TIDMTORO
RNS Number : 2325X
Toro Limited
17 February 2017
Toro Limited (the "Company")
17 February 2017
Whitewash Circular
This announcement contains price sensitive information.
1. INTRODUCTION
The Company has today published a Circular to Shareholders
setting out the business to be considered at an Extraordinary
General Meeting (the "EGM") to be held at Old Bank Chambers, La
Grande Rue, St Martin's, Guernsey GY4 6RT at 10.20 a.m. (or as soon
thereafter as the AGM shall have concluded) on 17 March 2017.
The purpose of the Circular is to set out the business to be
considered at the EGM (the "Proposals").
The Proposals being put forward to Shareholders by the Board
comprise:
-- Resolution 1 - to renew the authority granted to the Company
to make market purchases of its own Shares (the "Proposed Buy Back
Authority"); and
-- Resolutions 2 and 3 - to approve the waivers granted by the
Panel of the obligation that would otherwise arise on any member of
the Concert Party (including the Portfolio Manager individually) to
make a general offer to Shareholders pursuant to Rule 9 of the Code
as a result of:
(i) the potential exercise by the Company, prior to the 2018
annual general meeting of the Company, of the Proposed Buy Back
Authority (if approved); and
(ii) the allotment to the Portfolio Manager of the 2016
Performance Fee Shares (together the "Waiver Proposals").
The Circular provides Independent Shareholders with the details
of the Waiver Proposals and explains why the Independent Directors
consider that the Waiver Proposals are in the best interests of
Independent Shareholders and the Company as a whole.
The Proposals are described more fully in Sections 2 to 7 of
this announcement below.
2. RESOLUTION 1 - PROPOSED BUY BACK AUTHORITY
An ordinary resolution, to be proposed as Resolution 1 at the
EGM, will seek to renew the existing authority granted to the
Directors enabling the Company to make market purchases of
Shares.
The Company started buying back Shares in October 2016, and has
since acquired a total of 16,691,396 Shares, representing 4.6 per
cent. of the issued share capital before the buybacks commenced.
The average price paid for the repurchased Shares was EUR0.858 per
Share and the average discount to NAV was 11.4 per cent. These
figures are calculated up to and including 15 February 2017, being
the latest practicable date prior to the publication of the
Circular.
The Directors continue to believe that the ability of the
Company to purchase its own Shares is a potentially important
mechanism for managing capital efficiency. In particular the
Directors may want to take advantage of circumstances where a
purchase by the Company of its own Shares would represent good use
of the Company's available cash resources and would increase NAV
per Share and Shareholder value. For these reasons, Resolution 1,
as set out below, is being proposed. However, Shareholders should
note that there is no guarantee that the Board will exercise its
discretion to buy back Shares pursuant to the Existing Buyback
Authority or the Proposed Buy Back Authority.
If the Company purchases any of its Shares, the maximum price
(exclusive of expenses) which may be paid for a Share must not be
more than the higher of, (i) 105 per cent. of the average of the
mid-market values of a Share for the five trading days immediately
preceding the day on which the Share is contracted to be purchased,
or (ii) the higher of the price of the last independent trade in
the Shares and the highest than current independent bid for the
Shares. In addition, Shares will be purchased through the market
only, at prices below the last published Net Asset Value per Share,
which should have the effect of increasing the Net Asset Value per
Share for the remaining Shareholders. Any such purchase will be
carried out in accordance with the Companies Law, which provides
inter alia, that any buy-back is subject to the Company passing the
solvency test contained in the Companies Law at the relevant time.
The minimum price payable per Share is EUR0.01 per Share. The
Directors will only consider repurchasing Shares in the market if
they believe it to be in Shareholders' interests and as a means of
correcting any imbalance between supply and demand for shares, to
increase the NAV per Share and to assist in minimising any discount
to the NAV per Share in relation to the price at which Shares may
be trading.
