Proposed Delisting, AIM Admission, Placing and GM

LONDON--()--

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

8 October 2014

GRESHAM HOUSE PLC (“GRESHAM” OR “THE COMPANY”)

Proposed Delisting from the Official List and Admission to AIM (and loss of Authorised Investment Trust status)

Proposed Placing of 3,973,510 new Ordinary Shares at 286.9 pence per share

Proposed adoption of New Investing Policy

Proposed issue of Warrants

Proposed Capital Reduction

Proposed adoption of New Articles

and

Notice of General Meeting

The Board of Gresham is pleased to announce the final terms of a new strategic direction for the Company including the appointment of the Proposed Directors (and the retirement of Antony Ebel, Brian Hallett and John Lorimer as directors of the Company), the Placing, the issue of Warrants and the adoption of a New Investing Policy. In order to facilitate the Placing and having regard to the likely future size of the Company, the prospective investor base and the proposed New Investing Policy, the Company is also proposing to cancel its existing listing of Ordinary Shares on the premium segment of the Official List, to remove such Ordinary Shares from trading on the Main Market, and to apply for admission of the Ordinary Shares and the Shareholder Warrants to trading on AIM.

The Company is today publishing an admission document (“Admission Document”) in relation to the proposed Admission to AIM and expects to be posting a circular to Shareholders (“Circular”) later today to provide Shareholders with details of, and the background to, the Proposals and to explain why the Directors believe that the Proposals are in the best interests of the Shareholders as a whole.

The Board believes that, if implemented, the Proposals provide an attractive alternative to the current plan of liquidation and distribution which is likely to involve a significant amount of the proceeds of realisation of the Company’s assets being distributed to Shareholders in multiple stages, over a period of at least three to four years.

The Proposals are conditional, inter alia, on the approval of the Resolutions at the General Meeting. The Circular will contain a Notice of General Meeting at which the Resolutions will be proposed. The General Meeting is expected to be convened for 10.00 a.m. on 31 October 2014 and to take place at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL.

If any of the Resolutions are not passed at the General Meeting or if the Placing Agreement relating to the Admission of the Ordinary Shares and Shareholder Warrants to trading on AIM is terminated prior to Admission, the Proposals will not be implemented and the Company will, in the short term, continue as an Authorised Investment Trust with the objective of realising the Company’s assets with a view to returning capital to Shareholders and its Ordinary Shares will continue to be listed on the premium segment of the Official List and traded on the Main Market. In such circumstances, the directors of the Company would need to consider the most appropriate means of returning capital to Shareholders. The plan currently being contemplated by the Directors would involve a further circular being sent to Shareholders seeking their permission to restructure the Group (involving the hiving down of the Company’s key assets into unquoted special purpose vehicles) and to appoint liquidators to the Company. Under this plan, a distribution could be made to Shareholders comprising (i) a small amount of cash, (ii) a distribution in specie of certain quoted shares held by the Company and (iii) shares in the special purpose vehicles. Shareholders would then hold the shares in the special purpose vehicles until the relevant assets held by each special purpose vehicle were realised, after which these special purpose vehicles would themselves be wound up in order to return capital to Shareholders. This process would be expected to take at least three to four years to complete (in particular because of the payment policies being adopted by residential developers who wish to spread the payment of consideration monies over an extended time frame as they phase residential developments to reduce risk (residential developers are among the targeted purchasers of the Group’s property assets)).

Copies of Admission Document will be available for inspection at the Company’s website, www.greshamhouse.com. The New Articles (together with a comparison showing the proposed changes) will be available for inspection from today’s date until the close of the General Meeting at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL and at www.greshamhouse.com.

For further enquiries, please contact:

 
Gresham House plc
 
Brian Hallett 01489 570 861
 
Westhouse Securities Ltd 020 7601 6100
Robert Finlay
Richard Johnson

Disclaimer

Westhouse, which is authorised in the UK under the FSMA and which is regulated by the Financial Conduct Authority, is acting as financial adviser, nominated adviser and broker in connection with the Proposals. Westhouse is acting exclusively for Gresham House plc in connection with the Proposals and for no-one else and will not be responsible to anyone other than Gresham House plc for providing the protections afforded to the clients of Westhouse nor for providing any advice in relation to the Proposals or the contents of this announcement or any transaction, arrangement or matter referred to herein.

This announcement is for information purposes only and is not intended to and does not constitute or form part of an offer to sell or subscribe for or any invitation to purchase or subscribe for any securities or the solicitation of an offer to buy any securities, pursuant to the Proposals or otherwise. The Proposals will be implemented solely by means of the Circular and Placing Agreement which will contain the full terms and conditions of the Proposals, including details of how to vote in respect of the Resolutions.

Overseas Shareholders

The distribution of this announcement in or into jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, such restrictions. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. Subject to certain exceptions, this announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, the Republic of South Africa, Japan or any jurisdiction where to do so might constitute a violation of local securities laws or regulations.

Summary of the Proposals

New board of directors and appointment of the Investment Committee and the Advisory Group

Under the Proposals, the Proposed Directors comprising Anthony Townsend, Peter Moon, Anthony (Tony) Dalwood, Michael Phillips and Duncan Abbot will be appointed on Admission and the Directors (other than Richard Chadwick) will resign as directors of the Company. Richard Chadwick will remain on the board of the Company until at least December 2015 to assist the Proposed Directors with the process of familiarisation with the existing assets. Following Admission, the Company will also establish the Investment Committee and the Advisory Group.

New investment objective, strategy and policy

Under the Proposals, the New Investing Policy would be adopted in the place of the current investing policy of liquidation and distribution as approved at the 2011 annual general meeting of the Company.

The Proposed Directors intend to develop the Company as a quoted platform principally for investment in, and the investment management of, relatively differentiated, specialist or illiquid assets in order to generate superior risk adjusted returns for Shareholders of the Company over the longer term. Returns are expected to be principally through capital growth.

The Proposed Directors intend to use part of the proceeds of the Placing (and issue of the Supporter Warrants) to make investments in line with the New Investing Policy and to develop an asset management business, either organically or through one or more acquisitions. The development of such an asset management business may lead to the Company ceasing to be an investing company (as defined in the AIM Rules) and instead becoming a trading company, the implications of which are explained in more detail below.

The proposed New Investing Policy will state, inter alia, that the Company may:

• invest in (and take controlling or non-controlling stakes in) publicly and/or privately held companies (primarily in equity (and related instruments) and also in (convertible or non-convertible) debt instruments);

• set up (and potentially co-invest in) funds; and

• enter into derivative contracts (including but not limited to currency hedging, or other portfolio risk management techniques).

The Proposed Directors will review the Group’s existing assets as at the date of Admission and develop an appropriate strategy for each asset. By removing the necessity to liquidate the Company’s assets in a short time frame, the Proposed Directors believe that it should be possible to extract a better valuation for those assets than their current carrying value. As any of the existing assets are realised, the Proposed Directors will redeploy the proceeds of realisation of such assets in a timely manner and in accordance with the New Investing Policy and/or the development of an asset management business.

The proposed New Investing Policy and the Proposed Directors’ investment objectives and strategy are set out below.

Delisting from the Official List and Admission to AIM (and loss of Authorised Investment Trust status)

Under the Proposals, the Company will cancel the listing of the Ordinary Shares on the premium segment of the Official List, remove such Ordinary Shares from trading on the Main Market and apply for admission of the Ordinary Shares (including the Placing Shares) and Shareholder Warrants to trading on AIM.

The Listing Rules require that if a company wishes to cancel its listing on the premium segment of the Official List it must seek the approval of not less than 75 per cent. of its shareholders in a general meeting voting in person or by proxy. Accordingly, a special resolution is being proposed at the General Meeting to authorise the directors of the Company to cancel the listing of the Ordinary Shares on the Official List, to remove such Ordinary Shares from trading on the Main Market and to apply for admission of the Ordinary Shares (including the Placing Shares) and Shareholder Warrants to trading on AIM.

An Admission Document, prepared in accordance with the AIM Rules, setting out full details of the admission of the Ordinary Shares and the Shareholder Warrants to trading on AIM is being published today.

Upon Delisting, the Company will no longer meet the requirements of section 1158 of the Corporation Tax Act 2010 for an investment trust and, as a result, any capital gains realised by the Company (less any losses available) on or after 1 January 2014 will be subject to corporation tax. The loss of investment trust status will be triggered automatically by virtue of the Company self-assessing that it no longer qualifies and accordingly bringing any capital gains and losses into tax.

