TIDMASPL
RNS Number : 1505K
Aseana Properties Limited
06 April 2018
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
6 April 2018
Aseana Properties Limited
("Aseana" or the "Company")
Recommended Proposals regarding the future of the Company
Posting of Circular and Notice of General Meeting
Aseana Properties Limited (LSE: ASPL), a property developer in
Malaysia and Vietnam, listed on the Main Market of the London Stock
Exchange, announces that it has today posted to the Company's
shareholders ("Shareholders") a circular (the "Circular") putting
forward recommended Proposals regarding the future of the Company,
including an amendment to the Management Agreement, to be
considered at a General Meeting.
The General Meeting will be held at 12 Castle Street, St.
Helier, Jersey, JE2 3RT, Channel Islands on Monday, 23 April 2018
at 10.30 a.m. BST.
The Circular will shortly be made available on the Company's
website: http:// http://www.aseanaproperties.com/ and submitted to
the National Storage Mechanism and will shortly be available for
public inspection at http://www.morningstar.co.uk/uk/nsm.
Capitalised terms used but not defined in this announcement have
the meanings set out in the Circular. Further details of the
recommended Proposals, extracted from the Circular, are set out
below.
For further information:
Aseana Properties Limited Tel: +603 6411 6388
--------------------------------- ------------------------------------
Chan Chee Kian Email: cheekian.chan@ireka.com.my
--------------------------------- ------------------------------------
N+1 Singer Tel: 020 7496 3000
--------------------------------- ------------------------------------
James Maxwell / Liz Yong
/ James Moat (Corporate
Finance)
--------------------------------- ------------------------------------
Sam Greatrex (Sales)
--------------------------------- ------------------------------------
Tavistock Communications Tel: 020 7920 3150
--------------------------------- ------------------------------------
Jeremy Carey / James Verstringhe Email: jeremy.carey@tavistock.co.uk
--------------------------------- ------------------------------------
Set out below is a reproduction, without material adjustment, of
the key sections of the Chairman's letter to Shareholders which are
contained within the Circular:
PROPOSALS REGARDING THE FUTURE OF THE COMPANY
1. Introduction and background to the Proposals
When the Company was launched in 2007 the Board considered it
desirable that Shareholders should have an opportunity to review
the future of the Company at appropriate intervals. Accordingly, at
the 2015 AGM, held on 22 June 2015, the Board put forward a
resolution to Shareholders to determine if the Company should
continue in existence. Shareholders voted for the Company to
continue in existence, at the same time as approving the adoption
of a divestment investment policy to enable the controlled, orderly
and timely realisation of the Company's assets, with the objective
of achieving a balance between periodically returning cash to
Shareholders and maximising the realisation value of the Company's
investments (the "Divestment Investment Policy"). Pursuant to the
Divestment Investment Policy, the Company committed to dispose of
all of its assets by June 2018, ahead of the annual general meeting
of the Company to be held in 2018 (the "2018 AGM"), at which,
pursuant to the Existing Articles, the Board is required to propose
a discontinuation resolution for the Company to cease trading as
presently constituted (the "2018 Discontinuation Resolution").
Whilst significant progress has been made in realising the
Company's assets in an orderly manner and paying down project debts
since the Divestment Investment Policy was adopted, not all of the
Company's assets have yet been realised. Although discussions are
ongoing in relation to the realisation of the Company's remaining
assets, the Board cannot be certain that these discussions will
successfully conclude by June 2018 and therefore ahead of the 2018
AGM and the 2018 Discontinuation Resolution.
Since the Divestment Investment Policy was adopted the Company
has been unable to return capital to Shareholders to the extent
indicated in the circular to Shareholders dated 22 May 2015. The
lenders behind the Company's existing facilities are required to
approve certain distributions of capital by the Company, however
they have been unwilling to give their approval for further
distributions. The last distribution of capital made by the Company
was pursuant to a tender offer on 10 January 2017.
The Board remains of the view that ceasing to trade and placing
the Company into liquidation would have a significant adverse
effect upon Shareholder value and, whilst the Board is obliged to
put forward the 2018 Discontinuation Resolution in accordance with
the Existing Articles, it does not consider that such a resolution
is in the best interests of Shareholders.
In light of this, and as announced on 24 November 2017, the
Board, together with N+1 Singer and the Manager, undertook a
consultation with certain Shareholders to establish whether there
are suitable alternative proposals that may be put forward to
better serve the interests of, and maximise the value of returns
to, Shareholders.
