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GLOBAL RESOURCES INVESTMENT TRUST PLC ORD GBP0.01 RNS Release

Circular to Shareholders and Notice of GM

RNS Number : 5421S
Global Resources Investment Tst PLC
21 December 2016
 

 

 

 

For immediate release                                          60;                                          & #160;                                   21 December 2016

 

GLOBAL RESOURCES INVESTMENT TRUST PLC

 

Approval of the new Manager Agreements as a related party transaction under the Listing Rules

Adoption of New Investment Policy

and

Notice of General Meeting

 

 

The Company announces that it is posting a circular to Shareholders convening a general meeting at 12.00 noon on  16 January 2017 at the offices of  DMH Stallard LLP at 6 New Street Square, New Fetter Lane, London EC4A 3BF to consider the  related party transaction and the adoption of the new investment policy as described further below.  The circular will also be available on the Company's website www.grit.london and will shortly be available from the National Storage Mechanism.  

 

 

 

1.             INTRODUCTION

 

On 21 December 2016, the Company announced that it was proposing to change the arrangements with RDP (the Investment Manager as at the date of this announcement) for managing the Company, which is a related party transaction under the Listing Rules.

 

The Board considers that it is more practical for the Company and its Portfolio to become self- managed and have reached agreement with RDP in respect of an early termination of the Investment Management Agreement, as set out in the Termination Agreement, together with the continuing provision of certain back office functions to GRIT as set out in the Transitional Services Agreement. 

 

Under the terms of the Termination Agreement, the Company will pay the Investment Manager an early termination fee comprising the issue of new Ordinary Shares on the basis set out below.

 

In addition, the Company is proposing to appoint David Hutchins, a partner of RDP, as an Executive Director of GRIT under the Service Agreement entered into by GRIT and Mr Hutchins. 

 

The arrangements under the Termination Agreement, the Transitional Services Agreement and the Service Agreement, together the 'new Manager Agreements', are classified as a 'related party transaction' under the Listing Rules as together they are a transaction with the Investment Manager and are therefore subject to, and conditional upon the approval of the Independent Shareholders at the General Meeting. 

 

The Company is also proposing that, subject to Shareholder approval, the New Investment Policy is adopted from Completion

 

Further details of the Termination Agreement, the Transitional Services Agreement, and New Investment Policy and the recommendation of the Directors are set out in paragraphs 3 and 9 respectively below.

 

The purpose of the Document is to explain the background to, and reasons for, the Proposals and why the Directors believe that the Proposals are in the best interests of the Company and Shareholders as a whole and to recommend that Shareholders vote in favour of the Resolutions at the General Meeting to be held on 16 January 2017.

 

 

2.             BACKGROUND TO AND REASONS FOR THE PROPOSALS

 

Shareholders will recall that due to the perilous market conditions in the minerals sector the Company fell in breach of the cover ratio resulting in it being in default with regard to the £5,000,000 of Loan Notes. Following several financing proposals announced during the course of this year, we announced on 19 August that the latest proposal would not proceed due to the lack of Shareholder support and that we would repay £1,000,000 of Loan Notes due to LIM (now done) to be followed by a balance of £2,500,000 in full and final settlement. As announced on 2 November 2016, the Company has nevertheless been able to repay £1,000,000 of the outstanding amount from other portfolio realisations, leaving a balance of £1,500,000 due to LIM.   Further to the announcement of 6 December 2016 which notified the market that the proposed sale of 26,100,000 shares in Merrex Gold was no longer proceeding, the Company reported that it remains confident of realizing further funds which can be used to discharge the remaining liability to LIM. In addition, there remain £1,200,000 nominal of Loan Notes due to other parties. The Board is therefore pleased that the pressing need to repay LIM is now being dealt with without what would have been a very dilutive issue to Shareholders. However, given the reduced size of the portfolio and the need to run an efficient and cost effective operation, the Board has resolved that it should press ahead with the cancellation of the Investment Management Contract so that in the future the Company will be self-managed.

 

The current management arrangements under the Investment Management Agreement provide for an annual fee of 1.5 per cent. to the manager based upon net asset value.  For the years ended 31 December 2014 and 2015, the amounts of such fee were £316,696 and £255,434 respectively, and in the current year the fee has been £145,057.  If the net asset base of the Company were to grow, then the fee could rise without limit and this would represent a large cash cost to the Company.  The Proposals eliminate this cash cost in return for the issue of Ordinary Shares under the termination arrangements set out in paragraph 3 below.  In addition, it is considered more practical for the Company to take direct charge of the investment strategy and thus eliminate a layer of costly bureaucracy inherent in a formal investment management agreement.    As discussed in paragraph 3 below, the impetus for the Proposals came from certain major Shareholders, who had expressed a concern about the cash cost of running what had become a relatively small investment trust.

