Migration to Burmuda - Readmission to NEX Exchange

RNS Number : 3951W

EPE Special Opportunities PLC

01 August 2018

 

EPE Special Opportunities plc

Proposed Migration to Bermuda and Re-admission to the NEX Exchange Growth Market

EPE Special Opportunities plc ("ESO plc" or the "Company" or the "Issuer") today announces that it proposes to migrate the Company's jurisdiction of incorporation from the Isle of Man to Bermuda (the "Migration"). Under the NEX Exchange Growth Market ("NEX") Rules, the Migration will be treated as a cancellation of the admission of the Company's Ordinary Shares to trading on the NEX Exchange Growth Market, to be followed immediately by an application for re-admission of the Ordinary Shares (as continued to Bermuda) to trading on the NEX Exchange Growth Market.

The Company has today published a circular to shareholders detailing all information about the background to, and the rationale for, the Migration (the "Circular"), found here: http://www.epicprivateequity.com/our-business/capital/epe-special-opportunities-plc/investor-relations/aim-rule-26/ 

Capitalised terms used in this announcement have the meanings given to them in the Circular.

Company Information

ESO plc is a private equity investment company whose objective is to provide long-term return on equity for its shareholders by investing in small and medium sized companies. The Company is quoted on both the AIM and NEX stock exchanges and is advised by EPIC Private Equity LLP ("EPE" or the "Investment Adviser").

The Company was admitted to trading on AIM and NEX on 31 August 2010 and 15 July 2011 respectively. A copy of its AIM admission documents dated 4 August 2010 can be accessed on its website, http://www.epicprivateequity.com/our-business/capital/epe-special-opportunities-plc/investor-relations/aim-rule-26/. This website is where items can be inspected under Rule 75 of the NEX Rules for Issuers.

The Company also has unsecured loan notes admitted to trading on the NEX Exchange Growth Market, which will remain so admitted following completion of the Migration. There will be no changes to the terms and conditions of the unsecured loan notes as a result of the Migration.

The Ordinary Shares will remain admitted to trading on AIM and NEX following Admission. However, as the Company will no longer be incorporated in a jurisdiction which is entitled to use CREST, depository interests representing the Ordinary Shares will be issued to Shareholders in accordance with the terms of the Circular to facilitate trading via CREST. Following completion of the Migration, the Company will not be subject to the UK City Code on Takeovers and Mergers (the "Code") and Shareholders will therefore lose the protections afforded by the Code.

Suspension and re-admission process

It is anticipated that there will be up to a six business day period of suspension of dealings of the Ordinary Shares on AIM and the NEX Exchange Growth Market between (1) completion of the Migration; and (2) cancellation and re-admission of the Ordinary Shares to trading on AIM and the NEX Exchange Growth Market, whilst a Bermudian ISIN is obtained in respect of the Ordinary Shares from the Bermuda Stock Exchange. A Bermudian ISIN can only be procured following completion of the Migration and it is anticipated that this process, together with the necessary applications to be made with London Stock Exchange, the NEX Exchange and Euroclear, will take approximately six business days to complete. Without a Bermudian ISIN the Ordinary Shares cannot be re-admitted to AIM or the NEX Exchange Growth Market. As a result, it is currently anticipated that:

·     completion of the Migration will occur on 12 September 2018;

·     suspension of dealings of the Ordinary Shares on AIM and the NEX Exchange Growth Market and in CREST will occur at 8.00 a.m. on 13 September 2018; and

·     the re-admission of, and dealings in, the Ordinary Shares (as continued to Bermuda) to and on AIM and the NEX Exchange Growth Market will occur at 8.00 a.m. on 21 September 2018.

Enquiries:

EPIC Private Equity LLP	Alex Leslie [phone]
Numis Securities Ltd NEX Corporate Sponsor:	[phone] Stuart Skinner / Charles Farquhar / Huw Jeremy

In accordance with the NEX Rules, Part 1, the Company makes the following disclosures regarding its re-admission to NEX.

