Publication of a Prospectus UIL re 2022 ZDPs

RNS Number : 6405Y

UIL Limited

18 May 2016

 

For release on 18 May 2016

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, INTO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER OR INVITATION TO PURCHASE OR ACQUIRE ANY TRANSFERABLE SECURITIES (AS DEFINED IN SCHEDULE 11A OF THE FINANCIAL SERVICES AND MARKETS ACT 2000), NOR SHALL IT FORM THE BASIS OF ANY CONTRACT FOR THE SALE OF ANY INTEREST IN A TRANSFERABLE SECURITY OR A SOLICITATION, INDUCEMENT, ADVICE OR RECOMMENDATION TO EFFECT ANY TRANSACTION OF ANY KIND WHATSOEVER. POTENTIAL INVESTORS SHOULD READ THE RELEVANT PROSPECTUS (WHICH HAS BEEN PUBLISHED FOLLOWING APPROVAL BY THE UK LISTING AUTHORITY) CAREFULLY BEFORE ANY INVESTMENT DECISION IS MADE.

UIL Limited

UIL Finance Limited

(together the "Group")

Publication of Prospectus

The Group announces that it has today published a prospectus, which has been approved by the UK Listing Authority, in connection with:

·      a rollover offer of 2016 ZDP Shares into 2022 ZDP Shares:

·      the issue of up to 50,000,000 2022 ZDP Shares pursuant to the rollover offer, an initial placing and a placing programme; and

·      the issue of up to 25,000,000 2020 ZDP Shares pursuant to a placing programme.

The text of the Chairman's letter, extracted from the Prospectus which contains details of the Proposals, is set out below.

A copy of the Prospectus will be submitted to the National Storage Mechanism and will shortly be available for inspection at: www.morningstar.co.uk/uk/NSM and on the Company's website: www.uil.limited.

Terms used and not defined in this announcement bear the meaning given to them in the Prospectus to be published today.

Chairman's Letter

"To holders of 2016 ZDP Shares and, for information only, to holders of Ordinary Shares, 2018 ZDP Shares and 2020 ZDP Shares

INTRODUCTION

Your Board has today announced detailed proposals to provide holders of existing 2016 ZDP Shares with the opportunity to roll over some or all (subject to the overall limits of the Rollover Offer) of their 2016 ZDP Shares into a new class of 2022 ZDP Shares. Your Board has also announced proposals for an Initial Placing of up to 50 million 2022 ZDP Shares (less the number of 2022 ZDP Shares issued pursuant to the Rollover Offer) and a Placing Programme of up to 25 million 2020 ZDP Shares and up to 50 million 2022 ZDP Shares (less the number of 2020 ZDP Shares issued pursuant to the Rollover Offer and the Initial Placing).

In addition, the UIL Board has today announced the proposed acquisition of further ordinary shares in Somers and a separate circular is being sent to UIL Shareholders for their approval in relation thereto.

The purpose of this letter is to explain the Proposals and why your Board considers them in the best interests of ZDP Shareholders as a whole.

BACKGROUND TO THE PROPOSALS

UIL Finance currently has three series of ZDP Share in issue. These are due for redemption on 31 October in 2016, 2018 and 2020 respectively. The aggregate redemption sum payable on the redemption of the 2016 ZDP Shares is approximately £91.6 million. This will be due on 31 October 2016. Following discussions regarding the payment of the Final Capital Entitlement in respect of the 2016 ZDP Shares, the UIL Finance Directors concluded that they wish to provide 2016 ZDP Shareholders with the opportunity to remain invested in the Group and as a result have formulated the Proposals, which consist of the Rollover Offer, Initial Placing and Placing Programme.

THE ROLLOVER OFFER

Under the Rollover Offer, each Qualifying Holder of 2016 ZDP Shares on the Record Date will be given the opportunity to rollover some or all of their Qualifying Holding (subject to the overall limits of the Rollover Offer) into new 2022 ZDP Shares. The Rollover Value attributed to each 2016 ZDP Share will be equal to its Accrued Capital Entitlement as at the Rollover Date. The new 2022 ZDP Shares arising on the conversion of 2016 ZDP Shares pursuant to the Rollover Offer will be deemed to be issued at the 2022 ZDP Share issue price, which will be 100p per 2022 ZDP Share.

The 2022 ZDP Shares will have a Gross Redemption Yield of 6.25 per cent. and a maturity date of 31 October 2022. Investors should note that the predetermined capital entitlement of the ZDP Shares is not guaranteed and is dependent upon UIL having sufficient assets to satisfy its obligations to UIL Finance under the Subscription Agreement. There is no present intention to put forward further proposals to 2016 ZDP Shareholders in advance of the ZDP Repayment Date on 31 October 2016.

THE INITIAL PLACING AND THE PLACING PROGRAMME

UIL Finance intends to issue up to 25 million 2020 ZDP Shares and up to 50 million 2022 ZDP Shares (less the number of 2022 ZDP Shares issued under the Rollover Offer) pursuant to the Initial Placing and the Placing Programme.

