Tender Offer and Trading Update

RNS Number : 5296D

Aurora Russia Limited

30 April 2013

 



Aurora Russia Limited

30 April 2013

Tender Offer and Trading Update

Tender Offer

On 22 February 2013 the Board announced that Aurora Russia Limited (the "Company") had entered into an agreement for the sale of OSG with Elbrus Capital for a consideration of up to US$47.8 million (approximately £30.3 million using prevailing exchange rates at that time) and on 8 March 2013 it was announced that the disposal had been completed.

The Company today announces that a return of capital will be made to Shareholders by means of a tender offer for up to 38,237,383 Shares at a price of 52.3048p per Share, for an aggregate net consideration of £20 million.

The Repurchase Price has been calculated by reference to an unaudited net asset value of 52.7056p per Share as at 31 March 2013 and after deducting 0.4008p per Share of costs of the Tender Offer. The Unaudited Net Asset Value has been prepared in good faith solely for the purposes of calculating the Repurchase Price and is based, inter alia, on the Directors' estimate as at the date of this document of the fair value of the Company's assets (including the contingent elements of the consideration for the sale of OSG as further detailed below) and on the Company's cash holding as at 31 March 2013 of £23.1 million (which includes receipt of £21.6 million of cash consideration received on the closing of the sale of OSG).

The remainder of the Company's cash reserves will be retained by the Company for on-going working capital purposes, although the Board intends to make further returns of capital to Shareholders as and when realisations from the Company's portfolio so permit. 

Further detail of the Tender Offer is set out at the end of this announcement and in a circular which is expected to be posted to Shareholders today.

Expected Timetable of Events

	2013
Record Date for the Tender Offer	Close of business on 6 May
Latest time and date for receipt of Forms of Proxy	11.00 a.m. on 27 May
Latest time and date for receipt of Tender Forms and TTE Instructions	1.00 p.m. on 27 May
General Meeting	11.00 a.m. on 29 May
Results of the Tender Offer announced	On or around 30 May
Cheques despatched and CREST accounts credited with proceeds in respect of successfully tendered Shares	On or around 6 June
Balancing Share certificates dispatched, TFE Instructions and credits to CREST accounts in respect of any unpurchased Eligible Shares	On or around 6 June

Trading Update

The Company also provides the following trading update for its portfolio companies:

Flex Bank

Flex Bank continues to grow attracting retail deposits and issuing credit cards to its customers. At 31 March 2013 Flex Bank and Kreditmart Finance combined had assets of approximately £25.3 million, up from approximately £19 million at 31 March 2012.  Total revenue for Q1 2013 was £1.2 million, up from £0.4 million for the same period in 2012.  As of 1 April 2013, Flex Bank and Kreditmart Finance combined had a total of £3.6 million in cash. This amount consisted of £0.6 million of cash in the vault, £1.7 million in current accounts with banks and £1.3 million on 30 days interbank deposits.  For the year ended 31 December 2012 unaudited management accounts show total revenue of £3.4 million, up 254% from £0.95 million in 2011, with a loss before foreign exchange revaluation and income tax of £1.3 million compared to a loss of £0.9 million in 2011.

Superstroy

Management accounts show year to date sales to the end of March 2013 of RUR1.9 billion (approximately £39.4 million), 1.3% below sales for the same period in 2012.  Like-for-like sales showed a modest growth of 2.2% over the same period in 2012. We understand that retailers in the Urals in general are facing similar lacklustre performances with the region generally having a difficult time. For the year ended 31 December 2012, Superstroy's unaudited management accounts showed sales of RUR9.5 billion (approximately £197 million), up 8% from RUR8.8 billion (approximately £183 million) in 2011, and EBITDA of RUR376 million (approximately £7.8 million), up 128% from RUR165 million (approximately £3.4 million) in 2011.

