THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL
This announcement has been determined to contain inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014
9 May 2019
Baker Steel Resources Trust Limited
(the "Company" or "BSRT")
(a closed-ended investment company incorporated in Guernsey with registration number 51576 and registered office address of Arnold House, St. Julian's Avenue, St. Peter Port, Guernsey, GY1 3NF)
Following on from the Tender Offer announced in the Company's Annual Report, published on 10 April 2019, Baker Steel Resources Trust Limited announces a tender offer for up to 9,677,498 Shares (representing approximately one Share for every 12 of the Company's issued Shares as at the date of this announcement) at a Tender Price of 51 pence per share (the "Tender Offer"). The Tender Price represents a premium of 10.9 per cent. to the closing bid price of an Ordinary Share on 7 May 2019 and a discount of 10.2 per cent. to the unaudited NAV per Share as at 30 April 2019.
The Company will shortly publish a Circular providing details of the Tender Offer and the notice of the 2019 AGM.
The implementation of the Tender Offer is conditional upon the passing of Resolution 9 which will be proposed as a special resolution at the 2019 AGM, convened for 28 May 2019.
Key details from the Circular:
As included in the Company's annual report and accounts for the financial year ended 31 December 2018, the Company announces today a tender offer for up to 9,677,498 Shares (representing approximately one Share for every 12 of the Company's issued Shares as at the date of this announcement) as a means of implementing the first return of capital by the Company in accordance with the capital returns policy introduced in 2015.
The Tender Offer will be conducted at a fixed price of 51 pence per Share, which represents a premium of 10.9per cent. to the closing bid price of an Ordinary Share on the Latest Practicable Date and a discount of 10.2per cent. to the unaudited NAV per Share as at 30 April 2019 (the "Tender NAV").
The implementation of the Tender Offer is conditional upon the passing of Resolution 9 which will be proposed as a special resolution at the 2019 AGM. The notice convening the 2019 AGM which is to be held at 12 noon on Tuesday, 28 May 2019 accompanies the Circular document.
The purposes of the Circular are to set out the background to and reasons for the Tender Offer and why the Board recommends shareholders vote in favour of Resolution 9 to be proposed at the 2019 AGM. The Circular also contains the terms and conditions of the Tender Offer, together with details of how Qualifying Shareholders can tender Shares for purchase, if they wish to do so.
The Circular is not a recommendation for Qualifying Shareholders to tender any Shares under the Tender Offer. Whether or not Qualifying Shareholders tender any Shares will depend on, among other things, their view of the Company's prospects and their own individual circumstances, including their tax position, on which they should seek their own independent advice.
Background to and reasons for the Tender Offer
Notwithstanding that the current mining market environment is attractive for investing in new mining opportunities, in 2015 the Board introduced a capital returns policy whereby it will allocate cash for distributions to shareholders in an amount being no less than 15 per cent. of the aggregate audited net realised cash gains generated in the previous financial year.
The sale of the majority of the Company's interest in the Prognoz silver project provides the first opportunity to deliver on this policy. Although the majority of the proceeds are still held in Polymetal International plc shares, the Board considers these to be sufficiently liquid as to be considered as cash for the purposes of the policy.
Having considered the alternatives, the Board believes that the appropriate way to implement its capital returns policy is through one or more tender offers. The Tender Offer described in the Circular will enable the Company to return approximately 25 per cent. of the net realised gains generated on Prognoz during the last financial year.
It is hoped that the opportunity to receive a direct share of the proceeds of successful realisations will encourage existing shareholders to maintain their commitment to the Company and attract new investors appreciative of the clear visibility of likely future returns from its investment activities, which in turn may help reduce the discount and improve share liquidity.
Summary information on the Tender Offer
Full details of the Tender Offer, including the terms and conditions on which it is being made, are set out in Part III of the Circular and, in the case of Shares held in certificated form, on the Tender Form.
The Tender Offer is only available to Qualifying Shareholders on the register of members of the Company on the Record Date in respect of the Ordinary Shares and Management Ordinary Shares held by them on the Record Date.
Qualifying Shareholders can choose whether they wish to tender any of their Shares under the Tender Offer. Qualifying Shareholders are not obliged to tender any of their Shares if they do not wish to do so.