Under the Initial Placing, UIL Finance is proposing to issue up to 50 million 2022 ZDP Shares (less the number of 2022 ZDP Shares issued under the Rollover Offer) at the Initial Placing Price, which will be 100p per 2022 ZDP Share. Stockdale Securities has agreed under the Placing Agreement to use its reasonable endeavours to procure placees for 2022 ZDP Shares at the Initial Placing Price. Details of the Placing Agreement are set out in paragraph 8.11 of Part 9 of this document. The Initial Placing will close at 11.00 a.m. on 17 June 2016 (or such later date, not being later than 31 July 2016, as UIL Finance and Stockdale Securities may agree). If the Initial Placing is extended, the revised timetable will be notified via a Regulatory Information Service.

Under the Placing Programme, UIL Finance has the ability to issue up to 25 million 2020 ZDP Shares and up to 50 million 2022 ZDP Shares (less the number of 2022 ZDP Shares issued under the Rollover Offer and the Initial Placing) at the applicable Issue Price. The Placing Programme is flexible and may have a number of closing dates in order to provide UIL Finance with the ability to issue Placing ZDP Shares over a period of time. The Placing Programme will open on 18 May 2016 and will close on 17 May 2017 (or any earlier date on which it is fully subscribed). The Placing ZDP Shares will, when issued, rank equally with the ZDP Shares of the relevant class then in issue.

The illustrative financial effects of the Proposals set out in this document are based on the Assumptions which assume an issue of 50 million 2022 ZDP Shares pursuant to the Rollover Offer, Initial Placing and Placing Programme and 11.8 million 2020 ZDP Shares pursuant to the Placing Programme.

BENEFITS OF THE PROPOSALS

The UIL Finance Board believes the Proposals have the following advantages:

·     to allow 2016 ZDP Shareholders to remain invested in the Group;

·     to allow UIL Finance to issue a new class of 2022 ZDP Shares to satisfy demand over a period of time;

·     to increase the number of 2022 ZDP Shares in issue following completion of the Rollover Offer, thereby enabling UIL Finance to attract a wider range of investors which, in turn, would be expected to improve the liquidity in the 2022 ZDP Shares;

·     to increase the number of 2020 ZDP Shares in issue which would be expected to improve the liquidity in the 2020 ZDP Shares; and

·     to raise new funds to assist in financing the amount required for the redemption of the 2016 ZDP Shares.

As at 10 May 2016, being the latest practicable date prior to the publication of this document, UIL's borrowings under the Existing Loan Facility of £50 million from Scotiabank amounted to £47.7 million, reflecting the realisation of some investments from UIL's portfolio. The terms of the New Loan Facility with Scotiabank, which enable UIL to borrow a further £25 million from 31 October 2016 for a period of up to six months, are summarised below in paragraph 8.7 of Part 9 of this document.

UIL intends to continue to realise further investments from its portfolio which, when taken together with the proceeds from the Initial Placing, the Placing Programme and borrowings under the Existing Loan Facility and the New Loan Facility are expected to provide the balance of funding required to finance the redemption of the 2016 ZDP Shares on 31 October 2016. In the event that proceeds pursuant to the Initial Placing and the Placing Programme are lower than expected, UIL intends to realise further investments in order to redeem the 2016 ZDP Shares on 31 October 2016 as set out in "Working capital" below.

THE ROLLOVER OFFER

Under the Rollover Offer, holders of 2016 ZDP Shares are being given the opportunity to convert some or all of their holding of 2016 ZDP Shares (subject to the overall limits of the Rollover Offer) into new 2022 ZDP Shares. The Rollover Value attributed to the 2016 ZDP Shares will be equal to their Accrued Capital Entitlement as at the Rollover Date. The Rollover Offer is limited to a maximum of 55.979 per cent. of the 2016 ZDP Shares in issue at the Record Date and each Qualifying Holder on the Register on the Record Date will be entitled to have accepted under the Rollover Offer his or her Basic Entitlement, which is equal to 55.979 per cent. of their holding of 2016 ZDP Shares as at the Record Date, subject to the UIL Finance Directors not exercising their discretion to scale back elections under the Rollover Offer as described below.

The rights attaching to the 2022 ZDP Shares will be substantially similar to those attaching to the 2016 ZDP Shares although no ZDP Shares will be issued at a price which has the effect of reducing the ZDP Cover for the 2022 ZDP Shares, at or around the time of the issue of such additional ZDP Shares, below 1.35x. In addition, subject to Rollover Offer and Initial Admission occurring, the 2022 ZDP Shares will have an illustrative initial capital entitlement on 23 June 2016 of 100p per 2022 ZDP Share and will have a Final Capital Entitlement of 146.99p per 2022 ZDP Share on 31 October 2022, the 2022 ZDP Repayment Date, equivalent to a Gross Redemption Yield of 6.25 per cent. per annum on the 2022 ZDP Share issue price.

As with the 2016 ZDP Shares, the 2022 ZDP Shares will not carry the right to vote at general  meetings of UIL or UIL Finance but they will carry the right to vote as a class on certain proposals which would be likely to affect materially their position. The 2022 ZDP Shares will carry no entitlement to income and the whole of any return will therefore take the form of capital.

