REG - Reconstruction CapII - Proposed Cancellation & AGM Notice

Reconstruction Capital IIAnnouncement

01/11/2023 07:15

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RNS Number : 9155R  Reconstruction Capital II Ltd  01 November 2023

1 November 2023

 

 

Proposed Cancellation of Admission to Trading on AIM

and

Notice of Annual General Meeting

 

Reconstruction Capital II Limited ("RC2", the "Company" or the "Group"), a
closed-end investment company incorporated in the Cayman Islands admitted to
trading on the AIM market of the London Stock Exchange, today announces that
it has posted a circular to shareholders (the "Circular") in connection with a
proposal for the cancellation of admission of the ordinary shares in the
Company (the "Ordinary Shares") to trading on AIM (the "Cancellation"),
pursuant to Rule 41 of the AIM Rules for Companies (the "AIM Rules"), a
proposal for the adoption of new memorandum and articles of association and
continuation of the life of the Company.

The Circular will include a notice of the Annual General Meeting ("AGM") of
the Company which is being convened for 10.00 a.m. on 29 November 2023, at the
offices of Apex Group Fiduciary Services Limited at IFC 5, St Helier, Jersey
JE1 1ST, for the purposes of considering and, if thought fit, passing the
requisite shareholder resolutions to approve the Cancellation. In accordance
with the requirements of the AIM Rules, the Cancellation is conditional upon
the approval of not less than 75 per cent. of the votes cast by shareholders
(whether present in person or by proxy) at the AGM.

Extracts of the Circular are set out in the Appendices of this announcement
without material amendment or adjustment.

 

For further information, please contact:

 

Reconstruction Capital II Limited

Cornelia Oancea / Luca Nicolae

Tel: +40 21 3167680

 

Grant Thornton UK LLP (Nominated Adviser)

Philip Secrett

Tel: +44 (0) 20 7383 5100

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of the
UK law by virtue of the European Union (Withdrawal) Act 2018. The information
is disclosed in accordance with the Company's obligations under Article 17 of
the UK MAR. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

 

APPENDICES - EXTRACTS FROM THE CIRCULAR TO SHAREHOLDERS

APPENDIX I - LETTER FROM THE CHAIRMAN

Proposed Cancellation of admission of Ordinary Shares to trading on AIM,
proposed Adoption of new Memorandum and Articles of Association, Continuation
of the Life of the Company and Annual General Meeting

1          INTRODUCTION

1.1     At the Company's general meeting in 2018, Shareholders voted to
extend the life of the Company, so that the next continuation vote would be
held in 2023, and every two years thereafter.  The Directors have concluded
that given the slow process of selling the investments, exacerbated by the
Covid-19 crisis followed by the war in Ukraine and resulting cost of living
crisis, which has had a significant impact on the main investee company
Policolor and on Mamaia Resort Hotels, it is in the best interests of the
Company to further extend its life.

1.2     The Directors have also concluded that it is in the best interests
of the Company and its Shareholders to seek Shareholder approval for the
cancellation of the admission of the Ordinary Shares to trading on AIM. The
Cancellation is conditional, pursuant to Rule 41 of the AIM Rules, upon the
approval of not less than 75 per cent. of the votes cast by Shareholders
(whether present in person or by proxy) at the General Meeting, notice of
which is set out on page 12 of this document.

1.3     Given the proposed Cancellation, the Directors are also proposing
to amend the Articles to reflect the Cancellation and also so that
Shareholders will continue to be informed about the status of the Company with
certain information rights.

1.4     The Board is aware that the proposed Cancellation, should it be
approved by the Shareholders at the General Meeting, would make it more
difficult for Shareholders to buy and sell Ordinary Shares. The Company,
therefore, intends to make arrangements for a "matched bargain facility" to be
established post Cancellation in order to assist Shareholders wishing to trade
in the Ordinary Shares post Cancellation, assuming the Cancellation Resolution
is passed. It is envisaged that the Matched Bargain Facility would be in place
for at least twelve months post Cancellation.

