TIDMRDL
RNS Number : 4312J
RDL Realisation PLC
21 December 2020
21 December 2020
RDL Realisation PLC (the "Company")
Publication of Delisting Circular and Notice of General
Meeting
Further to the announcement on 25 November 2020, the Company has
today published a circular (the "Circular") in connection with its
proposal to cancel the listing of the Company's ordinary shares
from the premium segment of the Official List of the Financial
Conduct Authority and from trading on the Main Market of the London
Stock Exchange plc ("Share De-listing"). The Circular contains a
notice convening an Extraordinary General Meeting ("General
Meeting") of the Company to be held on 12 January 2021 at
10:00am.
The text of the Chairman's letter and the expected timetable of
principal events, extracted from the Circular, are set out
below.
A copy of the Circular will be submitted to the National Storage
Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the
Company's website: https://rdlrealisationplc.co.uk/.
Terms used and not defined in this announcement bear the meaning
given to them in the Circular published today.
1. Introduction
I am writing to provide you with details of the General Meeting
which will be held at 10:00am on 12 January 2021.
This document sets out the details of, and seeks your approval
of, the proposal to cancel the listing of the Shares to the
Official List of the FCA and to trading on the London Stock
Exchange's Main Market for listed securities. It is anticipated
that the effective date of the Share Delisting will be 10 February
2021.
Under the Listing Rules, the Share Delisting requires the
Company to obtain the prior approval for such cancellation at a
general meeting of the Company by Shareholders representing not
less than 75 per cent. of the votes attaching to the Shares voted
on the resolution (also referred to herein as a "special
resolution").
Further details of the Share Delisting and the Delisting
Resolution which will be put to Shareholders at the General
Meeting, are set out below.
2. Background to and reasons for the Share Delisting
The Company is a public company limited by shares incorporated
in England and Wales, registered as an investment company under
section 833 of the Companies Act 2006 and approved by HMRC as an
investment trust in accordance section 1158 of the CTA 2010 and the
Investment Trust Regulations 2011. As an investment trust, the
Company is not regulated as a collective investment scheme by the
FCA. The Company's Shares were admitted to the Official List on 1
May 2015. Its issued share capital comprises ordinary shares, which
are traded on the London Stock Exchange's premium segment of the
Main Market.
On 16 November 2018, Shareholders approved a change to the
Company's investment objective and policy to facilitate a managed
wind-down of the Company and a realisation of its assets over time,
in order to best serve the interests of the Company's
Shareholders.
Since September 2018, when the Company commenced the orderly
realisation of its investment portfolio, it has realised certain of
its investments and paid dividends to its Shareholders totalling
710p per Share. In addition, the Company declared a dividend of 16p
per Share on 10 December 2020 which is payable on 15 January
2021.
The Company's investment portfolio now comprises:
Platform Balance
International SME Lending $ 549,825
-------------
SME/ CRE Loans $ 4,105,475
-------------
Real Estate Loans $ 7,797,108
-------------
Vehicle Services Contract $ 235,000
-------------
Equipment Loans $ 34,044
-------------
Total $12,721,452
-------------
In addition, as at 18 December 2020, the Company held cash
balances of $7,017,794.
Whilst the full impact of the COVID-19 pandemic is yet to be
known by businesses worldwide, it has increased the credit risk
associated with the Company's remaining underlying platform loans.
As a result, the risk that Company's assets may not be realised at
their fair market value, or at any value, has increased. The loans
at the highest risk of realisation are those provided to the SME
platforms, which contain many small businesses that are reliant on
consumer spending for food and retail. The Coronavirus Aid, Relief,
and Economic Security Act (the "CARES Act") passed in the US is
providing meaningful support to this economic demographic, but the
lasting impact of this Government stimulus is yet to be proven.
