Toro Limited (the "Company")

17 February 2017

Whitewash Circular

This announcement contains price sensitive information.

1. INTRODUCTION

The Company has today published a Circular to Shareholders setting out the business to be considered at an Extraordinary General Meeting (the "EGM") to be held at Old Bank Chambers, La Grande Rue, St Martin's, Guernsey GY4 6RT at 10.20 a.m. (or as soon thereafter as the AGM shall have concluded) on 17 March 2017.

The purpose of the Circular is to set out the business to be considered at the EGM (the "Proposals").

The Proposals being put forward to Shareholders by the Board comprise:

·     Resolution 1 - to renew the authority granted to the Company to make market purchases of its own Shares (the "Proposed Buy Back Authority"); and

·     Resolutions 2 and 3 - to approve the waivers granted by the Panel of the obligation that would otherwise arise on any member of the Concert Party (including the Portfolio Manager individually) to make a general offer to Shareholders pursuant to Rule 9 of the Code as a result of:

(i) the potential exercise by the Company, prior to the 2018 annual general meeting of the Company, of the Proposed Buy Back Authority (if approved); and

(ii) the allotment to the Portfolio Manager of the 2016 Performance Fee Shares (together the "Waiver Proposals").

The Circular provides Independent Shareholders with the details of the Waiver Proposals and explains why the Independent Directors consider that the Waiver Proposals are in the best interests of Independent Shareholders and the Company as a whole.

The Proposals are described more fully in Sections 2 to 7 of this announcement below.

2. RESOLUTION 1 - PROPOSED BUY BACK AUTHORITY

An ordinary resolution, to be proposed as Resolution 1 at the EGM, will seek to renew the existing authority granted to the Directors enabling the Company to make market purchases of Shares.

The Company started buying back Shares in October 2016, and has since acquired a total of 16,691,396 Shares, representing 4.6 per cent. of the issued share capital before the buybacks commenced. The average price paid for the repurchased Shares was €0.858 per Share and the average discount to NAV was 11.4 per cent. These figures are calculated up to and including 15 February 2017, being the latest practicable date prior to the publication of the Circular.

The Directors continue to believe that the ability of the Company to purchase its own Shares is a potentially important mechanism for managing capital efficiency. In particular the Directors may want to take advantage of circumstances where a purchase by the Company of its own Shares would represent good use of the Company's available cash resources and would increase NAV per Share and Shareholder value. For these reasons, Resolution 1, as set out below, is being proposed. However, Shareholders should note that there is no guarantee that the Board will exercise its discretion to buy back Shares pursuant to the Existing Buyback Authority or the Proposed Buy Back Authority.

If the Company purchases any of its Shares, the maximum price (exclusive of expenses) which may be paid for a Share must not be more than the higher of, (i) 105 per cent. of the average of the mid-market values of a Share for the five trading days immediately preceding the day on which the Share is contracted to be purchased, or (ii) the higher of the price of the last independent trade in the Shares and the highest than current independent bid for the Shares. In addition, Shares will be purchased through the market only, at prices below the last published Net Asset Value per Share, which should have the effect of increasing the Net Asset Value per Share for the remaining Shareholders. Any such purchase will be carried out in accordance with the Companies Law, which provides inter alia, that any buy-back is subject to the Company passing the solvency test contained in the Companies Law at the relevant time. The minimum price payable per Share is €0.01 per Share. The Directors will only consider repurchasing Shares in the market if they believe it to be in Shareholders' interests and as a means of correcting any imbalance between supply and demand for shares, to increase the NAV per Share and to assist in minimising any discount to the NAV per Share in relation to the price at which Shares may be trading.

The Directors are seeking authority to purchase up to 51,813,664 Shares of no par value, being 14.99 per cent. of the current Shares in issue, or (if less) such other number of Shares that is equal to 14.99 per cent. of the issued share capital of the Company (excluding treasury shares) on 17 March 2017. The Directors have not agreed any terms for the purchase of the Shares and do not seek authority to purchase Shares from specific parties and have not at the date of the Circular entered into negotiations (or contemplated entering into negotiations) for the repurchase of Shares from any particular Shareholder. For the avoidance of doubt, the authority being sought is without prior understanding, arrangement or agreement between the Company and any related party in relation to the repurchase of Shares. This authority will expire on the earlier of the conclusion of the annual general meeting of the Company in 2018 or, if earlier, 18 months from the passing of Resolution 1.

