AGM Notice & Shareholder Value Initiatives

RNS Number : 8755Y

Trian Investors 1 Limited

17 May 2021

 

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, TO U.S. PERSONS OR IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA OR JAPAN OR THEIR RESPECTIVE TERRITORIES OR POSSESSIONS, OR INTO ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER TO ISSUE OR SELL, OR ANY SOLICITATION OF ANY OFFER TO SUBSCRIBE OR PURCHASE, ANY INVESTMENTS IN ANY JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

17 May 2021

Trian Investors 1 Announces AGM and Initiatives to Enhance Shareholder Value

· Trian Investors 1 Net Asset Value Growth Has Significantly Outperformed FTSE 100 Since Inception

· Proposed Investment Policy and Related Amendments Designed to Allow Trian Investors 1 to Capitalise on New Investment Opportunities and Compound Shareholders' Capital

· Up to US$20 million in Share Repurchases to Address Share Price Discount and Provide Additional Liquidity to Shareholders  

· To Promote Further Alignment with Shareholders, Affiliates of the Company's Investment Manager to Purchase Up to US$10 million of Trian Investors 1 Shares Through Open Market Purchases and Receive Future Incentive Allocation in Shares Valued at Net Asset Value  

Trian Investors 1 Limited (the "Company") will today post a circular convening its annual general meeting (the "AGM") to be held at 1:00 p.m. on 14 June 2021 (the "Circular"). In addition to the usual business to be conducted at the AGM, the Circular contains details of proposed amendments to the Company's investment policy, which, if approved by shareholders holding a majority of votes cast, will help position the Company to capitalise on a broader range of potential investment opportunities and to compound shareholders' capital over time by reinvesting investment profits.

The Circular, together with the Form of Proxy, have been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism    and will also shortly be available to download from the Company's website at www.trianinvestors1.com .  The Annual Report and Financial Statements for the period from 1 January 2020 to 31 December 2020 are available to download from the Company's website.

Overview

The Company's existing investment in Ferguson plc has generated attractive returns for shareholders. Since the Company's initial public offering on 24 September 2018 through 30 April 2021, the Company's net asset value ("NAV") per share has increased 56%, net of fees, significantly outperforming the FTSE 100 (+3%) during the same time period.

Trian Investors Management, LLC ( the "Investment Manager") believes that Ferguson remains an attractive investment. However, the Investment Manager and its parent, Trian Fund Management, L.P. (collectively, "Trian"), continue to identify other potential investment opportunities in Trian's focus sectors - consumer, industrials, and financials. As Trian continues to evaluate other future investment opportunities for the Company to pursue, the Board and Investment Manager believe that the proposed revisions to the Company's investment policy and the Company's related policies and guidelines will better position Trian to execute its highly engaged investment strategy in those new opportunities and to compound shareholders' capital over time by reinvesting investment profits.

The Company also announces today that it intends to use up to the Sterling equivalent of US$20 million to repurchase the Company's ordinary shares (the " Shares ") in the open market, subject to market conditions. The majority of the repurchase will be funded with available working capital, with the remaining portion expected to be funded through drawings under the revolving credit facility of the Company's investment partnership. Following the completion of the Company's share repurchase, the Board has authorised Trian Investors 1 Subscriber, LLC ("Trian Subscriber"), a company owned by Trian's partners and their affiliates, to purchase the Sterling equivalent of up to US$10 million of Shares in the open market, subject to market conditions. The Board expects the combined purchases of up to US$30 million to help address the current discount to NAV at which the Shares trade and to provide immediate liquidity for the Company's shareholders. The Board intends to continue to monitor the trading activity of the Shares - and expects the revisions to the Company's investment policy and related polices and guidelines to position the Company to become a larger, more widely followed public company over time. The Board also believes that the Company will have capacity - including over $60 million of additional borrowing capacity under the existing revolving credit facility - to opportunistically complete additional share repurchases in the future, if warranted.  

In addition, s ubject to shareholders approving the proposed amendment to the Company's investment policy, Trian Investors 1 SLP, L.P. (" Trian SLP "), a limited partnership owned by Trian's partners, will receive future incentive allocations (net of amounts required to cover certain tax liabilities) in the form of Shares, to be valued at NAV at the time of issuance. The Board believes this arrangement will further promote the alignment of interests between Trian and the Company's shareholders. Importantly, the Board believes that the proposed issuance of Shares at NAV to Trian SLP, combined with the Company purchasing Shares in the open market (which currently trade at a discount to NAV) as described above, will be beneficial to the Company's shareholders. Additionally, the expected issuances of Shares in lieu of cash will provide a greater pool of capital for future investments and/or allow for additional repurchases of Company Shares.  

