RNS Number : 4704X
Utilico Limited
06 December 2010
 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES OR INTO OR FROM CANADA, JAPAN OR AUSTRALIA

 

 

For immediate release

 

6th December 2010

 

 

 

Utilico Limited

("Utilico")

 

 

 

Recommended proposals for amendments to Utilico's investment policy, the acquisition of the assets of Eclectic Investment Company plc ("Eclectic"), the acquisition of certain assets from General Provincial Life Pension Fund (L) Limited ("GPLPF"), cancellation of share premium account, increase of authorised share capital and change of name to Utilico Investments Limited

 

 

Introduction

Utilico is today posting a Circular (and accompanying Prospectus) which convenes the necessary shareholder meetings to implement proposals for a change in Utilico's investment policy and to seek shareholder approval for this and other associated matters.

The Utilico Board has concluded that the current investment policy, restricted predominantly to the infrastructure and utilities sectors, no longer offers long term attractions for Shareholders. This has arisen as a result of a number of changes to these sectors over recent years.

The Board is therefore proposing a new investment objective and policy that will allow the Company to invest across all sectors and markets.  To reflect these changes it is also proposed that Utilico will change its name to Utilico Investments Limited.

The change in the Company's investment policy would give rise to a potential conflict for Utilico's manager, ICM, as Ingot, Utilico's former manager and an affiliate of ICM, manages Eclectic Investment Company plc, which has a similar investment mandate.  As Eclectic's investment portfolio contains a number of attractive assets that would comply with Utilico's proposed new investment policy, the Board considers that the most appropriate way to resolve this potential conflict, as well as allowing Utilico to acquire an attractive and diversified portfolio of assets, is for the Company to acquire Eclectic's investment portfolio through a scheme of reconstruction and winding up of Eclectic.  This would also lead to potential efficiency savings as the asset base of the Company would increase by the value of the assets acquired.  Pursuant to the Scheme and related transactions, Utilico will acquire all of Eclectic's investment portfolio in consideration for a cash payment to Eclectic and the issue of New Utilico Shares to certain Eclectic Shareholders. As a result of this transaction, Utilico's Gross Assets will increase by approximately £14.0m.

It is also proposed that Utilico acquires 19,965,369 Resolute Mining Limited ordinary shares from GPLPF (having a value, based on their closing bid price on 30 November 2010 and a A$/sterling exchange rate of 1.6238 on that date, of £15.0 million) in exchange for New Utilico Shares. The Board and the Manager believe that Resolute is an attractive investment and that it is advantageous to the Company to take this opportunity to increase its holding in this company.  This also has the benefit of increasing Utilico's asset base further, which is particularly positive for ZDP Shareholders as it will provide additional ZDP Cover.  The New Utilico Shares will be issued to GPLPF at the Utilico FAV per Share as at the Calculation Date with the Resolute ordinary shares being acquired being valued at their closing bid price on the same day translated into sterling at the prevailing A$/sterling exchange rate.

 

Applications will be made for the New Utilico Shares to be admitted to a premium listing of the Official List and to trading on the main market for listed securities of the London Stock Exchange.  The New Utilico Shares will be issued in registered form and may be held either in certificated form and settled through CREST. The New Utilico Shares will be transferable  and will rank pari passu in all respects with each other and the existing Utilico Shares save in respect of any distribution made or declared on the existing Utilico Shares prior to the Effective Date.

 

As previously announced to the market, despite having positive revenue earnings in addition to revenue reserves, under Bermuda law, Utilico has been unable to pay a dividend to Shareholders as a result of having negative capital reserves since March 2008. Whilst the bonus issue mechanism used in April this year allowed for some profits representing income to be returned to Shareholders, the Board believes that a more permanent solution is needed.  To this end, the Company is proposing to cancel the amount standing to the credit of the Company's share premium account, which will allow it to resume dividend payments.  Any such dividends will only be paid out of existing and future revenue profits, which will ensure that the interests of ZDP Shareholders are not prejudiced thereby and will be made in accordance with Bermuda law.

 

Finally, it is necessary to increase the authorised share capital of the Company to create sufficient additional New Utilico Shares to implement the Proposals, whilst leaving a degree of headroom for the future.

