TIDMRECI TIDMRECP TIDMTTM
RNS Number : 7067X
Real Estate Credit Investments Ltd
23 February 2017
NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, TO ANY US PERSONS OR INTO, THE UNITED
STATES, AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN, OR ANY OTHER
JURISDICTION, OR TO ANY PERSON, WHERE DOING SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
This announcement is an advertisement and not a prospectus.
Investors should not purchase or subscribe for any transferable
securities referred to in this announcement except on the basis of
information in the prospectus published on 23 February 2017 (the
"Prospectus") by Real Estate Credit Investments Limited (the
"Company") in connection with the admission of new ordinary shares
(the "New Ordinary Shares") to be issued by the Company pursuant to
the Initial Placing and the Placing Programme (each as defined
below) to the premium segment of the Official List of the Financial
Conduct Authority (the "Official List") and to trading on the Main
Market for listed securities of the London Stock Exchange (the
"London Stock Exchange"). Copies of the Prospectus will shortly be
available for viewing on the Company's website and at the National
Storage Mechanism at http://www.hemscott.com/nsm.do. This
announcement does not constitute or form a part of any offer to
sell or issue, or a solicitation of any offer to purchase or
otherwise acquire, securities by any US Persons or in the United
States or in any other jurisdiction. Neither this announcement nor
any part of it shall form the basis of or be relied on in
connection with or act as an inducement to enter into any contract
or commitment whatsoever.
23 February 2017
Real Estate Credit Investments Limited
Proposed Initial Placing and Placing Programme, Change of
Investment Objective and Policy of the Company
and
Notice of Extraordinary General Meeting
Further to the announcement of 9 February 2017, Real Estate
Credit Investments Limited ("RECI" or the "Company") today
announces that it has published a prospectus approved by the UK
Listing Authority in relation to issues of new shares by way of a
Placing Programme (the "Prospectus"). The Company intends to raise
gross proceeds of a minimum of GBP20 million by way of an initial
placing of New Ordinary Shares (the "Initial Placing"). The price
at which each New Ordinary Share will be issued will be 162.5 pence
(the "Initial Placing Price").
The Board of Real Estate Credit Investments Limited is pleased
to announce a proposed Placing Programme to enable the Company to
raise capital in an efficient and cost-effective manner over the
next 12 months (the "Placing Programme"). The Placing Price
applicable to each subsequent Placing under the Placing Programme
will be determined by reference to the Net Asset Value per Ordinary
Share as at the month-end immediately preceding the subsequent
Placing.
The Company also proposes to amend the Company's investment
objective and policy so that the Existing Investment Objective and
Policy is replaced by the Proposed Investment Objective and Policy,
further details of which are set out below (which together with the
Placing Programme, constitute the "Proposals").
The Proposals are conditional upon, amongst other things,
certain resolutions being passed at an Extraordinary General
Meeting of the Company (the "EGM") to be convened for 22 March
2017. A Circular, containing a notice convening the EGM, will be
sent to Shareholders today.
A Circular and Prospectus in relation to the Proposals will
shortly be available on the national storage mechanism at
http://www.hemscott.com/nsm.do, and will also be available on the
Company's website at www.recreditinvest.com
Highlights:
-- The Company intends to raise gross proceeds of a minimum of
GBP20 million by way of the Initial Placing of New Ordinary Shares
at the Initial Placing Price.
-- The Company intends to utilise the net proceeds of the
Placing to invest primarily in debt secured by commercial or
residential properties in the United Kingdom and Western Europe
which might take the form of (i) securitised tranches of secured
real estate related debt securities, for example, RMBS and CMBS and
(ii) secured real estate loans, debentures or any other form of
debt instrument.
-- The proposed Placing Programme is intended to enable the
Company to raise additional capital through the issue of up to 65
million New Ordinary Shares in the period from 23 February 2017 to
22 February 2018 as and when it identifies Real Estate Credit
Investments that are suitable for acquisition in accordance with
its investment objective and policy.
-- Assuming 65 million New Ordinary Shares are issued under the
Placing Programme, the Company will raise gross proceeds of
approximately GBP106 million based on the latest unaudited Net
Asset Value per Ordinary Share of 162.7 pence as at 31 January
2017.
-- The funds raised from the Placing Programme will be invested
in accordance with the Company's strategy and investment objective
and policy to grow its portfolio. Liberum Capital Limited
("Liberum") has been appointed as Sole Sponsor, Financial Adviser
and Bookrunner in relation to the Initial Placing and the Placing
Programme.
-- It is intended that the Placing Price applicable to each
subsequent Placing will be no less than the Net Asset Value per
Ordinary Share as at the month-end immediately preceding the
subsequent Placing.
-- All New Ordinary Shares will, when issued and fully paid,
include the right to receive all dividends or other distributions
made, paid or declared, if any, by reference to a record date after
the date of their issue. The New Ordinary Shares to be issued under
the Initial Placing will not be entitled to the dividend of 2.7
pence per Existing Ordinary Share declared by the Company on 8
February 2017 for the period from 1 October 2016 to 31 December
2016 (the "Q4 2016 Dividend").
-- The Board and the Investment Manager wish to update the
Existing Investment Objective and Policy to its key components to
better reflect the current Investment Portfolio and strategy.
Bob Cowdell, Chairman of Real Estate Credit Investments Limited,
commented:
"The Board is pleased to announce the proposed Initial Placing
and Placing Programme which, subject to Shareholder approval at the
EGM in March, will provide an opportunity for existing and new
investors to participate in RECI's pipeline of attractive
investment opportunities sourced by Cheyne Capital."