The Issuer's registered and trading name	EPE Special Opportunities plc ("ESO plc" or the "Company")
Registered office address and if different, principal trading address	Current registered office address: IOMA House Hope Street Douglas Isle of Man IM1 1AP As of completion of the Migration, the Company's registered office address will be: Clarendon House 2 Church Street Hamilton HM11 Bermuda The address of the Company's centre of operations is, and will continue to be after completion of the Migration: Ordnance House 31 Pier Road St Helier Jersey JE4 8PW
The full names and functions of the directors of the Issuer	Board of directors Geoffrey Vero, Non-executive chairman Heather Bestwick, Non-executive director Robert Quayle, Non-executive director Clive Spears, Non-executive director Nicholas Wilson, Non-executive director
Sector classification	Equity Investment Instruments
Brief description of the applicant's business and corporate structure	ESO plc is a private equity investment company whose objective is to provide long-term return on equity for its shareholders by investing in small and medium sized companies. The Company is quoted on both the AIM and NEX stock exchanges. EPIC Private Equity LLP ("EPE") is the investment adviser to the Company. ESO plc seeks to invest between £2m and £20m in growth capital, buyout, distressed and private investment in public equities ("PIPE") situations and has the flexibility to invest publicly as well as privately. The Company is also able to invest in special purpose acquisition companies ("SPACs") and third party funds. ESO plc will consider most industry sectors including consumer and retail, financial services, manufacturing and the wider services sector (including education, healthcare and business services). ESO plc targets companies with strong fundamentals, including defensible competitive positioning and high levels of cash generation, and seeks to partner with outstanding management teams to combine operational and financial expertise in each investment. ESO plc's portfolio may be concentrated in order to focus on a small number of high-quality assets, generally between two and ten at any one time.
Reasons for re-admission	Admission only due to a migration of the Company's jurisdiction of incorporation from the Isle of Man to Bermuda. There is no fund raise associated with the Migration. NEX Rules require that the Migration be treated as a cancellation of the admission to trading on the NEX Exchange Growth Market of the Ordinary Shares, to be followed immediately by an application for the re-admission of the Ordinary Shares (as continued to Bermuda) to trading on the NEX Exchange Growth Market. Background to the Migration The Board has concluded that the Migration is in the best interests of the Company. The Directors believe that Bermuda offers a more appropriate VAT, legal and regulatory environment for the Company going forwards. The Company migrated its management and business operations from the Isle of Man to Jersey such that it became resident for tax purposes in Jersey in May 2017 and, as a consequence, was outside the scope of VAT. Whilst tax resident in the Isle of Man, the Company paid VAT on the majority of fees incurred (including management fees payable to its investment adviser, EPE and other professional fees) as the Isle of Man is within the scope of VAT.  During the financial year ended 31 January 2017, the Company paid £310,161 in VAT. The Company was unable to recover any of such VAT.  Many of the Company's peer listed private equity funds are tax resident in territories outside the scope of VAT and therefore are not required to pay VAT on their fees. Given that the investment decisions taken by potential investors in the Company are, in part, based on the Company's running expenses (commonly summarised as the Company's ongoing change ratio, or OCR), the Company was at a competitive disadvantage to the majority of its peer listed private equity funds as its fees were increased by VAT. The migration of the Company's tax residency to Jersey was, therefore, to remove this VAT expense.  Jersey was selected for the interim step of migrating the Company's tax residency for, among other reasons, expediency and convenience and given that a number of the existing directors of the Company were resident in Jersey. The migration of tax residency and operations, however, was intended to be an interim step ahead of migration of the incorporation of the Company to a jurisdiction outside of the scope of VAT. Migration of the Company's incorporation is advisable to bring the Company's arrangements in line with the arrangements of the majority of those of its peer listed funds - which are tax resident outside the scope of VAT - and to mitigate any possible doubt (whether legitimate or not) over the Company's tax residency outside of the scope of VAT. The Board gave detailed consideration to a number of potential off-shore jurisdictions as a destination for the migration of the Company's jurisdiction of incorporation and chose Bermuda as the preferred destination.  As noted above, the Directors believe that Bermuda offers a more appropriate VAT, legal and regulatory environment for the Company going forwards.  