TIDMPIN
RNS Number : 0351S
Pantheon International PLC
28 September 2017
FOR IMMEDIATE RELEASE
This announcement is released by Pantheon International Plc and
contains information, which prior to its disclosure, was considered
inside information for the purposes of Article 7 of Regulation (EU)
No. 596/2014 (MAR), encompassing information relating to the
Proposed Share Capital Reorganisation and Issue of an Asset Linked
Note. For the purposes of MAR and Article 2 of Commission
Implementing Regulation (EU) 2016/1055, this announcement is made
by Capita Sinclair Henderson Limited, Company Secretary.
No securities of the Company referred to in this announcement
have been or will be registered under the United States Securities
Act of 1933 or the state securities laws of the United States and
none of them are being, nor may they be, offered or sold in the
United States.
PANTHEON INTERNATIONAL PLC
28 September 2017
Proposed Share Capital Consolidation and Issue of Asset Linked
Note
Pantheon International Plc ("PIP" or the "Company"), an
investment trust that invests in private equity funds globally,
today announces proposals (the "Proposals") to effect the
consolidation of its ordinary and redeemable share capital into a
single class of Ordinary Shares (the "Consolidation"). The
Proposals include the issue of an unlisted Asset Linked Note (the
"ALN") to the largest holder of the Company's Redeemable Shares
(the "Investor") in exchange for part of its shareholding. The
Board of PIP believes that the Proposals will lead to important
benefits for the Company and all its shareholders, both in terms of
improved investment prospects and increased share liquidity.
The key features of the Proposals are as follows:
-- The Consolidation will be effected through a reorganisation
pursuant to which, subject as provided below, Redeemable
Shareholders will have their Redeemable Shares converted into
Ordinary Shares on a one-for-one basis
-- Prior to the Consolidation, the Investor will surrender such
proportion of its holding of Redeemable Shares as has an underlying
NAV of GBP200m in exchange for an ALN with an initial principal
amount of GBP200m
-- The ALN will be linked to the performance of a portfolio of
more than 300 different fund interests in PIP's oldest private
equity funds (substantially comprising 2006 and earlier vintages).
Historically, younger funds in PIP's portfolio have outperformed
those funds aged 10 years and older
-- The Investor will convert the balance of its Redeemable
Shares into new Ordinary Shares, and is expected to be among the
ten largest Ordinary Shareholders in the Company following
implementation of the Proposals
-- The Proposals will require the approval of the shareholders
in a general meeting by way of a special resolution and the
separate approvals of both holders of PIP's Redeemable Shares and
holders of PIP's Ordinary Shares by way of an extraordinary
resolution at separate class meetings. The Investor will abstain
from voting at the class meeting of the holders of Redeemable
Shares
-- A circular is expected to be published in early October
setting out full details of the Proposals and convening the
shareholder meetings to vote on the Proposals.
Commenting on the Proposals, Sir Laurie Magnus, Chairman,
said:
"The Board has been seeking a way to simplify the dual share
capital structure of PIP for some time and it is aware that many of
the Company's existing and potential shareholders share its belief
in the benefits of consolidating the two share classes. It is the
Board's view that the proposed solution will benefit both the
Company and all its shareholders by simplifying the capital
structure, as well as reducing the Company's exposure to its lower
performing tail portfolio. In addition, shareholders should benefit
from the increased secondary market liquidity of the enlarged
Ordinary Share class and from the Company's greater freedom to
enhance shareholder returns over the long term through share
buybacks."
Background to the Proposals
The Board has been aware for some time that its views regarding
the benefits of a consolidation of PIP's share classes are shared
by a broad cross-section of its shareholders, who have regularly
raised the idea of a consolidation with the Company and its
advisers. However, the Investor, which has been a long-term
shareholder in PIP, has consistently indicated that it is not in a
position to support a simple consolidation of the share capital.