For further information please contact:
Cheyne Capital Management (UK) +44 (0)20 7968
LLP 7482
Nicole Von Westenholz (Investor
Relations)
Liberum Capital Limited (Sponsor +44 (0)20 3100
and Bookrunner) 2222
Shane Le Prevost
Richard Crawley
Richard Bootle
Ben Roberts
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
The anticipated dates and sequence of events relating to the
implementation of the Proposals are set out below:
Publication of Prospectus and 23 February 2017
Circular
Record date for participation Close of business
and voting at the EGM on 20 March 2017
Latest time and date for the 12.30p.m. on 20
receipt of the Proxy Appointments March 2017
for the EGM*
Extraordinary General Meeting 12.30p.m. on 22
March 2017
Admission and crediting of CREST 8.00 a.m. on 23
accounts in respect of the Initial March 2017
Placing
Admission and crediting of CREST 8.00 a.m. on the
accounts in respect of each Business
Placing Day on which
New Ordinary
Shares are issued
Placing Programme closes 22 February 2018
The times and dates set out in the expected timetable of
principal events above and mentioned throughout this announcement
may be adjusted by the Company, in which event details of the new
times and dates will be notified to the UK Listing Authority, and
an announcement will be made on a RIS.
References to times in this announcement are to London times
unless otherwise stated.
* Please note that the latest time for receipt of the Forms of
Proxy in respect of the EGM is 48 hours (excluding any part of a
day which is not a Business Day) prior to the time allotted for the
EGM.
PLACING PROGRAMME STATISTICS
Maximum number of New Ordinary 65 million New
Shares under the Ordinary Shares
Placing Programme
Maximum size of Placing Programme* GBP106 million
ISIN for Ordinary Shares GB00B0HW5366
SEDOL for Ordinary Shares B0HW536
Ordinary Shares ticker RECI
* Calculated using 31 January 2017 unaudited NAV per Ordinary
Share of 162.7 pence. The Placing Price applicable to each
subsequent Placing under the Placing Programme will be determined
by reference to the Net Asset Value per Ordinary Share as at the
month-end immediately preceding the subsequent Placing.
Minimum subscription per investor pursuant to each Placing
within the Placing Programme is GBP10,000.
1. Introduction
The Company is a non-cellular company limited by shares which
was incorporated in Guernsey on 6 September 2005 with registered
number 43634. The Company has two classes of shares: the Ordinary
Shares, which are admitted to listing on the premium segment of the
Official List and to trading on the Main Market; and the Current
Preference Shares, which are admitted to listing on the standard
segment of the Official List and to trading on the Main Market. It
has been declared to be an authorised closed-ended collective
investment scheme by the Guernsey Financial Services Commission.
The Company's investments are managed by Cheyne Capital Management
(UK) LLP ("Cheyne Capital" or the "Investment Manager"), a
London-based investment management company authorised and regulated
by the Financial Conduct Authority.
The Company's strategy offers investors exposure to a
diversified portfolio of Real Estate Credit Investments and
provides Current Preference Shareholders with stable returns in the
form of quarterly dividends. The real estate debt strategy focuses
on secured residential and commercial debt in the UK and Western
Europe, seeking to exploit opportunities in publicly traded
securities and real estate loans. The Company has adopted a long
term strategic approach to investing and focuses on identifying
value in real estate debt.
The Board and the Investment Manager believe there is the
potential to provide returns to Shareholders through investment in
Real Estate Credit Investments and as such the Board is also
proposing to implement the Placing Programme to enable the Company
to raise capital in an efficient and cost-effective manner over the
next 12 months. The implementation of the Initial Placing and the
Placing Programme are both conditional on Ordinary Shareholder
approval.
2. The Proposals
(i) Placing Programme and Initial Placing
The Company intends to issue up to 65 million New Ordinary
Shares pursuant to the Placing Programme, which will consist of the
Initial Placing and, potentially, one or more subsequent
Placings.
The New Ordinary Shares to be issued under the Initial Placing
will rank pari passu with the Existing Ordinary Shares save that
the New Ordinary Shares will not be entitled to the Q4 2016
Dividend.
The Initial Placing Price has been fixed at 162.5 pence. This
price has been set by reference to the 31 January 2017 unaudited
Net Asset Value per Existing Ordinary Share of 162.7 pence,
adjusted to take into account the Q4 2016 Dividend of 2.7 pence,
plus an amount to cover the costs of the Initial Placing.
On the date of the EGM, the latest published Net Asset Value
will be the unaudited Net Asset Value per Existing Ordinary Share
calculated as at 28 February 2017 (the "February 2017 NAV"), which
is expected to be published on or around 7 March 2017. In the event
that the February 2017 NAV is greater than the Initial Placing
Price, then the Initial Placing will be conditional on the Discount
Resolution being approved by Existing Ordinary Shareholders at the
EGM.
Subject to the requirements of the Listing Rules, the price at
which each New Ordinary Share will be issued pursuant to each
subsequent Placing will be no less than the aggregate of the
published Net Asset Value per Ordinary Share at the time of issue
and such sum as equates to the costs attributable to such Placing
and may, in the Directors' sole discretion, include a premium. The
Placing Price in relation to each subsequent Placing will be
announced by the Company via an RIS announcement.
The number of New Ordinary Shares issued in conjunction with
each Placing will be determined based on the Placing Price, but
will not exceed, in aggregate, 65 million New Ordinary Shares.
(ii) Background and benefits of the Initial Placing and Placing Programme
The Board, as advised by the Investment Manager, continues to be
positive about the investment opportunities available within real
estate credit markets. While the outlook for markets generally
remains challenging, and acknowledging that there has been some
economic uncertainty following the EU referendum last June which
caused a reduction in commercial property activity, it is the
Investment Manager's view that the UK and German real estate
markets in particular (and potentially other Western European real
estate markets) continue to offer an attractive combination of
reasonable underlying tenant demand, relatively liquid investment
markets and a shortage of debt capital.
