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Company Announcements

Tender Offer

By LSE RNS

RNS Number : 6898L
Qannas Investments Limited
21 July 2017
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

QANNAS INVESTMENTS LIMITED

Tender Offer to purchase up to 8,888,889 Ordinary Shares at a price of US$0.90 per Ordinary Share

Publication of Circular

Possible change in Investment Policy

 

Introduction

Qannas Investments Limited (the "Company" or "QIL"), the closed-ended investment company listed on the AIM market (AIM:QIL), is pleased to announce that it intends to return cash to Qualifying Shareholders by way of a Tender Offer.

Up to 8,888,889 Ordinary Shares, representing approximately 12.9 per cent. of the Company's issued share capital, may be purchased by the Company pursuant to the Tender Offer, to be satisfied by way of a repurchase of shares out of capital. The price to be paid for each Ordinary Share subject to the Tender Offer is US$0.90. If the maximum number of Ordinary Shares under the Tender Offer is purchased, this will result in an amount of approximately $8.00 million being paid to Qualifying Shareholders.

 

Background and Reasons for the Tender Offer

The Board has always maintained that distributions are an essential principle of the Investment Strategy and the Company intends to continue to return excess funds to Shareholders, dependent on, among other things, market conditions and the Company's investment pipeline. Historically, distributions have usually been made by way of dividend (with the exception of a previous tender offer effected on 25 November 2015) out of distributable profits. The Board is aware, following discussions with certain Shareholders, that at this time a return of capital is preferable to any new or further investments by the Company. The Company does not currently have sufficient distributable profits to do this by way of a dividend, and therefore the Company has decided that it would be appropriate to offer all Qualifying Shareholders the opportunity to realise some of their investment in the Company by means of a tender offer of approximately $8 million which will be effected as a repurchase out of capital (which includes all costs associated with making the Tender Offer).

 

Market Outlook and Investment Manager Report on website

On 30 June 2017 the Company released its annual results for the year ended 31 December 2016. The Board refers you to that announcement for a full description for the Company's financial position and prospects for the future.

The Board also draws your attention to Eagle's View published by the Investment Manager which provides updates on QIL's current investments (available on the Company's website www.qannasinvestments.com). An extract from which is reproduced in the Circular. Shareholders must note that this information is unaudited management information and should also bear in mind Section 6 of Eagle's View which contains the investment manager's valuation methodology and certain legal caveats regarding this information.

 

Investment Policy And Investment Strategy

While, since its IPO in March 2012, QIL has invested across different investment themes and has successfully built up a diverse portfolio of investments spread across the Middle East, Eastern Europe and Central London, the Board, together with ADCM, the Company's Investment Manager, have considered the current Investment Strategy and have concluded that the diverse nature of the Company's portfolio is not currently attractive to institutional investors and investors outside of the GCC countries. Consequently, the Board believes that the current Investment Strategy is holding back the Board and ADCM's growth plans for the Company. The Board is therefore embarking on a review of the Company's Investment Strategy, which will be presented to Shareholders in due course. Pending completion of such review, as noted in the annual results for the year ended 31 December 2016, the Board is recommending that substantially all of the Company's existing investments be realised and that the proceeds will be used to repay debt and make distributions to shareholders.

Accordingly, the Company intends to propose at the Company's forthcoming annual general meeting ("AGM") certain changes to the Company's Investment Policy, which will result in existing investments being realised in an orderly fashion over the next one to two years pending a decision on a new Investment Strategy.

Further details of the proposed change in Investment Policy (the "Proposal") is set out below. Further announcements in respect of the Proposal will be circulated to shareholders in the Company's Notice of AGM in due course, and not the subject of the Circular

The Board, having taken the advice of ADCM, intend to propose that the Company's Investment Policy be amended such:

·      that no further investments will be made until such time as a new Investment Policy be determined by the Board and approved by Shareholders; and

·      that the Company start a process of managed realisations with a view to substantially all of its investments being realised by 31 December 2019 and the cash generated from such realisations being used to repay the Company's existing borrowings, with any excess being returned progressively to Shareholders over this period.