Placing

In order that the Company has sufficient funds to execute the New Investing Policy and to develop an asset management business, either organically or through one or more acquisitions, as described in this announcement, the Admission Document and the Circular, the Board is proposing to raise £11.4 million (before expenses) by way of a placing of 3,973,510 new Ordinary Shares (assuming the Placing is fully subscribed). The Placing Price (of 286.9 pence per new Ordinary Share) has been calculated by reference to an 11.25 per cent. discount to the Adjusted NAV Per Ordinary Share (being a 13.5 per cent. discount to the NAV Per Ordinary Share) and represents:

• a 9.3 per cent. premium to the Closing Price of 262.5 pence per Ordinary Share on 24 June 2014 (being the latest practicable date prior to the announcement that the Board was considering the Proposals); and

• a 4.9 per cent. premium to the Closing Price of 273.5 pence per Ordinary Share on 7 October 2014 (being the latest practicable date prior to this announcement of full details of the Proposals).

The Proposed Directors are, in aggregate, subscribing for 453,119 Ordinary Shares under the Placing (representing 11.4 per cent. of the number of Ordinary Shares contained in the Placing and 4.8 per cent. of the Enlarged Share Capital (assuming that the Placing is fully subscribed)) and for 556,750 Supporter Warrants (further details of which are set out below). In addition, members of the Investment Committee and the Advisory Group are, in aggregate, subscribing for 400,836 Ordinary Shares under the Placing (representing 10.1 per cent. of the number of Ordinary Shares contained in the Placing and 4.3 per cent. of the Enlarged Share Capital (assuming that the Placing is fully subscribed)) and for up to 293,250 Supporter Warrants (further details of which are set out below).

The Placing is conditional, inter alia, on the passing by the Shareholders of the Resolutions at the General Meeting, including an ordinary resolution to give the Directors authority to allot the Placing Shares and a special resolution which will give the Directors the required authority to disapply statutory pre-emption rights in respect of the allotment of the Placing Shares for cash and an ordinary resolution (required under the Listing Rules) to approve the issue of the Placing Shares at a discount to the NAV Per Ordinary Share without offering the Placing Shares pro-rata to existing holders of Ordinary Shares. Subject to all relevant conditions being satisfied (or, if applicable, waived), it is expected that the Ordinary Shares (including the Placing Shares) will be admitted to trading on AIM on or about 1 December 2014. For the avoidance of doubt, please note that the issue of the Placing Shares is conditional, inter alia, on Admission and therefore no application will be made for the Placing Shares to be admitted to trading on the premium segment of the Main Market. Should Admission not become effective, the existing Ordinary Shares will continue to be traded on the premium segment of the Main Market and the Placing Shares will not be allotted.

The Proposed Directors believe that the proceeds of the Placing, together with the Company’s existing assets will provide the Company with the required critical mass to implement the plans under the New Investing Policy and to develop an asset management business. Shareholders who do not participate in the Placing will, as a result of the Placing (assuming the Placing is fully subscribed), be diluted immediately by approximately 42.5 per cent. in respect of their voting interests in the Company immediately prior to Admission and assuming the Supporter Warrants are subscribed for and exercised in full, the Shareholders will suffer a total voting dilution of approximately 52.7 per cent. The issued Ordinary Shares as at the date of this announcement will represent (assuming the Placing is fully subscribed) approximately 57.5 per cent. of the Enlarged Share Capital.

Issue of Shareholder Warrants

Under the Proposals, Shareholder Warrants will be issued to existing Shareholders to enable them to participate in any potential uplift that is realised from the Company’s existing assets in the future and through the implementation of the New Investing Policy and the development of an asset management business.

The removal of the need to liquidate the Company’s existing assets on a short to medium timescale will enable the Proposed Directors to realise the potential value of such assets over a longer time frame (if appropriate) which they believe should enable them to extract enhanced value for Shareholders.

Shareholder Warrantholders may be able to benefit from such uplift through any consequential uplift in the value of the Shareholder Warrants or any Ordinary Shares resulting from the exercise of the Shareholder Warrants. Accordingly, the Shareholder Warrants have been designed to allow Shareholder Warrantholders the opportunity to share any upside from the Adjusted NAV Per Ordinary Share (i.e. from the NAV as at 30 June 2014, as adjusted).

Under the Proposals, each existing Shareholder on the Company’s register of members on the Record Date will be issued with one Shareholder Warrant for every five Ordinary Shares held by that Shareholder at that time. Each such Shareholder Warrant will entitle the Shareholder to subscribe for one Ordinary Share, exercisable from 1 January 2015 to 31 December 2019 (inclusive) at an exercise price of 323.27 pence, being the Adjusted NAV Per Ordinary Share. The Company will apply to the London Stock Exchange for the Shareholder Warrants to be admitted to trading on AIM, with dealings expected to be effective on 1 December 2014.

Only whole Shareholder Warrants will be issued – fractional entitlements will not be issued and therefore the number of Shareholder Warrants issued to any existing Shareholder will be rounded down to the nearest Shareholder Warrant. For example, an existing Shareholder holding 999 Ordinary Shares will be issued with 199 Shareholder Warrants (999/5 = 199.8; rounded down to 199).

The Shareholder Warrants will be issued to the holders thereof in the same form (either certificated or uncertificated) as they hold their Ordinary Shares on the Record Date and will be dispatched or credited at the same time as the Placing Shares.

The Resolutions being considered by Shareholders at the General Meeting therefore include an allotment authority and a disapplication of pre-emption rights in respect of the issue of these Shareholder Warrants.

Issue of Supporter Warrants

Anthony Townsend, Anthony (Tony) Dalwood, Peter Moon, Michael Phillips and Duncan Abbot have demonstrated their confidence in the future success of the Company by agreeing to subscribe for, conditional on Admission, 556,750 Supporter Warrants at a price of 7.5 pence per Supporter Warrant. In addition, it is expected that a small group of other individuals who have assisted with the development and implementation of the Proposals and who will either become members of the Investment Committee or members of the Advisory Group will subscribe for up to 293,250 Supporter Warrants, also at a price of 7.5 pence per Supporter Warrant, prior to and conditional on Admission. The Supporter Warrants will have the same entitlements as the Shareholder Warrants to be issued to Shareholders save that they will not be freely transferable (such Supporter Warrants will only be transferable to certain family members, trusts or companies connected with the relevant Warrantholder) and accordingly will not be admitted to trading on AIM nor will they become exercisable until one year from the Admission Date.

Each such Supporter Warrant will entitle the holder to subscribe for one Ordinary Share at an exercise price of 323.27 pence, being the Adjusted NAV Per Ordinary Share, exercisable at any time between the first anniversary of the Admission Date and 31 December 2019.

The Resolutions being considered by Shareholders at the General Meeting therefore include an allotment authority and a disapplication of pre-emption rights in respect of the issue of the Supporter Warrants.

Immediately following Admission the Proposed Directors will hold the following number of Supporter Warrants:

  Number of
Supporter
Warrants
held immediately
following
Proposed Director Admission
Anthony Townsend 34,000
Anthony (Tony) Dalwood 212,500
Duncan Abbot 93,500
Michael Phillips 187,000
Peter Moon 29,750

It is expected that, immediately following Admission, 293,250 Supporter Warrants will be held by members of the Advisory Group and the Investment Committee.

Capital Reduction

From time to time after Admission, the board of the Company will consider the desirability of implementing a share buyback. In order to generate the distributable reserves required to facilitate any share buyback or dividend payment that the board of the Company may in the future approve, it is proposed that the amount standing to the credit of the share premium account following Admission (including any share premium arising from the issue of the Placing Shares) be cancelled. The Resolutions being considered by Shareholders at the General Meeting therefore include a special resolution to approve the cancellation of the share premium account. The Resolutions also include a standard share buyback authority.

Adoption of New Articles

Under the Proposals, the Company will adopt new articles of association and in particular delete all references in the memorandum and articles of association requiring that the Company maintain its status as an Authorised Investment Trust.

Standard authorities

In addition to those Resolutions described above, the Resolutions include standard shareholder resolutions ordinarily sought at an annual general meeting by a company with shares admitted to trading on AIM.

Background to, reasons for and benefits of the Proposals

On 19 April 2011, the Company announced that, having reviewed its investing policy in light of the downturn in the commercial property market, coupled with the restricted availability of bank funding, the Board believed it was in the best interests of Shareholders to conduct an orderly realisation of the Company’s assets over a period of approximately two years with a view to returning capital to Shareholders thereafter. This was subsequently approved by Shareholders at the Company’s annual general meeting on 19 May 2011.