 

The Board therefore consider that it is in Shareholders' interests to eliminate the cash management fee and replace this with an arrangement that more closely aligns the reward of the key executives with the interests of Shareholders, being share price performance.  

 

The Board have also been giving consideration to the Company's investment policy given the commodity markets have started to recover this year: after a prolonged and severe downturn, investor interest has been focused only towards the large capitalisation stocks or those with operational assets and positive cash  flows.  Exploration and early stage development companies, which were the original focus of the portfolio have remained largely ignored by investors and have continued to underperform.  Consequently, we have been reducing our portfolio exposure to those grass root, early exploration companies and focusing more heavily on those companies with potentially large scale assets that also have the ability to bring them into production over the coming years.  Consequently we would like to increase our focus on those types of companies, as we believe that they offer the best value within the junior resources market.  However, such a change in focus will require a change to the investment policy.

 

We will continue to maintain a diversified portfolio, both geographically and by commodity, and we will also continue to maintain a spread of investments.  However, it will become a more focused portfolio, on those companies that we have identified with a significant asset base and who also have the ability to make the transition from development company to producer.

 

 

3.             DETAILS OF THE RELATED PARTY TRANSACTION

 

RDP has been the Company's Investment Manager since IPO Admission and remains as such as at the date of this Document.  David Hutchins, the Proposed Director, is one of two partners of RDP. As at the LPD, RDP held the 50,000 Existing Ordinary Shares and 50,000 Deferred Shares.

 

RDPL is wholly owned by David Hutchins. RDPL is a management services company which provides office space and support services to RDP. David Hutchins, the Proposed Director, is on the board of RDPL. As at the LPD, RDPL held 400,000 Existing Ordinary Shares and £50,000 nominal of Loan Notes.

 

It is proposed that the Investment Management Agreement is terminated under the terms of which the consideration in full settlement of the Company's obligations under the agreement is as follows:

 

3.1.        The payment by the Company to RDP of:

 

(i)       £100,000 ("First Payment") on Admission ("First Trigger")

 

(ii)      £100,000 ("Second Payment") when the Closing Price remains for a period of at least one month at or above each of 14p ("Second Trigger");

 

(iii)     £100,000 ("Third Payment") when the Closing Price remains for a period of at least one month at or above each of 16p ("Third Trigger"); and

 

(iv)     £100,000 ("Fourth Payment") when the Closing Price remains for a period of at least one month at or above each of 18p ("Fourth Trigger").

 

3.2.           Subject to:

 

(i)       the occurrence of the First Trigger, RDP shall subscribe at £0.05 per Ordinary Share for 2,000,000 Ordinary Shares ("First Subscription");

 

(ii)      the occurrence of the Second Trigger, RDP shall subscribe at £0.05 per Ordinary Share for 2,000,000 Ordinary Shares ("Second Subscription");

 

(iii)     the occurrence of the Third Trigger, RDP shall subscribe at £0.05 per Ordinary Share for 2,000,000 Ordinary Shares ("Third Subscription"); and

 

(iv)     the occurrence of the Fourth Trigger, RDP shall subscribe at £0.05 per Ordinary Share for 2,000,000 Ordinary Shares ("Fourth Subscription").

 

3.3.           The Company and RDP have the right to set off the First Payment against the First Subscription, the Second Payment against the Second Subscription, the Third Payment against the Third Subscription, and the Fourth Payment against the Fourth Subscription.

 

3.4.           In the case of each issuance of Ordinary Shares in 3.2 above, RDP has agreed to a lock-in period of six months from the date of each respective issue.

 

3.5.           The Company shall not be required to issue any Ordinary Shares to RDP to the extent that doing so will require it to issue a prospectus.  Any Ordinary Shares not issued by the Company pursuant to the Termination Agreement will be issued as soon as the Company is able to issue such Ordinary Shares.

 

3.6.        The Company shall not be required to issue any Ordinary Shares to RDP, or make the corresponding payment to RDP, to the extent that the Company does not have authority to issue shares.  Any Ordinary Shares not issued, or payment not made, by the Company pursuant to this deed will be issued and/or paid as soon as the Company is able to issue such Ordinary Shares.

 

 

The terms of the Proposals set out above have been determined following consultation with certain major Shareholders who had expressed concern about the cash cost of the ongoing management arrangements under the Investment Management Agreement, and of whom three are providing irrevocable undertakings as referred to in paragraph 9 below.  The value of the subscriptions set out above reflect the share price at the time of these discussions and when the "in principle" support of these Shareholders was obtained.

 

The New Ordinary Shares will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other declarations, made or paid on the Existing Ordinary Shares after Admission.

 

Applications are being made for the 2,000,000 New Ordinary Shares now being issued pursuant to the Proposals to be admitted to listing on the premium listing segment of the Official List and to trading on the Main Market. It is expected that such admission will become effective and such dealings will commence on or around 17 January 2017 and the Termination Agreement is conditional on this taking place.

