TIDMQIL
RNS Number : 3986V
Qannas Investments Limited
03 December 2019
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Qannas Investments Limited
("Qannas", or the "Company")
Notice of EGM
Qannas Investments Limited, the closed-ended investment company
listed on the AIM market (AIM:QIL), announces that the notice of
the Extraordinary General Meeting ("EGM") has today been posted to
all shareholders and an electronic copy is available on the
Company's website.
The EGM will be held at the offices of Estera Fund
Administrators (Jersey) Limited, 13-14 Esplanade, St Helier,
Jersey, Channel Islands, JE1 1EE on 18 December 2019 at 9.00
am.
For further information please contact:
Qannas Investments Limited Tel: 01534 844 806
Nadia Trehiou
ADCM Ltd. (Investment Manager) Tel: +971 2 639 0099
Mustafa Kheriba
finnCap Ltd Tel: 020 7220 0500
Henrik Persson/James Thompson (Corporate Finance)
1. INTRODUCTION
On 3 September 2019, Qannas Investments Limited ("Qannas" or the
"Company") announced that it had conditionally agreed to acquire a
substantial portfolio of investment assets and associated
liabilities (the "Portfolio") from a consortium of third party
vendors (the "Transaction").
On 29 November 2019, the Company announced that it proposed to
cancel the admission of the Shares to trading on AIM (the
"Cancellation") and that it would not seek re-admission to AIM
following completion of the Transaction.
The board of directors of the Company (the "Board") is
proposing:
-- a resolution to approve the cancellation of the admission of
the Shares to trading on AIM; and
-- to adopt the New Articles,
(together, the "Proposals").
The Company is now writing to Shareholders to explain the
Proposals and to seek the Shareholder approvals required in order
to effect the Proposals. If the Resolutions relating to the
Proposals are passed by the requisite majority at the EGM, the
Company expects that the Cancellation will become effective on 31
December 2019.
Principal events relating to the Cancellation are set out in
Appendix A of this document for Shareholder reference.
2. Background to, and reasons for, the cancellation
The announcement of the Transaction on 3 September 2019 set out
that the Transaction, if it were to complete, would comprise a
reverse takeover pursuant to Rule 14 of the AIM Rules for Companies
(the "AIM Rules") due to the size of the Transaction relative to
the Company and, accordingly, the Company's Shares were suspended
from trading on AIM pending publication of an admission
document.
Qannas, the Investment Manager and advisers have worked
diligently to advance the necessary workstreams to complete the
Transaction. This had included inter alia detailed due diligence of
and independent valuations of the Portfolio, transaction
structuring, finalising documentation with regard to the
Transaction with the vendors, advanced negotiations with the banks
and financing counterparties associated with the Portfolio and
arranging certain appointments to strengthen the board of
Qannas.
The directors of the Company (the "Board") remain persuaded by
the commercial and strategic merits of the Transaction, and that it
represents a compelling opportunity to significantly enhance and
broaden the existing investment portfolio of Qannas with the aim of
achieving greater scale and enhanced diversification. The
independent directors of the Company, being Chris Ward and Richard
Prosser (the "Independent Directors"), having been so advised by
the Investment Manager, are concerned that the benefits of the
Transaction will diminish as the process of completing the
Transaction extends and consider that a protracted execution phase
will increase the risk of the Transaction lapsing. Following
discussions with the vendors of the Portfolio, it has recently
become apparent that there is a material risk that the Transaction
will lapse before an AIM admission document can be finalised.
