New Distribution Policy
13 April 2010 - 10:15PM
UK Regulatory
TIDMVOC
RNS Number : 1113K
Vision Opportunity China Fund Ltd
13 April 2010
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART INTO
THE
UNITED STATES, CANADA, AUSTRALIA, SOUTH AFRICA OR JAPAN
13 April 2010
Vision Opportunity China Fund Limited
(the "Company" or "VOC")
Proposals to Enhance Shareholder Value and First Payment under New Distribution
Policy
Introduction
Vision Opportunity China Fund Limited (AIM: VOC.L), the closed-ended fund traded
on AIM that seeks promising investments in small and medium enterprises with
operations principally within Greater China, is pleased to announce the
following initiatives that are designed, collectively, to further improve the
liquidity in the trading and rating of VOC's shares and, ultimately, to enhance
shareholder value:
· introducing a distribution policy which aims to return to
shareholders an amount equivalent to between 20% and 50% of the Company's
relevant net realisation proceeds achieved in each financial year;
· implementing a share buy-back policy; and
· moving the Company from AIM up to the London Stock Exchange's Main
Market.
The Board also announces, subject, inter alia, to shareholder approval at an
extraordinary general meeting of VOC to be held on 4 May 2010, a return of
capital of 5 cents per share, amounting to $3.31 million in aggregate, which
will be paid on Friday, 28 May 2010 to shareholders on the register as at close
of business on Friday, 7 May 2010. This payment will be funded through a
reduction of share capital and will be taken into account for the purposes of
the Company's new distribution policy. It is equivalent to 15.3% of the
relevant net realisation proceeds in the current financial year to 31 March 2010
and 1.8% of the net asset value as at 31 March 2010.
Background to, and Benefits of, the Proposals
Since its admission to AIM in November 2007, VOC has delivered a net asset total
return per share of some 191.4% 1which compares with a fall of 24.7% in the MSCI
China Index total return over the same period. Notwithstanding this strong
investment performance, the Company's shares are trading at a substantial
discount to their underlying net asset value (currently 27.7% 2).
Since October 2009, the Company has undertaken a number of initiatives to
improve its transparency, increase its market profile, broaden and diversify its
shareholder base and improve the liquidity in the trading of its shares. These
initiatives have led to increased trading in VOC's shares, the introduction of
new long-term investors in the Company, a broadening of the shareholder base and
a narrowing of the discount from its low in July 2009 of more than 46%.
Following discussions with its advisers and shareholders, the Board believes
that the proposals outlined in this announcement are a natural progression in
the Company's development and that the potential benefits of the proposals
include:
· the introduction of transparent distribution and share buy-back
policies;
· the use of share buy-backs to enhance value for ongoing
shareholders;
· improving VOC's market profile and visibility, particularly amongst
UK-based institutions, private wealth managers and other investors;
· continuing to broaden and diversify VOC's shareholder base;
· further enhancing liquidity in VOC's shares;
· subject to the satisfaction of certain eligibility criteria3, the
potential for the Company's shares to qualify for FTSE Index inclusion in due
course (such inclusion should generate additional buy-demand from index-tracking
investors); and
· the prospect of an improved rating in the Company's shares.
Accordingly, the Board believes that the proposals will build on VOC's strong
investment performance and provide long-term benefits to shareholders.
1 From 27 November 2007 to 31 March 2010, based on an issue price of $0.944
2 Based on the latest net asset value per share (being $2.752 as at 31 March
2010) published by the Company through a Regulatory Information Service and the
mid-market share price at the close of business on 31 March 2010
3 Including establishing a sterling-denominated price on SETS for the Company's
shares and sustaining the recent improvement in the liquidity in the trading of
the Company's shares.
