TIDMARCH
RNS Number : 8536R
ARC Capital Holdings Limited
10 November 2011
ARC CAPITAL HOLDINGS LIMITED
NOTICE OF EGM AND SHAREHOLDER CIRCULAR
ARC Capital Holdings Limited ("ARCH" or the "Company") (AIM:
ARCH), the closed-end investment company admitted to trading on the
AIM Market of the London Stock Exchange today announces its
extraordinary general meeting to be held at 2:00 p.m. (Hong Kong
time) on Wednesday, 14 December 2011 at the Four Seasons Hotel,
Macau ("EGM") and that it will today send a circular ("Circular")
to shareholders ("Shareholders") detailing certain proposals to be
put to Shareholders at the EGM ("Proposals").
The Company's board of directors (the "Board"), has consulted
with the Company's major Shareholders to formulate the Proposals
which are summarized as follows:
-- Improved standards of corporate governance and transparency:
The Board proposes to bring the Company in line with most other
AIM-quoted investment companies by, among other things, introducing
a regular annual general meeting to provide a regular forum for
voting on discount control policy and Board composition.
-- Adoption of a revised distribution policy: The Board and ARC
Capital Partners Limited (the "Investment Manager"), are committed
to narrowing the discount to net asset value per share ("NAV per
Share"). The Board, having consulted with the Investment Manager,
believes the current market conditions are not appropriate for
significant disposals of portfolio assets but proposes to return
available free cash to Shareholders pursuant to a revised
distribution policy that is described in detail in the
Circular.
The Board believes the recommended Proposals will improve
corporate governance and transparency and should narrow the
discount to NAV per Share.
-- Advisory resolution related to restructuring of the Company:
The Board has recently received communications from certain
Shareholders requesting the Board to consider a material
restructuring of the Company with a view to splitting the Company's
assets and liabilities into a continuing pool and a distribution
pool with Shareholders electing to receive a class of shares that
would be linked to the returns generated by one of the pools. In
response to this request, the Board is proposing an advisory
resolution at the EGM that the Company formulate a proposal to
undertake a restructuring broadly in line with the description
above, despite the Board's and the Investment Manager's strong and
unanimous recommendation this be rejected.
The Board does not believe that such a restructuring is in the
best interests of Shareholders as a whole. The Board and the
Investment Manager remain committed to the Company's primary
strategy of providing Shareholders with capital appreciation from a
diversified portfolio of attractive retail and consumer companies
in China
The adoption of certain elements of the recommended Proposals
will require the amendment of the Company's Articles of Association
(the "Articles").
The Circular, which provides further details of the Board's
recommended Proposals, will be sent to Shareholders today setting
out the reasons for the Proposals and to explain what Shareholders
should do next. A copy of the Circular will also shortly be
available from the Company's website www.arch-fund.com.
EXPECTED TIMETABLE OF EVENTS
Posting of Circular and Form of Proxy 10 November 2011
to Shareholders
Record date for EGM 8:00 a.m. (London time)
10 November 2011
Latest time and date for receipt of 5:00 p.m. (London time)
Forms of Proxy on
12 December 2011
Time and date of EGM 2:00 p.m. (Macau time)
on
14 December 2011
The above times and/or dates may be subject to change and, in
the event of such change, the revised times and/or dates will be
notified to Shareholders by an announcement through a Regulatory
Information Service of the London Stock Exchange.
For more information, please contact:
MANAGER:
Allan Liu, Managing Partner NOMINATED ADVISER:
ARC Capital Partners Limited Philip Secrett
T: (852) 2918 0088 Grant Thornton Corporate Finance
F: (852) 2918 0881 T: (44) 20 7383 5100
aliu@pagasia.com Philip.J.Secrett@uk.gt.com
BROKER: MEDIA RELATIONS:
Hiroshi Funaki Stephanie Barry
LCF Edmond de Rothschild Securities PAG
T: (44) 20 7845 5960 T: (852) 3719 3375
F: (44) 20 7845 5961 sbarry@pagasia.com
funds@lcfr.co.uk
INVESTOR RELATIONS:
Numis Securities Limited Chong Min Yi
David Benda / Hugh Jonathan PAG
T: (44) 20 7260 1000 T: (852) 3719 3319
F: (44) 20 7260 1001 cyi@pagasia.com
d.benda@numiscorp.com
About ARC Capital Holdings Limited
ARC Capital Holdings Limited ("ARCH") (AIM: ARCH) is a
closed-end investment company with net assets of US$432.5 million
as at 31 August 2011. ARCH was admitted to trading on the AIM
Market of the London Stock Exchange in June 2006. ARCH makes and
holds investments in the retail, consumer goods and consumer
services sectors, principally in China. Target investments include
regional hypermarkets and supermarkets, dominant consumer brands,
specialty retail chains, retail property assets and retail and
consumer service providers.