Investment objective and policy

 

Background to change of investment objective and policy

The Board and ICM have reviewed and discussed at length the merits of the current investment policy.  This review concluded that the infrastructure and utilities sectors in emerging markets remain attractive. However, in developed markets this is not the case and in such markets these asset classes face a number of challenges, namely the following:

 

·      Low growth. GDP growth in certain developed markets is likely to be depressed for a number of years. This arises from various factors, including declining populations, ageing populations and significant capital requirements to reduce both personal and sovereign debt levels exacerbated by current financial market pressures.

 

·      High debt. A number of utility and infrastructure investment opportunities require significant debt finance.  The ability to roll this debt over into the next cycle will be challenging given the increased margin and asset cover requirements that many lenders have imposed following the recent credit crisis. Further, many lenders are likely to need to reduce their loan books to meet regulatory requirements and reduce risk. This poses an additional risk to equity investors.

 

·      Uncertain political environment. Governments are under severe constraints to redress sovereign debt concerns. In Europe this is being met by the imposition of severe austerity measures in a number of countries, which is likely to result in a reduction in government spending on infrastructure and related projects, and an increase in protectionist tax and regulation. This was illustrated by the Spanish response to the solar industry where the Spanish Government has unilaterally reduced the feed-in tariffs for new solar energy projects and has publicly considered that this decision should have retrospective effect.

 

·      Smaller investment universe.  The strength of Utilico's manager, ICM, has been in exploiting quoted investments and ICM's investment team is structured to focus on this. However, the pool of listed utility and infrastructure investments in the developed markets has reduced significantly in recent times. In the UK, a number of utility and infrastructure companies have been taken private, including BAA and many of the water and power generation and supply companies. The reduced pool of listed investments limits ICM's investment flexibility. While there is a requirement for significant investment in this sector the Board believes that this is likely to be through public private finance initiatives or in the private equity arena, which is not ICM's core strength.

 

The Board is therefore proposing a new investment objective and a new investment policy, which will allow the Company to invest across all sectors and markets.  This will position Utilico as an absolute return fund, utilising strengths in infrastructure and utilities investment as well as in the wider market.  The Board expects the investment outlook to change as the world's economies are rebalanced and that the wider flexibility offered by the new investment policy will be beneficial to Utilico's Shareholders and indirectly ZDP Shareholders.

Proposed new investment objective and investment policy

If all of the Resolutions to be proposed at the SGM and the Class Meetings and the Eclectic Resolutions are passed by the requisite majorities, the Company's new investment objective and investment policy will be as follows:

Proposed investment objective

Utilico's investment objective will be to maximise shareholder returns by identifying and investing in investments where the underlying value is not reflected in the market price. 

Proposed investment policy

Utilico will seek to invest in undervalued investments and under its proposed investment policy will have the flexibility to make investments in a wide range of sectors and markets worldwide.

The Company will identify and invest in opportunities where the underlying value is not reflected in the market price.  This perceived undervaluation may arise from any number of factors including technological, market motivation, prospective financial engineering opportunities, competition or shareholder apathy. 

In the short to medium term it is anticipated that the Company will continue to have a significant proportion of its Gross Assets invested in developed markets in existing utilities and related stocks, including (but not limited to) water and sewerage companies, waste, electricity, gas, telecommunications, ports, airports, service companies, rail, roads, any business with essential service or monopolistic characteristics and in any new utilities which may arise.  The Company may also invest this segment of its portfolio in businesses which supply services to or otherwise support the utilities and related sectors. 

Subject to compliance with the Listing Rules in force from time to time, Utilico may invest in other investment funds or vehicles, including any managed by the Manager, where such investment would be complementary to the Company's investment objectives and policy.

The Company will continue to have the flexibility to invest in any instrument appropriate to the particular opportunity under consideration, including shares, bonds, convertibles, options, warrants, futures and debt securities and to invest in unlisted securities.   The Company may use derivative instruments for the purposes of efficient portfolio management and to obtain investment exposure, such as contracts for difference, financial futures, call and put options and warrants.  The Company may from time to time seek to actively protect the Company's portfolio and balance sheet from major market corrections.  This may include foreign currency hedges, interest rate hedges, stock market index options and similar instruments. 

