Result of EGM

RNS Number : 7935R

EPE Special Opportunities PLC

27 August 2010

 

27 August 2010

EPE Special Opportunities plc

Announcement of results of General Meeting

EPE Special Opportunities plc (the "Company") announces that all resolutions relating to, amongst other things, the proposed acquisition of a majority interest in the EPIC Private Equity Portfolio (the "Acquisition"), reorganisation of the ESO Portfolio and Investment by ESD and proposed issue of Convertible Loan Notes, were passed by the Company's shareholders at the General Meeting held earlier today. 100% of votes cast were in favour of the resolutions, with 76.40% of the Issued Share Capital voting.

Full details of the resolutions were set out in the notice of General Meeting contained in the Admission Document of the Company which was posted to shareholders on 4 August 2010.

The readmission of the Company to trading on AIM is expected to take place on 31 August 2010.

For the purposes of this announcement and unless otherwise defined herein, terms employed are as defined in the announcement made by the Company on 4 August 2010.

EPE Special Opportunities plc: Information and Effect of the Acquisition

Acquisition Highlights

The Board of ESO plc believes that the Acquisition offers the following key benefits to Shareholders:

·     The Acquisition of an interest in a mature portfolio of private equity assets at an attractive price, increasing the scale and diversification of the Company;

·     Increased scale has the potential to improve liquidity for Shareholders and reduce the share price discount, as well as offering greater opportunities to raise new capital for investments;

·     Minimal integration risk as the same investment team (EPIC Private Equity LLP ("EPE" or the "Investment Adviser")) manages or advises on all thirteen portfolio companies (the four existing companies of the Company and the nine portfolio companies of EPIC, together the "Combined Portfolio");

·     The potential to enhance the returns attributable to existing Shareholders when compared to the returns available to existing Shareholders from the existing portfolio of investments held by the Company; and

·     Alignment of interest between the Investment Adviser and Shareholders (EPE and its employees hold approximately 10% of the Company's Ordinary Shares).

Following the Acquisition, the Combined Portfolio (with the exception of Process Components) will be held in a new limited partnership, ESO Investments 1 LP (the "Fund"). The Company will hold a 72% limited partner interest in the Fund. ESD, which has invested £10 million into the Fund, will hold the residual 28% limited partner interest in the Fund in accordance with the terms of the Limited Partnership Agreement summarised in Part VIII of the Admission Document.

Going forward, new investments will be made through a new vehicle, ESO Investments, in which the Company is the sole investor. Process Components will be retained by the Company in ESO Investments.

Investment Strategy

The Company is a private equity investment company advised by EPE and focused on investing in small and medium-sized special situation transactions and distressed companies in the United Kingdom. The Acquisition unites EPE's investment discipline across special situations, distressed, growth and buyout transactions. Going forward, the Company will seek to target all these types of transaction, making investments where it believes that pricing is attractive and the opportunity for value creation is strong.

When sufficient financial resources are available, the Company will seek to invest between £2 million and £10 million in a range of debt and equity instruments with a view to generating returns through both yield and capital gain. Whilst in general the Company aims to take controlling equity positions, it may seek to develop companies as a minority investor. Occasionally the Board may authorise investments of less than £2 million. For investments larger than £5 million, the Company may seek co-investment from third parties, either from large existing Shareholders or, from time to time, non-Shareholders.

The Company will consider most industry sectors and shareholding structures utilising the Investment Adviser's experience in the consumer, retail, manufacturing, financial services, healthcare, support services and media industries.

Following the Acquisition, the Company intends to continue to develop the Combined Portfolio. The Investment Adviser considers that current market conditions provide opportunities to make bolt-on acquisitions at favourable values to enhance the value of existing investments.

New investments (other than follow-on investments in the Combined Portfolio) made in the future by the Company will be through ESO Investments in which the Company is the sole investor. On realisation of the Fund and any future investments held in ESO Investments, ESO may seek to return capital to shareholders.

Authorisation to Purchase Ordinary Shares, Dividend Policy and Investor Relations

Following the passing of all resolutions at the General Meeting the Board is authorised to purchase in the market up to 7,722,915 issued Ordinary Shares, equivalent to up to 25 per cent. of the Enlarged Issued Ordinary Share Capital. Purchases of the Shares will only be made for cash at prices well below the estimated NAV per Share at the relevant time and where the Board believes such purchases will enhance Shareholder value and/or earnings per Ordinary Share.

The Board recognises that the payment of sums to effect such repurchases will diminish funds available for investment but believes that addressing the imbalance between the market price for the Ordinary Shares and the NAV is a priority. Any such purchase will only be made on a basis which would enhance the NAV per Share.

The Board will review its dividend policy periodically and also evaluate distributing excess capital by way of share buy backs and/or special dividends as and when capital is returned to the Company.

The Board reaffirms its commitment to the Company's accounting policies which require regular valuations of the Company's portfolio investments and, more particularly, intends to focus on the market's valuation of the Company's shares which it believes do not reflect the Investment Adviser's progress in generating increased value from the Combined Portfolio. In order to achieve this, given the increased size and complexity of the Combined Portfolio, the Investment Advisor and the Board will seek to institute a more active investor relations and marketing strategy.

The Company intends to announce estimated NAV per Ordinary Share on a monthly basis following a review of the valuation of the Company's investments by the Board. The Company has always endeavoured to comply with industry-standard valuation guidelines and the Board will continue to take this approach as guidelines evolve with no material effect on valuation expected at this time. 

Corporate Governance

As an Isle of Man registered company and under the AIM Rules, the Company is not required to comply with the Corporate Governance Code. The Directors, however, place a high degree of importance to ensuring that the Company maintains high standards of corporate governance and have therefore adopted the spirit of the Corporate Governance Code to the extent that they consider appropriate, taking into account the size of the Company and nature of its operations.

For further information contact:

EPIC Private Equity (Investment Advisor to EPE Special Opportunities plc) 020-7553-2334

Giles Brand

James Henderson

Numis Securities Limited 020-7260-1000

As Nominated Advisor: Stuart Skinner

As Corporate Broker: Charlie Farquhar

Cardew Group 020-7930-0777

Catherine Maitland

IOMA Fund and Investment Management Limited 01624-681-250

Philip Scales

 

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