Subject to completion of the Rollover Offer, each 2016 ZDP Share validly elected to be rolled over will be converted into 1.8804 2022 ZDP Shares to be issued on the terms set out in the New UIL Finance Bye-Laws. Fractions of 2022 ZDP Shares will not be issued. The number of 2022 ZDP Shares arising pursuant to an election under the Rollover Offer will be rounded down to the nearest whole number and any excess monies will be retained by UIL Finance.

The Rollover Offer is open to all Qualifying Holders on the Register at the Record Date (such Qualifying Holders being Eligible Shareholders). All such persons shall be entitled to have accepted in the Rollover Offer valid elections in respect of his or her Basic Entitlement. In addition, Eligible Shareholders may make elections in excess of their Basic Entitlement but such excess elections will only be satisfied to the extent that other 2016 ZDP Shareholders have not made valid elections in respect of all or any part of their Basic Entitlement. Elections in excess of the Basic Entitlement will be satisfied pro rata in proportion to the excess over the Basic Entitlement elected, rounded down to the nearest whole number of 2016 ZDP Shares and subject to the exercise of the UIL Finance Directors' discretion to scale back elections under the Rollover Offer as described below.

In order to elect to participate in the Rollover Offer, 2016 ZDP Shareholders are advised to refer to the section entitled "Action to be Taken" on pages 36 and 37 of this document and to complete the Form of Election in accordance with the instructions printed thereon or submit a TTE Instruction through CREST, in each case in accordance with the instructions set out in this document.

UIL Finance reserves the absolute right to inspect (either itself or through its agents) all Forms of Election and may consider void and reject any Form of Election that does not, in the UIL Finance Board's sole judgement (acting reasonably), meet the requirements of the Rollover Offer. UIL Finance also reserves the absolute right to waive any defect or irregularity in relation to the acceptance of the Rollover Offer by Eligible Shareholders, including any Form of Election (in whole or in part) which is not entirely in order or which is received after the Closing Date, missing share certificate(s) and/or other document(s) of title or an indemnity acceptable to UIL Finance in lieu thereof. None of UIL Finance, UIL, the Receiving Agent or any other person will be under any duty to give notification of any defects or irregularities in acceptances under the Rollover Offer or incur any liability for failure to give any such notification.

If a holder of 2016 ZDP Shares signs and returns a Form of Election but does not specify in Box 1 of the form how many 2016 ZDP Shares he wishes to elect to participate in the Rollover Offer he will be deemed to have elected to participate in respect of his Basic Entitlement.

Completion of the Rollover Offer is conditional on Initial Admission, and therefore subject to the satisfaction of Listing Rule 14.2.2 as to the number of 2022 ZDP Shares held in public hands as at Initial Admission. The UIL Finance Directors will have the discretion to scale back elections under the Rollover Offer otherwise than on a pro rata basis and whether or not such elections are in excess of a 2016 ZDP Shareholder's Basic Entitlement if the UIL Finance Directors consider this necessary to ensure that sufficient 2022 ZDP Shares are held in public hands so as to satisfy the Listing Rule requirement. Further, the UIL Finance Directors may exercise their discretion and scale back elections under the Rollover Offer and place 2022 ZDP Shares pursuant to the Initial Placing in order to satisfy the Listing Rule requirement. The Rollover Offer is also conditional on the ZDP Cover of the 2022 ZDP Shares being not less than 1.35x, taking into account the relevant allotment. The UIL Finance Directors will therefore also have the discretion to scale back elections under the Rollover Offer if the UIL Finance Directors consider this necessary to satisfy the ZDP Cover requirement.

2016 ZDP Shareholders who are Overseas ZDP Shareholders and any other 2016 ZDP Shareholders who do not make a valid election to roll over all or part of their ZDP Shares on the Form of Election or submit a valid TTE Instruction, will be deemed to have declined the opportunity to participate in the Rollover Offer and will continue to hold their 2016 ZDP Shares, the rights attaching to which will be unaffected by the Proposals.

MECHANICS OF THE ROLLOVER OFFER

The Rollover Offer will be effected by the conversion of those 2016 ZDP Shares that are validly elected and accepted to participate in the Rollover Offer into new 2022 ZDP Shares pursuant to the New UIL Finance Bye-Laws. The key points of the Rollover Offer are as follows.

Subject to completion of the Rollover Offer, each 2016 ZDP Share validly elected to be rolled over will automatically convert into 1.8804 2022 ZDP Shares on and subject to the terms and conditions set out in this document and the Form of Election.

Forthwith upon conversion, any certificates relating to 2016 ZDP Shares that converted into 2022 ZDP Shares pursuant to the Rollover Offer shall be cancelled and UIL Finance shall issue to each such former holder of 2016 ZDP Shares new certificates in respect of the 2022 ZDP Shares which have arisen upon conversion unless such former holder of 2016 ZDP Shares elects to hold their 2022 ZDP Shares in uncertificated form.