This document sets out a summary of the feedback from the
consultation process and details of the Proposals (defined and more
fully described in section 3 below), together with considerations
that Shareholders should take into account in determining how to
vote on the Resolutions to be proposed at the General Meeting. A
schedule of the expected timeline of disposals of the Company's
remaining assets is set out in section 4 below.
2. Feedback from the Shareholder consultation process
In response to the Board's stated intention to identify
alternative proposals to proposing the 2018 Discontinuation
Resolution at the 2018 AGM, the Board, together with N+1 Singer and
the Manager, undertook a consultation with certain Shareholders to
establish whether there are suitable alternative proposals that may
be put forward to better serve the interests of, and maximise the
value of returns to, Shareholders. Key findings from the
consultation are summarised below:
-- Proposed date for a discontinuation resolution: there was
support for the Company to continue trading as presently
constituted for between 1 - 2 years prior to the next
discontinuation resolution being proposed and, overall, the
majority of Shareholders consulted indicated that a period of less
than two years until the next discontinuation resolution would be
appropriate;
-- Revised fee structure for the Manager: a number of
Shareholders indicated that they wish to see the remuneration
structure of the Manager re-negotiated so as to: (i) reduce the
fixed management fee payable by the Company to the Manager; and
(ii) introduce a variable fee that will incentivise the Manager to
maximise sales proceeds and achieve the expected disposal schedule
(set out in section 4 below) regarding the realisation of the
Company's remaining assets; and
-- Reducing the ongoing costs of the Company: a number of
Shareholders indicated that they wish to see a reduction in the
costs incurred by the Company which would include a reduction in
the size of the Board so as to increase Board efficiency and bring
the Board size in line with the size and nature of the Company.
3. The Proposals
Further to the Shareholder consultation process, the Board is
proposing to:
-- amend the Existing Articles to remove the requirement to
propose the 2018 Discontinuation Resolution at the 2018 AGM and
instead require the 2018 Discontinuation Resolution to be proposed
at the earlier, forthcoming General Meeting (notice of which is
contained at the back of this document), with a further
discontinuation resolution to be proposed at a general meeting of
the Company in December 2019;
-- propose the 2018 Discontinuation Resolution at the
forthcoming General Meeting (notice of which is contained at the
back of this document); and
-- amend the Management Agreement to adopt a revised fee
structure between the Company and the Manager that would seek to
better align the Manager's interests with those of Shareholders by
incentivising the Manager to maximise sales proceeds and achieve
the current disposal schedule regarding the realisation of the
Company's remaining assets,
(together, the "Proposals").
3.1 Amendment to the Existing Articles
The Existing Articles require the Board to propose the 2018
Discontinuation Resolution at the 2018 AGM and, in the event that
the 2018 Discontinuation Resolution is not passed, at every third
annual general meeting thereafter.
In the event that the 2018 Discontinuation Resolution is
rejected or irrevocable commitments from a sufficient number of
Shareholders to reject the 2018 Discontinuation Resolution have
been received, the Directors will need to determine on what basis
the Company's accounts for the financial year ended 31 December
2017 (the "2017 Financial Statements") are prepared. This may mean
that the 2017 Financial Statements may be prepared on a "break-up"
basis or that it may not be possible to obtain an unqualified,
clean audit report should the accounts be prepared on a "going
concern" basis. This could trigger an event of default under the
lending covenants of certain of the Company's existing facility
arrangements, requiring the immediate repayment of those loans.
This would force the Company to enter into liquidation, due to
having insufficient liquid assets to repay the facilities
immediately and could lead to the Company's remaining assets being
disposed of at significantly depressed prices.
As it would be necessary to finalise the 2017 Financial
Statements before 30 April 2018 and before the time of convening
the 2018 AGM, at which the 2018 Discontinuation Resolution would be
proposed, it would have been necessary for the Board to seek
irrevocable commitments from a necessary majority of Shareholders
to vote against the 2018 Discontinuation Resolution well in advance
of the 2018 AGM. The Board did not consider it to be in
Shareholders' interests to request such irrevocable undertakings so
early in the 2018 AGM process especially as it might have meant
that Shareholders providing such irrevocable undertakings would be
deemed to hold inside information relating to the Company under MAR
and would, therefore, have been unable to deal in their Shares for
a period of time.