Further, financial reporting has been disrupted making it difficult
to assess the financial health of these borrowers. The
International SME Lending portfolio is made up of venture loans to
small tech-oriented companies. Repayment of these loans is heavily
reliant on capital raising and new equity investment support. The
capital markets in Canada have also been disrupted making it
difficult to assess the viability of these borrowers. There are
also delays in the court system which might prevent or delay
collections from Real Estate Loans. Accordingly, there is a high
degree of uncertainty about the timing of collecting the balance of
the portfolio.
In recent years, the Directors have explored various options
regarding the realisation of the Company's Portfolio, with the
objective of the Directors being to place the Company into
liquidation following a divestment of the Company's holdings. This
outcome would also have resulted in the cancellation of the
admission of the Shares to listing on the Official List and to
trading on the Main Market, upon the commencement of the
liquidation of the Company.
Having analysed the existing portfolio, the Directors are of the
view that the remaining loan assets will be realised and currently
anticipate that the highest returns for shareholders will be
achieved by holding the outstanding loans until such time as they
are repaid or enforcement proceedings have taken place. In this
context, the Directors are of the opinion that it is most cost
effective, and therefore in the best interests of the Company and
its Shareholders, for the realisation of the Company's holdings to
be achieved by the Company's Directors, rather than by the
Company's current AIFM, International Fund Management Limited, or a
liquidator. Accordingly, as previously announced on 25 November
2020, the Directors propose to terminate the appointment of
International Fund Management Limited as the Company's AIFM and to
register the Company with the FCA as a small registered UK AIFM
with effect from 24 February 2021.
In the context of minimising the ongoing running costs of the
Company, the Directors have considered whether it remains in the
best interests of the Company, and its Shareholders, for the
listing of the Shares on the Official List and the trading of the
Shares on the Main Market to continue.
The costs of maintaining the Company's listed company status are
increasingly disproportionate to the value of the Company's
portfolio, and there are identifiable cost savings that can be
achieved by the Share Delisting. Consequently, the Directors
consider that maintaining the listing of the Shares is no longer in
the best interests of the Company or its Shareholders.
Accordingly, the Directors have resolved to propose the Share
Delisting at the General Meeting.
3. Details of the Share Delisting
3.1 Cost savings
The Board has focused on ongoing operational costs and
considered whether it is still appropriate for the Company's Shares
to be admitted to the Official List and trading on the Main Market.
The Board has concluded that the Company would benefit from the
passing of the Delisting Resolution to give effect to the Share
Delisting due to the relatively significant ongoing annual costs
associated with maintaining admission to the Official List and
trading on the Main Market. The cash costs of maintaining the
listing include fees paid to the Company's accountants, corporate
broker, registrars and lawyers, annual fees paid to the London
Stock Exchange and FCA, as well as costs relating to its AIC
membership and the release of regulatory announcements. These costs
have become increasingly significant in proportional terms as the
value of the Company's portfolio diminishes. The Board also
believes that the Company would benefit from the simpler
administration and regulatory requirements following the Share
Delisting which would be more appropriate to the Company's size.
The Company expects to achieve costs savings as a result of no
longer being subject to the provisions of the listed company
regime. It is estimated that the Company should achieve cost
savings of approximately $250,000 in the financial year following
the Share Delisting.
3.2 Investment Objective
The Company's investment objective as an unlisted company will
continue to be the realisation of the Company's assets in an
orderly manner (that is, with a view to achieving a balance between
returning cash to Shareholders promptly and maximising the exit
value of its investments).
3.3 Shareholder Considerations
Shareholders should take into consideration, amongst other
things, that following the Share Delisting: (a) there will be no
public market for the Shares and the opportunity for Shareholders
to realise their investment in the Company by selling their Shares
will be limited to secondary market sales; (b) the corporate
governance, regulatory and financial reporting regime which applies
to companies whose shares are admitted to the Official List and to
trading on the Main Market will no longer apply (more information
on regulatory considerations can be found on page 9 below); and (c)
there may be taxation consequences for Shareholders as a result of
the Shares no longer being admitted to the Official List and to
trading on the Main Market. Shareholders should consult their own
professional advisers and seek their own advice in connection with
the potential consequences of the Share Delisting, including any
potential changes in the tax treatment of their holding of
Shares.
