Placing, Open Offer and Subcriptions

RNS Number : 8055N

SKIL Ports & Logistics Limited

31 October 2016

 

SKIL Ports & Logistics Limited

31 October 2016

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014.  UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSI DERED TO BE IN THE PUBLIC DOMAIN.

NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE PROHIBITED BY ANY APPLICABLE LAW.

SKIL Ports & Logistics Limited ("SPL" or the "Company")

£36 million raised by way of the Placing and Subscriptions

plus

Open Offer to raise up to £1.6 million

Proposed change of name to Mercantile Ports and Logistics Limited

Directorate Change

and

Notice of General Meeting

The Company has today announced a conditional placing, open offer and subscriptions to raise up to approximately £37.6 million (before expenses) by the issue and allotment by the Company of an aggregate of up to 376,000,000 New Ordinary Shares at the Offer Price of 10 pence per Ordinary Share.

Highlights

·     Placing of 300,000,000 new Ordinary Shares at 10 pence per share with new and existing investors to raise £30 million

·     Subscriptions for 60,000,000 new Ordinary Shares at 10 pence per share to raise in aggregate £6.0 million

·     Open Offer  at  10 pence per Ordinary Share with existing Shareholders of up to £1.6 million

·     Funding expected to complete construction of Multi-purpose Terminal and the Logistics Park (the "Facility") by end of Q3 2017

·     Company to change name to Mercantile Ports and Logistics Limited

Nikhil Gandhi, Executive Chairman of the Company, commented:

"I am delighted with the response that we have received from new and existing shareholders which has exceeded our expectations and enabled us to fully achieve our funding goals. I believe that the fact that our shareholders and other stakeholders have supported the fundraising shows strong validation for the project. As the economy in India continues to thrive and the demand for port and logistics capacity shows no sign of easing, we can now move towards the operational phase of the project with confidence and to delivering our facility for all our stakeholders and for the region."

An explanatory circular detailing the Transaction (the "Circular") has today been posted to Shareholders. An electronic copy of the Circular is available to view on the Company's website at http://www.skilpl.com.  

Enquiries:

SPL                                                                                                                                                        

Nikhil Gandhi                                                   

C/O Redleaf PR [phone]

Cenkos Securities plc                                    

Stephen Keys/Camilla Hume/Callum Davidson (Nomad and Broker)                                                                         

[phone]

Redleaf Communications    

Charlie Geller/Sam Modlin (Financial PR)

[phone] 

[e-mail]

Introduction

The Company has today announced a conditional placing, open offer and subscriptions to raise up to approximately £37.6 million (before expenses) by the issue and allotment by the Company of an aggregate of up to 376,000,000 new Ordinary Shares at the Offer Price of 10 pence per Ordinary Share (assuming that the Placing is fully subscribed).

The Placing will raise £30 million (before expenses) by the issue and allotment by the Company of 300,000,000 new Ordinary Shares at the Offer Price (assuming that the Placing is fully subscribed).

In addition, in order to provide Shareholders who have not taken part in the Placing with an opportunity to participate in the proposed issue of new Ordinary Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe at the Offer Price for an aggregate of 16,000,000 Offer Shares, to raise up to £1.6 million (before expenses), on the basis of 4 new Ordinary Shares for every 11 Existing Ordinary Shares, at 10 pence each, payable in full on acceptance.

Furthermore, Nikhil Gandhi and ITD have agreed to subscribe for, and the Company has agreed to issue, in aggregate 60,000,000 new Ordinary Shares at the Offer Price on or following Admission, representing subscription proceeds of £6.0 million in aggregate, on such terms as are further described in the Circular.

The receipt of the Transaction proceeds is conditional, inter alia, upon Shareholders approving  Resolutions 1 and 2 at the General Meeting that will grant to the Directors the authority to allot the New Ordinary Shares and the power to disapply pre-emption rights set out in the articles of incorporation of the Company in respect of the New Ordinary Shares, and Admission. The Resolutions are contained in the Notice of General Meeting at the end of the Circular.  Admission is expected to occur no later than 8.00 a.m. on 25 November 2016 or such later time and/or date as Cenkos Securities and the Company may agree (not being later than 8:30 a.m. on 16 December 2016). The Transaction is not underwritten.

The Open Offer provides Qualifying Shareholders with an opportunity to participate in the proposed issue of the New Ordinary Shares on a pre-emptive basis whilst providing the Company with additional capital to invest in the business of the Group. The Offer Price is at a discount of approximately 4.8 per cent. to the closing middle market price of 10.5 pence per Existing Ordinary Share on 28 October 2016 (being the last practicable date before publication of this announcement).

Background on the Company

The Company is a Guernsey registered holding company quoted on the AIM market of the London Stock Exchange.  The Group's main activity, to date, has been the preparation for, and construction of, the Multi-purpose Terminal and the Logistics Park (together, the "Facility") located at Karanja Creek, a high growth industrial zone near Navi Mumbai.  The construction of the Facility was delayed due to a number of factors but work on site has continued without material interruption since October 2015 and, subject to securing the Funding, the Directors expect the Facility to be fully operational by end of the third quarter of 2017.

The Facility at a glance

Once completed, the Project Land which will comprise approximately 200 acres of reclaimed land with 1,000 metres of sea frontage and the Facility is expected to have the following specifications:

·     a port with an annual capacity of approximately 8 million tonnes per annum;

·     six berths serviced by cranes capable of handling bulk, container and general cargo;

·     a waterway which is capable of accommodating 4,000 DWT vessels with a draft of up  to 4.5 metres; and

·     warehousing facilities for break bulk, non-containerised, cargo.