The Tender Offer involves the following:
· Numis, acting as principal, will purchase up to 9,677,498 Shares at the Tender Price on and subject to the terms and conditions of the Tender Offer and will sell such tendered Shares to the Company pursuant to the Repurchase Agreement.
· 9,677,498 Shares represent approximately one Share for every 12 of the Company's issued Shares as at the date of the Circular (equivalent to 8.333 per cent. of the current issued Shares excluding Ordinary Shares held in treasury).
· The Tender Price, being 51 pence per Share represents a 10.9per cent premium to the closing bid price of an Ordinary Share on the Latest Practicable Date and a 10.2 per cent. discount to the Tender NAV.
· The Tendered Shares will be acquired by the Company from Numis and such Shares will then be cancelled.
· All Shares tendered by any Qualifying Shareholder up to their Basic Entitlement (which represents such Qualifying Shareholder's pro rata share of the maximum number of Shares to be acquired under the Tender Offer) will be accepted in full on and subject to the terms and conditions of the Tender Offer set out in Part III of the Circular and, in the case of Shares held in certificated form, the Tender Form.
· Each Qualifying Shareholder's Basic Entitlement will be calculated by the Registrars as at the Record Date by reference to the Qualifying Shareholder's holding of Ordinary Shares and/or Management Ordinary Shares as at that date.
· If the number of Shares validly tendered is 9,677,498 or less, all such Shares will be purchased under the Tender Offer on and subject to the terms and conditions of the Tender Offer set out in Part III of the circular.
· If the number of Shares validly tendered is more than 9,677,498, tenders will be accepted in the order set out below:
- all Shares tendered by Qualifying Shareholders up to their Basic Entitlement will be accepted in full; and
- tenders of Shares in excess of the Qualifying Shareholders' Basic Entitlements will be satisfied pro rata in proportion to the amount tendered in excess of Basic Entitlements (rounded down to the nearest whole number of Shares) or otherwise at the discretion of Numis, in consultation with the Board.
· Qualifying Shareholders are able to tender their Shares until 1.00 p.m. on the Tender Closing Date, which is 24 May 2019. In order to participate in the Tender Offer:
- Qualifying Shareholders holding Shares in certificated form as at the Record Date must return the accompanying personalised Tender Form together with any share certificate(s) and/or other document(s) of title in accordance with the instructions set out on the Tender Form by 1.00 p.m. on 24 May 2019; and
- Qualifying Shareholders holding Shares in uncertificated form (that is, in CREST) are directed to paragraph 3.2 of Part III of the Circular which details specific procedures for those holders.
Qualifying Shareholders who choose not to participate in the Tender Offer and who therefore do not tender their Shares will not receive any cash proceeds in respect of their Shares under the Tender Offer but will benefit from an uplift to the Company's NAV (estimated to be 0.7 per cent.) owing to the Tender Price being at a discount to the NAV per share. Further, non-participating Qualifying Shareholders will benefit by owning a greater percentage of the Company as there will be fewer Shares in issue after completion of the Tender Offer.
Ordinary Shares may be traded in the normal way during the period in which the Tender Offer remains open, but Qualifying Shareholders should note that, once tendered, their Shares may not be sold, transferred, charged or otherwise disposed of other than in accordance with the Tender Offer.
The purchase from Qualifying Shareholders and the subsequent sale of the tendered Ordinary Shares to the Company will be effected by Numis, as principal, "On Exchange" in accordance with the Rules of the London Stock Exchange, except for any Management Ordinary Shares which will be acquired by Numis, as principal, off-market since the Management Ordinary Shares are not admitted to trading on the London Stock Exchange.
The Tender Offer is only available to Qualifying Shareholders and is not available to Shareholders in the United States, Australia, Canada, Japan, the Republic of South Africa or to Shareholders who are otherwise within a Restricted Territory.
Any rights of Qualifying Shareholders who choose not to tender their Shares will be unaffected by the Tender Offer.
Irrevocable undertakings to accept the Tender Offer from the Deemed Concert Party
The Takeover Code applies to the Company and governs, inter alia, transactions which may result in a change of control of the Company. Under Rule 9 of the Takeover Code, any person who acquires, whether by a series of transactions over a period of time or not, an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested or in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is the subject to the Takeover Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares.