Unistream

The money transfer market remains very competitive, but Unistream continues to experience good growth year to date. Management accounts show year to date volumes to the end of March 2013 of RUR32.6 billion (approximately £677 million), up 13% on the same period in 2012.  Revenues grew 5.3% to RUR501 million (approximately £10.4 million) for the same period. For the year ended 31 December 2012, Unistream's unaudited accounts showed volumes of RUR155 billion (approximately £3.2 billion), up 13% from RUR137.7 billion (approximately £2.9 billion) in 2011 and sales of RUR2.5 billion (approximately £52 million), up 8% from RUR2.3 billion (approximately £48 million) in 2011. EBITDA was RUR189 million (approximately £3.9 million), up 9% from RUR173 million (approximately £3.6 million) in 2011.

Enquiries:
Aurora Russia Limited
Gilbert Chalk	[phone]
Numis Securities Limited
Nominated Adviser: Hugh Jonathan	[phone]
Corporate Broking: Rupert Krefting / Nathan Brown
FTI Consulting
Ed Gascoigne-Pees	[phone]
Jack Hickey

IMPORTANT INFORMATION

Defined terms used in this announcement shall, unless the context otherwise requires, have the same meanings set out in the Company's circular expected to be posted to Shareholders on 30 April 2013.

This announcement and the information contained herein is not for publication, release or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan or South Africa or any jurisdiction in which the same would be unlawful.

Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and is acting for no-one else in connection with the Tender Offer and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for providing advice in relation to the Tender Offer or any other matter referred to herein. To the fullest extent permitted by law recipients agree that Numis shall not have any liability (direct or indirect) for or in connection with this announcement or any matters arising out of or in connection herewith. Numis has not authorised the contents of, or any part of, this announcement.

EXTRACTS FROM CIRCULAR

PART I - CHAIRMAN'S LETTER

1          Introduction

On 30 April 2013, the Company announced that it was proposing to make a return of capital to Shareholders, subject to the passing of the Resolution at an Extraordinary General Meeting of the Company to be held on 29 May 2013.  In accordance with this announcement, the Company is proposing the Tender Offer for up to 38,237,383 Shares, being 33.989% of the issue. A Notice of the General Meeting is set out at the end of this document.

If the Resolution is passed, the Directors will have the power to effect one or more repurchases of the Shares subject in each case to satisfaction of statutory solvency tests.

A full explanation of the terms and conditions of the Tender Offer is set out in Part III.

The purpose of this document is to convene the General Meeting, explain the mechanics of the Tender Offer, provide Shareholders with the terms and conditions of the Tender Offer, and to explain how they may tender their Shares, should they wish to do so.

This letter is not a recommendation for Shareholders to tender their Shares under the Tender Offer.  Whether or not Shareholders tender their Shares will depend on, among other things, their own view of the Company's prospects and their own individual circumstances, including their tax position, on which they should seek their own independent advice.

The Company announced on 25 February 2013 that Geoffrey Miller, Grant Cameron and John Whittle had notified their intention to step down from the Board as soon as replacements had been found. I became Chairman on that date. On 12 April 2013 it was further announced that Geoffrey Miller and John Whittle had resigned as non-executive directors and that they had been replaced by Jonathan Bridel and Peregrine Moncreiffe as non-executive directors, all with effect from 12 April 2013.

2          Background to and reasons for the Tender Offer

The Board has previously made several announcements with regard to its intention to undertake a programme of realisations in relation to the Company's assets, subject to market conditions. In accordance with its stated policy, the Board intends to distribute the proceeds of realisations to Shareholders. The method by which proceeds will be returned, the timing of the distributions and the quantum will be determined by the Board, and announcements will be made in relation to each such disposal.

On 22 February 2013 the Board announced that the Company had entered into an agreement for the sale of OSG with Elbrus Capital for a consideration of up to US$47.8 million (approximately £30.3 million using prevailing exchange rates at that time) and on 8 March 2013 it was announced that the disposal had been completed. Further details in relation to this agreement are set out in Part V.

On 30 April 2013 the Company announced that a return of capital will be made to Shareholders in the net amount of up to £20 million, to be implemented by means of a tender offer. Accordingly, the Board has resolved to return up to £20 million to Shareholders from the Company's cash reserves.   The Board has concluded that it would be tax efficient, and therefore in the best interests of Shareholders, for this payment to be made by way of a tender offer.  As a result, the Board will offer Shareholders the opportunity to tender up to 38,237,383 Shares at a price of 52.3048p per Share (the "Repurchase Price") for an aggregate gross consideration of £20,153,250.

