REG - SLF Realisation Fund SLF Realisation-SLFX - Proposed delisting and termination of AIFM

SLF Realisation FundAnnouncement

29/10/2024 12:00

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RNS Number : 0725K  SLF Realisation Fund Limited  29 October 2024

LEI: 2138007S3YRY3IUU4W39

SLF Realisation Fund Limited (the "Company")

Publication of Delisting Circular, termination of AIFM appointment and Notices
of Class Meetings

29 October 2024

The Company has today published a circular (the "Circular") in connection with
a proposal to cancel the listing of the Company's Ordinary Shares and C Shares
from the Closed Ended Investment Funds Category of the Official List of the
Financial Conduct Authority and from trading on the Main Market of London
Stock Exchange plc (the "Share Delistings"). The Circular contains a notice
convening separate class meetings of the Ordinary Shareholders and C
Shareholders to be held on 26 November 2024 at 10.30 a.m. and 10.40 a.m.
respectively (the "Meetings"). A copy of the Circular will be submitted to the
National Storage Mechanism and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and on the Company's
website at  https://www.slfrealisationfund.co.uk
(https://www.slfrealisationfund.co.uk) .

The Company also announces that it has agreed with its alternative investment
fund manager ("AIFM"), FundRock Management Company (Guernsey) Limited
("FundRock") that its management contract will be terminated such that, with
effect from 1 January 2025, FundRock's appointment as AIFM will be terminated
and the Company shall continue as a self-manged alternative investment fund
for the remainder of its wind-down period.

Further details of the Share Delistings, the change in AIFM arrangements and
the Delisting Resolutions which will be put to Shareholders at the Meetings,
are set out below.

Capitalised terms used and not otherwise defined in this announcement shall
have the same meaning as in the Circular.

Background to and reasons for the Share DelistingS

The Company was incorporated on 28 May 2014 and registered in Guernsey as a
Closed-ended Collective Investment Scheme. Its issued share capital comprises
Ordinary Shares and C Shares, which are traded on the London Stock Exchange's
Main Market. The Company's Ordinary Shares were admitted to the Official List
on 14 July 2014. The C Shares were admitted on 12 December 2016.

On 4 December 2020, Shareholders approved a change to the Company's investment
objective and policy to facilitate a managed wind-down of the Company and a
realisation of its assets over time (the "Managed Wind-Down"), in order to
best serve the interests of the Company's Shareholders.

The 30 June 2020 NAV, being the NAV at the time the Managed Wind-Down
proposals were approved by Shareholders was 36.19p per Ordinary Share and
68.17p per C Share. Since that date, the Company has returned or announced the
return of 27.5p per share in cash to the Ordinary Shareholders and 74.75p per
share to the C Shareholders. The Company has therefore already returned or
announced the return of circa 76 per cent. of the Ordinary NAV and 109.7 per
cent. of the C Share NAV.

The Managed Wind-Down is therefore substantially completed in respect of the C
Share class and a substantial part of the realisations for the Ordinary Share
class has also been achieved.  There is, however, still some further value to
be realised, certainly for the Ordinary Shareholders.

The Board expects the wind-down plan for the bulk of what remains which is the
tail end of the portfolio to take approximately 12 months to exit, with a
further tail likely to take approximately a further 12 months, although it is
possible this could be done in a much shorter timeframe.

When the interim financial results were announced for the 6 month period to 31
December 2023, the Company stated that, as part of a review of costs, and due
to the small size of the Company, the Board was reviewing a plan to delist the
Company's Ordinary and 2016 C Shares from the London Stock Exchange. Since
that time, a further 0.5p per Ordinary Share and 2.25p per C Share has been
returned to shareholders.