The Project Land was chosen for its strategic location close to Mumbai, the commercial capital of India, situated eight miles from Jawaharlal Nehru Port ("JNPT"), Mumbai's largest, and heavily congested, container port.  The Facility will be well positioned for access to other key commercial infrastructures along the west coast of India including: (i) Mumbai port; (ii) Navi Mumbai International airport; (iii) access to India's national road network; (iv) the proposed Mumbai Trans-Harbour Link; and (v) the proposed Dedicated Rail Freight Corridor.  The Directors expect that the location of the Facility will prove to be attractive to end users, particularly those involved in the transport of cargo to supply the large infrastructure projects planned for the west coast of India together with those involved in the transport of cars on the basis that Facility and its ultimate end users will have access to Mumbai and the rest of India. 

Current status and timetable to completion

To date, the Company has achieved the following milestones in relation to the development of the Facility:

·     obtained all environmental and planning consents, approvals and authorisations;
 

·     completed all material investigations, surveys and studies;
 

·     designed the civil structures comprising the Facility;
 

·     completed piling for 100 metres of quay;
 

·     completed approximately 60 per cent. of the overall dredging requirement;
 

·     reclaimed approximately 75 acres of land; and
 

·     commenced commercial discussions with potential end users of the Facility.

Whilst the Directors expect that the Facility will be capable of receiving vessels by the end of this year, the Directors are not forecasting revenues from operations until the end of the third quarter of 2017 when, subject to securing the Funding, the Facility is expected to be fully operational.  Further details of the Funding are referred to below. 

Subject to the Company being able to secure the Funding by the end of the first quarter of 2017, the Company is working to the following timetable in order to achieve full operational completion of the Facility by the end of the third quarter of 2017:

By the end of January 2017 the Company expects to have:

·     completed the dredging requirement;
 

·     reclaimed 70 per cent. of the land; and

·     constructed two berths, one of which will be capable of receiving vessels.

By the end of the first quarter of 2017 the Company expects to have:

·     reclaimed 90 per cent. of the land;
 

·     constructed four berths, three of which will be capable of receiving vessels; and
 

·     entered into commercial agreements with end users.

By the end of the second quarter of 2017 the Company expects to have:

·     completed the balance of reclamation work;
 

·     carried out further ground improvement works;
 

·     constructed the remaining berths, four of which will be capable of receiving vessels; and
 

·     completed the sourcing of all necessary equipment.

Background to and reasons for the Transaction

The Company has made significant progress in the development and construction of the Facility, which was forecast at the time of the Company's IPO to cost Rs. 7.7 billion (£108.5 million).  However, as referred to in the Company's announcement of its 2015 preliminary results on 16 June 2016, discussions with the EPC Contractor were taking place at that time with a view to completing the Facility with the resources available to the Company and, in the context of the delays that had taken place, it was the Directors' view that the discussions with the Company's EPC Contractor were likely to conclude that additional funds would be required to complete the Facility to the desired specification.  Discussions have since continued, during which time it has also become apparent that the land that has been reclaimed has settled more than expected.  As a result, an additional quantity of infill material will be required which was not originally budgeted for and this issue has been further exacerbated by price inflation of quarried infill material since the development of the Facility commenced.

Taking these items together, and considering the working capital requirements of the Company until the Facility is fully operational, in the Company's announcement of its interim results on 22 September 2016, the Directors estimated that the Company had a funding requirement of £36 million. This was based on the total project cost and working capital requirement being £146 million and having spent approximately £61 million with cash in hand of approximately £24.6 million and £24.1 million available for drawdown under the Debt Facility as at 31 August 2016.

Since that time, whilst there has been a decline in the value of Sterling against the Indian Rupee, the impact of this has been offset through a combination of the negotiation of costs and other actions taken by the Company, such that the funding requirement remains at £36 million.

As described further in this announcement, the Relationship Agreement will terminate upon Admission and the Company will no longer have the right to use the word 'SKIL' in its registered name and/or brand name. Accordingly, the Directors also propose to rename the Company, Mercantile Ports and Logistics Limited.  If the relevant Resolution is passed, this change of name will take effect shortly after Admission.

Market and macro-dynamics

The proximity of the Facility to JNPT is a key factor that the Directors believe will contribute to the Company's success.  JNPT is classed as a Major Port and is the primary gateway for container shipments in India, accounting for approximately 55 per cent. of all such shipments.  Demand continues to outstrip its capacity, with congestion currently a significant problem at JNPT, despite JNPT's stated aim to become one of the top 10 ports in the world by 2020 with a capacity goal of over 10 million TEU.

The Directors expect that the continued expansion of JNPT will represent significant opportunities for the Company. In particular, the Directors believe that the Company will benefit from the Facility being able to offer:

·     mid-stream discharge and loading of cargo at anchorage whilst vessels wait to berth at JNPT;

·     coastal movement of cargos such as containers, cement and other break-up cargos, servicing end users along the industrialised west coast of India; and

·     an integrated container freight solution at the Logistics Park, easing congestion issues in the road network around Mumbai and JNPT.

The congestion in India's ports is being experienced at the same time as the Indian economy is forecast to be the seventh largest economy in the world by the end of 2016, with growth in GDP of 7.6 per cent. expected in 2017.  The Directors believe that the success of the Group will be enhanced by the continued growth in the Indian economy, especially given India's historic reliance on its ports for its import and export trade ("EXIM").  India's location, surrounded by a coastline of over 7,500 kilometers and with over 14,500 kilometers of navigable inland waterways, means that its ports and logistics industries have been relied upon historically to help facilitate the wider growth of the Indian economy, with India's maritime logistics accounting for 90 per cent. of total EXIM trade by volume and 72 per cent. by value.  Such EXIM trade is forecast to grow at 5 to 10 per cent. CAGR over the next decade and the Directors believe that once the Facility is fully operational it will be well positioned to benefit from this growth.

