Utilico Investments Limited
Recommended proposal for investment in Bermuda National Limited
Notice of Special General Meeting
Utilico Investments Limited ("Utilico" or the "Company") today announces a proposed further investment of approximately $17.0 million in Bermuda National Limited ("BNL"), the newly established holding company for Bermuda Commercial Bank Limited and investments in certain other financial service companies, which is listed on the Bermuda Stock Exchange.
The Proposed Investment will constitute a related party transaction for the purposes of the Listing Rules and accordingly is conditional on Independent Shareholder approval. A circular (the "Circular") has today being published, following approval by the UK Listing Authority, in respect of the Proposed Investment. The resolution to approve the Proposed Investment, which is to be proposed at a Special General Meeting on 6 December 2012 as an ordinary resolution, is set out in the Notice of the Special General Meeting at the end of the Circular.
The Chairman's Letter in respect of the Proposed Investment, as contained in the Circular, is set out below.
Terms used and not defined in this announcement bear the meaning given to them in the Circular.
Letter from the Chairman
"To the holders of Shares and Depositary Interests
Recommended proposal for investment in Bermuda National Limited
I am writing to you in relation to a proposed investment by the Company of approximately US$ 17.0 million in Bermuda National Limited ("BNL"), the newly established holding company for Bermuda Commercial Bank Limited ("BCB") and investments in certain other financial service companies, which is listed on the Bermuda Stock Exchange ("BSX"). The Company currently owns 37.4 per cent. of the existing issued share capital of BNL and the proposed further investment by the Company would increase its interest in BNL to approximately 47 per cent.
The Proposed Investment will constitute a related party transaction for the purposes of the Listing Rules and accordingly is conditional on Independent Shareholder approval. The resolution to approve the Proposed Investment, which is to be proposed at the Special General Meeting as an ordinary resolution, is set out in the Notice of the Special General Meeting at the end of this document.
The purpose of this letter is to outline the reasons for the Proposed Investment, and explain why the Board considers the Proposed Investment to be in the best interests of the Company and Shareholders as a whole and why the Board recommends that you vote in favour of the Resolution. Since Michael Collier and Warren McLeland (alternate director to Susan Hansen) are, respectively, deputy chairman and chairman of BNL, they are not considered as being independent and have therefore not taken part in the Board's consideration of the Proposed Investment.
2. Information on Bermuda National and rationale for the Proposed Investment
On 31 August 2012, BCB announced a proposed restructuring to establish Bermuda National Limited as the new investment holding company for BCB, its subsidiaries and investments in certain other financial service companies.
The restructuring of BCB was effected by way of a merger pursuant to section 104H of the Bermuda
Companies Act and was approved by BCB's shareholders on 18 September 2012. The restructuring was completed on 1 October 2012 at which time 7,003,318 BNL Shares were admitted to, and dealings in such shares commenced on, the BSX. As a result of the restructuring the Company's overall holding was unchanged and as at 15 November 2012 (the latest practicable date prior to the publication of this document), amounts to 37.4 per cent. of BNL's issued share capital.
In BCB's circular relating to its restructuring, the directors of BCB stated that they believe BNL will provide an enlarged platform for corporate acquisitions within the financial services sector and an opportunity for outside investors to invest in a diversified financial services company.
As a result of the fallout from the 2008 financial crisis and the current uncertainty in Europe, BNL expects that there will continue to be a number of attractive opportunities within the financial services sector which BNL may be able to take advantage of in the future. Furthermore, with a number of financial service companies under one umbrella there are expected to be benefits through improvements in overall operating efficiency of the organisations by facilitating the more effective utilisation of core competencies in particular in the areas of compliance, risk management and IT across the BCB group.
In light of these opportunities, the Company proposes to increase its holding in BNL. The Proposed Investment will be made through the subscription for approximately US$17.0 million new BNL Shares (with warrants attached on a one for five basis) at a price per BNL Share (the "Subscription Price") equal to the audited diluted net asset value of a BNL Share as at 30 September 2012 less the amount of any dividends declared but not paid as at that date. Each warrant will entitle the holder to subscribe for one BNL Share at an exercise price of equal to the Subscription Price per BNL Share and will be exercisable for a period ending on 31 December 2015.
Pursuant to the terms of the Subscription Agreement, the Proposed Investment would comprise a cash subscription by the Company of US$15.0 million. In addition, the Company would make an in specie contribution to BNL of its existing holding of 1,250,000 convertible loan notes in Ascot Lloyd Holdings Limited and all the Company's rights and obligations under the Ascot Lloyd Loan Agreement. Ascot Lloyd Holdings Limited is the holding company of Ascot Lloyd Financial Services Limited, a UK based independent financial advisory firm. The in specie contribution will be valued at its 2012 cost of investment of £1.25 million (US$2.0 million) together with accrued interest up to the date of subscription. The Proposed Investment will also be conditional on the approval of BNL shareholders.