The Company will have the flexibility to invest in markets worldwide although investments in the utilities and infrastructure sectors will principally be made in the developed markets of Australasia, Western Europe and North America, as Utilico's exposure to the emerging markets utilities and infrastructure sectors will primarily be through its holding in Utilico Emerging Markets Limited.  Utilico will have the flexibility to invest directly in these sectors in emerging markets with the prior agreement of Utilico Emerging Markets Limited.

The Company believes it is appropriate to support investee companies with their capital requirements while at the same time maintaining an active and constructive shareholder approach through encouraging the organisation of capital structure and business efficiencies.  The Manager's investment team will maintain regular contact with investee companies and Utilico may often be among the largest shareholders.  There are no limits on the proportion of an investee company that Utilico may hold and Utilico may take legal or management control of a company from time to time.

The Company aims to maximise value for Shareholders through a relatively concentrated portfolio of investments.  There will be no fixed limits on the allocation of investments between sectors and markets, however the following investment limits will apply:

·       investments in unlisted companies will, in aggregate, not exceed 20% of the Gross Assets at the time that any new investment is made; and

·       no single investment will exceed 30% of Gross Assets at the time such investment is made, save that this limit shall not prevent the exercise of any warrants, options or similar convertible instruments acquired prior to the relevant investment reaching the 30% limit.

Under the Bye-laws, the Group is permitted to borrow an aggregate amount equal to 100% of the Group's Gross Assets.  Borrowings will be drawn down in any currency appropriate for the portfolio.

As required by the Listing Rules, there will be no material change to the investment policy without prior approval of Shareholders. Any such change would also require the consent of ZDP Shareholders in accordance with the Subscription Agreement.

 

The Scheme

 

The Board has reached agreement with Eclectic to acquire the investment portfolio of Eclectic through the Scheme.

The Scheme will result in Eclectic Shareholders who elect to do so receiving New Utilico Shares, valued at the Utilico FAV per Share as at the Calculation Date, issued by the Company in exchange for the transfer to the Company of certain investments held by Eclectic. The Scheme will also provide for Eclectic Shareholders who do not elect for New Utilico Shares to receive a cash exit in respect of their investment in Eclectic equal to 95 per cent. of the Eclectic FAV per Share on the Calculation Date. Eclectic Shareholders who do not make an election under the Scheme will be deemed to have elected for the Cash option. In order to provide sufficient cash to fund the Cash Option and the costs of Eclectic's liquidation, Utilico has agreed to purchase certain assets from Eclectic shortly before the Scheme becomes effective pursuant to the Sale and Purchase Agreement.

Eclectic is an investment company with a broad investment policy, which permits Eclectic to make investments worldwide across all sectors and in a variety of financial instruments without having to focus on any country, sector or industry.  As at 30 November 2010, Eclectic had unaudited net assets of £19.3 million. The ten largest investments in Eclectic's portfolio constituted 86.0 per cent. of the portfolio. 

The majority of the assets of Eclectic to be acquired by the Company pursuant to the Scheme would fall outside the scope of the Company's existing investment policy.  The Scheme is therefore conditional, inter alia, on the amendment of the Company's investment policy.

The Scheme will not result in any changes to the management arrangements or the management and performance fees currently paid by Utilico to ICM.

The majority shareholder in Eclectic, NLPL, is controlled by the ultimate beneficial owner of GPLPF, the majority shareholder in Utilico.  This means that Eclectic is a related party of Utilico for the purposes of the Listing Rules.  As a result, the entry into the Transfer Agreement and the Sale and Purchase Agreement pursuant to the Scheme constitute related party transactions for Utilico, which must be approved by the Utilico Shareholders, excluding GPLPF and any of its associates. 

The Scheme is also conditional, inter alia, on the approval of Eclectic shareholders at two separate general meetings.

Benefits of the Scheme

The Board believes that the Scheme represents a good opportunity for the Company to attract new shareholders and to increase the size of the Company. The main benefits of the Scheme for Shareholders and ZDP Shareholders are that:

·    the Company will acquire a portfolio of assets which are, in the Manager's opinion, attractive investments;

·    Eclectic will cease to exist, which will eliminate a potential source of conflict of interest for ICM and Ingot as affiliates and investment managers of two funds with similar investment policies;

·    the Company's asset base will increase, which should have a beneficial effect on the Company's total expense ratio; and

·    ZDP Cover will be improved through the increase in the Company's Gross Assets.