Finally, if the proposed amendments to the Company's investment policy are approved, Trian SLP has agreed, for the Company's benefit, that should the Company realise losses on any future investment, Trian SLP will not receive any incentive allocation on investment returns until the Company recovers such realised losses. 

Chris Sherwell, Chairman of the Company said:

"My fellow directors, Mark Thompson and Simon Holden, and I believe the proposed revisions to Trian Investors 1's investment policy will enhance the Company's ability to generate long-term value for shareholders. We also believe the other initiatives announced today will benefit shareholders and encourage further alignment between their interests and those of Trian. We look forward to working closely with Trian as the Company pursues its goal of generating attractive returns for shareholders."

Nelson Peltz, Ed Garden and Peter W. May, co-founders of Trian said:

"We have a high degree of conviction in Trian Investors 1's trajectory, especially in light of the proposed revisions to the Company's policies and guidelines, which we believe will further its ability to compound profits for the benefit of shareholders. For these reasons, we are planning to invest significantly more of our own capital into Shares of the Company. We are excited to continue to work with the Board as we seek potential investment opportunities for Trian Investors 1 ."

Recommended Proposal to Amend the Company's Investment Policy

As further detailed in the Circular, the Board and the Investment Manager believe that the Company's current investment policy and related polices and guidelines may limit its potential to generate further value for shareholders. For example, the Company's current policies:

· Provide that the Company is expected to generally invest in only one U.K. or U.S. company at a time, restricting diversification;

· Restrict the Company from participating in control or private equity opportunities, even if the Board believes such investments could be attractive to the Company; and

· Impose certain restrictions on recycling investment sale proceeds, which limits the Company's ability to compound profits for shareholders' benefit.

As a result, the Company is proposing to amend its existing investment policy to allow it to invest in one or more U.K. or U.S. target companies at the same time; and to acquire minority, majority or controlling interests (including a 100% interest) in any listed or unlisted target company. The new investment policy incorporating the proposed changes is set out in the Circular.

If the revisions to the investment policy are approved by shareholders, the Company will also revise its existing policies and guidelines on recycling sale proceeds and return of capital so that all net proceeds, including net profits, generated from the sale of any investment in a target company (regardless of whether Trian has obtained board representation at the target company) may be reinvested following disposition.  

Following the implementation of the proposed investment policy and related policies and guidelines, the Company will have a Board composed of a majority of independent directors, which will be required to approve each proposed investment in a new target company, and the Company intends to continue to maintain robust corporate governance processes, including voluntary compliance with the UK Corporate Governance Code. 

Trian's Support for the Amendment Resolution

The Trian Subscriber, the Company's second largest shareholder as of the date of this Announcement, has informed the Board that it intends to vote in favour of all resolutions to be proposed at the AGM (including the proposal to amend the Company's investment policy) all the votes attaching to the Shares which it has the right to direct (representing approximately 14.5 per cent. of the Company's Share capital as at 14 May 2021). 

Recommendation

The Board considers the resolutions to be proposed at the AGM (including the proposal to amend the Company's investment policy) to be in the best interests of shareholders as a whole. Accordingly, the Board unanimously recommends that shareholders vote in favour of all the resolutions to be proposed at the AGM. The Board intends to vote in favour of all the resolutions in respect of their holdings of Shares amounting to 152,775 Shares in aggregate (representing approximately 0.06 per cent. of the issued Share capital of the Company as at 14 May 2021).

Further Information

Further information on the resolutions to be presented at the AGM, as well as the planned Share purchases by the Company and Trian Subscriber and the payment of  future incentive allocation in the form of Shares, are described in further detail in the Circular, which will be available on the Company's website at  https://www.trianinvestors1.com   and will also be available on the national storage mechanism at  https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism . The Circular sets out important information regarding these resolutions and initiatives, and shareholders are strongly encouraged to read it in its entirety.

