Custodian REIT PLC (LON:CREI) said it expects to seek approval to dis-apply pre-emption rights on up to 20% of the Company's issued share capital at the 2019 Annual General Meeting (AGM) after the resolutions failed to clear in the AGM held last month.
The real estate investment trust said that at its AGM on 19 July, shareholders had approved a resolution to disapply pre-emption rights to 10% of its share capital but had not voted above the required 75% threshold to approve a second resolution for a further 10%.
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This marks a change from the AGM in July 2017, when shareholders voted to disapply the pre-emption to 20% of the share capital.
The company highlighted that the votes against the resolution only represented 7.4% of eligible votes, and based on feedback from shareholders at the AGM, it expected to request approval for the disapplication of pre-emption rights on up to 20% of its share capital at the 2019 AGM.
Pre-emption rights are designed to protect shareholders against inappropriate dilution of their shares and require that they may only be disapplied by a special resolution at a general meeting.
It said having the authority to issue up to 20% of its share capital on a non-pre-emptive basis is "justified to continue the Company's programme of tap issuance, which allows the Company to grow in a cost-efficient manner by avoiding the significant costs of publishing a prospectus and satisfies demand for the Company's shares."
It added: "The Board believes that growing the Company is in the best interests of all Shareholders as it reduces the Company's fixed costs per Ordinary Share and should increase the secondary market liquidity in its Ordinary Shares."
It said that new ordinary shares will only be issued to new and existing Shareholders at a sufficient premium to net asset value (NAV) at the point of issue to at least cover the issue costs of the new Ordinary Shares and will therefore be accretive to the prevailing NAV for existing Shareholders.
"Whilst existing Shareholders' voting rights will be diluted, the Directors believe this consideration is outweighed by the flexibility that a larger authority provides and the cost savings associated with not needing to issue subsequent circulars to obtain further authority. The Directors would use this authority only when they consider it to be in the best interests of Shareholders to fund suitable property acquisitions.