Whilst maritime logistics are an important part of the Indian economy, handling more than 1 billion tonnes of cargo in 2015, such water transport only accounts for 7 per cent. of the total freight movement in India in tonne per kilometre terms despite water transport representing significantly lower costs than rail or road freight.  This figure compares to 20 per cent. in China.

India's maritime logistics sector is under-utilised when compared to its road and railway logistics sectors, yet India's Major Ports continue to be heavily congested.  This results in inefficiencies, such as an average turnaround time (being the time in which a vessel can be loaded or discharged of cargo) of 4.5 days compared to only 1 day and 1.2 days in China and the United States respectively, which the Indian government fears could hamper India's potential for wider economic growth.

Port-led development and efficiencies have, therefore, become a national focus of the Indian government. The Sagarmala initiative was approved by the Indian Government's Ministry of Shipping with the stated aim of "accelerating economic development in the country by harnessing the potential of India's coastline and river network".  The Directors believe that this further validates the Group's investment in the Facility to date and represents opportunities once the Facility is fully operational.

The Indian government aims to increase cargo at Indian ports to 2.5 billion tonnes by 2025, from 1.1 billion tonnes in 2015, necessitating increases in capacity and efficiencies at existing ports and the construction of new ports, such as the Facility to alleviate congestion.  Given that the cost per tonne of using waterway routes in India is 60 to 80 per cent. less than using road or rail, the Directors believe that the government's push towards maximising maritime freight logistics will further enhance the Facility's attractiveness to potential customers, with the added benefit that a multi-modal mix of freight transport is predicted to lead to carbon emissions savings of 3.5 per cent. of India's total freight sector emissions.

The Directors continue to believe that the Facility will have limited direct competition from surrounding Minor Ports due to the Facility's close proximity to Mumbai Port and JNPT.

Outlook

As at 30 September 2016, on the basis of an exchange rate of Rs. 86.6 : £1.00, the Company's cash position was £22.8 million and it had £24.0 million headroom in its Debt Facility. As such, the Directors believe that the Company has sufficient resources to finance the continued construction of the Facility, without delay, through to the end of the first quarter of 2017 and, following receipt of the Transaction proceeds, to complete the Facility by the end of the third quarter of 2017.

Alongside the Company's plan to continue the construction of the Facility to operational completion, there will also be a focus on marketing the Facility to potential customers.  The Directors intend, in particular, to focus on potential customers, including a consortium of shipping lines, exporters and importers of containers and break-bulk cargos in the region and coastal cargo given the Indian Government's stated aim to decongest the freight rail and road corridors along the west coast of India by stimulating growth in India's maritime logistics sector.

The Placing and Open Offer

Details of the Placing

The Company has conditionally raised £30.0 million before expenses by the conditional placing of 300,000,000 Placing Shares at the Offer Price to the Placees (assuming that the Placing is fully subscribed).

The Placing is conditional, inter alia, upon:

(a)          the passing of Resolutions 1 and 2 at the General Meeting;

(b)          the Placing Agreement becoming or being declared unconditional in all respects and not having been terminated in accordance with its terms prior to Admission; and

(c)           Admission becoming effective by no later than 8.00 a.m. on 25 November 2016 or such later time and/or date (being no later than 8.30 a.m. on 16 December 2016) as Cenkos Securities and the Company may agree.

If any of the conditions are not satisfied, the Placing Shares will not be issued and all monies received from the Placees will be returned to the Placees (at the Placees' risk and without interest) as soon as possible thereafter.

The Placing Shares are not subject to clawback. The Placing is not being underwritten.

The Placing Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the admission of the New Ordinary Shares (excluding the NG Subscription Shares) to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 25 November 2016 at which time it is also expected that the Placing Shares will be enabled for settlement in CREST.

Details of the Open Offer

The Company is proposing to raise up to £1.6 million before expenses. A total of 16,000,000 New Ordinary Shares are available to Qualifying Shareholders pursuant to the Open Offer at the Offer Price, payable in full on acceptance. Any Offer Shares not subscribed for by Qualifying Shareholders will be available to Qualifying Shareholders under the Excess Application Facility. The balance of any Offer Shares not subscribed for under the Excess Application Facility will not be available to Placees under the Placing.

Qualifying Shareholders may apply for Offer Shares under the Open Offer at the Offer Price on the following basis:

4 Offer Shares for every 11 Existing Ordinary Shares

and so in proportion for any number of Existing Ordinary Shares held by Qualifying Shareholders on the Record Date. Entitlements of Qualifying Shareholders will be rounded down to the nearest whole number of Offer Shares. Fractional entitlements which would otherwise arise will not be issued to the Qualifying Shareholders but will be aggregated and made available under the Excess Application Facility. The Excess Application Facility enables Qualifying Shareholders to apply for Excess Shares in excess of their Open Offer Entitlement. Not all Shareholders will be Qualifying Shareholders. Shareholders who are located in, or are citizens of, or have a registered office in Restricted Jurisdictions will not qualify to participate in the Open Offer. The attention of Overseas Shareholders is drawn to paragraph 7 of Part 3 of the Circular.

