TIDMLWT
RNS Number : 2310N
Loudwater Trust Limited
04 September 2013
4 September 2013
LOUDWATER TRUST LIMITED
("LOUDWATER" OR "THE COMPANY")
DISPOSAL OF REMAINING INVESTMENTS
Loudwater Trust Limited, the authorised closed-ended investment
company incorporated in Guernsey, is pleased to announce that the
Company has entered into an agreement to dispose of its remaining
investments for a cash consideration of GBP10.53 million to
Loudwater Capital LP (the "Transaction").
Highlights
-- Disposal of remaining investments for GBP10.53 million in cash;
-- Pro-forma 30 June 2013 NAV of GBP12.21 million/19.73 pence
per share (taking into account proceeds of the Transaction)
-- Initial forecast return of capital of 18.4 pence per share
-- Intention to put forward proposals to seek a delisting from
AIM, subject to shareholder approval
-- Intention post delisting from AIM to put forward proposals
for the voluntary winding-up of the Company and appointment of a
liquidator
-- Final estimated return of capital (following, and subject to,
delisting and liquidation process) of circa 0.2 pence per share,
expected to be payable before the end of 2013
-- Total forecast return of capital of circa 18.6 pence per share
Additional Transaction Details
Loudwater Capital LP (the "Partnership") is a newly established
partnership with monies principally committed by funds advised by
Headway Capital Partners LLP and Committed Advisors SAS.
The Transaction will result in the sale of Loudwater's interests
in the following investee companies (the "Remaining
Investments"):
Antenova Limited
The Engine Group Limited
Glimmerglass Networks Inc.
Somethin' Else Limited
Top Layer Networks, Inc ("Top Layer")
The Company's interest in Top Layer takes the form of a
promissory note. The terms of the promissory note provide for Top
Layer's parent company to have a right to purchase the promissory
note on no less favourable terms than those offered by the
Partnership. The pre-emption process will be undertaken in the next
10 business days, following which either Top Layer's parent company
or the Partnership will purchase the promissory note for the
relevant price. The Partnership has placed the relevant purchase
monies for the purchase of the promissory note in escrow as
security for such arrangement.
In addition, the Company has a contingent interest from the sale
of its investment in AgraQuest Inc., relating to monies held in
escrow against potential indemnification claims and contingent
consideration payable should AgraQuest achieve certain performance
milestones in future years, which also forms part of the Remaining
Investments.
The consideration of GBP10,529,263 (17.48 pence per share) for
the Transaction compares to the carrying value of the Remaining
Investments as follows:
-- at 31 December 2012 (the date of the Company's last audited
financial statements) of GBP19,116,314 or 31.74 pence per share
-- at 30 June 2013 (being the date of the Company's last
unaudited net asset value as announced on 31 July 2013) of
GBP19,699,983 or 32.71 pence per share.
The pro forma net asset value at 30 June 2013, taking into
account the proceeds of the Transaction, would be GBP12,211,290 and
the resultant net asset value per ordinary share would be 19.73
pence.
As stated in the 2012 annual report, given the continuation vote
at the annual general meeting for the year ended 31 December 2013,
expected to be in May 2014, the board of directors of the Company
(the "Board") and the Investment Adviser considered options to
enable the sale of the remaining portfolio and return of the
proceeds to shareholders, in addition to single asset disposals,
and that discussions were taking place with a number of parties.
The disposal of the Remaining Investments is in accordance with the
Company's investing policy.
Loudwater Investment Partners Limited (the "Investment
Advisor"), the Company's investment advisor, engaged the services
of Bluetower Associates, who conducted an exhaustive process of
identifying potentially interested parties who would consider the
acquisition of the Remaining Investments.
The Investment Advisor and its affiliates have entered into an
agreement with the Partnership to act as general partner and
manager of the Partnership. Accordingly the Investment Advisor will
continue to manage the assets comprising the Remaining Investments
following completion of the Transaction. An affiliate of the
Investment Advisor will also invest in the Partnership an amount
equal to 3 per cent. of the total monies committed to the
Partnership, equating to approximately GBP0.35 million.