The Directors are seeking authority to purchase up to 51,813,664
Shares of no par value, being 14.99 per cent. of the current Shares
in issue, or (if less) such other number of Shares that is equal to
14.99 per cent. of the issued share capital of the Company
(excluding treasury shares) on 17 March 2017. The Directors have
not agreed any terms for the purchase of the Shares and do not seek
authority to purchase Shares from specific parties and have not at
the date of the Circular entered into negotiations (or contemplated
entering into negotiations) for the repurchase of Shares from any
particular Shareholder. For the avoidance of doubt, the authority
being sought is without prior understanding, arrangement or
agreement between the Company and any related party in relation to
the repurchase of Shares. This authority will expire on the earlier
of the conclusion of the annual general meeting of the Company in
2018 or, if earlier, 18 months from the passing of Resolution
1.
All Shares purchased pursuant to the above authority shall be
either:
-- cancelled immediately on completion of the purchase; or
-- held as treasury shares as permitted by the Companies Law.
Shareholders should note that, following the approval of
Resolution 1, the Board will continue to apply the buy-back policy
published in the Prospectus but may, at its sole discretion and
without limit, make additional purchases of Shares beyond those
required by the policy.
Please refer to Section 3 below for information in relation to
Code implications of buy backs of the Shares.
3. RESOLUTIONS 2 AND 3 - PANEL WAIVER PROPOSALS
Background
As a Guernsey company which has its shares admitted to trading
on the Specialist Fund Segment of the London Stock Exchange, the
Company is subject to the Code. Under Rule 9 of the Code, any
person who acquires an interest (as defined in the Code) in shares
which, taken together with shares in which he is already interested
and shares in which persons acting in concert with him are
interested, carry 30 per cent. or more of the voting rights of a
company which is subject to the Code, is normally required to make
a general offer to all the remaining shareholders to acquire their
shares.
Similarly, when any person, together with persons acting in
concert with him, is interested in shares which in the aggregate
carry not less than 30 per cent. of the voting rights of such a
company, but does not hold shares carrying more than 50 per cent.
of such voting rights, a general offer will normally be required if
any further interests in shares are acquired by any such
person.
When members of a concert party hold more than 50 per cent. of
the voting rights in a company, no obligations normally arise from
acquisitions by any member of the concert party. They may
accordingly increase their aggregate interests in shares without
incurring any obligation under Rule 9 to make a general offer,
although individual members of a concert party will not be able to
increase their percentage interests in shares through or between a
Rule 9 threshold without Panel consent.
Rule 37 of the Takeover Code further provides that when a
company redeems or purchases its own voting shares, any resulting
increase in the percentage of shares carrying voting rights in
which a person or group of persons acting in concert is interested
will be treated as an acquisition for the purpose of Rule 9.
An offer under Rule 9 must be made in cash and at the highest
price paid by the person required to make the offer, or any person
acting in concert with him, for any interest in shares of the
company during the 12 months prior to the announcement of the
offer.
Outline of the Concert Party
By virtue of the Portfolio Manager having sole discretion over
all investment decisions of the Managed Account, each of (i) the
Portfolio Manager, (ii) the Managed Account, (iii) the Lock-up
Chenavari Partners, (iv) certain other individuals (including one
of the Company's directors, Roberto Silvotti) connected with, or
employed by, the Chenavari Financial Group and (v) group companies
of the Chenavari Financial Group are together deemed to be acting
in concert for the purposes of the Code (together the "Concert
Party").
Further information on the Concert Party is set out in Part II
of the Circular.
Effect of exercise of the Existing Buy Back Authority, the
payment of the 2016 Performance Fee Shares and/or the exercise of
the Proposed Buy Back Authority on the interests of the Concert
Party
The combination of the issuance of the 2016 Performance Fee
Shares to the Portfolio Manager or its nominee (as described in
Section 4 of this announcement) and the exercise of the Proposed
Buy Back Authority may result in a material increase in the
interests of the Concert Party as a whole. Please see the table set
out in paragraph 4.9 of Part II of the Circular which sets out the
maximum potential percentage holdings of the Concert Party members,
being 54.7 per cent., based on (i) the continued use of the
Existing Buy Back authority between the Latest Practicable Date and
the EGM over Shares not held by the Concert Party, provided that no
more than 5,000,000 Shares shall be acquired; (ii) the issuance in
full of the 2016 Performance Fee Shares and (iii) the exercise of
the Proposed Buy Back Authority in full over Shares not held by the
Concert Party.