It is in this context that the Board have resolved to seek the
Cancellation as soon as possible. The Board considers that the
Transaction can be more expeditiously completed with greater
certainty without the parallel complexities of the documentation
and regulatory requirements of seeking a re-admission to trading on
AIM. The Company and the Investment Manager would, as a result of
completing the Transaction sooner, have the opportunity to
restructure the Portfolio, enabling release of the value potential
inherent in the Portfolio, for the benefit of Qannas and its
Shareholders. Following completion of the Transaction, and
implementation of certain restructuring measures that the
Investment Manager believes will derive value for the Company from
the Portfolio, the Company intends to seek a new admission to AIM
or to another regulated, liquid, market or multi-lateral trading
facility. Investors should keep in mind that any such admission
would be subject to a range of risks beyond the control of the
Company, including market conditions at the time of any such
admission, funding requirements and availability of funding,
investor appetite and the satisfaction of applicable legal and
regulatory requirements in connection with the same. Accordingly,
there can be no guarantee that the Company will be admitted to any
regulated, liquid, market or multi-lateral trading facility in the
future.
Notice of the EGM to be held at 13-14 Esplanade, St Helier,
Jersey, Channel Islands at 9:00 a.m. on 18 December 2019, for the
purpose of seeking Shareholder approvals required for the
Proposals, is set in the shareholder circular posted to
Shareholders today ("Shareholder Circular"). The Cancellation will
be conditional upon consent of not less than 75 per cent. of votes
cast by Shareholders at the EGM.
Abu Dhabi Financial Group ("ADFG"), the Company's majority
shareholder, and 100 per cent. owner of the Investment Manager, has
an interest in 75.87 per cent. of the Company's issued share
capital and has indicated its intention to vote in favour of the
Cancellation.
Subject to shareholder approval, it is expected that the
Cancellation will take effect on 31 December 2019. If Shareholders
do not approve the proposed Cancellation, this is likely to
jeopardise the Company's ability to complete the Transaction.
3. Update on the Transaction
The Independent Directors continue to believe that the
Transaction represents an opportunity to enhance and broaden the
existing investment portfolio of Qannas with the aim of achieving
greater scale and enhanced diversification. The Independent
Directors expect that such greater scale and diversification will,
in the medium term, boost liquidity and the investor appeal of
Qannas.
The Transaction presents Qannas with the opportunity to acquire
the Portfolio with a net asset value (based on the terms of the
Transaction) of approximately AED 415 million (approximately $113
million) as at 30 Nov 2019. The Transaction and subsequent balance
of assets across the Company is consistent with the Company's
investment strategy that it adopted in September 2018 and increases
its investment exposure to listed equities in the GCC region.
The Portfolio includes shareholdings in a number of publicly
traded GCC-focussed companies, in sectors such as real estate,
maritime shipping services and insurance, as well as two plots of
land that have been zoned for commercial or residential development
and units of an open ended fund that the Company is currently
invested in. The Transaction attributes a value to the assets in
the Portfolio of approximately AED 1.5 billion (approximately $412
million), which represented a discount compared to the market value
of the Portfolio as at 30 September 2019 of approximately AED 2.1
billion (approximately $579 million).
Qannas will also assume accompanying liabilities with a value as
at the Latest Practicable Date of approximately AED 1.1 billion
(approximately $300 million). The liabilities are structured such
that the investment assets in the Portfolio are either held by or
pledged with the relevant lenders under the facilities as
collateral or security for the corresponding loan or held through
brokers as security for margin trading facilities. Following
completion of the Transaction, the Company and its Investment
Manager intend to restructure certain of the borrowings.
The Company will issue approximately 180 million new ordinary
shares of no par value ("New Qannas Shares") to the consortium of
third party vendors (the "Contributing Parties") in consideration
for the Portfolio, which was determined inter alia on Qannas' net
asset value as at 31 July 2019.
4. Process for the cancellation
The Cancellation is conditional, pursuant to Rule 41 of the AIM
Rules, upon the approval of not less than 75 per cent. of the votes
cast by Shareholders (whether present in person or by proxy) at the
EGM.
Notice of the EGM to be held at 13-14 Esplanade, St Helier,
Jersey, Channel Islands at 9:00 a.m. on 18 December 2019, for the
purpose of seeking Shareholder approvals required for the
Proposals, is set out at the end of the Shareholder Circular.
If the Resolutions relating to the Proposals are passed by the
requisite majority at the EGM, the Company currently expects that
Cancellation will become effective on 31 December 2019.
In accordance with Rule 41 of the AIM Rules, the Company has
notified the London Stock Exchange of the date of the proposed
Cancellation.
The Cancellation will not take effect until at least five clear
Business Days have passed following the passing of the Resolution
for the Cancellation. If the Resolution for the Cancellation is
passed at the EGM, it is the Company's intention that the
Cancellation will take effect on 31 December 2019.
5. Principal effects of the cancellation
The principal effects that the Cancellation will have on
Shareholders include the following:
-- there will be no formal market mechanism enabling the Shareholders to trade Shares;
-- whilst the Shares will remain freely transferrable, the
liquidity of the Shares will be more constrained following the
Cancellation than at present and the value of the Shares may be
adversely affected as a consequence;
-- in the absence of a formal market, it may be more difficult
for Shareholders to determine the market value of their investment
in the Company at any given time;
-- the regulatory and financial reporting regime applicable to
companies whose shares are admitted to trading on AIM will no
longer apply. However, the Company intends to continue to provide
updates to shareholders by maintaining its website covering
substantially the same matters as are currently addressed on the
Company's website, or such other method as may be agreed by or
communicated to shareholders. The Company will consider on a case
by case basis whether to make any announcement via RNS or a similar
service. Any change to that approach will be communicated to
shareholders;
-- Shareholders will no longer be afforded the protections given
by the AIM Rules, such as the requirement to be notified of certain
events, such as substantial transactions, financing transactions,
related party transactions and fundamental changes in the Company's
business; and
-- finnCap will cease to be the Company's nominated adviser and broker.
The Cancellation may have taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax
position should consult their own independent professional tax
adviser.
6. Transactions in shares
The Company's shares are currently suspended from trading on AIM
and will remain suspended prior to the proposed Cancellation.
In the event that Shareholders approve the Cancellation,
Shareholders will not be able to buy or sell Shares on AIM prior to
the Cancellation becoming effective on or around 31 December
2019.
The Board is aware that the proposed Cancellation, should it be
approved by the Shareholders at the EGM, would make it more
difficult to buy and sell Shares in the Company following the
Cancellation. The Board intends to put in place an internal process
that will allow Shareholders or persons wishing to acquire or sell
Shares to provide an indication to the Administrator that they are
prepared to buy or sell at an agreed price. The Company will have
no obligation to arrange transactions between parties that are
willing to buy and sell Shares.
7. CERTAIN MATERIAL DIFFERENCES BETWEEN CAYMAN islands AND ENGLISH CORPORATE LAW
Set out below is a description of certain relevant company law
differences between companies incorporated in the Cayman Islands
and companies incorporated in England, which may continue to affect
the holders of Ordinary Shares following the proposed
Cancellation:
-- Pre-emptive rights: Shareholders do not have statutory
pre-emption rights under the Cayman Islands Companies Law over
further issues of shares of the Company.
-- Takeovers: The Company is not, and following the Cancellation
will not be, subject to the City Code. The Cayman Islands Companies
Law does not contain provisions similar to those in the City Code
which oblige a person or persons acquiring at least 30 per cent. of
shares in a company to which the City Code applies to make an offer
to acquire the remainder of the shares in such company.
-- Disclosure of interests in shares: Under the Cayman Islands
Companies Law, Shareholders are not obliged to disclose their
interests in the Company in the same way as shareholders of a
company governed by the Companies Act 2006 are required to do.
-- Issuance of preference shares: Subject to the New Articles,
the Board could create a class of shares with terms intended to
delay or prevent a change of control of the Company or to make
removal of management more difficult. Additionally, the Board may
create shares with liquidation rights, dividend rights or rights to
receive consideration that greatly exceed the amount given to
holders of Shares.
