Tender Offer

RNS Number : 4632Z

Queen's Walk Investment Limited

21 July 2008

 



THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

Queen's Walk Investment Limited 

Announcement of Tender Offer

Introduction 

Queen's Walk Investment Limited (the 'Company') announces that on Friday 18 July 2008 it sent a circular (the 'Tender Offer Circular') to Eligible Shareholders (as defined in the Tender Offer Circular) detailing its proposed tender offer to purchase up to 3,000,000 Ordinary Shares and thereby to return a maximum of €15 million in cash to shareholders (the 'Tender Offer'). 

The Tender Offer will be open from 18 July 2008 to 3:00 p.m. on 8 August 2008 and is being made at a price per existing Ordinary Share in issue ('Ordinary Share') of €5.00 (the 'Tender Price'). The Tender Price represents a premium over the middle market closing price (as derived from the Daily Official List of the London Stock Exchange) of €0.60 per Ordinary Share on 17 July 2008.

The Tender Offer is conditional on the approval of shareholders at the extraordinary general meeting of the Company to be held at 4:00 p.m. on 12 August 2008. The Tender Offer is only available to Eligible Shareholders in respect of the number of Ordinary Shares registered in those shareholders' names at 5:00 p.m. on 8 August 2008 (the 'Record Date').

Background to and reasons for the Tender Offer 

The Ordinary Shares are traded on the main market of the London Stock Exchange and the Company has undertaken two tender offers in the preceding 12 months under which it repurchased for cancellation a total of 7,282,271 Ordinary Shares. In addition, the Company has a policy of buying back its Ordinary Shares in the market for cancellation. However, the number of Ordinary Shares which the Company has been able to repurchase has been constrained by applicable limits on the number of Ordinary Shares that can be purchased on any particular day and by the price at which the Company can repurchase Ordinary Shares and the Ordinary Shares continue to be priced at a discount to their underlying net asset value. In arriving at the maximum number of Ordinary Shares to be repurchased, the Board of the Company has taken account of current market conditions which have increased the volatility surrounding the fair value of the Company's portfolio. The Company remains confident of the cash generative capability of its assets and believes that the cash available to the Company is sufficient to continue with the Tender Offer.

In order to ensure an orderly market for the Ordinary Shares the general authority for the buy back of shares granted at the annual general meeting of the Company on 3 September 2007 (the 'Buy Back Authority') will not be utilised from and including 18 July 2008 until the Tender Offer is closed or terminated. Following the Tender Offer being closed or terminated, the Company intends to continue to buy back shares under the Buy Back Authority and, when doing so, will consider, on any particular day, buying back a number of Ordinary Shares which exceeds 50 per cent. of the Company's average daily trading volume over the prior 20 trading days including as a result of entering into block repurchases, where the Company considers this to be in the best interests of Shareholders.

The Tender Offer

The Tender Offer Circular which contains the formal terms and conditions of the Tender Offer, and a tender form, containing instructions to shareholders (who hold their Ordinary Shares in certificated form) on how to tender their Ordinary Shares should they choose to do so, was today sent to shareholders.

The Company is proposing to return up to €15 million in cash through a purchase of not more than 3,000,000 Ordinary Shares. Once purchased, those Ordinary Shares will be cancelled and will not be available for re-issue.

The Tender Offer is being made available to Eligible Shareholders on the register of members at the Record Date specified below. Eligible Shareholders may participate in the Tender Offer by tendering all or a proportion of the Ordinary Shares held by them at the Record Date.  

Director's intentions 

The Directors who are beneficially interested in Ordinary Shares have indicated that they will not tender Ordinary Shares pursuant to the Tender Offer.

Investor intentions

The Company has been informed on behalf of Cheyne ABS Opportunities Fund L.P. that, with the support of its largest investor, Cheyne Special Situations Fund L.P., it intends to participate in the Tender Offer. Cheyne ABS Opportunities Fund L.P. is the holder of 17,900,756 Ordinary Shares representing approximately 59.3 per cent. of the issued Ordinary Shares. 