Shareholders should note that the Company may continue to make
use of the Existing Buy Back Authority between the Latest
Practicable Date and the EGM, provided that no more than 5,000,000
Shares shall be acquired, and that the maximum percentage holdings
disclosures in the table in paragraph 4.9 of Part II of the
Circular have been calculated on this basis.
On 14 March 2017, being the day before the deadline for receipt
of forms of proxy for voting at the EGM, the Company will make a
further announcement of the maximum potential percentage holdings
of the Concert Party members, taking into account any Shares
acquired since the Latest Practicable Date under the Existing Buy
Back Authority. No further exercise of the Existing Buy Back
Authority will take place between 14 March 2017 and the EGM.
If the Concert Party's aggregate shareholding were to increase
to greater than 50 per cent. of the Company's total Voting Rights,
as a result of the exercise of the Proposed Buy Back Authority
and/or the issue of the 2016 Performance Fee Shares or otherwise,
no obligations would normally arise from acquisitions by any member
of the Concert Party. They may accordingly increase their aggregate
interests in Shares without incurring any obligation under Rule 9
to make a general offer, although individual members of the Concert
Party will not be able to increase their percentage interests in
Shares through or between a Rule 9 threshold without Panel consent.
If the Waiver Proposals are approved by the passing of the Waiver
Resolutions at the EGM, the Concert Party will not be restricted
from making an offer for the Company.
Impact of Rule 37 of the Code
Under Rule 37 of the Code, any increase in the percentage
holding of a shareholder that results from a company buying back or
redeeming its own shares is also treated as an acquisition for the
purposes of Rule 9 of the Code. Rule 37 does not normally apply,
however, unless the person who would otherwise be required to make
a mandatory offer under Rule 9 of the Code is a director of the
company or is acting in concert with the directors of the
company.
An investment manager of an investment company will, for these
purposes, be treated under the Code as a director. The Portfolio
Manager and the other Concert Party members would therefore be
subject to Rule 37.
Accordingly, if the Concert Party's aggregate shareholding
increased as a result of the issue of the 2016 Performance Fee
Shares or the exercise of the Proposed Buy Back Authority, the
Concert Party would be required to make a mandatory offer for the
remainder of the Issued Share Capital of the Company.
A Panel waiver was granted in respect of the Existing Buy Back
Authority and was approved by Independent Shareholders on 22 August
2016.
Panel Waivers - issuance of the 2016 Performance Fee Shares and
exercise of the Proposed Buy Back Authority
The Panel has agreed that, subject to the approval of the
Independent Shareholders on a poll, it will waive the obligation on
any member of the Concert Party (including the Portfolio Manager
individually) to make a general offer that would otherwise arise as
a result of the issue of the 2016 Performance Fee Shares, or the
exercise of the Proposed Buy Back Authority, if the Waiver
Resolutions are both approved at the EGM.
Accordingly, the Waiver Resolutions (for the approval of the
Waiver Proposals) are being proposed at the EGM as Resolutions 2
and 3 and will be taken on a poll to be called by the Chairman of
the EGM. The members of the Concert Party will not be entitled to
vote on the Waiver Resolutions.
Shareholders should note that, if the Waiver Resolutions are
approved at the EGM, any further increase in the Concert Party's
aggregate interest in Shares (other than pursuant to the exercise
of the Existing Buy Back Authority, the issue of the 2016
Performance Fee Shares or the exercise of the Proposed Buy Back
Authority) or an acquisition of further Shares by any member of the
Concert Party or any person acting in concert with it will be
subject to the provisions of Rule 9. The Panel Waiver will only
remain in effect until the 2018 annual general meeting of the
Company.
Intentions of the Directors
The Independent Directors anticipate that they will continue to
seek Shareholder approval on an annual basis of the waiver of any
Rule 9 obligation which may arise as a result of the issue of
further performance fee shares to the Portfolio Manager or the
exercise of a renewed buy back authority.
