TIDMMPO
RNS Number : 7161Q
Macau Property Opportunities Fund
08 June 2018
8 June 2018
Macau Property Opportunities Fund Limited
("MPO" or the "Company")
Publication of Circular and Notice of General Meeting
Further to its announcement of 8 May 2018, the Company's Board
announces that it has today published a circular (the "Circular"),
including a Notice of General Meeting, setting out details of the
recommended Proposals for a change of Investment Policy to reflect
the Company's continued divestment strategy and changes to the
Company's Articles to permit compulsory redemptions of the
Company's shares at the Board's discretion as a way of returning
capital to shareholders. The Circular also contains a Proposal that
a Continuation Resolution extending the life of the Company be put
to shareholders at this General Meeting, rather than later in 2018
as originally envisaged, in order to give the Manager sufficient
time to implement the new investment policy ahead of the next
continuation vote (expected to be in the second half of 2019).
The Circular, which contains the notice convening the General
Meeting to be held at 4.00 p.m. on Thursday, 5 July 2018 at
Lefebvre Place, Lefebvre Street, St. Peter Port, Guernsey GY1 4HY,
has today been posted to shareholders, together with the Form of
Proxy, for voting on the resolutions relating to each of the
Proposals.
Subject to the Proposals being approved at the General Meeting,
it is currently expected that the first redemption of shares, with
a total value of GBP 38.2 million (equivalent to 50 pence per share
in issue) and representing 62% of the net profits from the Senado
Square Disposal, will be implemented on or around 9 July 2018 (with
payments of redemption monies expected to be made to relevant
shareholders on or around 24 July 2018).
Any capitalised terms not defined in this announcement shall
have the same meaning as those defined in the Circular. An extract
from the Circular is set out below.
This announcement contains inside information.
-End-
About Macau Property Opportunities Fund
Macau Property Opportunities Fund Limited is a closed-end
investment company registered in Guernsey and is the only quoted
property fund dedicated to investing in Macau, the world's largest
gaming market and the only city in China where gaming is
legalised.
Listed on the London Stock Exchange's main market, it is also a
constituent stock of the FTSE All-Share and FTSE SmallCap
indices.
Launched in 2006, the Company targets strategic property
investment and development opportunities in Macau. Its current
portfolio comprises a mix of prime residential and retail property
assets that are valued at US$436.2 million as at 30 September
2017.
The Company is managed by Sniper Capital Limited, an Asia-based
property investment manager with an established track record in
fund management and investment advisory.
For further information:
Company Registration Number 44813
Website: www.mpofund.com
Manager
Sniper Capital Limited
Doris Boo
Tel: +65 6222 1440
Email: doris.boo@snipercapital.com
Corporate Broker
Liberum Capital
Gillian Martin / Louis Davies
Tel: +44 20 3100 2232
Company Secretary & Administrator
Estera International Fund Managers (Guernsey) Limited
Kevin Smith
Tel: +44 14 8174 2742
Stock Code:
London Stock Exchange: MPO
LEI
213800NOAO11OWIMLR72
EXTRACTS FROM THE CIRCULAR
The following has been extracted without amendment from, and
should be read in conjunction with, the Circular to Shareholders
dated 8 June 2018, which will be available shortly from the
Company's website: www.mpofund.com
The Circular has also been submitted to the National Storage
Mechanism where it will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM. In addition, the Circular and the
proposed changes to the Company's Articles will be available to
view at the registered office of the Company, Heritage Hall, Le
Marchant Street, St. Peter Port, Guernsey during usual business
hours on any weekday (Saturdays, Sundays and public holidays
excepted) from the date of this Circular up to and including the
date of the General Meeting and at the place of the General Meeting
for at least 15 minutes before and during the General Meeting.
EXPECTED TIMETABLE
Publication of this Circular Friday, 8 June 2018
Latest time and date for receipt of the 4.00 p.m. on Tuesday,
Form of Proxy or transmission 3 July 2018
Extraordinary General Meeting 4.00 p.m. on Thursday,
5 July 2018
Announcement of results of Extraordinary Thursday, 5 July
General Meeting 2018
Effective date of change of Investment Policy Thursday, 5 July
2018
Redemption Record Date for First Expected On or around Monday,
Compulsory Redemption 9 July 2018
First Expected Compulsory Redemption payment On or around Tuesday,
date and dispatch of balance share certificates 24 July 2018
Each of the times and dates in the expected timetable may (where
permitted by law) be extended or brought forward without further
notice and in particular the dates relating to the First Expected
Compulsory Redemption are provisional only. If any of the above
times and/or dates change, the revised time(s) and/or date(s) will
be notified to Shareholders by an announcement through a Regulatory
Information Service. Al references to times in this document are to
London time.
LETTER FROM THE CHAIRMAN
Recommended Proposals for Return of Capital by way of a
Compulsory Redemption,
Change of Investment Policy,
Adoption of New Articles of Incorporation and Continuation
Resolution
and
Notice of Extraordinary General Meeting
Dear Shareholder
1. Introduction
Further to the announcement made on 8 May 2018, I am writing to
outline details of proposals for the return of capital subsequent
to the sale of Senado Square (the Senado Square Disposal), as well
as changes to the Investment Policy and Articles of Macau Property
Opportunities Fund Limited (the Company), and relating to the
continuation of the life of the Company. The intention of these
proposals is to facilitate the Company's divestment strategy and to
allow the return of capital to Shareholders in an efficient
manner.