Whilst the Company has disposed of a number of its investments, it continues to hold two property assets that were independently valued by Jones Lang LaSalle, Chartered Surveyors, at a total of £16.55 million as at 30 June 2014. The Company also has a small investment portfolio consisting of quoted and unquoted securities which were valued at £3.44 million as at 30 June 2014. The quoted investments are valued at the market bid price and the unquoted investments are valued at the lower of cost or valuation taking into account the International Private Equity and Venture Capital Valuation guidelines.

Despite concerted efforts since May 2011 to complete an orderly realisation of the Company’s assets, management have not been able to dispose of all of them as quickly as originally anticipated at prices that they felt represented best value to Shareholders and the Company continues to hold two property assets and a small investment portfolio of quoted and unquoted securities. Investments in property make up 76.09 per cent. of the portfolio of total assets held by the Group as at 30 June 2014.

The Directors have been considering the most appropriate means of returning capital to Shareholders if the Proposals are not approved. The plan currently being contemplated by the Directors would involve a further circular being sent to Shareholders seeking their permission to restructure the Group (involving the hiving down of the Company’s key assets into unquoted special purpose vehicles) and to appoint liquidators to the Company. Under this plan, a distribution could be made to Shareholders comprising (i) a small amount of cash, (ii) a distribution in specie of certain quoted shares held by the Company and (iii) shares in the special purpose vehicles. Shareholders would then hold the shares in the special purpose vehicles until the relevant assets held by each special purpose vehicle were realised, after which these special purpose vehicles would themselves be wound up in order to return capital to Shareholders. This process is likely to involve a significant amount of the proceeds of realisation being distributed to Shareholders in multiple stages, over a period of at least three to four years. This is driven by the payment policy currently being adopted by residential developers who wish to spread the payment of consideration monies over an extended time frame as they phase residential developments to reduce risk (residential developers are among the targeted purchasers of the Company’s property assets).

The Directors believe that the Proposals are in the best interests of Shareholders and represent a better alternative to the current plan of liquidation and distribution for the following reasons:

• the successful business and investment track records of the Proposed Directors combined with the proposed New Investing Policy and the development of an asset management business set out in this announcement, the Admission Document and the Circular is expected to generate value for Shareholders over the long term;

• the Proposals include a fundraising (through the Placing and issue of Supporter Warrants) and the proceeds of the fundraising will increase the scale of the Company and enable the implementation of the New Investing Policy and the development of an asset management business;

• the Directors believe that the Proposals (in particular the adoption of the New Investing Policy to be implemented using the proceeds of the Placing and issue of Supporter Warrants) are likely to provide greater liquidity in the Ordinary Shares;

• existing Shareholders will receive Shareholder Warrants under the Proposals that will allow Shareholder Warrantholders to benefit from any uplift in the value of the Shareholder Warrants or any Ordinary Shares resulting from the exercise of the Shareholder Warrants; and

• there is no guarantee that the Company will be able to realise its assets in the next three to four years at prices that represent best value for Shareholders and the New Investing Policy provides time for the Company to realise its assets without the pressure of requiring such realisation under its current investing policy which may reduce the Company’s negotiating position with counterparties and without incurring the costs of formulating an alternative plan involving the appointment of liquidators.

The Proposed Directors, the Investment Committee and the Advisory Group

Proposed Directors

Details of the Proposed Directors and Richard Chadwick are set out below. Richard Chadwick will remain on the board of the Company until at least 31 December 2015 to assist the Proposed Directors with the process of familiarisation with the existing assets.

Anthony Townsend, aged 66, proposed Non-Executive Chairman

Anthony has spent over 40 years working in the City of London and was chairman of the Association of Investment Companies from 2001 to 2003. He is chairman of Baronsmead VCT 3 plc, British & American Investment Trust plc, F&C Global Smaller Companies plc, Finsbury Growth & Income Trust plc and Miton Worldwide Growth Investment Trust plc.

He was a director of Brit Insurance Holdings plc from 1999 to 2008 and represented it on the Council of Lloyd’s of London from 2006 to 2008. He was managing director of Finsbury Asset Management Ltd from 1988 to 1998. He was a non-executive director of Worldwide Healthcare Trust plc from 1995 to 2013.

Peter Moon, aged 64, proposed Non-Executive Director

Peter started working in the City of London in 1972 and worked as an investment analyst and fund manager in a number of roles in unit and investment trusts, insurance and finally pension schemes. The last 25 years of his career were spent as an investment manager of the British Airways Pensions scheme and chief investment officer of the Universities Superannuation Scheme.

He is currently a director of Scottish American Investment Company and First Property Group and chairman of Arden Partners plc, a UK stockbroker and Bell Potter Securities UK Limited, the UK branch of an Australian stockbroker.

Anthony (Tony) Dalwood, aged 43, proposed Chief Executive

Tony is an experienced investor and adviser to public and private equity businesses. Tony established SVG Investment Managers (a subsidiary of SVG Capital plc), acted as CEO and chairman of this entity, and launched Strategic Equity Capital plc. His previous appointments include CEO of SVG Advisers (formerly Schroder Ventures (London) Limited), membership of the UK Investment Committee of UBS Phillips & Drew Fund Management (PDFM), and the board of Schroders Private Equity Funds.

He is currently on the investment committee and board of the London Pensions Fund Authority, chairman of Downing Quoted Equity Investment Committee and a director of Branton Capital Limited.

Michael Phillips, aged 52, proposed Strategic Development Director

Michael is an experienced business manager with a history of founding and building businesses in fund management. Michael has served as a director of Strategic Equity Capital plc for the last seven years, founded iimia Investment Group plc (now Miton Group plc), Christows Limited (now part of Investec’s retail operations), and more recently REDS Investments Limited.

Michael is a Fellow of the Chartered Institute for Securities and Investments and is a non-executive director of Miton Worldwide Growth Investment Trust.

Duncan Abbot, aged 58, proposed Finance Director

Duncan will oversee the finance function and look after compliance and operational matters. Duncan is an experienced manager and investor in smaller companies. He has sat on many boards of both quoted and unquoted companies. He has worked with Michael Phillips for twenty years. He was chairman of Christows Group Limited and co-founded iimia Investments with Michael. He is a Chartered Accountant and Fellow of the Chartered Institute for Securities and Investments.

Richard Chadwick, aged 63, Non-Executive Director

Richard is a chartered accountant, who was appointed to the board of the Company on 17 June 2008 as a non-executive director. Richard spent 27 years within the J Sainsbury plc group of companies where he had considerable experience of property development and financing, having been director of corporate finance and of business development, and a non-executive director of the group’s property development company. He is also a non-executive director of SpaceandPeople plc, a company in which the Company holds an interest.

Investment Committee

The initial proposed Investment Committee will be chaired by Anthony (Tony) Dalwood with the other members being Michael Phillips (Strategic Development Director) and three experienced investment management professionals – Bruce Carnegie-Brown, Rupert Robinson and Matthew Peacock. It may be that membership of the Investment Committee will evolve as the business grows.

The purpose of the Investment Committee will be to promote and maintain a prudent and effective allocation of capital across the Company’s entire investment portfolio. The Investment Committee will meet on a regular basis and as required. Following completion of the Proposals, investment decisions will require the following approvals:

• investments below 2 per cent. of NAV will require the approval of an executive member of the board of directors;

• investments between 2 and 5 per cent. of NAV will require a majority Investment Committee approval; and

• investments above 5 per cent. of NAV will require unanimous Investment Committee approval.

Bruce Carnegie-Brown

Bruce is Chairman of Aon UK Ltd and of Moneysupermarket.com Group plc and a non-executive director of Santander UK plc and Close Brothers Group plc. He was previously a managing partner of 3i QPE plc, a managing director of JP Morgan and CEO of Marsh Ltd.

Rupert Robinson

Rupert was previously CEO of Schroders (UK) Private Bank and head of private clients at Rothschild Asset Management Limited.

Matthew Peacock

Matthew is Executive Chairman of Regenersis Plc and the founding partner of Hanover Investors. He has sat on numerous public company boards, including Elementis Plc, Renold Plc, 4imprint Plc, STV Group Plc and Fairpoint Plc and has previously been Chairman of Singer Capital Markets and a founding director of TDX Group. Prior to Hanover, Matthew held senior positions with Barclays De Zoete Wedd and Credit Suisse First Boston. Hanover Investors have pursued an illiquid investment strategy in small and mid-cap United Kingdom public equities and private equity transactions for over 12 years with a philosophy similar to that proposed at the Company. Hanover has worked alongside Tony Dalwood on a number of its investments over this period.

Advisory Group

It is intended that an Advisory Group be established to act as a general sounding board for the executive team and to provide a source of knowledge, experience, potential investment deal flow and contacts upon which they can draw.

In addition, members of the Advisory Group may co-invest alongside the Company in either direct investments or specialist funds.

