Tender Offer Commencement and

RNS Number : 5048O

BH Macro Limited

09 March 2009

 



BH Macro Limited (the 'Company')

(a closed-ended investment company incorporated with limited liability under the laws of Guernsey with registered number 46235)

9 March 2009

Not for release, publication or distribution, in whole or in part, in or into the United States, Canada, Australia or Japan

Commencement of Tender Offer and Notice of Extraordinary General Meeting

BH Macro Limited (the 'Company') has today released a circular (the 'Circular') containing details of a tender offer for 7.5 per cent. of the issued shares (excluding shares held in treasury) of each of its sterling, euro and US dollar share classes (the 'Tender Offer').  The Tender Offer will be accompanied by a matching purchase facility (the 'Matching Purchase Facility' and, together with the Tender Offer, the 'Proposals') whereby shareholders who wish to increase their stake in the Company may elect to do so by offering to purchase shares tendered by other shareholders for repurchase by the Company.

The Circular includes notice of an extraordinary general meeting of the Company to be held at the offices of Northern Trust International Fund Administration Services (Guernsey) Limited, Trafalgar Court, Les Banques, St Peter Port, Guernsey GY1 3QL at 11.00 a.m. on 30 March 2009 to approve a resolution relating to the Tender Offer. The Tender Offer is conditional, among other things, on the resolution being passed at the extraordinary general meeting.  

Background

As announced on 16 February 2009, in light of current market conditions, the Company has recently reviewed the options available to enhance the Company's appeal to existing and potential investors. In particular, the Company proposes to establish arrangements for an annual partial return of capital whereby shareholders would be able to elect to offer some of their shares for acquisition by the Company at a price equivalent to the prevailing net asset value of shares of the relevant class less costs while at the same time ensuring that shareholders who do not wish to sell their shares are not disadvantaged.  

The Circular provides details of the first of these proposed annual returns of capital, to be made by means of the Tender Offer to acquire up to 7.5 per cent. of the number of shares of each class of the Company in issue at a tender price for each class of share equivalent to 96 per cent. of the net asset value ('NAV') per share of the relevant class on 31 March 2009.  

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. 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. 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. It is currently anticipated that amendments to the Company's articles of association to facilitate the subsequent annual capital returns will be proposed at the Company's 2009 annual general meeting.  

It should be noted that the Proposals and the proposed annual return of capital are in addition to the Company's existing discount control measures, including the ability to make market purchase of shares and the obligation to propose class closure resolutions if, in any rolling twelve month period, the average daily closing market price of the relevant class of shares during such period is 10 per cent. or more below the average NAV per share of the relevant class taken over the 12 monthly NAV determination dates in that twelve month period, as described more fully in the Company's prospectus dated 7 February 2007 and its articles of association. 

Performance of the Company

Since its launch, the Company's investment performance has been consistently strong and all three currency classes of shares have recorded rises in NAV over the period to 27 February 2009, as follows: the estimated NAV per share of the US Dollar shares has risen 56.21 per cent., of the Euro shares 56.21 per cent. and of the Sterling shares 60.88 per cent. These figures are unaudited and based on the estimated NAVs for 27 February 2009.  

The closing share price as at the close of business on 5 March 2009 (the latest date practicable prior to the publication of this announcement) was US$14.11 for the US Dollar shares, €14.30 for the Euro shares and £14.77 for the Sterling shares, which are at discounts to the estimated unaudited NAV per share of the relevant class as at 27 February 2009 of 9.67 per cent., 8.63 per cent. and 8.20 per cent. respectively. These discounts are narrower than those existing prior to announcement by the Company of its capital return proposals on 16 February 2009.  

