Tender Offer for up to 10 per cent. of Shares

RNS Number : 5723T

Advance Developing Markets Fund Ltd

21 November 2013

 



Advance Developing Markets Fund Limited

("ADMF" or the "Company")

Tender Offer for up to 10 per cent. of Shares in issue and publication of circular

Introduction

Further to the Company's announcement on 4 November 2013, a circular explaining the terms of a Tender Offer for up to 10 per cent. of the Shares in issue (the "Circular") will today be posted to Shareholders. A copy of the Circular will be submitted to the National Storage Mechanism and will shortly be available at: http://www.morningstar.co.uk/uk/NSM and on the Company's website: www.advance-emerging.com.

The Chairman's Letter in respect of the Tender Offer, as contained in the Circular, is set out below.

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

Chairman's Letter

"Dear Shareholder,

Tender Offer for up to 10 per cent. of the Shares in issue

1. Introduction

At the extraordinary general meeting of the Company held on 15 March 2013, shareholders approved proposals for two conditional tender offers for up to 10 per cent. of the Company's shares in issue (excluding treasury shares) at 6 monthly intervals over the 12 month period to 30 April 2014.

As announced to the market on 4 November 2013, in the first six months measurement period ended 31 October 2013, the Company's shares traded at an average discount of 10.5 per cent. and the Company's performance over the same period, as measured by its net asset value total return, was 3.0 per cent. below that of the MSCI Emerging Markets Total Return Index (net) in Sterling terms. Consequently, the Board will be implementing a tender offer for up to 10 per cent. of the Company's shares in issue (excluding treasury shares) at a Tender Price equal to a 1 per cent. discount to the Formula Asset Value per Tendered Share.

The Company out-performed its benchmark in the first half of its financial year, being the six months ended 30 April 2013. However, the measurement period over the second half of the financial year proved to be one of exceptional volatility within emerging markets, with market performance largely driven by speculation over the future path of US monetary policy.

The purpose of this document is to set out the mechanics and the terms and conditions of the Tender Offer and to explain how Shareholders (other than Excluded Shareholders) may tender their Shares in the Tender Offer should they wish to do so.

This letter is not a recommendation for Shareholders to tender their Shares under the Tender Offer. Whether or not Shareholders tender their Shares will depend on, among other things, their view of the Company's prospects and their own individual circumstances, including their tax position, on which they should seek their own independent advice.

2. The Tender Offer

The Board proposes to make available a Tender Offer for up to 10 per cent. of the Shares in issue (excluding treasury shares) on the Record Date to enable those Shareholders (other than Excluded Shareholders) who wish to realise a portion of their holding of Eligible Shares to do so.

The Tender Price will be an amount equal to a discount of 1 per cent. to the Formula Asset Value per Tendered Share as at the close of business on 6 December 2013, calculated in accordance with paragraph 4 of Part III of this document. The Tender Price being equal to a 1 per cent. discount to the Formula Asset Value per Tendered Share allows Shareholders who wish to realise a portion of their holding of Eligible Shares to do so at a price close to NAV per Share whilst providing for a small uplift to NAV per Share for continuing Shareholders.

The Record Date for the Tender Offer is the close of business on 7 November 2013.

Under the terms of the Tender Offer, Shareholders (other than Excluded Shareholders) will be entitled to tender up to their Basic Entitlement, being 10 per cent. of the Eligible Shares they held as at the Record Date. Shareholders may also be able to tender additional Eligible Shares, but any such excess tenders above the Basic Entitlement will only be satisfied, on a pro rata basis, to the extent that other Shareholders tender less than their aggregate Basic Entitlement. Tender applications will be rounded down to the nearest whole number of Shares.

The results of the Tender Offer are expected to be announced on 10 December 2013.

Further details of the Tender Offer

Shareholders (other than Excluded Shareholders) on the Register on the Record Date are invited to tender for sale some or all of their Eligible Shares (subject to the overall limits of the Tender Offer) to Westhouse Securities who, as principal, will purchase at the Tender Price the Eligible Shares validly tendered (subject to the overall limits of the Tender Offer) and, following the completion of all those purchases, sell the relevant Eligible Shares on to the Company at the Tender Price by way of an on-market transaction, in accordance with the terms of the Repurchase Agreement. All transactions will be carried out on the London Stock Exchange. Any Shares purchased by the Company pursuant to the Tender Offer will be cancelled.

The Tender Offer is conditional upon Westhouse Securities having received payment from the Company in respect of the purchase price for the Repurchased Shares in accordance with the Repurchase Agreement and may be terminated in certain circumstances as set out in paragraph 3 of Part III of this document. Further details of the calculation of the Tender Price are set out in paragraph 4 of Part III of this document. Shareholders' attention is drawn to the letter from Westhouse Securities set out in Part II of this document and, for Shareholders who hold their Shares in certificated form, to the Tender Form which together constitute the terms and conditions of the Tender Offer.

Details of how to tender Eligible Shares can be found in paragraph 5 of Part III of this document. Shareholders should note that, once tendered, Eligible Shares may not be sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.

Shareholders are not obliged to tender any Shares and, if they do not wish to participate in the Tender Offer, Shareholders should not complete or return their Tender Form or send a TTE Instruction.

Shareholders who are in any doubt as to the contents of this document or as to the action to be

taken should immediately consult their stockbroker, bank manager, solicitor, accountant or other independent professional adviser authorised under the Financial Services and Markets Act 2000 or other appropriately qualified independent adviser.