Valuations for the Scheme

New Utilico Shares will be issued to Eclectic Shareholders who elect to receive New Utilico Shares under the Scheme on the basis of the Eclectic FAV per Share and the Utilico FAV per Share as at the Calculation Date.  The Eclectic FAV and the Utilico FAV will be based on the Net Asset Values of Eclectic and Utilico as calculated in accordance with their normal accounting policies (which are substantially similar) but adjusted as follows.

·           by deducting from the net asset value of the Eclectic Shares (i) all known costs of the Scheme and of its liquidation incurred or to be incurred by Eclectic and all other known liabilities of Eclectic and (ii) the Liquidators' retention (expected to be £50,000) to cover unknown liabilities; and

·           by deducting from the net asset value of the Utilico Shares all known costs of the Proposals incurred or to be incurred by Utilico.

 

Illustrative financial effects of the Scheme

For illustrative purposes only, if the Scheme had become effective at close of business on 30 November 2010 and based on the assumptions set out in the notes below, the Eclectic FAV per Share would have been 107.66 pence and the Utilico FAV per Share would have been 204.31 pence.  Based on the assumptions set out below, an electing Eclectic Shareholder would receive approximately 0.526 New Utilico Shares in respect of each Eclectic Share held.

On this basis, an Eclectic Shareholder would receive New Utilico Shares with an aggregate market price of £798.21 for every 1,000 Eclectic Shares held, which have an aggregate market price of £855.00, based on the closing share price of an Eclectic Share as at 30 November 2010.  On this basis, Utilico would issue up to 6,668,737 New Utilico Shares, representing 7.7 per cent. of the existing issued Ordinary Shares.

It should be noted that these figures are given for illustrative purposes only and should not be regarded as a forecast of the actual Eclectic FAV per Share or the actual Utilico FAV per Share to be calculated on the Calculation Date.

Assumptions

1.   As at close of business on 30 November 2010, the middle market share price of an Eclectic Share was 85.5 pence and of a Utilico Share was 151.75 pence;

2.   As at close of business on 30 November 2010, the unaudited NAV per Eclectic Share and the unaudited Eclectic FAV per Share were 109.51 pence and 107.66 pence respectively;

3.   As at close of business on 30 November 2010, the unaudited NAV per Utilico Share and the unaudited Utilico FAV per Share were 205.03 pence and 204.31pence respectively;

4.   Shareholders holding 71.83 per cent. of the Eclectic Shares validly elect for New Utilico Shares in respect of their entire holdings (being those who have given irrevocable undertakings to roll-over their investment);

5.   Current period revenue reserves are included within the relevant NAV calculations;

6.   Eclectic's total costs in implementing the Proposals are £275,000;

7.   The retention proposed by the Liquidators to cover unknown liabilities of Eclectic is £50,000;

8.   Utilico's total costs in implementing the Scheme and associated matters are £625,000;

9.   Completion of the Proposals as described in herein; and

10.  No account of the Warrants is taken in calculating the Utilico FAV per share.

 

The Cash Option

Under the Cash Option, Eclectic Shareholders may elect to dispose of some or all of their Eclectic Shares for cash equivalent to 95 per cent. of the Eclectic FAV per Share.  Based upon the illustrative ratio given above this would represent a premium of 19.6 per cent. to the closing share price of an Eclectic Share as at 30 November 2010. If no form of election is received by Eclectic, the relevant Eclectic Shareholder will be deemed to have elected for the Cash Option in respect of their entire holding of Eclectic Shares.  

If no form of election is received by Eclectic, the relevant Eclectic Shareholder will be deemed to have elected for the Cash Option in respect of their entire holding of Eclectic Shares.

Eclectic Shareholders who are resident outside the United Kingdom, the Channel Islands and the Isle of Man will be deemed to have elected for the Cash Option under the Scheme.  This is subject to the discretion of the Independent Directors and the Independent Eclectic Directors to allow such Eclectic Shareholders to elect for New Utilico Shares provided that the Independent Directors and the Independent Eclectic Directors are satisfied that such Eclectic Shareholders can be issued New Utilico Shares without breaching any relevant securities laws or regulations and without the need for compliance on the part of Utilico or Eclectic with any overseas laws, regulations, filing requirements or the like.

