The board of directors of Prospect Co., Ltd. (“Prospect”) and the independent directors of The Prospect Japan Fund Limited have announced that they have reached agreement on the terms of a recommended share for share exchange offer to be made by Prospect Co. for the entire issued and to be issued share capital Prospect Japan Fund. The announcement says that it is intended that the Offer will be implemented by way of a Court-sanctioned scheme of arrangement between Prospect Japan Fund and its shareholders under Part VIII of the Companies Law of Guernsey
Who is Prospect Co.?
Prospect Co is a Japanese company listed on the Tokyo Stock Exchange (ticker code: 3528), which owns and operates a number of Japanese and Hawaii based businesses including a real estate developer, a construction company, a house building company, an investment management business and a solar power generation business.
Prospect Co is also the parent company of both the investment manager and the investment adviser to Prospect Japan Fund, being Prospect Asset Management (Channel Islands) Ltd.
What is the offer?
The Offer is a share for share exchange offer at a ratio of 2.5 New Prospect Shares in exchange for each Prospect Japan Fund Share. According to Prospect Japan Fund, this “Exchange Ratio” attributes an implied value for the entire issued share capital of Prospect Japan Fund of approximately US$146.6 million (based on the middle market closing price of ¥70.50 per Prospect Share on 30 May 2017 and using an exchange rate of 111.03 ¥/US$).
Prospect Japan Fund says that, if successful, the combination of TPJF and Prospect will result in Prospect Japan Fund Shareholders holding approximately 57.6 per cent. of the Combined Group and Prospect Shareholders holding approximately 42.4 per cent. of the Combined Group.
What does the offer represent?
According to Prospect Japan Fund, at the value implied by the Exchange Ratio, the Offer represents a premium of approximately:
- 67.98 per cent. to the middle market closing price of US$0.945 per TPJF Share on 9 January 2017 (being the last Business Day in London prior to the start of the Offer Period);
- 71.05 per cent. to the volume weighted average price for TPJF Shares of US$0.928 over the three month period ended on and including 9 January 2017 (being the last Business Day in London prior to the start of the Offer Period);
- 45.63 per cent. to the middle market closing price of US$1.09 per TPJF Share on 30 May 2017 (being the last Business Day in London prior to the date of this Announcement); and
- 28.13 per cent. to TPJF’s last published NAV per share of US$1.2389 on 26 May 2017.
More information regarding the offer is available