The Repurchase Price has been calculated by reference to the Unaudited Net Asset Value of 52.7056p per Share as at 31 March 2013 and after deducting 0.4008p per Share of costs of the Tender Offer (such costs representing 0.76% of the Unaudited Net Asset Value per Share). 

The remainder of the Company's cash reserves will be retained by the Company for on-going working capital purposes, although the Board intends to make further returns of capital to Shareholders as and when realisations from the Company's portfolio so permit.  The Board may make one or more tender offers in the future acting in their absolute discretion in order to give effect to such returns of capital.  There is no guarantee that any such tender offers will be made.

Unaudited Net Asset Value

As at 31 March 2013, the Unaudited Net Asset Value was £59,293,822, equivalent to 52.7056p per Share (compared with the Company's unaudited net assets of £72,047,000 as at 30 September 2012 as shown in the condensed statement of financial position, equivalent to 64.0p per Share).

The Unaudited Net Asset Value is based, inter alia, on the Directors' estimate as at the date of this document of the fair value of the Company's assets (including the contingent elements of the consideration for the sale of OSG) and on the Company's cash holding as at 31 March 2013 of £23,134,223 (which includes receipt of £21.6 million of cash consideration received on the closing of the sale of OSG).

For the purposes of preparing the Unaudited Net Asset Value the Directors have attributed:

(a)    £32.0 million of value to the Company's portfolio investments (namely the Kreditmart Finance/Flex Bank, Superstroy and Unistream businesses) (compared with £41.1 million as at 30 September 2012) by utilising valuation methodologies consistent with those used by the Company as at 30 September 2012 but applying increased liquidity and/or minority discounts to such valuations in recognition of the current difficult market for the Company's residual portfolio of investments;

(b)      full value to the £5.6 million currency equivalent (at 31 March 2013) of the contingent elements of the consideration for the sale of OSG which was delivered to an escrow account on the closing of the sale and is payable to the Company conditional in parts on OSG's performance for the year ending 31 March 2013 and subject to any warranty claim under certain commercial or tax warranties. From this amount, fees associated with these payments have been provided for  (see further detail in paragraph 1 of Part V); and

(c)      nil value to the £3.4 million currency equivalent (at 31 March 2013) of the contingent elements of the consideration for the sale of OSG which will be paid conditional on OSG's performance for the year ending 31 March 2014 (see further detail in paragraph 1 of Part V).

The full value in sub-paragraph (b) above has been included after consultation with various Company advisers but receipt of such elements cannot be guaranteed as they are dependent upon certain conditions being met.

In aggregate the Directors have therefore attributed value of £27.2 million currency equivalent to the consideration for the sale of OSG (revised for the currency equivalent where applicable at 31 March 2013), which compares with the total consideration of up £30.6 million currency equivalent (also revised for the currency equivalent where applicable to 31 March 2013) and the Directors' valuation of OSG as at 30 September 2012 of  £29.9 million.

The Company has prepared the Unaudited Net Asset Value in good faith solely for the purposes of calculating the Repurchase Price.  Shareholders should be aware in making their decision as to whether or not to participate in the Tender Offer that the Unaudited Net Asset Value (and therefore the Repurchase Price) may differ, potentially significantly, from the audited Net Asset Value to be subsequently published in the Company's annual financial report for the year to 31 March 2013.

Trading update

Flex Bank

Flex Bank continues to grow attracting retail deposits and issuing credit cards to its customers. At 31 March 2013 Flex Bank and Kreditmart Finance combined had assets of approximately £25.3 million, up from approximately £19 million at 31 March 2012.  Total revenue for Q1 2013 was £1.2 million, up from £0.4 million for the same period in 2012.  As of 1 April 2013, Flex Bank and Kreditmart Finance combined had a total of £3.6 million in cash. This amount consisted of £0.6 million of cash in the vault, £1.7 million in current accounts with banks and £1.3 million on 30 days interbank deposits.  For the year ended 31 December 2012 unaudited management accounts show total revenue of £3.4 million, up 254% from £0.95 million in 2011, with a loss before foreign exchange revaluation and income tax of £1.3 million compared to a loss of £0.9 million in 2011.

Superstroy

Management accounts show year to date sales to the end of March 2013 of RUR1.9 billion (approximately £39.4 million), 1.3% below sales for the same period in 2012.  Like-for-like sales showed a modest growth of 2.2% over the same period in 2012. We understand that retailers in the Urals in general are facing similar lacklustre performances with the region generally having a difficult time. For the year ended 31 December 2012, Superstroy's unaudited management accounts showed sales of RUR9.5 billion (approximately £197 million), up 8% from RUR8.8 billion (approximately £183 million) in 2011, and EBITDA of RUR376 million (approximately £7.8 million), up 128% from RUR165 million (approximately £3.4 million) in 2011.

Unistream

The money transfer market remains very competitive, but Unistream continues to experience good growth year to date. Management accounts show year to date volumes to the end of March 2013 of RUR32.6 billion (approximately £677 million), up 13% on the same period in 2012.  Revenues grew 5.3% to RUR501 million (approximately £10.4 million) for the same period. For the year ended 31 December 2012, Unistream's unaudited accounts showed volumes of RUR155 billion (approximately £3.2 billion), up 13% from RUR137.7 billion (approximately £2.9 billion) in 2011 and sales of RUR2.5 billion (approximately £52 million), up 8% from RUR2.3 billion (approximately £48 million) in 2011. EBITDA was RUR189 million (approximately £3.9 million), up 9% from RUR173 million (approximately £3.6 million) in 2011.

Share Price

The Repurchase Price of 52.3048p per Share represented a premium of 38.1% to the mid-market price of 37.875p per Share quoted on the London Stock Exchange as at the 25 April 2013 (being the latest practicable date prior to the printing of this document)..

3          The Tender Offer

As set out in Part II, Numis Securities is inviting Shareholders to tender 38,237,383 Shares for an aggregate gross consideration of £20,153,250 (the "Aggregate Gross Consideration") at the Repurchase Price.  Each Shareholder shall be entitled to have Numis Securities repurchase a certain percentage of its holding of Shares (the "Basic Entitlement").  This percentage is the same as the percentage which the total number of Eligible Shares capable of being purchased under the Tender Offer represents of the entire issued share capital of the Company (rounded down to the nearest whole number of Shares). 

Shareholders will, however, be entitled to tender any percentage of their holdings for purchase under the Tender Offer (the "Excess Application Facility"), but tenders in excess of the Basic Entitlement will only be satisfied, on a pro rata basis, to the extent that other Shareholders tender less than their Basic Entitlement.  Tenders will be rounded down to the nearest whole number of Shares. 

The Tender Offer is subject to the Conditions set out in paragraph 2 of Part III.  The results of the Tender Offer are expected to be announced on or around 30 May 2013.

Accordingly:

·     Shareholders (other than Excluded Shareholders) are invited to tender any or all of their Shares by returning a Tender Form specifying the number of Shares that they are prepared to tender to Numis Securities for purchase.  If the Shares are held through CREST Shareholders (other than Excluded Shareholders) should submit the relevant TTE Instruction instead.

·     Each Shareholder shall be entitled to have Numis Securities repurchase the Basic Entitlement.

·     Tendering Shareholders will bear the costs of the Tender Offer through the application of the Tender Discount. The Tender Discount, which is 0.76%, is equal to the Tender Costs as a percentage of the Aggregate Gross Consideration.

·     The Repurchase Price is equal to the Unaudited Net Asset Value per Share as at 31 March 2013 less the Tender Discount. 

·     The maximum aggregate number of Shares the subject of the Tender Offer is equal to the Aggregate Gross Consideration divided by the Repurchase Price, rounded down to the nearest whole number of Shares.