The Company's investment strategy has proven successful since its launch, as illustrated by the figures below:

BH Macro Limited NAV per Share - Percentage Monthly Change

USD	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	YTD
2007	-	-	0.10	0.90	0.15	2.29	2.56	3.11	5.92	0.03	2.96	0.75	20.27
2008	9.89	6.69	-2.79	-2.48	0.77	2.78	1.13	0.76	-3.13	2.76	3.74	-0.68	20.32
2009	5.06	2.81*											7.95*

EUR	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	YTD
2007	-	-	0.05	0.70	0.02	2.26	2.43	3.07	5.65	-0.08	2.85	0.69	18.95
2008	9.92	6.68	-2.62	-2.34	0.86	2.87	1.28	0.99	-3.30	2.79	3.90	-0.45	21.65
2009	5.38	2.75*											8.16*

GBP	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	YTD
2007	-	-	0.11	0.83	0.17	2.28	2.55	3.26	5.92	0.04	3.08	0.89	20.67
2008	10.18	6.85	-2.61	-2.33	0.95	2.94	1.33	1.21	-2.99	2.84	4.21	-0.67	23.25
2009	5.19	2.79*											8.17*

Source: Company NAV and NAV per share data is provided by the Company's Administrator, Northern Trust International Fund Administration Services (Guernsey) Limited. Company NAV per share Percentage Monthly Change calculations made by Brevan Howard Asset Management LLP ('BHAM'). 

* February 2009 NAV figures are estimates, and are based on unaudited estimated valuations.  The final month-end NAV may be materially different from these estimated weekly values, and should only be taken as indicative values which have been provided for information only and no reliance should be placed on them. Estimated results, performance or achievements may differ materially from any actual results, performance or achievements. Except as required by applicable law, the Company and BHAM expressly disclaims any obligations to update or revise such estimates to reflect any change in expectations, new information, subsequent events or otherwise.

The NAV data is unaudited and net of all investment management fees (2 per cent. annual management fee and 20 per cent. performance fee) and all other fees and expenses payable by the Company. NAV performance is provided for information purposes only.  Shares in the Company do not necessarily trade at a price equal to the prevailing NAV per share. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.  

The Board believes that the Manager will be able to continue to secure favourable returns in the future for shareholders.  

Benefits of the Proposals

The Board believes that the Proposals will provide the following benefits:

• an opportunity for shareholders to benefit from the Company's strong NAV growth and realise a portion, or possibly all, of their investment at a price close to NAV;

• an opportunity for shareholders who wish to increase their stake in the Company to do so under the terms of the Matching Purchase Facility;

• potential enhancements to NAV for shareholders who remain invested following implementation of the Proposals; and

• a more balanced shareholder base for the longer term.  

Tender Offer

The Directors have arranged for the Tender Offer to be made for 7.5 per cent. of each class of the Company's issued share capital to enable those shareholders who wish to dispose of shares in the Company to do so at a price which is close to net asset value.

Under the Tender Offer, shareholders (other than certain overseas shareholders) will be able to realise 7.5 per cent. of their holdings of each class of shares (their ''Basic Entitlement'').  Shareholders may also tender less than their Basic Entitlement.  Further, shareholders will be able to tender additional shares in excess of their Basic Entitlement, but such tenders will only be satisfied, on a pro rata basis, to the extent that other shareholders tender less than their Basic Entitlement of the same class of shares.  Shareholders who do not wish to decrease their holdings in the Company should not participate in the Tender Offer.

The Tender Offer is being made at a tender price that will represent a discount of 4 per cent. to the Net Asset Value per share of each class on 31 March 2009.  The tender price has been set to take into account a reasonable estimate of the costs of implementing the Proposals in order that continuing shareholders should not be prejudiced and may receive a small uplift in NAV.

The Tender Offer is being made by JPMorgan Cazenove. JPMorgan Cazenove will, as principal, purchase the shares tendered by means of on-market purchases and, following the completion of all those purchases, sell them to the Company. Tendered shares may instead be sold to purchasers under the Matching Purchase Facility.

All shares acquired by the Company will be held in treasury. The repurchase of shares by the Company (and related costs) will be funded from cash resources generated by the realisation of investments in the Company's portfolio.

Matching Purchase Facility 

The Directors are aware that certain shareholders may wish to increase their investment in the Company.  

Accordingly, concurrently with the Tender Offer, the Directors have arranged for JPMorgan Cazenove to operate the Matching Purchase Facility. Under the Matching Purchase Facility, shareholders (other than certain overseas shareholders) will be able to purchase shares at the applicable Tender Price for the relevant class to the extent that there are shares of the relevant class available to be so purchased through valid tenders.  

The total number of shares of each class of the Company acquired by the Company pursuant to the Tender Offer and purchased by shareholders under the Matching Purchase Facility shall not in aggregate exceed 7.5 per cent of the shares of each class in issue (excluding shares held in treasury) as at the date of this announcement.  