All Shares purchased pursuant to the above authority shall be either:

·     cancelled immediately on completion of the purchase; or

·     held as treasury shares as permitted by the Companies Law.

Shareholders should note that, following the approval of Resolution 1, the Board will continue to apply the buy-back policy published in the Prospectus but may, at its sole discretion and without limit, make additional purchases of Shares beyond those required by the policy.

Please refer to Section 3 below for information in relation to Code implications of buy backs of the Shares.

3. RESOLUTIONS 2 AND 3 - PANEL WAIVER PROPOSALS

Background

As a Guernsey company which has its shares admitted to trading on the Specialist Fund Segment of the London Stock Exchange, the Company is subject to the Code. Under Rule 9 of the Code, any person who acquires an interest (as defined in the Code) in shares which, taken together with shares in which he is already interested and shares 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 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 the aggregate carry not less than 30 per cent. of the voting rights of such a 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 interests in shares are acquired by any such person.

When members of a concert party hold more than 50 per cent. of the voting rights in a company, no obligations normally arise from acquisitions by any member of the concert party. They may accordingly increase their aggregate interests in shares without incurring any obligation under Rule 9 to make a general offer, although individual members of a concert party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Panel consent.

Rule 37 of the Takeover Code further provides that when a company redeems or purchases its own voting shares, any resulting increase in the percentage of shares carrying voting rights in which a person or group of persons acting in concert is interested will be treated as an acquisition for the purpose of Rule 9.

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 of the company during the 12 months prior to the announcement of the offer.

Outline of the Concert Party

By virtue of the Portfolio Manager having sole discretion over all investment decisions of the Managed Account, each of (i) the Portfolio Manager, (ii) the Managed Account, (iii) the Lock-up Chenavari Partners, (iv) certain other individuals (including one of the Company's directors, Roberto Silvotti) connected with, or employed by, the Chenavari Financial Group and (v) group companies of the Chenavari Financial Group are together deemed to be acting in concert for the purposes of the Code (together the "Concert Party").

Further information on the Concert Party is set out in Part II of the Circular.

Effect of exercise of the Existing Buy Back Authority, the payment of the 2016 Performance Fee Shares and/or the exercise of the Proposed Buy Back Authority on the interests of the Concert Party

The combination of the issuance of the 2016 Performance Fee Shares to the Portfolio Manager or its nominee (as described in Section 4 of this announcement) and the exercise of the Proposed Buy Back Authority may result in a material increase in the interests of the Concert Party as a whole. Please see the table set out in paragraph 4.9 of Part II of the Circular which sets out the maximum potential percentage holdings of the Concert Party members, being 54.7 per cent., based on (i) the continued use of the Existing Buy Back authority between the Latest Practicable Date and the EGM over Shares not held by the Concert Party, provided that no more than 5,000,000 Shares shall be acquired; (ii) the issuance in full of the 2016 Performance Fee Shares and (iii) the exercise of the Proposed Buy Back Authority in full over Shares not held by the Concert Party.

Shareholders should note that the Company may continue to make use of the Existing Buy Back Authority between the Latest Practicable Date and the EGM, provided that no more than 5,000,000 Shares shall be acquired, and that the maximum percentage holdings disclosures in the table in paragraph 4.9 of Part II of the Circular have been calculated on this basis.

On 14 March 2017, being the day before the deadline for receipt of forms of proxy for voting at the EGM, the Company will make a further announcement of the maximum potential percentage holdings of the Concert Party members, taking into account any Shares acquired since the Latest Practicable Date under the Existing Buy Back Authority. No further exercise of the Existing Buy Back Authority will take place between 14 March 2017 and the EGM.

If the Concert Party's aggregate shareholding were to increase to greater than 50 per cent. of the Company's total Voting Rights, as a result of the exercise of the Proposed Buy Back Authority and/or the issue of the 2016 Performance Fee Shares or otherwise, no obligations would normally arise from acquisitions by any member of the Concert Party. They may accordingly increase their aggregate interests in Shares without incurring any obligation under Rule 9 to make a general offer, although individual members of the Concert Party will not be able to increase their percentage interests in Shares through or between a Rule 9 threshold without Panel consent. If the Waiver Proposals are approved by the passing of the Waiver Resolutions at the EGM, the Concert Party will not be restricted from making an offer for the Company.