·     The Unaudited Net Asset Value as at 31 March 2013 gives rise to the following:

o  the Aggregate Gross Consideration is £20,153,250;

o  the Maximum Tender is 38,237,383 Shares (being £20,153,250 divided by the Unaudited Net Asset Value per Share, rounded down to the nearest whole share);

o  the Basic Entitlement is 33.989% (being the Maximum Tender divided by the current issued capital of 112,500,000 Shares of 1p each);

o  the Tender Discount is 0.76% (being the costs of the Tender Offer as a percentage of the Aggregate Gross Consideration);

o  the Repurchase Price is 52.3048p per Share (being a discount of 0.76% to the Unaudited Net Asset Value per Share); and

o  the Repurchase Price represents a premium of 38.1% to the mid-market closing price per Share of 37.875p on 25 April 2013 (being the latest practicable date prior to the printing of this document).

·     Shareholders who validly tender a number of Shares that is less than or equal to their Basic Entitlement will have their tenders satisfied in full, subject to the Tender Offer not having lapsed or been terminated, (the number of Shares subject to such tenders being the "Satisfied Tenders"). 

·     Shareholders taking advantage of the Excess Application Facility who validly tender a number of Shares that is higher than their Basic Entitlement (such a Shareholder being an "Excess Tender Shareholder" and the number of Shares subject to such tenders being the "Excess Tenders") will, subject to the Tender Offer not having lapsed or been terminated, have their tenders either:

o  satisfied in full if the aggregate of the Excess Tenders is less than or equal to the Maximum Tender less the aggregate of the Satisfied Tenders; or

o  satisfied to the level of their Basic Entitlements plus such number of Shares as is derived from the application of the formula set out in paragraph 1.4.8 of Part III.

Please refer to paragraph 1.4.9 of Part III for a worked example of this formula.

General

The Tender Offer is being made by Numis Securities.  Subject as referred to above, Numis Securities will purchase the Shares tendered as principal and, following the completion of all those purchases, sell the tendered Shares on to the Company at the Repurchase Price pursuant to the terms of the Repurchase Agreement.  Those Shares which the Company acquires from Numis Securities will be cancelled.  All transactions will be carried out on the London Stock Exchange.

Shareholders' attention is drawn to the letter from Numis Securities set out in Part II and to Part III which, together with the accompanying Tender Form, constitute the terms and conditions of the Tender Offer.  Details of how to tender Shares can be found in paragraph 4 of Part III.

Repurchase Price

As mentioned above the Company has realised a portion of its investment portfolio and will utilise most of the net proceeds to satisfy the cash requirements of the Tender Offer.  The Repurchase Price payable to Numis Securities represents the Unaudited Net Asset Value per Share as at 31 March 2013 less the costs of the Tender Offer per Repurchased Share. As a result, the costs associated with the Tender Offer will be borne by only those Shareholders that elect for the Tender Offer, not all Shareholders.  

Further details of the Repurchase Price are set out in paragraph 3 of Part III.

Conditions of the Tender Offer

The Tender Offer is subject to the Conditions set out in paragraph 2 of Part III.

4          Overseas Persons and Excluded Shareholders

Before participating in the Tender Offer, Shareholders with an address outside the United Kingdom or who are resident outside the United Kingdom should satisfy themselves that they are lawfully entitled to participate in the Tender Offer and should ensure full observance of the laws of any relevant territory in connection therewith (including obtaining any requisite consents, observing any other applicable formalities and paying any taxes required to be paid in such territory).  Tender Forms will not be sent to Excluded Shareholders and the Tender Offer may not be accepted from within the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa or any other Excluded Territory.

Shareholders with registered or mailing address overseas or who are citizens of, or nationals of, or residents in, a jurisdiction other than the United Kingdom should read paragraph 9 of Part III.

5          Taxation

Shareholders who sell their Shares in the Tender Offer may, depending on their individual circumstances and subject to the availability of any exemption or relief, incur a liability to taxation.

The attention of Shareholders is drawn to Part IV, which sets out a general guide to certain aspects of UK taxation law and HMRC published practice. This information is a general guide and is not exhaustive.  Shareholders should seek advice in relation to their own specific circumstances.

Shareholders who are in any doubt as to their tax position should consult an appropriate professional adviser.

