Circular and Notice of General Meeting

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION IN PARTICULAR THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA AND JAPAN

This announcement is an advertisement and not a prospectus. This announcement does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities in Alternative Liquidity Fund Limited (the "Company") or securities in any other entity, in any jurisdiction, including the United States, 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. Any investment decision must be made exclusively on the basis of the final prospectus published by the Company and any supplement thereto.

6 February  2019

ALTERNATIVE LIQUIDITY FUND LIMITED

Registered in Guernsey - Number 60552

Registered Office:

Sarnia House, Le Truchot,

St Peter Port, Guernsey, GY1 1GR

PUBLICATION OF CIRCULAR

The Proposals

If the Proposals are approved by shareholders, the Company intends to publish a prospectus, introduce the Initial Placing, Offer for Subscription and subsequent Placing Programme the net proceeds of which will be attributable to the Ordinary Portfolio and will be used to invest in a diversified portfolio of investments in line with the new investment policy, including the Warana Master Fund. The Supplemental Agreement to the Investment Management Agreement, is proposing to introduce the new management fee that will be payable to the Investment Manager in relation to this new Ordinary Portfolio.  It will also extend Warana Capital's initial term of management and provide that either party may give to the other not less than 12 months' notice to terminate the management arrangements provided that such notice will only be able to be given after the conclusion of the Company's annual general meeting in 2023.  Under the Investment Management Agreement the initial term currently runs until 30 September 2020.  The extension is being proposed to allow the new Ordinary Portfolio enough time to mature and realise its maximum return.  The entering into of the Supplemental Agreement to the Investment Management Agreement by the Company
will constitute a related party transaction for the purpose of the Listing Rules and accordingly the Company is also seeking approval for this transaction from the relevant independent shareholders at the EGM.

If the Proposals become effective, the Realisation Portfolio's strategy will be to realise the underlying assets in the Realisation Portfolio as quickly as possible while also seeking to preserve value. It is not currently intended that the assets held within the Realisation Portfolio will be sold on a fire sale basis. The Company has already made six capital distributions and has announced a seventh in the form of redeemable B shares totalling US$0.20 per existing share.

It is unlikely that any new investments will be acquired by the Realisation Portfolio and, as a result of this portfolio going into wind down, it is expected that it will become more concentrated over time as assets are sold.

In the event that the Proposals are not approved by the Company's shareholders, the Proposals will not become effective.  The Company's existing shares will not be reclassified, the Company will not publish a prospectus and no new Ordinary Shares will be issued nor will it enter into the Supplemental Agreement to the Investment Management Agreement. In such an event, the Company will continue with its existing investment strategy and the Investment Manager may deem that additional capital might be needed to be added to certain assets in order to preserve longer term value. 

Benefits of the Proposals

The Board believes that the Proposals offer the following benefits for the Company's shareholders:

• the Company's existing portfolio (to be renamed the Realisation Portfolio) will be realised as rapidly as is optimal and the proceeds returned to the Company's existing shareholders (to be renamed the Realisation Shareholders);

• increasing the Company's issued share capital through the Initial Placing, Offer for Subscription and subsequent Placing Programme should result in the fixed costs of the Company being spread over a larger asset base and the ongoing expense ratio in respect of the Company's existing portfolio being lower than would otherwise be the case;

• the automatic conversion rights included in the New Articles provide Realisation Shareholders with the potential for higher capital returns over a longer-term recovery period as opposed to a portfolio liquidation driven by size and cost constraints; and

• the Proposals provide an improved investment proposition by diversifying the Company's investment base and offering new Ordinary Shareholders exposure to the wide range of assets within the Warana Master Fund with the aim of providing investors with attractive risk-adjusted returns over a multi-year period.

Indicative timetable

An indicative timetable of principal events is as follows: