Notice of class meeting of Ordinary Shareholders

This announcement is not for release, publication, or distribution, directly or indirectly, in whole or in part, to US persons or into or within the United States (including its territories and possessions, any state of the United States and the District of Columbia), Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa, or any other jurisdiction where to do so would constitute a violation of the relevant laws or regulations of such jurisdiction.

 

LEI: 213800L5751QTTVEA774

 

14 August 2018

 

MARWYN VALUE INVESTORS LIMITED (THE "COMPANY")

 

PROPOSED AMENDMENTS TO THE ORDINARY SHARE DISTRIBUTION POLICY

AND POSTING OF A SHAREHOLDER CIRCULAR CONTAINING NOTICE OF A CLASS MEETING OF ORDINARY SHAREHOLDERS

Posting of Circular

The Company today announces the posting of a shareholder circular (the "Circular") containing a notice convening a class meeting of Ordinary Shareholders of the Company (the "Class Meeting"). The Class Meeting is being convened in order for Ordinary Shareholders to vote on a resolution relating to proposed amendments to the Company's Ordinary Share Distribution Policy.

The Class Meeting will be held at 11.00 a.m. on 5 September 2018 at One Waverley Place, Union Street, St Helier, Jersey JE1 1AX.

A copy of the Circular will also be available on the Company's website at www.marwynvalue.com.

Background to, and benefits of, the Proposals

Minimum Annual Distributions

From November 2013, when the reorganisation of the Company and Marwyn Value Investors LP ("MVI I") was approved by shareholders, the Company has had a progressive distribution policy in relation to its Ordinary Shares to deliver a minimum capital return to Ordinary Shareholders in each year. The policy commenced in January 2014 with a distribution effected through a repurchase of Ordinary Shares, which amounted to 8p per Ordinary Share (representing a 4.4 per cent. yield at that time), increasing to 8.255p per Ordinary Share in January 2015 (representing a 3.8 per cent. yield at that time).

 

In December 2015, the Company amended its Ordinary Share Distribution Policy to deliver a quarterly dividend of 2.064p (totalling at least 8.255p per annum), in place of the annual capital distribution described in the paragraph above, with the first quarterly dividend payment being made in January 2016 and the most recent quarterly dividend being made in July 2018. The Company's commitment to a progressive minimum annual distribution ("Minimum Annual Distribution") remains unchanged and so, in circumstances where a dividend payment cannot be funded by income received by the Company from MVI I, MVI I may make distributions from the capital attributable to Ordinary Share Interests to enable the Company to meet its obligations described above.

 

Returns of Net Capital Gains

As part of the Ordinary Share Distribution Policy, where MVI I or Marwyn Value Investors II LP ("MVI II") disposes of an asset for a Net Capital Gain and the Company has not already returned to Ordinary Shareholders an aggregate amount since 19 November 2013 in excess of 50 per cent. of that gain and any previous such gains pursuant to the Ordinary Share Distribution Policy (the annual returns referred to above are treated as if they had been returns of gains for this purpose), MVI I will distribute the difference to the Company. The Company will, in turn, make a corresponding distribution to Ordinary Shareholders by way of tender offers, share repurchases, or other returns of capital and distributions. The Company's distribution may be made by way of an extraordinary distribution, where applicable, by adding such amount to the next regular quarterly dividend where doing so would not result in a delay as compared to declaring an extraordinary distribution. The balance of any Profitable Realisation, after the payment of any incentive allocation, will be retained in MVI I and available for new and follow-on investments and to meet MVI I's reasonable working capital requirements, although all or part of the balance may be used to augment distributions under the Ordinary Share Distribution Policy.

 

For shares in LCG, the Net Capital Gain is calculated based on the value of LCG at 27 August 2013 (which was 12.13 pence per share). In the case of the Portfolio Companies and any new investment attributed to Ordinary Share Interests of MVI I, the Weighted Average Investment Cost of such investment is used to calculate the relevant Net Capital Gain. The Weighted Average Investment Cost is the total capital cost of the particular investment divided by the number of shares held in such investment. There is no adjustment, or offset, of any Net Capital Gains for any investments realised at a loss.

 

For the avoidance of doubt, the Company's Ordinary Share Distribution Policy applies only to the Ordinary Shares. The Realisation Shares carry no rights to participate in the Company's Ordinary Share Distribution Policy.

 

The Proposals

The Proposals involve amending the Ordinary Share Distribution Policy in order to permit the Directors to:

 

(a)       effect the Minimum Annual Distribution by repurchasing Ordinary Shares on an ongoing basis each quarter instead of paying quarterly dividends to Ordinary Shareholders; and

 

(b)       in addition, effect returns of capital following realisations of Net Capital Gains through the repurchase of Ordinary Shares for a cost equal to the Net Capital Gain per Ordinary Share (less any amounts already distributed in respect of the Net Capital Gain in accordance with the Ordinary Share Distribution Policy), by increasing the aggregate amount of the remaining quarterly repurchases (referred to in paragraph (a) above) in the following twelve months,

 

in each case subject to the share repurchase authorities granted to the Directors pursuant to the Companies Law, the Articles and Shareholder resolutions from time to time. The share repurchases may be made by MVI I and subsequently cancelled using the Exchange Procedure described in the Company's prospectus dated 19 October 2016.

If the Resolution is passed by Ordinary Shareholders, the Ordinary Share Distribution Policy would be as set out below:

"Ordinary Share Distribution Policy

The Company's Ordinary Share Distribution Policy is comprised of two parts:

1.            Minimum annual return

The Company will deliver a minimum annual return to Shareholders by making distributions in each quarter. Pursuant to the Ordinary Share Distribution Policy, in each year the Minimum Annual Distribution will be maintained or grown on a pence per share basis. At the time of adoption of this revised Ordinary Share Distribution Policy (in September 2018), the Minimum Annual Distribution is equal to 8.255p per Ordinary Share, or 2.064p per Ordinary Share per quarter.

In circumstances where the Board decides to make a dividend payment which cannot be funded by income received by the MVI LPs, MVI I may make distributions from the capital attributable to Ordinary Share Interests to enable the Company to meet its obligations.

Any distribution of the minimum annual return may be made by way of (i) repurchases of Ordinary Shares; (ii) by payment of dividends; or (iii) a combination of both.

2.            Returns following Net Capital Gains

Where MVI I or MVI II disposes of an asset for a Net Capital Gain and the Company has not already returned to Ordinary Shareholders an aggregate amount since 19 November 2013 in excess of 50 per cent. of that gain and any previous such gains pursuant to the Ordinary Share Distribution Policy (Minimum Annual Distribution payments referred to above are treated as if they had been returns of gains for this purpose), MVI I will distribute the difference to the Company. The Company will, in turn, make a corresponding distribution to Ordinary Shareholders by way of tender offers, share repurchases or other returns of capital and distributions. Any share repurchases may alternatively be made by MVI I and cancelled using the Exchange Procedure described in the Company's prospectus dated 19 October 2016. Returns following a Net Capital Gain may also be made by way of an extraordinary distribution, where applicable, by adding such amount to the next proposed quarterly dividend (if any), where doing so would not result in a delay as compared to declaring an extraordinary distribution.

The balance of any Profitable Realisation, after the payment of any incentive allocation, will be retained in MVI I and available for new and follow-on investments and to meet MVI I's reasonable working capital requirements, although all or part of the balance may be used to augment distributions under the Ordinary Share Distribution Policy.

For shares in LCG, the Net Capital Gain is calculated based on the value of LCG at 27 August 2013 (which was 12.13 pence per share). In the case of other Portfolio Companies and any new investment attributed to Ordinary Share Interests of MVI I, the Weighted Average Investment Cost of such investment is used to calculate the relevant Net Capital Gain. The Weighted Average Investment Cost is the total capital cost of the particular investment divided by the number of shares held in such investment. There is no adjustment, or offset, of any Net Capital Gains for any investments realised at a loss.

 

For the avoidance of doubt, the Company's Ordinary Share Distribution Policy applies only to the Ordinary Shares. The Realisation Shares carry no rights to participate in the Company's Ordinary Share Distribution Policy."