4. 2016 PERFORMANCE FEE SHARES
Under the terms of the Portfolio Management Agreement, the
Company is able to pay the Portfolio Manager a proportion of
accrued performance fees otherwise payable in cash, in Shares. As
the Portfolio Manager is part of the Concert Party, the Company's
ability to do this is subject to various conditions, including that
at no time may the Company oblige the Portfolio Manager (and/or any
persons deemed to be acting in concert with it for the purposes of
the Code), in the absence of a relevant whitewash resolution having
been passed, to receive further Shares where to do so would trigger
a requirement to make a mandatory offer pursuant to Rule 9 of the
Code.
The performance fee for the period from 1 October 2015 to 30
September 2016, being EUR1,971,246, has been paid as to 60 per
cent. in cash and the remainder is currently accrued and payable by
the Company. If the Waiver Resolutions are passed the Portfolio
Manager has agreed with the Company that the remaining accrued
amount shall be satisfied by the issue or transfer of Shares to the
Portfolio Manager or its nominee issued at the latest published Net
Asset Value per Share applicable at the date of issuance (the "2016
Performance Fee Shares"). The Company may satisfy the requirement
to issue new Shares by the transfer of Shares held in treasury, and
the number of Shares to be issued (or transferred) will always be
rounded down to the nearest whole number of Shares. The Company and
the Portfolio Manager believe that this arrangement demonstrates
the commitment of the Portfolio Manager to align its performance
fee structure with Shareholders.
The 2016 Performance Fee Shares and any further issue of Shares
in connection with the performance fee will be subject to the
Performance Share Lock-up Undertaking for a period of two years
post issuance. In the event that the Waiver Resolutions are not
passed, the proportion of the performance fee for the period from 1
October 2015 to 30 September 2016 that has not already been paid
will be paid in cash.
The number of Shares to be issued or transferred to the
Portfolio Manager or its nominee as 2016 Performance Fee Shares
will be determined by reference to the Net Asset Value per Share as
at 28 February 2016, provided that no more than 850,810 2016
Performance Fee Shares may be issued or transferred to the
Portfolio Manager.
The Portfolio Manager intends to nominate Chenavari Investment
Managers Holdings Limited to receive the 2016 Performance Fee
Shares due to it.
5. BENEFITS OF THE PROPOSALS
The Directors recognise that it is important to Shareholders
that the Shares do not trade at a significant discount to their
prevailing Net Asset Value per Share and consider that the Proposed
Buy Back Authority represents a useful mechanism to seek to correct
any discount between the trading price and the Net Asset Value per
Share which might arise.
The Directors believe that the issuance of the 2016 Performance
Fee Shares to the Portfolio Manager, which will be subject to the
Performance Share Lock-up Undertaking for a period of two years
post issuance, should provide additional alignment of interests
between the Company and the Portfolio Manager.
Further, in order to prevent the need to make a mandatory offer
arising as a result of exercising the Proposed Buy Back Authority
and/or the issue of 2016 Performance Fee Shares and to enable the
Company to continue its business as an investment company without
material disruption, the Company has sought the Panel Waivers in
respect of the Code as set out in Section 3 of this
announcement.
In light of the matters outlined above, the Board believes that
it is in the best interests of the Company and the Shareholders as
a whole that the Proposals be implemented.
6. RISKS ASSOCIATED WITH THE PROPOSALS
In considering voting decisions in relation to the Proposals,
Shareholders are referred to the risks set out below. Only those
risks relating to the Proposals which are material and currently
known to the Company are set out below. Additional risks and
uncertainties not currently known to the Company, or that the
Company currently deems to be immaterial, may also have an adverse
effect on the Company.
The Waiver Proposals
-- The Independent Shareholders should note that, if the Waiver
Resolutions are approved and, as a result of the issue of the 2016
Performance Fee Shares and the exercise of the Proposed Buy Back
Authority, the Concert Party's aggregate shareholding in the
Company is increased, the Concert Party (and the Portfolio Manager
individually) would be able to exercise greater control over the
conduct of the Company than is currently already the case.
