Tender Offer for up to 10 per cent. of Shares

RNS Number : 2692I

Advance Developing Markets Fund Ltd

29 May 2014

 



Advance Developing Markets Fund Limited (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 2 May 2014, 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 2 May 2014, in the six months measurement period ended 30 April 2014, the Company's Shares traded at an average discount of 11.0 per cent. and the Company's performance over the same period, as measured by its net asset value total return, was 0.2 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 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 13 June 2014, 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 May 2014.

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 17 June 2014.

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. Discount control

The Tender Offer concludes the tender proposals which were put in place at the time of the Company's continuation vote in 2013 following a consultation exercise with Shareholders. Such proposals, which were linked to the Company's discount to Net Asset Value and performance, have resulted in a significant return of capital to Shareholders by way of three tender offers at a price very close to the then prevailing Net Asset Value per Share. It is not currently planned to put in place further tender proposals although the Board intends to continue to focus on management of the discount, through its stated discount control policy, and a regular review of the Company's performance at each Board meeting.

The Board seeks authority annually from Shareholders to buy back Shares and Shares may be repurchased when, in the opinion of the Board and taking into account factors such as market conditions and the discounts of comparable funds, the Company's discount is higher than desired and Shares are available to purchase in the market. The Board believes that, in normal market conditions, the Shares should trade at a price which on average represents a discount of less than 10 per cent. to Net Asset Value.

4. Expenses

The fixed costs and expenses payable by the Company in connection with the Tender Offer are estimated to amount to approximately £70,000. 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 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 13 June 2014, and they should also return the valid share certificate(s) and/or other document(s) 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 13 June 2014, 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 May 2014
Posting of the circular and Tender Form	29 May 2014
Latest time and date for receipt of Tender Forms and TTE Instructions (Closing Date)	1.00 p.m. on 13 June 2014
Calculation Date	Close of business on 13 June 2014
Announcement of results of Tender Offer and Tender Price	17 June 2014
Distribution of sale price of Repurchased Shares and  crediting of CREST accounts and despatch of cheques	Week commencing 23 June 2014
Despatch of balancing Share certificates and TFE messages in respect of any unpurchased Eligible Shares	Week commencing 23 June 2014

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

Enquiries

Westhouse Securities Limited

Financial adviser and broker

Alastair Moreton                                                                                         020 7601 6118

Hannah Young

Darren Vickers

 

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