Based on a Subscription Price per BNL Share of US$12.76 (being the unaudited diluted net asset value of a BNL Share as at 31 March 2012), Shareholders should note that the Proposed Investment would result in the Company increasing its interest in BNL from 37.4 per cent. to approximately 47.1 per cent. (prior to the exercise of the Company's warrants in BNL). The exact increase in the Company's interest will not be determined until the publication of the audited diluted net asset value per BNL Share as at 30 September 2012 which is expected to occur in early December 2012, with completion of the Proposed Investment taking place prior to 31 December 2012. Nonetheless, it is not expected that the audited diluted net asset value per BNL Share as at 30 September 2012 will be lower than the diluted net asset value per BNL Share at 31 March 2012 and therefore the Company's interest in BNL will not exceed 47.1 per cent.
Following the Proposed Investment the Company's interest in BNL would represent approximately 5.7 per cent. of the Company's gross assets based on the latest net asset value reported by the Company as at 13 November 2012.
Shareholders should also note that, although BNL is listed on the BSX, the investment may not be readily tradeable and the Company will hold a significant investment position in BNL which may represent a significant multiple of the normal trading volumes of BNL and this may make it difficult for the Company to sell its investment. Shareholders should not expect that the Company will necessarily be able to realise, within a period which they would otherwise regard as reasonable, its investment and any such realisation may be at a considerably lower price than the prevailing indicative market price of BNL.
3. Related Party Transaction
As noted above the Company currently holds 37.4 per cent. of the issued share capital of BNL and other key shareholders with aggregate holdings amounting to 44.7 per cent. are controlled by an Associate of the Investment Manager. BNL is therefore classed as a related party of the Company in accordance with the Listing Rules as BNL is an Associate of the Investment Manager and the Proposed Investment in BNL constitutes a related party transaction for the purposes of the Listing Rules.
The Listing Rules require that a related party transaction of a listed company must be approved by its shareholders other than the related party, unless certain exemptions apply. Since none of the exemptions are applicable in relation to the Proposed Investment, the investment is subject to the passing of the Resolution, which will be proposed as an ordinary resolution and will require the approval of a majority of the Independent Shareholders voting on the Resolution. The Investment Manager and its Associates will not be entitled to vote on the Resolution.
The Board, having been so advised by Dickson Minto W.S., consider the terms of the Proposed Investment to be fair and reasonable insofar as Shareholders are concerned. In providing advice to the Board, Dickson Minto W.S. has taken into account the Board's commercial assessments of this related party transaction.
4. Shareholder support
The Company has received an irrevocable undertaking from General Provincial Life Pension Fund (L)
Limited to vote in favour of the Resolution to approve the Proposed Investment in respect of a total of 56,767,393 Shares, representing approximately 57.0 per cent. of the ordinary shares with voting rights.
5. The Special General Meeting
A notice convening the SGM, to be held at Crowne Plaza Lille, Boulevard de Leeds, Lille 59777, France at 4.30 p.m. (local time) on 6 December 2012 is set out at the end of this document at which the Resolution to approve the Proposed Investment will be proposed.
6. Action to be taken
Independent Shareholders who hold Shares in certificated form
Independent Shareholders who hold their Shares in certificated form will find enclosed with this document a Form of Proxy for use in relation to the SGM. Whether or not you intend to be present at the SGM, such Independent Shareholders are requested to complete and return the Form of Proxy so as to be received by the Company's Registrars, Computershare Investor Services (Jersey) Limited, c/o The Pavilions, Bridgwater Road, Bristol BS99 6ZY not less than 48 hours before the time appointed for holding the SGM.
Submitting a Form of Proxy will not preclude an Independent Shareholder from attending the Special
General Meeting and voting in person should they so wish.
Independent Shareholders who hold Shares through Depositary Interests
Independent Shareholders who hold their Shares through Depositary Interests will find enclosed a Form of Instruction for use in respect of the SGM to instruct the Custodian how to vote on their behalf. Such Independent Shareholders are requested to complete and return the Form of Instruction so as to be received by the Depositary, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by not later than 3.30 p.m. (London time) on 3 December 2012.
Savings Plan Participants
Savings Plan Participants will find enclosed a Form of Direction for use at the SGM to indicate the way in which they wish their votes to be cast at the SGM.
Savings Plan Participants are requested to complete and return a Form of Direction so as to be received by Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by not later than 10.00 a.m. (London time) on 29 November 2012.
The Board considers the Proposed Investment to be in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommend that Independent Shareholders vote in favour of the Resolution to be proposed at the SGM, as the Independent Directors intend to do in respect of their own personal beneficial holdings which amount to 240,802 Shares (representing 0.2 per cent. of the existing issued ordinary share capital of the Company as at 15 November 2012, the latest practicable date prior to the publication of this document). Michael Collier and Warren McLeland (alternate director to Susan Hansen) have not taken part in the Board's consideration of the Proposed Investment and have refrained from voting on any Board decisions with regard to it.
For further information please contact:
ICM Investment Research Limited
Charles Jillings 01372 271486
Westhouse Securities Limited
Alastair Moreton/Darren Vickers 0207 601 6118
This information is provided by RNS