Given this backdrop, and in light of the positive prospects for
further investments by the Company in the short to medium term, the
Directors believe that an issue of New Ordinary Shares is in the
best interests of the Company and the Shareholders as a whole and
will lead to:
-- an improved free float, which can enhance liquidity in the Ordinary Shares; and
-- a reduction in the total expense ratio by spreading the
Company's fixed running costs over a larger Ordinary Shareholder
base.
The Net Placing Proceeds will be used for investment in new Real
Estate Credit Investments which the Directors believe will
provide:
-- greater scope to expand and diversify the Investment Portfolio; and
-- a better position for the Company to take advantage of the
investment opportunities which the Directors and the Investment
Manager anticipate arising in the future.
(iii) Placing Programme
The Company intends to issue up to 65 million New Ordinary
Shares pursuant to the Placing Programme, subject to the Company
being able to source suitable investments in accordance with its
Investment Objective and Policy. The maximum number of New Ordinary
Shares available under the Placing Programme should not be taken as
an indication of the number of New Ordinary Shares finally to be
issued.
The Placing Programme is flexible and may have a number of
closing dates in order to provide the Company with the ability to
issue the New Ordinary Shares over a period of time. The Placing
Programme is intended to partially satisfy market demand for the
Ordinary Shares and to raise further money for investment in
accordance with the Investment Objective and Policy.
If the Required Resolution and, to the extent relevant, the
Discount Resolution are passed, but not the Amendment Resolution,
the Company intends to use the Net Placing Proceeds to invest in
Real Estate Credit Investments in accordance with the Existing
Investment Objective and Policy. If the Required Resolution is
passed, but the Discount Resolution is not passed and the February
2017 NAV is greater than the Initial Placing Price, the Initial
Placing will not proceed; however, this will not affect subsequent
Placings under the Placing Programme. If all Resolutions are
passed, the Company intends to use the Net Placing Proceeds to
invest in Real Estate Credit Investments in accordance with the
Proposed Investment Objective and Policy.
The Directors believe, having been so advised by the Investment
Manager, that the primary advantage of raising capital pursuant to
the Placing Programme will be the opportunity for further
investment in the Western European real estate credit markets,
particularly in real estate loans secured against commercial and
residential real estate assets in the UK, Germany and, potentially,
other parts of Western Europe. To the extent that suitable
investments are not available (which the Directors do not expect to
be the case) the Net Placing Proceeds may also be invested in other
assets that fall within the Proposed Investment Objective and
Policy to the extent that the Investment Manager identifies
investment opportunities that it believes offer attractive returns
to the Company.
Pending investment of the Net Placing Proceeds in accordance
with the Proposed Investment Objective and Policy, the Company may
invest the net proceeds in short term money market funds. The
Company does not intend to apply leverage to these temporary
investments.
Allotment and issue of New Ordinary Shares under the Placing
Programme is at the discretion of the Directors. Allotments and
issuance may take place at any time prior to the final closing date
of the Placing Programme. An announcement of each allotment and
issue will be released through an RIS, including details of the
number of New Ordinary Shares allotted and issued and the
applicable Placing Price. It is anticipated that dealings in the
New Ordinary Shares will commence two Business Days after the trade
date for each issue of New Ordinary Shares. Whilst it is expected
that all New Ordinary Shares issued pursuant to a particular
Placing will be issued in uncertificated form, if any New Ordinary
Shares are issued in certificated form it is expected that share
certificates would be despatched approximately two weeks after the
relevant Admission. No temporary documents of title will be
issued.
The Placing Programme is not being underwritten and, as at the
date of the Prospectus, the actual number of New Ordinary Shares to
be issued under the Placing Programme is not known. The number of
New Ordinary Shares available under the Placing Programme should
not be taken as an indication of the number of New Ordinary Shares
to be finally issued.
The Placing Programme is not being made on a pre-emptive basis,
therefore Existing Ordinary Shareholders who do not participate in
the Placing Programme will have their percentage holding diluted
following each issue of New Ordinary Shares. Assuming that the
maximum number of New Ordinary Shares are issued under the Placing
Programme (being 65 million), this will result in a dilution of
approximately 47 per cent. in Existing Ordinary Shareholders'
voting control of the Company.
The New Ordinary Shares issued pursuant to the Placing Programme
(including pursuant to the Initial Placing) will rank pari passu
with the Ordinary Shares then in issue (save that the New Ordinary
Shares will not be entitled to receive any dividends or other
distributions declared, made or paid in respect of Ordinary Shares
by reference to a record date prior to the allotment and issue of
the relevant New Ordinary Shares, including, for the avoidance of
doubt, the Q4 2016 Dividend).
Each Placee which confirms its agreement (whether orally or in
writing) to Liberum to subscribe for New Ordinary Shares under the
Placing Programme will be bound by the Placing Programme Terms and
Conditions set out in Part VII of the Prospectus. All applications
for New Ordinary Shares will be effected through a contract note.
Each Placee is required to indicate their acceptance of the Placing
Programme Terms and Conditions in making their investment.
The Placing Programme is conditional upon the Existing Ordinary
Shareholders passing the Required Resolution at the EGM. To the
extent required, the Initial Placing is also conditional upon
Existing Ordinary Shareholders passing the Discount Resolution at
the EGM. In addition, each allotment and issue of New Ordinary
Shares pursuant to the Placing Programme is conditional, inter
alia, on:
-- Admission of the New Ordinary Shares issued pursuant to such allotment and issue; and
-- the Placing Agreement not being terminated in accordance with
its terms or a particular Placing not being terminated in
accordance with the terms of the Placing Agreement.
In circumstances where these conditions are not fully satisfied,
the relevant issue of New Ordinary Shares pursuant to the Placing
Programme will not take place. If a Placing does not proceed,
subscription monies received will be returned without interest at
the risk of the applicant.
