Publication of Circular

RNS Number : 4572K

Highbridge Multi-Strategy Fd Ltd £

28 August 2019

 

28 August 2019

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT OR ANY COPY OF IT. THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN.

HIGHBRIDGE MULTI-STRATEGY FUND LIMITED

(the "Company")

Publication of Circular

Further to the Company's announcement on 16 August 2019, the Company is today posting a circular to Shareholders in connection with the proposals to change the Company's Investment Policy and the Company's name (the "Circular" and the "Revised Proposals"), alongside the subsequent cash exit opportunity. The Circular sets out further details of the Proposals and contains a notice convening an Extraordinary General Meeting to be held at 8.30 a.m. on 17 September 2019 at Sarnia House, Le Truchot, St Peter Port, Guernsey, GY1 1GR, Channel Islands.

Introduction and background

As announced by the Company on 16 August 2019, and further to the circular dated 31 July 2019 (the "July Circular"), the resolution to, inter alia, change the Company's investment policy alongside a cash exit offer (the "Initial Cash Exit Offer") presented to Shareholders at the extraordinary general meeting held on 16 August 2019 was passed. However, elections for the Initial Cash Exit Offer were received such that the continuation condition contained in the July Circular in respect of the Company having a minimum Net Asset Value of £100 million following implementation of the Initial Cash Exit Offer was not met. The Net Asset Value attributable to those Shares which were not elected for the Initial Cash Exit Offer amounted to approximately £73.5 million.

In light of this significant number, the Board considers that it is desirable to attempt to facilitate the wishes of those Shareholders who did not elect to exit the Company by affording them the opportunity to continue in the Company with a revised continuation condition of a minimum Net Asset Value of the Company of £50 million.

The Board is today posting a Circular to Shareholders to convene a further extraordinary general meeting (the "Extraordinary General Meeting") to seek approval, amongst other things, to adopt the New Investment Policy to allow those Shareholders who wish to do so the opportunity to remain invested in the Company (the "Revised Proposals").

Shareholders who elected to redeem their Shares pursuant to the Initial Cash Exit Offer set out in the July Circular (the "Exiting Shareholders") had their Shares redeemed on or around 19 August 2019 (the "Initial Cash Exit Redemption Date") and, with effect from that date, ceased to be Shareholders in the Company with respect to such Shares.

The Continuation Election

As detailed in the July Circular, as part of the refocusing of Highbridge Capital Management, LLC's ("Highbridge") business exclusively around Highbridge's credit strategies, the Highbridge Multi-Strategy Fund structure, through which the Company invests as a shareholder of Highbridge Multi-Strategy Fund Corporation ("HCC") which invests substantially all of its investable assets in Highbridge Multi-Strategy Master Fund, L.P. (the "HMS Master Fund"), will be wound down, and Highbridge is offering investors, including the Company, the ability to elect between one of three options:

i.    to transfer the investor's entire holding in HCC, over time, to the 1992 Tactical Credit Fund, Ltd. (the "TCF Feeder"), a fund managed by Highbridge focusing on credit strategies, over time, effected through the issuance of in-kind dividends consisting of new shares in the TCF Feeder to such investor;

ii.    to partially transfer such portion of the investor's holding in HCC, over time, as it may determine to the TCF Feeder over time, effected through the issuance of in-kind dividends consisting of new shares in the TCF Feeder to such investor, with the remainder of its holding being distributed to it, over time, through the payment of cash dividends; or

iii.   to request that the investor's entire investment in HCC is distributed to it, over time, through the payment of cash dividends,

with an election for options (i) or (ii) being a "Continuation Election". Irrespective of which election the Company makes (in its capacity as a shareholder in HCC), the Company will continue to be a shareholder of HCC and will hold the same relative economic interest in the HMS Master Fund as compared with other indirect investors in the HMS Master Fund, until all of the assets of the HMS Master Fund have been liquidated.

In light of the Revised Proposals, Highbridge has extended the deadline for the Company to make a Continuation Election to 20 September 2019. If the Company is unable to obtain the requisite Shareholder approval by 19 September 2019 to enable it to make a Continuation Election, then unless Highbridge extends the deadline, the Company will be unable to make a Continuation Election and will be required to request that the Company's entire investment in HCC is distributed to it, over time, through the payment of cash dividends.

As detailed in the July Circular, the Board considers that making a Continuation Election is in the best interests of the Company and of the Shareholders as a whole. Accordingly, the Board is now seeking authority from Shareholders, subject to the satisfaction of the Revised Continuation Conditions, to make consequential changes to the Company's investment policy, amend the Company's Existing Articles and to change the Company's name ("Resolution 1") in order to continue the Company by transferring some or all of its holding in HCC to the TCF Feeder, over time, effected through the issuance of in-kind dividends consisting of new shares in the TCF Feeder to the Company (the "Continuation").

If Resolution 1 is not approved and/or the Revised Continuation Conditions are not satisfied, then the Continuation will not occur and the Board proposes to commence the Managed Wind-down of the Company as further described in paragraph 7 in Part I of the Circular.

Investment in the Tactical Credit Fund

The Tactical Credit Fund is a multi-strategy credit fund that seeks to generate returns from relative value and idiosyncratic opportunities. The Tactical Credit Fund, which launched in November 2013, currently invests in six credit focused sub-strategies: (i) mid-cap convertible credit; (ii) European convertible credit; (iii) capital structure arbitrage; (iv) event credit; (v) income investments and (vi) distressed credit and reorganised equities.

The Board believes that the investment strategy of the Tactical Credit Fund, which seeks to generate its return in a similar manner to the long-standing credit allocation within the HMS Master Fund, presents an opportunity for Shareholders wishing to remain invested in the Company. The Board further believes that investing in the Tactical Credit Fund through the TCF Feeder offers an opportunity for the Company to produce positive returns with low volatility for Shareholders. Pursuant to the Continuation, the Company will receive shares in a non-restricted series sterling share class of the TCF Feeder.

As set out below, the Company's investment policy and the Company's name reflects its current investment in the HMS Master Fund (indirectly through HCC). Accordingly, if approved, the Continuation will require the Company to amend its investment policy and the Board believes it is appropriate to change the Company's name to reflect its investment in the Tactical Credit Fund.

Please see paragraphs 3 and 4 of Part I of the Circular for further details on the Tactical Credit Fund, the proposed new investment policy and the proposed new name of the Company.

Subsequent Cash Exit Offer

At the same time as seeking approval from the Shareholders for the Revised Proposals, the Company is offering all Shareholders a further cash exit opportunity by way of a redemption offer (the "Subsequent Cash Exit Offer"), which is conditional on the Continuation being approved, and on the Revised Continuation Conditions being satisfied. Shareholders electing to redeem their Shares pursuant to the Subsequent Cash Exit Offer will receive, over time, a proportion of the actual amount received by the Company from the realisation of the assets (less any liabilities) attributable to the Redemption Portfolio. Such assets shall comprise: (i) the net realisation proceeds of such portion of the Company's holding in HCC which is attributable to their holding of Shares, (ii) the redeeming Shareholders' pro rata share of the Residual AllBlue Assets following their realisation; and (iii) the pro rata share of any cash held by the Company, less the costs and expenses of effecting such redemptions. Such net proceeds will be paid to the relevant Shareholders as soon as practicable following receipt of such realisation proceeds by the Company in connection with the wind down of the HMS Master Fund and the realisation of the Residual AllBlue Assets.

Under the Subsequent Cash Exit Offer, any Shareholder who no longer wishes to remain invested in the Company will receive the same quantum of redemption proceeds per Share over exactly the same time frame as would have been the case had they elected to participate in the Initial Cash Exit Offer. The realisation proceeds associated with the HMS Master Fund wind down are expected to be received by the Company from HCC on a staggered basis over a period of time. Based on the information Highbridge has provided, the first payment to Shareholders electing to redeem Shares under either the Initial Cash Exit Offer or the Subsequent Cash Exit Offer is expected to be made in October 2019.

Revised Continuation Conditions

The Revised Proposals are conditional upon: (i) the Net Asset Value of the Company being at least £50 million or such higher amount as the Directors consider would be sufficient for the Company to continue to be viable; and (ii) the Company satisfying the "shares in public hands" requirement of the Listing Rules, in each case, immediately following the redemption of Shares pursuant to the Subsequent Cash Exit Offer (each of which, individually, is a "Revised Continuation Condition"). The Net Asset Value will be calculated with reference to the most recently published unaudited net asset value per Share as at the date of the Extraordinary General Meeting. The Revised Continuation Conditions may not be waived by the Directors.

In the event that requests for the redemption of Shares pursuant to the Subsequent Cash Exit Offer are received such that the Board (in its sole discretion) determines that, following implementation of the Subsequent Cash Exit Offer, either Revised Continuation Condition will not or is unlikely to be satisfied, neither the Continuation nor the Subsequent Cash Exit Offer will proceed. In such event, the Board proposes to commence the Managed Wind-down of the Company as further described in paragraph 7 of Part I of the Circular.

Change to the Company's name

In connection with the proposed investment into Highbridge's Tactical Credit Fund, the Board is proposing that, subject to satisfaction of the Continuation Conditions, the name of the Company be changed from "Highbridge Multi-Strategy Fund Limited" to "Highbridge Tactical Credit Fund Limited".

Disapplication of pre-emption rights and proposed new discontinuation resolution

The Board believes that the Company has the potential to grow above £100 million, and believes that growing the Company to such size would be in the best interests of Shareholders, as this would reduce the Company's total expense ratio, spreading fixed costs over a broader investor base.

In order to be able to grow the Company in a time and cost efficient manner, the Board is proposing to table, at the Extraordinary General Meeting, a special resolution to disapply pre-emption rights ("Resolution 2") in respect of the issue or sale out of treasury to any person or persons of Shares up to a number not exceeding the lesser of 6,778,149 Shares or such number as shall represent 20 per cent. of the Company's issued share capital (excluding any shares held in treasury) at the time of issue of the equity securities. Further details of the proposed disapplication of pre-emption rights are set out in paragraph 8 of Part I of the Circular.

In support of the Board's belief that the Company has the potential to grow, the Board is proposing to amend the Existing Article to require the Board to propose a discontinuation resolution in the event that the Company's Net Asset Value is less than £80m as at 31 December 2020. Further details of this discontinuation are set out in paragraph 9 of Part I of the Circular.

Regulatory Considerations

The Company is a closed-ended investment company limited by shares. The Company is incorporated and domiciled in the Island of Guernsey. The Company operates under the Companies (Guernsey) Law 2008, as amended and regulations made under that law. The Company is regulated as an authorised closed-ended investment fund by the Guernsey Financial Services Commission (the "GFSC") and is subject to the Authorised Closed-Ended Investment Schemes Rules 2008 (the "ACIS Rules"). Pursuant to the ACIS Rules the GFSC will be notified of the Revised Proposals.

The Board shall be entitled to defer any effective date specified in the Circular and the implementation of the Revised Proposals in its absolute discretion to accommodate any legal, regulatory or operational requirements that are not resolved prior to or on the relevant effective date.

Shareholder Approval Required

In order to implement the Continuation, it is necessary to seek Shareholder approval of Resolution 1 to change the Company's investment policy, to amend the Existing Articles and to change Company's name. Resolution 1 is being proposed as a Special Resolution and is not conditional on Resolution 2 being passed. Resolution 2, which relates to the disapplication of pre-emption rights for up to the lesser of 6,778,149 Shares or up to 20 per cent. of the issued share capital at the time of issue (excluding any shares held in treasury), is being proposed as a Special Resolution.

The Circular sets out details of, and seeks your approval for, the proposed Continuation and explains why the Board is recommending that you vote in favour of the Resolutions to be proposed at the Extraordinary General Meeting to be held on 17 September 2019. The notice in respect of the Extraordinary General Meeting is set out at the end of the Circular.

Costs and Expenses Associated with the Revised Proposals

The costs and expenses incurred by the Company in connection with the Revised Proposals are currently expected to amount to approximately £75,000. Highbridge, a related party of the Company, has agreed to reimburse the Company for these costs and expenses.

As set out in the July Circular, Highbridge also agreed to pay the Company's costs, amounting to  £225,000, in connection with the proposals detailed in the July Circular (the "July Proposals"). The aggregate amount Highbridge has agreed to reimburse the Company for in connection with the July Proposals and the Revised Proposals is capped at £300,000. The arrangement falls to be disclosed as a smaller related party transaction pursuant to LR 11.1.10 R.

The Directors have agreed that they will not charge any additional fees for their work in connection with the Revised Proposals.

Timetable

The indicative timetable of principal events is set out below:

EXTRAORDINARY GENERAL MEETING
	2019
Circular sent to Shareholders	28 August
Latest time and date of receipt of Form of Proxy for the Extraordinary General Meeting	8:30 a.m. on 13 September
Extraordinary General Meeting	8:30 a.m. on 17 September
Announcement of results of the Extraordinary General Meeting	17 September
SUBSEQUENT CASH EXIT OFFER
Latest time and date for receipt of Redemption Notices and TTE Instructions (together with the relevant CREST Holder Forms) for the Cash Exit Offer	8:30 a.m. on 13 September
Record Date	5:00 p.m. on 13 September
Announcement of results of the Cash Exit Offer	17 September
Cash Exit Redemption Date	18 September
Announcement of the level of initial cash distribution to be made to Shareholders redeeming Shares in the Cash Exit Offer	By early October
Initial, subsequent and final payment of Cash Exit Proceeds*		Within 5 Business Days following receipt by the Company of cash proceeds of realising assets comprised in the Redemption Portfolios**
*Shareholders should note that there is no CREST payment method available and therefore Shareholders holding their Shares through CREST (i.e., in uncertificated form) must complete and return (together with the submission of a TTE Instruction) a CREST Holder Form to the Registrars including bank details. Shareholders who have not indicated bank details (either in the Redemption Notice or the CREST Holder Form(s)) will be paid by cheque despatched at the latest known address as indicated on the Shareholders' register. **Shareholders should note that the Company may hold back the payment of cash proceeds of realising assets comprised in the Redemption Portfolios until a material amount is available for distribution to redeeming Shareholders to avoid the cost and administrative burden of distributing small amounts.

Each of the times and dates in the above expected timetable may be extended or brought forward without further notice. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service. All references are to London time unless otherwise stated.

Further information

A copy of the Circular will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM. The Circular will also be available on the Company's website: https://www.highbridgemsfltd.co.uk.

Definitions

Terms used but not defined in this announcement shall have the meanings given to such terms in the Circular.

Enquiries:

Peel Hunt LLP		020 7418 8900
Liz Yong / Luke Simpson
Praxis Fund Services Limited		01481 737 600
Company Secretary

LEI: 213800397SYHLYFH5961

IMPORTANT INFORMATION

This announcement appears as a matter of record only and does not constitute an offer to issue or sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities in any jurisdiction. The information contained in this announcement is given at the date of its publication and is subject to updating, revision and amendment. The contents of this announcement have not been approved by any competent regulatory or supervisory authority.

All investments are subject to risk. Past performance is no guarantee of future returns. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results. This document is not intended to constitute legal, tax or accounting advice or investment recommendations. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. Statements contained in this document that are not historical facts are "forward-looking statements" which are based on current expectations, estimates, projections, opinions and beliefs of the Company and/or its investment manager. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Forward-looking statements can be identified in some cases by the use of forward-looking terminology, including terms such as "intends", "intention", "will", "continue", "believe", "view" or, in each case, variations or comparable terminology. Forward-looking statements are not guarantees of future events or performance. 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 and may be beyond the Company's ability to control or predict. Actual events or results or the actual performance of the Company and/or TCF may differ materially from those reflected or contemplated in such forward-looking statements.

 

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