In November 2014, Origo shareholders approved a revised investing policy, under which the Company is now, through an orderly realisation programme, seeking to divest its entire portfolio over a period of no longer than 4 years at such time and under such conditions as the independent directors of Origo may determine in order to maximise value on behalf of the Company’s shareholders.
Currently, Origo has to tender for its $12m convertible zero dividend preference share issue by 8 March 2016.
However they say the Chinese slowdown and weak commodity market mean that the realisation process is taking longer than they thought. They are worried that they won’t be able to redeem the CZDPs by March 2016.
So they have talked to the main CZDP shareholders and have come up with a set of proposals which would restructure the CZDPs and would provide Origo with greater flexibility to implement its orderly realisation strategy – with a view to maximising value on behalf of Origo’s shareholders. The key elements of the proposals are expected to include the following:
- The removal of the requirement for the Company to undertake the tender offer by 8 March 2016;
- The accreted principal amount per CZDP be reset to S$1.28.
- In the event that aggregate distributions equal to the aggregate CZDP accreted principal amount ($1.28 per CZDP) have not been made to the holders of the CZDPs by 31 December 2017, the remaining aggregate undistributed accreted principal amount shall increase at an accrued rate of return of 5% p.a. from 1 January 2018 and at an accrued rate of return of 10% p.a. from 1 January 2019 until repaid through distributions to CZDP Shareholders;
- Origo’s ordinary shareholders to receive a proportion of all future distributions alongside CZDP Shareholders, pro rata as follows:
- – in respect of the first US$40 million of distributions, 87.5% to CZDP Shareholders and 12.5% to Ordinary Shareholders;
- – in respect of the next US$40 million of distributions, 70% to CZDP Shareholders and 30% to Ordinary Shareholders;
- – in respect of distributions in excess of US$80 million:
- until such time as distributions equal to the accreted capital amount have been made to the CZDP Shareholders, 30% to CZDP Shareholders and 70% to Ordinary Shareholders;
- and thereafter, 100% to Ordinary Shareholders.
- The Articles be amended to remove the mandatory CZDP conversion clause; and the settlement of the dispute with Brooks Macdonald Group plc.
In addition, an additional independent non-executive director of Origo, acceptable to Brooks Macdonald, will be identified and appointed to the board of directors of Origo.
OPP : Origo proposes restructuring