It is anticipated that the Advisory Group will initially consist of a small number of private equity and financial services individuals who are experienced in the investment sectors in which the Company will be focused including in the business of asset management.

The opportunity

Investment objective

The Proposed Directors intend to develop the Company as a quoted platform principally for investment in, and the investment management of, relatively differentiated, specialist or illiquid assets in order to generate superior risk adjusted returns for Shareholders of the Company over the longer term. Returns are expected to be principally through capital growth.

The Proposed Directors intend to operate the Company as an investing company (as defined in the AIM Rules) in the short to medium term. The Proposed Directors intend to use part of the proceeds of the Placing (and issue of the Supporter Warrants) to make investments in line with the New Investing Policy and to develop an asset management business, either organically or through one or more acquisitions. The development of such an asset management business may lead to the Company ceasing to be an investing company and instead becoming a trading company, the implications of which are explained in more detail below.

New Investing Policy

The Proposed New Investing Policy is set out below.

Investment strategy

Asset management business

In addition to making direct and indirect investments in accordance with the New Investing Policy (see below), the Proposed Directors intend to use part of the proceeds to develop or acquire an asset management business. The Proposed Directors believe that the investment management industry currently offers interesting acquisition opportunities as there are a number of subscale companies and investment funds in the sector. The Proposed Directors believe that this has arisen for a number of reasons:

• the current regulatory environment, whilst aiming to provide protection and greater transparency for investors, has increased compliance overheads for industry participants. It has also meant, following the Financial Conduct Authority’s retail distribution review (RDR), that historic methods of retail distribution may no longer be applicable. Higher compliance costs mean that more assets under management are needed for these costs to be properly amortised. There are potential economies of scale in respect of compliance costs available to smaller companies as a result of becoming part of a larger business; and

• in some cases investment management companies have been set up by successful asset managers who are less experienced in the sales and distribution aspects of their businesses.

The Proposed Directors believe that this landscape will create interesting asset management business acquisition opportunities for the Company and the Proposed Directors believe that the Company, as enlarged by the Placing, will have the appropriate scale with which to pursue these opportunities.

Therefore the Proposed Directors intend to develop an asset management business, either organically or through one or more acquisitions which may involve the issue of Ordinary Shares to fund acquisitions. The Proposed Directors therefore intend for the Company (or a member of the Group) to apply to the Financial Conduct Authority for appropriate authorisations shortly after Admission. Such an asset management business would distribute its products and services to third parties (including via family offices, wealth managers, private banks, professional investors and ultra-high net worth individuals).

Direct and indirect investments

In accordance with the New Investing Policy the Company will make investments in funds (including, potentially, funds it intends to establish) and directly in underlying companies in order to enhance Shareholder returns. These investments will be made according to a robust private equity-style “value” investment philosophy. As such, they are typically expected to be based on cash generative opportunities, or those that can be expected to generate cash within a reasonable investment horizon.

It is further expected that certain investments will offer possible co-investment opportunities with, inter alia, strategic partners of the Group. Strategic partners are expected to include family offices, private banks, wealth managers, small institutions and ultra-high net worth individuals. These strategic partners would be given privileged access to co-investment opportunities and a privileged corporate advisory relationship with the Group.

The Proposed Directors expect the Investment Committee typically to pursue investments, which include a number of the following characteristics:

• cornerstone investments in specialist funds on preferred terms (which may include lower management fees), an example of which would be in a strategic public equity fund, an area where Anthony (Tony) Dalwood has had prior experience;

• assets which have an illiquidity discount;

• a minimum target internal rate of return (IRR) of 15 per cent.;

• cash generative assets;

• relatively attractive valuations;

• attractive management track records;

• potential for superior risk adjusted returns;

• potential for liquidity or exit within an identified time frame;

• potential for the Company to have a competitive advantage; and/or

• potential for the Company to add incremental value to an investment.

A typical direct investment (other than in connection with the development of an asset management business or an investment in a fund) will be expected to have a holding period of between three to five years, but may be shorter or longer if appropriate to develop realisable intrinsic value and in order to maximise returns.

A majority of the direct investments made by the Company will be in the securities of small and medium sized companies. Initial potential areas of focus may include small public (less than £250 million market capitalisation) and private companies and the development of a global unconstrained multi-asset portfolio in accordance with the New Investing Policy. As set out above, investments in such targets may be by means of a specialist fund and/or direct investments and/or other means.

The Investment Committee will monitor the portfolio composition of underlying investments, so that sector, geographic and factor exposures are managed reasonably in order to achieve the investment objective.

Fees & carried interests

The Proposed Directors intend to develop an asset management business.

The key source of income for the asset management business will be fees earned on assets under management (AUM) which will vary in accordance with the type of assets being managed. Illiquid assets tend to command higher management fees than more liquid assets.

As is often seen in respect of specialist asset classes, the Proposed Directors would expect that the Group’s asset managers will, as part of their fee arrangements with potential investors, negotiate carried interests in the funds to be managed by them.

The Proposed Directors would expect, as part of the employment incentive arrangements offered to certain of the Group’s asset management employees, to share those carried interests with the relevant asset managers. However, it is anticipated that the Company will also benefit from carried interests developed in the asset management business in addition to ad valorem fees earned on AUM. It is not possible to determine what such carried interests might be or what their potential value will be, as this will ultimately depend on the performance of the AUM.

The market and investment sourcing

The Proposed Directors are experienced businessmen who have been involved in the investment management industry for many years. They will be supported by members of the Investment Committee, an Advisory Group of experienced and well-connected individuals and prospective employees with relevant business experience as well as the Proposed Directors’ broader network of contacts. The Proposed Directors believe that this network of individuals (collectively) will have access to a deal stream from which the Company will be able to source investment opportunities in the future.

The Proposed Directors believe that there is an appetite from investors for specialist investments and private equity style opportunities but on a selective basis and not in a blind fund where their money is tied up with uncertainty as to the investments in which it will be invested and where investment fees are charged from the outset. Accordingly, a material part of the Company’s future business plan will involve the origination, structuring and distribution of specialist investments to the type of investor that is unhappy with existing models of participation in such investments. Thus the fees arising from the origination, structuring, syndication and distribution of such investments as well as investment management fees will be a source of income that the Company will target under the new strategy.

The Proposed Directors believe that, by harnessing their collective contact network and pool of available investment capital, the Company will have opportunities to make successful investments in accordance with the New Investing Policy and to build the specialist investment management platform outlined in this announcement, the Admission Document and the Circular.

Existing assets and future plans

The Proposed Directors will review the Group’s existing assets as at the date of Admission and develop an appropriate strategy for each asset. By removing the necessity to liquidate the Group’s assets in a short time frame, the Proposed Directors believe that it should be possible to extract a better valuation for those assets than their current carrying value. As any of the existing assets are realised, the Proposed Directors will redeploy the proceeds of realisation of such assets in a timely manner and in accordance with the New Investing Policy and/or the development of an asset management business. A working and regulatory capital buffer will be maintained.

The Proposed Directors may, in the medium term, look to maximise the tax efficiency of the Group (including exploring tax efficient domiciles and implementing a tax efficient capital returns policy).

Potential transition from an investing company to a trading company

It is the intention of the Proposed Directors to develop the Company in the short-term and medium-term in accordance with the New Investing Policy. In addition, and as set out above, the Proposed Directors intend to develop or acquire an asset management business. A consequence of the successful acquisition or organic development of an asset management business may be that the Company would move from being an investing company (as defined in the AIM Rules) and, instead, become a trading company (i.e. it would become a company which operates an asset management business with some direct and indirect investments). The date by which this transition may be achieved is not certain at present.

The key expected consequences of such a development would be as follows:

• NAV per share would cease to be an appropriate performance indicator. This is because the Proposed Directors intend to develop an asset management business where earnings and assets under management are more appropriate measures of performance;

• the Company may acquire businesses where the acquisition involves recognising purchased goodwill and other intangible assets, which may have to be amortised. Such amortisation would have a negative impact on the Company’s balance sheet, despite such acquisitions being made in anticipation of contributing in time to the Company’s earnings;

• the Company’s Standard Industrial Classification might change. This would in turn alter the way it is categorised for various statistical and analytical purposes and may limit the ability of some investors to hold the Company’s shares where the investors’ investment mandates are specific as to the type of share they are able to hold; and

• the New Investing Policy would cease to be applicable to the Company.

The directors of the Company will review and report to Shareholders on the implementation of the New Investing Policy and their progress on developing or acquiring an asset management business in accordance with their announcement obligations under the AIM Rules. If the directors of the Company believe, following such review, that the New Investing Policy ceases to apply, they will seek appropriate advice as to whether the relevant change in the Company’s business constitutes a reverse takeover under Rule 14 of the AIM Rules and, if it does, will produce an admission document in connection with this change in order to seek shareholder approval, following which, if approved, the Company will no longer be classified as an investing company for the purposes of the AIM Rules and the AIM Note for Investing Companies would cease to apply to the Company.