 

Funding the Cash Option

The beneficial holders of 71.83 per cent. of the Eclectic Shares have irrevocably undertaken to elect for New Utilico Shares under the Scheme.  If all other Eclectic Shareholders elect, or are deemed to elect, for the Cash Option, the maximum aggregate cash required by Eclectic to satisfy those elections would be approximately £5.1million, based upon 95 per cent. of the illustrative Eclectic FAV per Share shown above.  In order to ensure that Eclectic has sufficient cash, Utilico has agreed to enter into the Sale and Purchase Agreement shortly before the Second Eclectic GM.  Under the Sale and Purchase Agreement, Utilico will purchase certain investments from Eclectic (valued as at the Calculation Date in the same manner as if they would be transferred pursuant to the Scheme) in consideration for a cash payment.  These assets will be investments within Utilico's current investment policy. The amount of assets sold to Utilico under the Sale and Purchase Agreement will depend on elections received under the Scheme and Eclectic's other cash requirements and cannot, therefore, be determined at this time. The Sale and Purchase Agreement is not conditional upon completion of the Scheme.

Information on Resolute and the GPLPF Subscription

As part of the Proposals, GPLPF has agreed, subject to shareholder approval, to subscribe for New Utilico Shares in consideration for the acquisition by Utilico, in accordance with Utilico's proposed investment policy of 19,965,369 Resolute ordinary shares (having a value, based on their closing bid price on 30 November 2010 and a A$/£ sterling exchange rate on that date of 1.6238, of £15.0 million). 

 

Resolute is incorporated in Western Australia and has its registered office at 4th Floor, The BGC Centre, 28 The Esplanade, Western Australia 6000. Resolute is a developer and operator of gold projects, with operations in Africa, principally in Mali and Tanzania, and in Australia. Its ordinary shares, convertible loan notes and listed options are quoted on the official list of the Australian Stock Exchange.

 

Utilico currently has an interest in 25,000,000 ordinary shares, 60,011,871 convertible loan notes, 16,150,491 listed options and 2,250,000 unlisted options in Resolute.  As at 30 November 2010 these assets were valued at £70.6 million in aggregate and represented 19.1% of Gross Assets.  Eclectic has an interest in 500,000 ordinary shares and 5,711,667 convertible loan notes in Resolute with an aggregate value as at the same date of £4.8 million. 

 

The Directors, advised by the Manager, believe that these investments, and the opportunity to acquire further Resolute ordinary shares pursuant to the GPLPF Subscription, offer counter cyclical diversification through exposure to the gold sector and that they still remain undervalued with potential for significant upside.

 

The 19,965,369 ordinary shares in Resolute to be acquired by the Company from GPLPF will be valued at closing bid value as at the Calculation Date and the New Utilico Shares issued in consideration will be valued at the Utilico FAV per Share on the Calculation Date and applying the A$/£ sterling exchange rate at that date.  Based upon valuations and the A$/£ sterling exchange rate as at 30 November 2010, the satisfaction of the consideration would result in the issue of 7,341,748 New Utilico Shares to GPLPF, representing 8.5 per cent. of the current issued ordinary share capital and 7.3 per cent. of the enlarged issued ordinary share capital of Utilico on the assumption that the Scheme is also implemented and that all Eclectic Shareholders (other than those who have irrevocably undertaken to elect for New Utilico Shares) elect for, or are deemed to elect for, the Cash Option pursuant to the Scheme. 

 

GPLPF is interested in 52.6 per cent. of the current issued share capital of Utilico and accordingly the GPLPF Subscription constitutes a related party transaction for the purposes of the Listing Rules.  It is therefore conditional on the approval of the Shareholders excluding GPLPF and any of its associates.  If the GPLPF Subscription and the Scheme are both implemented, based on the assumptions in relation to the Cash Option and the valuations set out above, GPLPF will be interested in 52,778,632 Utilico Shares representing 52.6 per cent. of the enlarged issued ordinary share capital of Utilico.