6          General Meeting

You will find at the end of this document a notice convening the General Meeting to be held at Dorey Court, Admiral Park, St. Peter Port, Guernsey GY1 2HT on 29 May 2013 at 11.00 a.m. to consider and, if thought fit, pass a Resolution to the effect that the Company be authorised in accordance with section 315 of the Companies Law to make market acquisitions (with the meaning of the Companies Law) of its Shares pursuant to one or more tender offers on the terms set out in this document, provided that:

a.   the maximum number of Shares authorised to be purchased shall be 100 % of the issued share capital of the Company less one Share;

b.   the price which may be paid for a Share shall be the Repurchase Price (which shall be both the maximum and the minimum price for the purposes of the Companies Law, and which shall be recalculated for each tender offer in accordance with the circular published in relation to that tender offer);

c.   unless renewed, revoked, or varied, the authority conferred shall expire on the earlier of (1) the completion of the tender offers such that the Company has purchased 100 % of its issued share capital less one Share or (2) 18 months from the date of passing of the Resolution

The Resolution set out at above will be proposed as an ordinary resolution (and will therefore require the approval of a majority of Shareholders voting in person or by proxy or corporate representative at the General Meeting).

7          Action to be taken in respect of the Tender Offer

Shareholders who hold their Eligible Shares in certificated form and who wish to participate in the Tender Offer should complete the Tender Form in accordance with the instructions set out therein and return the completed Tender Form by post or by hand (during normal business hours only) to the Receiving Agent, Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham BR3 4TU, by no later than 1.00 p.m. on 27 May 2013, and they should also return the share certificate(s) and/or other documents of title in respect of Eligible Shares tendered, as described in paragraph 4.2.1 of Part III.

Shareholders who hold their Eligible Shares in uncertificated form (that is, in CREST) and who wish to participate in the Tender Offer should take the appropriate action in CREST to tender their Eligible Shares and should arrange for the relevant Eligible Shares to be transferred to escrow by no later than 1.00 p.m. on 27 May 2013, as described in paragraph 4.2.2 of Part III.

Shareholders are not obliged to tender any Shares under the Tender Offer and, if they do not wish to participate in the Tender Offer, Shareholders should take no action and should not complete or return their Tender Form or tender their Eligible Shares through CREST.

8          General

Advice

The extent to which Shareholders participate in the Tender Offer is a matter for each Shareholder to decide, and will be influenced by their own individual financial and tax circumstances and their investment objectives.  Shareholders should seek advice from a suitably qualified independent financial adviser authorised under FSMA).

City Code

Shareholders should note the important information in paragraph 2.2 of Part V relating to certain provisions of the City Code.

Notifiable Interests

Those Shareholders who are currently interested in 5% or more of the aggregate nominal value of all Shares in the issued share capital of the Company (a "Notifiable Interest") should note that they will be required, pursuant to the Articles, to give written notice to the Company within 5 days following the completion of the Tender Offer if, as a result of their participation in the Tender Offer, they have ceased to hold a Notifiable Interest or if they continue to hold a Notifiable Interest but the percentage level of such interest is not the same as it was prior to the completion of the Tender Offer.

9          Action to be taken in respect of the General Meeting

A Form of Proxy is enclosed with this document for use at the General Meeting. Whether or not you propose to attend the General Meeting in person, you are requested to complete the enclosed Form of Proxy in accordance with the instructions printed thereon. To be valid, completed Forms of Proxy must be returned by post to the offices of the Company's Registrars, Capita Registrars, at PXS, 34 Beckenham Road, Beckenham BR3 4TU, so as to arrive not later than 48 hours before the time appointed for holding the General Meeting or any adjournment thereof. If you complete and return a Form of Proxy, you may still attend and vote at the General Meeting in person should you decide to do so.

10        Recommendation

The Board, which has received advice from Numis Securities, considers that the Tender Offer is in the best interests of Shareholders as a whole.

Gilbert Chalk, Peregrine Moncreiffe and Timothy Slesinger, being Directors who hold in aggregate beneficial interests in 15,323,253 Shares, representing 13.62% of the issued share capital of the Company, intend to tender their Basic Entitlement in respect of such Shares, and will not participate in the Excess Application Facility.

PART II - LETTER FROM NUMIS SECURITIES

1.         Tender Offer

As explained in the letter from your Chairman in Part I, Shareholders are being given the opportunity to tender some or all of their Eligible Shares for purchase under the Tender Offer on the basis set out below and in Part III.  The purpose of this letter is to set out the principal terms and conditions of the Tender Offer.