For more information about ARC Capital Holdings Limited, please
visit: www.arch-fund.com.
Introduction
Further to the Company's announcement dated 19 October 2011, the
Board has consulted with the Company's major Shareholders to
formulate proposals: (i) to improve the Company's standards of
corporate governance and transparency, and (ii) to reduce the
discount (the "Discount") at which the Company's Shares trade to
NAV per share (together, the "Proposals").
The Board proposes to improve the Company's corporate governance
and transparency to align the Company with peer group AIM-quoted
investment companies by, among other things, introducing an annual
general meeting to provide a regular forum for voting on discount
control policy and Board composition.
The Board and the Investment Manager are committed to narrowing
the Discount and, to that end, the Company has purchased 46,911,761
of the Company's Shares in the market and distributed US$64,675,541
to Shareholders since the beginning of 2011. The Board, having
consulted with the Investment Manager, believes the current market
conditions are not appropriate for significant disposals of
portfolio assets but proposes, subject to Shareholder approval, to
return available free cash to Shareholders in a transparent and
prescriptive way, as outlined in the Circular.
The Circular provides further details of the Board's recommended
Proposals. The Board believes the Proposals will improve corporate
governance and transparency and should narrow the Discount. The
adoption of certain elements of the Proposals will require the
amendment of the Company's Articles.
The Board has recently received communications from certain
Shareholders requesting the Board consider a material restructuring
of the Company with a view to splitting the Company's assets and
liabilities into a continuing pool and a distribution pool (a
"Restructuring") with Shareholders electing to receive a class of
shares that would be linked to the returns generated by one of the
pools.
In response to this request, the Board is proposing an advisory
resolution at the EGM that the Company formulate a proposal to
undertake a Restructuring broadly in line with the description
above, despite the Board's and the Investment Manager's strong and
unanimous recommendation this be rejected.
The Board does not believe a restructuring is currently in the
best interests of Shareholders as a whole. The Board and the
Investment Manager remain committed to the Company's primary
strategy of providing Shareholders with capital appreciation from a
diversified portfolio of attractive retail and consumer companies
in China. With markets having corrected significantly due to recent
global macro-economic events, the Board and the Investment Manager
believe this is not an optimal time to sell portfolio assets.
Furthermore, subject to the revised Distribution Policy described
below, lower valuations resulting from these events and tightened
liquidity in China offer the Company potentially attractive
investment opportunities,
The Board intends to seek Shareholder approval for the
recommended Proposals at an EGM to be held on 14 December 2011. A
notice convening the EGM, with full details of the time, location
and resolutions to be proposed (the "Resolutions") can be found at
the end of the Circular.
RESOLUTION 1: CORPORATE GOVERNANCE
A. ANNUAL GENERAL MEETINGS
Pursuant to Resolution 1, the Company is proposing to amend the
Articles to require the Company to hold an annual general meeting
each year commencing in 2013. It is expected that annual general
meetings will be held in April of each year to coincide with the
release of the Company's audited financial statements. The annual
general meeting will address any required business, including the
consideration and approval of a Distribution Policy (as noted
above), and the consideration and re-election of Directors who have
reached the end of their term (as described further below at
paragraph C). In addition, as required, the annual general meeting
will consider any Continuation Resolution (as defined and described
below at paragraph D).
B. shareholder requisition threshold
Pursuant to the current Articles, a Shareholder or Shareholders
holding not less than 25 per cent. in par value of the voting
capital of the Company (the "Requisition Percentage"), may serve a
written notice on the Company to requisition an extraordinary
general meeting. Pursuant to Resolution 1, the Company is proposing
to reduce the Requisition Percentage to 15 per cent.
C. board composition
As part of the Board's commitment to improve corporate
governance, Resolution 1 will include a proposal to amend the
Articles to limit a Director's appointment to three years before
standing for re-election.
Current best practice for London Stock Exchange quoted
investment companies, consistent with the AIC Code of Corporate
Governance, is for the Board to include no more than one
representative of the Investment Manager. As two of the Board's
members (Messrs. Liu and Gradel) are representatives of the
Investment Manager, it is proposed that Mr. Allan Liu shall resign
from the Board conditionally upon the appointment of a new
non-executive Director who is not a representative of the
Investment Manager. In addition, having served two years as
Chairman, Mr. Guy Heald will be succeeded by Mr. Steven Feniger as
Chairman in April 2012, and Ms. Helen Wong shall serve as Vice
Chair.