1.5     The Company is seeking Shareholders' approval of the Cancellation,
of the proposed changes to the Articles as a consequence thereof, and of the
proposal to continue the life of the Company at the General Meeting, which has
been convened for 29 November  2023. Finally, the Company is laying the
balance sheet and auditors' report for the period ending 31 December 2022
before Shareholders and seeking the ratification of the same documents for the
previous periods ending 31 December 2021. If the Cancellation Resolution is
passed at the General Meeting, it is anticipated that the Cancellation will
become effective at 7.00 am on 19 December 2023.

1.6     The purpose of this document is to seek Shareholders' approval for
the Resolutions, to provide you with the information on the background and
reasons for the Cancellation and changes to the Articles, and the proposed
continuation of the life of the Company, and to explain the consequences of
the Cancellation and changes to the Articles, and provide reasons why the
Directors unanimously consider the Cancellation, the amendment to the
Articles, the continuation of the life of the Company and the laying of the
balance sheet and auditors' report for the period ending 31 December 2022
before Shareholders and the ratification of the same documents for the
previous periods ending 31 December 2021 to be in the best interests of the
Company and its Shareholders as a whole. The Notice of the General Meeting is
set out on page 12 of this document.

1.7     It should be noted that interests directly and indirectly
associated with Ion Florescu as beneficial owner of approximately 60.47 per
cent. of the Company's voting share capital, are entitled to vote on the
Cancellation Resolution and he has indicated to the Directors that such
interests shall vote in favour of the Cancellation Resolution.

2          BACKGROUND TO AND REASONS FOR THE PROPOSALS

2.1     The Directors have conducted a review of the benefits and
drawbacks to the Company and its shareholders in retaining its admission to
trading on AIM and believe that Cancellation is in the best interests of the
Company and its Shareholders as a whole. In reaching this conclusion, the
Directors have considered the following key factors:

2.1.1      whilst in principle trading on AIM should give the
Shareholders access to liquidity and give them the possibility to freely trade
their shares, in reality, trading in the Company's shares has been minimal
with a low total volume of trades evidenced over the last 12 months;

2.1.2      the considerable cost, management time and the legal and
regulatory burden associated with maintaining the Company's admission to
trading on AIM are, in the Directors' opinion, disproportionate to the
benefits to the Company and to its size; and

2.1.3      the Directors believe that the continued admission to trading
on AIM is highly unlikely to provide the Company with significantly wider
access to capital.

2.2     Following careful consideration, the Directors unanimously believe
that it is in the best interests of the Company and Shareholders, taken as a
whole, to seek the proposed Cancellation at the earliest opportunity.

2.3     Given the slow process of selling the investments, exacerbated by
the Covid-19 crisis followed by the war in Ukraine and resulting cost of
living crisis, which has had a significant impact on Policolor (delaying its
turnaround) and on Mamaia Resort Hotels, the Board believes that it should
continue with its efforts to maximize the exit value of both investments
before putting them up for sale. Whilst these macro events had a limited
negative effect on the Company's most recent investment, Telecredit, it
remains an early stage small and medium sized enterprise financing investment.

2.4     In order to continue the work on realising the Company's
investments, the Board considers that the life of the Company should be
extended for a further five years and that the current requirement to hold a
continuation vote every two years would be inconsistent with this strategy.
Accordingly, the Board is proposing an ordinary resolution that would extend
the life of the Company and amendments to the Articles which would mean that
the next continuation vote would be held in 2028 and then every five years
thereafter.  The Board will continue to apply the Company's existing
investing policy approved by Shareholders in February 2018.

3          PROCESS FOR, AND PRINCIPAL EFFECTS OF, THE CANCELLATION

3.1     Under the AIM Rules, it is a requirement that the Cancellation
must be approved by not less than 75 per cent. of votes cast by Shareholders
at a General Meeting. Accordingly, the Notice of General Meeting set out in
Part II of this document contains a special resolution to approve the
Cancellation.