If the Resolution is passed by Ordinary Shareholders, it is the current intention of the Board to effect the Minimum Annual Distribution by way of repurchases of Ordinary Shares each quarter to the extent possible within the parameters agreed with the Company's broker from time to time.

Benefits of the Proposals

For the period from 30 June 2017 to 30 June 2018, the average middle market price per Ordinary Share was 151.4 pence and the average NAV per Ordinary Share was 213.0 pence. The average discount to NAV at which the Ordinary Shares traded in such period was therefore 28.9 per cent.

The Directors believe that the principal benefit to Ordinary Shareholders of implementing the Proposals will be to provide a mechanism which should seek to narrow the discount to NAV at which the Ordinary Shares trade, which the Directors believe should, in turn, increase liquidity in the Ordinary Shares. Acquiring Ordinary Shares at a discount to NAV per share will also be NAV accretive for MVI I and the Company.

Class Meeting and action to be taken

Notice of the Class Meeting, at which the Resolution will be proposed to approve the Proposals, is set out in the Circular. The Resolution will be proposed as an ordinary resolution and requires a simple majority of votes cast by those voting in person or by proxy.

 

If the Resolution is passed, then the implementation of the Proposals would impact only on holders of Ordinary Shares. Therefore, only holders of Ordinary Shares have the right to attend the Class Meeting. For the avoidance of doubt, Realisation Shares and Exchange Shares in the capital of the Company do not therefore carry the right to vote on the Resolution.

 

Holders of Ordinary Shares in certificated form

If you are a holder of Ordinary Shares in certificated form, you are asked to complete the Form of Proxy enclosed with the Circular and return it, together with any power of attorney or other authority under which it is signed or a notarially certified or office copy thereof, to Link Asset Services, PXS, 34 Beckenham Road, Beckenham, BR3 4TU so as to arrive no later than 11.00 a.m. on 3 September 2018. Completion of the Form of Proxy does not prevent an Ordinary Shareholder from attending and voting in person.

Holders of Depository Interests representing Ordinary Shares 

If you are a holder of Depository Interests representing Ordinary Shares, you are asked to complete the Form of Direction enclosed with the Circular and return it, together with any power of attorney or other authority under which it is signed or a notarially certified or office copy thereof, to Link Asset Services, PXS, 34 Beckenham Road, Beckenham, BR3 4TU no later than 11.00 a.m. on 3 September 2018. Alternatively, if you are a holder of Depository Interests representing Ordinary Shares, Depository Interests may be voted through the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual. Instructions should be transmitted so as to be received by the Company's agent Link Asset Services, (RA10) no later than 11.00 a.m. on 3 September 2018. Completion of the Form of Direction or appointment of a proxy through CREST does not prevent an Ordinary Shareholder from attending and voting in person.

 

Depository Interest holders wishing to attend the Class Meeting should request a Letter of Representation by contacting the depository at Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by email: CAGtrustees@linkgroup.co.uk by no later than 11.00 a.m. on 3 September 2018.

Location of meeting

The Class Meeting will be held at One Waverley Place, Union Street, St Helier, Jersey JE1 1AX.

Invesco Asset Management Limited ("Invesco") - voting undertaking

Invesco has irrevocably undertaken to procure that all of the Ordinary Shares which it controls (being 31,671,415 Ordinary Shares representing 44.75 per cent. of the voting rights exercisable at the Class Meeting) are voted in favour of the Resolution.

Recommendation

The Board believes that the Proposals are in the best interests of Ordinary Shareholders as a whole and, accordingly, recommends that Ordinary Shareholders vote in favour of the Resolution.