Rhys Davies, Chairman, commented:
"The Board asked the Investment Advisor to explore options for
the sale of the remaining investments in one transaction, as well
as continue to review options for individual asset sales. An
exhaustive sales process has been undertaken and a number of
parties have been approached. Given prior disposals and subsequent
returns of capital, the investment portfolio has become more
concentrated, and one of the investee companies represented 47.5%
of the carrying value of the Remaining Investments at 30 June 2013.
In negotiations on the consideration, Headway Capital Partners LLP
and Committed Advisors SAS formed a different view on the value of
this investee company which impacted the overall consideration.
Whilst the consideration for the Transaction is below the 30
June 2013 carrying values of the Remaining Investments, the Board,
having received advice from the Investment Advisor, believe that
the Transaction reduces uncertainty over the timing and value that
could be obtained from future asset sales and future running costs,
and also removes any risk of the Company being required to provide
additional funding in the future to any of the investee companies,
as the Company did in early 2013 with a GBP500,000 loan to preserve
value for one of our investments. The Investment Advisor and the
Board has also consulted with a significant number of shareholders
(by percentage of Loudwater's share capital) on the Transaction
process."
Related Party Transaction
The Investment Advisor is a related party of the Company (as
defined in the AIM Rules). By virtue of the Investment Advisor's
(and its affiliates) ongoing role as general partner and manager of
the Partnership, the Partnership is deemed to be a related party of
the Company and the Transaction constitutes a related party
transaction for the purposes of Rule 13 of the AIM Rules.
The Directors consider, having consulted with the Company's
nominated adviser, Panmure Gordon (UK) Limited, that the terms of
the Transaction are fair and reasonable insofar as its shareholders
are concerned.
Matters following the Transaction
Following the Transaction, the Company's sole investment will be
cash. In accordance with the Company's investing policy, the
Company would not make any new investments other than follow-on
investments in existing portfolio companies, and that cash proceeds
from realisations in full following the exit of a portfolio
investment will be distributed to Shareholders.
Given the Company's Remaining Investments have been realised and
converted into cash, the Board has reviewed the Company's investing
policy and does not propose to put forward a new investing policy
to shareholders.
The existing Investment Advisory Agreement with the Investment
Advisor will terminate following the Transaction, however the
Investment Advisor will continue to provide certain services to the
Company for no fee. In addition, no performance fees are payable as
a result of the Transaction, nor on termination of the Investment
Advisory Agreement.
The Company intends to shortly publish a circular which will
contain proposals relating to the proposed cancellation of
admission to trading on AIM. It is also intended that the Company
will put forward proposals to shareholders for the voluntary
winding-up of the Company and the appointment of a liquidator,
assuming that shareholders approve the proposed cancellation of
admission to trading on AIM. A further announcement regarding the
publication of a circular will be made shortly.
The Company has agreed to procure that one representative of the
Partnership is either appointed to the Board or is appointed as an
observer to the Board, for no fee. Such appointment to the Board
shall be subject to completion of the necessary due diligence
required under the AIM Rules for Companies and AIM Rules for
Nominated Advisers, and also required under any other applicable
rules and regulations. In that regard, Edward Forwood has been
granted the right to attend meetings of the Board as an
observer.
Capital Return
Subject to completion of the pre-emption process described above
in respect of the Top Layer promissory note and receipt by the
Company of the purchase proceeds for the promissory note, and prior
to the cancellation of admission to trading on AIM, the Board of
Directors intend to approve a return of capital of GBP11,082,845 to
shareholders, equating to 18.4 pence per share.
The capital will be returned by way of a bonus issue of B shares
to shareholders pro rata to shareholders' existing holdings of
ordinary shares in the capital of the Company. Further details on
the record date and ex-date will be provided in due course.
-ends-
For further information
Loudwater Trust Limited
Rhys Davies +41 (0)79 620 0215
Loudwater Investment Partners
Limited
Edward Forwood +44 (0)20 3372 6400
Panmure Gordon (UK) Limited
Andrew Potts +44 (0)20 7886 2500
Note
http://www.loudwatertrust.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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