Valid applications by Qualifying Shareholders will be satisfied in full up to their Open Offer Entitlements as shown on the Application Form or credited to their CREST account(s). Applicants can apply for less or more than their entitlements under the Open Offer but the Company cannot guarantee that any application for Excess Shares under the Excess Application Facility will be satisfied as this will depend in part on the extent to which other Qualifying Shareholders apply for less than or more than their own Open Offer Entitlements. The Company may satisfy valid applications for Excess Shares of applicants in whole or in part but reserves the right not to satisfy any excess above any Open Offer Entitlement. The Board may scale back applications made in excess of Open Offer Entitlements on such basis as it reasonably considers to be appropriate.

Application has been made for the Open Offer Entitlements to be admitted to CREST. It is expected that such Offer Shares will be credited to CREST on 1 November 2016. The Open Offer Entitlements will be enabled for settlement in CREST until 11.00 a.m. on 23 November 2016. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of bona fide market claims. The Offer Shares must be paid in full on application. The latest time and date for receipt of completed Application Forms or CREST applications and payment in respect of the Open Offer is 11.00 a.m. on 23 November 2016. The Open Offer is not being made to certain Overseas Shareholders, as set out in paragraph 7 of Part 3 of the Circular.

Qualifying Shareholders should note that the Open Offer is not a rights issue and therefore any Offer Shares which are not applied for by Qualifying Shareholders will not be sold in the market for the benefit of the Qualifying Shareholders who do not apply under the Open Offer. The Application Form is not a document of title and cannot be traded or otherwise transferred.

Further details of the Open Offer and the terms and conditions on which it is being made, including the procedure for application and payment for Offer Shares, are contained in Part 3 of the Circular and, in the case of Qualifying Non-CREST Shareholders, on the accompanying Application Form.

The Open Offer is conditional on the Placing becoming or being declared unconditional in all respects and not being terminated before Admission (as the case may be). If the Placing does not proceed, the Offer Shares will not be issued and all monies received by the Receiving Agents from applicants will be returned to such applicants (at the applicants' risk and without interest) as soon as possible, but within 14 days thereafter. Any Open Offer Entitlements admitted to CREST will thereafter be disabled.

The Offer Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Application will be made to the London Stock Exchange for the admission of the Offer Shares to trading on AIM. It is expected that Admission will occur and that dealings will commence at 8.00 a.m. on 25 November 2016 at which time it is also expected that the Offer Shares will be enabled for settlement in CREST.

Use of net proceeds

The net proceeds of the Placing and the Subscriptions are expected to be approximately £34.3 million and it is proposed that such proceeds shall be used as follows:

·     to fund the continued construction and build-out of the Facility; and

·     for general working capital purposes.

Proceeds received via the Open Offer will be used for the same purposes as above.

Placing Agreement

Pursuant to the Placing Agreement, Cenkos Securities has agreed to use its reasonable endeavours as agent of the Company to procure subscribers for the Placing Shares at the Offer Price.

The Placing Agreement provides, inter alia, for payment by the Company to Cenkos Securities of commission based on the number of Placing Shares placed by Cenkos Securities multiplied by the Offer Price.  The commission payable to Cenkos Securities shall be satisfied, in part, via the issue of the Cenkos Fee Shares to Cenkos Securities (or any affiliate thereof).  In addition, 500,000 new Ordinary Shares shall be issued to the Company's other advisers in satisfaction, in part, of the fees payable by the Company in connection with the Transaction.

The Company will bear all other expenses of, and incidental to, the Placing, Open Offer and Subscriptions, including the fees of the London Stock Exchange, printing costs, Registrars' and Receiving Agent's fees, all legal and accounting fees of the Company and any stamp duty and other taxes and duties payable.

The Placing Agreement contains certain warranties and indemnities from the Company in favour of Cenkos Securities and is conditional, inter alia, upon:

(a)          the passing of the Resolutions at the General Meeting;

(b)          the Placing Agreement having become unconditional in all respects (save for the condition relating to Admission) and not having been terminated in accordance with its terms prior to Admission; and

(c)           Admission becoming effective not later than 8.00 a.m. on 25 November 2016 or such later time and/or date as the Company and Cenkos Securities may agree, being not later than 16 December 2016.

Cenkos Securities may terminate the Placing Agreement if, inter alia: the Company is in material breach of any of its obligations under the Placing Agreement; or there has occurred, in the opinion of Cenkos Securities, acting in good faith, a material adverse change in the business of the Group or in the financial or trading position or prospects of the Group.

The Arden Engagement Letter

Pursuant to the terms of the Arden Engagement Letter, Arden Partners agreed to, amongst other things, introduce the Company to potential Placees.

The Arden Engagement Letter provides, inter alia, for payment by the Company to Arden Partners of a commission fee of £177,916.60 on the completion of the Transaction, which shall be satisfied through  the issue of the Arden Fee Shares to Arden Partners (or any affiliate thereof).

The Subscriptions

NG Subscription Agreement

On 31 October 2016 the Company entered into the NG Subscription Agreement with, amongst others, Nikhil Gandhi and SKIL Global pursuant to which, subject to the Resolutions being duly passed, Nikhil Gandhi has agreed to subscribe (whether in his personal capacity or via SKIL Global and/or an affiliate) for the NG Subscription Shares at the Offer Price equal to an aggregate subscription amount of £3.0 million. Mr. Gandhi has agreed to complete the subscription for the NG Subscription Shares by 15 January 2017 and, as such, the Company will utilise the £3.0 million received by Mr. Gandhi to fund the continued construction of the Facility in accordance with the planned timetable.

In the event that Nikhil Gandhi does not complete the subscription for the NG Subscription Shares by 15 January 2017, and in addition to the Company's right to claim for contractual damages, Nikhil Gandhi and SKIL Global have granted a power of attorney in favour of the Company to sell any of the Existing Ordinary Shares currently held by SKIL Global. In such circumstances, the Company shall be entitled to receive the proceeds of any such sale of Existing Ordinary Shares in order to discharge Nikhil Gandhi's non-performance of his obligations under the NG Subscription Agreement. Any sale proceeds received by the Company in excess of £3.0 million (minus all costs, commissions and expenses) shall be paid to Nikhil Gandhi by the Company.