Distribution Policy
The Board has decided to introduce a distribution policy which will aim to
return to shareholders an amount equivalent to up to 50%, and not less than 20%,
of VOC's relevant net realisation proceeds achieved in each financial year. For
this purpose, the "relevant net realisation proceeds" will be, in each financial
year, 80% of the net realisation proceeds, being the proceeds on realisation of
investments during that year less the original acquisition costs of the realised
investments and any other expenses directly attributable to the acquisition or
realisation of such investments. The remaining 20% of such net realisation
proceeds takes account of the potential performance allocation that the
Company's investment manager may be entitled to.
The Directors will have discretion to determine the mechanics to be used on each
occasion an amount is to be returned to shareholders in accordance with the
distribution policy. Potential mechanics include, but are not limited to, a
return of share capital (such as that announced today), a B share scheme (giving
shareholders an element of choice over whether they receive income or capital
for tax purposes), buying back shares through the market or a tender offer.
In determining the quantum, mechanics and timing of any return to shareholders
of an amount equivalent to the relevant net realisation proceeds in accordance
with the distribution policy, the Directors will have regard, in particular (but
not limited), to:
· the Company's cash flow, working capital requirements, cash balances
and new investment opportunities;
· the amount available to be returned to shareholders in accordance
with the distribution policy;
· the Company's free float; and
· legal and regulatory restrictions.
The amounts returned to shareholders in respect of each financial year will
fluctuate and there may be financial years in which there are no relevant net
realisation proceeds.
In accordance with the new distribution policy, the Board announces that,
subject, inter alia, to shareholder approval, the Company will make a return of
capital of 5 cents per share, amounting to $3.31 million in aggregate, which
will be paid as follows:
· ex date: Wednesday, 5 May 2010;
· record date: Friday, 7 May 2010; and
· pay date: Friday, 28 May 2010.
This return of capital, which will be funded through a reduction of share
capital, is equivalent to 15.3% of the relevant net realisation proceeds in the
current financial year to 31 March 2010 and 1.8% of the net asset value as at 31
March 2010. The return of capital will be paid in sterling and calculated based
on the rate of exchange as at 3.00 p.m. on Wednesday, 5 May 2010.
To enable the return of capital to be made, it is necessary, inter alia, to pass
a special resolution to reduce VOC's share capital and to authorise the proposed
capital return at an extraordinary general meeting of the Company. The Company
will post a circular to shareholders convening that extraordinary general
meeting for 10.00 a.m. on 4 May 2010 shortly.
Share Buy-back Policy
At the annual general meeting held on 10 February 2010, the Company renewed its
general authority to buy back up to 15% of its issued share capital for cash
through the market (the "Buy-back Authority"). The maximum price payable by the
Company for a share bought back pursuant to the Buy-back Authority is the latest
net asset value per share published by the Company through a Regulatory
Information Service.
Although, to date, the Company has not used its general authority to buy back
shares through the market, the Directors believe that share buy-backs are a
useful mechanism for the long-term capital management, including discount
management, of an investment company and can benefit ongoing shareholders.
Accordingly, the Directors intend to use the Buy-back Authority when they
consider it to be in the interests of continuing shareholders to do so. Factors
that the Board will take into account when considering when to use of the
Buy-back Authority include:
· the potential enhancement to shareholder value by buying back shares
at a discount to their underlying net asset value;
· the Company's cash flow, working capital requirements and new
investment opportunities;
· the amount that may be available for distribution in accordance with
the distribution policy described above;
· the Company's free float;
· liquidity in the Company's shares; and
· legal and regulatory restrictions, including the express safe
harbour introduced by the EU Directive on Insider Dealing and Market
Manipulation which, if complied with, protects against the possible commission
of market abuse.
Consistent with the Listing Rules of the Financial Services Authority applicable
to companies listed on the London Stock Exchange's Main Market, the Directors
have decided that the maximum price that the Company will pay for any shares
bought back pursuant to the Buy-back Authority will be the higher of:
· 105% of the average of the middle market quotations of VOC's shares
for the five business days prior to the date of the market purchase; and
· the higher of the price of the last independent trade in VOC's
shares and the highest current independent bid for VOC's shares.
