Proposed Acquisitions and issue of Equity

RNS Number : 4746W

Baker Steel Resources Trust Ltd

10 November 2014

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA.

This announcement is an advertisement and not a prospectus. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information in the prospectus (the "Prospectus") expected to be published by Baker Steel Resources Trust Limited in due course in connection with a placing and open offer of new ordinary shares and the admission of such new ordinary shares (the "Ordinary Shares") to the premium segment of the Official List of the Financial Conduct Authority (the "Official List") and to trading on London Stock Exchange plc's main market for listed securities (the "London Stock Exchange"). A copy of the Prospectus will, following publication, be available from the Company's website. This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

Baker Steel Resources Trust Limited

10 November 2014

Potential acquisitions and issue of equity

Potential acquisitions

The Board of Baker Steel Resources Trust Limited (the "Company") is pleased to announce that it is considering the potential acquisition of certain assets (the "Assets") in exchange for equity (the "Acquisition") which would significantly increase the net assets and market capitalisation of the Company providing it with greater critical mass whilst enhancing the investment proposition.  This is expected to widen the appeal of the Company's Ordinary Shares to potential investors, improve their liquidity and reduce the discount at which the Ordinary Shares may trade relative to their Net Asset Value in the future.

The Assets would be acquired from a number of pooled investment vehicles, including vehicles in which clients of Baker Steel Capital Managers LLP and Salamanca Group Investors Limited have invested. Following such acquisition agreements becoming unconditional, Salamanca will become an additional Investment Adviser to the Company's Investment Manager. 

All of the Assets that may be acquired fall within the existing investment policy of the Company and, based on current values, over 80 per cent. by value are investments that are already held within the Company's portfolio. It is expected that the various acquisitions will be completed over a short period of time with approximately £25million of assets being acquired initially and up to approximately £90million being acquired on completion of the transaction.  

It is proposed that the consideration for the acquisition of the Assets will be satisfied by the issue of new equity in the Company, such equity to be valued at the prevailing net asset value in respect of unlisted assets being acquired and at a 15% discount to the prevailing net asset value in respect of listed assets being acquired. Of the total potential £90million of assets being acquired, based on current values, approximately 40 per cent are unlisted assets with the balance being listed assets.

Issue of equity

In conjunction with the Acquisition, the Board is also considering an issue of up to £100million of equity for cash. This equity would be issued at a 15% discount to the prevailing net asset value and will be first offered to existing shareholders on a pro rata basis via an open offer before being made available to prospective new investors via a placing.

The Investment Manager believes that the commodities cycle is close to its trough and that current market conditions therefore represent an attractive time to be investing in mining and resources assets many of which are priced well below their risk adjusted fair values. Capital markets are currently unreceptive to development companies' need for capital and such companies are currently being particularly undervalued due to perceived financing risk. The Investment Manager believes that it is therefore timely to seek to exploit this opportunity through carefully selected investment with a preference toward companies with late stage development projects requiring the last tranche of capital to reach positive cashflow from operations.

The increase in scale of the Company arising from the Acquisition and issue of equity for cash should provide the Investment Manager with an enhanced opportunity to achieve favourable terms for investment by the Company given the stronger negotiating position derived from its ability to invest larger 'ticket sizes' in investee companies.

Discount Management Mechanism and Distribution Policy

In the event that the Acquisition proceeds, the Company will introduce a discount management mechanism with effect from July 2015 such that if the Company's Ordinary Shares are trading at a discount in excess of 15% to their Net Asset Value, the Board intends to allocate no less than 50% of net cash received from realisations to buy back the Company's Ordinary Shares.

In addition, following the audit of the 2015 financial statements, the Board intends to allocate annually no less than 15% of the aggregate net realised cash gains for distribution to Shareholders.

Expected timetable

The Board currently expects to publish further details and the date of an Extraordinary General Meeting to approve the proposals, during November 2014.