Conditional upon the Delisting Resolution being approved at the
General Meeting, the Company will apply to cancel the listing of
the Shares on the Official List and their admission to trading on
the Main Market. It is anticipated that the last day of dealings of
the Shares on the Main Market will be 9 February 2021. Cancellation
of the listing of the Shares on the Official List is expected to
take effect at 8:00am on 10 February 2021, being not less than 20
Business Days from the passing of the Delisting Resolution as
required by the Listing Rules.
3.4 Corporate Structure
It is intended that following the Share Delisting, the Company
will continue to operate in accordance with the current Articles.
However, the Company's corporate structure will remain under review
and future proposals to amend the corporate constitution to
arrangements more appropriate to an unlisted company which does not
have its shares traded on the public markets may be proposed to
Shareholders following the Share Delisting. Any future changes to
the Articles (and also certain other general corporate matters
affecting the Company in accordance with the Articles and the
Companies Act 2006) will be subject to approval by
Shareholders.
3.5 Governance
The Directors intend following the Share Delisting to operate
the Company's corporate governance in substantially the same manner
as at present.
3.6 Financial Reporting
The Company will continue to produce an annual report and
accounts. On the basis that the Share Delisting, if approved by
Shareholders, will take effect on 10 February 2021, then the annual
report and accounts for the financial year ended 31 December 2020
will be published no later than 30 June 2021 and laid before the
annual general meeting to be convened in 2021.
3.7 Regulatory
In conjunction with the Share Delisting, the Company has applied
to register with the FCA as a small registered UK AIFM with effect
from 24 February 2021. The Takeover Code will continue to apply for
a period of ten years from the effective date of the Share
Delisting.
However, following the Share Delisting:
3.7.1 the regulatory regime which applies solely to companies
such as the Company with shares admitted to the listing category
"Premium Listing (Closed Ended Investment Fund)" of the Official
List, and to trading on the Main Market, will no longer apply to
the Shares, as detailed below;
3.7.2 the Company will not be subject to the disciplinary
controls of the Listing Rules, under which a closed-ended
investment company listed on the premium segment of the Official
List:
-- is required to appoint a 'sponsor' for the purposes of
certain corporate transactions, such as when undertaking a
significant transaction or capital raising. The responsibilities of
the sponsor include providing assurance to the FCA when required
that the responsibilities of the listed company have been met;
-- is required to obtain the prior approval of its shareholders
to any material change to its published investment policy;
-- is required to seek shareholder approval for a broader range
of transactions including related party transactions (related
parties including the Directors);
-- there are stringent obligations with regard to a company's
purchase of its own securities; and
-- there are specified structures and pricing limits in relation
to further issues of securities;
3.7.3 certain institutional investor guidelines (such as those
issued by the Investment Association, the Pensions and Lifetime
Savings Association and the Pre-Emption Group), which give guidance
on issues such as executive compensation and share-based
remuneration, corporate governance, share capital management and
the allotment and issue of shares on a pre-emptive or non
pre-emptive basis, will not apply to the Company as the Shares will
not be admitted to the Official List or to trading on the Main
Market; and
3.7.4 certain securities laws will no longer apply to the
Company, for example, the Disclosure Guidance and Transparency
Rules, including in relation to notification of significant
shareholdings, and the Market Abuse Regulations.
4. Investment trust status
Following the Share Delisting, the Company will cease to be
treated as an investment trust with effect from the accounting
period commencing on 1 January 2021.
As a result of no longing being an investment trust the Company
will continue to be liable to UK corporation tax (at a current rate
of 19%) on its profits after deducting allowable expenses. Any gain
on the realisation of the investment portfolio above its value on
31 December 2020 will also be subject to UK corporation tax.
The Company will not be able to pay interest distributions out
of income or gains arising after 1 January 2021. Apart from any
final distribution out of the 2020 accounting period (which may be
paid as an interest distribution) all future distributions will be
paid as dividends. This may increase profits subject to corporation
tax as such distributions will no longer be available for offset
against taxable income.