-- The Independent Shareholders should note that, if the Waiver
Resolutions are approved, this does not provide any guarantee that
in any future situation where Rule 9 of the Code became relevant to
the Company (whether in relation to the Concert Party or otherwise)
the Panel would be similarly willing to grant a waiver.
Whilst not a risk associated with the Proposals, Shareholders
should note that the Shares may trade at a discount to the
applicable Net Asset Value per Share for a variety of reasons,
including adverse market conditions and a deterioration in
investors' perceptions of the merits of the Company's investment
objective and investment policy. While the Directors may seek to
mitigate any discount to Net Asset Value per Share through such
discount management mechanisms as they consider appropriate, there
can be no guarantee that they will do so or that such mechanisms
will be successful.
7. IMPLEMENTING THE RESOLUTIONS
The Resolutions are subject to Shareholder or Independent
Shareholder approval (as appropriate) at the EGM and can only
become effective after the passing of the Resolutions by
Shareholders or Independent Shareholders (as appropriate) as set
out below.
Resolution 1 will be proposed as an ordinary resolution to be
passed by Shareholders representing more than 50 per cent. of the
voting rights held by Shareholders present in person or by proxy
and voting at the EGM.
In order to comply with the Code, Resolutions 2 and 3 (the
Waiver Resolutions) will be taken on a poll, to be passed by more
than 50 per cent. of votes cast by Independent Shareholders at the
EGM present in person or by proxy and voting at the EGM. The
Concert Party members have undertaken not to vote on the Waiver
Resolutions.
Resolution 3 is conditional on the approval of Resolution 1.
8. ACTION TO BE TAKEN BY SHAREHOLDERS
Shareholders will find enclosed with the Circular the Form of
Proxy for use at the EGM and are asked to complete the Form of
Proxy in accordance with the instructions printed thereon and to
return the Form of Proxy to Capita Asset Services, PXS 1, 34
Beckenham Road, Beckenham BR3 4ZF, to arrive by the time and date
specified on the Form of Proxy.
The completion and return of the Form of Proxy will not preclude
Shareholders from attending the EGM and voting in person if they
wish to do so.
9. RECOMMATION
The Waiver Proposals
The Independent Directors, who have been so advised by Fidante
Capital, consider the Waiver Proposals to be fair and reasonable
and in the best interests of Independent Shareholders and the
Company as a whole. Roberto Silvotti, who is a member of the
Concert Party, has not taken part in the recommendation of the
Waiver Proposals. In providing advice to the Independent Directors,
Fidante Capital has taken account of the commercial assessments of
the Independent Directors. Accordingly, the Independent Directors
unanimously recommend that the Independent Shareholders vote in
favour of the Waiver Resolutions, approving the Waiver Proposals at
the EGM, as the Independent Directors intend to do in respect of
their entire beneficial shareholdings of 151,091 Shares,
representing 0.04 per cent. of the total number of issued shares in
the Company (excluding Shares held in treasury).
The remainder of the Proposals
The Board considers that the Proposals (other than the Waiver
Proposals, which are addressed above) are in the best interests of
Shareholders and the Company as a whole. Accordingly, the Board
unanimously recommends Shareholders to vote in favour of Resolution
1 to be proposed at the EGM, as the Directors intend to do in
respect of their entire beneficial shareholdings of 1,105,783
Shares, representing 0.32 per cent. of the total number of issued
shares in the Company (excluding Shares held in treasury).
10. EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Latest time and date for receipt 15 March 2017
of Forms of Proxy for the EGM at 10.20 a.m.
EGM 17 March 2017
at 10.20 a.m.
(or as soon thereafter
as the AGM shall
have concluded)
All references to times in this announcement are to London time
unless otherwise stated. Any changes to the expected timetable will
be notified by the Company through a Regulatory Information
Service.
11. MISCELLANEOUS
Terms used and not defined in this announcement shall have the
meaning given in the Circular.
Copies of the following documents have been submitted to the
National Storage Mechanism (NSM) and will shortly be available for
inspection at www.morningstar.co.uk/uk/NSM:
-- The Circular
-- Form of Proxy for the EGM
Each of the above mentioned documents are also now available to
view on, and download from the Company's website at
http://www.torolimited.gg/panelwaiver/. Neither the NSM website nor
the Company's website nor the content of any website accessible
from hyperlinks on those websites (or any other website) is (or is
deemed to be) incorporated into, or forms (or is deemed to form)
part of this announcement.
