NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS OR IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
This announcement is an advertisement and not a prospectus. Investors should not purchase or subscribe for any shares referred to in this announcement except on the basis of information contained in the prospectus published by Axiom European Financial Debt Fund Limited (the “Company”) on 8 May 2017 (the “Prospectus”) in connection with the creation of a placing programme (the “Placing Programme”) in respect of new ordinary shares of no par value in the capital of the Company (“Shares”). This announcement does not constitute and may not be construed as an offer to sell or an invitation to purchase investments of any description, or as a recommendation or the provision of investment advice by any party. No information set out in this announcement or referred to in other written or oral form (other than the Prospectus) is intended to form the basis of any contract for sale, investment decision or any decision to purchase shares in the Company.
13 November 2017
Axiom European Financial Debt Fund Limited
Proposed Placing and Company update
The Board recognises the strong performance of the Company over the last 12 months and is pleased to announce that the Company is proposing to undertake a placing of new Shares under the Company’s existing Placing Programme (the “Placing”).
The Company sees significant investment opportunities in the market over the coming months deriving from improving fundamentals in the financial sector, combined with the acceleration of the Basel 3 transition period. The Company is seeking to deploy capital into the subordinated debt market to benefit from the positive credit actions by rating agencies, which should therefore support further spread compression. The Company will focus more specifically on the estimated €165bn legacy instruments universe, which currently provides (in the Investment Manager’s view) the most attractive risk reward profile in the subordinated debt market. As the Basel 3 transition period enters its last phase, corporate actions such as tenders and calls should accelerate, hence supporting valuations. With year-to-date returns in excess of 14%, the Company sees the current period as a very attractive window of opportunity to achieve its 10% long term target returns.
Any new Shares issued pursuant to the Placing will be issued at a 1.6% premium to the latest published estimated cum income NAV per share, as at the time the Placing closes, to cover the costs of the Placing (the “Placing Price”).
Winterflood Securities Limited (“Winterflood”) has been appointed as sole corporate broker and financial adviser to the Company, and will act as bookrunner in relation to the Placing.
The expected timetable for the Placing is as follows:
- Placing opens – 13 November 2017
- Investors roadshow – 13 November to 6 December
- Publication of estimated NAV used to determine the Placing Price – Week commencing 4 December
- Placing closes – 1.00 p.m. on 12 December
- Results of Placing announced – 13 December
- Admission of new Shares – 15 December
The Board notes that the current discount on the Shares may impact the above timetable. In the event that the dates change or the Placing is delayed, the Company will make a separate announcement.
All Shares issued pursuant to the Placing will, when issued and fully paid, confer the right to receive all dividends or other distributions made, paid or declared, if any, by reference to a record date after the date of their issue. The Placing Programme has a maximum capacity of up to 500 million Shares.
Application will be made to the London Stock Exchange (“LSE”) for the new Shares issued pursuant to the Placing to be admitted to trading on the Specialist Fund Segment. It is expected that dealings in the new Shares will commence at 8.00 a.m. on 15 December 2017.
The Placing will be made through Winterflood, subject to the terms and conditions contained in Part 7 of the Prospectus*. The decision to allot new Shares to any person pursuant to the Placing shall be at the absolute discretion of the Board, following consultation with Winterflood and the Company’s investment manager, Axiom Alternative Investments SARL (the “Investment Manager”).
By making an offer to subscribe for new Shares under the Placing, investors will be deemed to have accepted the terms and conditions of the Placing contained in Part 7 of the Prospectus*. An investor that has made an offer to subscribe for new Shares under the Placing accepts that following the closing of the bookbuild such offer shall be irrevocable (subject to any statutory withdrawal rights). Upon being notified of its allocation of new Shares in the Placing, an investor shall be contractually committed to acquire the number of new Shares allocated to it at the Placing Price.
Winterflood, in agreement with the Company and the Investment Manager, may choose to accept bids, either in whole or in part, on the basis of allocations determined, and may scale down any bids for this purpose, on such basis as the Company and Winterflood may determine. Winterflood may also, notwithstanding the above, subject to the prior consent of the Company: (i) allocate new Shares after the time of any initial allocation to any person submitting a bid after that time; and (ii) allocate new Shares after the bookbuild has closed to any person submitting a bid after that time. The Company reserves the right to reduce or increase the amount to be raised pursuant to the Placing.
In addition to the Placing, the Board is pleased to announce that it is currently considering a number of changes that it believes could increase the appeal of the Company to investors. These changes include:
- Publishing daily NAVs, instead of weekly NAVs;
- Transferring the Company’s listing from the Specialist Fund Segment of the LSE to the Premium Segment of the LSE;
- Replacing the 7-yearly discontinuation resolution with a commitment to provide full exit opportunities every seven years; and
- Implementing a more specific discount control mechanism.
Further details of each of these proposals are set out below. For the avoidance of doubt, save for publishing daily NAVs, should the Board determine to implement any of the above changes, their implementation would follow the Placing, would be subject to further announcements, and may also be subject to approval by Shareholders.
