Camper & Nicholsons Marina Investments Limited

("CNMI" or the "Company")

Proposed Fundraising and Appointment of Nominated Adviser and Broker

Summary

·     Proposed Fundraising of £4m by the issue of new Ordinary Shares at 6.5 pence per Ordinary Share.

·     Fundraising proposed to be by firm subscription by First Eastern Holdings for £1m, and £3m Open Offer to Qualifying Shareholders fully underwritten by First Eastern Holdings.

·     As a result of the Fundraising, and depending on the level of take up under the Open Offer by other Qualifying Shareholders, the aggregate holding of First Eastern Holdings and FE Marina Investments may increase to between 33.14 and 57.55 per cent. of the Enlarged Issued Share Capital.

·     In order to show their support for the ongoing development of the business, the Directors intend to apply for their Open Offer Entitlements in full.

·     The Fundraising will ensure that the Company has sufficient funds to facilitate the removal of the Debt Service Coverage Ratio covenant on the Scotia Bank loan to CNGL; to meet loan capital repayments as they fall due in both 2013 and 2014; and provide general working capital as the Company moves towards trading on a positive operating cash-flow basis in 2013, without the need for berth sales.

·     The Fundraising is subject to the approval of Shareholders at an Extraordinary General Meeting at which it will be proposed that Independent Shareholders also approve the Takeover Panel's waiver of the obligation that First Eastern Holdings and/or FE Marina Investments would otherwise incur as a consequence of their participation in the Fundraising to make a general offer for the Company under Rule 9 of the Takeover Code.

A circular setting out details of the proposed Fundraising and Waiver and giving notice of an Extraordinary General Meeting to approve these proposals will be sent to Shareholders in due course and will be available on the Company's website www.cnmarinas.com.

For further information please contact:

Camper & Nicholsons Marina Investments Limited

Sir Christopher Lewinton/Clive Whiley                                                                           Tel: +44 (0)1481 234 460

finnCap Ltd

Stuart Andrews/Christopher Raggett                                                                                Tel: +44(0)20 7220 0573

finnCap Ltd, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting only for CNMI and no one else in connection with the proposals and will not be responsible to anyone other than CNMI for providing the protections afforded to clients of finnCap Ltd or for providing advice in relation to the proposals, the contents of this announcement or any other matters referred to in this announcement.

Forward-looking statements

This announcement includes certain "forward-looking" statements with respect to the financial condition, results of operations and business of CNMI and certain plans and objectives of the board of directors of CNMI with respect thereto. The forward-looking statements contained herein may include statements about the expected effects on CNMI of the proposals, the expected timing and scope of the proposals, anticipated earnings enhancements and other strategic options, as well as other statements in this announcement other than historical facts. Forward-looking statements include, without limitation, statements typically containing words such as "intends", "expects", "anticipates", "targets", "estimates" and words of similar import. These statements are based on assumptions and assessments made by the board of directors of CNMI in the light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. They have not been reviewed by the auditors of CNMI. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.

All subsequent oral or written forward-looking statements attributable to CNMI or any of their respective members, directors, officers or employees or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included in this announcement are based on information available to CNMI on the date of this Announcement and are made only as of the date of this announcement. Undue reliance should not be placed on such forward-looking statements.

Subject to compliance with the Takeover Code and the AIM Rules, CNMI does not intend, or undertake any obligation, to update any information contained in this Announcement.

Fundraising

CNMI announces that it has entered into an agreement (the "Subscription and Open Offer Agreement") with First Eastern (Holdings) Limited ("First Eastern Holdings") to raise £4m for the Company by the issue of new Ordinary Shares, through a subscription by First Eastern Holdings of new Ordinary Shares to raise £1 million (the "Subscription") and an open offer by the Company of new Ordinary Shares to existing Shareholders to raise a further £3 million (the "Open Offer" and together with the Subscription, the "Fundraising"). The Open Offer will be fully underwritten by First Eastern Holdings.

