REG - Residential Secure - Publication of Circular & General Meeting Notice

Residential Secure IncomeAnnouncement

20/11/2024 07:00

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RNS Number : 8750M  Residential Secure Income PLC  20 November 2024

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

 

FOR IMMEDIATE RELEASE

 

20 November 2024

 

Residential Secure Income plc

 

("ReSI plc" or the "Company")

 

Publication of Circular and Notice of General Meeting

 

Further to the announcement of 3 October 2024, the Board of ReSI plc (LSE:
RESI) announces that a circular (the "Circular") to convene a general meeting
(the "General Meeting") has been published today and sent to shareholders
("Shareholders"), the purpose of which is to propose a new investment
objective and investment policy of the Company (the "New Investment Policy")
in order to implement a managed realisation and wind-down of the Company (the
"Managed Realisation and Wind-Down").

 

Under the proposed Managed Realisation and Wind-Down process, the Company will
be managed with the intention of realising all the existing assets in its
portfolio in an orderly manner and with a view to repaying borrowings and
making timely returns of capital to Shareholders.

 

The adoption of the New Investment Policy is conditional on Shareholder
approval by way of an ordinary resolution requiring the approval of holders of
a majority of the Company's shares voted at the General Meeting (whether in
person or by proxy) (the "Resolution").

 

The Board unanimously recommends that Shareholders vote in favour of the
Resolution to be proposed at the General Meeting.

 

The Board will seek to achieve the most tax-efficient treatment for the
Company's UK Shareholders as a whole taking into account the composition of
the Company's shareholder register, but, as Shareholders' circumstances will
vary, it is important that Shareholders seek their own independent tax and
financial advice at all times.

 

Change to the Fund Manager's fee arrangements

 

Conditional upon the adoption of the New Investment Policy, the Company and
the Fund Manager have agreed to amend the terms of the Fund Manager's fee
arrangements so as to ensure that the Fund Manager is appropriately
incentivised to maximise the value received from the Company's assets in a
timely manner.

 

Details of the proposed changes to be made to the Fund Manager's fee
arrangements have been set out in the Appendix to this announcement and shall,
if Shareholders approve the adoption of the New Investment Policy at the
General Meeting, be documented in an amendment to the Fund Management
Agreement, effective from 1 January 2025.

 

General Meeting

 

The General Meeting has been convened for 2:00 p.m. on Friday, 6 December 2024
to be held at the offices of Computershare, the Company Secretary, at Floor 3,
Moor House, 120 London Wall, London, EC2Y 5ET. The expected timetable of
principal events in relation to the General Meeting is as follows:

 

 Publication of the Circular                                                  Wednesday, 20 November 2024
 Latest time and date for receipt of proxy appointments and instructions for  2:00 p.m. on Wednesday, 4 December 2024
 the General Meeting
 General Meeting                                                              2:00 p.m. on Friday, 6 December 2024

 

The Circular will be made available on the Company's website at
https://greshamhouse.com/real-assets/uk-housing/residential-secure-income-plc/.
For the avoidance of doubt, neither the contents of this website nor the
contents of any websites accessible from any hyperlinks are incorporated into
or form part of this announcement.

 

A copy of the Circular will also be submitted to the National Storage
Mechanism, where it will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

 

Capitalised terms used in this announcement have the meanings given to them in
the Circular.

 

LEI: 213800D24WA531LAR763

 

For further information, please contact:

 

 Gresham House Real Estate

 Ben Fry                            +44 (0) 20 7382 0900

 Sandeep Patel

 Peel Hunt LLP

 (Broker & Financial Adviser)       +44 (0) 20 7418 8900

 Luke Simpson

 Huw Jeremy

 KL Communications                  gh@kl-communications.com (mailto:gh@kl-communications.com)

 Charles Gorman                     +44 (0) 20 3882 6644

 Charlotte Francis

 

Peel Hunt LLP, which is authorised and regulated in the United Kingdom by the
Financial Conduct Authority, is acting exclusively for the Company and no-one
else in connection with the matters referred to in this announcement and shall
not be responsible to anyone other than the Company for providing the
protections afforded to clients of Peel Hunt, nor for providing advice in
connection with the matters referred to in this announcement. Neither Peel
Hunt nor any of its affiliates (nor any of its or their respective directors,
officers, employees, representatives or agents) owes or accepts any duty,
liability or responsibility whatsoever (whether direct, indirect,
consequential, whether in contract, in tort, under statute or otherwise) to
any person who is not a client of Peel Hunt in connection with the matters
referred to in this announcement.