The list set out above is intended to be illustrative only and
does not purport to be exhaustive or to constitute legal advice.
Shareholders seeking a detailed explanation of the Articles or the
New Articles or any provisions of Cayman Islands Companies Law, or
the difference between it and English law or the law of any other
jurisdiction, should consult their own independent legal
adviser.
8. Current Trading
The Directors are pleased to report a marginal improvement in
Qannas' NAV since 30 June 2019. The existing portfolio described
above are assets already in liquidation or, particularly with
regard to HRC and Project Palace, where Qannas believes that a
liquidity or exit event is likely to occur in the coming financial
year to 31 December 2020.
Since 30 June 2019, a further distribution has been received
from IFG such that Qannas has received approximately $16 million of
an expected $19 million of expected proceeds. Qannas repaid $5
million of its borrowings in September 2019 leaving an outstanding
amount of $5 million.
9. Cancellation and Completion of the Transaction
As set out in the announcement of the Transaction on 3 September
2019, Eagle T2 Limited ("Eagle"), a wholly owned subsidiary of
ADFG, which is the controlling shareholder of the Company's
investment manager, ADCM Ltd., has advised the Contributing Parties
in relation to the Transaction and provided advisory and financial
support to facilitate the agreement and execution of the
Transaction. Eagle is entitled to a fee payable by the
representatives on behalf of the Contributing Parties (the "Eagle
Fee"). The Company is not a party to the agreement between Eagle
and the representatives on behalf of the Contributing Parties with
regard to the Eagle Fee.
The Eagle Fee is comprised of AED 31 million in cash or in kind
payments and the transfer to Eagle of 35 million New Qannas Shares
on completion of the Transaction which would otherwise be issued to
the Contributing Parties (the "Eagle Shares") and, therefore, has
no incrementally dilutive impact on Shareholders. The Eagle Fee
will continue to be payable to ADFG if completion of the
Transaction occurs after the Cancellation.
ADCM has made the Independent Directors aware that Eagle is
advising the Contributing Parties and the Independent Directors
have provided their consent to any perceived conflict of interest
(as required pursuant to the investment management agreement
between the Company and Investment Manager dated 1 March 2012 and
as amended and restated on 28 March 2014 and from time to time (the
"Investment Management Agreement")).
The Independent Directors' have held separate discussions with
regard to the Transaction in which Mustafa Kheriba, a director of
Qannas and a director of ADCM and Deputy Chief Executive Officer of
ADFG, has not participated.
The Cancellation will be conditional upon consent of not less
than 75 per cent. of votes cast by Shareholders at the EGM. ADFG is
currently the holder of Ordinary Shares representing 75.87 per
cent. of the issued share capital of the Company and has indicated
its intention to vote in favour of the Cancellation.
10. SHAREHOLDER AUTHORITies
10.1 Cancellation
The Cancellation is conditional on the Shareholders passing a
special resolution. The Company intends to proceed with the
Transaction and the issue of the New Qannas Shares following the
Cancellation.
If Resolution 1 is passed by the Shareholders at the EGM, the
Company will have authority to effect the Cancellation.
10.2 Adoption of New Articles
The Transaction is conditional on the Shareholders passing a
special resolution amending the Company's existing Articles and
replacing them with the New Articles.
The only material difference between the Company's existing
Articles and the New Articles is that under the New Articles there
is an increase in the threshold required for termination of the
Investment Management Agreement without cause by the Company from a
majority of Shareholders to 75 per cent. of Shareholders entitled
to vote at a general meeting of the Company.
Pursuant to the terms of the Transaction, a corresponding
amendment will be made to increase the threshold for termination of
the Investment Management Agreement in the Investment Management
Agreement.
A copy of the current articles of association and the proposed
new articles of association that reflect the amendments will be
available for inspection during normal business hours (Saturdays,
Sundays and public holidays excepted) on the Articles of
Association section of the Investor Relations page of the Company's
website
https://qannasinvestments.com/memorandum-articles-of-assosiation/
and at the offices of the Administrator at 13-14 Esplanade, St
Helier, Jersey, Channel Islands up until the close of the meeting.