Potential acquisition or development of an asset management business

The Company may make an acquisition or acquisitions, or enter into a transaction or transactions, which may be classified as a reverse takeover for the purposes of the AIM Rules on the basis that such an acquisition or transaction may exceed 100 per cent. in any of the relevant “class tests” (as set out in the AIM Rules). In such an event, the Company would be required to publish an AIM admission document and seek shareholder approval for the reverse takeover. Furthermore, where an acquisition does not exceed 100 per cent. in any of the relevant class tests but is nonetheless considered to be a reverse takeover pursuant to the AIM Rules, the Company will also be required to publish an AIM admission document and seek shareholder approval for the acquisition.

Typical investors

The Proposed Directors believe that typical investors in the Company will be institutional investors, private client fund managers and private client brokers, as well as private individuals who have received advice from their professional advisers regarding investment in the Ordinary Shares and/or Shareholder Warrants and/or who have sufficient experience to enable them to evaluate the risks and merits of such investment themselves.

Valuation principles

Through the release of its annual and half yearly financial statements, the Company will continue to publish a net asset value statement as at the end of each six month financial period. The fair value of financial instruments traded in active markets (such as publicly traded securities) will be based on the quoted bid price at the balance sheet date. The fair value of financial instruments that are not traded in an active market (for example unlisted private companies) is determined by using valuation techniques in accordance with the International Private Equity and Venture Capital Valuation Guidelines.

The property assets will be revalued at each reporting date. The Proposed Directors will revalue the property assets at the half-year and the year-end. The Proposed Directors intend to engage an external valuer to carry out such a valuation on an annual basis, but at the half-yearly stage a directors’ valuation will be used unless circumstances indicate that an external valuation is more appropriate.

The directors of the Company may temporarily suspend the determination of the NAV per Ordinary Share if, in the opinion of the directors, the interest of Shareholders would otherwise be materially prejudiced. If the calculation of NAV is suspended, all reasonable steps will be taken to bring this period of suspension to an end, as soon as possible. Details of any suspension in the making of valuations will be announced by the Company through an RIS announcement.

In the event of a breach of the investment restrictions applicable to the Company, Shareholders will be informed of the remedial actions to be taken by the Company through an RIS announcement.

Dividend policy

The Company’s principal objective is to provide Shareholders with superior risk adjusted returns over the longer term, primarily through capital appreciation. The Proposed Directors’ intention therefore is to re-invest funds into the Company rather than paying dividends but at the appropriate time they intend to review this dividend policy.

In addition to considering such a dividend policy in the future, the board of the Company will, from time to time, consider the desirability of implementing a share buyback. The authority will only be exercised if the directors of the Company consider that it is in the best interests of the Shareholders at that time.

Existing asset summary

The principal assets of the Group are its property investments consisting of two properties or sites which were independently valued by Jones Lang LaSalle, Chartered Surveyors, at a total of £16.55 million as at 30 June 2014. These external valuations were carried out on the basis of market value in accordance with the latest edition of the Valuation Standards published by the Royal Institution of Chartered Surveyors.

These property assets were classified in the unaudited interim accounts of the Company as at 30 June 2014, announced on 28 August 2014, as: (i) “non-current assets – property investments” with a valuation of £10.00 million; and (ii) “non-current assets held for sale – property investments” with a valuation of £6.55 million.

These investments represented 76.09 per cent. of the total assets of the Group as at 30 June 2014. The two principal property investments comprised:

  Location   Nature of site
Force 6 Trading Estate Newton-le-Willows   Development site
Southern Gateway Speke, Liverpool Industrial

On 29 April 2014, contracts were exchanged with Persimmon for the sale of 22.8 acres gross (20 acres net developable area) of the 30 acre site at Newton-le-Willows owned by the Group for £7.43 million in cash, plus overage, conditional upon Persimmon obtaining satisfactory detailed planning permission. Outline planning consent for residential use has already been granted. The sale proceeds are payable in four instalments over a period of 42 months from completion, which is expected by the end of January 2015 (hence it was categorised as “non-current assets held for sale – property investments”).

As at 30 June 2014, the Company held a small diversified portfolio of securities, details of which are shown below and which was valued at a total of £3.44 million. These investments represented 15.82 per cent. of the total assets of the Group as at 30 June 2014.

  Value £000s
Listed
RSA Insurance Group plc 7.375% pref share 105
 
AIM
SpaceandPeople plc 1,382
 
ISDX Growth Market
Wheelsure Holdings plc 86
 
Unquoted
Attila (BR) Ltd – loan notes 945
Kemnal Investments Ltd – loan notes 466
Lancashire Tea Ltd (in liquidation) – loan notes 15
Memorial Holdings Ltd 441
Others
 
Total 3,440

As at 30 June 2014, the remainder of the Group’s total assets consisted of current assets (£1.76 million), including cash and cash equivalents (£1.044 million). These current assets represented 8.09 per cent. of the total assets of the Group as at 30 June 2014.

The Group has loans of approximately £3.3 million from the Co-operative Bank repayable on demand and in any event by 31 December 2014. The Board does not anticipate that the approval, or not, of the Proposals will materially affect any potential refinancing negotiations or the terms thereof.

The unaudited NAV Per Ordinary Share (as at 30 June 2014) amounted to 331.7 pence per Ordinary Share.

New Investing Policy

Business characteristics

The Company will seek to use the expertise and experience of its board of directors and members of the Investment Committee to invest according to a robust private equity-style “value” investment philosophy. The Company’s investing policy is to invest in assets that will typically have a number of the following characteristics:

• an illiquidity discount;

• a minimum target internal rate of return (IRR) of 15 per cent;

• cash generative (or expected to generate cash within a reasonable investment horizon);

• relatively differentiated, specialist or illiquid;

• attractive management track records;

• potential for superior risk adjusted returns;

• potential for liquidity or exit within an identified time frame;

• potential for the Company to have a competitive advantage; and/or

• potential for the Company to add incremental value to an investment.

Direct and indirect investments

Investments may be either passive or active and the Company may make its investments directly or indirectly (including through any asset management business, special purpose vehicle or underlying fund) and for cash or share consideration. In particular, the Company may:

• invest in (and take controlling or non-controlling stakes in) publicly and/or privately held companies (primarily in equity (and related instruments) and also in (convertible or non-convertible) debt instruments);

• set up (and potentially co-invest in) funds (including cornerstone investments in specialist funds on preferred terms (which may include lower management fees)); and

• enter into derivative contracts (including but not limited to currency hedging, or other portfolio risk management techniques).

A majority of the direct investments made by the Company will be in the securities of small and medium sized companies. Initial potential target areas may include small public (less than £250 million market capitalisation) and private companies.

Exposure limits

The Company will not invest more than 35 per cent. of the Group’s gross assets, at the time when the investment is made, in securities issued by any single company other than in a single collective investment undertaking or fund structure. Where such an investment is made in a single collective investment undertaking, due regard will be paid to the concentration of risk that such an investment may entail. The investment will only be made after the Investment Committee is convinced that the risk/return relationship is acceptable.

Sector

The board of directors will consider investment in a number of business areas, particularly those sectors in which the board of directors collectively believes that it and/or members of the Investment Committee has the necessary expertise and experience to be able to manage the opportunity. The Proposed Directors and the proposed members of the Investment Committee have a wide network of contacts to assist in the identification, evaluation and funding of suitable investment opportunities.

Geography

Investments may be made in any country globally.

Gearing

The Company has no borrowing limits.

Length of investment

A typical direct investment (other than in connection with the development of an asset management business or an investment in a fund) will be expected to have a holding period of between three to five years, but may be shorter or longer, as appropriate to develop realisable intrinsic value in order to maximise Shareholder value.

Returns on investment

The Proposed Directors’ initial intention is to re-invest profits into the Company rather than paying dividends and Shareholder returns are likely to be through capital appreciation. However, the directors of the Company may pay dividends in accordance with any alternative dividend policy that they may adopt from time to time in order to maximise Shareholder value over the long term.

Any material change of the New Investing Policy by the Company will require prior Shareholder approval in accordance with the AIM Rules.