Following extensive discussions with the Investor and its advisers,
the Board and its advisers have formulated proposals to effect the
Consolidation which have the support of the Investor and which
would, if approved by Shareholders, result in the conversion of a
material proportion of the Investor's Redeemable Shares into
Ordinary Shares along with the exchange of the majority of its
holding of Redeemable Shares at NAV for the ALN, an instrument
offering liquidity over the medium term but linked to the
performance of the older vintage funds in PIP's portfolio.
The Investor has indicated that it is supportive of the
Proposals, and has entered into a conditional Letter of Intent with
the Company in which it undertakes to support the Proposals subject
to the satisfaction of certain conditions.
Details of the Proposals
The Proposals comprise the Consolidation and the issue of the
ALN.
(a) Consolidation of share capital
A full consolidation of the Company's two share classes will be
implemented, in which all Redeemable Shares (other than those
surrendered by the Investor) will be converted into Ordinary Shares
of 67p each on a one-for-one basis. The Investor will convert the
balance of its Redeemable Shares into Ordinary Shares along with
all other holders of Redeemable Shares and will consequently
continue to have a meaningful equity stake in PIP, becoming one of
the top 10 holders of the enlarged Ordinary Share class following
implementation of the Proposals.
In order to equalise the par value of the Ordinary Shares and
Redeemable Shares, a bonus issue of new, unlisted deferred shares
of 66p each ("Deferred Shares") will be made to holders of
Redeemable Shares on a one-for-one basis following the redemption
of the relevant portion of the Investor's Redeemable Shares. The
bonus Deferred Shares and existing Redeemable Shares will be
consolidated to form new shares of 67p each, which will be
designated as new Ordinary Shares of 67p each ranking pari passu
with the Ordinary Shares already in issue. Application will be made
for the new Ordinary Shares to be admitted to the premium segment
of the Official List of the UK Listing Authority and to trading on
the London Stock Exchange's Main Market with effect from the
business day following the designation.
(b) Issue of the ALN
PIP will redeem such number of the Investor's Redeemable Shares
as have an aggregate net asset value of GBP200m as at PIP's latest
published NAV calculation date (the "Valuation Date", which is
expected to be 30 September 2017.) The Valuation Date NAV will
include an accrual for the expected costs of the Proposals. In
return, PIP will issue the ALN with an initial principal amount of
GBP200m. The Investor will thus effectively exchange Redeemable
Shares with an underlying NAV of GBP200m on a NAV-for-NAV basis for
the ALN at the same initial value, with no impact on the Company's
NAV per share (other than the Company's pro rata share of the costs
of the Proposals). The ALN will be unlisted and subordinated to
PIP's existing revolving loan agreement (and any refinancing.) The
ALN will not be transferable, other than to an affiliate of the
Investor.
The amount repayable on the ALN will be linked to a subset of
PIP's assets (the "Reference Portfolio"), substantially comprising
PIP's oldest funds (2006 and earlier vintages). It is expected that
the ALN will reflect c.75% of the value received by PIP from the
Reference Portfolio. PIP will retain full legal and beneficial
ownership of the Reference Portfolio and Pantheon will continue to
manage for PIP all the assets within the Reference Portfolio.
Under the terms of the ALN, repayments of the ALN will be made
to the Investor by reference to net cash flow from the Reference
Portfolio. A first distribution is expected to become payable on 30
November 2017 and will be based on the net cash flow generated by
the Reference Portfolio over the period from 1 January 2017 to the
Valuation Date. Thereafter, distributions will be made by the
Company to the Investor on a quarterly basis to coincide with the
Company's year-end and audit cycle and will be based on the net
cash flow from the Reference Portfolio in the previous quarter. The
Company will have the right to defer a distribution, in order to
manage cash flow required for future drawdowns, for three months at
a cost of LIBOR +3%.
In the eight months to 31 August 2017, the Reference Portfolio
generated net cash of GBP66.9m through a combination of
distributions from underlying funds and secondary sales, which was
in line with expectations. On this basis, the first payment in
respect of the nine month period to the Valuation Date will be
GBP51.7m plus an amount based on the net cash flow generated by the
Reference Portfolio in September 2017. Over time, payments under
the ALN are expected to decline steadily in line with the shrinkage
of the Reference Portfolio as it is progressively realised.