Definitions

Articles	The articles of association of the Company.
BCA	BCA Marketplace plc.
Board	The board of directors of the Company.
Company	Marwyn Value Investors Limited.
Companies Law	The Companies Law (2016 Revision) of the Cayman Islands.
CREST	The relevant system (as defined in the UK Uncertificated Securities Regulations 2001 (SI 2001 No. 3755)) in respect of which Euroclear is the operator (as defined in such Regulations).
CREST Manual	The CREST Manual issued by Euroclear dated 30 August 2013.
Depository Interests	The dematerialised depository interests issued by Link Market Services Trustees Limited, as the depository, representing Ordinary Share Depository Interests which may be held and transferred through the CREST system.
Director	A director of the Company.
Euroclear	Euroclear UK and Ireland Limited.
Exchange Shares	Exchange shares of 0.0001p each in the share capital of the Company.
Gloo	Gloo Networks plc.
LCG	Le Chameau Group plc.
Link Asset Services	Link Asset Services Limited.
London Stock Exchange	London Stock Exchange plc.
MVI I	Marwyn Value Investors LP.
MVI II	Marwyn Value Investors II LP.
MVI LPs	Either or both of MVI I and MVI II as the context may require.
NAV	Net asset value.
Net Capital Gain	The net sale proceeds received by an MVI LP on a Profitable Realisation less, in the case of the Company's investment in LCG, the value of such investment on 27 August 2013, or, in the case of the Portfolio Companies and any other new investments attributed to Ordinary Share Interests, the Weighted Average Investment Cost of such investment.
Ordinary Share Distribution Policy	The Company's distribution policy applicable to the Ordinary Shares.
Ordinary Share Interests	Class F and Class G limited partnership interests in MVI I.  References to Ordinary Share Interests are to be construed as references to Ordinary Share Interests held by the Company and attributable to the Ordinary Shares, unless the context requires otherwise.
Ordinary Shareholders	The holders of Ordinary Shares or Depository Interests representing Ordinary Shares (as the case may be).
Ordinary Shares	Ordinary shares of 0.0001p each in the share capital of the Company not designated with a class demarcation.
Portfolio Companies	The companies into which MVI II currently invests, being BCA, Gloo, Safe Harbour, Wilmcote and Zegona.
Profitable Realisation	The disposal of a security for a net consideration with a value higher than, in the case of the Company's investment in LCG, its value on 27 August 2013 or, in the case of other Portfolio Companies and any other new investments attributable to Ordinary Share Interests, the Weighted Average Investment Cost.
Proposals	The proposals set out in the Circular.
Realisation Shares	Ordinary Shares that are redesignated as Realisation Shares following receipt of valid elections to redesignate such Ordinary Shares as Realisation Shares, in accordance with the Articles.
Regulatory Information Service	A service authorised by the UK Listing Authority to release regulatory announcements to the London Stock Exchange.
Safe Harbour	Safe Harbour Holdings plc.
Weighted Average Investment Cost	The total capital cost of the particular investment, divided by the number of shares held in such investment.
Wilmcote	Wilmcote Holdings plc.
Zegona	Zegona Communications plc.

 

This announcement contains inside information.

 

Robert Ware, Chairman, Marwyn Value Investors Limited

PO Box 309, Ugland House, Grand Cayman, KY1 - 1104, Cayman Islands

 

Company enquiries:

 

Louisa Bonney / Scott Danks

Axio Capital Solutions Limited

Telephone: 01534 761240

 

PR enquiries:

 

Alex Child-Villiers / Will Barker

Temple Bar Advisory

Telephone: 020 7002 1080

 

Important Notices

This announcement does not constitute or form part of, and should not be construed as, any offer for sale of, or solicitation of any offer to buy or subscribe for, any share in the Company or securities in any other entity, in any jurisdiction, including the United States Australia, Canada or Japan, nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction.  This announcement does not constitute a recommendation regarding any securities.

All investments are subject to risk, including the loss of the principal amount invested.  Past performance is no guarantee of future returns.  All investments held by the Company involve a substantial degree of risk, including the risk of total loss.  Investors should always seek expert legal, financial, tax and other professional advice before making any investment decision.

None of the Company, their affiliates or any other person (including, without limitation, the directors, officers, employees, partners, agents, representatives, members and advisers of the Company and their affiliates) undertakes any obligation to update or revise any statement made in this announcement (including, without limitation, any forward looking statements), whether as a result of new information, future events or otherwise.

The information in this announcement contains forward-looking statements (being any statement other than a statement of historical fact).  Actual results may differ materially from those expressed or implied by any forward-looking statement. Investors should not place undue reliance on any forward-looking statement, which speaks only as of the date of this announcement.