3.2     Furthermore, Rule 41 of the AIM Rules requires any AIM company
that wishes the London Stock Exchange to cancel the admission of its shares to
trading on AIM to notify shareholders and to separately inform the London
Stock Exchange of its preferred cancellation date at least 20 Business Days
prior to such date. In accordance with AIM Rule 41, the Company's Nominated
Adviser has notified the London Stock Exchange of the Company's intention,
subject to the Resolutions being passed at the General Meeting, to cancel the
Company's admission of the Ordinary Shares to trading on AIM.

3.3     Accordingly, if the Cancellation Resolution is passed, it is
expected that the Cancellation will become effective at 7:00 a.m. on 19
December 2023. If the Cancellation becomes effective, Grant Thornton UK LLP
will cease to be nominated adviser of the Company and the Company will no
longer be required to comply with the AIM Rules. Furthermore, if the
Resolution relating to the amendment and restatement of the Articles is
passed, then the amended and restated Articles will come into effect on or
after the Cancellation.

3.4     The principal effects of the Cancellation will be that:

3.4.1      there will be no formal market mechanism enabling the
Shareholders to trade Ordinary Shares, no recognised market or trading
facility is intended to be put in place to facilitate the trading of the
Ordinary Shares post Cancellation (save for the intended Matched Bargain
Facility described in paragraph 4 below, which will provide a limited
mechanism to facilitate the trading of Ordinary Shares off-market), no price
will be publicly quoted for the Ordinary Shares and the transfer of Ordinary
Shares will be subject to the provisions of the Articles;

3.4.2      while the Ordinary Shares will remain freely transferrable, it
is likely that the liquidity and marketability of the Ordinary Shares will, in
the future, be more constrained than at present and the value of such shares
may be adversely affected as a consequence;

3.4.3      in the absence of a formal market and quote, it may be more
difficult for Shareholders to determine the market value of their investment
in the Company at any given time;

3.4.4      the Company will no longer be subject to the UK MAR regulating
inside information and other matters;

3.4.5      Shareholders will lose certain protections provided to
minority shareholders by virtue of the Company being subject to the AIM Rules,
and the existing Relationship Agreement with Mr Ion Florescu will
automatically terminate.  The Board has, however, negotiated a new
relationship agreement with Mr Ion Florescu in which he gives the following
main undertakings:

(i)           that the Company will continue to be managed
independently and for the benefit of the Shareholders as a whole (provided
that nothing shall preclude him and/or his connected persons from providing
loans and advisory services to the Company and its subsidiaries and exercising
all of their rights in respect of such loans);

(ii)          that, at all times, the majority of the Directors will
be independent directors.

(iii)         that all transactions and relationships between himself
and/or a connected person on the one hand and the Company and/or any of its
subsidiaries on the other hand, will be at arm's length and on a normal
commercial basis.

3.4.6      the Company will no longer be required to seek Shareholder
approval for reverse takeovers and fundamental changes in the Company's
business;

3.4.7      the Company will not be bound to announce material
developments as required by the AIM Rules and MAR, such as interim results,
final results, substantial transactions, related party transactions, and the
information maintained on the Company's website under AIM Rule 26. However,
the Company intends to continue to maintain its website
(http://www.reconstructioncapital2.com) and the Directors intend to provide
quarterly reports and to continue to publish audited annual accounts of the
Company;

3.4.8      Grant Thornton UK LLP will cease to be the Company's nominated
adviser and the Company will cease to have a broker; and

3.4.9      the Cancellation may have taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax position
should consult their own professional independent tax adviser.

3.5     There is currently no intention to change the existing Directors
following the Cancellation.

3.6     The Company will continue to be subject to Cayman Islands law
notwithstanding the Cancellation and will also continue to be bound by the
provisions of the Articles, pursuant to which shareholder approval is required
for certain matters.