On 26 March 2018, the Company announced that it had completed
the Senado Square Disposal, for a total consideration of HK$800
million (c. US$102 million), representing a premium of c. 14 per
cent. to the property's valuation of HK$703 million (c. US$89.7
million) as at 31 January 2018 and a gain of 541 per cent. over the
acquisition cost. This translated to a return on investment of 469
per cent. and an internal rate of return of 20 per cent. Having now
received the full proceeds from the Senado Square Disposal, the
Directors propose a return of capital to Shareholders of a total of
GBP 38.2 million (equivalent to 50 pence per Share in issue), to be
made by way of a Compulsory Redemption of Shares. The proposed
amount to be returned to Shareholders represents 62 per cent. of
the net profits of the Senado Square Disposal. The remainder of the
disposal proceeds will be retained as working capital to support
the Company's ongoing operations and also to be used to partially
repay the Company's debts to maintain a prudent overall
loan-to-value ratio. Further details of the proposed mechanism for
implementing the Compulsory Redemption are set out in Part 4 of
this Circular.
With the Company now in its divestment phase, the Directors
believe that the Investment Policy should be modified to reflect
the Company's current divestment strategy. The changes are designed
to facilitate future disposals of the Company's remaining
properties by enabling disposals to be completed with greater
certainty and speed, hence reducing "deal risk". Further, the
Directors believe the Proposed Investment Policy will strengthen
the Company's negotiating position with potential buyers and reduce
the significant costs associated with seeking specific Shareholder
authority for future divestments. Further details on the proposed
changes to the Investment Policy, including the text of the
proposed new Investment Policy, are set out in Part 3 of this
Circular.
The Board and the Manager believe that the continued economic
recovery in Macau coupled with the upcoming completion of a major
infrastructure project - the 40 kilometre long Hong
Kong-Zhuhai-Macau Bridge - should further benefit the Company's
investments and provide attractive realisation opportunities. The
Board and the Manager believe that continuing the life of the
Company (by proposing the first annual vote on a resolution to
continue the Company (a Continuation Resolution) now rather than
later in 2018 as originally envisaged) will enable the Company to
maximise the value realised on the sale of its remaining
investments, strengthen the Company's hand in negotiations with
potential purchasers and grant it sufficient time to put into
effect its new Investment Policy. In addition, proposing the
Continuation Resolution now, rather than later in 2018, will remove
any uncertainty surrounding the continuation of the Company in the
short term, which would help the Manager to negotiate from a
position of strength. It is envisaged that the next Continuation
Resolution would then be held in the second half of 2019.
Accordingly, the Company is now putting forward proposals which
comprise:
(a) a change to the Company's Investment Policy to reflect the
fact that the Company has ceased making any further new investments
and will continue to pursue a realisation and divestment strategy
of the remaining property assets in the Company's portfolio;
(b) adoption of new Articles of Incorporation (New Articles)
which provide for the Compulsory Redemption of the Company's Shares
at the discretion of the Directors to allow cash to be returned to
Shareholders following the realisation of assets. The New Articles
also clarify the timing of future yearly Continuation Resolutions;
and
(c) the consideration of the first Continuation Resolution which
provides that the life of the Company be extended for a period of
one year (or, if Shareholders also resolve to adopt the New
Articles, until the next Continuation Resolution which shall be
proposed to Shareholders no later than 30 November 2019),
together, the Proposals.
The proposed amendment of the Company's Investment Policy is
considered a material change to the Investment Policy, which
requires the consent of Shareholders by ordinary resolution in
accordance with the Listing Rules.
The adoption of New Articles to permit the Compulsory Redemption
of the Company's Shares requires Shareholder approval, pursuant to
the Companies Law, and is proposed as a special resolution.
The Continuation Resolution will require the approval of
Shareholders in accordance with Article 38 of the Company's
Articles, and is proposed as an ordinary resolution.
This Circular sets out details of, and seeks your approval for,
the Proposals and explains why the Board is recommending that you
vote in favour of all of the Resolutions to be proposed at the
General Meeting to be held at 4.00 p.m. on Thursday, 5 July
2018.
Notice of the General Meeting is set out at the end of this
Circular. The Proposals are described in paragraphs 4 through 6 of
Part 1 of this Circular and in Parts 3 and 4.
2. Background to and reasons for the Proposals
At the Company's annual general meeting in November 2016 (the
2016 AGM), Shareholders were asked to vote on whether the Company
should be discontinued in the form it was constituted. Shareholders
voted against the discontinuation in order to allow flexibility for
the Manager to realise value from the Company's portfolio.
Shareholders resolved at the 2016 AGM that, going forward, the
Company would hold an annual vote on a Continuation Resolution to
continue the Company, with the first of such Continuation
Resolutions needing to be put to Shareholders no later than 30
November 2018.
Since the 2016 AGM, the Company has continued to pursue its
strategy of maximising Shareholder value by seeking opportunities
to realise the Company's property portfolio. On 26 March 2018, the
Company announced that it had completed the Senado Square Disposal,
following receipt of Shareholder approval at an extraordinary
general meeting held on 19 March 2018.
The total consideration paid to the Company in connection with
the Senado Square Disposal was HK$800 million (c. US$102 million),
representing a premium of c. 14 per cent. to the property's
valuation of HK$703 million (c. US$89.7 million) as at 31 January
2018 and a gain of 541 per cent. over the acquisition cost of
HK$124.8 million (c. US$15.9 million) in October 2007. This
translated to a return on investment of 469 per cent. and an
internal rate of return of 20 per cent.
Having received the full proceeds from the Senado Square
Disposal, and in line with the Company's ongoing divestment
strategy in relation to the balance of the Company's property
portfolio, the Company will seek to return cash to Shareholders in
an orderly manner as soon as reasonably practicable, while
maintaining a prudent overall loan-to-value ratio and retaining
sufficient working capital for ongoing operations.