Similarly, Rule 9 of the Takeover Code also provides that when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry more than 30 per cent. of the voting rights of such company, but does not hold shares carrying 50 per cent, or more of such voting rights, a general offer will normally be required if any further interest in shares is acquired by any such person.
An offer under Rule 9 must be in cash and at the highest price paid within the twelve months prior to the announcement of the offer for any interest in shares in the Company by the person required to make the offer or any person acting in concert with him.
Baker Steel Capital Managers LLP which acts as the Company's investment manager was co-founded by Trevor Steel and David Baker in 2001. David Baker and Trevor Steel exercise majority management control over Baker Steel Capital Managers LLP. Both Trevor Steel and David Baker are considered to be acting in concert for the purposes of the Takeover Code and certain other Shareholders of the Company are considered to be acting in concert as a result of their relationships with Trevor Steel, David Baker and/or the Investment Manager (the "Deemed Concert Party"). Full details of the Deemed Concert Party are set out in paragraph 4 to Part VI of the Circular.
The Deemed Concert Party originally acquired an aggregate interest of more than 30 per cent. in the Company's voting rights in connection with the acquisition by the Company of a portfolio of additional investments from Genus Natural Resources Fund and Genus Natural Resources Master Fund for which a waiver from the obligation to make a general offer to the Shareholders pursuant to Rule 9 of the Takeover Code was obtained from the Panel that was approved by the Company's independent shareholders at a general meeting held on 23 February 2015.
The aggregate shareholding of the Deemed Concert Party in the Company as at the Latest Practicable Date was 36,910,436 Shares (including 10,000 Management Ordinary Shares), representing approximately 31.78 per cent. of the voting share capital of the Company.
In order to ensure that the aggregate shareholding of the Deemed Concert Party does not increase as a result of the Tender Offer, all members of the Deemed Concert Party have irrevocably undertaken to take up at least their Basic Entitlement under the Tender Offer.
The costs relating to the Tender Offer, and assuming the Tender Offer is fully subscribed, are expected to be approximately £116,000. The Tender Price represents a 10.2 per cent. discount to the Tender NAV and assuming that the Tender Offer is fully subscribed, the costs of the Tender Offer are expected to be approximately 2.0 per cent. of the Tender NAV, and therefore continuing Shareholders should expect to receive an uplift to the NAV per Share.
A guide to certain UK tax consequences of the Tender Offer for Shareholders under UK law and HMRC practice is set out in Part V of the Circular.
Qualifying Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the United Kingdom should consult a professional adviser.
The attention of Shareholders who are not resident in the United Kingdom is drawn to paragraph 9 of Part III of the Circular headed "Restricted Shareholders and other Overseas Shareholders".
2019 AGM and Tender Offer Authority
In addition to the usual annual buy-back authority which enables the Company to make market purchases of Ordinary Shares representing up to 14.99 per cent. of the Company's issued Ordinary Shares in accordance with and subject to the requirements of the Listing Rules, to enable the Company to implement its capital returns policy, the Directors are also seeking Shareholders' authority to purchase up to 30,000,000 Ordinary Shares and Management Ordinary Shares (representing approximately 25.8 per cent of the Company's ordinary share capital) in connection with one or more tender offers for the Shares, the first of which is the Tender Offer described in the Circular, (the Tender Offer Authority). The Board intends to seek renewal of the Tender Offer Authority at each annual general meeting held after the 2019 AGM.
Accordingly, the proposed Tender Offer requires Shareholders' approval of the Tender Offer Authority and is conditional on the passing of Resolution 9 set out in the 2019 AGM Notice which accompanies the Circular. The Tender Offer Authority which will be proposed as a special resolution requires at least 75 per cent. of the votes cast to be in favour of it.
Action to be taken
To vote at the 2019 AGM to approve the tender offer authority
Whether or not Shareholders propose to attend the 2019 AGM in person, they are requested either to complete the accompanying Form of Proxy and return it to Link Asset Services at the Registry, 34Beckenham Road, Beckenham, Kent BR3 4TU in accordance with the instructions printed on it, or, if Shareholders hold their Ordinary Shares in CREST, to utilise the CREST electronic proxy appointment service in accordance with the procedures set out on the Form of Proxy. In each case, proxy votes should be returned as soon as possible, but in any event not later than 48 hours before the time appointed for the 2019 AGM or any adjournment of that meeting.