The Company will announce, through a Regulatory Information Service, any
on-market purchases on the business day following the purchase. Any shares
purchased pursuant to the Buy-back Authority will be cancelled.
The Buy-back Authority will expire at the next annual general meeting of the
Company or, if earlier, the date which is 18 months after the date on which the
resolution granting the Buy-back Authority was passed. The Directors intend to
renew the Buy-back Authority at each annual general meeting of the Company.
Premium Listing on the London Stock Exchange's Main Market
The Company intends to apply for admission to trading on the London Stock
Exchange's Main Market for listed securities. It is currently envisaged that,
subject to receiving the necessary regulatory and shareholder approvals,
admission will occur before 30 September 2010. Canaccord Adams will act as
VOC's sole sponsor and broker to the listing.
City Code
Under Rule 9 of the City Code on Takeovers and Mergers (the "City Code"), when a
person acquires, whether by a series of transactions over a period of time or
not, an interest (as defined in the City Code) in shares which (taken together
with shares in which persons acting in concert with them are interested) carry
30% or more of the voting rights of a company to which the City Code applies,
such person is normally required by the Panel to make a general offer to the
holders of any class of equity share capital of that company (whether voting or
non-voting) and also to the holders of any class of transferable securities
carrying voting rights issued by that company to acquire their shares or other
securities.
Rule 9 of the City Code ("Rule 9") also provides that any person, together with
persons acting in concert with them, who is interested in shares which in
aggregate carry not less than 30% but do not hold more than 50% of the voting
rights of a company to which the City Code applies will be unable, without the
Panel's consent, to acquire, either individually or together, any interest in
any other shares which increases the percentage of shares carrying voting rights
in which they are interested without being required to make a general offer to
the holders of any class of equity square capital of that company (whether
voting or non-voting) and also to the holders of any class of transferable
securities carrying voting rights issued by that company to acquire their shares
or other securities.
Under Rule 37.1 of the City Code, when a company 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 (a "Concert
Party") is interested will be treated as an acquisition for the purpose of Rule
9. A person not acting, or presumed to be acting, in concert with any one or
more of the directors will not normally incur an obligation to make a mandatory
offer under Rule 9 if, as a result of the purchase of its own shares by a
company, they come to exceed the percentage limits set out in Rule 9, but the
Panel should be consulted in all such cases. However, this exception will not
normally apply when a person (or any relevant members of a group of persons
acting in concert) not acting, or presumed to be acting, in concert with any one
or more of the directors has acquired an interest in shares at a time when they
had reason to believe that such a purchase of its own shares by the company
would take place.
As at 9 April 2010 (being the latest practicable date prior to this
announcement), funds managed by City of London Investment Management Limited
("City of London") owned 19,731,332 shares, representing 29.8% of the Company's
issued share capital.
As a result of the share buy-back policy that the Company is proposing to
implement, City of London could end up holding an interest in 30% or more of the
issued share capital of the Company. Following discussions between the Company
and the Panel on Takeovers and Mergers (the "Panel"), the Panel has agreed that,
under Rule 37.1 of the Code and the notes to that Rule, City of London should be
treated as an "innocent bystander" in relation to any increase in its interest
in the Company's issued share capital as a result of share buy-backs pursuant to
the Buy-back Authority and there will not be any Rule 9 consequences for City of
London arising from such share buy-backs.
For further information, please contact:
Vision Opportunity China Fund Limited Tel: +1 (212) 849
8225
David Benway/Adam Benowitz
www.vocfund.com
Canaccord Adams Limited Tel: +44 (0)20
7050 6500
Sue Inglis/Guy Blakeney
Financial Dynamics Tel: +44
(0)20 7269 7132
Ed Gascoigne-Pees/Ed Berry
NOTE TO EDITORS
Vision Opportunity China Fund Limited is a closed-ended listed fund traded on
AIM. VOC primarily invests directly in listed companies with operations
principally within Greater China. Greater China is a collective term for the
territories administered by the People's Republic of China, those administered
by the Republic of China and Singapore.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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