Copies will also be available at 13-14 Esplanade, St Helier,
Jersey, Channel Islands on the morning of the meeting from 9.00
a.m. until its conclusion.
If Resolution 2 is passed by the Shareholders at the EGM the
Company will adopt the New Articles conditional on and from the
Cancellation.
11. EXTRAORDINARY GENERAL MEETING
Set out at the end of the Shareholder Circular is a notice
convening an EGM of the Company to be held at 13-14 Esplanade, St
Helier, Jersey, Channel Islands at 9:00 a.m. on 18 December 2019 at
which the Resolutions will be proposed.
The quorum required for the EGM will be two Shareholders present
in person or by proxy and entitled to vote. The majority required
for the passing of Resolutions 1 and 2 is no less than three
quarters of the total number of votes cast for and against
Resolutions 1 and 2, respectively.
12. ACTION TO BE TAKEN
Please note that hard copy form of proxies will not be posted to
shareholders with for this EGM. Whether or not you intend to be
present at the EGM, you are asked to vote either online at
www.signalshares.com or through Crest to be received by the
Company's Registrars, Link Asset Services, PXS, The Registry, 34
Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible but in
any event not later than 9.00 am on the 16 December 2019 for
holders of ordinary shares or 9.00am on the 13 December for holders
of Depository Interests. Completion of the Form of Proxy or Form of
Direction will not preclude you from attending and voting at the
EGM should you so wish.
CREST members who wish to appoint a proxy or proxies through the
CREST electronic proxy appointment service may do so for the Annual
General Meeting to be held at 13-14 Esplanade, St Helier, Jersey,
Channel Islands at 9:00 a.m. on Wednesday 18 December 2019. and any
adjournment(s) thereof by using the procedures described in the
CREST Manual. CREST personal members or other CREST sponsored
members, and those CREST members who have appointed a voting
service provider should refer to their CREST sponsors or voting
service provider(s), who will be able to take the appropriate
action on their behalf.
13. RECOMMENDATION
The Board, considers the approval of the Resolutions to be put
forward at the EGM to be in the best interests of the Company and
its Shareholders as a whole. Accordingly, the Board, unanimously
recommends that Shareholders vote in favour of the Resolutions.
14. Definitions
Capitalised terms used but not otherwise defined in this
announcement have the meanings given to them in the Shareholder
Circular.
Appendix A
EXPECTED TIMETABLE OF PRINCIPAL EVENTS(1),(2)
Announcement of the 3 September 2019
Transaction.................................................................................
Announcement of proposed Cancellation and 29 November 2019
notice provided to the London Stock
Exchange......................................................................................
...................................
Publication and posting of the Shareholder 3 December 2019
Circular, Forms of Proxy and Forms of
Direction.....................................................................................
....................................
Latest time and date for receipt of completed 9:00 a.m. on 16
Forms of Proxy in respect of Ordinary Shareholders December 2019
for the Extraordinary General Meeting
Latest time and date for receipt of completed 9:00 a.m. on 13
Forms of Direction in respect of holders of December 2019
Depository Interests for the Extraordinary
General Meeting.......................
Time and date of the Extraordinary General 9:00 a.m. on 18
Meeting................................................. December 2019
Expected time and date of Cancellation(3) 7.00 a.m. on or
..................................................................... around 31 December
2019
__________________
Notes:
(1) All times referred to in this announcement are to times in
London.
(2) All the above dates and times are indicative and any
material changes to the timetable will be announced through a
Regulatory Information Service.
(3) The Cancellation requires the approval of not less than 75
per cent. of the votes cast by Shareholders at the Extraordinary
General Meeting.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
NOGCKBDQABDDCBK
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December 03, 2019 02:01 ET (07:01 GMT)
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