To facilitate such orderly realisation of the Company's
portfolio and the return of cash to Shareholders, the Directors are
proposing that the Company's divestment strategy be formally
reflected in the Company's Investment Policy and that New Articles
be adopted to permit the Compulsory Redemption of the Company's
Shares. Consistent with this strategy, the Directors are of the
view that the first Continuation Resolution should be put to
Shareholders at the General Meeting on 5 July 2018 which is being
convened to approve the Proposals, rather than in November 2018 as
originally envisaged. A separate Continuation Resolution
(Resolution 3) is proposed to this effect. It should be noted that
in order for there to be sufficient time for the new Investment
Policy to be implemented and to enable the Manager to negotiate
from a position of strength, it is desirable for the Company to
continue in its current form and that therefore Shareholders should
vote in favour of the Continuation Resolution.
It should also be noted that should the Continuation Resolution
not be passed the Board will be required to formulate and revert to
Shareholders with proposals to reorganise, unitise, reconstruct, or
wind up the Company, which may impact the practicality of
implementing the Proposals, including the Compulsory Redemption of
Shares, set out in this Circular.
Should the Proposals be approved by Shareholders, the Directors
and the Manager will be able to continue to execute a managed
realisation of the Company's assets, in a prudent manner consistent
with the principles of good investment management and as required
by the Listing Rules. As and when proceeds from the realisation of
the Company's assets are received, the Directors will have the
discretion to make Compulsory Redemptions of Shares in volumes and
on dates to be determined by the Directors. The number of Shares to
be redeemed shall have an aggregate Adjusted NAV equivalent to the
amount proposed to be returned to Shareholders and will be redeemed
from all Shareholders pro rata to their Shareholdings on the
Redemption Date.
It is intended that the first redemption (the First Expected
Compulsory Redemption), which is in respect of the Senado Square
Disposal, comprises an amount equal to 62 per cent. of the net
profits of this disposal (equivalent to 50 pence per Share in
issue) and which is expected to be implemented on or around Monday,
9 July 2018 (with payments of redemption monies expected to be made
to relevant Shareholders on or around 24 July 2018). Further
details of the First Expected Compulsory Redemption will be
announced to the market by way of an announcement released on a
Regulatory Information Service after the General Meeting.
3. Market trends
Macau's Gross Domestic Product (GDP) in the first quarter of
2018 grew by 9.2 per cent. year-on-year in real terms, higher than
the 8.0 per cent. rise in the previous quarter. Whilst the
International Monetary Fund expects Macau's GDP to grow by 7 per
cent. in 2018 and 6.1 per cent. in 2019, the Economist Intelligence
Unit expects Macau's GDP to grow 5.8 per cent. this year and 3.9
per cent. in 2019. The robust gaming industry should drive
employment and salary growth this year and next, resulting in an
improved household spending, which is expected to grow at a pace of
5.2 per cent. on average for 2018 and 2019. Fundamentals remained
strong in the first quarter. The unemployment rate was at a low of
1.9 per cent. and median monthly salary increased 3 per cent.
quarter-on-quarter to MOP 16,000.
According to the Gaming Inspection and Coordination Bureau, by
April 2018, Macau had achieved 21 consecutive months of
year-on-year gross gaming revenue (GGR) growth. In April, GGR
increased
by 27.6 per cent. year-on-year to MOP 25.7 billion. For the
first four months of 2018, GGR reached MOP 102.2 billion (c. US$
12.6 billion), an increase of 22.2 per cent. year-on-year. Due to
the better than expected April GGR growth, Deutsche Bank believes
that investor sentiment will be strong during the second half of
2018, and has raised its annual GGR forecast to +14.9 per cent.
from +12.4 per cent.
Macau welcomed 11.5 million visitors during the first four
months of 2018, up 8.4 per cent. year-on-year. For April 2018, the
number of inbound visitors rose 8.0 per cent. year-on-year to 3.0
million, with Mainland China and Hong Kong visitors forming the
bulk of the arrivals. The average occupancy rate of hotels and
guesthouses remained high at 88.9 per cent. in April 2018, up 2.8
percentage points year-on-year. Five-and four-star hotels both
registered occupancy rates at 91.9 per cent. during the same
period, up 6.1 percentage points and 2.1 percentages points
year-on-year, respectively. Visitor expenditure increased by 22.0
per cent. year-on-year to MOP 16.4 billion in the first quarter of
2018.
For the residential property market, demand, in particular for
the primary sales market, remained strong throughout the first
quarter of 2018. The number of offplan sales increased sevenfold
from the previous year to 526, and the average sales price
increased 4.8 per cent. year-on-year to MOP 11,990 (c. US$1,495)
per sq ft. According to property agency Centaline, Macau
residential prices are expected to increase by another 15 per cent.
in 2018, on the back of the positive outlook for the Macau economy,
the soon-to-be opened Hong Kong-Zhuhai-Macau Bridge, and the
continued increase in total deposits accumulated by residents.
The Directors believe that Macau's property market should
continue to remain attractive in the medium to long term, thanks to
the city's positive economic growth, sound fundamentals and the
upcoming completion of the Hong Kong-Zhuhai-Macau Bridge. The
Directors believe that the Macau government's move to tighten its
housing policy is a pragmatic one, intended to promote a healthy
and sustainable residential market. The Greater Bay Area initiative
which demonstrates strong support from China's central and local
governments to further improve the economic development and
connectivity within the region is likely to boost demand for homes
and housing prices.
Whilst the Directors consider the prospects for Macau's property
market remain positive, the Directors continue to maintain a
cautious stance as any further intervention by the Macau government
could disrupt the current outlook. Other potential headwinds that
could threaten the city's economic growth include new rounds of
interest rate hikes by the US Federal Reserve, which local banks
are likely to follow in lockstep, and the potential US-China trade
war where investment sentiment could be affected.