Enquiries:

Baker Steel Resources Trust Limited

[phone]

Francis Johnstone

Trevor Steel

Numis Securities Limited

[phone]

David Benda (corporate)

James Glass (sales)

Note to Editors:

Salamanca Group integrates traditional Merchant Banking practices and values with sophisticated Operational Risk expertise, providing a new approach to business. The Group's track record of enabling business, protecting assets and growing capital has led to it establishing enduring relationships with a broad client base including private individuals, corporates, institutions and governments. Recognising the risks inherent in today's world, Salamanca Group develops services that help reveal opportunities and manage risks proactively.  It delivers these services through the following divisions: Investment & Advisory, Corporate Risk Services, Business Intelligence & Investigations and Private Office. With offices established in Accra, Athens, Barcelona, Cape Town, Copenhagen, Geneva, Houston, Limassol, London, Lubumbashi, Madrid, Mauritius, Natal, Rio de Janeiro, St Helier, Tripoli and Warsaw; as well as a network in Dubai, Karachi and Sana'a, Salamanca Group has an established global network.

Salamanca Capital Partners LLP ("SCP") is the principal United Kingdom ("UK") Financial Conduct Authority ("FCA") regulated entity of Salamanca Group with FRN 522491. SCP and its Appointed Representatives undertake Salamanca Group's regulated activities.

Important Information

This document is not for release, publication or distribution (directly or indirectly) in or into the United States, Canada, Australia, Japan, the Republic of South Africa or to any "US person" as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act") or into any other jurisdiction where applicable laws prohibit its release, distribution or publication. It does not constitute an offer of securities for sale anywhere in the world, including in or into the United States, Canada, Australia, Japan or the Republic of South Africa. No recipient may distribute, or make available, this document (directly or indirectly) to any other person. Recipients of this document in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements in their jurisdictions. In particular, the distribution of this document may in certain jurisdictions be restricted by law.

The Ordinary Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or benefit of, US Persons. The Company will not be registered as an "investment company" under the Investment Company Act of 1940, and investors will not be entitled to the benefits of that Act. In addition, relevant clearances have not been, and will not be, obtained from the securities commission (or equivalent) of any province of Australia, Canada, Japan or the Republic of South Africa and, accordingly, unless an exemption under any relevant legislation or regulations is applicable, none of the Ordinary Shares may be offered, sold, renounced, transferred or delivered, directly or indirectly, in Australia, Canada, Japan or the Republic of South Africa.

The contents of this announcement, which has been prepared by and is the sole responsibility of the Company, have been approved by Baker Steel Capital Managers LLP ("Baker Steel") solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000.

Each of Baker Steel and Numis Securities Limited ("Numis") is authorised and regulated by the UK Financial Conduct Authority.  Neither Baker Steel nor Numis is acting as adviser to any recipient of this document or will be responsible to any recipient of the document for providing the protections afforded to clients of either of them or for providing advice in connection with this document or any of the matters referred to herein. Numis has not verified or authorised the contents of, or any part of, this document.

This document is an advertisement and not a prospectus and investors must only subscribe for or purchase the securities referred to in this document on the basis of information contained in the Prospectus and not in reliance on this document. This document does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment. This document does not constitute and may not be construed as an offer to sell, or an invitation to purchase, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this document should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating the investment opportunity. No reliance may be placed for any purposes whatsoever on this document (including, without limitation, any illustrative modelling information contained herein), or its completeness.

None of the Company, Baker Steel or Numis nor any of their respective officers, partners, employees, agents, advisers or affiliates makes any express or implied representation, warranty or undertaking with respect to the information or opinions contained in this document and none of them accept any responsibility or liability (for negligence or otherwise) as to this document's accuracy or completeness or as to the suitability of any particular investment for any particular investor or for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. In addition, no duty of care or otherwise is owed for any loss, cost or damage suffered or incurred as a result of the reliance on such information or opinions or otherwise arising in connection with this document. In all cases, each recipient should conduct its own investigations and analysis of the Company and Baker Steel  and such recipient will be solely responsible for forming its own views as to the potential future performance of the Company.

Certain information contained in this document constitutes "forward-looking statements," which can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue," "target" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward-looking statements in making their investment decisions. No representation or warranty is made as to the achievement or reasonableness of and no reliance should be placed on such forward-looking statements.

 

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