Proposed capital return and s

RNS Number : 3423N

BH Macro Limited

16 February 2009

 



BH Macro Limited

16 February 2009

Discount management arrangements and amendments to Management Agreement

Proposed capital return and share buy backs

In light of current market conditions, BH Macro Limited (the 'Company') has reviewed and consulted with its advisers and certain major shareholders regarding the options available to the Company in respect of the discount to net asset value at which the Company's shares are currently trading.  

In order to help address concerns regarding the prevailing discount and to enhance the Company's appeal to existing and potential investors, the Company proposes to establish arrangements for an annual partial return of capital whereby shareholders would be able to elect to tender some of their shares for repurchase by the Company at a price equivalent to the prevailing net asset value of shares of the relevant class less costs. The decision whether to make a partial return of capital in any year and, if so, its price and size, would be taken by the Company's directors and, depending on market conditions and other relevant factors, may be for an amount representing up to 100% of the positive NAV performance of the Company for the prior calendar year.  

The first of these returns of capital will be made by means of a tender offer on behalf of the Company to acquire up to 7.5% of the number of shares of each class of the Company in issue.  Further details of this tender offer, which will be subject to shareholder approval and certain other terms and conditions, will be contained in a circular that the Company intends to send to shareholders prior to the end of this quarter.  

It is expected that documentation to implement any subsequent annual capital return, which would be subject to the discretion of the Company's board of directors in respect of any specific year, would be sent to shareholders with the Company's annual report for the relevant year. Whether a return of capital is made in any particular year and, if so, the amount of the return, may depend, among other things, on prevailing market conditions, the ability of the Company to liquidate its investments to fund the capital return, the success of prior capital returns and applicable legal, regulatory and tax considerations.  

In addition, the Company has decided to use its existing share buyback authority as and when appropriate to make market purchases of the Company's shares. The Board believes that, in conjunction with the proposed tender offer, this is the most appropriate means in the current market of addressing the discount at which the Company's shares are currently trading and potentially enhancing the Company's net asset value, while continuing to preserve flexibility.  

Amendments to Management Agreement

The Company and its manager, Brevan Howard Offshore Management Limited (the 'Manager') have agreed to amend the management agreement between the Company and the Manager.  

The amendments relate to the obligations of the Company to repay to the Manager the costs of the Company's initial formation and listing that were borne by the Manager. In particular, the Management Agreement has been amended to provide that the Company will repay the Manager a fraction of these costs for every US dollar by which repurchases, redemptions or cancellations of the Company's shares reduce the net asset value of the Company below its net asset value at the time of the Company's listing. The amount of these costs to be repaid for every dollar by which the Company's net asset value is reduced will be 3.91 cents, being the figure obtained by dividing the relevant costs by the net asset value of the Company at the time of its listing, which was US$1,080,740,459. The Management Agreement has also been amended to clarify that redemptions by the Company of its investments to fund discount management measures do not constitute grounds for the Manager to treat the Management Agreement as having been terminated. These amendments are intended to provide the Company and its shareholders with greater certainty regarding apportionment of the potential liability of the Company for the formation and listing costs borne by the Manager and should assist the Company in setting appropriate prices which discount management arrangements can be executed, so that an appropriate portion of that potential liability can be effectively borne by exiting shareholders. 

In addition, the Management Agreement has been amended to clarify the arrangements for payment to the Manager of performance fees in respect of share class conversions by shareholders pursuant to the periodic class conversion facility. The performance fee attributable to shares that are converted, if any, will crystallise on the date of the relevant conversion but will not be paid to the Manager until the end of the year in which the conversion occurs.  

These amendments to the Management Agreement are effective with immediate effect.  

Enquiries:  

Stephen Stonberg / Paul Dentskevich 0207 022 6200  

Brevan Howard

Angus Gordon Lennox / William Simmonds 0207 588 2828  

JPMorgan Cazenove 

Anthony Payne/ Paul Mungo 0203 178 6869/ 0203 178 6872

Peregrine Communications 

Important notice

This announcement does not constitute an offer or solicitation to acquire any securities in the Company. Any tender offer or return of capital will not be extended into any jurisdiction where to do so may be unlawful or otherwise subject the Company or any other person to any unduly onerous obligation.  

This announcement includes 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. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of the Company. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The investment performance, financial condition and prospects of the Company may change. Except as required by law or applicable regulation, the Company does not undertake any obligation to update any forward-looking statements, even though the situation of the Company or its subsidiary may change in the future. All of the information presented in this announcement, and particularly the forward-looking statements, is qualified by these cautionary statements.

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