Furthermore, the NG Subscription Agreement provides that:

•the Existing Ordinary Shares held by SKIL Global; and

•the shares in SKIL Global held by Nikhil Gandhi;

 in each case, are subject to lock-ins on terms that any interest in any such shares shall only be disposed of with the Company's consent until the earlier of (i) completion of the Subscription by 15 January 2017; or (ii) the Company selling any of the Existing Ordinary Shares currently held by SKIL Global in satisfaction of the liabilities owed to the Company.

Contractor Subscription Agreement

On 31 October 2016, the Company entered into the Contractor Subscription Agreement with ITD pursuant to which, subject to the Resolutions being duly passed, the Company has agreed to issue the Contractor Subscription Shares at the Offer Price, in part payment of amounts to be paid under the EPC Contract. Accordingly, the Company's total cash funding requirement in relation to the construction of the Facility will be reduced by £3.0 million.

Following the passing of the Resolutions, the relevant New Ordinary Shares are to be issued, conditional upon Admission, to ITD or to such affiliates or third party sub-contractors as it may nominate. ITD has agreed to a lock-in of such shares on terms that any interest in any such shares shall only be disposed of with the Company's consent on or before the Facility becoming fully operational. However, ITD may dispose of shares to its affiliates or third party sub-contractors if such persons agree to the same lock-in terms or if required by law or court order.

Effect of Transaction

Upon Admission, the New Ordinary Shares (excluding the NG Subscription Shares) will represent approximately 88.7 per cent. of the Enlarged Share Capital (assuming full take up under the Placing and the Open Offer and that all of the Contractor Subscription Shares are issued).

Certain of the Directors have indicated that they intend to participate in the Transaction, further details of which are set out in the table below.

Directors' Shareholdings pre and post the Placing, Open Offer and issue of the Contractor Subscription Shares

Director	Number of Existing Ordinary Shares held on 28 October 2016*	Percentage of Existing Ordinary Shares held on 28 October 2016*	Number of New Ordinary Shares subscribed for in the Placing	Resulting number of Ordinary Shares held immediately following Admission	Resulting holding as a percentage of the Enlarged Share Capital**
Nikhil Gandhi(1)	12,720,000	28.91	nil	12,720,000	3.26%
Pavandeep Bakhshi	880,000	2.00	500,000	1,380,000	0.35%
Peter Jones	8,000	0.02	200,000	208,000	0.05%
Lord Flight	nil	nil	1,000,000	1,000,000	0.26%

(1) Nikhil Gandhi's interests are all held indirectly through SKIL Global Ports & Logistics Limited, which is ultimately beneficially owned by Nikhil Gandhi. The table above does not include reference to the NG Subscription Shares which it is anticipated will not be issued until shortly before 15 January 2017.

Following the  issue of the NG Subscription Shares (and assuming the Placing and Open Offer are fully subscribed and that no other Ordinary Shares are issued in the interim) Nikhil Gandhi's aggregate interest in Ordinary Shares will be 42,720,000 representing 10.17 per cent. of the then issued share capital of the Company.

*being the last practicable date prior to publication of this announcement

**assuming that the Placing and the Open Offer are fully subscribed and that the Contractor Subscription Shares are issued.

Relationship Agreement

The Relationship Agreement will terminate upon Admission on the basis that Nikhil Gandhi's interest in the Company, held indirectly via SKIL Global, will fall below 15 per cent. of the voting rights of the Enlarged Share Capital. Upon the expiry of a 12 month period following the termination of the Relationship Agreement, Nikhil Gandhi and SKIL Global will no longer be prohibited from competing with the business of the Group nor will the Group have a right to participate in future projects or opportunities of SKIL Infrastructure Limited. However, assuming completion of the subscription in accordance with the terms of the NG Subscription Agreement, the Relationship Agreement will be amended and revived and thereafter Nikhil Gandhi's rights and obligations under the Relationship Agreement (including the right to nominate a director to the Board and certain non-compete restrictions) will continue for so long as the personal guarantee granted by Nikhil Gandhi in relation to the Debt Facility remains in full force and effect.

Furthermore, the Relationship Agreement provides that upon its termination, SKIL Global can require that the Company changes its name so that it does not include the word 'SKIL' and, as such, the Company is proposing to change its name to Mercantile Ports and Logistics Limited. Subject to the passing of the relevant Resolution, the change of name of the Company will take effect shortly after Admission.

Board change

Jigar Shah was appointed interim finance director at the time of the Company's admission on the AIM market of the London Stock Exchange on 7 October 2010. Since that time the Company's finance function has been enhanced and Mr Shah's role has diminished. Andrew Henderson was appointed as Head of Finance, a non-board role, on 12 September 2016. Mr Shah currently has no day to day involvement in the Company and has resigned with immediate effect.

