Publication of Prospectus

RNS Number : 2601T

Utilico Investments Limited

02 December 2011

 



For immediate release on 2 December 2011

Utilico Investments Limited ("UIL")

Utilico Finance Limited ("UFL")

(together the "Group")

Publication of prospectus

Further to the announcement on 14 November 2011 regarding proposals to offer the holders of 2012 ZDP shares the opportunity to elect to roll part of their investment into a new 2018 ZDP share issue and arrangements to enable the issue of additional 2014 ZDP shares, 2016 ZDP shares and 2018 ZDP shares, the Group announces that it has today published a prospectus containing details of these proposals. The text of the Chairman's letter extracted from the prospectus is set out below.

"To holders of 2012 ZDP Shares and, for information only, to holders of Ordinary Shares, 2014 ZDP Shares, 2016 ZDP Shares and Warrantholders

Introduction

Your Board has today announced detailed proposals to provide holders of existing 2012 ZDP Shares with the opportunity to roll over some or all (subject to the overall limits of the Rollover Offer) of their 2012 ZDP Shares into a new class of 2018 ZDP Shares and for a placing of up to 10.0 million 2014 ZDP Shares, 10.0 million 2016 ZDP Shares and, to the extent that the Rollover Offer is not taken up in full, up to 49.8 million 2018 ZDP Shares.

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

Background to the Proposals

The Rollover Offer

Utilico Finance currently has three series of ZDP Share in issue. These are due for redemption on 31 October in 2012, 2014 and 2016 respectively. The aggregate redemption sum payable on the redemption of the 2012 ZDP Shares is approximately £80.75 million. This will be due on 31 October 2012. Following discussions regarding the payment of the Final Capital Entitlement in respect of the 2012 ZDP Shares, the Directors concluded that they wish to provide 2012 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 and Placing.

Under the Rollover Offer, each Qualifying Holder of 2012 ZDP Shares on the Record Date will be given the opportunity to rollover up to 65 per cent. of their Qualifying Holding into new 2018 ZDP Shares. The Rollover Value attributed to the 2012 ZDP Shares will be equal to their Accrued Capital Entitlement as at the Rollover Date, which will be 168.58p per 2012 ZDP Share. The new 2018 ZDP Shares arising on the conversion of 2012 ZDP Shares pursuant to the Rollover Offer will be deemed to be issued at the 2018 ZDP Share issue price, which will be 100p per 2018 ZDP Share.

The 2018 ZDP Shares will have a Gross Redemption Yield of 7.25 per cent. and a maturity date of 31 October 2018. Assuming the Rollover Offer is taken up in full, up to 49,842,413 new 2018 ZDP Shares

will arise on the conversion of 2012 ZDP Shares and, based on the Assumptions, the 2018 ZDP Shares will have a ZDP Cover of 1.67x following the Rollover Offer and a ZDP Cover of 1.57x following the Rollover Offer and the Placing.

Investors should note that the predetermined capital entitlement of the ZDP Shares is not guaranteed and is dependent upon Utilico having sufficient assets to satisfy its obligations under the Subscription Agreement.

There is no present intention to put forward further proposals to 2012 ZDP Shareholders in advance of the ZDP Repayment Date in 2012.

The Placing

Utilico Finance also intends to issue, pursuant to the Placing, up to 10.0 million new 2014 ZDP Shares, 10.0 million new 2016 ZDP Shares and, to the extent that the Rollover Offer is not taken up in full, up to 49.8 million 2018 ZDP Shares. The Placing is flexible and may have a number of closing dates in order to provide Utilico Finance with the ability to issue 2014 ZDP Shares, 2016 ZDP Shares and, if applicable, 2018 ZDP Shares over a period of time. The Placing will open on 2 December 2011 and will close on 1 December 2012 (or any earlier date on which it is fully subscribed). The Placing Shares will, when issued, rank equally with the existing 2014 ZDP Shares, the existing 2016 ZDP Shares and the 2018 ZDP Shares arising under the Rollover Offer respectively.

Benefits of the Proposals

The Rollover Offer and the Placing are being proposed primarily to assist Utilico Finance in meeting its obligation to finance the Final Capital Entitlement on maturity of the 2012 ZDP Shares, by continuing to spread the aggregate final capital entitlement liability over three classes of ZDP Shares thereby reducing the extent of the investments within the Utilico portfolio which could need to be realised at a potentially inopportune time.

The Board believes the Proposals may also have the following advantages:

·     maintain the capability of Utilico Finance to issue new ZDP Shares to satisfy demand over a period of time;

·     to allow 2012 ZDP Shareholders to remain invested in the Group; and

·     to further increase the number of ZDP Shares of each class in issue, thereby enabling the Company to attract a wider range of investors which, in turn, would be expected to improve the liquidity in the ZDP Shares.

