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Reconstruction Capital II acquiring Policolor

Reconstruction Capital II acquiring Policolor – Reconstruction Capital II has signed conditional agreements to buy shareholdings in two Romanian-focussed investment funds whose main underlying asset is a 60% shareholding in Policolor S.A., a Romanian producer of paints and coatings, resins and chemicals with a substantial real estate portfolio. Reconstruction Capital already owns 40% of Policolor and, if the deal goes ahead, it will end up with 55.36%.

Further investment in Policolor

Reconstruction Capital II has entered into an agreements to acquire 22 per cent. of the issued share capital of Reconstruction Capital plc for EUR 1.6 million and 10 per cent. of the issued share capital of The Romanian Investment Fund Limited for EUR 1.7 million, both acquisitions being subject to shareholder approval.

The deal will provide Reconstruction Capital II with greater control over the exit process from this asset. For the year ended 31 December 2016, the two funds had losses of US$ 701,348 and US$ 970,622 respectively. The total cost is EUR 3.35 million, and the shares are being acquired at an overall discount of 35 per cent. to their net asset values.   The total net asset values of the two funds as at 30 November 2017 were US$ 15.1 million and US$ 27.4 million, respectively.  The consideration is being satisfied from existing cash balances.

Romanian Investment Fund’s 60% shareholding in Policolor represents over 97% of its total assets and Reconstruction Capital ‘s only substantial asset is a 69.2% shareholding in Romanian Investment Fund .

Proposal to revise the existing Investing Objective and Policy

Reconstruction Capital also intends to propose to its shareholders that its investment objective and policy be amended so that new investments will be permitted, but only in assets based in Romania, and with a primary focus on real estate assets. If the proposed change to the investment policy is approved by shareholders, the board intends to distribute any net income received from such investments to shareholders, whilst re-investing any realised capital, including capital gains, in further investments.

No more buybacks

Furthermore, if shareholders approve the proposed change to the investment policy, the board will end the annual buyback programme pursuant to which any annual realised profits are to be returned to shareholders by way of tender offers to repurchase Shares at NAV.

Proposal to continue the life of the Company

The board intends to propose that the life of the company be extended so that the next continuation vote be held in 2023.

RC2 : Reconstruction Capital II acquiring Policolor

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