Application will be made for the New Ordinary Shares to be
issued pursuant to the Placing Programme to be admitted to listing
on the premium segment of the Official List of the UK Listing
Authority and to trading on the Main Market for listed securities
of the London Stock Exchange. It is expected that, subject to the
approval of the Required Resolution and the satisfaction or waiver
(where applicable) of the conditions in the Placing Agreement,
Placings may take place up until 22 February 2018, being the end of
the Placing Programme.
All New Ordinary Shares issued pursuant to the Placing Programme
will be in registered form and will be delivered in uncertificated
form, unless otherwise requested.
It is expected that the Company will arrange for Euroclear UK
and Ireland to be instructed to credit the appropriate CREST
accounts of the subscribers concerned or their nominees with their
respective entitlements to New Ordinary Shares. The names of
subscribers or their nominees investing through their CREST
accounts will be entered directly on to the share register of the
Company. Definitive certificates in respect of New Ordinary Shares
in certificated form will be dispatched by post within two weeks of
commencement of dealings. Temporary documents of title will not be
issued.
Ordinary Shareholders (other than US Persons) holding definitive
certificates may elect at a later date to hold such Shares through
CREST or in uncertificated form provided they surrender their
definitive certificates.
(iv) Proposed amendments to the Existing Investment Objective and Policy
The Existing Investment Objective and Policy of the Company (as
set out below) evolved from the legacy investment policy language
that has been employed by the Company from its inception. The Board
and the Investment Manager wish to update the Investment Objective
and Policy to its key components to better reflect the current
Investment Portfolio and strategy. The Proposed Investment
Objective and Policy is set out below and the key changes, which
the Board considers to be material changes, are:
-- to reflect more accurately the current Investment Portfolio
and strategy, a clarification that the majority of the Company's
investments will be in the UK and Germany, but noting that the
Company retains the ability to invest in other jurisdictions in
Western Europe;
-- a clarification of the types of investments which fall within
the meaning of 'Real Estate Credit Investments'; and
-- a change to the Company's leverage policy to allow for long
term finance to be used so that the Company can take advantage of
investment opportunities where previously it may not have had
sufficient liquidity.
The following is the Proposed Investment Objective and Policy of
the Company:
Investment objective
The investment objective of the Company is to provide Ordinary
Shareholders with exposure to a diversified portfolio of Real
Estate Credit Investments (defined below) and to provide Preference
Shareholders with stable returns in the form of quarterly
dividends.
Asset allocation
To achieve the investment objective, the Company invests and
will continue to invest in real estate credit secured by commercial
or residential properties in Western Europe, focussing primarily in
the United Kingdom and Germany ("Real Estate Credit Investments").
The Real Estate Credit Investments may take different forms but are
likely to be:
(i) secured real estate loans, debentures or any other forms of
debt instruments (together "Secured Debt"). Secured real estate
loans are typically secured by mortgages over the property or
charges over the shares of the property-owning vehicle. Individual
Secured Debt investments will have a weighted average life profile
ranging from six months to 15 years. Investments in Secured Debt
will also be directly or indirectly secured by one or more
commercial or residential properties, and shall not exceed a loan
to value ("LTV") of 85 per cent. at the time of investment;
(ii) listed debt securities and securitised tranches of real
estate related debt securities, for example, residential
mortgage-backed securities and commercial mortgage-backed
securities (together "MBS"), for the avoidance of doubt, this does
not include equity residual positions in MBS;
(iii) other direct or indirect opportunities, including equity
participations in real estate, save that no more than 20 per cent.
of the Total Assets will be invested in positions with an LTV in
excess of 85 per cent. or in equity positions that are
uncollateralised. On certain transactions the Company may be
granted equity positions as part of its loan terms. These positions
will come as part of the Company's overall return on its
investments and may or may not provide extra profit to the Company
depending on market conditions and the performance of the loan.
These positions are deemed collateralised equity positions. All
other equity positions that the Company may invest in are deemed
uncollateralised equity positions.
Risk diversification
At any given time, certain geographic areas, asset types or
industry sectors may provide more attractive investment
opportunities than others and, as a result, the Investment
Portfolio may be concentrated in those geographic areas, asset
types or industry sectors. However, the Company will seek to create
a diversified portfolio of investments. It will regularly monitor
the extent to which the Investment Portfolio is concentrated in any
particular country, region or servicer and the Investment Manager
may re-balance the Investment Portfolio as and when it deems it
necessary. The Company has adopted guidelines for investments and
borrowings to the effect that, except in the case of cash deposits
awaiting investment:
(i) no more than 20 per cent. of Total Assets will be lent to or
invested in any one group of companies at the time the investment
or loan is made;
(ii) no more than 10 per cent. of Total Assets will be invested
in other listed investment companies (including listed investment
trusts), except where the investment companies themselves have
stated investment policies to invest no more than 15 per cent. of
their total assets in other listed investment companies (including
listed investment trusts);
(iii) no more than 15 per cent. of Total Assets will be invested
in other listed investment companies (including listed investment
trusts), regardless of their investment policies and the Company
will not take legal control, or seek to take legal control, or be
actively involved in the management of, any companies or businesses
in which it invests, except for:
(a) any SPVs it may establish, should the Board conclude that
exercising control or management over such entity is in the best
interests of the Company; and
(b) pursuant to the exercise of rights as a consequence of the
Group taking steps to preserve or enforce its security in relation
to a particular investment.
The Company will not, to a significant extent, be a dealer in
investments and neither the Company nor any member of its Group
will conduct trading activity which is significant in the context
of the Group as a whole.
Company leverage
The Company will limit Company-level recourse leverage for
investment purposes to 40 per cent. of NAV. The Preference Shares
represent a form of Company-level recourse leverage for investment
purposes and are included in this 40 per cent. of NAV limit.