The Rollover Offer

Under the Rollover Offer, holders of 2012 ZDP Shares are being given the opportunity to convert some or all of their holding of 2012 ZDP Shares into new 2018 ZDP Shares. The Rollover Value attributed to the 2012 ZDP Shares will be equal to their Accrued Capital Entitlement as at the Rollover Date, which will be 168.58p per 2012 ZDP Share. The Rollover Offer is limited to a maximum of 65 per cent. of the 2012 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 65 per cent. of their holding of 2012 ZDP Shares as at the Record Date subject to the Directors not exercising their discretion to scale back elections under the Rollover Offer as described below.

The rights attaching to the 2018 ZDP Shares will be substantially similar to those attaching to the 2012 ZDP Shares but, subject to Admission occurring, the 2018 ZDP Shares will have an illustrative initial capital entitlement on 26 January 2012 of 100p per 2018 ZDP Share and will have a Final Capital Entitlement of 160.52p per 2018 ZDP Share on 31 October 2018, the 2018 ZDP Repayment Date, equivalent to a Gross Redemption Yield of 7.25 per cent. per annum on the 2018 ZDP Share issue price.

As with the 2012 ZDP Shares, the 2018 ZDP Shares will not carry the right to vote at general meetings of Utilico or Utilico 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 2018 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 2012 ZDP Share validly elected to be rolled over will be converted into 1.6858 2018 ZDP Shares to be issued on the terms set out in the New Utilico Finance Bye-Laws. Fractions of 2018 ZDP Shares will not be issued. The number of 2018 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 Utilico 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 2012 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 2012 ZDP Shares and subject to the exercise of the Directors' discretion to scale back elections under the Rollover Offer as described below.

In order to elect to participate in the Rollover Offer, 2012 ZDP Shareholders are advised to refer to the section entitled ''Action to be Taken'' on pages 16 and 17 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.

The Company 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 Board's sole judgement (acting reasonably) meet the requirements of the Rollover Offer. The Company 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 the Company in lieu thereof. None of the Company, 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 2012 ZDP Shares signs and returns a Form of Election but does not specify in Box 1 of the form how many 2012 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.

The Rollover Offer is conditional on Admission, and therefore subject to the satisfaction of Listing Rule 14.2.2 as to the number of 2018 ZDP Shares held in public hands as at Admission. The 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 2012 ZDP Shareholder's Basic Entitlement if the Directors consider this necessary to ensure that sufficient 2018 ZDP Shares are held in public hands so as to satisfy the Listing Rule requirement. In particular, the Directors may exercise their discretion so that the relevant 2018 ZDP Shares can be placed pursuant to the Placing in order to satisfy this Listing Rule.

ZDP Shareholders who are Overseas ZDP Shareholders and any other 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 2012 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 2012 ZDP Shares that are validly elected and accepted to participate in the Rollover Offer into new 2018 ZDP Shares pursuant to the New Utilico Finance Bye-Laws. The key points of the Rollover Offer are as follows:

Subject to completion of the Rollover Offer, each 2012 ZDP Share validly elected to be rolled over will automatically convert into 1.6858 2018 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 2012 ZDP Shares that converted into 2018 ZDP Shares pursuant to the Rollover Offer shall be cancelled and the Company shall issue to each such holder of former 2012 ZDP Shares new certificates in respect of the 2018 ZDP Shares which have arisen upon conversion unless such holder of former 2012 ZDP Shares elects to hold their 2018 ZDP Shares in uncertificated form.

The rights attaching to 2012 ZDP Shares that are not converted into 2018 ZDP Shares pursuant to the

Rollover Offer will remain unchanged, with their ZDP Repayment Date being 31 October 2012 and a Final Capital Entitlement of 177.52 pence per share.

Conditions to the Rollover Offer

The Rollover Offer is conditional on:

·     valid elections being received in respect of 2018 ZDP Shares with a minimum value, at the 2018 ZDP Share issue price, of £5 million (including any 2018 ZDP Shares issued pursuant to the Placing and allotted at the same time as the 2018 ZDP Shares issued under the Rollover Offer);

·     ZDP Cover of all classes of ZDP Share being not less than 1.5x, 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 ZDP Shares issued pursuant to the Rollover Offer and, if applicable, the Placing.

In circumstances in which these conditions are not fully met, the Rollover Offer will not take place and no 2012 ZDP Shares will be converted into 2018 ZDP Shares.

