Circular and Notice of General Meeting

RNS Number : 2999P

Alternative Liquidity Fund Limited

06 February 2019

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION IN PARTICULAR THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA AND JAPAN
This announcement is an advertisement and not a prospectus. This announcement 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 securities in Alternative Liquidity Fund Limited (the "Company") or securities in any other entity, in any jurisdiction, including the United States, 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 announcement does not constitute a recommendation regarding any securities. Any investment decision must be made exclusively on the basis of the final prospectus published by the Company and any supplement thereto.
6 February  2019
ALTERNATIVE LIQUIDITY FUND LIMITED Registered in Guernsey - Number 60552 Registered Office: Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 1GR
PUBLICATION OF CIRCULAR
The Proposals
The Board stated in the Company's annual report and accounts for the year to 30 June 2018 that it, together with the Company's investment manager, Warana Capital, LLC, (herein referred to as the "Investment Manager" or "Warana Capital") have been exploring various growth strategies for the Company and the scope of the Company to offer new share classes for illiquid assets and portfolios similar to the Company's current illiquid investment portfolio.  The Board is pleased to announce its proposals to introduce a new class of ordinary shares (herein referred to as the "Ordinary Shares") pursuant to an Initial Placing, Offer for Subscription and subsequent Placing Programme the net proceeds of which will be used to invest in a diversified portfolio of illiquid funds, funds of funds and other assets including the new segregated portfolio of the Warana SP Master Fund SPC  (herein referred to as the  "Warana Master Fund").  As part of these proposals it is intended that the Company's existing ordinary shares will be re-designated as realisation shares (the "Realisation Shares") and the Company's existing assets currently held within its existing portfolio would be attributable to the realisation portfolio (the "Realisation Portfolio") which will be realised as rapidly as possible and the proceeds returned to Realisation Shareholders (the "Proposals"). The Company has today published a circular including notice of an extraordinary general meeting to be held at 9 a.m. on 25 February 2019 at Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 1GR (the "EGM") to seek authority from the Company's shareholders for the Proposals (the "Circular").
As part of the Proposals the Board is recommending that:
the Company's investment policy be amended in order to allow the Company to create new share classes for separate investment portfolios and to specifically allow the Company to act as a feeder fund and invest the assets of any of its portfolios either directly or indirectly into master funds (including the Warana Master Fund);
the Company's current articles of association be amended and new articles adopted (the "New Articles") in order to inter alia change the name of the existing ordinary shares to Realisation Shares,  to provide for the rights of the new class of Ordinary Shares as well as the Realisation Shares and to extend the continuation vote from being held at the annual general meeting of the Company in 2020 to 2023 and then every second year thereafter;
Shareholders approve the disapplication of the pre-emption rights contained in the New Articles so that the Board will have authority to allot and issue up to 100 million new Ordinary Shares pursuant to the Initial Placing and Offer for cash on a non pre-emptive basis; and
Shareholders grant the Board the discretion to buy back up to 14.99 per cent of the Ordinary Shares in issue on the admission of the Ordinary Shares to the UK Listing Authority's official list and to trading on the main market of the London Stock Exchange.
In addition, Sunrise Partners Limited Partnership ("Sunrise Partners") and LIM Advisers Limited the manager of the LIM Asia Special Situations Master Fund Limited ("LIM"), both substantial shareholders in the Company, have indicated that they may subscribe for new Ordinary Shares under the Initial Placing and/or the Placing Programme. The further issue of Ordinary Shares to Sunrise Partners and LIM under the Initial Placing and/or the Placing Programme would constitute related party transactions for the purpose of the UK Listing Authority's Listing Rules and accordingly the Company is seeking approval for these transactions from the relevant independent shareholders at the EGM.
If the Proposals are approved by shareholders, the Company intends to publish a prospectus, introduce the Initial Placing, Offer for Subscription and subsequent Placing Programme the net proceeds of which will be attributable to the Ordinary Portfolio and will be used to invest in a diversified portfolio of investments in line with the new investment policy, including the Warana Master Fund. The Supplemental Agreement to the Investment Management Agreement, is proposing to introduce the new management fee that will be payable to the Investment Manager in relation to this new Ordinary Portfolio.  It will also extend Warana Capital's initial term of management and provide that either party may give to the other not less than 12 months' notice to terminate the management arrangements provided that such notice will only be able to be given after the conclusion of the Company's annual general meeting in 2023.  Under the Investment Management Agreement the initial term currently runs until 30 September 2020.  The extension is being proposed to allow the new Ordinary Portfolio enough time to mature and realise its maximum return.  The entering into of the Supplemental Agreement to the Investment Management Agreement by the Company will constitute a related party transaction for the purpose of the Listing Rules and accordingly the Company is also seeking approval for this transaction from the relevant independent shareholders at the EGM.