Where the aggregate number of 2022 ZDP Shares to which a 2016 ZDP Shareholder is entitled upon the conversion of his 2016 ZDP Shares pursuant to an election made and accepted under the Rollover Offer results in an entitlement to a fraction of a 2022 ZDP Share, the total number of 2022 ZDP Shares to which such 2016 ZDP Shareholder is entitled will be rounded down to the nearest whole number and such rounded down fractional entitlements will then be aggregated and form part of UIL Finance's authorised but unissued share capital.

The rights attaching to 2016 ZDP Shares that are not converted into 2022 ZDP Shares pursuant to the Rollover Offer will remain unchanged, with their ZDP Repayment Date being 31 October 2016 and a Final Capital Entitlement of 192.78 pence per share.

CONDITIONS TO THE ROLLOVER OFFER

The Rollover Offer is conditional on:

·     valid elections being received in respect of 2022 ZDP Shares, together with any 2022 ZDP Shares issued pursuant to the Initial Placing and allotted at the same time as the 2022 ZDP Shares issued under the Rollover Offer, with a minimum value, at the Initial Placing Price, of £750,000;

·     ZDP Cover of the 2022 ZDP Shares being not less than 1.35x, taking into account the effect of the relevant allotment;

·     the Placing Agreement remaining in full force and effect and not having been terminated in accordance with its terms; and

·     Admission of the 2022 ZDP Shares issued pursuant to the Rollover Offer and, if applicable, the Initial Placing.

In circumstances in which these conditions are not fully met, the Rollover Offer will not take place and no 2016 ZDP Shares will be converted into 2022 ZDP Shares.

ANNOUNCEMENT OF THE RESULTS OF THE ROLLOVER OFFER

The results of the Rollover Offer will be announced through a Regulatory Information Service on or around 20 June 2016. This announcement will include the number of 2022 ZDP Shares arising pursuant to the Rollover Offer, the number of 2016 ZDP Shares that have elected to take part and details of any scaling back in relation to elections in excess of the Basic Entitlement or where the UIL Finance Directors have exercised their discretion to scale back elections so as to satisfy the ZDP Cover condition or to enable UIL Finance to satisfy the Listing Rule requirement as to the minimum number of 2022 ZDP Shares which must be held in public hands which is a condition to Admission.

OVERSEAS ZDP SHAREHOLDERS

In order to avoid any inadvertent breach of overseas securities laws, Overseas ZDP Shareholders shall be deemed to have elected to not participate in the Rollover Offer. Notwithstanding any other provision of this document, UIL Finance reserves the right to permit any Overseas ZDP Shareholders to receive 2022 ZDP Shares under the Rollover Offer if the UIL Finance Directors, in their sole and absolute discretion, are satisfied at any time prior to the Closing Date that the transaction in question is exempt from, or not subject to, the legislation or regulations giving rise to the restrictions in question.

THE INITIAL PLACING

Under the Initial Placing, UIL Finance is proposing to issue up to 50 million 2022 ZDP Shares (less the number of 2022 ZDP Shares issued pursuant to the Rollover Offer). Stockdale Securities has agreed under the Placing Agreement to use its reasonable endeavours to procure placees for the 2022 ZDP Shares at the Initial Placing Price. No 2022 ZDP Shares will be issued pursuant to the Initial Placing where such issue would reduce the ZDP Cover of the 2022 ZDP Shares below 1.35x. The Initial Placing will close at 11.00 a.m. on 17 June 2016 (or such later date, not being later than 31 July, as UIL Finance and Stockdale Securities may agree). If the Initial Placing is extended, the revised timetable will be notified via a Regulatory Information Service.

The Initial Placing is conditional, inter alia, on:

·     the Placing Agreement becoming wholly unconditional (save as to completion of the Rollover Offer and Initial Admission) and not having been terminated in accordance with its terms prior to completion of the Rollover Offer and Initial Admission;

·     minimum Gross Proceeds from the placing of 2022 ZDP Shares (together with the value of any 2022 ZDP Shares issued pursuant to the Rollover Offer) equalling £750,000; and

·     Admission of the Initial Placing Shares occurring by 8.00 a.m. on 23 June 2016 (or such later date as UIL Finance and Stockdale Securities may agree in writing, being not later than 31 July 2016).

The Initial Placing is not being underwritten.

UIL reserves the right to subscribe for all or any of the 2022 ZDP Shares available under the Initial Placing to the extent that such shares are not subscribed for by any other placees pursuant to the Initial Placing or issued pursuant to the Rollover Offer, subject to ensuring that the ZDP Cover of the 2022 ZDP Shares is not less than 1.35x or that sufficient 2022 ZDP Shares are held in public hands so as to satisfy the Listing Rule requirement at completion of the Rollover Offer and Initial Admission. Such shares will be held by UIL for investment purposes in accordance with its investment policy. Applications will be made to the Financial Conduct Authority and to the London Stock Exchange respectively for the 2022 ZDP Shares issued pursuant to the Rollover Offer and the Initial Placing to be admitted: (i) to the Official List (by way of a standard listing under Chapter 14 of the Listing Rules); and (ii) to the London Stock Exchange's main market for listed securities. It is expected that Initial Admission will become effective and that unconditional dealings in such 2022 ZDP Shares will commence on the London Stock Exchange on 23 June 2016.