 

The Board considers that it is attractive to terminate the Investment Management Agreement on a basis that aligns the Investment Manager's interests with those of the Shareholders, considering the termination fee to be paid in accordance with the termination provisions of the Investment Management Agreement which would have been £309,891 in cash.  The Board has taken into account that whilst the value of the New Ordinary Shares is in excess of this amount, only 2,000,000 New Ordinary Shares to an agreed value of £100,000 are being issued at this stage, and the remainder will depend on the significant increases in the prices of the Ordinary Shares as set out above, which will be in the interests of Shareholders as a whole.

 

In accordance with the Termination Agreement, and in order to provide ongoing office support services, GRIT and RDP have also entered into the Transitional Services Agreement, under which RDP will provide certain back office functions to GRIT.  This agreement is for a period of 12 months and RDP shall be entitled to recover the costs and expenses of providing these services to GRIT, such amount not to exceed £40,000.

 

In addition, the Company is proposing to enter into the Service Agreement with the Proposed Director for an annual salary of £20,000, further details of which are set out in paragraph 2.8(iv) of Part II of the Document. 

 

Following the Proposals, RDP will continue to hold £50,000 nominal of Loan Notes and initially 2,400,000 Ordinary Shares rising to a maximum of 8,400,000 Ordinary Shares under the arrangements set out above.

 

The new Manager Agreements (comprising the Termination Agreement, the Transitional Services Agreement and the Service Agreement) are classified as a 'related party transaction' under the Listing Rules as they are a transaction with the Investment Manager. Consequently, these agreements are subject to, and conditional upon, inter alia, the approval of Shareholders at the General Meeting.

 

4.             PROPOSED BOARD CHANGE

 

On approval of the Proposals, it is intended that David Hutchins, the Proposed Director, will be appointed as an Executive Director of GRIT. Further details, including details of current and past directorships and/or partnerships of the Proposed Director are as follows:

 

The business address of the Proposed Director is 4th Floor, Vintners Place, 68 Upper Thames Street, London EC4V 3BJ(Tel: +44 (0) 20 7290 8540) on appointment.

 

David (Sam) James Hutchins (aged 56) (Executive Director)

 

David has 30 years' experience as a resources analyst and fund manager. His career began with the Melbourne Stock Exchange in 1979 and he subsequently became an executive director of M&G Investment Management in London. He headed the International Desk at M&G Investment Management from 1995, where he was concurrently responsible for M&G's investments in the precious metals and commodities sector globally. He later became involved in Fund Management with Yorkton and AWI Administration Services. He was a founding director of Resources Investment Trust plc at its launch in January 2002, and Chief Executive of Ocean Resource Capital Holdings plc which was admitted to the AIM Market of the London Stock Exchange from 2003 to 2007.

 

In 2008, he became a director and fund manager of Grafton Resource Investments Limited, a Cayman Island exempt company investing in the resource sector. David was also a founding partner of www.minesite.com, a resource industry specific news related website and conference business, and is a member of the FTSE gold mines index committee. David is also one of two partners of RDP, the Company's Investment Manager as at the date of this Document, and has been a designated member of the team managing GRIT's Portfolio since IPO Admission. David is also a member of the Chartered Institute for Securities and Investment.

 

Director / Proposed Director

Current

Directorships/Partnerships

 

Past

Directorships/Partnerships

David Hutchins

(Proposed Director)

 

Endstone Capital Limited

RDP Fund Management LLP

Grafton Resource Investments Limited

Resources Development Partners Limited

Global Resources International Limited

Robdale Investments Limited

Aresa Investments Limited

Napolean Energy Limited

U30 Limited

Global Resources Investment Trust PLC

Coinworks Limited

Toxic Friction Limited

GRIT ZDP Limited

 

 

 

5.             ADOPTION OF THE NEW INVESTMENT POLICY

 

Current Investment Policy

 

As at the date of this Document, the Company's investment policy, as it has been since IPO Admission, is as follows:

 

"GRIT will seek to achieve its investment objective through investment in companies globally which have a significant focus on natural resources and mining. GRIT will invest in companies that are in the field of the exploration and production of oil, gas, precious and industrial metals, and industrial and commercial minerals which, in the opinion of GRIT's investment manager, have the potential to increase their value considerably. These companies may be producing companies with a historical track record of production or they may be development companies or companies with exploration potential. GRIT will seek to ensure, through active shareholder involvement, that investee companies act to maximise long-term shareholder value. GRIT will invest primarily in companies with shares and securities which are listed, quoted or are admitted to dealing, on a relevant exchange (including debt securities which are convertible into quoted equity securities). For the purpose of this investment policy, a "relevant exchange" is (i) a regulated market, recognised investment exchange, recognised stock exchange, recognised overseas investment exchange or designated investment exchange, or (ii) a junior market operated by the operator of an exchange referred to in (i).

 

However GRIT may hold some investments in non-quoted, seed capital or pre-IPO companies.