The Board believes the Proposal will enable the Company to achieve a better return for Shareholders than the possible alternative of immediately realising the Company's portfolio. Further, the Board believes that, by developing a new Investment Strategy, it will be able to broaden the appeal of the Company to prospective new shareholders.

 

Details of the Tender Offer

The Company is making an offer to purchase up to 8,888,889 Ordinary Shares, representing approximately 12.9 per cent. of the Company's issued share capital at the Purchase Price. The Purchase Price represents a 4.3 per cent. discount to the audited Net Asset Value of $0.94 per Ordinary Share as at 31 December 2016. If the maximum number of Ordinary Shares under the Tender Offer is purchased, the Company's issued share capital (excluding any Ordinary Shares held in treasury) will be reduced by 8,888,889 Ordinary Shares to 59,939,712 Ordinary Shares.

The Tender Offer is open to all Qualifying Shareholders on the Register at the Record Time. Qualifying Shareholders are invited to participate in the Tender Offer by tendering up to, subject to the below, a maximum of 12.9 per cent. of the Ordinary Shares and Depositary Interests registered in their name at the Record Time (rounded down to the nearest whole Ordinary Share), such percentage to be rounded downwards in the event that any Ordinary Shares are ,issued before the Record Time. Qualifying Shareholders are entitled to tender such lower proportion of their Tender Offer Entitlement as they may see fit.

The Tender Offer will also present Qualifying Shareholders with an opportunity to sell more than their Tender Offer Entitlement to the extent that Qualifying Shareholders tender less than their full Tender Offer Entitlement. If the number of Ordinary Shares tendered exceeds 8,888,889 and if and to the extent that any Qualifying Shareholder has tendered less than his/her Tender Offer Entitlement, surplus tenders will be accepted in proportion to the number of additional Ordinary Shares tendered so that the total number of Ordinary Shares purchased pursuant to the Tender Offer does not exceed 8,888,889.

Successfully tendered Ordinary Shares accepted by the Company (with such decision being at the Company's sole discretion) will be held in treasury by the Company. The overall number of Ordinary Shares issued to current Shareholders will therefore be reduced by the number of Ordinary Shares so purchased. The practical effect of this is that each remaining issued Ordinary Share (excluding any Ordinary Shares held in treasury by the Company) will, immediately following the Tender Offer, represent a greater percentage of the Company's available share capital than it does at present.

Certain of the Directors and the Investment Manager intend to participate in the Tender Offer in respect of their holdings of Ordinary Shares

 

Expected Timetable of Events*

Announcement of Tender Offer and publication of the Circular

21 July 2017

Latest time and date for receipt of Tender Offer Application Forms

21 July 2017

Closing Time

1.00 p.m. on 4 August

Record Time

5.00 p.m. on 4 August

Result of Tender Offer announced

By 8.00 a.m. on 9 August

CREST accounts credited for revised holdings of Ordinary Shares

10 August

Cheques and balancing share certificates despatched for certificated Ordinary Shares purchased pursuant to the Tender Offer and payment through CREST for uncertificated Ordinary Shares purchased pursuant to the Tender Offer

By 18 August

*All times shown in this Circular are London times unless otherwise stated. The dates and times given are indicative only and are based on the Company's current expectations and may be subject to change. If any of the times and/or dates above change, the revised times and/or dates will be notified to Shareholders by announcement through the Regulatory News Service of the London Stock Exchange.

 

The Circular

The Circular that will be sent to Shareholders today will contain the formal terms of the Tender Offer, together with details on how Qualifying Shareholders can participate in the Tender Offer, if they wish to do so.  The Circular will shortly be available on the Company's website at www.qannasinvestments.com/other-documents/.

 

Terms used and not defined in this announcement bear the meaning given to them in the Circular.

 

For further information please contact:

 

Qannas Investments Limited                                                                           Tel: 01534 818 022

Vinod Rajput

 

ADCM Ltd. (Investment Manager)                                                                   Tel: +971 2 639 0099

Mustafa Kheriba

 

finnCap Ltd                                                                                                     Tel: 020 7220 0500

Henrik Persson / James Thompson (Corporate Finance)

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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