Holders of Preference Shares are entitled to receive a preferred
income return and, on a winding up of the Company, to receive a
preferred return of capital ahead of the holders of Ordinary
Shares. To this extent, the rights of Ordinary Shareholders to
income and capital are geared by the presence of the Preference
Shares. In calculating the Company's leverage for the above, any
liabilities incurred under the Company's foreign exchange hedging
arrangements shall be disregarded.
In addition to the Company-level recourse leverage, the Company
has the ability to utilise a working capital facility (which would
include any liabilities incurred under the Company's foreign
exchange hedging arrangements), subject to a maximum limit of 10
per cent. of NAV.
Hedging and use of derivatives
The Company's policy is to hedge currency risk on a case by case
basis and also, where the Investment Manager considers it
appropriate, on a portfolio basis. The Company may bear a level of
currency risk that could otherwise be hedged where it considers
that bearing such risks is appropriate. Ordinary Shareholders
should not expect that all currency risks that arise from time to
time in the Investment Portfolio will be hedged. As at the date of
the Prospectus, the Company uses a combination of Sterling:Euro
options and forwards to hedge its currency exposure.
The Company may, but shall not be obliged to, enter into hedging
arrangements in respect of interest rate fluctuations and certain
macro risks that may affect the value of the Investment
Portfolio.
Save where the Company enters into swap arrangements to gain
exposure to an underlying cash asset or assets, or to comply with
asset transfer restrictions or similar legal restrictions which
prevent the Company from owning a target investment directly,
derivative transactions will only be used for the purpose of
efficient portfolio management. However, the Company will not make
investments via derivatives unless the Company has fully
collateralised the derivative position or cannot be exposed to
margin calls.
The Company will not enter into derivative transactions for
speculative purposes.
A substantial portion of the Investment Portfolio will be
denominated in Sterling and Euro. The Company may, and currently
does, hedge this exposure, although it is not obliged to do so.
3. Dividends and Dividend Policy
The Prospectus issued today sets out a new dividend policy of
the Company:
Current Preference Shares
The Company's available income and assets will first be used to
pay the Current Preference Dividends when they become due and
payable pursuant to the Articles.
The maximum aggregate Current Preference Dividend that will be
payable pursuant to the terms of the Current Preference Shares in
any financial year will be approximately GBP1.7 million.
Ordinary Shares
Subject to the payment of the Current Preference Dividend to the
holders of the Current Preference Shares and the applicable
requirements and restrictions contained in the Companies Law, the
Company may consider making interim dividend payments to Ordinary
Shareholders (which includes investors subscribing for New Ordinary
Shares pursuant to the Placing Programme), having regard to the net
income remaining after the payment of the Current Preference
Dividends, potential reinvestment of cash or other uses of income,
at a level the Directors deem appropriate, in their sole
discretion, from time to time. There is no fixed date on which it
is expected that dividends will be paid to Ordinary Shareholders.
The Directors intend that the Company pays dividends to Ordinary
Shareholders (which includes New Ordinary Shareholders) when it is
able and appropriate to do so. It is the intention of the Company
to continue to pay a regular, stable dividend with the prospect of
additional or incremental payments as investment returns
permit.
There is no assurance that the Company will declare or pay
dividends on Ordinary Shares or Current Preference Shares and, if
dividends are paid, there is no assurance with respect to the
amount and timing of any such dividend.
4. Extraordinary General Meeting
The Placing Programme is conditional on the approval of the
Required Resolution, which must be passed as an Extraordinary
Resolution at the EGM. To the extent relevant, the Initial Placing
will also be conditional on the approval of the Discount
Resolution, which must be passed as an Ordinary Resolution at the
EGM. The Company is also seeking approval of the Amendment
Resolution, which must be passed as an Ordinary Resolution at the
EGM.
The Required Resolution
-- To disapply the pre-emption rights contained in the Articles
in respect of 65 million Ordinary Shares, such disapplication to
have effect for the duration of the Placing Programme (unless
previously renewed, varied or revoked by the Company in a general
meeting).
The Discount Resolution
-- To approve the Initial Placing Price, if the February 2017
NAV is greater than the Initial Placing Price.
The Amendment Resolution
-- To amend the Company's Investment Objective and Policy so
that the Existing Investment Objective and Policy is replaced by
the Proposed Investment Objective and Policy, as such are set out
in the section (iv) of paragraph 2 of this Announcement, with
immediate effect.
As noted above, the Placing Programme is conditional on the
Required Resolution being approved by Existing Ordinary
Shareholders at the EGM.
In the event that the Required Resolution is not passed by the
required majority of Existing Ordinary Shareholders attending and
voting at the EGM (whether in person or by proxy), the Placing
Programme will not proceed.
The Companies Law and the Articles require that any
disapplication of pre-emption rights be approved by an
Extraordinary Resolution (that is 75 per cent. of the Existing
Ordinary Shareholders present and voting, whether in person or by
proxy).
The Listing Rules impose an obligation on the Company to obtain
Existing Ordinary Shareholder consent for issuances of New Ordinary
Shares at a price below the Net Asset Value of Existing Ordinary
Shares.
The Initial Placing Price has been fixed at 162.5 pence. This
price has been set by reference to the 31 January 2017 unaudited
Net Asset Value per Existing Ordinary Share of 162.7 pence,
adjusted to take into account the Q4 2016 Dividend of 2.7 pence,
plus an amount to cover the costs of the Initial Placing.
On the date of the EGM, the latest published Net Asset Value
will be the February 2017 NAV, which is expected to be published on
or around 7 March 2017. In the event that the February 2017 NAV is
greater than the Initial Placing Price, then the Initial Placing
will be conditional on the Discount Resolution being approved by
Existing Ordinary Shareholders at the EGM.