Expected timetable 

Tender offer opens		18 July 2008
Latest time and date for receipt of Tender Forms		3:00 p.m. on 8  August 2008
Record Date for the Tender Offer		5:00 p.m. on 8 August 2008
Latest time and date for receipt of the Form of Proxy		4:00 p.m. on 10 August 2008
Extraordinary General Meeting		4:00 p.m. on 12 August 2008
Announcement of result of Extraordinary General Meeting		12 August 2008
CREST accounts credited with Tender Offer proceeds and revised holdings of uncertificated Ordinary Shares		15 August 2008
Dispatch of cheques for Tender Offer proceeds for certificated Ordinary Shares		15 August 2008
Dispatch of balance share certificates for unsold Ordinary Shares and share certificates for unsuccessful tenders (certificated holders only)		15 August 2008

Current trading On 19 June 2008, the Company announced its results for the quarter and full year ended 31 March 2008. The Company recorded an operating income of €39.1 million or €1.27 per Ordinary Share for the financial year ended 31 March 2008, compared to €65.5 million or €1.61 per Ordinary Share in the previous year. The fall in operating income is largely attributable to reduced net leverage. The ability of the Company's investment portfolio to generate cash remained strong with total cash proceeds of €16.6 million received in the quarter ended 31 March 2008. The Company expects the amount of cash generated by the investment portfolio to decline in the coming quarters as a result of the expected amortisation of the Company's investment portfolio, a weakening Sterling-Euro foreign exchange rate and the expected variation of the investment cashflows over time. The Company incurred a net loss of €22.1 million for last financial year, an improvement from a net loss of €67.7 million for the 2007 financial year. The Company's NAV at the end of this financial year is €6.42 per Ordinary Share, down from €7.24 per Ordinary Share as at 31 March 2007.

The Company's net leverage as at 31 March 2008 was 6.2% and this will increase following the completion of the Tender Offer.

The Company expects the current credit crisis to continue in the near term. The impact of the credit crisis will continue to spread through the economy and lead to a weakening of economic fundamentals. In the UK, the Company expects a further weakening of house prices and a contraction of available mortgage credit in the near term. Growth in the Continental European economy is expected to slow, but economic conditions should be more robust than in the UK or the US.

The Company's direct and indirect exposure to the US subprime mortgage market currently accounts for approximately 0.1% of the investment portfolio. The volatility in the ABS markets is likely to continue and as such the Company may be exposed to further fair value write downs as a result of a widening in the discount rates market participants apply to residual investments. A widening of market discount rates would not affect the cash generative ability of the Company's investment portfolio.

Copies of the Tender Offer Circular together with relevant documents relating to the extraordinary general meeting to be held on 12 August 2008 will be available for inspection at the UK Listing Authority's Document Viewing Facility which is situated at the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS. Copies of these documents can be obtained from the Company Secretary.

For further information please contact:

Investor Relations:

Caroline Villiers [phone]

Company Secretary:

Kleinwort Benson (Channel Islands) Fund Services Limited [phone]

About Queen's Walk

Queen's Walk Investment Limited is a Guernsey-incorporated investment company listed on the London Stock Exchange. The Company's investment objective is to preserve capital and to provide stable returns to shareholders in the form of quarterly dividends. To achieve this, Queen's Walk invests primarily in a diversified portfolio of subordinated tranches of asset backed securities, including the unrated 'equity' or 'first loss' residual income position typically retained by the banks or other financial institutions which have originated the loan assets that collateralise a securitisation transaction. The Company makes such investments where its investment manager, Cheyne Capital Management Limited, considers the coupon or cash flows from the investment to be attractive relative to the credit exposure of the underlying asset collateral. 

 

END

 

 

TENURAKRWSRBUAR