Announcement of the Results of the Rollover Offer

The results of the Rollover Offer will be announced via an RNS service of the London Stock Exchange on or around 20 January 2012. This announcement will include the number of 2018 ZDP Shares arising pursuant to the Rollover Offer, the number of 2012 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 Directors have exercised their discretion to scale back elections so as to enable Utilico Finance to satisfy the Listing Rule requirement as to the minimum number of 2018 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, the Company reserves the right to permit any Overseas ZDP Shareholders to receive 2018 ZDP Shares under the Rollover Offer if the 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 Placing

The Placing will open on 2 December 2011 and will close on 1 December 2012 (or any earlier date on which it is fully subscribed). The maximum number of 2014 ZDP Shares to be issued pursuant to the Placing is 10,000,000, the maximum number of 2016 ZDP Shares to be issued pursuant to the Placing is 10,000,000 and the maximum number of 2018 ZDP Shares to be issued pursuant to the Placing is 49,842,413, less the number of 2018 ZDP Shares arising pursuant to the Rollover Offer. No ZDP Shares will be issued at a discount to their Accrued Capital Entitlement at the time of the relevant allotment, nor where such issue would reduce ZDP Cover of any class of ZDP Share below 1.5 times. The Directors reserve the right to close the Placing at any time or to extend the closing date of the Placing to no later than 1 December 2012. Notification of any closure or extension will be via an RNS announcement.

The allotment of new 2014 ZDP Shares, 2016 ZDP Shares and 2018 ZDP Shares under the Placing is at

the discretion of the Directors. Allotments may take place at any time prior to the final closing date of 1 December 2012. In relation to allotments, an announcement will be released through an RNS service of the London Stock Exchange, including details of the number and class of New ZDP Shares allotted and the Placing Price for the allotment. It is anticipated that dealings in any New ZDP Shares issued pursuant to the Placing will commence three Business Days after their allotment. Whilst it is expected that all New ZDP Shares allotted pursuant to the Placing will be issued as Depositary Interests in uncertificated form, if any New 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.

The Placing is not being underwritten and, as at the date of this document, the actual number of 2014 ZDP Shares, 2016 ZDP Shares and 2018 ZDP Shares, if any, to be issued under the Placing is not known. The number of New ZDP Shares available under the Placing should not be taken as an indication of the number of ZDP Shares finally to be issued.

So far as the Directors are aware as at the date of this document, no major Shareholders or members of the Company's management, supervisory or administrative bodies intend to make a commitment for New ZDP Shares under the Placing.

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

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

Conditions to the Placing

Each allotment of 2014 ZDP Shares, 2016 ZDP Shares or 2018 ZDP Shares pursuant to the Placing is

conditional on:

·     the Placing Price being not less than the Accrued Capital Entitlement of the relevant class of ZDP Share;

·     ZDP Cover of all classes of ZDP Share being not less than 1.5, taking into account the effect of the relevant allotment; and

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

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

The Placing Price

The minimum price at which each New ZDP Share will be issued, will be calculated by reference to the Accrued Capital Entitlement of each existing 2014 ZDP Share, 2016 ZDP Share and 2018 ZDP Share, respectively. The maximum price in respect of any allotment of New ZDP Shares will be equal to the best offer price of each existing 2014 ZDP Share, 2016 ZDP Share and 2018 ZDP Share respectively, 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 Utilico Finance Bye-Laws.

Holders of Ordinary Shares issued by Utilico 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 existing 2014 ZDP Shares, existing 2016 ZDP Shares and holders of 2018 ZDP Shares arising pursuant to the Rollover Offer will have their voting rights at class meetings of the relevant class of ZDP Shares diluted when New ZDP Shares are issued pursuant to the Placing. If the maximum number of 2014 ZDP Shares are issued, a holder of 10 per cent. of the existing 2014 ZDP Shares would have their voting rights at 2014 ZDP Share class meetings reduced to 7.9 per cent. If the maximum number of 2016 ZDP Shares are issued, a holder of 10 per cent. of the existing 2016 ZDP Shares would have their voting rights at 2016 ZDP Share class meetings reduced to 7.9 per cent.

Illustrative financial effects of the Proposals

By way of illustration and based upon the Assumptions, had the Rollover Offer and Placing taken place (and been taken up in full) at the date of this document, the Group's Gross Assets would have been increased by the estimated gross proceeds of the Placing of £29.8 million, adjusted for all expenses in relation to the Proposals estimated to be approximately £1.1 million.

By way of illustration and based upon the Assumptions, if the Rollover Offer is taken up in full, the illustrative ZDP Cover following such rollover (and before any New ZDP Shares are issued under the Placing) for the 2012 ZDP Shares, the 2014 ZDP Shares, the 2016 ZDP Shares and the 2018 ZDP Shares would be 9.53x, 4.02x, 2.41x and 1.67x respectively.