Details of the Delisting, Admission and the issue of the Placing Shares and Warrants

In order to effect the Delisting, Admission and Placing, the Company will require, inter alia, shareholder approval of the Resolutions at the General Meeting. The Resolutions (as set out in the Notice of General Meeting) will, inter alia, authorise the directors of the Company to:

(i) cancel the listing of Ordinary Shares on the Official List, remove such Ordinary Shares from trading on the Main Market and apply for Admission of the Ordinary Shares and Shareholder Warrants to trading on AIM; and

(ii) allot the Placing Shares and issue the Shareholder Warrants and Supporter Warrants and disapply statutory pre-emption rights in respect of their issue.

The Proposed Directors believe that the proceeds of the Placing, together with the Company’s existing assets will provide the Company with the required critical mass to implement the plans under the New Investing Policy and to develop an asset management business, either organically or through one or more acquisitions. Shareholders who do not participate in the Placing will, as a result of the Placing (assuming the Placing is fully subscribed), be diluted immediately by approximately 42.5 per cent. in respect of their voting interests in the Company immediately prior to Admission and assuming the Supporter Warrants are subscribed for and exercised in full, the Shareholders will suffer a total voting dilution of approximately 52.7 per cent. The issued Ordinary Shares as at the date of this announcement will represent (assuming the Placing is fully subscribed) approximately 57.5 per cent. of the Enlarged Share Capital.

Conditional on the Resolutions being approved at the General Meeting and the Placing Agreement not having been terminated in accordance with its terms, the Company will apply to cancel the listing of Ordinary Shares on the Official List and to trading on the Main Market and give 20 business days’ notice of its intention to seek admission to trading on AIM. Conditional on the Resolutions being approved at the General Meeting and Admission taking place, the Company will issue the Placing Shares, the Shareholder Warrants and Supporter Warrants.

Based on the assumption that the Circular will be posted today, it is anticipated that the last day of dealing in the Ordinary Shares on the Main Market will be 28 November 2014. In this case, cancellation of the listing of Ordinary Shares on the Official List will take effect at 8.00 a.m. on 1 December 2014, being not less than 20 business days from the passing of the Resolutions. Admission is then expected to take place, and dealings in Ordinary Shares (including the Placing Shares) and the Shareholder Warrants are expected to commence on AIM, at 8.00 a.m. on 1 December 2014. The Shareholder Warrants will be issued to the holders thereof in the same form (either certificated or uncertificated) as they hold their Ordinary Shares and will be dispatched or credited at the same time as the Placing Shares.

Although it is their intention, there is no guarantee that the Directors will be successful in achieving Admission of the Ordinary Shares to trading on AIM. The Company must meet the following requirements in order for the Ordinary Shares to be considered eligible for Admission: (i) it must appoint and retain a nominated adviser and broker; (ii) the Ordinary Shares must be freely transferable; (iii) electronic settlement arrangements must be put in place with regard to the Ordinary Shares; (iv) all of the Ordinary Shares must be admitted to AIM; and (v) the Company must produce an Admission Document. In addition, as an investing company (as defined in the AIM Rules) the Company must meet certain additional specific requirements. The Company must: (i) raise a minimum of £3 million in cash via an equity fundraising at or shortly prior to Admission; and (ii) have a stated investing policy. The Company should also (i) be a close-ended entity not requiring a restricted investor base; (ii) not have a complex structure; and (iii) issue primarily ordinary shares. The Directors note the proposed issue of Shareholder Warrants and Supporter Warrants, which matter has been discussed in advance with AIM. The London Stock Exchange may also make Admission subject to one or more special conditions, and a failure to satisfy any such condition may mean that Admission is refused. The Directors and the Proposed Directors believe that the Company either already does or will satisfy the above requirements, and will therefore be considered to be eligible for Admission.

The Company’s nominated adviser must also satisfy itself that the Company is appropriate for Admission. In assessing this, the nominated adviser must satisfy itself as to the appropriateness of: (i) the Directors and Proposed Directors and the efficacy of the board of the Company; (ii) the pre-Admission due diligence process; (iii) the Admission Document; (iv) the Company’s systems and controls; and (v) certain other matters relating to the Company’s status as an investing company (as defined in the AIM Rules). Westhouse has confirmed that, as at the date of this announcement, it is not aware of any reason why it will not be able to give the required confirmation.

Furthermore, before Admission can be effective, all of the conditions in the Placing Agreement must be either satisfied or waived. If any of the Resolutions are not passed at the General Meeting, the requirements for Admission are not met, the conditions in the Placing Agreement are not either satisfied or waived, the Placing Agreement is terminated prior to Admission or if it becomes clear that Admission will not take place on 1 December 2014 (or such later date as may be agreed in writing between the Company and Westhouse but in any event not later than 30 December 2014), the Directors will not apply for the cancellation of the listing of the Ordinary Shares on the Official List.

Information on the Placing and use of proceeds

Information on the Placing

The Company is proposing to raise £11.4 million (assuming the Placing is fully subscribed and before expenses) by way of a placing of 3,973,510 new Ordinary Shares at the Placing Price. The Placing Shares will represent approximately 42.5 per cent. of the Enlarged Share Capital of the Company (assuming the Placing is fully subscribed). The Placing Price represents:

• a 9.3 per cent. premium to the Closing Price of 262.5 pence per Ordinary Share on 24 June 2014 (being the latest practicable date prior to the announcement that the Board was considering the Proposals); and

• a 4.9 per cent. premium to the Closing Price of 273.5 pence per Ordinary Share on 7 October 2014 (being the latest practicable date prior to this announcement of full details of the Proposals).

The Placing Price is set at an 11.25 per cent. discount to the Adjusted NAV Per Ordinary Share, representing a 13.5 per cent. discount to the NAV Per Ordinary Share. In order to produce the Adjusted NAV Per Ordinary Share, the NAV Per Ordinary Share has been adjusted for the movement in the share price of SpaceandPeople plc (being the Company’s most significant quoted shareholding) since 30 June 2014 (taking the average VWAP of 45.06 pence per ordinary share for the five business days preceding 3 October 2014, being the latest practicable date prior to the finalising of the Placing Price). As at 7 October 2014, being the latest practicable date prior to the publication of this announcement, the Group’s interest in ordinary shares in SpaceandPeople plc had a market value at bid price (as of that date) of approximately £886,875.

In connection with the Placing, the Company has today entered into the Placing Agreement pursuant to which Westhouse has conditionally agreed, in accordance with its terms, to use reasonable endeavours to place the Placing Shares with certain institutional and other investors. Westhouse is not underwriting the Placing, the Supporter Warrant Issue or the Shareholder Warrant Issue but has received conditional commitments to subscribe for the entire Placing from institutional and other investors. On the basis of such commitments and holdings of Ordinary Shares as at 7 October 2014, being the latest practicable date prior to the date of this announcement, the Company is aware of the following persons who were (as at 7 October 2014) or will be immediately following Admission (assuming the Placing is fully subscribed and that the Shareholders do not trade in any Ordinary Shares between 7 October 2014 and Admission), interested, directly or indirectly, in three per cent. or more of the issued share capital of the Company:

      Number of  
Ordinary
Number of Percentage of Shares
Ordinary issued share held
Shares capital immediately Percentage of
currently currently following Enlarged
Name held held Admission Share Capital
Revcap Estates 24 Limited 1,170,452 21.8 1,170,452 12.5
The Trustees of the Rowe Trust 644,209 12.0 644,209 6.9
A P Stirling 468,436 8.7 468,436 5.0
Cayenne Asset Management Limited 266,000 5.0 266,000 2.8
Helium Rising Stars Fund 107,143 2.0 629,976 6.7
River & Mercantile Asset Management - 697,110 7.5
Majedie Asset Management - 697,110 7.5
Rathbone Investment Management 142,857 2.7 285,765 3.1

The Placing is conditional, inter alia, on:

• the passing of the Resolutions;

• the conditions in the Placing Agreement having been satisfied or (if applicable) waived and the Placing Agreement not having been terminated in accordance with its terms prior to Admission; and

• Admission becoming effective by no later than 8.00 a.m. on 1 December 2014 (or such later time and/or date, being no later than 8.00 a.m. on 30 December 2014, as the Company and Westhouse may agree).

The Placing Agreement contains customary warranties given by the Company to Westhouse as to matters relating to the Group and its business and a customary indemnity given by the Company to Westhouse in respect of liabilities arising out of or in connection with the Placing. Westhouse may terminate the Placing Agreement in certain specified circumstances prior to Admission including, inter alia, if: the Company fails to comply with any of its obligations under the Placing Agreement which Westhouse (acting in good faith) considers to be material in the context of the Placing and Admission; any of the representations, warranties or undertakings set out in the Placing Agreement cease to be true, accurate and not misleading and which Westhouse (acting in good faith) considers to be material in the context of the PLacing and Admission; in the opinion of Westhouse (acting in good faith) there has been a material and adverse change or any development reasonably likely to involve a material and adverse change after the date of the Placing Agreement which, when considered with other relevant changes or developments (if any), would or would be likely to cause a material and adverse change to the Adjusted NAV Per Ordinary Share, or on the occurrence of certain force majeure events.