3.7     Conditional on the Cancellation becoming effective, the Company
proposes to amend and restate its Articles. The form of the proposed amended
and restated Articles can be found on the Company's website (https://www.
reconstructioncapital2.com) and a copy of the new articles and a redline of
the articles showing the changes from the existing Articles accompany this
Circular.

3.8     The amended and restated Articles will be updated and will not
contain certain of the detailed provisions of the current Articles which are
common for AIM-listed companies and which will not be necessary for the
Company following the Cancellation. In summary, the key proposed amendments
are set out below:

3.8.1      the period within which the Company is required to file its
accounts shall be extended from six months (required for most listed
companies) to nine months following the end of the financial year and certain
specific accounts content requirements will no longer apply;

3.8.2      the requirement to hold annual general meetings shall be
removed;

3.8.3      certain restrictions in the Articles relating to the Company's
ability to issue new shares shall be removed (e.g. to ineligible investors or
restrictions requiring the Company to obtain a valuation report in the case of
shares issued for non-cash consideration);

3.8.4      references to telex and telefax shall be removed;

3.8.5      various historic references shall be removed (e.g. references
to the Company's initial subscribers, admission document and AIM market
buyback programme); and

3.8.6      potentially restrictive "objects" contained in the Articles
shall be removed, along with other general updates required following changes
to applicable laws.

The above considerations are not exhaustive and Shareholders should seek their
own independent advice when assessing the likely impact of the Cancellation on
them.

Certain Shareholders may be unwilling or unable to hold Ordinary Shares
following the Cancellation and may wish to consider selling their Ordinary
Shares in the market prior to the Cancellation becoming effective on 19
December 2023. The Board is however making no recommendation as to whether or
not Shareholders should buy, continue to hold or sell Ordinary Shares.

4          TRANSACTIONS IN THE ORDINARY SHARES POST CANCELLATION

The Board is aware that the proposed Cancellation, should it be approved by
Shareholders at the General Meeting, would make it more difficult for
Shareholders to buy and sell Ordinary Shares should they wish to do so.
Thereafter, the Company is making arrangements for the Matched Bargain
Facility to assist Shareholders to trade in the Ordinary Shares from the date
of Cancellation, if the Cancellation Resolution is passed. The Matched Bargain
Facility will be provided by J P Jenkins, which is an appointed representative
of Prosper Capital LLP, which is authorised and regulated by the UK Financial
Conduct Authority. Under the Matched Bargain Facility, Shareholders or persons
wishing to acquire or dispose of Ordinary Shares will be able to leave an
indication with J P Jenkins, through their stockbroker, of the number of
Ordinary Shares that they are prepared to buy or sell and the price at which
they are prepared to do so. In the event that J P Jenkins is able to match
that order with an opposite sell or buy instruction, it would contact both
parties and then effect the bargain (trade). Should the Cancellation become
effective, and the Company puts in place the Matched Bargain Facility, details
will be made available to Shareholders on the Company's website. It should be
noted, however, that there is no guarantee that the Matched Bargain Facility
will be established, or as to the liquidity such a facility would afford the
Ordinary Shares post Cancellation.  Therefore, Shareholders should carefully
consider, inter alia, the effects of the proposed Cancellation set out above
and seek their own independent advice when assessing the likely impact of the
Cancellation.

 

The Matched Bargain Facility is intended to operate for a minimum of twelve
months after Cancellation. The Directors' current intention is that it will
continue beyond that time but Shareholders should note that it may not be put
in place in the first instance or, if established, be withdrawn at short
notice and therefore in both instances inhibit Shareholders' ability to trade
the Ordinary Shares. Further details will be communicated to the Shareholders
at the relevant time.  If Shareholders wish to buy or sell Ordinary Shares on
AIM, they must do so prior to the Cancellation becoming effective. As noted
above, in the event that Shareholders approve the Cancellation, it is
anticipated that the last day of dealings in Ordinary Shares on AIM will be 18
December 2023 and that the effective date of the Cancellation will be 19
December 2023 at 7.00 a.m.