 Related Party Transaction

Legal & General Investment Management ("L&G") is a substantial Shareholder in the Company, holding in aggregate 8,100,000 Ordinary Shares of the Company representing approximately 18.41 per cent. of the voting rights and, consequently L&G is considered to be a related party of the Company pursuant to Rule 13 of the AIM Rules for Companies.  L&G is subscribing for 62,500,000 Placing Shares under the Placing.  This subscription by L&G also constitutes a related party transaction for the purposes of the AIM Rules for Companies. The Directors consider, having consulted with Cenkos Securities, that the participation in the Placing by L&G is fair and reasonable insofar as the Shareholders are concerned.  Assuming that the Placing and the Open Offer are fully subscribed and that the Contractor Subscription Shares are issued, L&G's holding in the Company will be 18.1 per cent of the Enlarged Share Capital           

Nikhil Gandhi is a substantial Shareholder in the Company, holding, via SKIL Global, in aggregate

12,720,000 Ordinary Shares of the Company representing approximately 28.91 per cent. of the voting rights and, consequently Mr. Gandhi is considered to be a related party of the Company pursuant to Rule 13 of the AIM Rules for Companies. Mr. Gandhi has agreed to subscribe for the NG Subscription Shares under the NG Subscription Agreement. This subscription also constitutes a related party transaction for the purposes of the AIM Rules. The Directors (other than Mr. Gandhi) consider, having consulted with Cenkos Securities, that the participation in the Subscription by Mr. Gandhi is fair and reasonable insofar as the Shareholders are concerned. Assuming that the Placing and the Open Offer are fully subscribed and that the Subscription Shares are issued, Mr. Gandhi's holding in the Company will be approximately 10.17 per cent. of the then enlarged share capital.

General Meeting

The Directors do not currently have authority to allot all of the New Ordinary Shares and, accordingly, the Board is seeking the approval of Shareholders at the General Meeting to allot the New Ordinary Shares.

A notice convening the General Meeting, which is to be held at the offices of the Company Secretary, Elian Fiduciary Services (Guernsey) Limited, at Redwood House, St. Julian's Avenue, St. Peter Port, Guernsey, GY1 1WA at 10.00 a.m. on 24 November 2016, is set out at the end of the Circular.   At the General Meeting, the Resolutions will be proposed to authorise the Directors to allot relevant securities equal to 376,000,000 New Ordinary Shares and to authorise the Directors to issue and allot 376,000,000 New Ordinary Shares pursuant to the Placing, the Open Offer and the Subscriptions (and in order to satisfy its payment obligations to Cenkos Securities under the Placing Agreement and Arden Partners under the Arden Engagement Letter) on a non-pre-emptive basis.

The authorities to be granted pursuant to the Resolutions shall expire on whichever is the earlier of the conclusion of the Annual General Meeting of the Company to be held in 2017 or the date falling six months from the date of the passing of the Resolutions (unless renewed, varied or revoked by the Company prior to or on that date) and shall be in addition to the Directors' authorities to allot relevant securities and dis-apply statutory pre-emption rights granted at the Company's Annual General Meeting held on 28 July 2016.

Furthermore, the Board is also seeking the approval of Shareholders at the General Meeting to change the registered name of the Company to 'Mercantile Ports and Logistics Limited'.  Subject to the passing of the relevant Resolution, this change of name will take effect shortly after Admission.

Recommendation

The Directors believe that the Transaction and the passing of the Resolutions are in the best interests of the Company and Shareholders, taken as a whole. Accordingly the Directors unanimously recommend that Shareholders vote in favour of the Resolutions, as they intend to do in respect of their own holdings of Ordinary Shares, totalling 13,616,000 Ordinary Shares, being approximately 30.95 per cent. of the Existing Ordinary Shares.

The Transaction is conditional, inter alia, upon the passing of the Resolutions at the General Meeting. Shareholders should be aware that if the Resolutions are not approved at the General Meeting, the Transaction will not proceed.

Expected Timetable of Principal Events

Record Date for the Open Offer	5.00 p.m. on 27 October  2016
Announcement of the Placing and Open Offer, publication and posting of  the Circular, the Application Form and Form of Proxy	31 October 2016
Ex-entitlement Date	8.00 a.m. on 1 November 2016
Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders	8.00 a.m on 12016
Latest time and date for receipt of completed Forms of Proxy to be valid at the General Meeting	10.00 a.m. on 22 November]2016
Recommended latest time and date for requesting withdrawal of Open Offer Entitlements from CREST	4.30 p.m. on 17 November 2016
Latest time and date for Depositing Open Offer Entitlements in CREST	3.00 p.m. on 18 November 2016
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 21 November 2016
Latest time and date for acceptance of the Open Offer and receipt of completed Application Forms and payment in full under the Open Offer or settlement of relevant CREST instructions (if appropriate)	11.00 a.m. on 23 November 2016
General Meeting	10.00 a.m. on 24 November 2016
Announcement of result of General Meeting and Open Offer	24 November 2016
Admission and commencement of dealings in the New Ordinary Shares on AIM	8.00 a.m. on 25 November 2016
New Ordinary Shares credited to CREST members' accounts	25 November 2016
Despatch of definitive share certificates in certificated form	within 10 business days of Admission