The Directors believe that Bermuda is attractive to the Company given that, most notably, it is outside the scope of VAT (unlike the Isle of Man) in addition to, amongst other things, it having a legal framework which replicates many of the features of Isle of Man company law, it being an established centre for investment companies and it having a developed regulatory environment.  Two key reasons for the decision to choose Bermuda as the preferred destination for the Migration were: Reduced capital gains risk: the discontinuance of the Company under the Isle of Man Companies Act and the registration of the continuance of the Company under the Bermuda Companies Act should not be deemed to create a new legal entity. There are express statements to this effect in Isle of Man and Bermuda company law. Therefore, the continuance should not be treated as a disposal event for the purposes of  UK capital gains tax, which would significantly disadvantage the Shareholders.   This can be compared with certain other jurisdictions which either do not permit a continuance or where the continuance law does not contain the above statement.  In such jurisdictions, a scheme of arrangement would or might be needed to effect the re-domicile (for which Shareholders holding more than 5% of the Ordinary Shares would need HMRC clearance). A scheme of arrangement would be a significantly more involved, lengthy and costly process than the proposed Migration. Further, there is no guarantee that HMRC clearance would be received; and More secure VAT status: in addition, Bermuda's VAT status is perceived by the Board to be more secure than that of certain other off-shore jurisdictions given the changes required to the tax regimes of the United Kingdom and other jurisdictions to effect Brexit.  The Board understands that there is a reduced risk that Bermuda's tax regime is impacted by the Brexit settlement currently being negotiated by the United Kingdom Government as compared to other offshore jurisdictions , such as Jersey, Guernsey and the Isle of Man.
The name of its NEX Exchange Corporate Adviser	Numis Securities Limited
The number and class (and the par value per share, or that the shares have no par value, if applicable) of securities being admitted	The Company's issued share capital is 30,065,714 ordinary shares of 5 pence each ("Ordinary Shares"), of which 1,765,876 Ordinary Shares, are Ordinary Shares held in treasury. There are no restrictions on the transfer of securities.
The timetable for any offer of securities (including an address or website where any prospectus or fundraising document is available for inspection) being undertaken in conjunction with admission, together with any information required to be disclosed under paragraphs 53 and 54 of Part 2 of Appendix 1	N/A - there is no offer of securities in relation to the Migration. The names of persons (excluding professional advisers otherwise named in this announcement) that have received fees in excess of £10,000 from the Company since 1 September 2017 are set out below: Cardew Group Limited Drax Executive Limited FIM Capital Limited EPE Administration Limited KPMG Audit LLC Latham & Watkins (London) LLP Macfarlanes LLP R&H Fund Services (Jersey) Limited Squire Patton Boggs (UK) LLP
Shares in public hands as a percentage of issued share capital	The Company's ordinary shares in public hands at the time of Admission will be approximately 70.12%.
Substantial shareholdings required to be disclosed under paragraph 28 of Part 1 of Appendix 1	Major shareholders are as follows (% of ISC): Giles Brand: 22.59% Miton Asset Management: 6.64% The Corporation of Lloyds: 6.20% HSBC Private Bank: 5.26% Canaccord Genuity Wealth Management: 4.82% Janus Henderson Investors: 3.42% Hoares Bank: 3.33% Lombard Odier Darier Hentsch: 3.25% Killik & Co: 3.17%
The address of the website where the items required by Rule 75 are available for inspection	www.epespecialopportunities.com
The expected admission date. If the expected admission dates changes, the announcement will be required to be updated	Expected timetable of Principal Events Date and time of the General Meeting 12.00 noon on 24 August 2018 Expected date of completion of the Migration 12 September 2018 Last day of dealings of Ordinary Shares on AIM and the NEX Exchange Growth Market1 12 September 2018 Suspension of dealings of Ordinary Shares on AIM and the NEX Exchange Growth Market1 8.00 a.m. on 13 September 2018 Cancellation of admission of the Ordinary Shares to trading on AIM and the NEX Exchange Growth Market and in CREST1 7.30 a.m. on 21 September 2018 AIM Admission effective in accordance with the AIM Rules and dealings in the Ordinary Shares (as continued to Bermuda) expected to commence on AIM1 8.00 a.m. on 21 September 2018 NEX Admission effective in accordance with the NEX Rules and dealings in the Ordinary Shares (as continued to Bermuda) expected to commence on the NEX Exchange Growth Market1 8.00 a.m. on 21 September 2018 Dealings in the Depositary Interests expected to commence in CREST1 8.00 a.m. on 21 September 2018 Notes: 1.   Assuming that the Migration is completed on 12 September 2018.

 

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