Completion and return of Forms of Proxy will not prevent Shareholders from attending and voting in person at the 2019 AGM should they wish to do so.
To tender Shares under the Tender Offer
The procedure for tendering Shares depends on whether Shares are held in certificated or uncertificated form and is summarised below.
By Shareholders holding Shares in certificated form
Qualifying Shareholders who hold Shares in certificated form and who wish to tender all or any of their existing holding of Shares should complete the Tender Form in accordance with the instructions printed thereon (including a witnessed signature) and in Part IV of the Circular and return it to Link Asset Services in accordance with the instructions printed on the Tender Form. A prepaid envelope is enclosed for this purpose. Qualifying Shareholders who hold their Shares in certificated form should also return their share certificate(s) and/or other document(s) of title in respect of the Shares tendered. Completed Tender Forms must be received by not later than 1.00 p.m. on 24 May 2019. Further details of the procedures for tendering and settlement are set out in paragraph 3.2 of Part III of the circular and in the accompanying Tender Form.
By Shareholders holding Ordinary Shares in uncertificated form
Qualifying Shareholders who hold Ordinary Shares in uncertificated form (that is, in CREST) and who wish to tender all or any of their existing holdings of Ordinary Shares should tender electronically through CREST so that the TTE Instruction settles by not later than 1.00 p.m. on 24 May 2019. Further details of the procedures for tendering and settlement are set out in Part III of the circular.
The CREST manual may also assist Shareholders in making a TTE Instruction.
Shareholders who do not wish to tender any Shares should not complete a Tender Form or submit a TTE Instruction.
The Board considers that the Tender Offer is in the best interests of Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of Resolution 9 to be proposed at the 2019 AGM which will authorise the implementation of the Tender Offer.
The Directors intend to vote in favour, or procure the vote in favour, of Resolution 9 at the 2019 AGM in respect of their own beneficial holdings of Ordinary Shares, which in aggregate amount to 129,198 Ordinary Shares (representing 0.1 per cent. of the issued ordinary share capital of the Company as at the date of the circular).
The Directors make no recommendation to Shareholders as to whether or not they should tender all or any of their Shares in the Tender Offer. Whether or not Shareholders decide to tender their Shares will depend, amongst other factors, on their view of the Company's prospects and their own individual circumstances, including their own tax position.
If you are in any doubt about the contents of the circular or the action you should take, you should seek your own independent financial or legal advice immediately.
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Latest time and date for receipt of Forms of Proxy for the 2019 AGM
12 noon on 24 May
Latest time and date for receipt of Tender Forms or for settlement of TTE Instructions
1.00 p.m. 24 May
Record Date for participation in the Tender Offer
5.00 p.m. on 24 May
Annual General Meeting
12 noon on 28 May
Results of the 2019 AGM and Tender Offer announced
Tender Purchase Date
CREST accounts credited with Tender Offer consideration in respect of uncertificated Shares sold under the Tender Offer and any unsold uncertificated Shares
Despatch of cheques for the Tender Offer consideration in respect of certificated Shares sold under the Tender Offer
Despatch of any balance certificates in respect of any unsold certificated Shares
Baker Steel Resources Trust Limited +44 20 7389 8237
Numis Securities Limited +44 20 7260 1000
David Benda (Corporate)
James Glass (Sales)
HSBC Securities Services (Guernsey) Limited
Company Secretary +44 (0)1481 717 852
Further details of the Tender Offer are set out in the circular, which will be available on the Company's website at www.bakersteelresourcestrust.com. A copy of the circular will be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk /uk/NSM.
Capitalised terms used in this announcement shall, unless the context otherwise requires, bear the meaning given to them in the Circular.
This announcement and the information contained herein is not for publication, release or distribution, directly or indirectly, in or into the United States, Australia, Canada, Japan or South Africa or any jurisdiction in which the same would be unlawful.
This announcement is for information purposes only and does not constitute an invitation to tender shares or otherwise acquire or dispose of securities in the Company in any jurisdiction.
Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and is acting for no-one else in connection with any tender offer declared by the Company and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for providing advice in relation to any tender offer by the Company or any other matter referred to herein. To the fullest extent permitted by law recipients agree that Numis shall not have any liability (direct or indirect) for or in connection with this announcement or any matters arising out of or in connection herewith. Numis has not authorised the contents of, or any part of, this announcement.
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