The following statement was published by RM Infrastructure Income today:
Although RMII is well positioned from an investment perspective, the company’s shares, in common with many investment companies, have traded at a discount over a period of time. This, coupled with the company being of a small scale, has created challenges in generating improved liquidity in the company’s shares and has restricted the company’s ability to grow.
In early April 2023, while preparing for the proposed liquidity opportunity consultation, the RMII board (the “board”) received a non-binding indicative proposal which involved a combination of all the company’s assets with another investment company under Section 110 of the Insolvency Act 1986 (the “proposal”). Unusually for a Section 110 approach, the proposal did not include any option, partial or otherwise, for RMII Shareholders to elect to receive cash (such as through a run-off liquidation pool as the company’s investments are realised over time). For the avoidance of doubt, the proposal did not anticipate any offer for the company, recommended or otherwise, under the City Code on Takeovers and Mergers. [a cash element is definitely preferable when one or both parties are trading at a discount]
Since the initial approach in early April, the board has attempted to address various issues with the proposal which would have negatively impacted RMII shareholders but progress to date has been limited. If the counterparty is willing to substantially improve its offer, then the board intends to explore this opportunity further. At this time, no heads of terms have been agreed by the board and the counterparty’s board of directors and consequently there can be no certainty that any potential transaction would be successfully completed.
While the board believes the company remains in a strong position to continue to generate attractive returns for RMII shareholders, in connection with the above, the board today announces that it intends to undertake a review of the company’s strategy to consider its future prospects. The review will include a consideration of:
- a continuation of the company’s existing investment policy and strategy;
- a partial or full exit opportunity (which may be undertaken by way of a buy back as and when the company’s investments mature, or other method of distribution, such as the creation of a new share class which would return capital to holders of such shares as investments are realised over time);
- a combination of the company’s assets with another suitable investment company or fund under section 110 of the Insolvency Act, possibly coupled with a liquidity opportunity, pursuant to the proposal or otherwise; or
- a managed wind-down of the company.
When considering a potential combination of the company’s assets with another suitable investment company, the board is also mindful that a number of the company’s peers trade at discounts similar to, or wider than, RMII.
As a result of the foregoing, the commencement of the announced liquidity opportunity consultation has been superseded to allow for a broader review of the company’s strategy to take place.
Singer Capital Markets and Peel Hunt, joint brokers to the company, will contact RMII shareholders shortly. [We would suggest sticking with the status quo, in our view the managers appear to be doing a reasonable job, but, if available, a merger that included a cash exit option would be the most desirable option.]
The board will update RMII shareholders on the progress of the strategic review, as appropriate. During this process the company’s existing investment policy and strategy will continue to be applied. There can be no certainty as to the outcome of the strategic review nor whether any potential transaction arising would be successfully completed.
RMII : RM Infrastructure was approached about a potential merger