TIDMPTF
RNS Number : 0488M
Phaunos Timber Fund Limited
25 July 2017
Phaunos Timber Fund Limited
("Phaunos" or the "Company")
25 July 2017
Company Update
Further to the Company's update announcements on 3 July 2017 and
10 July 2017, the Board wishes to provide the following progress
report.
Board succession plan
The Company has announced today that Brendan Hawthorne will join
the Board. Brendan is a managing director at Duff & Phelps, a
global valuations and corporate recovery firm.
Brendan has more than 20 years' experience as a specialist in
financial investigations and asset recovery. He has extensive
multi-jurisdictional experience including having been a director
of, or professional advisor to the investors in, several
substantial hedge funds.
As announced on 3 July 2017, professional search agents have
been engaged with a mandate to recruit a replacement Chairman and
two replacement Non-Executive Directors, with appropriate skills,
in addition to Mr Hawthorne. The search agents are making good
progress and further announcements will follow in due course. It is
expected that a new Chairman will be appointed during August
2017.
The current directors will render all assistance to their
replacements and to the Company in ensuring an orderly hand over
and to protect the best interests of shareholders.
Management of the Company's assets
Further to the announcement made on 10 July 2017, the Board
would like to give an update in relation to the management of the
Company's assets following the intended resignation of Stafford
Capital Partners ("Stafford") as the Company's investment
manager.
Following the vote by shareholders for the Company not to
continue for a further five years, subject to approval by
shareholders, Phaunos' assets will be realised in an orderly way. A
principal reason for Stafford's resignation is that their business
is to build and manage funds for the longer term; they are not
dissolution specialists. The assets will therefore be realised
using third-party sales agents, as has been the case with previous
asset sales from the Phaunos portfolio. Consequently the new Board
will need to decide whether a new manager is required as part of
the process to maximise the sale value of the Company's remaining
assets.
Until their notice period expires, Stafford, in conjunction with
the Board, will oversee the selection process of sales agents. They
will also continue their involvement in the day-to-day management
of the Company's assets. By offering that their six month notice
period run from the day on which shareholders consider the change
to the Company's investment policy to allow the managed wind-down
process, expected to be in August 2017, rather than a month earlier
when they notified the Board of their intention to resign, they
will be able to assist the new Board in the preparation of the
annual accounts for the year to 31 December 2017.
Lapse of warrants
The Management Fee agreed on the appointment of Stafford in
2014, to manage the Company's assets was composed of two elements:
(i) a Base Fee of 0.35% per annum of the Company's Market
Capitalisation (calculated by taking the average of the buy price
at the close of business on each Business Day in the relevant
quarter). These fees were unusually low for the management of a
global timber fund and reflected Stafford's and the Board's concern
over the low level of cash to support the Company's operations at
that time and (ii) an issue of warrants to allow Stafford to
subscribe to shares at fixed prices and to benefit from an uplift
in Phaunos' share price.
As set out on page 33 of the Annual Report for the year to 31
December 2016, in the event of the Company's continuation
resolution not being passed, the rights relating to the warrants
lapse and in compensation an Increased Base Fee becomes payable
retrospectively to bring Stafford's aggregate Management Fee, since
appointment, to 1% per annum of the Company's Market
Capitalisation. These terms were also set out in the 2014 capital
raise document and were approved by shareholders.
The compensatory uplift of 0.65% per annum for the period from 1
July 2014 to 19 June 2017 (the date the continuation vote was not
passed), both dates inclusive, results in a payment to Stafford of
$4.38 million. Partly offsetting this is the release of the warrant
instrument reserve, which stood at $2.7 million as at 31 Dec 2016,
which is no longer required due to the cancelation of the
warrants.
All other liquidation payments, which Stafford might have
received, have been forfeited as a consequence of Stafford's
resignation.
Next steps
The process of selecting and appointing sales agents is in
progress. At this stage the Board and Stafford both consider that
the best way to realise shareholder value is to appoint a single
lead sales agent for the sale of all of the Company's assets. The
sale process will include seeking offers for all of the portfolio
as well as for any individual asset or group of assets. This
flexibility is considered to be the most efficient way to maximise
the value of the portfolio. As stated in an announcement on 3 July
2017, the objective of the sales process will be to maximise
overall returns to shareholders, taking into account the ability of
potential buyers to complete transactions in a timely manner.
This sales process will require a change to the Company's
investment objective and policy and it is intended that an EGM will
be convened before the end of August to seek shareholder approval
for this, as well as to seek approval for the appointment of
Brendan Hawthorne and the necessary amendments to the Company's
Articles to permit the periodic returns of capital. The Company
expects to publish a circular shortly in connection with this and
will provide a further update in due course.
The Company has distributable cash of approximately $10 million,
in excess of revised projections of costs, that is available in
Guernsey or capable of being repatriated to Guernsey. This amount
will form the basis of the Company's first distribution of capital.
Therefore, following the amendment to the Company's Articles of
Incorporation to be considered by shareholders at the EGM as set
out above, a first payment is expected to be made by means of a
compulsory redemption of shares pro rata to shareholders' holdings
as soon as practicable thereafter.
Enquiries:
Phaunos Timber Fund Limited (Chairman)
Sir Henry Studholme
Stafford Capital Partners Limited (Manager)
Michael Goodfellow, +44 (0)20 7535 4915
Winterflood Investment Trusts (Corporate Broker)
Joe Winkley, +44 (0)20 3100 0301
Media Enquiries:
Phoenix Financial PR
Gordon Puckey: +44 (0) 7799 767468
info@phaunostimber.com
Notes to Editors
Established in 2006, Phaunos Timber Fund Limited ("PTF" or "the
Company") invests in a concentrated, but diversified portfolio of
timberland and timber-related investments.
PTF is a Guernsey-domiciled authorised closed-ended investment
scheme, authorised by the Guernsey Financial Services Commission
under section 8 of The Protection of Investors (Bailiwick of
Guernsey) Law, 1987 (as amended) and the Authorised Closed-ended
Investment Schemes Rules 2008 made thereunder. The Company's
ordinary shares are traded on the Main Market of the London Stock
Exchange. www.phaunostimber.com
It was announced on 19 June 2017 that the Company's continuation
resolution had not been passed. The Board has stated that it will
put forward proposals to commence the process for an orderly
realisation of the assets of the Company.
The Company's ticker is PTF. www.phaunostimber.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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