Therefore, having taken into account recent Shareholder
feedback, as summarised above, it is proposed that the Existing
Articles be amended such that the 2018 Discontinuation Resolution
is brought forward to be proposed at an earlier General Meeting
(notice of which is contained at the back of this document) and
that, in the event that the 2018 Discontinuation Resolution
proposed at the General Meeting is not passed, a further such
discontinuation resolution be proposed at a general meeting of the
Company in December 2019. For so long as the Management Agreement
has not been terminated neither the Manager nor any member of the
Ireka Group nor any of their respective directors, officers, agents
or employees (including for the avoidance of doubt, Legacy Essence
Limited) shall exercise votes attached to the Shares held by any of
them at the time of the discontinuation vote in December 2019.
The Existing Articles and the Amended Articles (together with a
comparison document showing the changes between the two) are
available for inspection on the Company's website at
www.aseanaproperties.com and during normal business hours on any
weekday (public holidays excepted) at the registered office of the
Company at 12 Castle Street, St. Helier, Jersey JE2 3RT, and will
also be available for inspection at the General Meeting and for at
least 15 minutes prior to the General Meeting.
Resolution 1, proposing the amendment to the Existing Articles,
will be proposed as a special resolution. The Directors are
unanimously recommending that Shareholders vote FOR Resolution 1.
Assuming Resolution 1 is passed, any consequential, non-material
amendments required to the Divestment Investment Policy to reflect
the change to the timing of the further discontinuation resolution
to be proposed at a general meeting of the Company in December 2019
will be made.
3.2 2018 Discontinuation Resolution
Notwithstanding the obligation on the Board to propose the 2018
Discontinuation Resolution pursuant to the Existing Articles, the
Board firmly believes that ceasing to trade and placing the Company
into liquidation (which would be the result of passing the 2018
Discontinuation Resolution) would have a significant adverse impact
on Shareholder value. The Company has been advised that, in the
event that the 2018 Discontinuation Resolution is passed, an event
of default under the lending covenants of certain of the Company's
facility arrangements would be triggered. In addition, if the
Company prepares the 2017 Financial Statements on a "break up"
basis or it is not possible to obtain an unqualified, clean audit
report should the 2017 Financial Statements be prepared on a "going
concern" basis this could also trigger an event of default under
certain of the Company's facility arrangements. If an event of
default is triggered the loans will become immediately repayable
and this would force the Company to enter into liquidation, due to
having insufficient liquid assets to repay the facilities
immediately, and could lead to the Company's remaining assets being
disposed of at significantly depressed prices.
The proposal of the 2018 Discontinuation Resolution at the
General Meeting (as Resolution 2) is conditional on the passing of
Resolution 1. The Directors are unanimously recommending that
Shareholders vote AGAINST the 2018 Discontinuation Resolution. This
will allow the Company and the Manager to continue to pursue the
Divestment Investment Policy, rather than placing the Company into
liquidation or seeking a "fire sale" of the portfolio at
potentially significantly depressed prices.
If the 2018 Discontinuation Resolution is rejected the Company
will proceed with the realisation of the Company's remaining assets
and the distribution of capital to Shareholders. The Manager
intends to use the proceeds from the disposal of the Company's
remaining assets to repay all external debt as quickly as possible,
which would accelerate the recommencement of capital distributions
to Shareholders.
Resolution 2, the 2018 Discontinuation Resolution, will be
proposed as an ordinary resolution.
3.3 Changes to the Management Agreement to amend the fee
structure between the Company and the Manager
Under the Management Agreement, the Manager is currently
entitled to a management fee equal to 2 per cent. per annum of net
asset value, calculated on the last business day of June and
December in each calendar year and payable quarterly in advance. In
addition, the Manager would be entitled to a performance fee based
on net asset value per Share performance over a hurdle rate, being
10 per cent. per annum compounded annually, although no performance
fee has been paid to the Manager since the Company's launch.
The Directors do not believe that the current fee arrangements
under the Management Agreement operate to the benefit of the
Company whilst it continues to pursue its Divestment Investment
Policy. Accordingly, the Company has agreed with the Manager that
the Management Agreement be amended to remove the current fee
structure in its entirety and replace it with the following revised
fee arrangements, with effect from 1 May 2018, and conditional on
(i) Resolution 1 being passed and (ii) Resolution 2 failing, at the
General Meeting:
-- a base fee payable to the Manager equal to US$75,000 per
month, payable in advance, in respect of the period to 30 April
2019, following which the base fee payable to the Manager shall
reduce to US$50,000 per month, again payable in advance;
-- a realisation fee equal to 1 per cent. of the Net Disposal
Proceeds of each of the Company's remaining assets (or any part
thereof, whether that be an individual unit or a part share only of
the Company's interest in a property) provided that the Company has
entered into a legally binding sale agreement within 3 months of
the end of the relevant quarter specified in the disposal schedule
set out at section 4 below. The realisation fee would only be
payable by the Company upon receipt of the full sale proceeds
pursuant to the sale agreement.