 

Illustrative financial effects of the Proposals

By way of illustration only, based on the Group's unaudited Net Asset Value of £177.1 million as at 30 November 2010 had the Scheme become effective and the GPLPF Subscription taken place at the date of this document, the Group's Net Asset Value would have been increased by 16.0% (such increase representing the aggregate of (i) the unaudited Net Asset Value of Eclectic of £19.3 million adjusted for the Cash Option (assuming this is taken up by all the Eclectic Shareholders other than those who have irrevocably undertaken to elect for New Utilico Shares) and for all expenses in relation to the Scheme and (ii) the value of the assets acquired pursuant to the GPLPF Subscription of £15.0 million. 

The Share Premium Cancellation

As previously announced to the market, despite having positive revenue earnings in addition to revenue reserves, under Bermuda law, Utilico has been unable to pay a dividend to Shareholders as a result of having negative capital reserves since March 2008.  In light of this position, the Board, in conjunction with its advisers, has examined alternative ways to enable the Company to make cash distributions to Shareholders equal to the dividends the Board would otherwise have declared if they were permitted to do so in accordance with Bermuda law.  This resulted in the bonus issue and buyback of Ordinary Shares on 21 April this year.

Whilst the bonus issue and buyback mechanism allowed the Company to make a distribution equivalent to the dividend that would have been paid but for the Bermuda legal issue, this method is unsatisfactory as a long term solution.  It relies on ZDP Cover exceeding 1.4 times immediately following any bonus issue and is administratively more complicated than the payment of a cash dividend.  With these concerns in mind, the Board is therefore proposing the Share Premium Cancellation.  This will eliminate the negative capital reserves as the negative balance is less than the amount standing to the credit of the share premium account and thereby permit the future payment of dividends out of the Company's revenue reserves and future revenue profits on both the existing Ordinary Shares and New Utilico Shares.

As at 30 June 2010, being the last date to which audited accounts have been prepared, the negative balance on the Company's capital reserve account was £138.0 million, whilst the credit balance on the share premium account amounted to £223.5 million. At the same date, the Company's revenue reserve was £4.1 million.

Both the Scheme  and the GPLPF Subscription are conditional on the Share Premium Cancellation taking place.

The Share Premium Cancellation requires the consent of both Shareholders and ZDP Shareholders. The Board has considered the interests of ZDP Shareholders and considers that ZDP Shareholders' interests are not prejudiced by the Share Premium Cancellation.  Any dividends paid to Shareholders will only be paid from the Company's existing and future revenue reserves, which would not be available to ZDP Shareholders even on the Company's winding up (as they would constitute Winding-Up Revenue Profits under the Bye-laws, which are attributable to the Ordinary Shares only).

In addition, had the GPLPF Subscription and the Scheme taken place prior to the publication of this document, they would have had the effect of increasing ZDP Cover from 1.52 times as at 30 November 2010 to 1.63 times.  This figure assumes that both the GPLPF Subscription and the Scheme proceed and that all Eclectic Shareholders other than those who have irrevocably undertaken to elect for New Utilico Shares elect for, or are deemed to elect for, the Cash Option pursuant to the Scheme.

Dividend Policy

If the Share Premium Cancellation takes place, the Directors intend to reinstate the Company's original dividend policy, under which they anticipate distributing the majority of net revenue arising from normal income streams (such as dividends from portfolio companies) less normal costs (such as management fees).  Any dividend payments would be made in accordance with Bermuda law.

Costs and expenses

The costs to be incurred by Utilico in connection with the Proposals are expected to be approximately £625,000 in aggregate (including irrecoverable VAT but excluding stamp duty). 

If any of the Resolutions are not passed at the SGM or at the Class Meetings or the Proposals do not otherwise proceed it is estimated that the Company would suffer approximately £485,000 of irrecoverable costs.

Related party issues

The Scheme

As at the date of this document, GPLPF owns and is entitled to exercise votes attaching to 45,436,884 Ordinary Shares, representing 52.6 per cent. of the issued Ordinary Shares. NLPL owns and is entitled to exercise votes attaching to 9,252,332 Eclectic Shares, representing 52.5 per cent. of the issued Eclectic Shares (excluding treasury shares).  GPLPF and NLPL are ultimately controlled by the same beneficial owner and as a result Eclectic and Utilico constitute related parties for the purposes of Chapter 11 of the Listing Rules. The Scheme, which requires the entry into of the Transfer Agreement and the Sale and Purchase Agreement, is therefore 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 and any of its associates who are not allowed to vote on the relevant resolutions. The Scheme is therefore conditional, inter alia, on the passing of a separate resolution, which will be proposed as an ordinary resolution which will require the approval of a majority of the Ordinary Shareholders voting on the resolution. GPLPF and its associates will not vote on this resolution.