As at the end of March 2018 (the latest valuation date of the
Company), the portfolio valuation was US$340.2 million, the
Adjusted NAV per Share was US$3.46 and the loan-to-value ratio was
36.6 per cent.
4. Change of Investment Policy
The Company's Existing Investment Policy does not correspond to
its current divestment strategy, which is to undertake a staged
return of capital as and when it realises its remaining assets. A
staged return of capital and the realisation of all the Company's
remaining assets are not currently specifically contemplated within
the scope of the Company's existing Investment Policy, and
therefore any future disposals which exceed the relevant thresholds
under the Listing Rules may require specific Shareholder approval
(as was required in relation to the Senado Square Disposal).
The Directors believe that the Proposed Investment Policy, to
which the FCA has given its consent, should facilitate future
disposals of the Company's remaining property portfolio by enabling
disposals to be completed with greater certainty and speed, hence
reducing "deal risk". Further, the Directors believe the Proposed
Investment Policy will strengthen the Company's negotiating
position with potential buyers and reduce the significant costs
associated with seeking specific Shareholder authority for future
divestments. Therefore, an ordinary resolution approving a formal
change of the Investment Policy to bring it in line with the
approved divestment strategy will be proposed at the General
Meeting.
It is intended that the Company's listing and the capacity to
trade in its Shares will be maintained for as long as practicable
during the realisation process and subject to any regulatory
considerations. Accordingly, once a significant proportion of the
Company's assets have been realised, the Board will then consider,
in the light of the then prevailing market conditions and
Shareholders' views, making new proposals as to the continuation of
the Company (which could include a formal voluntary liquidation of
the Company) and which will require additional Shareholder approval
at that time. Further details on the change of the Investment
Policy, including the text of the Proposed Investment Policy, are
set out in Part 3 of this Circular. A summary of certain possible
risks associated with the change of the Investment Policy is set
out in Part 2 of this Circular. The Proposed Investment Policy will
only become effective once approved by Shareholders at the General
Meeting. The proposed ordinary resolution to change the Investment
Policy (Resolution 1) is set out in the Notice of General Meeting
at the end of this document.
5. Staged return of capital and Compulsory Redemption of Shares
The Company proposes to undertake a staged return of capital to
Shareholders. The Directors propose to effect the return of capital
by way of a redemption of Shares compulsorily (a Compulsory
Redemption). Currently the Company's Shares are non-redeemable.
Accordingly, it will first be necessary to change the Company's
existing Articles to permit the Directors, at their sole
discretion, to effect a Compulsory Redemption of Shares on an
ongoing basis, and pro rata to a Shareholder's shareholding in the
Company, in order to return capital to Shareholders.
The First Expected Compulsory Redemption, relating to the Senado
Square Disposal, is expected to be implemented on or around Monday,
9 July 2018. Under this redemption, the Directors are proposing a
return of capital to Shareholders of a total amount of GBP 38.2
million (equivalent to 50 pence per Share in issue). This amount
represents 62 per cent. of the net profits of the Senado Square
Disposal. The remainder of the disposal proceeds will be retained
as working capital to support the Company's ongoing operations and
also to be used to partially repay the Company's debts to maintain
a prudent overall loan-to-value ratio. Payments of redemption
monies to relevant Shareholders are expected to be made on or
around 24 July 2018.
Further details regarding the return of capital and the proposed
changes to the Articles are set out in Part 4 of this Circular. A
summary of certain possible risks associated with the return of
capital is set out in Part 2 of this Circular. The proposed special
resolution to approve the adoption of the New Articles to permit
Compulsory Redemptions of the Shares (Resolution 2) is set out in
the Notice of General Meeting at the end of this document.
Details of the tax consequences of the Proposals are set out in
Part 5 of this Circular.
6. Continuation Resolution
As noted in paragraph 2 above, a Continuation Resolution is
currently required by the Company's Articles to be put to
Shareholders no later than 30 November 2018.
If Shareholders are supportive of the Proposals contained in
this Circular to change the Company's Investment Policy and to
undertake a staged return of capital in line with the Company's
divestment strategy, then the Directors believe that it would be
logical to extend the Company's life at the same time to enable the
divestment strategy to be carried out in an efficient manner.
Accordingly, the Directors propose that the first Continuation
Resolution should be put to Shareholders at the General Meeting to
be held on Thursday, 5 July 2018, instead of in November 2018 as
originally envisaged. In line with the existing policy of proposing
a Continuation Resolution annually, it is intended that a
subsequent Continuation Resolution will be put to Shareholders in
the second half of 2019.
The Directors consider it opportune for Shareholders to consider
and pass a Continuation Resolution earlier in 2018 than originally
envisaged in order to allow flexibility for the Manager to continue
to realise value from the Company's portfolio in accordance with
the Proposed Investment Policy (if Resolution 1 is also passed).
Proposing the Continuation Resolution now, rather than later in
2018, will remove any uncertainty surrounding the continuation of
the Company in the short term, which will help the Manager to
negotiate from a position of strength. Following the success of the
Senado Square Disposal, the Directors consider the passing of a
Continuation Resolution extending the life of the Company to be in
the best interests of Shareholders as a whole and will enable the
Directors and the Manager to focus on the Company's realisation
strategy.
If the Company's life is not extended by the passing of the
Continuation Resolution, the Directors will be required to
formulate and revert to Shareholders with proposals to reorganise,
unitise, reconstruct, or wind up the Company. Given the illiquid
nature of the Company's property portfolio, this could negatively
impact the Manager's ability to realise assets at attractive values
in accordance with the Proposed Investment Policy and divert
management time.