3. Further Conditional Tender Offer

In addition to the Tender Offer, the Board proposes to implement a further Conditional Tender Offer for up to 10 per cent. of the Company's Shares in issue (excluding treasury shares) at the end of the 6 month period ending on 30 April 2014 if: (i) the Shares trade at an average discount to NAV per Share of more than 10 per cent. over the period from 1 November 2013 to 30 April 2014; or (ii) the Company's performance over that period, as measured by its Net Asset Value total return, is less than that of the MSCI Emerging Markets Total Return Index (net) in Sterling terms.

The price at which the Company's Shares will be purchased under the Conditional Tender Offer will be an amount equal to a discount of 1 per cent. to the formula asset value per tendered share as at the close of business on a calculation date, following the 6 month period end.

As announced on 4 November 2013, with a view to increasing the Company's transparency, the Board has resolved to move from the current publication of a weekly NAV per Share to publishing the Company's NAV per Share through a Regulatory Information Service on a daily basis. Accordingly, the average discount to NAV per Share for the second tender monitoring period ending on 30 April 2014 will be calculated by reference to such daily NAV per Share and the quoted closing price of the Shares (as derived from Bloomberg).

In order to implement the Conditional Tender Offer (if any), Westhouse Securities will, as principal, purchase the Shares accepted under the Conditional Tender Offer at the applicable tender price and, following completion of the purchase, will sell the Shares on to the Company at the same price by way of an on-market transaction. The terms and conditions upon which it is intended that the Conditional Tender Offer would be implemented will be substantially the same as those set out in Part III of this document and will be included in a circular sent to Shareholders following the end of the 6 month period ending on 30 April 2014. In the event that a Conditional Tender Offer is implemented, a Shareholder need not have participated in the Tender Offer in order to participate in the subsequent Conditional Tender Offer.

4. Expenses

The fixed costs and expenses payable by the Company in connection with the Tender Offer are estimated to amount to approximately £90,000. This amount does not include portfolio realisation costs and commission payable to Westhouse Securities (being 0.2 per cent. of the amount equal to the Tender Price multiplied by the number of successfully tendered Eligible Shares). All costs and expenses in relation to the Tender Offer will be borne by Shareholders participating in the Tender Offer.

5. Taxation

Shareholders who sell Eligible Shares in the Tender Offer may, depending on their individual circumstances and subject to the availability of any exemption or relief, incur a liability to taxation. UK resident Shareholders should be aware that HMRC may seek to treat part of the disposal proceeds of their Eligible Shares as income. The attention of Shareholders is drawn to Part IV of this document, which sets out a general guide and is not exhaustive. Shareholders should seek advice in relation to their own specific circumstances.

Shareholders who are in any doubt as to their tax position should seek advice from an appropriately qualified professional.

6. Overseas Shareholders and Excluded Shareholders

Before participating in the Tender Offer, Shareholders with an address outside the United Kingdom or who are resident outside the United Kingdom should satisfy themselves that they are lawfully entitled to participate in the Tender Offer and should ensure full observance of the laws of any relevant territory in connection therewith (including obtaining any requisite consents, observing any other applicable formalities and paying any taxes required to be paid in such territory). Tender Forms will not be sent to Excluded Shareholders and the Tender Offer may not be accepted from within any of the Restricted Territories.

Shareholders with registered or mailing addresses overseas or who are citizens of, or nationals of, or

residents in, an overseas jurisdiction should read paragraph 10 of Part III of this document.

7. Action to be taken

Shareholders who hold their Eligible Shares in certificated form and who wish to participate in the Tender Offer should complete the Tender Form in accordance with the instructions set out therein and return the completed Tender Form by post or hand (during normal business hours only) to the Receiving Agent, Capita Asset Services, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, by no later than 1.00 p.m. on 6 December 2013, and they should also return the valid share certificate(s) and/or other documents of title in respect of the Eligible Shares tendered. A reply-paid envelope (for use within the UK only) is enclosed for your convenience.

Shareholders who hold their Eligible Shares in uncertificated form (that is, in CREST) and who wish to

participate in the Tender Offer should take the appropriate action in CREST to tender their Eligible Shares and should arrange for the relevant Eligible Shares to be transferred to escrow by no later than 1.00 p.m. on 6 December 2013, as described in paragraph 5.3 of Part III of this document.

Shareholders who wish to continue with their existing investment in the Company should not return a Tender Form or tender their Eligible Shares through CREST.

8. Recommendation

The Board makes no recommendation to Shareholders as to whether or not they should tender their Eligible Shares in the Tender Offer. The Directors do not intend to tender any of their own Shares. Whether or not Shareholders decide to tender their Eligible Shares will depend, amongst other factors, on their view of the Company's prospects and their own individual circumstances, including their own tax position.

Yours faithfully

Richard Bonsor

Chairman"

Expected Timetable

Record Date for Tender Offer	Close of business on 7 November 2013
Posting of the circular and Tender Form	21 November 2013
Latest time and date for receipt of Tender Forms and TTE Instructions (Closing Date)	1.00 p.m. on 6 December 2013
Calculation Date	Close of business on 6 December 2013
Announcement of results of Tender Offer and Tender Price	10 December 2013
Distribution of sale price of Repurchased Shares and  crediting of CREST accounts and despatch of cheques	Week commencing 16 December 2013
Despatch of balancing Share certificates and TFE messages in respect of any unpurchased Eligible Shares	Week commencing 16 December 2013

All times are UK times. Times and dates are subject to change.

Enquiries

Advance Developing Markets Fund Limited

Richard Bonsor, Chairman                                                                       020 7484 7484

Westhouse Securities Limited

Financial adviser and broker

Alastair Moreton                                                                                         020 7601 6118

Hannah Young

Darren Vickers

 

END

 

 

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