By way of illustration and based upon the Assumptions, if, in addition to the Rollover Offer being taken up in full, 10.0 million 2014 ZDP Shares and 10.0 million 2016 ZDP Shares are issued pursuant to the Placing at a price per ZDP Share of 149.5p and 148.5p respectively (being the mid market price of the respective ZDP Shares as at 30 November 2011), the illustrative ZDP Cover for the 2012 ZDP Shares, the 2014 ZDP Shares, the 2016 ZDP Shares and the 2018 ZDP Shares following the Placing would be 10.18x, 3.72x, 2.15x and 1.57x respectively.

This statement is unaudited and is solely for illustrative purposes only, represents a hypothetical situation and, therefore, does 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 £1.1 million.

Use of proceeds

The gross proceeds of the Placing will be used by Utilico Finance to fund the Final Capital Entitlement of the 2012 ZDP Shares on maturity (and pending such maturity may be used to reduce Group debt or be invested in listed liquid securities) and any balance will be paid to Utilico for investment to continue to further diversify its portfolio in accordance with its investment policy.

Admission and Dealings

Application will be made for the New ZDP Shares to be admitted to a standard listing on the Official List and to trading on the main market for listed securities of the London Stock Exchange. All allotments of New ZDP Shares will be conditional on Admission. The timing of the applications for Admission and their approval are not known as at the date of this document but no New 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 New ZDP Shares issued pursuant to the Rollover Offer and the Placing. No application will be made for the New ZDP Shares to be listed or dealt in on any stock exchange or investment exchange other than the London Stock Exchange.

The 2018 ZDP Shares to be issued pursuant to the Rollover Offer and the Placing will be issued 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 New ZDP Shares through CREST, the Depositary will hold the relevant New ZDP Shares and will issue dematerialised Depositary Interests representing the underlying New ZDP Shares to the relevant investors.

The Depositary will hold the New ZDP Shares on trust for the respective underlying ZDP Shareholders. This trust relationship is documented in a deed executed by the 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 ZDP Shares that they represent and do not require a separate admission to the London Stock Exchange.

Shareholders wishing to settle ZDP Shares through CREST can transfer their holding to the Depositary, which will then issue Depositary Interests representing the transferred ZDP Shares. The Depositary Interest holder will not hold a certificate evidencing the underlying ZDP Share. Depositary Interests are issued on a one for one basis against the ZDP Shares that they represent for all purposes. Any payments received by the Depositary will be passed on to each Depositary Interest holder noted on the Depositary Interest register as the beneficial owner of the relevant 2018 ZDP Shares.

Participation in CREST is voluntary and Shareholders who wish to hold ZDP Shares outside of CREST will be entered on the Jersey branch register and issued with a share certificate evidencing ownership.

Application will be made by the Depositary for Depositary Interests representing the New ZDP Shares to be admitted to CREST on Admission.

Investors should be aware that ZDP Shares delivered in certificated form are likely to incur, on an ongoing basis, higher dealing costs than those ZDP Shares held through CREST. 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 New ZDP Shares issued in certificated form are expected to be despatched on 30 January 2012 or as soon as practicable thereafter.

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

Directors' opinion

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

Yours faithfully

Roger Urwin

Chairman"

Expected timetable

Prospectus published	2 December 2011
Placing opens	2 December 2011
Record Date for the Rollover Offer	5.00 p.m. on 13 January 2012
Latest time for receipt of Forms of Election and TTE Instructions in connection with the Rollover Offer	5.00 p.m. on 13 January 2012
Announcement of the result of the Rollover Offer	20 January 2012
Admission of 2018 ZDP Shares to the Official List and dealings commence on the London Stock Exchange	26 January 2012
Earliest date for New ZDP Shares to be issued pursuant to the Placing	26 January 2012
Placing closes and last date for New ZDP Shares to be issued pursuant to the Placing	1 December 2012

*All references to times are to London time unless specified otherwise

Terms used and not defined in this announcement bear the meaning given to them in the Prospectus dated 2 December 2011.

A copy of the Prospectus is being submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.do and on the Company's website: www.utilico.co.uk

Copies of the Prospectus are available from the offices of Norton Rose LLP, 3 More London Riverside, London SE1 2AQ.

For further information please contact:

ICM Analysis & Research Ltd

Charles Jillings                                                                  01372 271486

Westhouse Securities Limited

Alastair Moreton/Hannah Young                              0207 601 6119

 

END

 

 

PDILLFVLFTLFIIL