 

Any material changes to GRIT's investment policy will only be made with the approval of Shareholders by ordinary resolution.

 

Risk diversification, asset allocation and maximum exposures                                         & #160;                           

GRIT will seek to diversify its investments across a number of companies, with a range of natural resource assets, in jurisdictions globally. There are no restrictions as to the commodity classes and geographical regions into which GRIT may invest, however, GRIT will invest and manage its assets in a way which is consistent with its object of spreading risk. GRIT will adhere to the following investment restrictions:

Ø GRIT may only invest up to 10 per cent. of its Gross Asset Value (at the time of investment) in non-quoted, seed capital or pre-IPO;

Ø GRIT will not invest more than 15 per cent. of its Gross Asset Value in any one company (measured at the time of investment);

Ø GRIT will not take legal or management control over investments in its Portfolio;

Ø GRIT will not invest more than 10 per cent., in aggregate, of its Gross Asset Value in other listed closed-ended investment funds;

Ø distributable income (if any) will be principally derived from investments. GRIT will not conduct a trading activity which is significant in the context of the activities of GRIT as a whole;

Ø GRIT will not enter into derivative transactions for speculative purposes. GRIT does not expect to enter into any hedging transactions, although it may do so for the purposes of efficient portfolio management and to hedge against exposure to changes in currency rates to the full extent of any such exposure.

 

GRIT will hold any uninvested funds in cash, cash equivalents or other liquid instruments with a view to maximising the returns on any such funds.

 

For the purpose of this investment policy, "Gross Asset Value" shall mean the aggregate value of the gross assets of GRIT, calculated in accordance with the accounting policies adopted by GRIT from time to time."

 

Background to Proposed New Investment Policy

 

As the commodity markets have started to recover this year: after a prolonged and severe downturn, investor interest has been focused only towards the large capitalisation stocks or those with operational assets and positive cash  flows.  Exploration and early stage development companies, which were the original focus of the portfolio have remained largely ignored by investors and have continued to underperform.  Consequently, we have been reducing our portfolio exposure to those grass root, early exploration companies and focusing more heavily on those companies with potentially large scale assets that also have the ability to bring them into production over the coming years.  Consequently, we would like to increase our focus on those types of companies, as we believe that they offer the best value within the junior resources market.  However, such a change in focus will require a change to the investment policy.

 

We will continue to maintain a diversified portfolio, both geographically and by commodity, and we will also continue to maintain a spread of investments.  However, it will become a more focused portfolio, on those companies that we have identified with a significant asset base and who also have the ability to make the transition from development company to producer.

 

It is proposed that as part of the New Investment Policy, the investment limit for any single investment is increased to above 15 per cent. but limited to not more than 40 per cent of Gross Asset Value.   There are currently no specific agreements or proposals to either make new investments or to increase existing holdings above 15 per cent, but the Board would like to have the ability to increase any investment beyond 15 per cent. if the opportunity presented itself.  An investment beyond 15 per cent will not be the norm.  It is anticipated that the Board will maintain a diverse portfolio with only 1 or 2 investments going beyond 15 per cent at any point in time.  With the remainder of the portfolio being spread amongst a number of diverse investments in line with the New Investment Policy, the Board is of the view that the Company will be able to invest and manage its assets in a way which is consistent with its objective of spreading investment risk.

 

It should be noted that due to the reduction in net asset value since IPO Admission, and share performance of the investments, a number of holdings which are in compliance with the Current Investment Policy now represent over 20 per cent. of Gross Asset Value (being: Siberian Goldfields - 30.7 per cent.; and Merrex Gold - 20.0 per cent.) will also be in line with the New Investment Policy if agreed.  

 

New Investment Policy

 

It is proposed that from Completion, the Company will adopt the New Investment Policy which will enable the Company to focus on specific opportunities that may arise, which the Directors and the Proposed Director believe demonstrate the potential to become major mining projects.   

 

The New Investment Policy is set out below and the bold underlined text indicates the changes proposed:

 

"GRIT will seek to achieve its investment objective through investment in companies globally which have a significant focus on natural resources and mining. GRIT will invest in companies that are in the field of the exploration and production of oil, gas, precious and industrial metals, and industrial and commercial minerals which, in the opinion of GRIT's investment manager, have the potential to increase their value considerably. These companies may be producing companies with a historical track record of production or they may be development companies or companies with exploration potential. GRIT will seek to ensure, through active shareholder involvement, that investee companies act to maximise long-term shareholder value. GRIT will invest primarily in companies with shares and securities which are listed, quoted or are admitted to dealing, on a relevant exchange (including debt securities which are convertible into quoted equity securities). For the purpose of this investment policy, a "relevant exchange" is (i) a regulated market, recognised investment exchange, recognised stock exchange, recognised overseas investment exchange or designated investment exchange, or (ii) a junior market operated by the operator of an exchange referred to in (i).