-- If a legally binding sale agreement is not entered into in
respect of an asset (or any part thereof) within 3 months of the
end of the quarter specified in the disposal schedule at section 4
below, the Manager shall receive no realisation fee in respect of
that asset (or part asset). However, if the proposed buyer fails to
complete in respect of a sale agreement, in respect of which the
Manager would otherwise be entitled to a realisation fee, and the
proposed buyer has paid a non-refundable deposit on entry into such
sale agreement, the Manager would be entitled to a realisation fee
equal to 1 per cent. of such non-refundable deposit; and
-- an incentive fee payable upon receipt of all sale proceeds
from the disposal of the Company's remaining assets. Any incentive
fee shall be based upon a comparison of:
-- Aggregate Net Disposal Proceeds (meaning the aggregate of all
Net Disposal Proceeds from the sale of all remaining assets of the
Company less any realisation fees paid to the Manager); and
-- the Aggregate RNAV (meaning the aggregate of the RNAVs of all
remaining assets of the Company as at 31 December 2017, being
US$176,774,331).
Aggregate Net Disposal Incentive fee payable
Proceeds as a proportion to the Manager
of Aggregate RNAV
-------------------------- --------------------------------
Less than 90% No incentive fee payable
-------------------------- --------------------------------
Between 90% and 100% 1% of Aggregate Net Disposal
Proceeds
-------------------------- --------------------------------
Greater than 100% a) 1% of Aggregate Net
Disposal Proceeds up to
100% of Aggregate RNAV;
plus
b) 20% of any Aggregate
Net Disposal Proceeds
in excess of 100% of Aggregate
RNAV.
-------------------------- --------------------------------
The Directors believe that the revised fee structure will align
the Manager's interests with those of Shareholders by incentivising
the Manager to maximise sales proceeds and achieve the current
disposal schedule regarding the realisation of the Company's
remaining assets.
As required pursuant to the Company's related party transaction
policy adopted at IPO, the amendments to the Management Agreement
have been approved by a majority of the independent Directors, with
the independent directors unanimously approving the amendments
(with only Ms Mahomed abstaining from voting as she is a
representative of Legacy Essence Limited and so is a
non-independent, non-executive director of the Company) and N+1
Singer has provided a fairness opinion addressed to the Board in
respect of the proposed changes.
The revised fee structure described above will only be adopted
conditional on Shareholders approving Resolution 1 and voting
against the 2018 Discontinuation Resolution.
4. Realisation of the Company's remaining assets
On 24 January 2018 the Company announced the publication of a
Shareholder consultation presentation in which the Company set out
the Manager's expected disposal schedule for the Company's
remaining assets. That schedule is copied below. There have been no
material changes to the expected disposal dates since the
announcement made on 24 January 2018.
Name of asset Expected disposal
date
----------------------------------- ------------------
SENI Mont' Kiara Q2 2018
----------------------------------- ------------------
City International Hospital Q2 2018
----------------------------------- ------------------
Seafront Resort and Residential Q2 2018
Development, Kota Kinabalu, Sabah
----------------------------------- ------------------
Harbour Mall Sandakan Q4 2018
----------------------------------- ------------------
International Healthcare Park Q2 2019
----------------------------------- ------------------
The RuMa Hotel and Residences Q4 2019
----------------------------------- ------------------
Four Points by Sheraton Sandakan Q1 2020
Hotel
----------------------------------- ------------------
Assuming that the Proposals are approved by Shareholders at the
General Meeting, the Manager will seek to achieve realisation of
the Company's remaining assets in accordance with this
schedule.
5. Changes to the Board of Directors
In light of the feedback received from the Shareholder
consultation process, the Board has reviewed its composition and it
is proposed that David Harris, John Lynton Jones and Christopher
Henry Lovell will step down from the Board at the 2018 AGM so as to
reduce the Company's ongoing costs and bring the size of the Board
in line with the objectives of the realisation process.