D. continuation vote
The Company is further proposing to amend the Articles to
reaffirm and enshrine the continuation vote proposal that was
included in the Company's AIM admission document dated 20 June
2006. Pursuant to Resolution 1, this new provision in the Articles
will require the Board to propose a resolution at the Company's
first annual general meeting (which is expected to be held in April
2013) that the Company continue as presently constituted for an
additional five years (a "Continuation Resolution"). If such
Continuation Resolution is passed, a similar Continuation
Resolution will be proposed at each fifth annual general meeting
thereafter. If at any time a Continuation Resolution is not passed,
the Directors will be obliged to formulate proposals for
Shareholders to reorganise or reconstruct the Company.
RESOLUTION 2: REVISED Discount Control POLICY
Pursuant to Resolution 2, the Company is proposing a revised
distribution policy (the "Distribution Policy"), the terms of which
are provided below (capitalised terms not otherwise defined shall
have the meanings given to them in this announcement under
"Definitions" below).
Revised Distribution Policy
On any Discount Assessment Date:
(i) if the Market Price Discount is greater than 25 per cent.,
the Company shall distribute 100 per cent. of Free Cash;
(ii) if the Market Price Discount is equal to or greater than 15
per cent., but less than or equal to 25 per cent., the Company
shall distribute 50 per cent. of Free Cash and the remaining 50 per
cent. of Free Cash shall be available for re-investment; and
(iii) if the Market Price Discount is less than 15 per cent.,
100 per cent. of Free Cash shall be available for
re-investment.
The Market Price Discount and Free Cash amounts shall be
determined by the Board as at 9:00 a.m. Hong Kong time on the
relevant Discount Assessment Date and will be included in the
Company's quarterly newsletters.
All distributions of Free Cash shall be subject to the Company's
satisfaction of the statutory solvency test under section 34(2) of
the Cayman Islands Companies Law (2010 Revision) (as amended) (the
"Cayman Islands Companies Law"), and all other Applicable
Requirements, from time-to-time.
All distributions of Free Cash shall be made by pro-rata tender
offer, share buy-back or such other method of distribution as the
Board, in its absolute discretion, may consider appropriate.
Definitions
For the purpose of interpreting the Distribution Policy, the
following terms shall have the following meanings:
"Applicable Requirements " all applicable laws and regulations
and, if applicable, the prevailing
rules (including the AIM Rules
for Companies), regulations, requirements,
determinations, practice and guidelines
of the London Stock Exchange,
any other governmental or market
authority to which the Company
or any of its subsidiaries is
subject, in each case for the
time being in force;
"Business Day " any day on which banks are open
for normal business in Hong Kong
and London;
"Discount Assessment Date " the last Business Day of each
calendar month;
"Free Cash " the freely distributable US dollar
cash reserves of the Company (whether
held in the form of cash or near-cash
assets, and whether denominated
in US dollars or another freely
convertible currency) but excluding
such reserves and hold backs as
the Directors may in their absolute
discretion determine are necessary
to meet the Company's: (i) general
working capital requirements;
(ii) existing contractual payment
or funding obligations (including
follow-on funding obligations
in relation to existing investments);
and (iii) potential contingent
liabilities (including guarantees
and indemnities provided by the
Company in relation to existing
investments) for which provision
has been made in the Company's
financial accounts. In addition,
all Renminbi denominated assets
of the Company shall not be considered
capable of distribution and shall
be excluded from the definition
of "Free Cash" until such amounts
are converted into US dollars
or another freely convertible
currency;
"London Stock Exchange " London Stock Exchange plc;
"LSE Trading Day " any day on which the London Stock
Exchange is open for trading business;
and
"Market Price Discount " the volume weighted average closing
price of a Share for the preceding
60 LSE Trading Days (as reported
by Bloomberg) ending immediately
prior to such Discount Assessment
Date, divided by the NAV per Share
as reported in the Company's last
preceding quarterly net asset
value announcement published prior
to such Discount Assessment Date.
Annual consideration and approval of Distribution Policy
The Directors shall present a Distribution Policy, which may be
the existing Distribution Policy, to Shareholders for approval by
way of ordinary resolution at each annual general meeting
commencing in 2013. In the event the presented Distribution Policy
is not approved at any annual general meeting, the Directors shall
immediately suspend all distributions and re-investments until such
time as a Distribution Policy has been approved by Shareholders.
The Directors shall then have 90 days to consult with Shareholders
and present a revised Distribution Policy for consideration and
approval at an extraordinary general meeting of the Company.
Material changes to Distribution Policy
Any material change to a Distribution Policy shall be made only
with the approval of Shareholders by ordinary resolution.