5. General Meeting
The Directors are convening the General Meeting to attend to the
Delisting Resolution.
The notice convening the General Meeting is set out in Part II
of this circular. You may appoint a proxy online via
www.signalshares.com or, if you hold your shares in CREST, you may
appoint a proxy via the CREST system. Alternatively, enclosed
separately are the paper Forms of Proxy for you to use in
connection with your votes at the forthcoming General Meeting.
If the Delisting Resolution is passed, the Board proposes to
make an application to the FCA for the Share Delisting. If the
requisite percentage of Shareholders does not approve the Delisting
Resolution, the Shares will continue to be admitted to the premium
segment of the Official List and to trading on the Main Market.
6. Actions to be taken by Shareholders
The General Meeting will be held at 10:00am on 12 January 2021
to approve the Delisting Resolution referred to in paragraph 3
above.
The Delisting Resolution will be proposed as a special
resolution; this means that more than 75 per cent. of the votes
cast must be in favour for the resolution to be passed.
All Shareholders are entitled to vote at the General Meeting. In
accordance with the Articles, all Shareholders present by proxy
shall upon a show of hands have one vote and upon a poll shall have
one vote in respect of each share held. The Board continues to
monitor the ongoing COVID-19 restrictions. As at the date of this
letter, there are still significant restrictions on attendance at
public gatherings and the UK Government advice is to stay at home
as much as possible and limit contact with other people. In the
light of these circumstances and in accordance with the Corporate
Insolvency and Governance Act 2020, the Board, having taken advice
from its advisers, have reluctantly resolved that Shareholders will
not be permitted to attend the General Meeting on health and safety
grounds. The Board will ensure that a quorum of two Shareholders
are present at the General Meeting to allow it to take place and
for the proxy votes to be exercised.
The Notice of the General Meeting is set out at the end of this
document. The Company is relying on its existing authority to
convene the General Meeting on 14 clear days' notice to hold the
General Meeting on 12 January 2021.
Shareholders are asked to submit their proxy vote electronically
via the Registrar's website by visiting www.signalshares.com. For
an electronic proxy to be valid, the appointment must be received
by the Registrar by no later than 10:00am on 8 January 2021.
Shareholders who hold their shares electronically may submit their
votes through CREST. Alternatively, Shareholders may complete and
return the Form of Proxy enclosed with this document, together with
any power of attorney or other authority under which they are
signed or a notarially certified or office copy thereof, in
accordance with the instructions printed thereon to Link Group, PXS
1, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF so as
to be received as soon as possible and in any event by no later
than 10:00am on 8 January 2021. Shareholders are requested to vote
electronically, submit their votes through CREST or complete and
return a Form of Proxy
Shareholders are invited to participate in the General Meeting
by submitting any questions in advance. Any specific questions on
the business of the General Meeting can be submitted (with details
of the shareholding) by no later than 48 hours prior to the meeting
(or any adjournment thereof) by email to RDL@linkgroup.co.uk.
7. Recommendations
The Board considers that the Delisting Resolution to be proposed
at the General Meeting is in the best interests of the Shareholders
as a whole. Accordingly, the Board unanimously recommends that all
Shareholders vote IN FAVOUR OF the Delisting Resolution at the
General Meeting.
Yours faithfully
Brendan Hawthorne
Non-Executive Chairman
EXPECTED GENERAL MEETING TIMETABLE
Date of this Circular 21 December 2020
Latest time and date for receipt 8 January 2021 at 10:00am
of Forms of Proxy
General Meeting 12 January 2021 at 10:00am
Last day of dealing in Shares* 9 February 2021
Delisting* 10 February 2021 at 8:00am
*These timings are estimated timings assuming the Delisting
Resolution is passed.
References to times in this document are to London times unless
otherwise stated. Any changes to the expected timetable will be
notified by the Company through a Regulatory Information
Service.
For further information, please contact:
Link Company Matters Limited
Secretary +44 (0)1392 477 571
LEI: 549300VGZSKYQ7C2U221
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