6. Additional considerations
As a result of the Proposals, Shareholders should be aware of
the following additional considerations:
-- There can be no guarantee that the result of implementing the
Proposals will provide the returns or realise the capital sought by
Shareholders. The Company's investments are illiquid. Accordingly,
they may be disposed of at a discount to their current valuations.
The eventual disposal price of the Company's remaining assets is
unknown and it is possible that the Company may not be able to
realise some investments at any value.
-- Returns of cash will be made at the Directors' sole
discretion, as and when they deem that the Company has sufficient
assets available to return cash to Shareholders, subject to
applicable Jersey law. Shareholders will therefore have little
certainty as to when their capital will be returned. Distributions
pursuant to the orderly realisation programme are subject, amongst
other things, to the Board being able to give the necessary
certificate(s) of solvency required by Jersey law. Distributions
under the orderly realisation programme are subject to the Board
continuing to be satisfied, on reasonable grounds, that the Company
will, at the time of distribution and for a period of 12 months
thereafter, in respect of each distribution, continue to satisfy
the statutory solvency test. Returns of cash may also in certain
circumstances be subject, amongst other things, to the Company
obtaining the consent of one or more lenders to the Group.
-- In the event that Resolution 1 is not passed, the Company
will continue to operate in accordance with the Divestment
Investment Policy, no changes to the fee structure between the
Company and the Manager will be implemented and the 2018
Discontinuation Resolution will be proposed at the 2018 AGM (and at
every third annual general meeting thereafter, in the event that
the resolution is not passed). This may mean that the Company may
decide to prepare the 2017 Financial Statements on a "break up"
basis or that it may not be possible to obtain an unqualified,
clean audit report should the 2017 Financial Statements be prepared
on a "going concern" basis which could trigger an event of default
on the existing facilities.
7. General Meeting
The implementation of the Proposals is conditional on the
outcome of the votes cast by Shareholders in connection with the
Resolutions to be proposed at the General Meeting. A notice
convening the General Meeting, which is to be held at 10.30 a.m. on
23 April 2018, is set out at the end of this document. The
Directors are unanimously recommending that Shareholders vote FOR
Resolution 1.
At the General Meeting, Resolution 1 (proposing the amendments
to the Existing Articles) will be proposed as a special resolution
and will require a vote in favour by Shareholders holding not less
than two thirds of votes cast in order to be validly passed.
Conditional upon the passing of Resolution 1, Resolution 2 (the
2018 Discontinuation Resolution) will be proposed as an ordinary
resolution and will require a vote in favour by Shareholders
holding a majority of the Shares represented at the General
Meeting, either in person or by proxy, and voting on Resolution 2,
to be validly passed. The Directors are unanimously recommending
that Shareholders vote AGAINST Resolution 2.
8. Irrevocable undertakings
Shareholders holding, in aggregate, 153,692,216 Shares as at the
date of this document (representing 77.4 per cent. of the total
voting rights of the Company and including Ireka Corporation Berhad
and Legacy Essence Limited) have given their irrevocable
undertaking to vote the Shares held in their name at the time of
the General Meeting in favour of Resolution 1.
Shareholders holding, in aggregate, 69,259,954 Shares as at the
date of this document (representing 60.6 per cent. of Shares held
by persons entitled to vote on the 2018 Discontinuation Resolution
and excluding Ireka Corporation Berhad and Legacy Essence Limited,
who may not vote the Shares held in their names in respect of the
2018 Discontinuation Resolution) have given their irrevocable
undertaking to vote the Shares held in their name at the time of
the General Meeting against the 2018 Discontinuation Resolution to
be proposed at the General Meeting.
9. Directors' voting intentions and recommendation
The Directors consider that the Proposals are in the best
interests of the Company and Shareholders as a whole. Accordingly,
the Directors unanimously recommend that Shareholders vote (1) FOR
Resolution 1 to be proposed at the General Meeting and (2) AGAINST
Resolution 2 to be proposed at the General Meeting, as they intend
to do in respect of their own beneficial holdings which amount, in
aggregate, to 2,328,994 Shares representing 1.2 per cent. of the
total voting rights of the Company.
The Directors have each given an irrevocable undertaking to vote
the Shares held in their name at the time of the General Meeting in
favour of Resolution 1 and against the 2018 Discontinuation
Resolution (Resolution 2).
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCXQLFBVZFBBBL
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