TIDMRMII TIDMTTM
RNS Number : 1315V
RM Infrastructure Income PLC
30 November 2023
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA,
CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN, ANY MEMBER STATE OF
THE EUROPEAN ECONOMIC AREA OR ANY JURISDICTION IN WHICH IT WOULD BE
UNLAWFUL TO DO SO
30 November 2023
RM Infrastructure Income plc
(the "Company")
Proposed change of investment objective and policy to facilitate
a managed wind-down of the Company
and
Notice of General Meeting
As announced by the Company on 6 September 2023, the board of
directors (the "Board") has decided to put forward details to
Shareholders for the implementation of a managed wind-down of the
Company (the "Managed Wind-down").
A circular (the "Circular") to convene a General Meeting ("GM")
containing details of the proposals in respect of the Managed
Wind-down is expected to be published today and a copy of will be
submitted to the National Storage Mechanism and will shortly be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism . The
Circular will also be available on the Company's website
https://rm-funds.co.uk/rm-infrastructure-income/ .
Background to the Managed Wind-down
Although the Company has demonstrated strong NAV total return
performance over the longer term (4.97 per cent. and 31.72 per
cent. over one year and five years, respectively, to 31 October
2023) and generated a high net interest income in excess of the
annual dividend target of 6.5 pence per share [1] , the discount to
NAV per Share at which the Shares trade has been both wide and
persistent despite measures taken by the Board to seek to address
this through the use of buybacks and the provision of a periodic
realisation opportunity. This, coupled with the small scale of the
Company and the low levels of liquidity in the Company's shares has
restricted the Company's ability to grow.
As set out in the Company's announcement on 23 May 2023, in
April 2023 the Board received a non-binding indicative proposal
which involved a combination of all the Company's assets with
another investment company managed by Gravis Capital Partners (as
disclosed on 11 August 2023 ). The combination was proposed to be
structured under section 110 of the Insolvency Act 1986 with no
option, partial or otherwise, for you as a shareholder to elect to
receive cash.
The proposal was considered alongside a wide array of potential
options under a broader review of the Company's future strategy: a
potential continuation of the Company's existing investment policy
and strategy, a full or partial exit opportunity, a combination of
the Company's assets with another suitable investment company or
fund and a managed wind-down. The Board consulted with Shareholders
on these options and concluded that a partial exit opportunity
would only exacerbate the challenges the Company faces, as it would
further reduce the size of the Company.
Following the receipt of the first proposal, the Board received
two additional business combination proposals, as described in the
Company's announcement on 10 July 2023.
Having considered the various proposals in detail, the Board
concluded that no better option existed which was likely to receive
the required Shareholder consent, and on 6 September 2023, the
Board announced its decision to put forward a proposal for a
managed wind-down of the Company.
The Investment Manager provided a run-off profile of the
portfolio to Shareholders during the Shareholder consultation in
the third quarter of 2023. This showed an expected maturity profile
of the Company's Loans and a forecasted weighted average remaining
life of circa 1.7 years (as of 31 October 2023) with liquidation of
the Company occurring in the second half of 2027. The Investment
Manager has since then discussed with the Board an incentive
structure to accelerate capital repayments to Shareholders via
management initiatives and developed a capital acceleration
incentive proposal, details of which are set out in section 3 of
the Circular. The Investment Manager believes that the maturity
profile of the run-off portfolio could be reduced with proactive
management and as a result the weighted average remaining life
reduced to less than one year (as of 31 October 2023). Shareholders
would benefit from such acceleration as follows:
-- circa GBP72 million of Loans returned quicker or circa 70 per
cent. of total portfolio Loans;
-- potential shorter maturity to December 2026;
-- a significant amount of capital returned during 2024;
-- a Net Present Value to Shareholders versus the Shareholder
consulta ti on por tf olio repayment profile of circa GBP7.5
million assuming a discount rate of 9 per cent.; and
-- a reduc ti on of forecasted management fees of circa GBP0.77 million.
In order to implement the Proposal, Shareholders are requested
to approve revisions to the investment objective and policy of the
Company to restate the policy to facilitate the Company's assets
being realised in an orderly manner in order to maximise
shareholder value.