In the event that the aggregate applications under the Initial Placing were to exceed 50 million 2022 ZDP Shares, it would be necessary to scale back applications under the Initial Placing. In such an event, applications under the Initial Placing will be scaled back at the UIL Finance Directors' discretion (in consultation with Stockdale Securities) and thereafter no further commitments will be accepted and the Initial Placing will be closed.

In addition, it may also be necessary to scale back applications of 2022 ZDP Shares to ensure either that, following the Initial Placing, the ZDP Cover of the 2022 ZDP Shares is not less than 1.35x or that sufficient 2022 ZDP Shares are held in public hands so as to satisfy the Listing Rule requirement at completion of the Rollover Offer and Initial Admission.

THE PLACING PROGRAMME

Following the Initial Placing the Directors intend to implement the Placing Programme (although Placing ZDP Shares may be issued pursuant to the Placing Programme from 18 May 2016) which will close on 17 May 2017 (or any earlier date on which it is fully subscribed). Under the Placing Programme, UIL Finance is proposing to issue up to 50 million 2022 ZDP Shares (less the number of 2022 ZDP Shares issued under the Rollover Offer and the Initial Placing) and up to 25 million 2020 ZDP Shares at the applicable Issue Price. There is no minimum or maximum number of Placing ZDP Shares that may be placed with any subscriber.

No Placing ZDP Shares will be issued pursuant to the Placing Programme at a discount to their Accrued Capital Entitlement at the time of the relevant allotment, nor where such issue would reduce the ZDP Cover of the 2022 ZDP Shares or the 2020 ZDP Shares below 1.35x.

The Directors reserve the right to close the Placing Programme at any time prior to 17 May 2017. Notification of any closure or extension will be made through a Regulatory Information Service.

The allotment of Placing ZDP Shares under the Placing Programme is at the discretion of the UIL Finance Directors. Allotments may take place at any time prior to the final closing date of 17 May 2017. In relation to allotments, an announcement will be released through a Regulatory Information Service, including details of the number and class of Placing ZDP Shares allotted and the Issue Price for the allotment. It is anticipated that dealings in any Placing ZDP Shares issued pursuant to the Placing Programme will commence three Business Days after their allotment. Whilst it is expected that all Placing ZDP Shares allotted under the Placing Programme will be issued as Depositary Interests in uncertificated form, if any Placing ZDP Shares are issued in certificated form it is expected that share certificates will be despatched within ten Business Days after the relevant allotment date.

In the event that the aggregate applications under the Placing Programme were to exceed 50 million 2022 ZDP Shares and/or 25 million 2020 ZDP Shares, it would be necessary to scale back applications under the Placing Programme. In such an event, applications under the Placing Programme will be scaled back at the UIL Finance Directors' discretion (in consultation with Stockdale Securities) and thereafter no further commitments will be accepted and the Placing Programme will be closed. In addition, it may also be necessary to scale back applications of Placing ZDP Shares to ensure that following each placing under the Placing Programme: (i) the ZDP Cover of the 2020 ZDP Shares and the 2022 ZDP Shares is not less than 1.35x; and/ or (ii) sufficient ZDP Shares of each class are held in public hands so as to satisfy the Listing Rule requirement at the relevant Admission of the 2022 ZDP Shares and/or the 2020 ZDP Shares (as applicable).

The Placing Programme is not being underwritten and, as at the date of this document, the actual number and class of Placing ZDP Shares, if any, to be issued under the Placing Programme is not known. The number of Placing ZDP Shares available under the Placing Programme should not be taken as an indication of the number of Placing ZDP Shares finally to be issued.

The net proceeds of the Placing Programme is dependent on the subscriptions received, the number of 2022 ZDP Shares issued pursuant to the Rollover Offer and Initial Placing, the class of Placing ZDP Shares issued and the Issue Price at which such Placing ZDP Shares are issued under each placing. Assuming that the Initial Placing is fully subscribed and that gross proceeds of the Placing Programme equal £15 million, the net proceeds of the Placing Programme would be approximately £14.85 million with expenses (including any commission) of approximately £0.15 million. These expenses will be met out of the gross proceeds of the Placing Programme.

So far as the UIL Finance Directors are aware as at the date of this document, no major Shareholders or members of UIL Finance's or UIL's management, supervisory or administrative bodies intend to make a commitment for Placing ZDP Shares under the Placing Programme. However, UIL reserves the right to subscribe for all or any of the 2020 ZDP Shares available under the Placing Programme to the extent that such shares are not subscribed for by any other placees, subject to ensuring that the ZDP Cover of the 2020 ZDP Shares is not less than 1.35x or that sufficient 2020 ZDP Shares are held in public hands so as to satisfy the Listing Rule following completion of such subscription. Such shares will be held by UIL for investment purposes in accordance with its investment policy.

