EF Realisation proposes wind-up terms and the in-specie distribution of its Lonestar holding.
The winding up of EF Realisation (EFR) and an in-specie distribution of the company’s shares in Lonestar to certain larger shareholders will require shareholders to vote in favour of resolutions at an EGM of the company, which will happen on 24 September 2018.
UPDATE: 25 September 2018
The company announced that, further to the EGM of the company on 24 September 2018, the two resolutions were approved by shareholders.
Summary of the Proposals
As laid out in the company’s Articles, the board must put a resolution to wind up the company to a vote of Shareholders by 26 September 2018, being the second anniversary of the company’s listing on the London Stock Exchange. Alternatively, prior to that date the board could put a resolution to a vote of shareholders extending the life of the company by further successive periods of one year.
The board is recommending the voluntary winding up of the company as the company has three investments of value; a holding in a NASDAQ-listed US public company, Lonestar, which accounts for approximately 72 per cent of the value of the company, and holdings in two unquoted investments which are in the process of being sold.
As a result, the period of active management of the company by the investment manager has come to an end.
Time table and program of disposal of Lonestar
- If the resolutions are passed, the company will be put into voluntary liquidation on 24 September 2018 and a liquidator will be appointed.
- As soon as practicable, the liquidator will arrange for a pro rata, in specie distribution of most of the company’s shares in Lonestar to shareholders holding 75,000 or more shares in the company (“Qualifying Shareholders”).
- At the same time, the liquidator will sell those Lonestar shares attributable to shareholders holding fewer than 75,000 shares in the company (“Non-Qualifying Shareholders”) for cash and distribute the cash to those shareholders.
- Approximately 94.5 per cent of the company’s holding of 4,174,259 shares in Lonestar is attributable to qualifying shareholders and 5.5 per cent to non-qualifying Shareholders. As a result, the company expects to sell approximately 240,000 Lonestar shares on behalf of non-qualifying shareholders.
The liquidator will continue the sale processes of the company’s two unquoted investments of value and make cash distributions to shareholders as and when possible. The Investment Manager expects the amounts to be realised by the sale of these unquoted investments to be in line with the values at which they are carried by the company.
Impact of Lonestar disposal
- Based on a Lonestar bid price per share of US$8.94 and foreign exchange rates on the latest practicable date, the impact of the proposals would be to return to shareholders an estimated £38.7 million or 86.1 pence per share of value.
This is 11% more than the NAV of 77.75 pence per share on the latest practicable date which reflects the lower expenses that are expected to be incurred in implementing the proposals than had been allowed for in calculating the NAV as at the latest practicable date.
- Qualifying Shareholders would receive the equivalent of 64.0 pence per Share, based on the Lonestar bid share price and the exchange rate at the Latest Practicable Date, by way of a distribution of Lonestar Shares as soon as practicable following the EGM to be held on 24 September 2018, and expected cash proceeds equivalent to 22.1 pence per Share over the course of the liquidation as the unquoted investments are realised over the following six months depending on the ultimate realised value of the investments.
- Non-Qualifying Shareholders would receive 64.0 pence per Share in cash, based on the Lonestar bid price and the exchange rate on the Latest Practicable Date, as soon as practical following the EGM and a further 22.1 pence per Share in cash over the course of the liquidation as the unquoted investments are realised over the following six months depending on the ultimate realised value of the investments.
EFR : EF Realisation proposes wind-up terms