RESOLUTION 3: RESTRUCTURING
The Board has recently received communications from certain
Shareholders requesting the Board to consider a Restructuring of
the Company with a view to splitting the Company's assets and
liabilities into a continuing pool and a distribution pool. In
response to this request, the Company is proposing an advisory
resolution as Resolution 3 that the Board formulate a proposal to
undertake a Restructuring.
In the event Resolution 3 is passed by the required majority,
the Board shall, in consultation with Shareholders and its
professional advisers, formulate and present a restructuring
proposal to Shareholders. Any restructuring proposal shall be
subject to all legal and regulatory requirements applicable to the
Company.
The Board and the Investment Manager remain committed to the
Company's primary strategy of providing Shareholders with capital
appreciation from a diversified portfolio of attractive retail and
consumer companies in China. The Board and the Investment Manager
continue to believe a larger Company offers better liquidity to
Shareholders and is better placed to capture significant
opportunities presented by the long term trend of consumption
growth in China, including economic growth accompanied by rising
disposable incomes, urbanisation and deregulation.
The Board and the Investment Manager do not believe a
restructuring is in the best interests of Shareholders as a whole
and therefore recommend Shareholders vote AGAINST Resolution 3.
extraordinary general meeting
Shareholder resolutions to:
Resolution 1 - (a) implement an annual general meeting
commencing in 2013, (b) reduce the Shareholder requisition
threshold, (c) require periodic re-election of Directors, and (d)
reconfirm and enshrine the Company's policy on Continuation
Resolutions;
Resolution 2 - approve the revised Distribution Policy; and
Resolution 3 - instruct the Board to formulate and present to
Shareholders a proposal to restructure the Company to create
continuing and distributing share classes,
will be presented at the EGM to be held at 2:00 p.m. (Macau
time) on Wednesday, 14 December 2011 at the Four Seasons Hotel,
Macau.
Resolutions 1 and 3 will be proposed as special resolutions
(which must be passed by a positive vote of at least two-thirds of
the votes cast at the EGM) as required by Cayman Islands Companies
Law and/or the Articles.
Resolution 2 will be proposed as an ordinary resolution (which
must be passed by a positive vote of a majority of the votes cast
at the EGM) as required by Cayman Islands Companies Law and the
Articles.
Whether or not you expect to attend the EGM, Shareholders are
urged to complete and return the accompanying Form of Proxy in
accordance with the instructions printed thereon as soon as
possible by mail or by facsimile, but in any event so as to
reach:
Sanne Trust Company Limited
13 Castle Street
St Helier
Jersey, JE4 5UT
Channel Islands
Attn: Noel Walsh
or
by fax on
+44 1534 769 770
Attn: Noel Walsh
By no later than 2:00 p.m. (London Time) on Monday, 12 December
2011
The completion and return of a Form of Proxy will not prevent a
Shareholder from attending the EGM and voting in person if he/she
wishes to do so. A holder of Shares (or the beneficial title
thereto) must first have his or her name entered on the register of
members (or where Shares are held in Euroclear and/or Clearstream
by the relevant nominee on behalf of such holder, be beneficially
entitled to such shares by) not later than 8:00 a.m. (London time)
on Thursday, 10 November 2011. Changes to entries in that register
after that time shall be disregarded in determining the rights of
any holder to attend and vote at such meeting (or to provide voting
instructions to the relevant Euroclear and/or Clearstream
nominee).
The quorum for the EGM is two (2) Shareholders present in person
or by proxy and entitled to vote at the meeting. In the event a
quorum is not achieved, the EGM will be adjourned until the same
time on Wednesday, 21 December 2011, and the adjourned EGM will be
held at the same place as the originally scheduled meeting. The
quorum for such adjourned EGM is one (1) Shareholder present in
person or by proxy.
If you have queries regarding the EGM, please contact the
Investment Manager at +852 3719 6300. Please note the Investment
Manager can only give procedural advice in relation to the meeting
and is not authorised to provide investment advice.
Recommendations
The Directors, whose beneficial or direct and indirect
controlled holdings collectively total 6,207,039 Shares, will be
voting FOR Resolutions 1 and 2, and AGAINST Resolution 3 at the
EGM.
The Directors consider the Corporate Governance and Discount
Control proposals covered by Resolutions 1 and 2 to be in the best
interests of the Company and recommend that Shareholders vote FOR
Resolutions 1 and 2.
The Directors do not consider a Restructuring as proposed by
Resolution 3 to be in the best interests of Shareholders as a whole
and recommend that Shareholders vote AGAINST Resolution 3.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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