In addition, the Listing Rules also impose an obligation on the
Company to obtain Shareholder consent for a material change to a
Company's Investment Policy following approval of that change by
the UK Listing Authority.
In accordance with the Listing Rules, any material change to the
Company's Investment Policy must be approved by the UK Listing
Authority before approval of the change is sought from the
Company's Shareholders. Such approval has been sought from the UK
Listing Authority and was obtained on 1 April 2016. Conditional on
the Amendment Resolution being approved by Existing Ordinary
Shareholders at the EGM, the Company shall adopt the Proposed
Investment Objective and Policy set out above in section (iv) of
paragraph 2 of this Announcement. If the Required Resolution is
passed (and, to the extent the February 2017 NAV is greater than
the Initial Placing Price, the Discount Resolution is also passed)
but the Amendment Resolution is not passed, the Company intends to
use the Net Placing Proceeds to invest in Real Estate Credit
Investments in accordance with the Existing Investment Objective
and Policy. If the February 2017 NAV is greater than the Initial
Placing Price, and the Discount Resolution is not passed, the issue
of New Ordinary Shares pursuant to the Initial Placing will not
take place. This will not affect subsequent Placings under the
Placing Programme.
5. Recommendation
Your Board, as advised by Liberum, considers that the Proposals
and the Resolutions are in the best interests of the Company and
Shareholders as a whole. Accordingly, the Board unanimously
recommends that Existing Ordinary Shareholders vote in favour of
each of the Resolutions to be proposed at the EGM. Existing
Ordinary Shareholders are therefore urged to complete and return
their Proxy Appointment without delay, whether or not they intend
to attend the EGM.
DEFINITIONS
In this announcement the words and expressions listed below have
the meanings set out opposite them, except where the context
otherwise requires:
ABS asset-backed securities which are debt securities which have their
interest and principal
repayments sourced principally from a generic group of income producing
assets
Amendment Resolution a shareholder resolution be proposed at the EGM, as described in paragraph
4 of this Announcement
Admission admissions of the New Ordinary Shares issued pursuant to Placings under
the Placing Programme
to the premium segment of the Official List and to trading on the Main
Market and such admissions
becoming effective
Articles or Articles of Incorporation the Articles of Incorporation of the Company in force from time to time
Assets the assets in the Investment Portfolio
Board of Directors or Directors or Board the board of directors of the Company
Circular the circular issued by the Company in connection with the EGM
CMBS commercial mortgage-backed securities, being interests in or obligations
secured by a commercial
mortgage loan or a pool of commercial mortgage loans
Companies Law The Companies (Guernsey) Law, 2008 (as amended)
Company or RECI Real Estate Credit Investments Limited and, where relevant, its
subsidiaries and subsidiary
undertakings
CREST the relevant system as defined in the CREST Regulations in respect of
which Euroclear is operator
(as defined in the CREST Regulations) in accordance with which securities
may be held in uncertificated
form
CREST Regulations the Uncertificated Securities Regulations 2001 (SI 2001 No. 2001/3755), as
amended
Current Preference Dividend an amount in Sterling equal to 8 per cent. per annum of the Current
Preference Share Notional
Value
Current Preference Share Notional Value GBP1.00
Current Preference Shareholders holders of Current Preference Shares
Current Preference Shares redeemable shares of no par value in the capital of the Company designated
as Preference Shares
and due to be redeemed on 17 September 2017
Directors the directors of the Company from time to time
Discount Resolution a shareholder resolution be proposed at the EGM, as described in paragraph
4 of this Announcement
EGM or Extraordinary General Meeting the extraordinary general meeting of the Company to be held on 22 March
2017 at which the
Resolutions will be put to the Existing Ordinary Shareholders for approval
Euro or EUR or EUR the lawful single currency of member states of the European Communities
that adopt or have
adopted the Euro as their currency in accordance with the legislation of
the European Union
relating to European Monetary Union
Euroclear Euroclear UK & Ireland Limited, the operator of CREST
Existing Investment Objective and Policy the investment objective and policy that relates to the Company
Existing Ordinary Shareholders the holders of Existing Ordinary Shares
Existing Ordinary Shares the ordinary shares in issue in the capital of the Company as at the date
of the Prospectus
Extraordinary Resolution a resolution passed by a majority of not less than 75 per cent. of the
Existing Ordinary Shareholders
present and voting in person or by proxy
February 2017 NAV the unaudited Net Asset Value per Existing Ordinary Share calculated as at
28 February 2017
Financial Conduct Authority or FCA the Financial Conduct Authority, and including any successor thereof,
acting in its capacity
as the competent listing authority for the purposes of Part 6 of FSMA
FSMA the Financial Services and Markets Act 2000, as amended
GBP or Sterling or GBP the lawful currency of the United Kingdom
Gross Placing Proceeds the aggregate value of the New Ordinary Shares issued under the Placing
Programme at the Placing
Price
Group the Company and any other consolidated subsidiaries of the Company from
time to time
Initial Placing the first Placing of New Ordinary Shares to one of more investors pursuant
to the Placing
Programme
Investment Manager Cheyne Capital Management (UK) LLP, a limited liability partnership
incorporated in England
(registered number OC321484)
Investment Objective and Policy either the Existing Investment Objective and Policy, or the Proposed
Investment Objective
and Policy, depending on which is in force at the relevant time
Investment Portfolio the total assets of the Company which, when taken together, at any time,
may include the ABS,
MBS, RMBS, CMBS or other investments, rights to investments, instruments
and securities in
which the Company's assets are invested from time to time
Liberum Liberum Capital Limited
Listing Rules the listing rules made by the Financial Conduct Authority for the purposes
of Part VI of FSMA
London Stock Exchange London Stock Exchange plc
LTV loan to value
Main Market the London Stock Exchange's main market for listed securities
MBS mortgage backed securities
Net Asset Value of the Company or NAV the aggregate net asset value of the Company, calculated in accordance
with the Company's
accounting policies and published in the Company's latest factsheet
Net Placing Proceeds the Gross Placing Proceeds less applicable fees and expenses of the
Placing Programme