Definitions

"Admission"	the admission of the New Ordinary Shares (excluding the NG Subscription Shares) to trading on AIM in accordance with the AIM Rules for Companies
"AIM"	the AIM market operated by the London Stock Exchange
"AIM Rules for Companies"	the AIM Rules for Companies and guidance notes as published by the London Stock Exchange from time to time
"Application Form"	the non-CREST Application Form
"Arden Fee Shares"	the 1,779,166 new Ordinary Shares to be issued to Arden Partners in satisfaction, in part, of the commission and fees payable to them by the Company under the Arden Engagement Letter
"Arden Engagement Letter"	the letter of engagement between the Company and Arden Partners dated 15 September 2016 (as varied via a side letter dated on or around the date of the Circular)
"Arden Partners"	Arden Partners plc (Company No. 04427253) a company incorporated and registered in England and Wales whose registered office is located at Arden House, 17 Highfield Road, Edgbaston, Birmingham, B15 3DU
"Board" or "Directors"	the directors of the Company as at the date of this announcement
"BOOT"	build, own, operate and transfer
"Business Day"	a day other than a Saturday, Sunday or public holiday in England when banks in London are open for business
"CAGR"	compounded annual growth rate
"Capita Asset Services"	a trading name of Capita Registrars Limited
"Cenkos Securities"	Cenkos Securities plc
"Cenkos Fee Shares"	up to 3,546,284 new Ordinary Shares to be issued to Cenkos Securities in satisfaction, in part, of the commission payable to them by the Company under the Placing Agreement
"Code"	the City Code on Takeovers and Mergers
"Companies Law"	the Companies (Guernsey) Law 2008 as amended (as may be further amended from time to time)
"Company"	SKIL Ports & Logistics Limited
"Contractor Subscription Agreement"	the agreement entered into between the Company, KTLPL and ITD in relation to the subscription of 30,000,000 new Ordinary Shares at the Offer Price dated 31 October 2016, as described in this document
"Contractor Subscription Shares"	the 30,000,000 new Ordinary Shares to be issued by the Company under the terms of the Contractor Subscription Agreement
"CREST"	the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the operator (as defined in the CREST Regulations)
"CREST member"	a person who has been admitted to CREST as a system-member (as defined in the CREST Manual)
"CREST member account ID"	the identification code or number attached to a member account in CREST
"CREST participant"	a person who is, in relation to CREST, a system-participant (as defined in the CREST Regulations)
"CREST participant ID"	shall have the meaning given in the CREST Manual issued by Euroclear
"CREST payment"	shall have the meaning given in the CREST Manual issued by Euroclear
"CREST Regulations"	the Uncertificated Securities Regulations 2001 (SI 2001/3755) (as amended)
"CREST sponsor"	a CREST participant admitted to CREST as a CREST sponsor
"CREST sponsored member"	a CREST member admitted to CREST as a sponsored member
"Debt Facility"	the 10 year term loan of INR 480 crore (£52.99 million) entered into on 28 February 2014 between KTLPL and a syndicate of four Indian public sector banks
"Deed of Lease"	the 30 year lease entered into between Karanja Infrastructure Private Limited ("KIPL") and MMB on 31 August 2009 with an effective date of 7 August 2009 in respect of the Project Land with a concession to develop on a BOOT basis: (i) the Facility; and (ii) a ship repair facility (as novated to KTLPL via a deed of confirmation entered into between KIPL, KTLPL and MMB on 28 September 2010)
"Dedicated Rail Freight Corridor"	the freight corridor under construction to connect Delhi, the national capital of India, and Mumbai, the commercial capital of India
"DWT"	deadweight tonnage
"EPC Contract"	the construction contract made between KTLPL and ITD dated 11 June 2013
"Enlarged Share Capital"	the entire issued share capital of the Company on Admission, assuming that the Placing and Open Offer are each fully subscribed and that all of the Contractor Subscription Shares are issued
"EU"	the European Union
"Euro" or "€"	euros, the legal currency of the members of the European Union who have entered into an Economic and Monetary Union
"Euroclear"	Euroclear UK & Ireland Limited
"Excess Application Facility"	the arrangement pursuant to which Qualifying Shareholders may apply for additional Offer Shares in excess of their Open Offer Entitlement in accordance with the terms and conditions of the Open Offer
"Excess CREST Open Offer Entitlement"	in respect of each Qualifying CREST Shareholder, his entitlement (in addition to his Open Offer Entitlement) to apply for Offer Shares in accordance with the Excess Application Facility, which is conditional on him taking up his Open Offer Entitlement in full
"Excess Shares"	Offer Shares applied for by Qualifying Shareholders in accordance with the Excess Application Facility
"Ex-entitlement Date"	the date on which the Existing Ordinary Shares are marked "ex" for entitlement under the Open Offer, being 1 November 2016
"Existing Ordinary Shares"	the 44,000,000 Ordinary Shares in issue on the date of this document
"Facility"	the completed Logistics Park and Multi-purpose Terminal
"FCA"	the Financial Conduct Authority of the UK
"Fee Shares"	the Arden Fee Shares, the Cenkos Fee Shares and the 500,000 new Ordinary Shares to be issued to certain of the Company's other advisers as part payment of fees with respect to the Transaction
"Form of Proxy"	the form of proxy for use in relation to the General Meeting enclosed with the Circular
"FSMA"	Financial Services and Markets Act 2000 (as amended)
"Funding"	the £36 million, estimated by the Directors, required to fund the completion of the Facility which will be satisfied by the net proceeds of the Transaction
"GDP"	gross domestic product
"General Meeting"	the General Meeting of the Company, convened for 10.00 a.m. on 24 November 2016 or at any adjournment thereof, notice of which is set out at the end of this document
"Group"	the Company and its subsidiaries
"India"	The Republic of India
"ITD" or "EPC Contractor"	ITD Cementation India Limited, (CIN L61000MH1978PLC020435), a company incorporated and registered in India whose registered office is at National Plastic Building, A-Subhash Road, Paranjape B Scheme, Vile Parle (East) Mumbai, MH400057, India