The Company's investment portfolio now comprises:

Ordinary Share Class

 

 Borrower     FV at 30 June 2024  Asset Type      Asset Class           Currency

              £m
 Borrower 6   7.3                 Term Loan       Manufacturing         EUR
 Borrower 20  0.2                 Revolving Loan  Wholesale Portfolios  GBP
 Borrower 26  0.7                 Finance Lease   Wind Turbines         GBP
 Total        8.2

 

Equity Holdings and other Investments

 

 Borrower     FV at 30 June 2024  Investment Type  Asset Class           Currency

              £m
 Borrower 63  0.3                 Equity           Electronic Utilities  HKG
 Total        0.3

 

 

 

2016 C Share Class

 

 Borrower     FV on 30 June 24 £m   Asset Type      Asset Class           Currency
 Borrower 44  0.3                   Revolving Loan  Wholesale             GBP
 Borrower 45  0.5                   Finance Lease   Manufacturing         EUR
 Borrower 52  1.4                   Finance Lease   Waste Processing      GBP
 Total        2.24

 

In recent years, the Directors have explored various options regarding the
realisation of remainder of the Company's Portfolio, with the objective of the
Directors being to ultimately place the Company into liquidation following a
divestment of the Company's holdings. This outcome would also have resulted in
the cancellation of the admission of the Shares to listing on the Official
List and to trading on the Main Market, upon the commencement of the
liquidation of the Company.

Having analysed the existing portfolio, the Directors are of the opinion that
it is most cost effective, and therefore in the best interests of the Company
and its Shareholders, for the realisation of the Company's remaining holdings
to be achieved by the Company's Directors, rather than by the Company's
current AIFM, FundRock Management Company (Guernsey) Limited, or a liquidator.
Accordingly, the Directors have given notice to terminate the appointment of
FundRock Management Company (Guernsey) Limited as the Company's AIFM and
propose that the Company becomes a self-managed AIF with effect from 1 January
2025.

In the context of minimising the ongoing running costs of the Company, the
Directors have considered whether it remains in the best interests of the
Company, and its Shareholders, for the listing of the Shares on the Official
List and the trading of the Shares on the Main Market to continue.

The costs of maintaining the Company's listed company status are increasingly
disproportionate to the value of the Company's portfolio, and there are
identifiable cost savings that can be achieved by the Share Delistings.
Consequently, the Directors consider that maintaining the listing of the
Shares is no longer in the best interests of the Company or its Shareholders.

Details of the Share DelistingS

Cost savings

The Board has focused on ongoing operational costs and considered whether it
is still appropriate for the Company's Shares to be admitted to the Official
List and trading on the Main Market. The Board has concluded that the Company
would benefit from the passing of the Delisting Resolutions to give effect to
the Share Delistings due to the relatively significant ongoing annual costs
associated with maintaining admission to the Official List and trading on the
Main Market. The cash costs of maintaining the listing include fees paid to
the Company's accountants, corporate broker, registrars and lawyers, annual
fees paid to the London Stock Exchange and FCA, as well as costs relating to
the release of regulatory announcements. These costs have become increasingly
significant in proportional terms as the value of the Company's portfolio
diminishes. The Board also believes that the Company would benefit from the
simpler administration and regulatory requirements following the Share
Delistings which would be more appropriate to the Company's size. The Company
expects to achieve costs savings as a result of no longer being subject to the
provisions of the listed company regime. It is estimated that the Company
should achieve cost savings of approximately £183,500 in the financial year
following the Share Delistings.

Investment Objective

The Company's investment objective as an unlisted company will continue to be
the realisation of the Company's remaining assets in the portfolios attributed
to the Ordinary Shares and the C Shares in a prudent manner consistent with
the principles of good investment management and to return cash to
shareholders in an orderly manner.

Shareholder Considerations

Shareholders should take into consideration, amongst other things, that
following the Share Delistings: (a) there will be no public market for the
Shares and the opportunity for Shareholders to realise their investment in the
Company by selling their Shares will be limited to private secondary market
sales; (b) the corporate governance, regulatory and financial reporting regime
which applies to companies whose shares are admitted to the Official List and
to trading on the Main Market will no longer apply (more information on
regulatory considerations can be found in the paragraphs headed "Regulatory"
below)); and (c) there may be taxation consequences for Shareholders as a
result of the Shares no longer being admitted to the Official List and to
trading on the Main Market. Shareholders should consult their own professional
advisers and seek their own advice in connection with the potential
consequences of the Share Delistings, including any potential changes in the
tax treatment of their holding of Shares.