The Placing ZDP Shares issued under the Placing Programme will rank pari passu with the relevant class of ZDP Shares then in issue and will carry no entitlement to income, therefore the whole of any return will take the form of capital.

The Placing Programme will be suspended at any time when UIL Finance is unable to issue Placing ZDP Shares pursuant to the Placing Programme under any statutory provision or other regulation applicable to UIL or UIL Finance or otherwise at the UIL Finance Directors' discretion.

Stockdale Securities will be entitled to a commission payable by UIL in connection with the issue of the Placing ZDP Shares arising under the Rollover Offer and in respect of the gross proceeds of the Initial Placing and the Placing Programme. No commissions will be payable by UIL Finance or UIL to placees under the Initial Placing and the Placing Programme.

CONDITIONS TO EACH ALLOTMENT OF PLACING ZDP SHARES UNDER THE PLACING PROGRAMME

Each allotment of Placing ZDP Shares under the Placing Programme is conditional on:

·     the Issue Price being not less than the Accrued Capital Entitlement of the relevant Placing ZDP Shares at the time of the relevant allotment;

·     the ZDP Cover of the 2020 ZDP Shares and the 2022 ZDP Shares being not less than 1.35x, in each case taking into account the effect of the relevant allotment; and

·     Admission of the Placing ZDP Shares issued pursuant to such allotment.

In circumstances in which these conditions are not fully met, the relevant issue of Placing ZDP Shares pursuant to the Placing Programme will not take place.

THE PLACING PROGRAMME PRICE

The minimum price at which each new Placing ZDP Share will be issued under the Placing Programme will be the Accrued Capital Entitlement of the relevant class of ZDP Share at the date of allotment. The maximum price in respect of any allotment of Placing ZDP Shares will be equal to the best offer price of the relevant class of ZDP Share, as quoted on the London Stock Exchange at the time that the proposed allotment is agreed.

For these purposes, the Accrued Capital Entitlement will be calculated in accordance with the New UIL Finance Bye-Laws.

Holders of Ordinary Shares issued by UIL will not suffer any dilution of their voting rights as a result of the Placing as ZDP Shares do not carry voting rights save in very limited circumstances. Holders of 2022 ZDP Shares arising pursuant to the Rollover Offer will have their voting rights at class meetings of the 2022 ZDP Shares diluted when new 2022 ZDP Shares are issued pursuant to the Placing Programme. Holders of existing 2020 ZDP Shares will have their voting rights at class meetings of the 2020 ZDP Shares diluted when new 2020 ZDP Shares are issued pursuant to the Placing Programme.

WORKING CAPITAL

The Group is dependent on proceeds from the Initial Placing and Placing Programme, a reduction in the redemption sum payable on the redemption of the 2016 ZDP Shares following the Rollover Offer and proceeds from the sale of certain identified portfolio investments in order to meet its working capital requirements for at least the 12 months following the date of this document.

If the conditions of the Rollover Offer, Initial Placing and Placing Programme are not satisfied the Group will need to make alternative arrangements to fund the redemption of the 2016 ZDP Shares on 31 October 2016. In such a situation, which the Group believes to be a reasonable worst case scenario, the Group would be expected to have a shortfall of approximately £64 million by 31 October 2016. Accordingly the Group would make additional sales of investments from the Group's investment portfolio, it would continue to seek investors pursuant to the Placing Programme and may also seek further alternative sources of debt financing. The Company believes that these alternative arrangements are likely to be successful.

The Group has a long track record of investment realisations having realised investments providing proceeds of £100 million in the financial year ended 30 June 2015 and £90 million in the year ended 30 June 2014. As at 30 April 2016 the Group's investment portfolio amounted to £421.7 million of which listed investments amounted to £329.3 million, unlisted investments £67.7 million and loans to listed investments £24.7 million. The Issue Price under the Placing Programme is not less than the Accrued Capital Entitlement of the relevant class of ZDP shares at the time of allotment and since the 2020 ZDP Shares are trading at a premium of 12 per cent. to the accrued capital entitlement (as at 16 May 2016, the latest practicable date prior to the publication of this document) this gives the Group significant flexibility to attract placees for further 2020 ZDP Shares. The Group's Joint Portfolio Managers also have a track record of raising funds through alternative debt structures both for the Group and for other companies which they manage.

In the event that such arrangements are not successful and the Group is unable to fund the redemption of the 2016 ZDP Shares on 31 October 2016, the bye-laws of UIL provide that the UIL Directors shall, inter alia, convene a special general meeting of UIL at which a resolution shall be proposed requiring that UIL be wound up voluntarily pursuant to the Bermuda Companies Act.

ILLUSTRATIVE FINANCIAL EFFECTS OF THE PROPOSALS

By way of illustration and based upon the Assumptions, had the Rollover Offer, the Initial Placing and Placing Programme taken place at the date of this document, the Group's Gross Assets would have been increased by the estimated gross proceeds of the Initial Placing and the Placing Programme of £55 million, adjusted for all expenses in relation to the Proposals estimated to be approximately £1 million.