Details of the Fundraising

Pursuant to the Subscription and Open Offer Agreement, First Eastern Holdings will subscribe for 15,384,615 Ordinary Shares (the "Subscription Shares") at a price of 6.5 pence per new Ordinary Share (the "Issue Price").

In addition, the Company will make the Open Offer to the existing Shareholders in the Company pursuant to which Qualifying Shareholders will be entitled to subscribe at the Issue Price for 0.5752 new Ordinary Shares for each existing Ordinary Share they hold.

Qualifying Shareholders will also be entitled to apply for additional Open Offer Shares through the Excess Application Facility, pursuant to which they may apply for up to a further number of Open Offer Shares, equivalent to 33.3% of their Open Offer Entitlement ("Excess Application"). Satisfaction of the Excess Application will be dependent on the level of take-up by other Shareholders of their entitlements under the Open Offer and may therefore be subject to being scaled back.

First Eastern Holdings has underwritten the Open Offer by agreeing to subscribe for such number of Open Offer Shares as are not taken up by Qualifying Shareholders by way of their Open Offer entitlement or through the Excess Application Facility.

In order to show their support for the ongoing development of the business, the Directors intend to subscribe for their Open Offer Entitlement. Moreover, FE Marina Investments Limited ("FE Marina Investments"), which is 66.78% indirectly owned by First Eastern Holdings and is currently a 25% Shareholder in CNMI, has undertaken to take up its full entitlement under the Open Offer and to apply for its full entitlement under the Excess Application Facility.

The issue of new Ordinary Shares at the Issue Price pursuant to the Fundraising is subject to approval of Shareholders at an extraordinary general meeting and the Company intends to send out a circular (the "Circular") setting out further details of the Fundraising and convening such general meeting in due course.

The Issue Price of 6.5p represents a discount of 38.09 per cent. to the closing price of 10.5 pence per Ordinary Share on 19 March 2013 (being the last trading day prior to this announcement) and a discount of 28.00 per cent. to the volume weighted average price per Ordinary Share of the last 30 days prior to this announcement.

As described below, due to slow berth sales at Port Louis Marina, Grenada, Camper & Nicholsons Grenada Limited ("CNGL") is not generating sufficient cash to enable it to fund capital repayments due to Scotia Bank pursuant to the terms of a loan provided. This has resulted in historic breaches of the Debt Service Coverage Ratio covenant which Scotia Bank has previously waived. Absent the Fundraising, the next such breach of this covenant would occur on 31 March 2013 and Scotia Bank has agreed a temporary waiver of such breach and confirmed that it will waive such breaches permanently conditional upon a cash deposit being lodged which will not be possible without completion of the Fundraising. Although the Company has historically enjoyed a strong relationship with Scotia Bank and is confident of its continued support, if such waiver is not granted Scotia Bank will be entitled to take action under the debenture granted in its favour which ultimately has full recourse to the Company's balance sheet and if enforced would as a direct consequence mean that it would not be appropriate for the accounts to be prepared on a going concern basis.  Accordingly, Shareholders should be aware that if the Resolutions are not passed and the Fundraising does not proceed, there could be a consequent negative impact on the Company's ability to trade in its current form.

Background to and reasons for the Fundraising

The Company's Ordinary Shares were admitted to trading on AIM in January 2007 with the Company's investment objective being to generate returns primarily through capital appreciation of real estate assets with, additionally, the potential for dividends over the medium and long term. It pursued this objective through the acquisition, development, redevelopment and operation of an international portfolio of both new and existing marinas and marina-related real estate.

However, the challenging economic climate since late 2008 has made it difficult to generate returns through capital appreciation and, moreover, the Company's constrained capital base and funding structure has imposed ever increasing pressure on its operating activities.

Although the Company has acquired and subsequently invested significant capital into what the Directors believe to be intrinsically good assets and the intangible capital residing in the business, the Directors also believe that the Company needs to adopt more active management of the assets and to pay greater attention to the generation of shorter term returns and cash flow.