Corporate Structure

It is intended that, following the Share Delistings, the Company will continue
to operate in accordance with the current Articles. However, the Company's
corporate structure will remain under review and future proposals to amend the
corporate constitution to arrangements more appropriate to an unlisted company
which does not have its shares traded on the public markets may be proposed to
Shareholders following the Share Delistings. Any future changes to the
Articles (and also certain other general corporate matters affecting the
Company in accordance with the Articles and Guernsey Companies Law) will be
subject to approval by Shareholders.

 

 

Governance

The Directors intend following the Share Delistings to operate the Company's
corporate governance in substantially the same manner as at present.

Financial Reporting

The Company will continue to produce an annual report and accounts. On the
basis that the Share Delistings (if approved by Shareholders), will take
effect on 13 December 2024, then the full year accounts to 30 June 2025 are
expected to be published by 31 October 2025.

Regulatory

In conjunction with the Share Delistings, the Company intends to become a
self-managed AIF with effect from 1 January 2025. The Takeover Code will
continue to apply to the Company for a period of ten years from the effective
date of the Share Delistings. However, following the Share Delistings:

(a)       the regulatory regime which applies solely to companies such
as the Company with shares admitted to the Official List under Chapter 11 of
the UK Listing Rules, and to trading on the Main Market, will no longer apply
to the relevant class(es) of Shares, as detailed below;

(b)       the Company will not be subject to the disciplinary controls
of the Listing Rules, under which a closed-ended investment company listed on
the Official List under Chapter 11 of the UK Listing Rules at the current
time:

(i)        is required to appoint a 'sponsor' for the purposes of
certain corporate transactions, such as when undertaking a significant
transaction or capital raising. The responsibilities of the sponsor include
providing assurance to the FCA when required that the responsibilities of the
listed company have been met;

(ii)       is required to obtain the prior approval of its shareholders
to any material change to its published investment policy;

(iii)      is required to seek shareholder approval for a broader range
of transactions including certain related party transactions (related parties
including the Directors);

(iv)      there are stringent obligations with regard to a company's
purchase of its own securities; and

(v)       there are specified structures and pricing limits in relation
to further issues of securities;

(c)       certain institutional investor guidelines (such as those
issued by the Investment Association, the Pensions and Lifetime Savings
Association and the Pre-Emption Group), which give guidance on issues such as
executive compensation and share-based remuneration, corporate governance,
share capital management and the allotment and issue of shares on a
pre-emptive or non pre-emptive basis, will not apply to the Company as the
Shares will not be admitted to the Official List or to trading on the Main
Market; and

(d)       certain securities laws will no longer apply to the Company,
for example, the Disclosure Guidance and Transparency Rules, including in
relation to notification of significant shareholdings, and the UK MAR.

Shareholder updates

Following the Share Delistings, the Company intends to maintain its website in
order to communicate with Shareholders. Announcements of material information
will be posted on the Company's website at
https://www.slfrealisationfund.co.uk (https://www.slfrealisationfund.co.uk) ,
where a facility will also be established in order to allow Shareholders to
register for email updates.  The Company does not intend to maintain its
Regulatory News Service facility following the  Share Delistings.

Meetings

The Directors are convening the Meetings to attend to the Delisting
Resolutions.

The notices convening the Meetings are set out in the Circular. If you hold
your shares in CREST, you may appoint a proxy via the CREST system.
Alternatively, there paper Form of Proxy are enclosed with the Circular for
use at the Meetings.

If the Ordinary Share Delisting Resolution is passed, the Board proposes to
make an application to the FCA for the Ordinary Share Delisting. If the
requisite percentage of Ordinary Shareholders does not approve the Ordinary
Share Delisting Resolution, the Ordinary Shares will continue to be admitted
to the Closed Ended Investment Funds Category of the Official List and to
trading on the Main Market.

If the C Share Delisting Resolution is passed, the Board proposes to make an
application to the FCA for the C Share Delisting. If the requisite percentage
of C Shareholders does not approve the C Share Delisting Resolution, the C
Shares will continue to be admitted to the Closed Ended Investment Funds
Category of the Official List and to trading on the Main Market.