The Board believes that a carefully managed process of divesting
assets and periodically returning capital is in Shareholders' best
interests. In the Board's view, there is insufficient Shareholder
support for an alternative as evidenced during the Shareholder
consultation.
Amendments to Investment Objective and Policy
In order for the Company to follow the Managed Wind-down
process, it would be necessary to amend the Company's Investment
Objective and Policy. Therefore, t he Company proposes to amend its
investment objective and is proposing that the Company's investment
objective be restated as follows: "The Company aims to conduct an
orderly realisation of the assets of the Company, to be effected in
a manner that seeks to achieve a balance between returning cash to
Shareholders promptly and maximising value.". The full text of the
proposed Investment Objective and Policy is in the Circular
published today.
Amendment to the Investment Management Agreement
The Company proposes to amend the Investment Management
Agreement, once the Proposal has been approved, so that the
management fee will continue to be calculated at the rate of 0.875
per cent. of NAV per annum (payable monthly in arrears), but
subject to a minimum fee of GBP33,300 payable monthly in arrears,
subject to renegotiation with the Board, until the earlier of (i)
the Company's liquidation; (ii) the value of the Company's
portfolio (excluding cash and other liquid assets) being less than
or equal to GBP35 million; or (iii) 31 December 2026. Further
details on the proposed amendments to the Investment Management
Agreement are set out in the Circular.
The proposed amendment to the Investment Management Agreement
constitutes a related party transaction to which the modified
requirements for smaller related party transactions in the Listing
Rules apply (LR11.1.10R). Under the smaller related party
transaction rules, there is no requirement for Shareholders to vote
on the amendment. However, as a matter of good corporate
governance, the Company has consulted with its major Shareholders
on the terms of the proposed amendment as to the best interests of
Shareholders. The Company has also received written confirmation
from a sponsor that the terms of the proposed amendment are fair
and reasonable as far as the Shareholders are concerned.
Shareholder returns
The Board will keep Shareholders informed of its intentions
concerning returns of capital, mechanisms for which may include
tender offers, other schemes for the return of capital and/or the
buying back of Shares as the portfolio is realised. Throughout the
managed wind-down, the Board will follow the principle of seeking
to balance the optimum scale and accompanying costs to the Company
of the relevant method of return with the desire to accomplish that
return as quickly as practicable, without eroding the value to be
distributed.
Amounts becoming available for return will come from contractual
repayments of Loans by borrowers to the Company and from the
disposal of portfolio assets, potentially after the repayment and
cancellation of some or all of the Company's bank facilities.
The Board also expects to continue paying dividends at the
current rate of 6.5 pence per share [2] until the commencement of
the managed wind-down. Thereafter, the Company expects not to be
able to keep paying dividends at the current rate. The Company will
instead pay dividends only as required to maintain investment trust
status. As the Company's portfolio reduces in size its fixed costs
will become a greater proportion of its income.
The Company intends to maintain its investment trust status and
listing during this managed realisation process prior to the
Company's eventual liquidation. Maintaining the listing would allow
Shareholders to continue to trade Shares during the managed
wind-down of the Company.
Unless there are other proposals which it considers to be in the
Company's best interests at the relevant time, the Board also
expects to propose that the Company enters into members' voluntary
liquidation at a point when the realisations and returns of capital
have caused the Company to become too small to justify the costs of
retaining a listing for its Shares or otherwise at a point when the
Board considers the Company's remaining portfolio would be likely
to cease, in the near term future, to continue to provide a spread
of investment risk that is reasonable in the prevailing
circumstances. Any such proposed liquidation process would require
separate Shareholder approval.
General Meeting
The Proposal is conditional on the approval by Shareholders of
the Resolution to be proposed at the General Meeting which has been
convened for 10 a.m. on 20 December 2023.
The Resolution will be proposed as an ordinary resolution. An
ordinary resolution requires a majority of members entitled to vote
and present in person or by proxy to vote in favour in order for it
to be passed.