New Ordinary Shares the ordinary shares in the capital of the Company to be issued pursuant to
the Placing Programme
Official List the list maintained by the UK Listing Authority pursuant to Part VI of
FSMA
Ordinary Resolution under the Companies Law, a resolution passed by more than 50 per cent. of
the Existing Ordinary
Shareholders present and voting in person or by proxy
Ordinary Shareholders holders of Ordinary Shares
Ordinary Shares ordinary shares in the capital of the Company
Placees those investors participating in the Initial Placing and Placing Programme
Placing any placing of New Ordinary Shares to one of more investors pursuant to
the Placing Programme
Placing Agreement the placing agreement between the Company and Liberum as more fully
described in the Prospectus
Placing Price the price at which the New Ordinary Shares will be issued pursuant to the
Placing to Placees,
being such price as shall be determined by the Directors, as discussed
further in the section
entitled "Placing Price" in Part VI of the Prospectus
Placing Programme the proposed programme of placings of up to 65 million New Ordinary Shares
as described in
the Prospectus
Placing Programme Terms and Conditions the terms and conditions of each Placing set out in Part VII of the
Prospectus on which Placees
agree to subscribe for New Ordinary Shares under the Placing Programme
Preference Shareholders holders of Preference Shares
Preference Shares redeemable shares of no par value in the capital of the Company designated
as Preference Shares
Proposals the items of business to be discussed at the EGM as set out in paragraph 4
of this Announcement
Proposed Investment Objective and Policy the investment objective and policy proposed to be adopted by the Company
subject to the approval
of the Amendment Resolution
Proxy Appointment the appointment of a proxy for the EGM on behalf of an Ordinary
Shareholder in accordance
with the procedures described in the Circular
Q4 2016 Dividend the dividend of 2.7 pence per Existing Ordinary Share declared by the
Company on 8 February
2017 for the period from 1 October 2016 to 31 December 2016
Real Estate Credit Investments debt secured, directly or indirectly, by commercial or residential
properties within Western
Europe or the United Kingdom
Regulatory Information Service a service authorised by the UK Listing Authority to release regulatory
announcements to the
London Stock Exchange
Resolutions together, the Amendment Resolution, the Discount Resolution and the
Required Resolution
Required Resolution a shareholder resolution be proposed at the EGM, as described in paragraph
4 of this Announcement
RIS a Regulatory Information Service
RMBS residential mortgage-backed securities, being interests in or obligations
secured by pools
of residential mortgage loans
Secured Debt has the meaning provided in paragraph 2(iv) of this Announcement
Shareholders the holders of Shares
Shares the Existing Ordinary Shares and/or the Current Preference Shares (as
appropriate)
SPV special purpose vehicle
Total Assets the sum of all investments held in the Investment Portfolio in the Company
and including cash
and cash equivalents, derivatives and other assets
UK Listing Authority the FCA in its capacity as the competent authority for listing in the
United Kingdom pursuant
to Part IV of FSMA
United Kingdom or UK the United Kingdom of Great Britain and Northern Ireland
United States or US the United States of America, its territories and possessions, any State
of the United States,
and the District of Columbia
US Investment Company Act US Investment Company Act of 1940, as amended
US Person US person within the meaning given to it in Regulation S under the US
Securities Act
US Securities Act the US Securities Act of 1933, as amended
US Tax Code the US Internal Revenue Code of 1986, as amended
US$ or US Dollars or $ the lawful currency of the United States of America
Important notice
This announcement is an advertisement and not a prospectus and
investors should not subscribe for or purchase any shares referred
to in this announcement except on the basis of information in the
Prospectus to be published by the Company in connection with the
admission of the New Ordinary Shares in the capital of the Company
to the premium segment of the Official List of the Financial
Conduct Authority and to trading on the London Stock Exchange's
Main Market for listed securities. Copies of the Prospectus will be
available from the Company's registered office, and made available
for viewing at the National Storage Mechanism at
http://www.hemscott.com/nsm.do.
The merits or suitability of any securities must be
independently determined by the recipient on the basis of its own
investigation and evaluation of the proposed Company. Any such
determination should involve, among other things, an assessment of
the legal, tax, accounting, regulatory, financial, credit and other
related aspects of the securities.
This announcement does not constitute and may not be construed
as an offer to sell, or an invitation to purchase, investments of
any description, nor as a recommendation regarding the possible
offering or the provision of investment advice by any party. No
information in this announcement should be construed as providing
financial, investment or other professional advice and each
prospective investor should consult its own legal, business, tax
and other advisers in evaluating the investment opportunity. No
reliance may be placed for any purposes whatsoever on this
announcement (including, without limitation, any illustrative
modelling information contained herein), or its completeness.
Nothing in this announcement constitutes investment advice and
any recommendations that may be contained herein have not been
based upon a consideration of the investment objectives, financial
situation or particular needs of any specific recipient.
All investments are subject to risk, including the loss of the
principal amount invested. Past performance is no guarantee of
future returns. Potential investors should be aware that any
investment in the Company is speculative, involves a high degree of
risk, and could result in the loss of all or substantially all of
their investment. Results can be positively or negatively affected
by market conditions beyond the control of the Company or any other
person.
This announcement does not constitute or form part of, and
should not be construed as, any offer or invitation or inducement
for sale, transfer or subscription of, or any solicitation of any
offer or invitation to buy or subscribe for or to underwrite, any
share in the Company or to engage in investment activity (as
defined by the Financial Services and Markets Act 2000) in any
jurisdiction nor shall it, or any part of it, or the fact of its
distribution form the basis of, or be relied on in connection with,
any contract or investment decision whatsoever, in any
jurisdiction. This announcement does not constitute a
recommendation regarding any securities.