Actions to be taken by Shareholders

The Ordinary Class Meeting and the C Class Meeting will be held at the
Registered Office of the Company, 1(st) Floor Royal Chambers, St Julian's
Avenue, St Peter Port Guernsey on 26 November 2024 at 10.30 a.m. and 10.40
a.m. respectively to approve the Delisting Resolutions.

Each Delisting Resolution will be proposed as a special resolution; this means
that, for each Delisting Resolution, more than 75 per cent. of the votes cast
must be in favour for the resolution to be passed.

Members only of the respective class are entitled to attend and vote at their
own Meeting. Members present in person or by proxy shall upon a show of hands
have one vote and on a poll shall have one vote in respect of each share of
the relevant class held. In order to ensure that a quorum is present at the
relevant Meeting, it is necessary for two Shareholders of the relevant class
entitled to vote to be present, whether in person or by proxy.

Shareholders who hold their shares electronically may submit their votes
through CREST. Alternatively, Shareholders may complete and return the Forms
of Proxy provided to them, together with any power of attorney or other
authority under which they are signed or a notarially certified or office copy
thereof, in accordance with the instructions printed thereon to Link Group,
PXS1, Central Square, 29 Wellington Street, Leeds, LS1 4DL so as to be
received as soon as possible and in any event by no later than 10.30 a.m. on
22 November 2024 in relation to the blue Form of Proxy for the Ordinary Class
Meeting; and 10.40 a.m. on 22 November 2024 in relation to the red Form of
Proxy for the C Class Meeting.

Shareholders are requested to submit their votes through CREST or complete and
return a Form of Proxy.

Recommendations

The Board considers that the Delisting Resolutions to be proposed at the
Meetings are in the best interests of the Shareholders as a whole.
Accordingly, the Board unanimously recommends that all Shareholders vote IN
FAVOUR OF the Delisting Resolutions at the Meetings.

EXPECTED TIMETABLE

 Date of the Circular                                                          29 October 2024
 Latest time and date for receipt of Forms of Proxy (Ordinary Class Meeting)   22 November 2024 at 10.30 a.m.
 Latest time and date for receipt of Forms of Proxy (C Class Meeting)          22 November 2024 at 10.40 a.m.
 Ordinary Class Meeting                                                        26 November 2024 at 10.30 a.m.
 C Class Meeting                                                               26 November 2024 at 10.40 a.m.
 Last day of dealing in Shares*                                                24 December  2024
 Cancellation of listing of the Company's Ordinary Shares and C Shares on the  27 December 2024 at 7.00 a.m.
 Main Market of the London Stock Exchange*

*These timings are estimated timings assuming the Delisting Resolutions are
passed.

References to times in this announcement  are to London times unless
otherwise stated. Any changes to the expected timetable will be notified by
the Company through a Regulatory Information Service.

For further information please contact:

 SLF Realisation Fund Limited    Brett Miller via the Company Secretary
 Elysium Fund Management         Elysium@elysiumfundman.com

 Company Secretary               01481 703 100

 Winterflood Securities Limited  020 3100 0000

 Neil Langford

 IMPORTANT INFORMATION

The content of the website referred to in this announcement is not
incorporated into, and does not form part of, this announcement.

This announcement includes statements that are, or may be deemed to be,
"forward-looking statements".  These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "will",
or "should" or, in each case, their negative or other variations or comparable
terminology.  These forward-looking statements relate to matters that are not
historical facts regarding the Company's investment strategy, financing
strategies, investment performance, results of operations, financial
condition, prospects and dividend policies of the Company and the instruments
in which it will invest.  By their nature, forward-looking statements involve
risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.  Forward-looking
statements are not guarantees of future performance.  There are a number of
factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements. These
factors include, but are not limited to, changes in general market conditions,
legislative or regulatory changes, changes in taxation regimes or development
planning regimes, the Company's ability to invest its cash in suitable
investments on a timely basis and the availability and cost of capital for
future investments.

The Company expressly disclaims any obligation or undertaking to update or
revise any forward-looking statements contained herein to reflect actual
results or any change in the assumptions, conditions or circumstances on which
any such statements are based unless required to do so by FSMA, the Listing
Rules, the Prospectus Regulation Rules made under Part VI of the FSMA or the
Financial Conduct Authority or other applicable laws, regulations or rules.

 

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