For enquiries, please contact:

Ocorian Administration (Guernsey) Limited (Administrator and Company Secretary) Ian Smith	[phone]
Numis Securities Limited (Joint Broker) David Benda	[phone]
Jefferies International Limited (Joint Broker) Stuart Klein	[phone]
Greenbrook Communications Limited (Communications Adviser) Andrew Honnor / Rob White	[phone] [e-mail]

About the Company:

The Company is a Guernsey domiciled limited company, which was admitted to trading on the Specialist Fund Segment of the London Stock Exchange on 27 September 2018.  Its investment objective is to generate significant capital appreciation through Trian's activity as a highly engaged shareowner. In accordance with its investment policy, the Company has made a substantial minority investment through its investment in Trian Investors 1, L.P., in the amount of approximately £250 million, in Ferguson plc.

Founded by Nelson Peltz, Ed Garden and Peter May, Trian seeks to invest in high quality but undervalued and underperforming public companies and to work collaboratively with management teams and boards of those companies to execute operational, strategic and environmental, social and governance (ESG) initiatives designed to drive long-term sustainable earnings growth for the benefit of all stakeholders. This investment strategy has been deployed by Trian's founders over a variety of market cycles for nearly five decades.

LEI number: 213800UQPHIQI5SPNG39

DISCLAIMERS

This Announcement has been prepared for information purposes only. This Announcement is not an offer to sell or a solicitation of any offer to buy Shares in the United States, Australia, Canada, the Republic of South Africa, the Republic of Ireland or Japan, or any of their respective territories or possessions, or in any other jurisdiction where such offer or sale would be unlawful. No action has been taken by the Company or Numis or Jefferies that would permit an offering of any shares in the capital of the Company or possession or distribution of this Announcement or any other offering or publicity material relating to such 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 and Jefferies to inform themselves about, and to observe, such restrictions.

This Announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This Announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered, sold, resold, transferred or delivered directly or indirectly in the United States, or to, or for the account or benefit of, U.S. Persons, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

The Company has not been and will not be registered under the US Investment Company Act of 1940 (the "Investment Company Act") and, as such, holders of the Shares will not be entitled to the benefits of the Investment Company Act. No offer, sale, resale, pledge, delivery, distribution or transfer of the Shares may be made except under circumstances that will not result in the Company being required to register as an investment company under the Investment Company Act. 

The merits or suitability of any securities must be independently determined by the recipient on the basis of its own investigation and evaluation of the Company. Any such determination should involve, among other things, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the securities.

This Announcement may not be used in making any investment decision in isolation. This Announcement on its own does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment. This Announcement does not constitute or form part of and may not be construed as an offer to sell, or an invitation to purchase or otherwise acquire, 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 prospective investor should consult its own legal, business, tax and other advisers in evaluating the investment opportunity. No reliance may be placed for any purposes whatsoever on this Announcement or its completeness.

The information and opinions contained in this Announcement are provided as at the date of the Announcement and are subject to change without notice and no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information contained herein and no responsibility, obligation or liability or duty (whether direct or indirect, in contract, tort or otherwise) is or will be accepted by the Company, Trian, Numis, Jefferies or any of their affiliates or by any of their respective officers, employees or agents to update or revise publicly any of the statements contained herein. No reliance may be placed for any purpose whatsoever on the information or opinions contained in this Announcement or on its completeness, accuracy or fairness. The document has not been approved by any competent regulatory or supervisory authority.

Potential investors should be aware that any investment in Company is speculative, involves a high degree of risk, and could result in the loss of all or substantially all of their investment. Results can be positively or negatively affected by market conditions beyond the control of the Company or any other person. Any data on past performance contained herein is no indication as to future performance and there can be no assurance that any targeted or projected returns will be achieved or that the Company will be able to implement its investment strategy or achieve its investment objectives. Any target returns published by the Company are targets only. There is no guarantee that any such returns can be achieved or can be continued if achieved, nor that the Company will make any distributions whatsoever. There may be other additional risks, uncertainties and factors that could cause the returns generated by the Company to be materially lower than the target returns of the Company.

The information in this Announcement may include forward-looking statements, which are based on the current expectations, intentions and projections about future events and trends or other matters that are not historical facts and in certain cases can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "believe" (or the negatives thereof) or other variations thereof or comparable terminology. These forward-looking statements, as well as those included in any related materials, are not guarantees of future performance and are subject to known and unknown risks, uncertainties, assumptions about the Company and other factors, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur and actual results may 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. 

Each of the Company, Trian, Numis, Jefferies and their affiliates and their respective officers, employees and agents expressly disclaim any and all liability which may be based on this Announcement and any errors therein or omissions therefrom.

No representation or warranty is given to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views contained herein are based on financial, economic, market and other conditions prevailing as at the date of this Announcement. The information contained in this Announcement will not be updated.

 

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