TIDMPMEA
RNS Number : 7853E
PME African Infrastructure Opps PLC
06 November 2015
6 November 2015
PME African Infrastructure Opportunities plc
("PME" or the "Company")
(AIM: PMEA.L)
Notice of EGM, Circular and Current Tender Offer
PME African Infrastructure Opportunities plc confirms that a
notice convening an Extraordinary General Meeting ("Notice") to be
held at 10.00 a.m. hours (UK time) on 23 November 2015 at the
offices of Galileo Fund Services Limited, Millennium House, 46
Athol Street, Douglas, Isle of Man IM1 1JB, is to be sent to
Shareholders today.
Accompanying the Notice is a circular (the "Tender Offer
Document") which sets out the Company's proposal ("Proposal") to
renew Shareholder authority for the Company to return capital to
Shareholders via a series of Tender Offers (which require approval
under the Isle of Man Companies Acts 1931 to 2004 (as amended)) and
sets out details of a current tender offer (the "Current Tender
Offer"). The Tender Offer Document will shortly be available from
the Company's website at www.pmeinfrastructure.com.
Under the Current Tender Offer, the Board is proposing to return
up to US$7.7 million of cash through the purchase by the Company of
up to 38,376,948 existing Ordinary Shares from Eligible
Shareholders, representing 50.0 per cent. of the Ordinary Shares in
issue at the Record Time at the Tender Offer Price of US$0.20 per
Ordinary Share.
The Current Tender Offer is only available to Shareholders
(other than certain Overseas Shareholders) on the Register on the
Record Time, and only in respect of a maximum of 1 Ordinary Share
for every 2 Ordinary Shares registered in their names at the Record
Time.
Capitalised terms used in this announcement shall have the
meanings given to them in the Tender Offer Document referred to
above.
Background to and reasons for the Proposal
The Company's investing policy is to realise the remaining
assets of the Company at a time and under such conditions as the
Directors may determine in order to maximise value on behalf of the
Shareholders of the Company, and to return both existing cash
reserves and the proceeds of realisation of the remaining assets to
Shareholders. Since 2012 the Company has returned a total of
approximately US$19.6 million to Shareholders.
As first announced by the Company on 17 April 2015, the Company
agreed the sale to PCF Investments of 100 per cent. of the equity
of PME RSACO, the entity which held the Group's 50 per cent.
interest in Sheltam, together with certain intercompany loans, and
of seven C30 locomotives then owned by PME Locomotives, for an
aggregate cash consideration of US$11.5 million (the "Disposal").
The Disposal completed on 5 May 2015.
Following the Disposal, the Group now owns three C30 locomotives
and a commercial property in Dar-es-Salaam, Tanzania (the
"Dar-es-Salaam Property").
The three C30 locomotives are held through the Company's wholly
owned subsidiary PME Locomotives. PME Locomotives has a put option
(the "Option") which, if exercised, would require the Company's
former subsidiary, RSACO, to purchase one or more of the three
locomotives for US$1,416,666 per locomotive at any point during a
90 day period commencing on 6 November 2016 (the "Option
Period").
If PME Locomotives decides to exercise its Option with RSACO in
respect of all three remaining C30 locomotives, it can expect
proceeds of a further US$4.25 million.
The Dar-es-Salaam Property, which is managed by a local managing
agent, is fully let and the investment continues to be profitable.
In 2010, a subsidiary of PME acquired the Dar-es-Salaam Property
from Dovetel (T) Limited ("Dovetel"), the Company's former
telecommunication investee company in Tanzania. Dovetel is also a
tenant of part of the Dar-es-Salaam Property.
The Directors of PME visited Tanzania in June 2015 and reviewed
the legal strategy being pursued in relation to this investment.
The Group will continue to follow the current court action to evict
Dovetel for non-payment of rent. However, PME will no longer
continue to seek the winding up of Dovetel as this has had the
effect of restricting the eviction process. Since June 2015, PME's
legal advisers have attended a number of status hearings on the
withdrawal of the Dovetel winding up petition. The Directors expect
the withdrawal of the winding up petition to be successful, but it
remains dependent on the availability of a judge in Tanzania to
hear the case.
Following the withdrawal of the winding up petition, the
Directors will seek to progress the eviction of Dovetel, pursue the
collection of outstanding debt due from Dovetel and seek the
removal of the caveat from the land register which is currently
prohibiting the sale of the Dar-es-Salaam Property.