 

However GRIT may hold some investments in non-quoted, seed capital or pre-IPO companies.

 

Any material changes to GRIT's investment policy will only be made with the approval of Shareholders by ordinary resolution.

 

Risk diversification, asset allocation and maximum exposures                                         & #160;                           

GRIT will seek to diversify its investments across a number of companies, with a range of natural resource assets, in jurisdictions globally. There are no restrictions as to the commodity classes and geographical regions into which GRIT may invest, however, GRIT will invest and manage its assets in a way which is consistent with its object of spreading risk. GRIT will adhere to the following investment restrictions:

Ø GRIT may only invest up to  10 60 per cent. of its Gross Asset Value (at the time of investment) in non-quoted, seed capital or pre-IPO companies provided that at any one time such new investments above a 15 per cent. limit will not be in more than two companies, with an emphasis in such instances on potentially large scale assets that also have the ability to bring them to production in the coming years ;

Ø GRIT will not invest more than 15 40 per cent. of its Gross Asset Value in any one company (measured at the time of investment) provided that at any one time such new investments above a 15 per cent. limit will not be in more than two companies, with an emphasis in such instances on potentially large scale assets that also have the ability to bring them to production in the coming years;

Ø GRIT will not take legal or management control over investments in its Portfolio;

Ø GRIT will not invest more than 10 per cent., in aggregate, of its Gross Asset Value in other listed closed-ended investment funds;

Ø distributable income (if any) will be principally derived from investments. GRIT will not conduct a trading activity which is significant in the context of the activities of GRIT as a whole;

Ø GRIT will not enter into derivative transactions for speculative purposes. GRIT does not expect to enter into any hedging transactions, although it may do so for the purposes of efficient portfolio management and to hedge against exposure to changes in currency rates to the full extent of any such exposure;

Ø GRIT will not incur any debt beyond such amount that is covered four times by the gross value of its investments at the time of incurring such debt (ie a "4 to 1 cover ratio);

 

Ø GRIT will manage the overall portfolio to ensure that there is a spread of investments to provide diversification, with a target of having between 10 and 20 different investments at any one time.

 

GRIT will hold any uninvested funds in cash, cash equivalents or other liquid instruments with a view to maximising the returns on any such funds.

 

For the purpose of this investment policy, "Gross Asset Value" shall mean the aggregate value of the gross assets of GRIT, calculated in accordance with the accounting policies adopted by GRIT from time to time."

 

 

Investment Objective

 

At Completion, GRIT's investment objective will be as it has been since IPO Admission which is to generate medium and long-term capital growth through investing in a diverse portfolio of primarily small and mid-capitalisation natural resources and mining companies which are listed, traded or quoted on a Relevant Exchange.

 

6.             GENERAL MEETING AND UNDERTAKINGS

 

You will find at the end of this Document the Notice of General Meeting, to be held at the offices of DMH Stallard LLP at 6 New Street Square, New Fetter Lane, London EC4A 3BF at 12.00 noon . At the General Meeting Resolutions to approve the new Manager Agreements as a related party transaction under the Listing Rules will be proposed, as an ordinary resolution (resolution 2).    In addition, ordinary resolution 1, and special resolution 4 (together the "Share Resolutions") will be proposed to grant authorities to issue Ordinary Shares to RDP pursuant to the Termination Agreement, and ordinary resolution 3 will be proposed to adopt the New Investment Policy.

 

RDP is a related party of the Company under the Listing Rules. RDPL is a Connected Person of RDP. RDP and RDPL will therefore not be permitted to vote, and have undertaken not to vote, (and to take all reasonable steps to ensure that each of their Connected Persons and/or associates (as defined in the glossary to the Listing Rules) do not vote) on any of the Resolutions in respect of their aggregate holding of Existing Ordinary Shares amounting to 450,000 Existing Ordinary Shares, representing approximately 1.13 per cent. of the Existing Ordinary Share Capital.

 

7.             ACTION TO BE  TAKEN

 

A Form of Proxy is enclosed for use by Shareholders at the General Meeting. Whether or not Shareholders intend to be present at the General Meeting, they are asked to complete, sign and return the Form of  Proxy by post to the Company's Registrars, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY or by hand to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS13 8AE as soon as possible, but in any event so as to be received by 12.00 noon on 12 January 2017. The completion and return of a Form of Proxy will not preclude a Shareholder from attending the General Meeting and voting in person should he or she wish to do so. Shareholders who hold their Existing Ordinary Shares through a nominee should instruct the nominee to submit the Form of Proxy on their behalf.

 

CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the General Meeting 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(s) should refer to their CREST sponsor or voting service provider(s), who are able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a 'CREST Proxy Instruction') must be properly authenticated in accordance with CREST specifications and must contain the information required for such instructions, as described in the CREST manual.