At the end of 2012, the Company undertook a board reorganisation culminating in the appointment of Clive Whiley as CEO in December 2012. 

Following a preliminary review of the assets and operations, the Board has concluded that the business and assets are currently undervalued due to the lack of focus in ensuring that the operations are performing profitably from day to day and are cash generative.

Accordingly, the Board has sought to strengthen the Company through a significant cost saving programme, which coupled with a simplified management structure, has the objective of cutting annualized costs by €1m.  In doing so, this has given clear leadership and, with the management team, a more detailed review of the business has been conducted in order to develop a strategy for realising the underlying value in the Company for the benefit of its Shareholders.

The Board believes that, with the benefit of the Fundraising and the identified cost savings, the Company:

·     has a reasonable prospect of achieving above-inflation revenue growth for the foreseeable future;

·     should trade on a positive operating cash-flow basis  in 2013, without the need for berth sales;

·     should have adequate working capital for the next two years whilst it seeks to address the repayment of debt through berth and other asset sales and/or its refinancing because the Company will be more able to support some debt through profitable trading operations; and

·     should build a platform for sustainable profitability into the future, even without the additional upside of one-off berth sales.

The Board is of the firm opinion that the Fundraising is both necessary and in the best interests of the Company as it will:

·      ensure that the Company has sufficient funds to facilitate the removal of the Debt Service Coverage Ratio covenant on the Scotia Bank loan to CNGL and to meet loan capital repayments as they fall due in both 2013 and 2014;

·      cover the one-off costs of restructuring the business required to generate target cost savings for the business to become cash flow positive; and

·      fund the working capital cost, of some US$750,000, to support accelerated growth in the Company's third party business and in CNFE, its Hong Kong based joint venture.

The new corporate development plan, which has been endorsed by senior management, is designed to optimise the value of the Company's principal assets as the Board seeks to restore Shareholder value. The objective of the Fundraising is to create a path to facilitate a balanced approach to debt reduction, capital investment and the restoration of Shareholder value through both share price appreciation and distributions to Shareholders.

Funding

As at the date of this document, the Company's indebtedness is as set out below:

Security:

The Scotia Bank loan in respect of CNGL is secured by a debenture stamped for US$15,000,000 or equivalent charge over the fixed assets, goodwill, and uncalled capital of CNGL and a floating charge over all other assets.

The loan comprises two parts, Scotia Bank Loan A and Scotia Bank Loan B, with the two parts having different repayment profiles. Scotia Bank Loan A, originally for US$7,500,000, is repayable in quarterly instalments that commenced on 30 June 2010 with the final payment due in June 2015. Scotia Bank Loan B, also for US$7,500,000, on which the interest rate is fixed at 5.7%, is repayable by a single  bullet payment due in June 2015.

As outlined above, due to slow berth sales at Port Louis Marina, Grenada, Camper & Nicholsons Grenada Limited ("CNGL") is not generating sufficient cash to enable it to fund capital repayments due to Scotia Bank pursuant to the terms of a loan provided. This has resulted in historic breaches of the Debt Service Coverage Ratio covenant which Scotia Bank has previously waived. Absent the Fundraising, the next such breach of this covenant would occur on 31 March 2013 and Scotia Bank has agreed a temporary waiver of such breach and confirmed that it will waive such breaches permanently conditional upon a cash deposit being lodged which will not be possible without completion of the Fundraising. Although the Company has historically enjoyed a strong relationship with Scotia Bank and is confident of its continued support, if such waiver is not granted Scotia Bank will be entitled to take action under the debenture granted in its favour which ultimately has full recourse to the Company's balance sheet and if enforced would as a direct consequence mean that it would not be appropriate for the accounts to be prepared on a going concern basis.  Accordingly, Shareholders should be aware that if the Resolutions are not passed and the Fundraising does not proceed, there could be a consequent negative impact on the Company's ability to trade in its current form.