Numis Securities hereby invites Shareholders on the Register on the Record Date (other than Excluded Shareholders) to tender Eligible Shares for purchase by Numis Securities for cash at 52.3048p per Share, being equal to the Unaudited Net Asset Value per Share as at 31 March 2013 less the costs of the Tender Offer.

Numis Securities will determine the number of Shares it will purchase on the basis of valid tenders received, as determined following the Closing Date.  All Shares repurchased will be repurchased at the Repurchase Price.  Numis Securities will purchase Shares for up to the Aggregate Gross Consideration.

The Tender Offer is made on the terms and subject to the Conditions set out in Part III and the accompanying Tender Form, and those terms and conditions are deemed to be incorporated herein and form part of the Tender Offer.

Shareholders are not obliged to tender any Shares under the Tender Offer and, if they do not wish to participate in the Tender Offer, Shareholders should take no action and should not complete or return their Tender Form or tender their Eligible Shares through CREST.

2.         Key Elements of the Tender Offer

The key elements of the Tender Offer are as follows:

·     Numis Securities is inviting Shareholders to tender Shares for an aggregate gross consideration of up to £20,153,250 at the Repurchase Price.

·     Each Shareholder shall be entitled to have Numis Securities repurchase the Basic Entitlement, being the percentage which the total number of Eligible Shares capable of being purchased under the Tender Offer represents of the entire issued share capital of the Company (rounded down to the nearest whole number of Shares).  Shareholders will, however, be entitled to tender a number of Shares held by them at the Record Date for purchase under the Tender Offer, but tenders in excess of the Basic Entitlement will only be satisfied, on a pro rata basis, to the extent that other Shareholders tender less than their Basic Entitlement.  Tenders will be rounded down to the nearest whole number of Shares. 

·     Shareholders (other than Excluded Shareholders) are invited to tender any or all of their Shares specifying the number of Shares that they are prepared to tender to Numis Securities for purchase at the Repurchase Price. 

·     Tendering Shareholders will bear the costs of the Tender Offer through the application of the Tender Discount.  The Tender Discount will be equal to the Tender Costs as a percentage of the Aggregate Gross Consideration.

·     The Repurchase Price is equal to the Unaudited Net Asset Value per Share as at 31 March 2013 less the Tender Discount.

·     An aggregate of 38,237,383 Shares are subject to the Tender Offer, being a number equal to the Aggregate Gross Consideration divided by the Repurchase Price, rounded down to the nearest whole number of Shares. 

·     Shareholders who validly tender a number of Shares that is less than or equal to their Basic Entitlement will have their tenders satisfied in full (subject to the Tender Offer not having lapsed or been terminated). 

·     Shareholders taking advantage of the Excess Application Facility who validly tender a number of Shares that is higher than their Basic Entitlement will (subject to the Tender Offer not having lapsed or been terminated) have their tenders either:

o  satisfied in full if the aggregate of the Excess Tenders is less than or equal to the Maximum Tender less the aggregate of the Satisfied Tenders; or

o  satisfied to the level of their Basic Entitlements plus such number of Shares as is derived from the application of the formula set out in paragraph 1.4.8 of Part III.

·     Eligible Shares will be acquired by Numis Securities as principal and subsequently repurchased by the Company.

·     The Tender Offer will only be open to Shareholders (other than Excluded Shareholders) on the Register at the close of business on 6 May 2013 (the "Record Date") in respect of their Eligible Shares.

3.         Conditions of the Offer

The Tender Offer will not proceed unless it becomes unconditional. The Tender Offer is conditional on the following:

·     the Repurchase Agreement having been entered into, and Numis Securities having received payment from the Company in respect of the Repurchase Price for the Repurchased Shares;

·     the Resolution having been duly passed;

·     the Board, in its absolute discretion, being satisfied on reasonable grounds and certifying that, immediately following the acquisition by the Company of the Repurchased Shares pursuant to the Repurchase Agreement, the Company will satisfy the Solvency Test (as defined in section 527 of the Companies Law); and

·     Numis Securities being reasonably satisfied that it can acquire the legal and beneficial title to any Shares tendered absolutely and not subject to any Encumbrance.