To the extent that more shares of a particular class are required to satisfy demand under the Matching Purchase Facility than are tendered under the Tender Offer, such tendered shares shall be allocated pro rata to the aggregate demand for shares of that class under the Matching Purchase Facility.

The Matching Purchase Facility is conditional upon the Tender Offer proceeding.  

Repayment of the Manager's costs under the Management Agreement

As announced on 16 February 2009, the management agreement between the Company and Brevan Howard Offshore Management Limited (the 'Manager') has been amended so that the Company will repay the Manager a fraction of the costs paid by the Manager incurred in connection with the Company's initial listing for every dollar by which repurchases, redemptions or cancellations of the shares reduce the net asset value of the Company below its net asset value at the time of the Company's listing. The tender price will take account of the apportionment of part of the Company's potential liability for these costs to the shares that may be repurchased by the Company pursuant to the Tender Offer. 

Overseas Shareholders

The Tender Offer and the Matching Purchase Facility are not available to certain overseas shareholders, as described further in the Circular.  

Expected Timetable

Latest time and date for receipt of tender forms for the Tender Offer and purchase forms for the Matching Purchase Facility accompanied by payment	5.00 p.m. on 27 March 2009
Record date for Tender Offer and Matching Purchase Facility	the close of business on 27 March 2009
Latest time and date for receipt of forms of proxy for the extraordinary general meeting	11.00 a.m. on 28 March 2009
Extraordinary general meeting	11.00 a.m. on 30 March 2009
Results of extraordinary general meeting and Tender Offer elections announced	30 March 2009
NAV determination date (being the date of the NAVs on which the Tender Price is based)	31 March 2009
Tender price for each class of share announced	30 April 2009
Results of Tender Offer and Matching Purchase Facility announced and repurchase of tendered shares by the Company	1 May 2009
Settlement through CREST of, and despatch of cheques for, the Tender Offer consideration and settlement through CREST of unsatisfied tenders and relevant Matching Purchase Facility trades	5 May 2009
Balance certificates in respect of unsatisfied tenders and certificates for shares acquired under the Matching Purchase Facility despatched	by 12 May 2009

All references are to London time.  

Enquiries:  

Brevan Howard:

Stephen Stonberg / Paul Dentskevich 0207 022 6200  

JPMorgan Cazenove:

Angus Gordon Lennox / William Simmonds 0207 588 2828  

Important notices

JPMorgan Cazenove Limited, which is regulated by the Financial Services Authority, is acting for the Company and no-one else in connection with the Proposals described in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of JPMorgan Cazenove Limited or for providing advice in relation to the proposals described in this announcement.  

This announcement does not constitute an offer or solicitation to acquire or sell any securities in the Company.  Any acceptance or other response to the Proposals should be made on the basis of the information contained in the Circular.  The Tender Offer and Matching Purchase Facility are not being extended into any jurisdiction where to do so may be unlawful or which may otherwise subject the Company or any other person to any unduly onerous obligation.  

This announcement is not for distribution in or into the United States, Canada, Australia or Japan or any other jurisdiction in which its distribution may be unlawful. This announcement is not an offer of securities for sale in the United States or elsewhere. The securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the 'Securities Act'), and may not be offered or sold in the United States unless registered under the Securities Act or pursuant to an exemption from such registration.  The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended, and investors are not entitled to the benefits of that Act. There has not been and there will be no public offering of the Company's securities in the United States.

In respect of the Proposals, the Company is not required to obtain a licence as a collective investment scheme pursuant to the Dutch Financial Supervision Act (Wet Financieel Toezicht) and the Company is not subject to supervision by the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten).

Certain of the NAV figures contained in this announcement are estimates, and are based on unaudited estimated valuations.  The final month-end Net Asset Value may be materially different from these estimated weekly values, and should only be taken as indicative values which have been provided for information only and no reliance should be placed on them. Estimated results, performance or achievements may differ materially from any actual results, performance or achievements. Except as required by applicable law, the Company expressly disclaims any obligations to update or revise such estimates to reflect any change in expectations, new information, subsequent events or otherwise. 

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 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.

 

END

 

 

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