The Isbank Term Facility is provided to IC Cesme in the amount of €9,249,386. This loan is repayable in semi-annual instalments which commenced in December 2012. In addition to the Term Facility, Isbank provided a loan in the form of a General Cash and Non-Cash Credit Agreement (the "Subordinated Loan") with a maximum facility of €10 million. The Subordinated Loan is secured against cash pledges and guarantees by the IC Cesme shareholders and is repayable commensurate with the Term Facility.

The bank overdraft in respect of GHM is secured by:

·      a first general hypothec for €1,747,030 on an overdraft basis over all assets, present and future given by GHM; and

·      a first special hypothec for €1,747,030 on an overdraft basis over the temporary utile dominium for 99 years commencing from 2 June 1999 over the land measuring 1,410 square metres at Cottonera Waterfront Vittoriosa.

Current Trading and Future Prospects

A commentary on the Group's current trading and its strategy for the foreseeable future is set out in the preliminary announcement of unaudited results for the year ended 31 December 2012 released today which show that:

·     Each of the Company's three marinas showed improving performance. Grand Harbour Marina, which achieved a €3.1 million berth sale in December, generated a profit before tax.  IC Cesme, with significant revenue increases, was close to being breakeven at PBT. Before and after non-cash impairment charges, Port Louis reduced its loss before tax. 

·     Revenues from the Company's third party marina business increased by 73% in 2012 to €1.6 million (2011: €0.9 million) which included a first full year contribution of €0.1 million from CNFE, the Company's Hong Kong based joint venture. In Europe three new management services agreements were signed during the year, two in Italy and one in Greece, which, alongside initial progress in the Asia Pacific region, is encouraging for future revenue.

·     The loss before tax and before the impairment charge improved from the €5.1 million loss (7.6 Euro cents per Ordinary Share) reported in 2011 to €1.6 million (2.0 Euro cents per Ordinary Share).

In addition, each of the Company's marinas continues to service their clients to the high standards which should enable occupancy to grow and continued year on year tariff increases.

Use of Proceeds

The net proceeds from the Fundraising will be used to:

·   provide a cash deposit of US$655,000, to facilitate the removal of a Debt Service Coverage Ratio covenant given to Scotia Bank, that would otherwise be breached on 31 March 2013 and secure a permanent waiver of prior breaches and, additionally, to be available as security for capital and interest payments as they fall due through to the bullet repayment of US$7,500,000 due to Scotia Bank on 30 June 2015;

·     fund the estimated working capital requirement, of some US$750,000, needed to support the accelerated revenue growth anticipated in the Company's Hong Kong joint venture;

·     provide some additional working capital to fund revenue growth in the Rest of the World Third Party business;

·     cover the one-off costs associated with the restructuring necessary to generate the targeted cost savings for the business to become cash flow positive; and

·     provide general working capital for use across the Company.

The Fundraising will also allow the Board to optimise the value of the Company's principal assets from a position of not being a distressed seller and of having a cohesive and self-sustaining strategic plan.

Effect of the Fundraising

The table below shows First Eastern Holding's shareholding (either itself or indirectly through FE Marina Investments) as it is now and as it would be following the Subscription and the Open Offer on the assumption (a) that all Shareholders take up their full Open Offer Entitlements; and (b) that no Shareholders take up any of their Open Offer Entitlements.

First Eastern Holdings

First Eastern Holdings became the largest Shareholder in the Company in August 2011, through its 66.78 per cent. owned subsidiary company FE Marina Investments, which made an investment of approximately £4.2 million for a 25% stake in the Company by a subscription of Ordinary Shares, coupled with the formation of a joint venture company to assist in the development of the Company's business in China, one of the world's fastest growing marina markets.