This announcement is only addressed to or directed at persons in
the United Kingdom who: (i) have professional experience in matters
relating to investments and fall within the definition of
"investment professionals" in Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 (the
"Order"); or (ii) high net worth companies, unincorporated
associations and partnerships and trustees of high value trusts as
described in Article 49(2) of the Order; or (iii) are other persons
to whom it may otherwise lawfully be communicated (all such persons
referred to in (i), (ii) and (iii) together being "Relevant
Persons"). Any investment or investment activity to which this
announcement relates is available only to and will only be engaged
in with the persons referred to in (i), (ii) and (iii).
Neither this announcement nor any part or copy of it may be
taken or transmitted into the United States, Australia, Canada,
South Africa or Japan, or distributed, in whole or in part,
directly or indirectly, to any US Persons or in or into the United
States, Australia, Canada, South Africa, Japan or any other
jurisdiction where, or to any other person to whom, to do so would
constitute a violation of applicable law. Any failure to comply
with this restriction may constitute a violation of applicable law.
This announcement does not constitute or form a part of any offer
to sell or issue, or a solicitation of any offer to purchase or
otherwise acquire, securities by any US Persons or in the United
States or in any other jurisdiction. Persons into whose possession
this announcement comes should observe all relevant
restrictions.
The Company has not been and will not be registered under the US
Investment Company Act and as such investors are not and will not
be entitled to the benefits of the US Investment Company Act. The
Ordinary Shares have not been and will not be registered under the
US Securities Act, or with any securities regulatory authority of
any state or other jurisdiction of the United States, and may not
be offered, sold, resold, pledged, taken up, exercised, renounced,
delivered, distributed or transferred, directly or indirectly, into
or within the United States or to, or for the account or benefit
of, US Persons, except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the US
Securities Act and in compliance with any applicable securities
laws of any state or other jurisdiction of the United States and in
a manner which would not result in the Company being required to
register as an "investment company" under the US Investment Company
Act. In connection with the Placing Programme, subject to certain
exceptions, offers and sales of Ordinary Shares will be made only
outside the United States in "offshore transactions" to non-US
Persons pursuant to Regulation S under the US Securities Act. There
has been and will be no public offering of the Ordinary Shares in
the United States.
Neither the US Securities and Exchange Commission, nor any
securities regulatory authority of any state or other jurisdiction
of the United States, has approved or disapproved of the securities
of the Company or passed upon or endorsed the merits of any
offering of such securities.
Prospective investors should take note that any securities may
not be acquired by (i) investors using assets of (A) an "employee
benefit plan" as defined in Section 3(3) of US Employee Retirement
Income Security Act of 1974, as amended ("ERISA") that is subject
to Title I of ERISA; (B) a "plan" as defined in Section 4975 of the
US Tax Code, including an individual retirement account or other
arrangement that is subject to Section 4975 of the US Tax Code; or
(C) an entity which is deemed to hold the assets of any of the
foregoing types of plans, accounts or arrangements that is subject
to Title I of ERISA or Section 4975 of the US Tax Code or (ii) a
governmental, church, non-US or other employee benefit plan that is
subject to any federal, state, local or non-US law that is
substantially similar to the provisions of Title I of ERISA or
Section 4975 of the US Tax Code.
Liberum is authorised and regulated in the United Kingdom by the
Financial Conduct Authority. Liberum is acting for the Company and
no one else in connection with the Placing Programme and will not
be responsible to anyone other than the Company for providing the
protections afforded to clients of Liberum or for affording advice
in relation to any transaction or arrangement referred to in this
announcement. This announcement does not constitute any form of
financial opinion or recommendation on the part of Liberum or any
of its affiliates and is not intended to be an offer, or the
solicitation of any offer, to buy or sell any securities.
Forward-looking statements
This announcement may contain forward-looking statements
regarding the financial condition, results of operations, cash
flows, dividends, financing plans, business strategies, operating
efficiencies, budgets, capital and other expenditures, competitive
positions, growth opportunities, plans and objectives of management
and other matters relating to the Company. Statements in this
announcement that are not statements of historical facts are hereby
identified as forward-looking statements. In some instances,
forward-looking statements can be identified by the use of
forward-looking terminology, including terms such as "projects",
"forecasts", "anticipates", "expects", "believes", "intends",
"may", "will" or "should" or, in each case, their negative or other
variations or comparable terminology.
By their nature, forward-looking statements involve risk and
uncertainty as they relate to future events and circumstances.
Forward-looking statements are not guarantees of future
performance, and the actual results, performance or achievements of
the Company, and development of the markets and the industries in
which it operates or is likely to operate, may differ materially
from those-described in, or suggested by, any forward-looking
statements contained in this announcement. In addition, even if
actual results, performance, achievements or developments are
consistent with any forward-looking statements contained in this
announcement in a given period, those results, performance,
achievements or developments may not be indicative of results,
performance, achievements or developments in subsequent periods. A
number of factors could cause results, performance, achievements
and developments to differ materially from those expressed or
implied by any forward-looking statements including, without
limitation, general economic and business conditions, industry
trends, competition, changes in regulation and currency
fluctuations.
Any forward-looking statements in this announcement reflect the
Company's current view with respect to future events, speak only as
of their date and are subject to change without notice. Save as
required by applicable law or regulation, the Company and the other
parties named in this announcement expressly disclaim any
obligation or undertaking to update, review or revise any
forward-looking statement contained in this announcement whether as
a result of new information, future developments or otherwise.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLXLFLDLFEBBE
(END) Dow Jones Newswires
February 23, 2017 08:00 ET (13:00 GMT)
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