Global Resources Investment Trust says it has entered into a legally binding subscription agreement with RDP Fund Management LLP under which RDP has agreed conditionally to subscribe (subject to having the right to assign some or all of the right to subscribe) for a total of 40,000,000 new ordinary shares of GBP0.01 in GRIT (plus warrants) at a price of GBP0.05 per share raising GBP2.0 million for the Company.
The warrants will entitle the holder to subscribe for Ordinary Shares, on the basis of: (a) one warrant (“First Warrant”) for every five Ordinary Shares, at a subscription price of GBP0.075 per Ordinary Share, exercisable until the period ending 12 months from readmission; and (b) if the First Warrant is exercised a further one warrant (“Second Warrant”), at a subscription price of GBP0.10 per Ordinary Share for each warrant exercised, exercisable until the period ending 24 months from readmission, issued pursuant to a warrant instrument (together the “Warrants”). The Subscription will be scaled back at the discretion of GRIT to ensure that (a) sufficient Ordinary Shares are in public hands in accordance with the Listing Rules and (b) RDP and persons acting in concert with RDP do not hold more than 29.9 per cent of the entire issued share capital of GRIT.
In addition, the Company is proposing an open offer to shareholders of GRIT whereby Shareholders will be able to apply for up to 10 million Ordinary Shares (plus Warrants on the same basis as the Subscription) to raise a further GBP0.5 million for the Company, pro rata to their existing holdings, at a price of GBP0.05 per share (“Open Offer”). Shareholders will also be given an excess application facility whereby they will be able to subscribe for more than their pro rata Open Offer entitlements. The full terms of the Open Offer are yet to be determined and will be announced in due course together with the expected timetable and record date. The Board will use its reasonable endeavours to place any Ordinary Shares not subscribed for under the Open Offer.
It is intended that the proceeds of the Subscription and Open Offer, being up to GBP2.5 million (less costs), in conjunction with portfolio realisations, will enable the Company to reduce its gearing by repaying amounts owing to LIM Asia Multi-Strategy Fund Inc, its principal loan note holder, under the defaulted loan notes as announced on 11 March 2016, to implement the Company’s revised investment policy and consider specific follow-on investments in existing investee companies.
The Board considers that it is more practical for the Company to become Board managed following the proposed change of investment policy. It is therefore proposed, under the terms of the Subscription Agreement, that the investment management agreement between RDP and the Company is terminated on completion of the Subscription and Open Offer (“Completion”) for an early termination fee to be agreed. It is therefore also proposed that there will be additional directors appointed to the Board.
Upon Completion, it is anticipated that the Company will no longer meet the requirements of section 1158 of the Corporation Tax Act 2010 for an investment trust. However, the Company will remain a closed-ended investment company, whose Ordinary Shares are traded on the Main Market of the London Stock Exchange plc.
Given the anticipated loss of investment trust status, the Company intends to broaden its investment policy and make the requisite changes to its articles of association and name.
The proposals set out in this announcement and under the Subscription Agreement (“Proposals”) are subject to compliance with the applicable provisions of the Listing Rules, the Prospectus Rules, the Financial Services and Markets Act 2000, the Companies Act 2006 and all other relevant and applicable laws and regulations in the United Kingdom.
To implement the Proposals, the Company will be required to publish a prospectus containing a circular in accordance with the Listing Rules and the Prospectus Rules, under which the Company will be required to seek the approval of Shareholders to certain of the Proposals at a general meeting of Shareholders.
Completion of the Proposals will depend, inter alia, on the Company and RDP reaching agreement on the form of any documentation required to implement the Proposals and on the detailed terms of the Subscription and Open Offer.
A further announcement will be made in due course.
GRIT : Global Resources gets cash injection from manager