The remaining 33.22 per cent. of FE Marina Investments is held by The Euro-China Fund, L.P. ("Euro-China"), an exempted limited partnership formed under the laws of the Cayman Islands. The primary investment objective of Euro-China is to achieve superior returns on partnership capital by direct investments in opportunities involving a European/Chinese commercial nexus, taking advantage of the growing trade and investment flows between Europe and China. The general partner of Euro-China is FE Euro-China Partners Limited ("FE Euro-China Partners"), which is responsible for the overall management and operations of the partnership and the making and realisation of investments. FE Euro China Partners is a private company registered under the laws of the Cayman Islands and is indirectly owned as to 90 per cent. by Mr. Victor Chu and as to 10 per cent. by Elizabeth Kan, Managing Director of First Eastern Holdings. As at 31 December 2012, Euro-China had net assets of €12.3 million.

First Eastern Holdings, which was founded in 1988 as a private investment company, is 92 per cent. owned by Victor Chu and his family, with the remaining 8 per cent. owned by Elizabeth Kan. Since its formation, First Eastern Holdings and its associates have made significant direct investments into China and, more recently, internationally, including Japan and the UK. Investments by First Eastern Holdings and its associates into the UK include shareholdings and/or joint ventures with Evolution Securities China Limited, Monitise PLC, Lulu Guiness Holdings Limited, Camper & Nicholsons Marina Investments Limited and Sustainable Development Capital LLP.

Victor Chu is the Chairman and principal shareholder of First Eastern Holdings and of other companies in Hong Kong trading under the First Eastern name, including FE Securities Ltd and First Eastern Investments Limited.

Mr Chu obtained his law degree at University College London and qualified as a solicitor in England and Hong Kong in 1982 with Herbert Smith, the City law firm. Over the last 25 years he has served, at various times, as a Director and Council Member of the Hong Kong Stock Exchange, Member of the Hong Kong Takeovers and Mergers Panel, Advisory Committee Member of the Hong Kong Securities and Futures Commission and part-time member of the Hong Kong Government's Central Policy Unit.

Mr Chu is currently a Foundation Board Member of the World Economic Forum in Geneva and co-chairs the Forum's International Business Council. He is also Chairman of the Hong Kong - EU Business Cooperation Committee, a member of the Mayor of London's International Business Advisory Council and serves on the Board of Zurich Insurance Group and China Merchants China Direct Investments Ltd. In June 2011, Mr Chu was awarded the 2011 Global Economy Prize (jointly with Professor Larry Summers and then European Central Bank President Jean-Claude Trichet) by the Kiel Institute for the World Economy.

First Eastern Holdings and Mr Chu are an important partner for the Company as it seeks to use the knowledge and relationships that First Eastern companies have developed over the last 20 years of operating and investing in China and the Far East. However, First Eastern Holdings is not only important to the growth of CNMI's China activities but, over the last 18 months since becoming (through FE Marina Investments) the Company's largest Shareholder, has provided significant strategic assistance and offered financial support when it was approached to assist with the current Fundraising.

The Board believes that the increased investment by First Eastern Holdings is a very clear confirmation of its continued belief in both the opportunities in China and also in the prospects for the Company generally.

Intentions of First Eastern Holdings

First Eastern Holdings has confirmed to the Company that it is not proposing, following any increase in its direct and indirect percentage interests in Ordinary Shares or voting rights as a result of its participation in the Fundraising to seek any change in the composition of the Board, as currently constituted, or the general nature of the Company's business.

First Eastern Holdings has also confirmed that it has no current intention to make any changes regarding the future of the Company's business, the locations of the Company's places of business or the continued employment of its employees and management (and those of its subsidiaries) beyond those cost saving measures already contemplated by the Board following its recent review, nor does First Eastern Holdings intend that there should be any redeployment of the fixed assets of the Company. First Eastern Holdings intends that the Company should remain quoted on AIM. However, First Eastern Holdings has the right, granted pursuant to the subscription agreement entered into at the time of its initial investment in the Company in 2011 and, as yet, unexercised, to appoint and remove one person to and from the board of the Company from time to time for so long as First Eastern Holdings continues to hold 10 per cent or more of the Company's issued share capital.