 

5          GENERAL MEETING AND ACTION TO BE TAKEN

The Proposals are subject to the passing of Resolutions 1 to 3 to be proposed
at the General Meeting. It is intended that this meeting should also
constitute the Company's annual general meeting for 2023 and that the
Company's balance sheet and auditors' report for the period ending 31 December
2022 be received, and those circulated in the previous years up to and
including 31 December 2021 be ratified. Page 12 of this Circular contains a
notice of the General Meeting of the Company to be held at 10.00 a.m. on 29
November 2023 when the following resolutions will be proposed:

 

1.                        the cancellation of the
admission to trading on AIM (the market of that name operated by London Stock
Exchange plc) of the ordinary shares of €0.01 each of the Company be
approved;

2.                        that, in accordance with
138.2 of the Articles, the Company continues as presently constituted until
the next continuation vote;

3.                        the adoption of new
memorandum of association and articles of association of the Company in
substitution for and to the exclusion of the existing memorandum of
association and articles of association, conditional on the Cancellation
becoming effective; and

4.                        the balance sheet and
auditors' report for the period ending 31 December 2022 be received and those
circulated in the previous years up to and including 31 December 2021 be
ratified.

All votes on the Resolutions will be taken via a poll in accordance with the
Articles.

Resolutions 1 and 3 are each proposed as a Special Resolution. Resolution 1
requires 75 per cent. of votes cast to be in favour to be approved and
Resolution 3 requires the approval of two thirds of the total number of votes
capable of being cast to be in favour to be approved.

Resolution 2 will be proposed as an Ordinary Resolution and, in accordance
with the Articles, will be deemed not to have been passed if the votes against
the Resolution constitute a majority against the Resolution and represent at
least 25 per cent. of the total number of votes capable of being cast on that
Resolution.

Resolution 4 will be proposed as an Ordinary Resolution and will be passed if
the votes in favour constitute a majority of the members entitled to vote
present at the meeting.

Shareholders will find enclosed with this Circular a Form of Proxy to enable
you to vote at the General Meeting. Whether or not you intend to be present at
the General Meeting, you are requested to complete and return the Form of
Proxy in accordance with the instructions printed on it to the Company's
Registrars, Apex Group Fiduciary Services Limited, so as to arrive no later
than 10.00 a.m. (London time) on 29 November 2023. Completion and return of
the form of proxy will not affect your right to attend in person and vote at
the Annual General Meeting should you so wish.

6          RECOMMENDATION AND VOTING INTENTIONS

Your Board considers that the Proposals are in the best interest of the
Company and its Shareholders as a whole and unanimously recommends
Shareholders to vote in favour of all the Resolutions to be proposed at the
General Meeting.  Ion Florescu and shareholders directly and indirectly
connected to him have advised the Board that they intend to vote their
aggregate shareholding of 81,985,081 Ordinary Shares, representing
approximately 60.47 per cent. of the issued share capital of the Company, in
favour of the Resolutions.

 

 

APPENDIX II - EXPECTED TIMETABLE OF PRINCIPAL ((1) (2))

 Announcement of proposed Cancellation and notice provided to the London Stock
 Exchange

                                                                                 1 November  2023
 Publication and posting of this document and Form of Proxy to Shareholders     1 November 2023
 Latest time and date for receipt of Forms of Proxy in respect of the Annual    10.00 a.m. on 29 November 2023
 General Meeting
 Time and date of the Annual General Meeting                                    10.00 a.m. on 29 November 2023
 Expected last day of dealings in Ordinary Shares on AIM                        18 December 2023
 Expected time and date of Cancellation ((3))                                   7.00 a.m. on 19 December2023

 

Notes:

(1) All of the times referred to in this document and the Form of Proxy refer
to London time, unless otherwise stated.

(2) Each of the times and dates in the above timetable is subject to change.
If any of the above times and/or dates change, the revised times and/or dates
will be notified to Shareholders by announcement through a Regulatory
Information Service.