Impact of Rule 37 of the Code

Under Rule 37 of the Code, any increase in the percentage holding of a shareholder that results from a company buying back or redeeming its own shares is also treated as an acquisition for the purposes of Rule 9 of the Code. Rule 37 does not normally apply, however, unless the person who would otherwise be required to make a mandatory offer under Rule 9 of the Code is a director of the company or is acting in concert with the directors of the company.

An investment manager of an investment company will, for these purposes, be treated under the Code as a director. The Portfolio Manager and the other Concert Party members would therefore be subject to Rule 37.

Accordingly, if the Concert Party's aggregate shareholding increased as a result of the issue of the 2016 Performance Fee Shares or the exercise of the Proposed Buy Back Authority, the Concert Party would be required to make a mandatory offer for the remainder of the Issued Share Capital of the Company.

A Panel waiver was granted in respect of the Existing Buy Back Authority and was approved by Independent Shareholders on 22 August 2016.

Panel Waivers - issuance of the 2016 Performance Fee Shares and exercise of the Proposed Buy Back Authority

The Panel has agreed that, subject to the approval of the Independent Shareholders on a poll, it will waive the obligation on any member of the Concert Party (including the Portfolio Manager individually) to make a general offer that would otherwise arise as a result of the issue of the 2016 Performance Fee Shares, or the exercise of the Proposed Buy Back Authority, if the Waiver Resolutions are both approved at the EGM.

Accordingly, the Waiver Resolutions (for the approval of the Waiver Proposals) are being proposed at the EGM as Resolutions 2 and 3 and will be taken on a poll to be called by the Chairman of the EGM. The members of the Concert Party will not be entitled to vote on the Waiver Resolutions.

Shareholders should note that, if the Waiver Resolutions are approved at the EGM, any further increase in the Concert Party's aggregate interest in Shares (other than pursuant to the exercise of the Existing Buy Back Authority, the issue of the 2016 Performance Fee Shares or the exercise of the Proposed Buy Back Authority) or an acquisition of further Shares by any member of the Concert Party or any person acting in concert with it will be subject to the provisions of Rule 9. The Panel Waiver will only remain in effect until the 2018 annual general meeting of the Company.

Intentions of the Directors

The Independent Directors anticipate that they will continue to seek Shareholder approval on an annual basis of the waiver of any Rule 9 obligation which may arise as a result of the issue of further performance fee shares to the Portfolio Manager or the exercise of a renewed buy back authority.

4. 2016 PERFORMANCE FEE SHARES

Under the terms of the Portfolio Management Agreement, the Company is able to pay the Portfolio Manager a proportion of accrued performance fees otherwise payable in cash, in Shares. As the Portfolio Manager is part of the Concert Party, the Company's ability to do this is subject to various conditions, including that at no time may the Company oblige the Portfolio Manager (and/or any persons deemed to be acting in concert with it for the purposes of the Code), in the absence of a relevant whitewash resolution having been passed, to receive further Shares where to do so would trigger a requirement to make a mandatory offer pursuant to Rule 9 of the Code.

The performance fee for the period from 1 October 2015 to 30 September 2016, being €1,971,246, has been paid as to 60 per cent. in cash and the remainder is currently accrued and payable by the Company. If the Waiver Resolutions are passed the Portfolio Manager has agreed with the Company that the remaining accrued amount shall be satisfied by the issue or transfer of Shares to the Portfolio Manager or its nominee issued at the latest published Net Asset Value per Share applicable at the date of issuance (the "2016 Performance Fee Shares"). The Company may satisfy the requirement to issue new Shares by the transfer of Shares held in treasury, and the number of Shares to be issued (or transferred) will always be rounded down to the nearest whole number of Shares. The Company and the Portfolio Manager believe that this arrangement demonstrates the commitment of the Portfolio Manager to align its performance fee structure with Shareholders.

The 2016 Performance Fee Shares and any further issue of Shares in connection with the performance fee will be subject to the Performance Share Lock-up Undertaking for a period of two years post issuance. In the event that the Waiver Resolutions are not passed, the proportion of the performance fee for the period from 1 October 2015 to 30 September 2016 that has not already been paid will be paid in cash.

The number of Shares to be issued or transferred to the Portfolio Manager or its nominee as 2016 Performance Fee Shares will be determined by reference to the Net Asset Value per Share as at 28 February 2016, provided that no more than 850,810 2016 Performance Fee Shares may be issued or transferred to the Portfolio Manager.