The Company views the continued long term support of the First Eastern Holdings as beneficial to CNMI.

Dispensation from Rule 9 of the Takeover Code

Rule 9

The Takeover Code governs, inter alia, transactions which may result in the change of control of a public company to which the Takeover Code applies.

Under Rule 9, any person who acquires an interest (as defined in the Takeover Code) in shares, which taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining Shareholders to acquire their shares.

Similarly, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights of such company but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interest in shares are acquired by any such person.

An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares in the company during the 12 months prior to the announcement of the offer.

Dispensation

If First Eastern Holdings were to subscribe for all of the Subscription Shares, all Open Offer Entitlements were taken up in full by Qualifying Shareholders and FE Marina Investments took up only its Open Offer Entitlement, First Eastern Holdings and FE Marina Investments would, together, hold 49,983,981 Ordinary Shares representing 33.14 per cent. of the total voting rights of CNMI following the Fundraising. If First Eastern Holdings were to subscribe for all of the Subscription Shares and Open Offer Shares, First Eastern Holdings and FE Marina Investments would, together, hold 81,599,366 Ordinary Shares representing 57.55 per cent. of the total voting rights of CNMI following the Fundraising.

Therefore, on implementation of the Open Offer, the interests of First Eastern Holdings and FE Marina Investments in the Ordinary Shares could reach a potential maximum of 57.55 per cent. of the issued share capital of the Company, depending on the level of take up under the Open Offer. An increase in the aggregate shareholdings of First Eastern Holdings and FE Marina Investments to over 30 per cent. of the issued shares through the Subscription on the terms referred to above would usually trigger an obligation for First Eastern Holdings and/or FE Marina Investments to make a general takeover offer for the Company to all the other Shareholders in accordance with Rule 9 of the Takeover Code at a cash price of 6.5p per Ordinary Share.

However, the Takeover Panel has agreed in principle to grant a conditional waiver that will release First Eastern Holdings and FE Marina Investments from such an obligation and will allow them to increase their aggregate shareholdings through 30 per cent. to a maximum of 57.55 per cent.. This Waiver is conditional on (i) neither First Eastern Holdings nor FE Marina Investments nor any of their concert parties acquiring any interest in any other Ordinary Shares prior to the General Meeting; and (ii) the passing of the Waiver Resolution by Independent Shareholders at the Extraordinary General Meeting. Voting on the Waiver Resolution will be put to a poll, as required by the Takeover Code. FE Marina Investments has undertaken that it will not vote on the Waiver Resolution in respect of its existing Ordinary Shares.

In the event that the First Eastern Holdings' and FE Marina Investments' shareholdings increase over 50 per cent. as permitted by the Waiver, First Eastern Holdings or FE Marina Investments will usually be entitled to acquire any number of additional Ordinary Shares without incurring an obligation to make a general offer to the remaining Shareholders for their Ordinary Shares. This is because, under Rule 9, where any person who (together with persons acting in concert with him) already holds over 50 per cent. of the voting rights of a company acquires an interest in shares which carry additional voting rights, then that person will not generally be required to make a general offer to the remaining Shareholders to acquire their shares. However, individual members of the concert party (being First Eastern Holdings and FE Marina Investments) will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Takeover Panel consent.

In the event that take up under the Open Offer is such that, following completion of the Fundraising the aggregate shareholdings of First Eastern Holdings and FE Marina Investments are in excess of 30 per cent. but less than 50 per cent., neither First Eastern Holdings, FE Marina Investments nor any other person acting in concert with them will be able to acquire further shares in the Company without being required to make a mandatory offer for all other Ordinary Shares under Rule 9. However, First Eastern Holdings and FE Marina Investments will retain the right to transfer Ordinary Shares between entities within the First Eastern group of companies, on the basis that such entities will be under the ultimate control of Victor Chu, save that such transfers will require the prior consent of the Takeover Panel.