The GPLPF Subscription

The GPLPF Subscription is a transaction between the Company and GPLPF (the Company's majority shareholder) and is a related party transaction for the purposes of the Listing Rules.  As a result, the GPLPF Subscription is conditional on the passing of a separate resolution, which will be proposed as an ordinary resolution which will require the approval of a majority of the Ordinary Shareholders voting on the resolution.  GPLPF and its associates will not vote on this resolution.

Conditions to the Proposals

The Proposals are conditional upon all of the Utilico Resolutions and the Eclectic Resolutions being passed by the requisite majorities. Accordingly, if any of the Utilico Resolutions or the Eclectic Resolutions are not passed no element of the Proposals will be implemented other than the Sale and Purchase Agreement which may be implemented without the Eclectic Resolutions being passed at the Second Eclectic GM.

The change to the investment policy and the Share Premium Cancellation are also conditional upon the approval of the ZDP Shareholders with each of the 2012, 2014 and 2016 ZDP Shareholders voting at separate class meetings.

Irrevocable undertakings

The Board has consulted with its two largest shareholders, GPLPF and Foreign and Colonial Investment Trust plc ("FCIT"), who hold in aggregate 64.7 per cent. of the Company's issued Ordinary Shares. GPLPF and FCIT have signed irrevocable undertakings to vote in favour of the Resolutions to be proposed at the SGM, in GPLPF's case with the exception of the related party resolutions.

The board of Eclectic has consulted with certain of its major shareholders, holding 71.83 per cent. of Eclectic's issued share capital (excluding shares held in treasury), who have all undertaken to vote in favour of the Scheme and to elect to receive New Utilico Shares in respect of their entire holding of Eclectic Shares.

 

Outline Timetable

 

Circular posted to Shareholders and ZDP Shareholders

6 December 2010

Latest time for receipt of Forms of Proxy

Latest time and date for receipt of Election Forms

2pm on 5 January 2011

12 noon on 5 January 2011

Calculation Date

Close of business on 5 January 2011

Special General Meeting

10.00am (Bermuda time) on 7 January 2011

2012 ZDP Class Meeting

10.05am (Bermuda time) on 7 January 2011

2014 ZDP Class Meeting

10.10am (Bermuda time) on 7 January 2011

2016 ZDP Class Meeting

10.15am (Bermuda time) on 7 January 2011

First Eclectic GM

12 noon on 7 January 2011

Announcement of results of the Proposals

17 January 2011

Second Eclectic GM

12 noon on 17 January 2011

Effective Date of the GPLPF Subscription, the Scheme and Eclectic in liquidation

17 January 2011

Admission and dealings in respect of the New Utilico Shares commence

8.00 am on 18 January 2011

CREST accounts credited in respect of Depositary Interests for New Utilico Shares in uncertificated form

18 January 2011

Certificates for New Utilico Shares in certificated form despatched

on or as soon as practicable after 18 January 2011

Cheques expected to be despatched and CREST payments made to Eclectic Shareholders in respect of the Cash Option

on or as soon as practicable after 18 January 2011

 

Notes:

(i)         The dates set out in the expected timetable above may be adjusted by the Company, in which event details of the new dates will be notified to the UK Listing Authority and the London Stock Exchange, and an announcement will be made through a Regulatory Information Service.

(ii)        All references to time in this document are to London time, except for the time of the Utilico Meetings, which are references to Bermuda time.

 

Further Information

A Circular is being posted to Shareholders today.

Copies of the Circular and the accompanying Prospectus are available on the Utilico website www.utilico.bm and maybe obtained from the Company Secretary, Martin Cassels on +44 131 718 195.

A copy of the Circular and Prospectus has been submitted to the National Storage Mechanism and is available for inspection at: www.Hemscott.com/nsm.do.

 

Enquiries

Charles Jillings

Utilico Limited

+44 1372 271 486

 

Alastair Moreton/Dermot McKechnie

Westhouse Securities Limited

+44 207 601 6100

 

Definitions

Capitalised terms have the meaning set out in the definitions section of the Circular unless the sense or context determines otherwise.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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