If the Continuation Resolution is not passed, Shareholders
should note that the Company would be required to provide the
Manager with 12 months' notice of termination in order to terminate
the Management Agreement.
Continuing the life of the Company, rather than winding up the
Company (and thus accelerating the disposal process of the
remaining assets in the portfolio), should better enable the
Company to maximise the value realised on the sale of its remaining
investments, strengthen the Company's hand in negotiations with
potential purchasers and also give it enough time to put into
effect its new Investment Policy.
The Directors further propose to amend Article 38 of the
Company's Articles to clarify that, if a Continuation Resolution is
passed by Shareholders, such Continuation Resolution (including the
first Continuation Resolution proposed as Resolution 3 in the
Notice of General Meeting) remains effective up to the date that
the next Continuation Resolution is proposed to Shareholders (which
shall not be earlier than the first anniversary of the preceding
Continuation Resolution but not later than 30 November in any given
year). Such clarifying amendments will be included in the New
Articles proposed for adoption in Resolution 2, the principal
changes to which are more fully described in Part 4 of this
Circular. If the Continuation Resolution is passed by Shareholders,
the Directors intend to propose the second Continuation Resolution
to Shareholders in the second half of 2019 in accordance with the
New Articles.
The proposed ordinary resolution (Resolution 3) to extend the
life of the Company is set out in the Notice of General Meeting at
the end of this document.
7. Risk factors
The Directors have given consideration to the potential risks
and uncertainties relating to the Proposals.
For a discussion of certain risk factors which Shareholders
should take into account when considering whether to vote in favour
of the Resolutions, please refer to Part 2 of this Circular.
8. General Meeting
At the end of this Circular, you will find a Notice of General
Meeting of the Company, convening a general meeting which is to be
held at Lefebvre Place, Lefebvre Street, St. Peter Port, Guernsey
GY1 4HY at 4.00 p.m. on Thursday, 5 July 2018.
A summary of the action you should take is set out in the
paragraph below and in the Form of Proxy that accompanies this
Circular.
The Resolutions seek the approval of Shareholders for:
(a) Resolution 1: the change of the Investment Policy (the full
text of which is set out in paragraph 2 of Part 3 of this
Circular);
(b) Resolution 2: the adoption of the New Articles to permit the
Directors to undertake Compulsory Redemptions of the Shares at
their sole discretion (as described in Part 4 of this Circular).
The New Articles also clarify the timing of future Continuation
Resolutions (as described in paragraph 6 of this Part 1); and
(c) Resolution 3: the extension of life of the Company for a
period of one year (or such other period as permitted by the
Articles as amended with the approval of Shareholders from time to
time) (i.e. the Continuation Resolution).
The full text of the Resolutions to be proposed at the General
Meeting is set out in the Notice of General Meeting at the end of
this Circular.
Resolutions 1 and 3 will be proposed as ordinary resolutions and
the passing of both such Resolutions requires a simple majority of
the votes cast in person or by proxy. Resolution 2 will be proposed
as a special resolution and the passing of such Resolution requires
a 75 per cent. majority of the votes cast in person or by
proxy.
9. Action to be taken by Shareholders
If you are a Shareholder, you will find enclosed with this
document a Form of Proxy for use at the General Meeting.
Whether or not you intend to be present at the General Meeting,
please complete the Form of Proxy for the General Meeting in
accordance with the instructions printed thereon and to return it
to the Registrar at the address indicated on the front page of this
document, as soon as possible, but in any event so as to arrive not
later than forty-eight hours (excluding non-working days) before
the time appointed for holding the General Meeting.
The completion and return of a Form of Proxy will not preclude
you from attending the General Meeting and voting in person if you
wish to do so.
10. Further information
Your attention is drawn to the further information set out in
Parts 2 to 6 of this Circular, including Part 6 containing
additional information. You should read the whole of this Circular
and, in particular, the risk factors set out in Part 2, before
deciding on the course of action you will take in respect of the
Resolutions and the Proposals.
11. Recommendation
The Board considers the Proposals to be in the best interests of
the Company and Shareholders as a whole.
Accordingly, the Board recommends Shareholders vote in favour of
the Continuation Resolution as well as both of the Resolutions to
adopt the Proposed Investment Policy and the New Articles, as they
intend to do in respect of their own beneficial holdings which, as
at 6 June 2018, being the latest practicable date prior to the
publication of this Circular, amount in aggregate to 13,485,164
Shares, representing approximately 17.64 per cent. of the Company's
existing issued share capital.
Yours faithfully
Chris Russell
Chairman
RISK FACTORS
Prior to voting on the Resolutions, Shareholders should
carefully consider the risk factors described in this Part 2. The
risk factors below represent certain risks known to the Directors
as at the date of this Circular which the Directors consider to be
material and to relate to the Proposals, or that represent new or
changed risks to the Company as a consequence of these matters.
Shareholders should note that the risk factors set out below do not
purport to comprise a complete list or explanation of al relevant
risks which may affect the Company alone or in connection with the
Proposals, and are not set out in any order of priority. If any or
a combination of the events described below actually occurs, the
business, results of operations, financial condition or prospects
of the Company could be materially and adversely affected. In such
case, the market price of the Shares could decline and Shareholders
may lose all or part of their investment.
1. Risks associated with the change of Investment Policy
If the Continuation Resolution is passed, but the change in
Investment Policy is not approved, the Company will continue to
operate in accordance with the Existing Investment Policy. This
could impede the Company's ability to realise its remaining assets
in accordance with its divestment strategy. Under the Existing
Investment Policy, any future disposals which exceed the relevant
thresholds under the Listing Rules may require specific Shareholder
approval (as was required in relation to the Senado Square
Disposal), which is administratively burdensome, results in delays
in effecting disposals and limits the Company's ability to
negotiate from a position of strength.