 

For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp generated by the CREST system) from which the issuer's agent is able to retrieve the message. All messages relating to the appointment of a Proxy or an instruction to a previously appointed Proxy must be transmitted so as to be received by Computershare Investor Services PLC (ID: 3RA50) by no later than 12.00 noon on 12 January 2017.  Normal system timings and limitations will apply in relation to the input of CREST Proxy Instructions.  It is therefore the responsibility of the CREST member concerned to take such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time.  In this connection, CREST members and, where applicable their CREST sponsor(s) or voting service provider(s) are referred, in particular, to those sections of the CREST manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid an appointment sent by CREST in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.

 

If you are in any doubt as to what action you should take, or the contents of this Document, you are recommended to consult immediately your stockbroker, bank manager, solicitor, accountant, fund manager or other appropriate independent financial adviser being a firm authorised under the FSMA, or otherwise from another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom.

 

8.             FURTHER INFORMATION

 

The Document is available, subject to certain restrictions, to Shareholders on the Company's website (www.grit.london) and at its registered office.

 

Shareholders should read the whole of the Document, which provides additional information on the Company and the Proposals, and should not rely on summaries of, or individual parts only of the Document.

 

9.             RECOMMENDATION

 

The Board, having been so advised by Beaumont Cornish (the Company's Sponsor and Financial Adviser), considers that the new Manager Agreements are fair and reasonable as far as the Shareholders are concerned.  In giving its advice, Beaumont Cornish has taken account of, but not relied on, the commercial assessments of the Directors.

 

The Board consider that the new Manager Agreements and the adoption of the New Investment Policy are in the best interests of the Shareholders and the Company as a whole and unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.  If one or more of these Resolutions is not passed, then the existing manager agreements and the current investment policy will remain.  The Board, however, would like Shareholders to consider what we say above in that the new Manager Agreements are proposed as a means of streamlining the management of the Company, together with the associated costs, and the New Investment Policy is being proposed to provide the Company with the opportunity of making investments in larger scale projects with the intention of enhancing the returns to Shareholders

 

RDP is a related party of the Company under the Listing Rules and RDPL is a Connected Person of RDP. RDP and RDPL will not therefore be permitted to vote, and have undertaken not to vote, (and to take all reasonable steps to ensure that each of their Connected Persons and/or associates (as defined in the glossary to the Listing Rules) do not vote) on the Resolutions in respect of their aggregate holding of Existing Ordinary Shares amounting to 450,000 Existing Ordinary Shares, representing approximately 1.13 per cent. of the Existing Ordinary Share Capital.  

 

The Company has received irrevocable undertakings in relation to the Proposals from the following,  which represent a total holding of 4,957,290 Existing Ordinary Shares or 12.4% of the Ordinary Share Capital:  Arakan Resources Limited, representing a holding of 826,090 Existing Ordinary Shares or 2.06 per cent of the Ordinary Share Capital; NuLegacy Gold Corporation representing a holding of 1,731,200 of Existing Ordinary Shares or 4.33 per cent. of the Ordinary Share Capital; and RS and CA Jennings, representing a holding of 2,400,000 Existing Ordinary Shares or 6.00 per cent. of the Ordinary Share Capital.

 

Enquiries to:

David ("Sam") Hutchins,

RDP Fund Management LLP

Investment Manager

Tel:  +(020) 7290 8540

Martin Cassels

R&H Fund Services Limited

Company Secretary and Administrator

Tel:  +(0) 131 524 6140

Roland Cornish / Felicity Geidt

Beaumont Cornish Limited

Financial Adviser

Tel:  +(020) 7628 3396

 



 

APPENDIX

DEFINITIONS

 

The following defined terms apply throughout this announcement and are extracted from the Document, unless the context requires otherwise:

 



"Act"

Companies Act 2006 (as amended)

 

"Adjusted NAV"

the audited Net Asset Value of GRIT adjusted to add back the value of any distributions paid during the relevant performance period

 

"Administrator" or "Secretary"

R&H Fund Services Limited

 

"Admission"

admission of the New Ordinary Shares to the premium listing segment of the Official List and to trading on the Main Market becoming effective

 

"Articles"

the articles of association of the Company from time to time

 

"Beaumont Cornish" or "Sponsor"

Beaumont Cornish Limited, the Company's financial adviser and sponsor, a member of the London Stock Exchange and which is authorised and regulated by the FCA with its registered office at 3 Hardman Street Manchester M3 3HF

 

"Benchmark"

(a) as at the first calculation date the NAV on IPO Admission as increased by the Benchmark Hurdle Rate in respect of the period from IPO Admission to such calculation date and (b) on each subsequent calculation date the Target NAV on the immediately preceding calculation date, increased by the Benchmark Hurdle Rate, in respect of the period from the immediately preceding calculation date to the relevant calculation date

 

"Benchmark Hurdle Rate"

a rate of 7 per cent. per period between calculation dates save that where such period is more or less than 12 months the rate shall be increased or decreased pro rata by the amount the period is greater or less than 12 months

