Proposed Amendments to Redemption Facility

RNS Number : 4735X

Atlantis Japan Growth Fund Ld

08 February 2013

 



ATLANTIS JAPAN GROWTH FUND LIMITED ("AJG" or the "Company")

(A closed-ended investment company incorporated in Guernsey with registration number 30709)

Proposed Amendment to the terms of the Redemption Facility

8 February 2013

In December 2010 the Company introduced, with the support of Shareholders, a share redemption facility ("Redemption Facility").  This was a means by which the liquidity in the Company's Shares could be improved and the discount to NAV at which the Shares traded could be minimised.  The Board of AJG is pleased to report that the Redemption Facility has indeed served to improve the liquidity in the Company's Shares and that the market has rewarded the Company with a higher rating.  

A further objective of the Redemption Facility was to encourage investors to use the Company as a good way of offering exposure to Japanese equities with an ability to add exposure to less liquid securities.  The Directors had hoped that, in time, new Share issuance, as well as redemptions, would be possible if investor demand for Japanese exposure increased. However, the global economic environment has remained challenging and Japan has remained a market out of favour with many investors.  As a result, new Share issuance by the Company has not been possible.  While new investors have been attracted to invest in the Company this has not outweighed selling demand.

Following consultation with major Shareholders, the Board has concluded that it would be in the best interests of Shareholders as a whole to bring forward proposals to amend the terms of the Redemption Facility (the "Proposals").

Notwithstanding the Directors' absolute discretion to amend the terms of the Redemption Facility and their earlier indication that Shareholders would have a further opportunity to redeem their Shares on the terms introduced in 2010, before the terms of the Redemption Facility were amended, the Board now considers it appropriate to seek Shareholder approval at an EGM to approve the adoption of revised terms for the operation of the Redemption Facility.  In the interim, the Board therefore intends to exercise its discretion to suspend the Redemption Facility until Shareholders have had the opportunity to consider and vote on the amended terms of the Redemption Facility.

The Board is mindful of the wish of certain Shareholders to maintain their investment in the Company but not to have their percentage holding significantly increase beyond current levels.  It is the Board's intention to retain the Redemption Facility as they believe it provides Shareholders with an alternative source of liquidity to that which is available through the market but:

·     to change the frequency of the redemption points from three times per year to twice per year; and

·     to introduce a limit on redemptions of 5% of the issued share capital at the relevant time.

In addition the Board intends to implement a further discount control mechanism; such that if the average discount to NAV exceeds 10% over a rolling three month period, in normal market conditions, then a continuation vote will be proposed at the next AGM.

The Board shall retain the absolute discretion to operate the Redemption Facility and/or to accept or reject redemption requests at any redemption point.

A circular convening the EGM and giving further details on the Proposals will be despatched to Shareholders shortly.

It is the Board's view that Japan remains an attractive area for investment.  The Board notes that the recent stimulatory pronouncements of the new Japanese government have been considered encouraging for Japanese stock markets by many commentators.  The Company's investment sub-adviser in Tokyo expects strong Japanese stock markets in coming months supported by continuing low interest rates, increasing exports, positive industrial output and better prospects for GDP growth in 2014.  After so many years of lacklustre Japanese markets, the Board is concerned not to damage the prospects for achieving positive investment performance with the impact further redemptions might have on the Company's expense ratios and its ability to retain use of current borrowing facilities.

It is intended that after Shareholders have voted on the Proposals, the Redemption Facility will be reinstituted, with the next redemption point expected to be in the month following the EGM.  If Shareholders approve the Proposals, this will be on the amended terms, otherwise the current Redemption Facility terms will be reinstated.  As is currently the case, the Redemption Facility will only be open to those Shareholders who have held their Shares continuously since the last redemption point.

Enquiries

Tim Guinness

Chairman, Atlantis Japan Growth Fund Limited

Tel:       [phone]

William Marle / John Armstrong-Denby

Edmond de Rothschild

Tel:       [phone]

Andrew Maiden

Northern Trust International Fund Administration Services (Guernsey) Limited

Tel:       [phone]

 

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