Numis Securities will not purchase (or enter into any commitment or contract to purchase) any Eligible Shares pursuant to the Tender Offer unless the Conditions have been satisfied in full (or, where applicable, waived).  If the Conditions are not satisfied (or, where applicable, waived) prior to the close of business on 29 May 2013, the Company may postpone the completion of the Tender Offer until no later than 21 June 2013, after which time the Tender Offer, if not then completed, will lapse.

4.         Procedure for Tendering Shares

Shareholders (other than Excluded Shareholders) who hold their Shares in certificated form and who wish to tender their Eligible Shares should complete the Tender Form in accordance with the instructions set out therein and return the completed Tender Form by post or by hand (during normal business hours only) to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham BR3 4TU so as to be received as soon as possible and, in any event, not later than 1.00 p.m. on 27 May 2013, and they should also return the share certificate(s) and/or other documents of title in respect of the Eligible Shares tendered, as described in paragraph 4.2.1 of Part III.

Shareholders (other than Excluded Shareholders) who hold their Shares in uncertificated form (that is, in CREST) and who wish to participate in the Tender Offer should take the appropriate action in CREST to tender their Eligible Shares and should arrange for the relevant Eligible Shares to be transferred to escrow no later than 1.00 p.m. on 27 May 2013, as described in paragraph 4.2.2 of Part III.

Shareholders (other than Excluded Shareholders) should note that, once tendered, Eligible Shares may not be sold, transferred, charged, lent or otherwise disposed of.

Although the Tender Form must be returned by 1.00 p.m. on 27 May 2013 and the escrow arrangements for uncertificated tender Shares should be in place by the same time, the purchase of any Eligible Shares by Numis Securities will not be effected until on or about 30 May 2013.  Upon having returned a Tender Form, or tendered Eligible Shares through CREST, a Shareholder is deemed to accept that such a tender application may not be withdrawn or cancelled at any time, save with the consent of the Company.

Full details of the procedure for tendering are set out in Part III and in the Tender Form.

5.         Validity of Tenders

Tender Forms which are received by the Receiving Agent, or TTE Instructions which settle, after 1.00 p.m. on 27 May 2013, or which are incorrectly completed or not accompanied by all relevant documents or instructions, may be rejected and returned to Shareholders or their appointed agent, together with any accompanying share certificate(s) and/or other document(s) of title or a satisfactory indemnity in lieu thereof.  However, Numis Securities reserves the right to treat as valid Tender Forms which are not entirely in order or which are not accompanied by all relevant documents (or a satisfactory indemnity in lieu thereof) and Numis Securities shall be entitled (in its sole discretion) to accept late Tender Forms or late transfers to escrow in CREST.

6.         Excluded Shareholders and overseas Shareholders

The Tender Offer is not being made to Excluded Shareholders. Shareholders who are resident in, or citizens of, the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa or any other Excluded Territory are excluded from the Tender Offer to avoid breaching local laws relating to the implementation of the Tender Offer. Accordingly, copies of this document, the personalised Tender Form and any related documents are not being and must not be mailed or otherwise distributed in or into the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa or any other Excluded Territory.

Shareholders who are not Excluded Shareholders but who have a registered or mailing address outside the United Kingdom or who are citizens or nationals of, or resident in, a jurisdiction other than the United Kingdom should read paragraph 9 of Part III and the relevant provisions of the Tender Form.

7.         Postponement of the Tender Offer

The Tender Offer may be postponed in the circumstances described in paragraph 2 of Part III and in certain circumstances set out in the Repurchase Agreement.

8.         Settlement

Subject to the Tender Offer becoming unconditional, the distribution proceeds are expected to be despatched (by cheque or by payment through CREST, as appropriate) on or around 6 June 2013 or as soon as practicable thereafter as described in paragraph 5 of Part III, subject to any postponement in the circumstances described in paragraph 2 of Part III.

9.         Further Information

Your attention is drawn to the information contained in the rest of this document including, in particular, the terms and conditions of the Tender Offer set out in Part III.

ENDS

 

END

 

 

MSCPGUCGCUPWGMB