The formal notice convening the General Meeting, to be held at
the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL on
20 December 2023 at 10 a.m., is set out in the Circular.
Consequences of the Proposal not being approved
The Board regards the orderly realisation of the Company's
assets as the best strategic option for Shareholders. However,
should Shareholders reject the proposed amendment to the investment
policy to facilitate a managed wind-down of the Company, the Board
and the Investment Manager will continue to fulfil the existing
investment objective and policy and work to identify alternative
options for the future of the Company.
Recommendation
The Board considers that the Proposal is in the best interests
of the Company and its Shareholders as a whole. In the opinion of
the Board the proposed amendments to the Investment Management
Agreement are fair and reasonable as far as Shareholders are
concerned.
Accordingly, the Board unanimously recommends that Shareholders
vote in favour of the Resolution to be proposed at the General
Meeting.
The Directors intend to vote in favour, or procure the vote in
favour, of the Resolution at the General Meeting in respect of
their own beneficial holdings of Shares which, in aggregate, amount
to 69,982 Shares representing approximately 0.06 per cent. of the
Company's issued share capital (excluding Shares held in
treasury).
Expected timetable of events
The anticipated dates and sequence of events relating to the
implementation of the Proposals are set out below:
Latest time and date for receipt of
Forms
of Proxy or CREST electronic proxy 10 a.m. on 18 December
appointments for the General Meeting 2023
General Meeting 10 a.m. on 20 December
2023
Adoption of amended and restated investment 20 December 2023
objective and policy (if the Resolution
is passed)
Publication of the results of the 20 December 2023
General Meeting
Capitalised terms used but not defined in this announcement will
have the same meaning as set out in the Circular.
For further information, please contact:
RM Funds - Investment Manager
James Robson
Pietro Nicholls
Thomas Le Grix De La Salle 0131 603 7060
Singer Capital Markets - Financial Adviser and
Broker
James Maxwell
Asha Chotai 020 7496 3000
Apex Listed Funds Services (UK) Limited - Administrator
and Company Secretary
Jenny Thompson 020 3327 9720
About RM Infrastructure Income PLC
The Company aims to generate attractive and regular dividends
and positive social impact by lending to assets at the forefront of
providing essential services to society.
Its diversified portfolio of loans sourced or originated by the
Investment Manager with a degree of inflation protection through
index-linked returns where appropriate. Loans in which the Company
invests are predominantly secured against assets such as real
estate or plant and machinery and/or income streams such as account
receivables.
For more information, please contact James Robson at RM
Funds.
About RM Funds
RM Funds is an alternative asset manager. Founded in 2010, with
offices in Edinburgh, and London, the firm manages capital on
behalf of institutional investors, multi-asset allocators, wealth
managers and retail investors. RM Funds focuses on real asset
investing across liquid alternatives and private markets.
RM Funds is a delivery partner to the British Business Bank in
connection with the Coronavirus Business Interruption Loan Scheme.
RM Funds is a trading name of RM Capital Markets Limited.
RM Funds is a signatory to the Principles of Responsible
Investment.
Disclaimer
Neither the content of the Company's website, nor the content on
any website accessible from hyperlinks on its website for any other
website, is incorporated into, or forms part of, this announcement
nor, unless previously published by means of a recognised
information service, should any such content be relied upon in
reaching a decision as to whether or not to acquire, continue to
hold, or dispose of, securities in the Company.
[1] The dividend target is a target only and not a profit
forecast. There can be no assurance that this target will be met,
or that the Company will make any distributions at all and it
should not be taken as an indication of the Company's expected
future results. The Company's actual returns will depend upon a
number of factors, including but not limited to the Company's net
income and level of ongoing charges.
[2] The dividend target is a target only and not a profit
forecast. There can be no assurance that this target will be met,
or that the Company will make any distributions at all and it
should not be taken as an indication of the Company's expected
future results. The Company's actual returns will depend upon a
number of factors, including but not limited to the Company's net
income and level of ongoing charges.
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END
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Grafico Azioni Rm Infrastructure Income (LSE:RMII)
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Grafico Azioni Rm Infrastructure Income (LSE:RMII)
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