"KTLCL"	Karanja Terminal & Logistics (Cyprus) Ltd (Company No. 272677), a company incorporated in Cyprus under the Companies Law, Cap 113 of Cyprus on 31 August 2010, whose registered office is at Vyzantiou, 30, Vyzantio Building, Floor 2, Flat 22 Strovolos 2064, Lefkosia, Cyprus
"KTLPL"	Karanja Terminal & Logistics Private Limited (CIN U63090MH2010PTC203226), a company incorporated and registered in India under the Companies Act, 1956 of India on 14 May 2010, whose registered office is at 13/14, Khetan, Bhavan, 3rd Floor, 198 Jamshedji Tata Road, Churchgate, Mumbai-40020, India
"Logistics Park"	the logistics park being developed by the Group on the Project Land
"London Stock Exchange"	London Stock Exchange plc
"Major Port"	each of the 13 ports located in India designated as 'Major Ports' by India's Ministry of Shipping
"Minor Port"	any port located in India which is not a Major Port
"MMB"	Maharashtra Maritime Board
"Money Laundering Regulations"	the Money Laundering Regulations 2007, the money laundering provisions of the Criminal Justice Act 1993 and the Proceeds of Crime Act 2002
"Mumbai Trans-Harbour Link"	the proposed 22 kilometre freeway grade road bridge connecting Mumbai with Navi Mumbai, its satellite city
"Multi-purpose Terminal"	the multi-purpose port terminal being developed by the Group on the Project Land
"New Ordinary Shares"	the Placing Shares, the Offer Shares, and the Subscription Shares
"NG Subscription Agreement"	the agreement entered into between the Company, Nikhil Gandhi, SKIL Global and SKIL Infrastructure Limited dated 31 October 2016 in relation to the subscription of 30,000,000 new Ordinary Shares at the Offer Price and the amendment to the Relationship Agreement, as described in this document
"NG Subscription Shares"	the 30,000,000 new Ordinary Shares to be issued by the Company under the terms of the NG Subscription Agreement
"Notice of General Meeting"	the notice convening the General Meeting as set out at the end of this document
"Offer Price"	10 pence per New Ordinary Share
"Offer Shares"	up to 16,000,000 Ordinary Shares being made available to Qualifying Shareholders pursuant to the Open Offer
"Open Offer"	the conditional invitation made to Qualifying Shareholders to apply to subscribe for the Offer Shares at the Offer Price on the terms and subject to the conditions set out in Part 3 of this document and, where relevant, in the Application Form
"Open Offer Entitlement"	the entitlement of Qualifying Shareholders to subscribe for Offer Shares allocated to Qualifying Shareholders on the Record Date pursuant to the Open Offer
"Ordinary Shares"	ordinary shares of nil par value each in the capital of the Company
"Overseas Shareholders"	a Shareholder with a registered address outside the United Kingdom or who is a citizen of, or incorporated, registered or otherwise resident in, a country outside the United Kingdom
"Placees"	subscribers for Placing Shares
"Placing"	the placing by the Company of the Placing Shares with certain institutional and other investors pursuant to the Placing Agreement
"Placing Agreement"	the agreement entered into between the Company and Cenkos Securities in respect of the Placing dated 31 October 2016, as described in the Circular
"Placing Shares"	300,000,000 new Ordinary Shares the subject of the Placing, which includes the Fee Shares
"Project Land"	the 821,440 square miles (approximately 200 acres) of land with a sea frontage of approximately 1,000 metres at Karanja Creek, Chanje Village, Taluka Uran, District Raigad, Maharashtra, India as described in the Deed of Lease
"Prospectus Rules"	the Prospectus Rules made in accordance with the EU Prospectus Directive 2003/71/EC in relation to offers of securities to the public and the admission of securities to trading on a regulated market
"Qualifying CREST Shareholders"	Qualifying Shareholders holding Existing Ordinary Shares in a CREST account
"Qualifying Non-CREST Shareholders"	Qualifying Shareholders holding Existing Ordinary Shares in certificated form
"Qualifying Shareholders"	holders of Existing Ordinary Shares on the register of members of the Company at the Record Date (but excluding, subject to certain exceptions, any Overseas Shareholder who is located or resident or who has a registered address in, or who is a citizen of, the United States of America or any other Restricted Jurisdiction)
"Record Date"	5.00 p.m. on 27 October 2016 in respect of the entitlements of Qualifying Shareholders under the Open Offer
"Registrars" and "Receiving Agents"	Capita Asset Services, a trading name of Capita Registrars Limited
"Regulatory Information Service"	has the meaning given in the AIM Rules for Companies
"Relationship Agreement"	the agreement entered into on or around 7 October 2010 between, amongst others, the Company, Nikhil Gandhi and SKIL Global
"Resolutions"	the ordinary and special resolutions to be proposed at the General Meeting, as set out in the Notice of the General Meeting
"Restricted Jurisdictions"	United States of America, Canada, Australia, Japan and the Republic of South Africa and any other jurisdiction where the extension or availability of the Placing and Open Offer would breach any applicable law
"Rupees" or "Rs"	Indian Rupees, the legal currency of India
"Securities Act"	US Securities Act of 1933 (as amended)
"Shareholders"	the holders of Existing Ordinary Shares
"SKIL Global"	SKIL Global Ports & Logistics Limited, a company incorporated in Guernsey under the Companies Law with registered number 52320, which is ultimately beneficially owned by Nikhil Gandhi
"Subscriptions"	the subscriptions for the Contractor Subscription Shares and the NG Subscription Shares
"TEU"	twenty-foot equivalent unit, an industry standard unit for describing a ship's cargo carrying capacity or a shipping terminal's cargo handling capacity
"Transaction"	the Placing, the Open Offer and the Subscriptions
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland
"United States", "United States of America" or "US"	the United States of America, its territories and possessions, any State of the United States, and the District of Columbia
"uncertificated" or "uncertificated form"	recorded on the relevant register or other record of the Shares or other security concerned as being held in uncertificated form in CREST, and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST
"UK Companies Act"	Companies Act 2006 (as amended)

-ENDS-

 

END

 

 

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