However, the timing and size of distributions are unpredictable and
the size of individual quarterly payments will vary depending on
the actual level of realisations in the preceding quarter.
The ALN is expected to mature on 31 August 2027, at which point
the Company will make a final distribution to the Investor of an
amount equal to the remaining principal amount of the ALN as at
that date (which is expected to be less than 10% of the initial
principal amount of the ALN). Following repayment in full of the
ALN, PIP will not be obliged to make further payments to the
Investor under the ALN by reference to any residual value
subsequently received by PIP from the Reference Portfolio. In the
event that the total distributions made by the Company to the
Investor under the terms of the ALN amount to less than GBP200m,
the difference (reduced, in the event that PIP's NAV per share
decreases over the life of the ALN, by an equal percentage
decrease) will be paid over by the Company to the Investor in the
form of a rebate. The rebate is subject to an absolute cap of
GBP30m, except in the case of PIP being placed in run off, or
repayment of the ALN repayment being accelerated through an event
of default under the ALN. The rebate will not be paid if PIP's NAV
per share underperforms the ALN over the life of the ALN.
(c) Costs
The Proposals are neutral in terms of their impact on current
NAV per share, excluding the impact of the costs incurred by PIP in
connection with the Proposals, which are expected to amount to less
than 4p per share. The Investor will absorb its share of the costs
as the price at which some of its shareholding is redeemed will
take into account an accrual for those costs. The Investor will
continue to bear its proportionate share of the management costs in
relation to the Reference Portfolio for the life of the ALN. The
assets contained within the Reference Portfolio will continue to be
legally and beneficially owned by PIP and will be managed by
Pantheon in the interests of PIP as part of the Company's total
portfolio.
Benefits of the Proposals
The Board believes that the Proposals will deliver significant
advantages to PIP and its shareholders. The future performance of
the Company will be aligned more closely to younger fund vintages,
and PIP will benefit from the increased secondary market liquidity
and flexibility in capital management that flow from having a
single class of issued share capital.
By simplifying the Company's capital structure, the Board
believes that the Consolidation will improve secondary market
liquidity in the ongoing enlarged single share class and better
reflect the scale of the Company's operations, increasing the
likelihood of the Company's inclusion in the FTSE 250 Index and
boosting its market profile. The Board will also have greater
flexibility to conduct share buybacks for the benefit of
shareholders as a whole.
In seeking to optimise PIP's investment performance, Pantheon
takes an active approach to portfolio management and has undertaken
a number of transactions in the secondary market on PIP's behalf,
both as buyer and seller. Part of the rationale for this activity
is to rejuvenate the portfolio mix, based on the long-established
tendency for older funds (the "tail portfolio") to generate lower
investment returns than more recent vintages. For example, in the
last 5 financial years (to 31 May 2017), the aggregate percentage
NAV growth of the younger funds in PIP's portfolio outperformed the
aggregate percentage NAV growth of those funds aged 10 years and
older by at least 2.9% in each year. PIP has an extensive tail
portfolio, comprising over 300 funds from 2006 and earlier where
the investment periods are largely expired. Any disposal of a tail
portfolio of this size and breadth in the secondary market would
not be straightforward and could be expected to have a negative
initial impact on the Company's NAV per share, as the discounts for
tail portfolios are typically wider than for younger funds.
The issue of the ALN is equivalent to an effective reduction of
the weighted average fund age of PIP's pro forma portfolio as at 31
May 2017 from 6.7 years to c.5.8 years and will de-emphasise the
tail portfolio without a material negative initial impact on the
Company's NAV per share. While PIP will remain the legal and
beneficial owner of the underlying fund assets comprised in the
Reference Portfolio and the Investor would not acquire an interest
in the assets, an amount equal to c.75% of the net cash flow
received by PIP from the Reference Portfolio (less an adjustment
for costs associated with the Reference Portfolio) will be paid out
to the Investor through the payment structure of the ALN. As a
consequence, to the extent that the Reference Portfolio generates
lower future returns than the rest of PIP's portfolio, as has been
the historic trend, the post-consolidation NAV per share
performance of the Ordinary Shares should in all likely
circumstances be enhanced. While the Reference Portfolio is
expected to generate higher near-term cash flow than PIP's
portfolio as a whole (as draw-downs are typically at very low
levels for funds of this age), the Company's pro forma cash flow
profile net of payments made under the ALN is still expected to be
strong and sufficient to fund new investments including share
buyback opportunities as they arise.