By way of illustration and based upon the Assumptions, if, 10 million 2022 ZDP Shares are issued pursuant to Rollover Offer, 40 million 2022 ZDP Shares are issued pursuant to the Initial Placing at a price of 100p per share, and 11.8 million 2020 ZDP Shares are issued pursuant to the Placing Programme, the illustrative ZDP Cover for the 2016 ZDP Shares, the 2018 ZDP Shares, the 2020 ZDP Shares and the 2022 ZDP Shares following completion of the Initial Placing would be 5.46x, 2.75x, 2.03x and 1.52x respectively.

By way of illustration and based upon the Assumptions, if the maximum number of ZDP Shares are issued pursuant to the Rollover Offer, Initial Placing and Placing Programme (namely 50 million 2022 ZDP Shares and 25 million 2020 ZDP Shares), the illustrative ZDP Cover following the Proposals for the 2016 ZDP Shares, the 2018 ZDP Shares, the 2020 ZDP Shares and the 2022 ZDP Shares would be 5.66x, 2.85x, 1.93x and 1.47x respectively.

The above statements are unaudited and are solely for illustrative purposes only, represent hypothetical situations and, therefore, do not reflect the Group's actual financial position or results.

COSTS OF THE PROPOSALS

The expenses of the Group incurred in connection with the Proposals (and based upon the Assumptions) are estimated to be approximately £1 million.

USE OF PROCEEDS

The gross proceeds of the Initial Placing and the Placing Programme will be paid by UIL Finance to UIL for investment to continue to further diversify its portfolio in accordance with its investment policy.

ADMISSION AND DEALINGS

Applications will be made to the Financial Conduct Authority and to the London Stock Exchange respectively for the 2022 ZDP Shares issued pursuant to the Rollover Offer and the Initial Placing to be admitted: (i) to the Official List (by way of a standard listing under Chapter 14 of the Listing Rules); and (ii) to the London Stock Exchange's main market for listed securities. It is expected that Initial Admission will become effective and that unconditional dealings in such 2022 ZDP Shares will commence on the London Stock Exchange on 23 June 2016

Applications will be made to the Financial Conduct Authority and to the London Stock Exchange respectively for the Placing ZDP Shares issued pursuant to the Placing Programme to be admitted: (i) to the Official List (by way of a standard listing under Chapter 14 of the Listing Rules); and (ii) to the London Stock Exchange's main market for listed securities. It is expected that such subsequent Admissions will become effective and that unconditional dealings in such Placing ZDP Shares will commence on the London Stock Exchange during the period from 23 June 2016 to 17 May 2017.

All allotments of Offered ZDP Shares will be conditional on Admission of such Offered ZDP Shares. The timing of the applications for Admission and their approval pursuant to the Placing Programme are not known as at the date of this document but no Placing ZDP Shares will be issued if they will not be so admitted. This document has been published in order to obtain Admission to a standard listing on the Official List of any 2022 ZDP Shares arising pursuant to the Rollover Offer or issued under the Initial Placing and of any other Offered ZDP Shares issued under the Placing Programme. No application will be made for the Offered ZDP Shares to be listed or dealt in on any stock exchange or investment exchange other than the London Stock Exchange.

The Offered ZDP Shares arising pursuant to the Rollover Offer and to be issued pursuant to the Initial Placing and the Placing Programme will be in registered form and may be held either in certificated form or as Depositary Interests in uncertificated form and settled through CREST.

CREST is a computerised paperless settlements system, which allows securities to be transferred via electronic means, without the need for a written instrument of transfer. Foreign securities cannot be held or traded in the CREST system. To enable investors to settle their Offered ZDP Shares through CREST, the DI Depositary will hold the relevant Offered ZDP Shares and will issue dematerialised Depositary Interests representing the underlying Offered ZDP Shares to the relevant investors. Dealings in the Offered ZDP Shares in advance of the crediting of the relevant Depositary Interests acquired shall be at the risk of the person concerned.

The DI Depositary will hold the Offered ZDP Shares on trust for the respective underlying Offered ZDP Shareholders. This trust relationship is documented in a deed executed by the DI Depositary. The Depositary Interests are independent, English securities and are held on a register maintained by the Registrars. The Depositary Interests have the same security code as the Offered ZDP Shares that they represent and do not require a separate admission to the London Stock Exchange.

Shareholders wishing to settle Offered ZDP Shares through CREST can transfer their holding to the DI Depositary, which will then issue Depositary Interests representing the relevant transferred Offered ZDP Shares. The Depositary Interest holder will not hold a certificate evidencing the underlying Offered ZDP Share. Depositary Interests are issued on a one-for-one basis against the relevant Offered ZDP Shares that they represent for all purposes. Any payments received by the DI Depositary will be passed on to each Depositary Interest holder noted on the Depositary Interest register as the beneficial owner of the relevant Offered ZDP Shares.

Participation in CREST is voluntary and Shareholders who wish to hold Offered ZDP Shares outside of CREST will be entered on the Register and issued with a share certificate evidencing ownership. Application will be made by the DI Depositary for Depositary Interests representing the Offered ZDP Shares to be admitted to CREST on their Admission.