The Portfolio Manager intends to nominate Chenavari Investment Managers Holdings Limited to receive the 2016 Performance Fee Shares due to it.

5. BENEFITS OF THE PROPOSALS

The Directors recognise that it is important to Shareholders that the Shares do not trade at a significant discount to their prevailing Net Asset Value per Share and consider that the Proposed Buy Back Authority represents a useful mechanism to seek to correct any discount between the trading price and the Net Asset Value per Share which might arise.

The Directors believe that the issuance of the 2016 Performance Fee Shares to the Portfolio Manager, which will be subject to the Performance Share Lock-up Undertaking for a period of two years post issuance, should provide additional alignment of interests between the Company and the Portfolio Manager.

Further, in order to prevent the need to make a mandatory offer arising as a result of exercising the Proposed Buy Back Authority and/or the issue of 2016 Performance Fee Shares and to enable the Company to continue its business as an investment company without material disruption, the Company has sought the Panel Waivers in respect of the Code as set out in Section 3 of this announcement.

In light of the matters outlined above, the Board believes that it is in the best interests of the Company and the Shareholders as a whole that the Proposals be implemented.

6. RISKS ASSOCIATED WITH THE PROPOSALS

In considering voting decisions in relation to the Proposals, Shareholders are referred to the risks set out below. Only those risks relating to the Proposals which are material and currently known to the Company are set out below. Additional risks and uncertainties not currently known to the Company, or that the Company currently deems to be immaterial, may also have an adverse effect on the Company.

The Waiver Proposals

·     The Independent Shareholders should note that, if the Waiver Resolutions are approved and, as a result of the issue of the 2016 Performance Fee Shares and the exercise of the Proposed Buy Back Authority, the Concert Party's aggregate shareholding in the Company is increased, the Concert Party (and the Portfolio Manager individually) would be able to exercise greater control over the conduct of the Company than is currently already the case.

·     The Independent Shareholders should note that, if the Waiver Resolutions are approved, this does not provide any guarantee that in any future situation where Rule 9 of the Code became relevant to the Company (whether in relation to the Concert Party or otherwise) the Panel would be similarly willing to grant a waiver.

Whilst not a risk associated with the Proposals, Shareholders should note that the Shares may trade at a discount to the applicable Net Asset Value per Share for a variety of reasons, including adverse market conditions and a deterioration in investors' perceptions of the merits of the Company's investment objective and investment policy. While the Directors may seek to mitigate any discount to Net Asset Value per Share through such discount management mechanisms as they consider appropriate, there can be no guarantee that they will do so or that such mechanisms will be successful.

7. IMPLEMENTING THE RESOLUTIONS

The Resolutions are subject to Shareholder or Independent Shareholder approval (as appropriate) at the EGM and can only become effective after the passing of the Resolutions by Shareholders or Independent Shareholders (as appropriate) as set out below.

Resolution 1 will be proposed as an ordinary resolution to be passed by Shareholders representing more than 50 per cent. of the voting rights held by Shareholders present in person or by proxy and voting at the EGM.

In order to comply with the Code, Resolutions 2 and 3 (the Waiver Resolutions) will be taken on a poll, to be passed by more than 50 per cent. of votes cast by Independent Shareholders at the EGM present in person or by proxy and voting at the EGM. The Concert Party members have undertaken not to vote on the Waiver Resolutions.

Resolution 3 is conditional on the approval of Resolution 1.

8. ACTION TO BE TAKEN BY SHAREHOLDERS

Shareholders will find enclosed with the Circular the Form of Proxy for use at the EGM and are asked to complete the Form of Proxy in accordance with the instructions printed thereon and to return the Form of Proxy to Capita Asset Services, PXS 1, 34 Beckenham Road, Beckenham BR3 4ZF, to arrive by the time and date specified on the Form of Proxy.

The completion and return of the Form of Proxy will not preclude Shareholders from attending the EGM and voting in person if they wish to do so.