Shareholder Circular and Meetings
The Consolidation and the issuance of the ALN are
inter-conditional and subject to regulatory and bank approvals, the
approval of shareholders in a general meeting by way of a special
resolution and separate approvals by holders of the Redeemable
Shares and the Ordinary Shares by way of an extraordinary
resolution in separate class meetings, in each case requiring 75%
approval of those present and voting. The Investor has agreed to
abstain from voting at the class meeting of the holders of
Redeemable Shares.
Subject to required regulatory and bank approvals being
obtained, a circular including notices of the general meeting and
the separate class meetings of holders of Redeemable Shares and of
Ordinary Shares to be convened for the purpose of seeking approval
of the Proposal is expected to be posted in early October. The
meetings are expected to be held around the end of October. Full
details of the Proposals and the proposed timetable will be set out
in the circular.
Enquiries:
Pantheon Ventures (UK) LLP
Andrew Lebus / Vicki Bradley
020 3356 1800
Evercore
Matthew Lindsey-Clark
020 7653 6000
Canaccord Genuity Limited
Andrew Zychowski / Lucy Lewis / Robbie Robertson
020 7523 8000
Buchanan
Charles Ryland / Victoria Hayns / Henry Wilson
020 7466 5000
NOTES
PIP
PIP is a London quoted investment trust, managed by Pantheon
Ventures (UK) LLP ("Pantheon"), a leading global private equity
fund investor, investing in both primary funds and secondary
transactions, and from time to time capitalising further on its
fund investment activities by acquiring direct holdings in unquoted
companies, usually either where a vendor is seeking to sell a
combined portfolio of fund interests and direct holdings or where
there is a private equity manager, well known to Pantheon,
investing on substantially the same terms. With investments in
private equity funds, covering multiple private equity strategies
ranging from investments in late stage buyouts to early stage
venture, PIP enables individuals as well as institutions to gain
access to a substantial portfolio of unquoted companies in the USA,
the UK, Continental Europe and Asia, within funds managed by
experienced private equity managers.
Pantheon
Pantheon is a leading global private equity fund investor that
invests on behalf of over 400 institutional investors. Established
over 35 years ago, Pantheon has developed a strong reputation and
track record in primary, secondary and co-investments and across
all stages and geographies. Pantheon has GBP29.2 billion in AUM**
(as at 31 March 2017) 223 employees, including 71 investment
professionals, located across offices in London, San Francisco, New
York, Hong Kong, Seoul and Bogotá.
Evercore
Evercore Partners International LLP ("Evercore"), which is
authorised and regulated in the United Kingdom by the FCA, is
acting as financial adviser exclusively for the Company and no one
else in connection with the proposed transactions described in this
announcement and the content of this announcement and accordingly
will not be responsible to anyone other than the Company in
providing the protections afforded to clients of Evercore nor for
providing advice in relation to the proposed transactions described
in this announcement and the content of this announcement. Neither
Evercore nor any of its subsidiaries, branches or affiliates owes
or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, whether in contract, in tort, under
statute or otherwise) to any person other than the Company in
connection with this announcement, any statement contained herein
or otherwise.
Canaccord
Canaccord Genuity Limited ("Canaccord"), which is authorised and
regulated in the United Kingdom by the FCA, is acting exclusively
for the Company and for no-one else in connection with the proposed
transactions described in this announcement and the content of this
announcement, and accordingly will not be responsible to anyone
other than the Company for providing the protections offered to
clients of Canaccord nor for providing advice to any other person
in relation to the proposed transactions described in this
announcement or the contents of this announcement.
** This figure includes assets subject to discretionary or
non-discretionary management, advice or those limited to a
reporting function.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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