Enquiries:
Kirstie Sumarno
Chenavari Investment Managers
Email: tlir@chenavari.com
Telephone: +44 20 7259 3600
Robert Peel
Fidante Capital
Email: rpeel@fidante.com
Telephone: +44 20 7832 0983
IMPORTANT INFORMATION
This document has been issued by Toro, and should not be taken
as an inducement to engage in any investment activity and is for
the purpose of providing information about the Company. This
document does not constitute or form part of, and should not be
construed as, any offer for sale or subscription of, or
solicitation of any offer to buy or subscribe for, any share in the
Company or securities in any other entity, in any jurisdiction,
including the United States, Canada, Japan, South Africa 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 document, and the information contained therein, is not for
viewing, release, distribution or publication in or into the United
States, Canada, Japan, South Africa or any other jurisdiction where
applicable laws prohibit its release, distribution or publication,
and will not be made available to any national, resident or citizen
of the United States, Canada, Japan or South Africa. The
distribution of this document in other jurisdictions may be
restricted by law and persons into whose possession this document
comes must inform themselves about, and observe, any such
restrictions. Any failure to comply with the restrictions may
constitute a violation of the federal securities law of the United
States and the laws of other jurisdictions.
The shares issued and to be issued by the Company (the "Shares")
have not been and will not be registered under the US Securities
Act of 1933, as amended (the "Securities Act"), or with any
securities regulatory authority of any state or other jurisdiction
of the United States. The Shares may not be offered, sold, resold,
pledged, delivered, distributed or otherwise transferred, directly
or indirectly, into or within the United States, or to, or for the
account or benefit of, US persons (as defined in Regulation S under
the Securities Act). No public offering of the Shares is being made
in the United States.
The Company has not been and will not be registered under the US
Investment Company Act of 1940, as amended (the "Investment Company
Act") and, as such, holders of the Shares will not be entitled to
the benefits of the Investment Company Act. No offer, sale, resale,
pledge, delivery, distribution or transfer of the Shares may be
made except under circumstances that will not result in the Company
being required to register as an investment company under the
Investment Company Act. Neither the U.S. Securities and Exchange
Commission (the "SEC") nor any state securities commission has
approved or disapproved of the Shares or passed upon or endorsed
the merits of the offering of the Shares or the adequacy or
accuracy of the Company's prospectus. Any representation to the
contrary is a criminal offence in the United States. In addition,
the Shares are subject to restrictions on transferability and
resale in certain jurisdictions and may not be transferred or
resold except as permitted under applicable securities laws and
regulations. Investors may be required to bear the financial risks
of their investment in the Shares for an indefinite period of time.
Any failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdictions.
No liability whatsoever (whether in negligence or otherwise)
arising directly or indirectly from the use of this document is
accepted and no representation, warranty or undertaking, express or
implied, is or will be made by the Company, or any of their
respective directors, officers, employees, advisers,
representatives or other agents ("Agents") for any information or
any of the opinions contained herein or for any errors, omissions
or misstatements. None of the Agents makes or has been authorised
to make any representation or warranties (express or implied) in
relation to the Company or as to the truth, accuracy or
completeness of this document, or any other written or oral
statement provided. In particular, no representation or warranty is
given as to the achievement or reasonableness of, and no reliance
should be placed on any, targets, estimates or forecasts contained
in this document and nothing in this document is or should be
relied on as a promise or representation as to the future.
Unless otherwise indicated, the information provided herein is
based on matters as they exist as of the date of preparation and
not as of any future date.
All investments are subject to risk, including the loss of the
principal amount invested. Past performance is no guarantee of
future returns. All investments to be held by the Company involve a
substantial degree of risk, including the risk of total loss. The
value of shares and the income from them is not guaranteed and can
fall as well as rise due to stock market and currency movements.
When you sell your investment you may get back less than you
originally invested. You should always seek expert legal,
financial, tax and other professional advice before making any
investment decision.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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