 

"Board"

the directors of the Company from time to time

 

"Business Day"

any day (other than a Saturday, Sunday or a public holiday) on which banks are generally open in the City of London for the transaction of normal banking business

 

"certificated" or "in certificated form"

 

a share or other security recorded on the relevant register of the  company as being held in certificated form and title to which may be transferred by means of a stock transfer form

 

"Closing Price"

the closing middle-market quotation of an Ordinary Share, as established in the daily official list of the London Stock Exchange

 

"Company" or "GRIT"

Global Resources Investment Trust Plc, a company incorporated in England and Wales with registered number 8256031

 

"Completion"

completion of the Proposals which is conditional on Admission

 

"Connected Persons"

has the meaning set out in section 252 and section 254 of the Act and includes a spouse, children under 18 and any company in which the relevant person is interested in shares comprising at least one-fifth of the share capital of that company  and set out in 1122(2) of the CTA 2010 and includes a  company being connected with another company

 

"Control"

the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to: (a) cast, or control the casting of, 30 per cent. or more of the maximum number of votes that might be cast at a general meeting of the Company; or (b) appoint or remove all, or the majority, of the directors of the Company; and/or (ii) the holding beneficially 30 per cent. or more of the issued share capital of the Company (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital)

 

"CREST"

the relevant system, as defined in the CREST Regulations, for the paperless settlement of share transfers and the holding of shares in uncertificated form in respect of which Euroclear is the operator (as defined in the CREST Regulations)

 

"CREST Regulations"

the Uncertificated Securities Regulations 2001 (SI 2001 No. 2001/3755) (as amended)

 

"CREST Rules"

the  rules  governing  the  operation  of  CREST,  consisting  of  the CREST Reference Manual, CREST International Manual, CREST Counterparty Service Manual, CREST Rules, Registrars Service Standards, Settlement Discipline Rules, CCSS Operations Manual, Daily Timetable, CREST Application Procedures and CREST Glossary of Terms (all as defined in the CREST Glossary of Terms promulgated by Euroclear on 15 July, 1996 and as amended since that date)

 

"CTA 2010"

the Corporation Tax Act 2010 and any statutory modification or re-enactment thereof for the time being in force

 

"Deferred Shares"

 

the existing 50,000 deferred shares of £0.99 each in the capital of the Company

 

"Directors"

the directors of the Company as at the date of the Document

 

"Document"

the document

 

"Excluded Territory"

the United States, the Republic of South Africa, the Republic of Ireland, Australia, or Japan or any other jurisdiction where access to this Document would constitute a violation of the relevant laws of such jurisdiction

 

 

"Existing Ordinary Share Capital"

 

the issued Ordinary Shares as at the date of this Document

 

"Existing Warrants"

 

the existing warrants to subscribe for new Ordinary Shares

"Existing Ordinary Shares"

the 39,970,012  Ordinary Shares in issue at the date of this Document

 

"FCA"

the United Kingdom Financial Conduct Authority

 

"Form of Proxy"

the form of proxy accompanying this Document to be used by Shareholders in respect of the General Meeting

"FSMA"

the Financial Services and Markets Act 2000 of the United Kingdom and any statutory modification or re-enactment thereof for the time being in force

 

"General Meeting"

the general meeting of the Company convened for 12.00 noon on 16 January 2017, the notice convening which is set out in Part IV at the end of the Document

 

"Gross Asset Value"

 

the aggregate value of the gross assets of GRIT, calculated in accordance with the accounting policies adopted by GRIT from time to time

 



"Investment Management Agreement"

 

the investment management agreement dated 20 February 2014 between the Company and RDP, a summary of which is summarised in paragraph 4.1 of Part II (Additional Information) of this Document, which is proposed to be terminated by mutual consent on Completion

 

"IPO Admission"

the admission of the Ordinary Shares issued pursuant to the Company's initial public offering to the premium listing segment of the Official List and to trading on the Main Market, which occurred on 7 March 2014

 



"ISIN"

International Securities Identifying Number

 

"LIM"

LIM Asia Multi-Strategy Fund Inc

 

"Listing Rules"

the listing rules made by the UKLA under section 73A of FSMA, as amended from time to time

 

"Loan Note Holders"

 

the holders of the Loan Notes

               

"Loan Note Instrument"

the loan note instrument executed by GRIT constituting the Loan Notes and dated 27 February 2014, which is summarised in paragraph 4.4 of Part II (Additional Information) of the Document

 

"Loan Notes"

the £5 million nominal of 9 per cent. convertible unsecured loan notes of the Company which were issued to the Loan Note Holders pursuant to the Loan Note Instrument of which £4,850,000 were issued since IPO Admission

 

"London Stock Exchange"

London Stock Exchange plc

 

"LPD"

20 December 2016, being the last practicable date prior to the publication of the Document

 

