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Third Point Investors to borrow $150m as it declines second EGM requisition

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Third Point Investors to borrow $150m as it declines second EGM requisition – Third Point Investors has entered into a loan agreement to employ gearing and will seek approval of an extension of its exchange facility as part of a previously announced package of changes aimed at enhancing shareholder value.

The credit facility will see approximately $150m borrowed at a rate of LIBOR plus 2.4% for a period of two years, with the ability to extend annually or repay early subject to small “make whole” payments. The proceeds will be used to invest in the Master Fund and will be deployed gradually before year-end in consultation with the manager. There will be no management fee in respect of the Master Fund units acquired by the company using this leverage.

The credit facility is the latest of the Company’s announced list of changes to be enacted after the completion of a strategic review conducted in consultation with shareholders.

Also included in the strategic plan announced in April was a two-part, 25% tender offer in 2024 and 2027 if the discount to NAV persists above 10% and 7.5%, respectively, as well as the ability for eligible shareholders to exchange Third Point shares for shares in the Master Fund at a 7.5% discount to NAV this autumn. The latter measure was recently approved by shareholders at the trust’s AGM.

Given the narrowing of the discount over the past several months, the board also intends to seek shareholder approval for the exchange facility to be offered again in 2022, whereby eligible shareholders will be able to exchange their shares in the company for shares in the Master Fund at just a 2% discount to NAV, down from the 7.5% discount to NAV applicable to the 2021 exchange facility.

The board also anticipates increasing the number of company shares which can be exchanged for Master Fund shares under the 2022 exchange facility to the extent that the 2021 exchange facility is undersubscribed, subject to a maximum of $75 million worth of company shares (at the prevailing NAV per share).

Steve Bates, chair, said: “Given the Investment Manager’s strong performance and constructive view on the opportunity set, the Board felt that applying a modest amount of leverage over time would be additive to overall shareholder value. We feel the flexibility aligns with the Company’s decision to increase its exposure to private markets opportunities, where the Investment Manager has had particular success. Meanwhile, as the strategic discount control measures continue to bear fruit, we acknowledge that this is an iterative process, and we intend to continue to be proactive in refining our approach.”

Response to Shareholder Communication

Meanwhile, the board of directors has acknowledged receipt of another requisition for an Extraordinary General Meeting from Asset Value Investors and three other shareholders, the signatories being the same as those who attempted to requisition an EGM in July.

Following guidance from its legal and other advisors, Third Point determined that the July requisition was flawed as the shareholder resolution proposed would have been ineffective even if passed. This latest requisition is declined for similar reasons.

The discount control package announced at the beginning of April set out a series of measures which were structured to narrow the discount over time, in line with feedback from the majority of shareholders. The board believes that this package is in the best interests of the company and its shareholders as a whole, and the decline in discount following the announcement suggests that the market takes a similar view.

Nevertheless, the board wishes to see further discount reduction, implicit in the package presented in April, and will be proactive in keeping the parameters of the programme under review.

Third Point Investors to borrow $150m as it declines second EGM requisition

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