and its subsidiaries, a
group operating in the paints, resins and
chemicals business in Romania and Bulgaria;
Proposals the Cancellation, Continuation, adoption
of a new memorandum of association and
articles of association, receipt of the
balance sheet and auditors' report for
the period ending 31 December 2022 and
ratification of these for the previous
years ending on 31 December 2021;
Registrars Apex Group Fiduciary Services Limited at IFC
5, St Helier, Jersey JE1 1ST;
Regulatory Information has the meaning given to it in the AIM Rules
Service for any of the services approved by the London
Stock Exchange for the distribution of AIM
announcements and included within the list
maintained on the website of the London Stock
Exchange;
Resolutions the Resolutions to be put to the General
Meeting as detailed in this Circular and
in the Notice of the General Meeting;
Shareholders holders of Shares;
Telecredit Telecredit IFN SA, a Romanian non-banking financial
institution whose main activity is providing
factoring, discounting, and microloans to small
and medium-sized companies;
UK or United Kingdom the United Kingdom of Great Britain and Northern
Ireland;
UK MAR Regulation (EU) (No 596/2014) of the European
Parliament and of the Council of 16 April 2014
on market abuse to the extent that it forms
part of the domestic law of the United Kingdom
including by virtue of the European Union (Withdrawal)
Act 2018 (as amended by virtue of the European
Union (Withdrawal Agreement) Act 2020); and
uncertificated a share or security recorded in the Company's
or in uncertificated register of members as being held in uncertificated
form form.
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END
CIRFLFFRIFLLVIV
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Reconstruction Capital Ii (LSE:RC2)
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