If the Proposals become effective, the Realisation Portfolio's strategy will be to realise the underlying assets in the Realisation Portfolio as quickly as possible while also seeking to preserve value. It is not currently intended that the assets held within the Realisation Portfolio will be sold on a fire sale basis. The Company has already made six capital distributions and has announced a seventh in the form of redeemable B shares totalling US$0.20 per existing share. It is unlikely that any new investments will be acquired by the Realisation Portfolio and, as a result of this portfolio going into wind down, it is expected that it will become more concentrated over time as assets are sold. In the event that the Proposals are not approved by the Company's shareholders, the Proposals will not become effective.  The Company's existing shares will not be reclassified, the Company will not publish a prospectus and no new Ordinary Shares will be issued nor will it enter into the Supplemental Agreement to the Investment Management Agreement. In such an event, the Company will continue with its existing investment strategy and the Investment Manager may deem that additional capital might be needed to be added to certain assets in order to preserve longer term value.
Benefits of the Proposals
The Board believes that the Proposals offer the following benefits for the Company's shareholders:
the Company's existing portfolio (to be renamed the Realisation Portfolio) will be realised as rapidly as is optimal and the proceeds returned to the Company's existing shareholders (to be renamed the Realisation Shareholders);
increasing the Company's issued share capital through the Initial Placing, Offer for Subscription and subsequent Placing Programme should result in the fixed costs of the Company being spread over a larger asset base and the ongoing expense ratio in respect of the Company's existing portfolio being lower than would otherwise be the case;
the automatic conversion rights included in the New Articles provide Realisation Shareholders with the potential for higher capital returns over a longer-term recovery period as opposed to a portfolio liquidation driven by size and cost constraints; and
the Proposals provide an improved investment proposition by diversifying the Company's investment base and offering new Ordinary Shareholders exposure to the wide range of assets within the Warana Master Fund with the aim of providing investors with attractive risk-adjusted returns over a multi-year period.
Indicative timetable
An indicative timetable of principal events is as follows:
Event		Indicative Timing
EGM
Latest time and date for receipt of Forms of Proxy for use at the EGM		9 a.m. on 21 February
EGM		9 a.m. on 25 February
Issue of Ordinary Shares under the Initial Placing and Offer
Latest time and date for receipt of application forms under the Offer		11.00 a.m. on 17 April
Latest time and date for receipt of commitments under the Initial Placing		3.00 p.m. on 17 April
Results of Initial Placing and Offer announced		18 April
Admission to listing and dealings commence in the Ordinary Shares issued under the Initial Placing and Offer		8.00 a.m. on or around 23 April
General
In deciding whether or not to vote in favour of the Resolutions at the EGM to implement the Proposals, Shareholders should rely only on the information contained in, and should follow the procedures described in, the Circular.
Copies of the Circular will shortly be available for inspection at the National Storage Mechanism which is located at http://www.morningstar.co.uk/uk/nsm.do.
Copies of the Circular are also available in electronic form on the Company's website at www.waranacap.com and are available for collection, free of charge, during normal business hours on any working day (Saturday, Sunday and public holidays excepted) until 25 February 2019 from the offices of Dickson Minto W.S., Broadgate Tower, 20 Primrose Street, London EC2A 2EW.
For further information please contact:
Warana Capital, LLP Tim Gardner	[phone] [e-mail]
Praxis Fund Services Limited	[phone] [e-mail]
Notes:
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via a Regulatory Information Service this information is now considered to be in the public domain.
This announcement is for information purposes only and does not purport to be full or complete and any decision regarding the Proposals should be made only on the basis of the Circular.
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.
Forward-looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. The Company, Warana Capital, LLC, Praxis Fund Services Limited and Dickson Minto W.S. expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Prospectus Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.

LEI: 213800R5CHD76J3LU713

 

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