Until there is clarity on the legal issues regarding the status
of the Dar-es-Salaam Property, and as shown in the Company's
unaudited interim results for the six months ended 30 June 2015,
the Directors have valued the Dar-es-Salaam Property at US$3.8
million, which value takes account of the legal uncertainty
regarding realisation of the property. However, the latest
valuation obtained by the Company from a local expert on 17 April
2015 puts the open market value of the Dar-es-Salaam Property as at
31 December 2014 at US$6.5 million.
The Directors have recently considered the cash reserves
required to be retained by the Company for foreseeable working
capital purposes. As the period during which claims can be made
under the agreements entered into in connection with the Disposal
has now expired, and no such claims have been notified to the
Company, the Directors now propose to carry out the Current Tender
Offer in order to return the proceeds of the Disposal, less funds
required to be retained for working capital purposes, to
Shareholders.
The Board will continue to review on a regular basis the
continuing requirements of the Company and to the extent that the
Company holds cash in excess of anticipated requirements, the
Directors will seek to return such cash to Shareholders by way of
one or more further Tender Offers.
Details of the Current Tender Offer
The Board is proposing to return up to US$7.7 million of cash
through the purchase by the Company of up to 38,376,948 existing
Ordinary Shares from Eligible Shareholders. Once purchased by the
Company, those Ordinary Shares will be cancelled so that such
Ordinary Shares will no longer be in issue but the Company's
authorised share capital will remain unchanged.
The Current Tender Offer is being made by the Company on the
terms and subject to the conditions set out in the Tender Offer
Document and the Tender Form, in respect of up to 38,376,948
Ordinary Shares, representing 50.0 per cent. of the Ordinary Shares
in issue on the Record Time at the Tender Price of US$0.20 per
Ordinary Share. The Tender Price represents a premium of
approximately 73.9 per cent. over the middle market closing price
(as derived from the AIM Appendix to the Daily Official List of the
London Stock Exchange) of US$0.115 per Ordinary Share on 5 November
2015, being the latest practicable date before the publication of
the Tender Offer Document. The Tender Price has been calculated by
reference to the Net Asset Value per Ordinary Share as at 30 June
2015 of US$0.22 and constitutes a discount to the Net Asset Value
of the Company at that date.
The Current Tender Offer is only available to Shareholders
(other than certain Overseas Shareholders) on the Register on the
Record Time, and only in respect of a maximum of 1 Ordinary Share
for every 2 Ordinary Shares registered in their names at the Record
Time.
Risks relating to the Tender Offers
The risks described below should be carefully considered by
Shareholders when deciding what action to take in relation to the
Resolution to be proposed at the Extraordinary General Meeting.
-- If any Ordinary Shares permitted to be tendered pursuant to
the Tender Offers are tendered, the issued share capital of the
Company will be reduced. As a result, (i) the fixed costs of the
Company would be spread over fewer Ordinary Shares and the
Company's total expense ratio may increase; and (ii) the ability to
trade Ordinary Shares in the secondary market would be likely to be
reduced as the Company's issued share capital becomes smaller
through the execution of the Tender Offers.
-- The Tender Offers would contribute to increased asset
concentration and, therefore, increased portfolio risk. The amount
that the Company would be able to return to Shareholders in future
would, therefore, be significantly dependent on the performance of
remaining investments and the proceeds realised from them.
-- If the Current Tender Offer does not proceed for any reason,
the Company would bear costs in relation to the Current Tender
Offer.
-- Although the taxation consequences of the Current Tender
Offer are set out in the Tender Offer Document, such tax treatment
may change as a result of changes in the law or HM Revenue &
Customs custom and practice.
Recommendation
The Board unanimously considers that approval of the Resolution
is in the best interests of the Company and its Shareholders as a
whole. The Board unanimously recommends that Shareholders vote in
favour of the Resolution as Lawrence Kearns (being the only
Director who holds an interest in the Company) intends to do in
respect of his own beneficial holding, which amounts to 74,000
Ordinary Shares, representing approximately 0.1 per cent. of the
Company's issued ordinary share capital as at 5 November 2013,
being the latest practicable date prior to the posting of the
Tender Offer Document.
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