Investors should be aware that Offered ZDP Shares delivered in certificated form are likely to incur, on an ongoing basis, higher dealing costs than those Offered ZDP Shares held through CREST. ZDP Shares initially issued in certificated form may subsequently be exchanged for Depositary Interests, which can be deposited into CREST in accordance with the procedure described above. Certificates in respect of 2022 ZDP Shares arising under the Rollover Offer and the Initial Placing and held in certificated form are expected to be despatched on 24 June 2016 or as soon as practicable thereafter.

Temporary documents of title will not be issued pending the delivery of 2022 ZDP Shares to the persons entitled thereto and, during that period, transfers will be certified against the register of 2022 ZDP Shareholders.

PROPOSED ACQUISITION OF FURTHER ORDINARY SHARES IN SOMERS

In addition to the Proposals announced by UIL Finance today, the UIL Board has today announced the proposed conditional purchase of 2.45 million ordinary shares in Somers to be satisfied by the issue of new UIL ordinary shares valued at NAV at the latest practicable date prior to completion.  The purchase will take UIL's interest from 49.6 per cent. to 70.1 per cent. of Somers' ordinary share capital. It is proposed that UIL purchase 2.45 million ordinary shares from Permanent Investments Limited which is a related party of ICM Limited, the joint portfolio manager, pursuant to Listing Rule 11. As a result, UIL Shareholder approval of this transaction is required and a separate circular is being sent to UIL Shareholders. In addition, the proposed purchase is also subject to the receipt of all necessary FCA and other regulatory approvals.

The UIL Board believes that the benefits of the proposed purchase of Somers' ordinary shares will include increasing UIL's Gross Assets in order to provide increased ZDP Cover for the ZDP Shares and enabling UIL to increase its interest materially above 50 per cent. in Somers to thereby benefit from the expected future uplift in its underlying investments. Although Somers will become a subsidiary of UIL, UIL intends to continue to account for Somers as an investment at fair value in its financial statements.

By way of illustration, if the proposed purchase of the Somers' ordinary shares pursuant to the Related Party Transaction does not complete, and based on the Assumptions, the illustrative ZDP Cover for the 2016 ZDP Shares, the 2018 ZDP Shares, the 2020 ZDP Shares and the 2022 ZDP Shares following completion of the Initial Placing would be 5.19x, 2.61x, 1.93x and 1.45x respectively.

DIRECTORS' OPINION

As the Proposals do not require the approval of ZDP Shareholders, the UIL Finance Directors are not required to make a recommendation as to how voting rights should be exercised. The UIL Finance Directors do, however, consider that the Proposals are in the best interests of UIL Finance and the ZDP Shareholders as a whole.

Yours faithfully

Peter Burrows
Chairman"

Issue Statistics

2022 ZDP Share issue price and Initial Placing Price	100p
Initial Capital Entitlement per 2022 ZDP Share	100p
Final Capital Entitlement per 2022 ZDP Share	146.99p
Gross Redemption Yield at 2022 issue price	6.25%
2022 ZDP Cover following the Rollover Offer, Initial Placing and Placing Programme*	1.52x
Maximum size of the Initial Placing and the Placing Programme	50 million 2022 ZDP Shares and 25 million 2020 ZDP Shares **
Issue Price under the Placing Programme	not less than the Accrued Capital Entitlement of the relevant class of ZDP Shares at the time of the allotment ***

* Assuming that an aggregate of 40 million 2022 ZDP Shares and 11.8 million 2020 ZDP Shares are issued.

** The number of 2022 ZDP Shares available under the Initial Placing and Placing Programme will be reduced to the extent that 2022 ZDP Shares are taken up under the Rollover Offer and, in the case of the Placing Programme, issued under the Initial Placing.

*** The maximum Issue Price will be equal to the best offer price per relevant class of ZDP Shares at the time the proposed allotment is agreed.

Expected Timetable

Prospectus published	18 May 2016
Placing Programme opens	18 May 2016
Latest time for receipt of Forms of Election and TTE Instructions in connection with the Rollover Offer	3.00 p.m. on 10 June 2016
Record Date for the Rollover Offer	5.00 p.m. on 10 June 2016
Latest time and date for receipt of placing commitments under the Initial Placing of 2022 ZDP Shares	11.00 a.m. on 17 June 2016
Announcement of the result of the Rollover Offer and Initial Placing of 2022 ZDP Shares	20 June 2016
Admission of 2022 ZDP Shares issued pursuant to the Rollover Offer and Initial Placing to the Official List and dealings commence on the London Stock Exchange	23 June 2016
Placing Programme closes	17 May 2017

* All references to times are to London time unless specified otherwise. Each of the times and dates is subject to change. Any changes to the timetable will be notified by publication of a notice through a RIS.

For further information please contact:

ICM Investment Management Limited

Charles Jillings                                                                                           01372 271486

Stockdale Securities Limited

Alastair Moreton/Rose Ramsden                                                      0207 601 6118

 

END

 

 

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