9. RECOMMENDATION

The Waiver Proposals

The Independent Directors, who have been so advised by Fidante Capital, consider the Waiver Proposals to be fair and reasonable and in the best interests of Independent Shareholders and the Company as a whole. Roberto Silvotti, who is a member of the Concert Party, has not taken part in the recommendation of the Waiver Proposals. In providing advice to the Independent Directors, Fidante Capital has taken account of the commercial assessments of the Independent Directors. Accordingly, the Independent Directors unanimously recommend that the Independent Shareholders vote in favour of the Waiver Resolutions, approving the Waiver Proposals at the EGM, as the Independent Directors intend to do in respect of their entire beneficial shareholdings of 151,091 Shares, representing 0.04 per cent. of the total number of issued shares in the Company (excluding Shares held in treasury).

The remainder of the Proposals

The Board considers that the Proposals (other than the Waiver Proposals, which are addressed above) are in the best interests of Shareholders and the Company as a whole. Accordingly, the Board unanimously recommends Shareholders to vote in favour of Resolution 1 to be proposed at the EGM, as the Directors intend to do in respect of their entire beneficial shareholdings of 1,105,783 Shares, representing 0.32 per cent. of the total number of issued shares in the Company (excluding Shares held in treasury).

10. EXPECTED TIMETABLE OF PRINCIPAL EVENTS 

All references to times in this announcement are to London time unless otherwise stated. Any changes to the expected timetable will be notified by the Company through a Regulatory Information Service.

11. MISCELLANEOUS

Terms used and not defined in this announcement shall have the meaning given in the Circular.

Copies of the following documents have been submitted to the National Storage Mechanism (NSM) and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM:

• The Circular

• Form of Proxy for the EGM

Each of the above mentioned documents are also now available to view on, and download from the Company's website at http://www.torolimited.gg/panelwaiver/. Neither the NSM website nor the Company's website nor the content of any website accessible from hyperlinks on those websites (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

Enquiries:

Kirstie Sumarno

Chenavari Investment Managers

Email: tlir@chenavari.com

Telephone: +44 20 7259 3600

Robert Peel

Fidante Capital

Email: rpeel@fidante.com

Telephone: +44 20 7832 0983

IMPORTANT INFORMATION

This document has been issued by Toro, and should not be taken as an inducement to engage in any investment activity and is for the purpose of providing information about the Company. This document does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any share in the Company or securities in any other entity, in any jurisdiction, including the United States, Canada, Japan, South Africa nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction.

This document, and the information contained therein, is not for viewing, release, distribution or publication in or into the United States, Canada, Japan, South Africa or any other jurisdiction where applicable laws prohibit its release, distribution or publication, and will not be made available to any national, resident or citizen of the United States, Canada, Japan or South Africa. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes must inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the federal securities law of the United States and the laws of other jurisdictions.

The shares issued and to be issued by the Company (the "Shares") have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the United States. The Shares may not be offered, sold, resold, pledged, delivered, distributed or otherwise transferred, directly or indirectly, into or within the United States, or to, or for the account or benefit of, US persons (as defined in Regulation S under the Securities Act). No public offering of the Shares is being made in the United States.

The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "Investment Company Act") and, as such, holders of the Shares will not be entitled to the benefits of the Investment Company Act. No offer, sale, resale, pledge, delivery, distribution or transfer of the Shares may be made except under circumstances that will not result in the Company being required to register as an investment company under the Investment Company Act. Neither the U.S. Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of the Shares or passed upon or endorsed the merits of the offering of the Shares or the adequacy or accuracy of the Company's prospectus. Any representation to the contrary is a criminal offence in the United States. In addition, the Shares are subject to restrictions on transferability and resale in certain jurisdictions and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors may be required to bear the financial risks of their investment in the Shares for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdictions.

No liability whatsoever (whether in negligence or otherwise) arising directly or indirectly from the use of this document is accepted and no representation, warranty or undertaking, express or implied, is or will be made by the Company, or any of their respective directors, officers, employees, advisers, representatives or other agents ("Agents") for any information or any of the opinions contained herein or for any errors, omissions or misstatements. None of the Agents makes or has been authorised to make any representation or warranties (express or implied) in relation to the Company or as to the truth, accuracy or completeness of this document, or any other written or oral statement provided. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on any, targets, estimates or forecasts contained in this document and nothing in this document is or should be relied on as a promise or representation as to the future.

Unless otherwise indicated, the information provided herein is based on matters as they exist as of the date of preparation and not as of any future date.

All investments are subject to risk, including the loss of the principal amount invested. Past performance is no guarantee of future returns. All investments to be held by the Company involve a substantial degree of risk, including the risk of total loss. The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. You should always seek expert legal, financial, tax and other professional advice before making any investment decision.