There can be no guarantee that the change to the Company's
Investment Policy will provide the returns, or realise the value,
described in this Circular. The liquidity profile of the Company's
property portfolio is such that Shareholders may have to wait a
considerable period of time before receiving any returns of capital
or other distribution.
Following adoption of the Proposed Investment Policy, the
Company will be unable to make new investments in property and will
be able only to invest realised cash in liquid cash-equivalent
securities, pending its return to Shareholders, in accordance with
the Proposed Investment Policy. The value of such cash-equivalent
securities, including the Company's cash balances, may fluctuate
and the amount of value available to be returned to Shareholders
may decrease as a result.
As the Company's portfolio is divested, the value of the
portfolio will be reduced and further concentrated in fewer
holdings, and the mix of asset exposure and the spread of risk will
be affected accordingly. This may adversely affect the performance
of the Company's portfolio.
The Company might experience increased volatility in its net
asset value and/or its Share price as a result of the changes to
the portfolio structure following approval of the Proposals and
further realisations.
The maintenance of the Company as an ongoing listed vehicle will
entail administrative, legal and listing costs, which will decrease
the amount ultimately distributed to Shareholders. Although the
Board intends to maintain the Company's listing for as long as the
Directors believe it to be practicable during the divestment
period, the Directors shall immediately notify the FCA and may seek
suspension of the listing of the Shares pursuant to the
requirements of the Listing Rules (which may include Shareholder
approval prior to any suspension or de-listing) if the Company can
no longer satisfy the continuing obligations for listing set out
therein including, but not limited to, the requirements in respect
of Shares held in "public hands" (as such phrase is defined in the
Listing Rules) and in relation to spreading investment risk, and
consequently the listing of the Shares may be suspended and / or
cancelled. Once suspended and / or cancelled, the Shares would no
longer be capable of being traded on the London Stock Exchange,
which would materially reduce market liquidity in the Shares.
The Company reports in US Dollars. The US Dollar amount of the
proceeds received by the Company from any disposal of assets may
depend upon exchange rates between the relevant currencies of
consideration received and the US Dollar at the relevant time. Any
return of capital will be paid to Shareholders in Sterling.
2. Risks associated with the proposed New Articles permitting
the Compulsory Redemption of Shares
If the New Articles are not adopted so as to permit the
Compulsory Redemption of Shares, the Company will have to utilise
other methods to make distributions to Shareholders, which may be
less efficient than the Compulsory Redemption of Shares.
The Company's cash balances will be reduced by any Compulsory
Redemption or other distribution to Shareholders, thereby
increasing the impact of fixed costs incurred by the Company on the
remaining assets. The funds returned to Shareholders pursuant to a
Compulsory Redemption or other distribution will no longer be
available for application in the ordinary course of the Company's
business or to meet contingencies.
Shareholders are advised that future returns of cash may not
necessarily be made as soon as cash becomes available. Shareholders
should also note that, due to the illiquid nature of the Company's
investments, there can be no certainty of the length of time it may
take to complete a realisation of all the Company's assets.
In determining the size of any Compulsory Redemption or other
distribution to Shareholders, the Directors will take into account
the Company's ongoing running costs. However, should these costs be
greater than expected or should cash receipts for the realisations
of investments be less than expected, this will reduce the amount
available for Shareholders in future Compulsory Redemptions or
distributions.
The market price of the Shares is subject to change during the
course of, and subsequent to, any Compulsory Redemption. It
therefore cannot be certain whether the value returned to
Shareholders pursuant to any Compulsory Redemption will be greater
or less than the price at which Shares could be sold in the market
at any given time.
Any Compulsory Redemption will reduce the number of Shares in
issue. The impact on the liquidity and the market price of the
Shares as a result of the implementation of the Compulsory
Redemption, if any, cannot be predicted and Shareholders may find
it more difficult to sell their Shares, or may be forced to sell
them at a lower price as supply and demand for Shares may change.
More generally, as with all investment company shares, the market
price of the Shares may not reflect the underlying net asset value
of the Company and the discount (or premium) to net asset value at
which the Shares trade may fluctuate from day to day, depending on
factors such as supply and demand, market conditions and general
sentiment.
Levels of, and legislation and practice concerning, taxation may
change. Shareholders should have regard to the information in
relation to taxation set out in Part 5 of this Circular.
3. Risks associated with the Continuation Resolution
If the Continuation Resolution is not passed by Shareholders,
the Articles require the Directors to formulate proposals to put to
Shareholders to reorganise, unitise, reconstruct, or wind up the
Company. Given the illiquid nature of the Company's property
portfolio, this could negatively impact the Manager's ability to
realise assets at attractive values and divert management time.
If Shareholders vote against the Continuation Resolution, but in
favour of the change of Investment Policy and the New Articles
containing the Compulsory Redemption mechanism, the Board will be
required to formulate the other proposals referred to above which
may mean that the Compulsory Redemption of Shares may no longer be
practicable and there may not be sufficient opportunity for the
Board and the Manager to implement the new Investment Policy.
CHANGE OF INVESTMENT POLICY
In connection with the Company's divestment strategy and the
proposed orderly return of capital, the Directors consider it to be
in the best interests of the Company and its Shareholders that the
Company's Investment Policy be changed to facilitate the
realisation of the Company's remaining assets. The Company is
therefore seeking Shareholder approval at the General Meeting for
the adoption of the Proposed Investment Policy (set out in full in
paragraph 2 below) in substitution for the Existing Investment
Policy (set out in full in paragraph 1 below).