 

Appendix

Proposed Changes to the Fund Manager's fee arrangements

 

Conditional on the passing of the Resolution, the Company and the Fund Manager
have agreed to amend the terms of the Fund Manager's fee arrangements so as to
ensure that the Fund Manager is appropriately incentivised to maximise the
value received from the Company's assets in a timely manner.

 

Under this new fee structure, the Fund Manager will continue to be paid its
current Fund Management Fee, which was rebased, effective 1 January 2024, to
the average of the Company's Market Capitalisation and the Net Asset Value for
the relevant quarter (the "Current Fund Management Fee"), in addition to a new
incentivisation fee which will comprise a disposal base fee (the "Base Fee")
and a conditional disposal fee (the "Conditional Disposal Fee" and, together
with the Base Fee, the "Incentivisation Fee"), where fees will be linked to
both the execution and the net disposal proceeds of asset sales accounting for
the repayment or transfer of outstanding debt and any taxes payable by the
Company but excluding any transaction costs and excluding the benefit of any
actual or potential debt break gains not reflected in the Benchmark EPRA NTA,
as described below.

 

In addition to the below, the Company and the Fund Manager have agreed that
the notice period under the Fund Management Agreement will be reduced from
twelve months down to three months.

 

Subject to the passing of the Resolution, the Fund Manager's existing fee
arrangement will be replaced, effective from 1 January 2025, with the
following:

 

(1)         the Current Fund Management Fee on that part of the Net Asset
Value up to and including £250 million, being an amount equal to 1 per cent.
per annum of such part of the average of the Company's Market Capitalisation
and Net Asset Value. The Current Fund Management Fee is paid quarterly in
advance. 75 per cent. of the total Current Fund Management Fee is payable in
cash (the "Cash Fee") and 25 per cent. of the total Current Fund Management
Fee (net of any applicable tax) is payable in the form of Ordinary Shares
rather than cash (the "Equity Element"); and

 

(2)         the Incentivisation Fee payable in connection with the Managed
Realisation and Wind-Down, consisting of:

 

(a)      the Base Fee, being a fee of £700,000 (plus VAT, if applicable),
payable in two equal instalments of £350,000, on completion of the sale of
each of the Shared Ownership portfolio and the Retirement Living portfolio;
and

 

(b)     the Conditional Disposal Fee, being a maximum fee of £500,000 (plus
VAT, if applicable), first accruing once aggregate net disposal proceeds
received from 1 January 2025 after repayment or transfer of outstanding debt
and any taxes payable by the Company but excluding any transaction costs and
excluding the benefit of any actual or potential debt break gains not
reflected in the Benchmark EPRA NTA ("Net Disposal Proceeds") are equivalent
to not less than 90 per cent. of the Benchmark EPRA NTA, and moving on a
straight-line basis from 90 per cent. to 100 per cent. of the Benchmark EPRA
NTA, which shall be payable on liquidation of the Company.

 

For the avoidance of doubt, the sum of the Base Fee and Conditional Disposal
Fee shall not exceed £1,200,000 (plus VAT, if applicable).

 

The amendments to the fee arrangements outlined above are considered to be a
relevant related party transaction under UKLR 11.5.4R(1) and this announcement
is being made in accordance with UKLR 8.2.1R.

 

The Board, which has been so advised by Peel Hunt LLP ("Peel Hunt"), considers
that the terms of the Incentivisation Fee are fair and reasonable as far as
shareholders are concerned. In giving its advice, Peel Hunt has taken into
account the Board's commercial assessment of the Incentivisation Fee.

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