(3) The Cancellation requires the approval of not less than 75 per cent. of
the votes cast by Shareholders at the Annual General Meeting

 

 

APPENDIX III - DEFINITIONS

In this Circular, unless the context otherwise requires, the following
expressions bear the following meanings:

 

 AIM                                        AIM, the market operated by the London Stock Exchange;
 AIM Rules                                  the rules for AIM companies as published by the London Stock Exchange from
                                            time to time;
 Announcement                               the Company's announcement relating to the contents of this Circular, dated 1
                                            November  2023;
 Articles                                   the memorandum and articles of association of the Company as amended from time
                                            to time
 Business Day                               any day which is not a Saturday, Sunday or public holiday on which banks are
                                            open for business in the City of London;
 certificated or in certificated form       a share or other security which is not in uncertificated form;
 Cancellation                               cancellation of the admission to trading on AIM of the Ordinary Shares, in
                                            accordance with Rule 41 of the AIM Rules, subject to passing of the
                                            Cancellation Resolution;
 Cancellation Resolution                    Resolution 1 to be proposed at the General Meeting;
 Circular or 'this document'                this circular dated 1 November  2023;
 Continuation                               the continuation of the Company as constituted and referred to in Resolution
                                            2;
 Directors or Board                         the directors of the Company from time to time;
 Form of Proxy                              the form of proxy for use at the General Meeting, which accompanies this
                                            document;
 General Meeting or Annual General Meeting  the annual general meeting of the Shareholders, notice of which is set out on
                                            page 12 at the end of this document;
 J P Jenkins                                the trading name of InfinitX Limited (Company Number: 11551708), a company
                                            incorporated in England & Wales;
 London Stock Exchange                      London Stock Exchange plc;
 Mamaia Resort Hotels                       Mamaia Resort Hotels SRL, a company that owns and operates a hotel on the

                                          Black Sea coast in Romania;

                                          the trading facility operated by J P Jenkins to facilitate trading in the
 Matched Bargain Facility                   Ordinary Shares on a matched bargain basis following Cancellation, details of
                                            which are set out in this Circular;
 NEC                                        New Europe Capital SRL, the Company's investment adviser;
 Notice of General Meeting                  the notice of the Annual General Meeting, which is set out on page 12 at the
                                            end of this document;
 Ordinary Shares                            ordinary shares of €0.01 par value each in the Company;
 Policolor                                  Policolor S.A. and its subsidiaries, a group operating in the paints, resins
                                            and chemicals business in Romania and Bulgaria;
 Proposals                                  the Cancellation, Continuation, adoption of a new memorandum of association
                                            and articles of association, receipt of the balance sheet and auditors' report
                                            for the period ending 31 December 2022 and ratification of these for the
                                            previous years ending on 31 December 2021;
 Registrars                                 Apex Group Fiduciary Services Limited at IFC 5, St Helier, Jersey JE1 1ST;
 Regulatory Information Service             has the meaning given to it in the AIM Rules for any of the services approved
                                            by the London Stock Exchange for the distribution of AIM announcements and
                                            included within the list maintained on the website of the London Stock
                                            Exchange;
 Resolutions                                the Resolutions to be put to the General Meeting as detailed in this Circular
                                            and in the Notice of the General Meeting;
 Shareholders                               holders of Shares;
 Telecredit                                 Telecredit IFN SA, a Romanian non-banking financial institution whose main
                                            activity is providing factoring, discounting, and microloans to small and
                                            medium-sized companies;
 UK or United Kingdom                       the United Kingdom of Great Britain and Northern Ireland;
 UK MAR                                     Regulation (EU) (No 596/2014) of the European Parliament and of the Council of
                                            16 April 2014 on market abuse to the extent that it forms part of the domestic
                                            law of the United Kingdom including by virtue of the European Union
                                            (Withdrawal) Act 2018 (as amended by virtue of the European Union (Withdrawal
                                            Agreement) Act 2020); and
 uncertificated or in uncertificated form   a share or security recorded in the Company's register of members as being
                                            held in uncertificated form.

 

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