1. Existing Investment Policy
The Company's investment objective is to provide shareholders
with an attractive total return, which is intended to primarily
comprise capital growth but with the potential for distributions
over the medium to long term.
Asset allocation
The Company aims to achieve its investment objective by
investing in property segments in Macau. The Company's portfolio
may comprise a mixture of asset classes which include residential,
retail, leisure, industrial and office properties.
The Company targets developments which are often overlooked by
large developers and which, in the opinion of the Manager and the
Investment Adviser, offer opportunities to achieve an attractive
total return through their location, sector or 'value-added'
potential.
The Company looks to add value through redevelopment,
development, refurbishment, change of use and repositioning. In
particular, it seeks to acquire undervalued sites in attractive
locations where it believes there is a sustainable end-user demand.
The Company seeks to maximise the total return on its portfolio,
either through selling the properties after development or
redevelopment or by generating rental income.
Diversification
The Company, as an active investor, wil consider concentration
risk from both a sector as wel as an asset perspective. However, if
assets are realised and not replaced, concentration risk will
inevitably increase. The Company may wholly own its investments
(directly or indirectly) or it may invest through a joint venture
arrangement if the terms of the arrangement are deemed suitable.
There is no limit on the number of projects in which the Company
may invest and there is no minimum or maximum limit on the length
of time that any investment may be held.
No single investment in a development wil represent more than 40
per cent. of the Gross Asset Value of the Company at the time of
investment.
Gearing
The Company and its subsidiaries (together referred to as the
"Group") have the ability to borrow, both at Company level and
Special Purpose Vehicles ("SPVs") level, if SPVs are used in
relation to particular investments. The Group, either directly or
through its SPVs, may not borrow amounts in relation to any single
investment that exceed 75 per cent. of that investment's market
value. When the Company is fuly invested, the maximum amount of net
borrowings that the Group may have as a whole (i.e. all principal
amounts borrowed by the Group less the Group's cash balances) will
not exceed 60 per cent. of the aggregate value of all the Group's
investments at the time that any new borrowings are made.
2. Proposed new Investment Policy
Investment objective
The Company wil be managed with the objective of realising the
value of all remaining assets in the portfolio, individually, in
aggregate or in any other combination of disposals or transaction
structures, in a prudent
manner consistent with the principles of good investment
management with a view to making an orderly return of capital to
Shareholders over time.
Investment policy
The Company's investment objective will be effected with a view
to realising all of its investments in such a manner that seeks to
achieve a balance between maximising the value from the Company's
investments and making timely returns of capital to
Shareholders.
The Company may sel or otherwise realise its investments
(including individually, or in aggregate or other combinations) to
such persons as it chooses, but in all cases with the objective of
achieving the best exit values reasonably available within
reasonable time scales.
The Company will cease to make any new investments and shall not
undertake additional borrowing other than to refinance existing
borrowing or for working capital purposes.
Any cash received by the Company as part of the realisation
process wil be held by the Company as cash on deposit and/or as
cash equivalents prior to its distribution to Shareholders, which
shal be at such intervals as the Board may determine is
appropriate.
3. Effectiveness of the change of Investment Policy
The FCA has, in accordance with the Listing Rule 15.4.8, given
its consent to the proposed change to the Company's Investment
Policy. The proposed change of Investment Policy will, however,
become effective only once approved by Shareholders at the General
Meeting.
4. Risks associated with the adoption of the revised Investment Policy
Please refer to Part 2 of this Circular for a summary of certain
possible risks associated with the proposed change of Investment
Policy.
COMPULSORY REDEMPTION OF SHARES AND
RELATED AMMENTS TO THE ARTICLES
1. Proposed staged return of capital to Shareholders by
Compulsory Redemption of Shares
Pursuant to the Proposals, the Company proposes to undertake a
staged return of capital to Shareholders. It is proposed to effect
the return of capital by way of a Compulsory Redemption of Shares.
Currently the Shares are non-redeemable and, accordingly, it will
first be necessary to change the Articles to authorise the
Directors to compulsorily redeem some or all of the Shares at the
discretion of the Board.
Following such change, the Company will have the power to make
Compulsory Redemptions of Shares in volumes and on dates to be
determined at the Directors' sole discretion, with the amount
distributed in respect of the Shares on each occasion to be
determined by the Directors at the relevant time having regard to
the amount of cash available for distribution and retaining
sufficient working capital for ongoing operations. Shares will be
redeemed from all Shareholders pro rata to their existing holdings
of the Shares on a Redemption Date. The Directors will be
authorised to make such Compulsory Redemptions in accordance with
the process to be included in the New Articles (the mechanics of
which are described in paragraphs 2 and 3 below).
2. Changes to make the Shares redeemable
In order to make the Shares redeemable, it is proposed to amend
the existing Articles in order to permit the redemption of some or
all of the Company's Shares at the discretion of the Directors and
to set out the procedure by which the Directors may undertake any
Compulsory Redemption of such Shares.
Accordingly, the Company is proposing a special resolution
(Resolution 2), which will, if passed, adopt the New Articles
including the Compulsory Redemption mechanism described in
paragraphs 2 and 3 of this Part 4.
The full text of Resolution 2 is set out in the Notice of
General Meeting at the end of this document. A draft of the
proposed New Articles (showing the full terms of the changes
proposed to be made) may be inspected at the registered office of
the Company, Heritage Hall, Le Marchant Street, St. Peter Port,
Guernsey during usual business hours on any weekday (Saturdays,
Sundays and public holidays excepted) from the date of this
Circular up to and including the date of the General Meeting and at
the place of the General Meeting for at least 15 minutes before and
during the General Meeting.
Once the New Articles have been adopted, it is proposed that the
Board will resolve to undertake Compulsory Redemptions of the
Shares in stages in line with the Company's divestment strategy.