The Placing Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid in respect of Ordinary Shares following Admission and will otherwise rank on Admission pari passu in all respects with the existing Ordinary Shares. The Placing Shares are not being made available to the public and are not being offered or sold in or into any jurisdiction where it would be unlawful to do so.

Application will be made to the London Stock Exchange for the Ordinary Shares (including the Placing Shares) and Shareholder Warrants to be admitted to trading on AIM. On the assumption that, inter alia, the Circular is posted today and the Resolutions are passed, it is expected that Admission will become effective on 1 December 2014.

Use of proceeds

The net proceeds of the Placing and issue of the Supporter Warrants receivable by the Company will amount to approximately £10.6 million (assuming the Placing and the Supporter Warrant Issue are fully subscribed).

The proceeds will be used to support the Proposed Directors’ business strategy. This will comprise making investments in line with the New Investing Policy and the development of an asset management business (either organically or through one or more acquisitions).

In order to develop an asset management business, the proceeds may be used either to acquire one or more existing asset management businesses and/or to organically develop such a business (including the provision of regulatory capital).

Therefore, upon completion of the Proposals, the Proposed Directors intend to: (i) commence discussions with possible investment acquisition targets and (ii) apply to the Financial Conduct Authority for appropriate authorisations.

It will remain part of the Company’s strategy to execute direct investments in accordance with the New Investing Policy either alone or through co-investment with other investors and some of the proceeds may be used in this activity.

Once the asset management business is appropriately authorised, part of the proceeds may be used to make cornerstone investments in funds to be set up by it/run by it or funds where the Company has preferential relationships.

The balance of the proceeds will be used for general working capital purposes.

The Group has loans of approximately £3.3 million from the Co-operative Bank repayable on demand and in any event by 31 December 2014. If no appropriate refinancing is sourced prior to the maturing of the current facility and the Group is therefore required to repay such facility, certain of the proceeds of the Placing and Supporter Warrant Issue will be used to repay such facility. Following such repayment, the directors of the Company will review financing options available to the Company and it is expected that an appropriate facility would be sought, releasing funds to be used for the other purposes set out above.

Illustrative deployment of assets

Assuming the net proceeds of the Placing and the Supporter Warrant Issue are £10.6 million then the Proposed Directors expect that the deployment of the proceeds of the Placing and the Supporter Warrants Issue over the first 12 to 18 months post-Admission might be as follows:

Deployment   £m
Developing an asset management business (organically and/or by acquisition(s))* 4.0
 
Investing as a cornerstone investor in specialist fund(s) and other direct investments 6.0
 
Balance for working and regulatory capital 0.6

* Including set up costs such as office costs, hiring of staff and FCA authorisation applications.

As any of the existing assets are realised, the Proposed Directors will redeploy the proceeds of realisation of such assets in a timely manner and in accordance with the New Investing Policy and/or the development of an asset management business. A working and regulatory capital buffer will be maintained.

Information on the Capital Reduction

Share buybacks

The board of the Company will, from time to time, consider the desirability of implementing a share buyback and the Resolutions include a standard share buyback authority. The authority will only be exercised if the directors of the Company consider that it is in the best interests of the Shareholders at that time.

Capital Reduction

Amounts credited to the share premium account of the Company have arisen on the issue by the Company of Ordinary Shares at a premium to their nominal value and form a non-distributable capital reserve. The Company’s share premium account will be increased by the issue of Ordinary Shares at the Placing Price (being an issue at a premium to the nominal value of the Ordinary Shares of 25 pence each). The Company’s ability to distribute any amount credited to the share premium account is limited by the Act. In particular, it cannot be used for the payment of dividends or to fund share buybacks.

Under the Act, a public company may reduce its capital and share premium account provided that it obtains the approval of its shareholders by special resolution in a general meeting and that the Court confirms the reduction. The reserve arising on such a reduction in capital may be credited to the public company’s profit and loss account.

As set out above, from time to time after Admission, the board of the Company will consider the desirability of implementing a share buyback. In order to generate the distributable reserves to facilitate any such share buyback or payment of dividends that the board of the Company may in the future approve, it is proposed that, subject to the approval of the Court, the share premium account be reduced by cancelling the entire amount of the share premium account following the Placing. The amount standing to the credit of the share premium account immediately following Admission (and therefore being the amount reduced by the Capital Reduction) is expected to be approximately £12.7 million (assuming the Placing is fully subscribed). The Resolutions being considered by Shareholders at the General Meeting therefore include a special resolution to approve the Capital Reduction.

Court confirmation

If the Capital Reduction is approved by Shareholders, the Company intends to apply to the Court for an appropriate Court order by the end of January 2015. The Capital Reduction will only take effect if confirmed by the Court and upon the order of the Court confirming the Capital Reduction being registered with the Registrar of Companies in England and Wales.

In seeking the Court’s approval, it will be necessary for the Company to satisfy the Court that the interests of the Company’s creditors are not prejudiced by the Capital Reduction and accordingly, if required by the Court, the Company will give such undertakings to the Court as are appropriate.

If, for any reason, the Capital Reduction is not confirmed by the Court, the Capital Reduction will not proceed. The Capital Reduction will not affect the validity or the number of the Ordinary Shares held by Shareholders and existing share certificates will remain valid.

Consequences of the move to AIM

Following Admission, the Company will be subject to the AIM Rules. Shareholders should note that AIM is operated by the London Stock Exchange but self-regulated and the protections afforded to investors in AIM companies are less rigorous than those afforded to investors in companies listed on the premium segment of the Official List.

Following Admission, Ordinary Shares that are held in uncertificated form will continue to be held in and dealt with through CREST. Share certificates representing those Ordinary Shares held in certificated form will continue to be valid and no new Ordinary Share certificates will be issued. The Shareholder Warrants will be issued to the holders thereof in the same form (either certificated or uncertificated) as they hold their Ordinary Shares and will be dispatched or credited at the same time as the Placing Shares.

Employee incentive arrangements

On Admission, the Company will have no share option schemes in place. In due course, the Proposed Directors intend to establish suitable long-term retention share schemes linked to the Company’s performance. The Proposed Directors would only create such a scheme with shareholder approval and with due regard to appropriate corporate governance guidelines.

In addition, it is intended that the Group’s employees (including the executive directors) following Admission will be appropriately incentivized which may include a discretionary bonus. The incentivisation for employees (excluding the executive directors) may include receiving carried interests and performance fees.

In addition, as to be set out in the Circular, the Proposed Directors (and others) are subscribing for Placing Shares and Supporter Warrants.

General Meeting

The Circular is expected to contain a Notice of General Meeting to be held at 10.00 a.m. on 31 October 2014 at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL to enable Shareholders to consider and, if thought fit, pass the Resolutions set out in the Notice of General Meeting. The Resolutions are all inter-conditional and the Proposals will not proceed unless all of the Resolutions are passed.

Irrevocable Undertakings

To become effective, the Proposals require, amongst other things, the approval of the Resolutions at the General Meeting expected to be convened for 10.00 a.m. on 31 October 2014.

The Company has received irrevocable undertakings to vote (or procure the vote) in favour of the Resolutions from Revcap Estates 24 Limited and the Rowe Trust in respect of a total 1,814,661 Ordinary Shares, representing approximately 33.8 per cent. of the Company’s issued ordinary share capital (the “Irrevocable Undertakings”).

Both Irrevocable Undertakings shall terminate if either (i) the General Meeting is not convened by 14 November 2014 or (ii) the Placing Agreement is terminated prior to the General Meeting. The Irrevocable Undertaking given by Revcap Estates 24 Limited alone shall also terminate if (prior to the date of the General Meeting) a recommended offer is made for the entire issued share capital of the Company at or in excess of a price per Ordinary Share 10 per cent. above the Placing Price.

Recommendation

The Board, which has received financial advice from Westhouse, considers the Proposals and the passing of all of the Resolutions to be in the best interests of the Shareholders as a whole and, accordingly, unanimously recommends that Shareholders vote in favour of all of the Resolutions at the General Meeting. The Company’s Directors intend to vote their own shareholdings, totalling 249,897 Ordinary Shares, representing approximately 4.65 per cent. of the Company’s existing issued ordinary share capital, in favour of each of the Resolutions. In providing its advice, Westhouse has taken into account the commercial assessments of the Board.