"Main Market"

the regulated market of the London Stock Exchange for officially listed securities

 

"Manager Agreements"

the Termination Agreement, the Transitional Services Agreement and the Service Agreement as further set out in paragraph 3 of Part I (Letter from the Chairman) of the Document

 

"Month"

calendar month

"Monthly Average NAV"

the aggregate daily NAVs for each Month divided by the number of  Business Days in that Month adjusted to add back the value of any distributions paid during the relevant performance period

 

"Net Asset Value" or "NAV"

the value of the assets of GRIT less its liabilities in total calculated in accordance with the accounting policies adopted by GRIT from time to time

 

"Net Asset Value per Share"

NAV divided by the number of Ordinary Shares in issue from time to time

 

"New Investment Policy"

the proposed new investment policy to be adopted by the Company on Completion and as set out in paragraph 5 of Part I (Letter from the Chairman) of this Document

 

"New Ordinary Shares"

 

the 2,000,000 ordinary shares of £0.01 each to be issued to RDP pursuant to the Termination Agreement

 

"Notice of General Meeting"

the notice of the General Meeting set out in Part IV at the end of the Document

 

"Official List"

the official list maintained by the UKLA

 

"Ordinary Shares"

the issued ordinary shares of £0.01 each in the capital of the Company from time to time

 

"Portfolio"

the portfolio of investments of GRIT from time to time

 

"Proposals"

 

the new Manager Agreements,  the adoption of the New Investment Policy and the Share Resolutions

 

"Proposed Director"

David Hutchins, the proposed director to be appointed to the Board on Completion

 

"RDP" or "Investment Manager"

RDP Fund Management LLP, being the Company's investment manager as at the date of this Document, whose principal place of business and registered office is at 4th Floor, Vintners Place, 68 Upper Thames Street, London EC4V 3BJ (Tel: +44 (0)20 7290 8540)

 

"RDPL"

 

Resources Development Partners Limited, a company wholly owned by David Hutchins, the Proposed Director

 

"Registrar" or "Receiving Agent"

Computershare Investor Services PLC

 

"Related Party Transaction"

the related party transaction as set out in part II (Letter from the Chairman) of the Document

 

"Relevant Exchange"

(i) a regulated market, recognised investment exchange, recognised stock exchange, recognised overseas investment exchange or designated investment exchange, or (ii) a junior market operated by the operator of an exchange referred to in (i)

 

"Resolutions"

the resolutions set out in the Notice of General Meeting in Part IV at the end of this Document

 

"Service Agreement"

 

the service agreement with the Proposed Director to be entered into between GRIT and David Hutchins whereby David Hutchins will be appointed as a Director, conditional upon Admission

 

"Share Resolutions"

 

resolutions 1 and 4 set out in the Notice of General Meeting in Part IV at the end of the Document relating to sections 551 (1)(a) and (b) and section 570 of the Act respectively

 

"Shareholders"

 

 

person(s) who is/are registered holder(s) of Ordinary Shares from time to time

"Sterling" "£" or "pence"

the lawful currency of the UK

 

"Target NAV"

at any calculation date the higher of the (a) NAV, and (b) the Benchmark, as at the preceding calculation date as increased by the Benchmark Hurdle Rate in respect of the period from the preceding calculation date to the relevant calculation date

 

"Termination Agreement"

the agreement to be entered into between the Company and RDP and which formalises the Manager Arrangements, further details of which are summarised in paragraph 4.6 of Part II (Additional Information) of the Document

 

"Transitional Services Agreement"

the agreement to be entered into between the Company and RDP further details of which are contained in paragraph 4.7 of Part II (Additional Information) of the Document

 



"UK Listing Authority" or "UKLA"

the FCA acting in its capacity as the competent authority for the purposes of Part VII of FSMA

 

"UK" or "United Kingdom"

the United Kingdom of Great Britain and Northern Ireland

 

"uncertificated" or "in

uncertificated form"

a share or other security recorded on the relevant register of the relevant company concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST

 

"United States" or "U.S."

the United States of America, its territories and possessions, any State of America and the District of Columbia

 

"U.S. Commodity Exchange Act"

 

the United States Commodity Exchange Act of 1936, as amended

 

"US Person"

a citizen or resident of the United States, a corporation, partnership or other entity created or organised in or under the laws of the United States or any person: (i) falling within the definition of the term "United States Person" in Regulation S promulgated under the U.S. Securities Act; or (ii) who is not a "Non-United States person" as that term is defined in Rule 4.7 promulgated under the U.S. Commodity Exchange Act

 

"U.S. Securities Act" or "Securities Act"

 

the U.S. Securities Act of 1933, as amended

 

"US$" or "US Dollars" or "cents"

 

the legal currency of the United States

 

"VAT"

value added tax

 



 



 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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GLOBAL RESOURCES INVESTMENT TRUST PLC ORD GBP0.01 Timeline

Newswire
December 05 2014

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