The Directors may only authorise a Compulsory Redemption of Shares
if they are satisfied on reasonable grounds that, immediately after
such Compulsory Redemption is made, the Company would satisfy the
statutory "solvency test".
For the purpose of the Companies Law, the Company would satisfy
the "solvency test" if:
(a) the Company is able to pay its debts as they became due; and
(b) the value of the Company's assets is greater than the value of its liabilities.
3. Mechanics of Compulsory Redemptions
Under the New Articles, the Directors will be authorised to make
Compulsory Redemptions of Shares in volumes and on dates to be
determined at the Directors' sole discretion. The Directors will
determine the aggregate amount to be distributed to Shareholders
pursuant to any Compulsory Redemption, having regard to the amount
of cash available for distribution whilst maintaining a prudent
overall loan-to-value ratio and retaining sufficient working
capital for ongoing operations. Shares will be redeemed from all
Shareholders pro rata to their existing holdings of the Shares on
the relevant Redemption Date.
As and when the Directors exercise their discretion to redeem
compulsorily a given percentage of the Shares of any class in
issue, the Company will make a Redemption Announcement in advance
of the relevant Redemption Date. The Redemption Announcement is
expected to include the following details:
(a) the aggregate amount to be distributed to Shareholders;
(b) the Relevant Percentage of Shares to be redeemed (pro rata
as between the holders of Shares as at the Redemption Record
Date);
(c) a timetable for the Compulsory Redemption and distribution
of redemption proceeds, including the Redemption Date and
Redemption Record Date;
(d) the Redemption Price per Share, which is expected to be
calculated by reference to the Adjusted NAV per Share (as at a NAV
Date selected by the Directors) of the Shares that will be redeemed
on a given Redemption Date, less the costs associated with the
relevant redemption and as adjusted as the Directors consider
appropriate;
(e) the New ISIN in respect of Shares which will continue to be
listed following the relevant Redemption Date; and
(f) any additional information that the Board deems necessary in
connection with the Compulsory Redemption.
Compulsory Redemptions of Shares will become effective on each
Redemption Date, being a date chosen at the Directors' absolute
discretion, as determined by the Directors to be in the best
interests of Shareholders as a whole. In determining the timing of
any Redemption Date, the Directors will take into account, among
other things, the amount of cash available for payment of
redemption proceeds and the costs associated with such Compulsory
Redemption.
Accordingly, the proceeds of any disposals of the Company's
assets in line with the Proposed Investment Policy will not
necessarily be distributed at or soon after the date of any such
disposal but may be retained and aggregated with the proceeds of
other disposals pending return to Shareholders. The Shares redeemed
will be the Relevant Percentage of the Shares registered in the
names of Shareholders on the Redemption Record Date. Shareholders
will receive the Redemption Price per Share in respect of each of
their Shares redeemed compulsorily.
In the case of Shares held in uncertificated form (that is, in
CREST), Compulsory Redemptions will take effect automatically on
each Redemption Date and redeemed Shares will be cancelled. All
Shares in issue will be disabled in CREST after 6.00 p.m. (UK time)
on the Redemption Date and the Old ISIN will expire. The New ISIN
in respect of the remaining Shares in issue and which have not been
redeemed will be enabled and available for transactions from and
including the first Business Day following the relevant Redemption
Date (or such other date notified to Shareholders). The New ISIN
will be notified to Shareholders in the relevant Redemption
Announcement. Up to and including the Redemption Date, Shares will
be traded under the Old ISIN and, as such, a purchaser of such
Shares would have a market claim for a proportion of the redemption
proceeds. CREST will automatically transform any open transactions
as at the Redemption Date (which may be the record date for the
purposes of the redemption) into the New ISIN.
In the case of Shares held in certificated form (that is, not in
CREST), Compulsory Redemptions will take effect automatically on
each Redemption Date. As the Shares will be compulsorily redeemed,
certificated Shareholders do not need to return their Share
certificates to the Company in order to claim their redemption
monies. Shareholders' existing Share certificates will be cancelled
and new Share certificates will be issued to each such Shareholder
for the balance of their shareholding in the Company after each
Redemption Date. Cheques will automatically be issued to
certificated Shareholders upon the cancellation of any of their
Shares. All Shares that are redeemed will be cancelled with effect
from the relevant Redemption Date. Accordingly, once redeemed,
Shares will be incapable of transfer.
Payments of redemption monies are expected to be effected either
through CREST (in the case of Shares held in uncertificated form)
or by cheque (in the case of Shares held in certificated form)
within 14 Business Days of the relevant Redemption Date, or as soon
as practicable thereafter. Shareholders will be paid their
redemption proceeds in Sterling.
(4. Alternative methods to return cash to Shareholders)
The Directors shall continue to have the right to return cash
otherwise than through Compulsory Redemptions, such as by way of
tender offers to Shareholders to purchase their Shares. In such
circumstances, a tender offer will be made to Shareholders in
accordance with market practice and in compliance with the Listing
Rules and the Companies Law. Further, the Directors may determine,
in their absolute discretion where they consider it to be in the
best interests of Shareholders, to return cash from disposals of
the Company's assets in accordance with the Proposed Investment
Policy to Shareholders by way of dividend or any other distribution
permitted by the Listing Rules and the Companies Law.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
NOGEANKXEFEPEFF
(END) Dow Jones Newswires
June 08, 2018 02:00 ET (06:00 GMT)
Macau Property Opportuni... (LSE:MPO)
Historical Stock Chart
From Apr 2024 to May 2024
Macau Property Opportuni... (LSE:MPO)
Historical Stock Chart
From May 2023 to May 2024