Circular

It is therefore proposed that simultaneously with the Open Offer, the Company will publish the Circular which will set out the details of the Fundraising and call an extraordinary general meeting seeking Shareholder approval for: (i) the issuance of the Subscription Shares and Open Offer Shares at a discount of more than 5% to the prevailing market price at the date of this announcement; and (ii) a whitewash approving the Waiver.

If the Resolutions are not passed, the Fundraising will not proceed. The consequences of this are set out above.

The Record Date for the Open Offer will be announced at the time of publication of the Circular. Unless the Whitewash has been approved by the Independent Shareholders, or unless First Eastern Holdings makes an offer for the remaining Ordinary Shares as required by the City Code, First Eastern Holdings and FE Marina Investments would not be able to participate in the Fundraising if as a result of such participation, First Eastern Holdings and FE Marina Investments would hold 30% or more of the total voting rights of CNMI.

Subscription and Open Offer Agreement

The Company and First Eastern Holdings have entered into the Subscription and Offer Agreement dated 19 March 2013. Pursuant to the Subscription and Offer Agreement, subject to the making of the Open Offer by the Company, First Eastern Holdings has agreed to subscribe for, or procure the subscription of, 15,384,615 Ordinary Shares. In addition, First Eastern Holdings has agreed to subscribe for, or procure the subscription of, the number of Ordinary Shares which are not validly taken up by Shareholders pursuant to the Open Offer (including any Excess Applications). The Company has agreed to pay First Eastern Holdings a commission of £40,000 in consideration for it underwriting the Open Offer.

The Subscription and Offer Agreement is conditional, inter alia, on: (i) the Panel granting the Waiver; (ii) the Company publishing the Circular; (iii) the passing of the Fundraising Resolution and the Whitewash Resolution; and (iv) Admission occurring not later than 8.00 a.m. on 31 July 2013.

The Company has given standard warranties to First Eastern Holdings relating to the Company (the "Warranties") which will be repeated on completion of the Subscription and Offer Agreement. First Eastern Holdings may terminate the Subscription and Offer Agreement at any time prior to Admission if there is a material adverse change in the financial or trading position or prospects of the Group or if any of the Warranties was or becomes materially untrue, inaccurate or misleading when made.

Related Party Transactions

FE Marina Investments is a substantial Shareholder in CNMI, holding 25% of the voting rights of the Company and accordingly FE Marina Investments and First Eastern Holdings are considered to be related parties of the Company as defined by the AIM Rules. The participation of First Eastern Holdings in the Fundraising is therefore a related party transaction pursuant to Rule 13 of the AIM Rules. The Directors, having consulted with the Company's nominated adviser, finnCap, consider that the terms of the Fundraising and the participation by First Eastern Holdings are fair and reasonable insofar as the Company's Shareholders are concerned.

Recommendation

The Independent Directors:-

·     having consulted with finnCap, are satisfied that the terms of the Fundraising are fair and reasonable and in the best interests of the Company and Shareholders as a whole; and

·     having been so advised by finnCap, consider the Whitewash and the Waiver to be in the best interest of the Company and Independent Shareholders as a whole.

Accordingly, the Independent Directors will recommend that all Shareholders vote in favour of the Fundraising Resolution and that all Independent Shareholders vote in favour of the Whitewash Resolution to be proposed at the Extraordinary General Meeting, as they intend to do in respect of their beneficial holdings which amount to, in aggregate, 3,064,795 Ordinary Shares, representing 3.82 per cent. of the Company's issued share capital.

Mr Clive Whiley is not considered to be independent of First Eastern Holdings and has accordingly abstained from deliberating on the recommendation of the Board.

Appointment of Nominated Adviser and Broker

The Company is also pleased to announce the appointment of finnCap as nominated adviser and broker with immediate effect.

Definitions

The following definitions apply in this announcement, unless the context requires otherwise: