Placing, Open Offer and Offer for Subscription

RNS Number : 7292C

International Public Partnership Ld

19 October 2015

 



THE INFORMATION IN THIS ANNOUNCEMENT IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA OR IN ANY MEMBER STATE OF THE EU OTHER THAN THE UK AND IRELAND

 19 October 2015

Placing, Open Offer and Offer for Subscription

International Public Partnerships Limited ("INPP" or the "Company") is pleased to announce its intention to raise up to £150 million by way of a Placing, Open Offer and Offer for Subscription (together, the "Issue") and up to £300 million by way of a Placing Programme (with the "Issue", the "Offering"). The Company today published a prospectus relating to the Offering (the "Prospectus") and will post this, together with a circular and notice of Extraordinary General Meeting (the "Circular"), to shareholders tomorrow, as well as making them available on the Company's website (http://www.internationalpublicpartnerships.com).

Unless otherwise defined, capitalised words and phrases in this Announcement shall have the meaning given to them in the Prospectus.

HIGHLIGHTS

-- Proceeds will be used in repayment of the Company's cash drawn portion of its existing debt facility (of which approximately £278 million is currently utilised, with £111 million cash drawn and £167 million committed in respect of letters of credit) and then, to the extent not required for repayment, to acquire Further Investments which may include:

i.      Pipeline Investments where the Group or Amber Fund Management Limited ("Amber" or the "Investment Adviser") is currently Preferred Bidder;

ii.     A number of other projects that Amber and/or the Group are bidding on, developing or are in discussions about; or

iii.    Opportunities to acquire investments from third party vendors or where the Group has pre-emption rights.

-- Proceeds are anticipated to be invested within six to nine months

-- Under the Open Offer, existing Shareholders are entitled to subscribe for New Shares pro rata to their holdings of Ordinary Shares on the basis of 1 New Share for every 8 Ordinary Shares held as at close of business on 15 October 2015 (the "Record Date")

-- The balance of New Shares to be made available under the Issue, together with any New Shares not taken up pursuant to the Open Offer, will be made available for subscription under the Excess Application Facility, the Offer for Subscription and the Placing

-- Estimated Net Asset Value not less than 127.2 pence per Existing Ordinary Share (as at 30 September 2015)  The Estimated Net Asset Value is an estimate of the Directors based on the advice of the Investment Adviser and based on unaudited financial information of the Group, but using the same methodology as is used for the half-yearly Net Asset Values. This Estimated Net Asset Value and the information that has been used to prepare it has not been audited or reviewed by any person outside the Amber Group other than the Directors. As such, there can be no assurance that the Net Asset Value as at 31 December 2015 will reflect the Estimated Net Asset Value which is prepared as at 30 September 2015.

-- Issue price of 131.25 pence per New Share, representing a discount of 0.65 per cent. to the Closing Price of 132.1 pence per Existing Ordinary Share as at the close of business on 15 October 2015 and a premium of 3.18 per cent. to the estimated NAV per Existing Ordinary Share of 127.2 pence (as at 30 September 2015).

-- All investors on the register as at the Record Date will be entitled to the dividend distribution in respect of the six months to 31 December 2015 (assuming admission of the New Shares takes place before such dividend is declared). INPP will target a minimum dividend of 6.45 pence per Ordinary Share for 2015. This figure is a target only and not a profit forecast. There can be no assurance that this target will be met or that the Company will make any distributions whatsoever.

For further information, please contact

Erica Sibree                                                                                                                          [phone]

Amber Fund Management Limited                                

Nick Westlake/Hugh Jonathan (Corporate Broking & Advisory)                                [phone]/1263

Chris Gook (Sales)                                                                                                             [phone]

Numis Securities, Sponsor, Broker, Financial Adviser and Bookrunner

Expected timetable

Each of the times and dates set out below and mentioned elsewhere in this announcement may be adjusted by the Company, in which event details of the new times and dates will be notified to a Regulatory Information Service. References to a time of day are to London time.

Event	Date
The Issue
Record Date for entitlements under the Open Offer	15 October 2015
Despatch of the Prospectus and the EGM Circular to Existing Shareholders and, to Qualifying Non-CREST Shareholders only, the Open Offer Application Forms	20 October 2015
Offer for Subscription and Placing Open	20 October 2015
Ex-entitlement date for the Open Offer	7.00 a.m. on 20 October 2015
Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock account of Qualifying CREST Shareholders in CREST	As soon as possible after 8.00 a.m. on 21 October 2015
Recommended latest time for requesting withdrawal of Open Offer Entitlements and Excess CREST Open Offer Entitlements from CREST (i.e. if the Open Offer Entitlements are in CREST and the Existing Shareholder wishes to convert them into certified forms)	4.30 p.m. on 5 November 2015
Latest time and date for depositing Open Offer Entitlements and Excess CREST Open Offer Entitlements into CREST	3.00 p.m. on 6 November 2015
Latest time and date for splitting Open Offer Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 9 November 2015
Latest time and date for receipt of completed Subscription Forms under the Offer for Subscription and payment in full under the Offer for Subscription and settlement of relevant CREST instructions (as appropriate)	11.00 a.m. on 11 November 2015
Latest time and date for receipt of completed Open Offer Application Forms and payment in full under the Open Offer and Offer for Subscription and settlement of relevant CREST instructions (as appropriate)	11.00 a.m. on 11 November 2015
Latest time and date for receipt of forms of proxy	2 p.m. on 6 November 2015
Latest time and date for receipt of Placing commitments	12 noon on 13 November 2015
Extraordinary General Meeting	2.00 p.m. on 10 November 2015
Results of the Issue announced through a Regulatory Information Service	Before 8.00 a.m. on 16 November 2015
Admission and commencement of dealings in the New Shares	18 November 2015
New Shares issued in uncertificated form expected to be credited to accounts in CREST	18 November 2015
Despatch of definitive share certificates for the New Shares issued in certificated form	As soon as possible after 23 November 2015

THE COMPANY

The Company is a Guernsey incorporated authorised closed-ended investment company which currently invests directly or indirectly in public or social infrastructure assets and concessions located in the UK, Australia, Belgium, Germany, Ireland, Italy and North America and it may also consider investment in other European or core OECD countries. The Company is advised by Amber Fund Management Limited and provides investors with access to Amber's network of infrastructure executives to manage the Company's existing investment portfolio and to source future infrastructure assets to provide income and capital growth.

The Existing Ordinary Shares are admitted to the premium segment of the Official List and to trading on the London Stock Exchange's main market for listed securities.

The Company retains a committed £300 million loan facility from the Royal Bank of Scotland plc and National Australia Bank Limited (the "Facility") and had utilised approximately £278 million of this Facility as at 14 October 2015, of which £111 million has been drawn down as loans and £167 million committed in respect of letters of credit provided by the lenders.

The Directors believe that the Company has the opportunity to invest in further infrastructure investments meeting the Company's investment policy. In particular, on 24 August 2015 a consortium including the Company reached financial close on the Thames Tideway Tunnel, entailing expected capital investment by the Group of approximately £210 million.

BACKGROUND TO AND REASONS FOR THE ISSUE AND THE PLACING PROGRAMME

The Company intends to raise up to £150 million through the Issue (although it can increase the size of the Issue to up to £180 million) and up to £300 million through the Placing Programme. The Issue comprises a Placing, an Open Offer to Qualifying Shareholders on a pre-emptive basis and an Offer for Subscription, in aggregate equalling up to 114,285,714 New Shares at an Issue price of 131.25 pence per New Share.

Regardless of the eventual size of the Issue, the Net Issue Proceeds will be used first to discharge the Group's indebtedness under the Loan Facilities Agreement (excluding letters of credit) of approximately £111 million and then, to the extent they are not required for repayment, to finance the acquisition of Further Investments or to discharge third party debt incurred to acquire Further Investments, as a result of which the Directors anticipate that the Net Issue Proceeds are likely to be fully deployed within around six to nine months. The Net Placing Programme Proceeds are expected to be used for the same purposes, but in the longer term.

The Directors estimate that the Company's total investment commitments until the end of the first quarter of the 2016 financial year on the Thames Tideway Tunnel and other Further Investments are expected to be around £84.6 million, with £139.9 million of additional investment required up to the end of the first quarter of the 2018

financial year. The Directors have therefore decided to raise capital by way of a combination of the Issue (to fund the initial expenditure) and the Placing Programme (for longer-term obligations) in order to ensure that the Group does not hold uninvested cash for an excessively long period.

The Company has exclusive access to a number of the Pipeline Investments where either the Group or Amber (with the right of first refusal for the Company on disposal by Amber) is the Preferred Bidder to acquire the corresponding Investment Capital. However, there is no guarantee that the Group will reach financial close or that they will be acquired, or in each case if they are completed on what terms.

Amber is also engaged in developing a number of other projects which if successfully developed are anticipated to be likely to fit within the Company's investment criteria and which the Company would have the right (but no obligation) to acquire on disposal by Amber. The Group also has opportunities in mature or semi-mature stage PPP projects, including where it has the benefit of pre-emption rights arising from the Existing Portfolio.

NET ASSET VALUE UPDATE

The last Net Asset Value per Existing Ordinary Share published by the Company was as at 30 June 2015, was unaudited, and was 128.6 pence. The next Net Asset Value per Existing Ordinary Share due to be published by the Company will be as at 31 December 2015, and is expected to be published in March 2016. In advance of this, the Directors, based on the advice of the Investment Adviser (and taking into account the dividend of 3.225 pence per Ordinary Share declared on 27 August 2015 which had an ex dividend date of 17 September 2015), estimate that as at 30 September 2015 the Estimated Net Asset Value is not less than 127.2 pence per Existing Ordinary Share.

The Estimated Net Asset Value is an estimate of the Directors based on the Investment Adviser's advice and unaudited financial information of the Group. This estimate has been calculated using the same methodology as was used for the 30 June 2015 Net Asset Value, other than in respect of the forecast cashflows of underlying projects, which have only been updated to reflect known changes in project performance to the extent these are expected to have a significant adverse impact on the total estimated net asset value.

This Estimated Net Asset Value and the information that has been used to prepare it has not been audited or reviewed by any person outside the Amber Group other than the Directors. As such, there can be no assurance that the Net Asset Value as at 31 December 2015 will reflect the Estimated Net Asset Value which is prepared as at 30 September 2015.

INVESTMENT OBJECTIVES AND POLICY

The Company seeks to provide Shareholders with a predictable and attractive yield on the Company's investments. The Company's intention is to provide, over the long-term, distributions at levels that are both sustainable and which preserve the capital value of the Group's portfolio of infrastructure investments over the long-term (subject, where relevant, to amortisation of the Group's investments over the term of the relevant concession periods of such investments). The Company will target a minimum dividend per annum and the Company will aim to maintain and enhance the level of distributions where sustainable to do so. The Company's target dividend for 2015 is 6.45 pence per Ordinary Share which equates to a dividend yield (based on the Net Asset Value per Share as at 30 June 2015) of approximately 5.0 per cent. The Company's target dividend for 2016 is 6.65 pence per Ordinary Share which equates to a dividend yield (based on the Net Asset Value per Share as at 30 June 2015) of approximately 5.2 per cent. The Company has met its pro rata dividend target in respect of the dividend declared on 27 August 2015 for the first half of the 2015 financial year.

The Company's ability to make distributions and/or to pay dividends will be subject always to the requirements of the Law.

The Directors also believe that long-term capital growth can be achieved. The Company will target an IRR equal to or greater than 8 per cent. on the Initial Public Offer issue price of 100 pence per Ordinary Share to be achieved over the long-term and the Company hopes to achieve this through (amongst other techniques) asset development, future acquisitions, active management and prudent use of gearing. The Directors believe, based on the advice of the Investment Adviser, that there are currently opportunities to acquire Further Investments that may enhance the Company's IRR.

The Company's investment policy is to invest directly or indirectly in public or social infrastructure assets located in the UK, Australia, Europe and North America. The Investment Adviser will also consider investment in other core OECD countries, such as New Zealand, where it considers that the risk profile of a particular opportunity meets the Company's requirements.

The Group intends to continue acquiring operational and construction phase assets from Amber (or via its own asset origination activities) and/or third party vendors. The Group intends (but is not bound) to hold its investments for the long-term and may well hold its investments for the life of a project. The Group will seek to enhance the capital value of its investments and the income derived from its investments.

The target IRR and dividends noted above are targets and not profit forecasts.  There can be no guarantee that these targets will be met or that the Company will make any distributions at all.

PRINCIPAL TERMS OF THE ISSUE

The Issue comprises up to 114,285,714 New Shares to be issued at a price of 131.25 pence per New Share. The Issue comprises a Placing, an Open Offer and an Offer for Subscription. The Issue is conditional upon, inter alia:

·      The Pre-emption Resolution being passed at the Extraordinary General Meeting;

·      Admission of the New Shares becoming effective by not later than 8.00 a.m. (London time) on 18 November 2015 (or such later date (being no later than 31 December 2015) as may be provided for in accordance with the terms of the Issue Agreement); and

·      the Issue Agreement becoming otherwise unconditional in all respects and not being terminated in accordance with its terms before Admission becomes effective.

If these Issue Conditions are not met, unless they are waived the Issue will not proceed. Subject to those matters

upon which the Issue is conditional, the Directors, with the consent of Numis Securities Limited ("Numis"), may bring forward or postpone the closing date for the Placing, the Open Offer and the Offer for Subscription by up to two weeks. The Issue is not being underwritten.

The Open Offer will be made to Qualifying Shareholders at the Issue Price, on the terms and subject to the conditions of the Open Offer, on the basis of 1 New Share for every 8 Existing Ordinary Shares held on the Record Date.

The Offer for Subscription is only being made in the UK but, subject to applicable law, the Company may allot New Shares on a private placement basis to applicants in other jurisdictions.

Following the Issue, dependent on the further investment opportunities available to the Group, the Directors intend to implement the Placing Programme to enable the Company to raise additional capital in the period from 18 November 2015 to 18 October 2016. The maximum size of the Placing Programme is £300 million. Each Subsequent Placing pursuant to the Placing Programme is conditional upon, inter alia:

a)    the passing of the Pre-emption Resolution (and/or any further Shareholder authority required);

b)    the applicable Placing Programme Price being not less than the most recently published Net Asset Value per Ordinary Share plus any premium agreed by the Board and Numis to reflect, inter alia, the costs and expenses of the relevant Subsequent Placing;

c)     Admission of the New Shares issued pursuant to such Subsequent Placing; and

d)    the Issue Agreement not being terminated in accordance with its terms and the particular Subsequent Placing becoming unconditional, in each case in accordance with the terms of the Issue Agreement prior to the completion of the Subsequent Placing.

If any of these conditions are not met in respect of any Subsequent Placing under the Placing Programme, the relevant issue of New Shares will not proceed. Any subscriptions or applications under the Placing, Open Offer, Offer for Subscription or a Subsequent Placing will be subject to the full terms and conditions that are set out in the Prospectus.

The ISIN of the New Shares is GB00B188SR50 and the SEDOL is B188SR5.

EXTRAORDINARY GENERAL MEETING

As the Placing, Open Offer and Offer for Subscription are not on a pre-emptive basis, the Issue is conditional, amongst other things, on the passing of a resolution to disapply the pre-emption provisions in the Company's Articles in relation to the Issue at the Extraordinary General Meeting convened for 10 November 2015.

IMPORTANT NOTICES

This Announcement has been prepared for information purposes only.  The content of this announcement, which has been prepared by and is the sole responsibility of the Company, has been approved by Numis, which is authorised and regulated by the Financial Conduct Authority, solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended).

No representation or warranty, express or implied, is or will be made to, or in relation to, and no responsibility or liability is or will be accepted by Numis or by any of their affiliates or agents as to or in relation to, the accuracy or completeness of this Announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Numis, which is authorised and regulated by the Financial Conduct Authority, is acting for the Company in connection with the Issue and no-one else and will not be responsible to anyone other than the Company for providing the protections afforded to clients of them nor for providing advice in relation to the Issue, the contents of this Announcement or any other matter referred to herein. To the fullest extent permitted by law recipients agree that Numis shall not have any liability (direct or indirect) for or in connection with this Announcement or any matters arising out of or in connection herewith.

This announcement is not a prospectus.  Recipients of this announcement who are considering acquiring shares in the Company in connection with the Issue and the Placing Programme are reminded that any such acquisition must be made only on the basis of the information contained in the Prospectus and any supplementary prospectus(es) thereto which may be different from the information contained in this announcement.  This announcement does not constitute or form part of 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 announcement should be construed as providing financial, investment or other professional advice and each prospectus investor should consult its own legal, business, tax and other advisers in evaluating any investment opportunity.  In particular, an investment in the Company involves a high degree of risk and prospective investors should read the section in the Prospectus entitled "Risk Factors" for further information.

The use of the proposed Placing Programme and/or the potential acquisition by the Company of any of the investments referred to in this Announcement or the Prospectus is subject, among other things, to those projects reaching legal completion and to the Company having conducted satisfactory due diligence in relation to such investments. Although the Company has a right of first refusal for investments disposed of by the Amber group, any acquisitions will be subject to agreement having been reached between the Company and the relevant counterparty as to the terms of the acquisitions.  In addition, some of the investment opportunities are those where Amber or the Company is currently undergoing a bidding process.  There is no guarantee that they will be successful in any such bidding process. There is therefore no guarantee that any of the investments will be acquired and if they are on what terms.  Nor is there any guarantee that further suitable investments will be available.

Ordinary Shares to be issued pursuant to the Issue have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or under the applicable state securities laws of the United States, and accordingly, subject to certain exceptions, may not be offered or sold directly or indirectly in or into the United States, or to or for the benefit of any U.S. person (within the meaning of Regulation S under the Securities Act).  In addition, the Company has not been and will not be registered under the United States Investment Company Act of 1940, as amended.

The distribution of this Announcement and the placing, open offer and offer for subscription of Ordinary Shares in certain jurisdictions may be restricted by law.  No action has been taken by the Company or Numis that would permit an offering of any Ordinary Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such Ordinary Shares in any jurisdiction where action for that purpose is required.  Persons into whose possession this Announcement comes are required by the Company and Numis to inform themselves about, and to observe, such restrictions.

Certain statements in this Announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts.  These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.  Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements.  Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

The information contained in this Announcement is subject to change without notice and neither the Company nor Numis assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

 

END

 

 

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