APPENDIX 1 - Expected Timetable of Principal Events

Latest time and date for receipt of Forms of Proxy   10.00 a.m. on 29 October 2014
Voting Record Time 6.00 p.m. on 29 October 2014
General Meeting 10.00 a.m. on 31 October 2014
Last day of dealings in Ordinary Shares on the Main Market 28 November 2014
Cancellation of listing of Ordinary Shares on the Official List 8.00 a.m. on 1 December 2014
Admission and commencement of dealings in the Ordinary Shares (including the Placing Shares) and Shareholder Warrants on AIM 8.00 a.m. on 1 December 2014
CREST accounts credited with Placing Shares and Shareholder Warrants in uncertificated form 8.00 a.m. on 1 December 2014
Dispatch of definitive certificates in respect of Placing Shares, Shareholder Warrants and Supporter Warrants to be issued in certificated form by 8 December 2014

Each of the times and dates above are indicative only, are based on the expectation that the Circular will be posted today and are subject to further change. If any of the above times and/or dates change, the revised times and/or dates will be notified by the Company to Shareholders by announcement through a regulatory information service.

All of the above times refer to London time unless otherwise stated.

The cancellation of listing of the Ordinary Shares on the Official List and Admission and commencement of dealings in the Ordinary Shares (including the Placing Shares) and Shareholder Warrants on AIM are conditional on, inter alia, the passing of the Resolutions at the General Meeting.

APPENDIX 2 - DEFINITIONS

The following definitions apply throughout this announcement unless the context requires otherwise:

“Act”   the Companies Act 2006 (as amended) from time to time
 
“Adjusted NAV Per Ordinary Share” 323.27 pence, being the NAV Per Ordinary Share as adjusted for the movement in the share price of SpaceandPeople plc since 30 June 2014, as fully described above
 
“Admission” the admission of the issued and to be issued Ordinary Shares (including the Placing Shares) and the Shareholder Warrants to trading on AIM (or any of them as the context requires)
 
“Admission Date” the date on which Admission becomes effective
 
“Admission Document” the document published by the Company in accordance with Rule 3 of the AIM Rules in connection with Admission
 
“Advisory Group” the advisory group of the Company, as described above
 
“AIM” AIM, a market operated by the London Stock Exchange
 
“AIM Note for Investing Companies” the AIM note for investing companies published from time to time by the London Stock Exchange
 
“AIM Rules” the AIM Rules for Companies published by the London Stock Exchange from time to time
 
“Authorised Investment Trust” a company which has been approved as an investment trust by HMRC under section 1158 of the Corporation Tax Act 2010
 
“Board” or “Directors” the current directors of the Company
 
“Capital Reduction” the capital reduction proposed under the Resolutions
 
“CEO” chief executive officer
 
“certificated” or “in certificated form” a share or other security not held in uncertificated form (i.e. not in CREST)
 
“Circular” the circular to the Shareholders expected to be posted later today, to provide Shareholders with details of, and the background to, the Proposals and to contain the Notice of General Meeting
 
“Closing Price” the closing middle market quotation of an Ordinary Share as derived from the Daily Official List of the London Stock Exchange
 
“Company” or “Gresham” Gresham House plc, a company registered in England and Wales with registered number 871
 
“Co-operative Bank” The Co-operative Bank plc
 
“Court” the High Court of England and Wales
 
“CREST” the relevant system (as defined in the CREST Regulations) in respect of which Euroclear UK & Ireland Limited is the operator (as defined in the CREST Regulations)
 
“CREST Regulations” the Uncertificated Securities Regulations 2001 (SI 2001/3755) as amended from time to time
 
“Delisting” the cancellation of the listing of the Ordinary Shares on the premium listing segment of the Official List and from trading on the Main Market
 
“Enlarged Share Capital” the issued share capital of the Company on Admission (including the Placing Shares)
 
“Financial Conduct Authority” or “FCA” the Financial Conduct Authority of the UK
 
 
“FSMA” the Financial Services and Markets Act 2000 (as amended, modified, consolidated, re-enacted or replaced from time to time)
 
“General Meeting” the general meeting of the Company expected to be convened for 10.00 a.m. on 31 October 2014 at the offices of Travers Smith LLP, 10 Snow Hill, London EC1A 2AL, notice of which will be set out in the Circular
 
“Group” the Company and its subsidiary undertakings
 
“HMRC” HM Revenue & Customs
 
“Investment Committee” the investment committee of the Company, as described above
 
“ISDX Growth Market” the ISDX Growth Market operated by ICAP Securities & Derivatives Exchange Limited, for dealings in unlisted securities
 
“Jones Lang LaSalle” Jones Lang LaSalle Limited, a company registered in England & Wales with registered number 1188567 and with its registered office at 30 Warwick Street, London W1B 5NH
 
“Listing Rules” the listing rules made by the FCA in the exercise of its function as competent authority pursuant to Part VI of the FSMA, as amended from time to time
 
“London Stock Exchange” London Stock Exchange plc
 
“Main Market” the London Stock Exchange’s main market for listed securities
 
“NAV” the basic net asset value of the Company
 
“NAV Per Ordinary Share” the NAV per Ordinary Share shown in the Company’s interim accounts as at 30 June 2014 (being 331.7 pence per Ordinary Share)
 
“New Articles” the new articles of association to be adopted by the Company under the Resolutions
 
“New Investing Policy” the Company’s proposed new investing policy, as set above
 
“Notice” or “Notice of General Meeting” the notice of General Meeting to be set out in the Circular
 
“Official List” the Official List of the Financial Conduct Authority
 
“Ordinary Shares” ordinary shares of 25 pence each in the share capital of the Company
 
“Persimmon” Persimmon Homes Limited
 
“Placing” the conditional placing of the Placing Shares with investors by Westhouse at the Placing Price pursuant to the Placing Agreement
 
“Placing Agreement” the conditional agreement between the Company and Westhouse dated 8 October 2014 relating to the Placing
 
“Placing Price” the price of 286.9 pence per Placing Share
 
“Placing Shares” the 3,973,510 new Ordinary Shares conditionally placed pursuant to the Placing that will be allotted subject to, inter alia, the passing of the Resolutions and Admission
 
“Proposals” collectively, the Delisting, Admission, the Placing (at an 11.25 per cent. discount to the Adjusted NAV Per Ordinary Share), the issue of the Shareholder Warrants and the Supporter Warrants, the loss of Authorised Investment Trust status, the adoption of a New Investing Policy, the adoption of the New Articles, the appointment of the Proposed Directors and the Capital Reduction
 
“Proposed Directors” those individuals whose names above and that it is proposed be appointed as directors of the Company on Admission together with, where the context so permits, Richard Chadwick
 
“Record Date” 6.00 p.m. on the last day of dealings of Ordinary Shares on the Main Market
 
“Resolutions” the resolutions to be proposed at the General Meeting, as to be set out in the Notice of General Meeting
 
“Shareholder Warrantholders” holders of the Shareholder Warrants
 
“Shareholder Warrant Instrument” the warrant instrument dated 7 October 2014, details of which will be set out in the Circular
 
“Shareholder Warrant Issue” the issue of up to 1,073,976 Shareholder Warrants to Shareholders on the Company’s register of members on the Record Date
 
“Shareholder Warrants” warrants to subscribe for Ordinary Shares on the terms set out in the Shareholder Warrant Instrument
 
“Shareholders” holders of Ordinary Shares, including (where the context so permits) holders of the Placing Shares
 
“subsidiary” as defined in section 1159 and Schedule 6 of the Act
 
“Supporter Warrantholders” holders of Supporter Warrants
 
 
“Supporter Warrant Instrument” the warrant instrument dated 7 October 2014, details of which will be set out in the Circular
 
“Supporter Warrant Issue” the issue of up to 850,000 Supporter Warrants, conditional upon Admission, at the issue price of 7.5 pence per Supporter Warrant
 
“Supporter Warrants” warrants to subscribe for Ordinary Shares on the terms set out in the Supporter Warrant Instrument
 
“uncertificated” or “in uncertificated form” recorded on the register of members of the Company as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of the CREST system
 
“United Kingdom” or “UK” the United Kingdom of Great Britain and Northern Ireland
 
“United States” or “US” the United States of America
 
“Voting Record Time” expected to be 6.00 p.m. on 29 October 2014
 
“Warrantholders” the holders of Shareholder Warrants and/or Supporter Warrants
 
“Warrants” the Shareholder Warrants and the Supporter Warrants or either of them (as the context requires)
 
“Westhouse” Westhouse Securities Limited, the Company’s financial adviser, nominated adviser and broker

Short Name: Gresham House plc
Category Code: MSC
Sequence Number: 435975
Time of Receipt (offset from UTC): 20141008T070018+0100

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Gresham House plc

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Gresham House plc