Moving to daily NAVs
The Company currently publishes its estimated NAV per Share on a weekly basis. However, the Company is in the process of updating its procedures such that the Company’s estimated NAV per Share can be published on a daily basis to provide Shareholders with the most up-to-date available information. Further details, including the date on which the daily estimated NAV announcements will be introduced, will be provided in due course.
Transfer to the Premium Segment of the LSE
At the Company’s initial public offering, the Shares were admitted to the Specialist Fund Segment of the LSE (then the Specialist Fund Market). However, the Company has, since its launch, voluntarily complied with the requirements for a Premium Listing as set out in the Prospectus in the section entitled “Voluntary compliance with the Listing Rules”. The Board is of the view that the Company and its Shareholders may benefit from the Company transferring to a Premium Listing, in particular as this may result in improved liquidity in the Shares and would enable the Company to be available to a wider investor audience than is currently the case while admitted to the Specialist Fund Segment. Therefore, the Board is considering the merits of applying to the LSE and to the UK Listing Authority (the “UKLA”) for the Shares to be admitted to trading on the Premium Segment of the LSE and to the Premium Listing Segment of the Official List of the UKLA.
Removal of discontinuation votes and introduction of periodic exit opportunities
The Company was launched with the intention to have an indefinite life and the Company’s articles of incorporation do not provide for a scheduled winding up. However, under the current arrangements, at every seventh annual general meeting, with the first such opportunity being at the annual general meeting in 2022, the Board is required to propose a special resolution that the Company should cease to continue as presently constituted (a “Discontinuation Resolution”). In the event that a Discontinuation Resolution were passed, the Board would be required to formulate proposals to be put to Shareholders within four months to wind-up or otherwise reconstruct the Company, having regard (to the extent applicable) to the illiquid nature of any of the Company’s underlying assets.
However, the Board believes that it could be in Shareholders’ interests to replace the discontinuation votes described above with periodic opportunities for Shareholders to realise the value of some or all of their Shares at a level close to Net Asset Value per Share. The periodic exit opportunities would be provided at the same times, but instead of, the discontinuation votes that they would replace. The exact mechanism for such periodic exit opportunities would be determined by the Board at the relevant time.
Any such introduction of periodic exit opportunities in place of Discontinuation Resolutions would be subject to the Board determining, in its absolute discretion, that the introduction of such periodic exit opportunities is likely to be in the interests of Shareholders and to Shareholder approval. As part of reaching such a decision, the Board will consider, among other matters, the likely tax consequences for Shareholders of such changes to the Company. Information in relation to such consequences would be provided to Shareholders prior to any vote to approve the introduction of such periodic exit opportunities.
Discount control policy
At the Company’s annual general meeting on 6 April 2017 (the “2017 AGM”), the Company was granted authority to purchase up to 14.99% of the Shares in issue immediately following the 2017 AGM, being 9,133,521 Shares. Together with the Company’s authority to issue Shares under the Placing Programme, the Board is considering the use of these authorities more proactively such that, in the ordinary course of business, the Company would issue or repurchase Shares with a view to maintaining the premium/discount at a level close to NAV per Share in normal market conditions. The Directors would consider a number of factors in determining whether to exercise such discretion, including: (i) the Company having sufficient liquidity and cash available for buybacks; (ii) any share buybacks not having a negative impact on the Company’s investment portfolio; and (iii) satisfaction of the solvency test under the Companies Law at the relevant time. The implementation of such a policy is subject to further due diligence by the Board, including as to any tax consequences for the Company and/or Shareholders.
Axiom Alternative Investments SARL +44 (0)20 3807 0670 David Benamou, Managing Partner Jerome Legras, Managing Partner
This announcement is not for distribution, directly or indirectly, in or into the United States of America (including its territories and possessions, any state of the United States of America and the District of Columbia) (the “United States”), Australia, Canada, Japan or South Africa. This announcement does not constitute, or form part of, an offer to sell, or a solicitation of an offer to purchase, any securities in the United States, Australia, Canada, Japan or South Africa. The securities of the Company have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or the US Investment Company Act of 1940, as amended and may not be offered or sold directly or indirectly in or into the United States or to or for the account or benefit of any U.S. Person (within the meaning of Regulation S under the Securities Act). The securities referred to herein have not been registered under the applicable securities laws of Australia, Canada, Japan or South Africa and, subject to certain exceptions, may not be offered or sold within Australia, Canada, Japan or South Africa or to any national, resident or citizen of Australia, Canada, Japan or South Africa.
This announcement has been issued by and is the sole responsibility of the Company.
No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by, Winterflood or by any of its affiliates or agents as to or in relation to the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers and any liability therefore is expressly disclaimed
Winterflood, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as sole financial adviser to the Company and bookrunner and is acting for no-one else in connection with the Placing and the contents of this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Winterflood or for providing advice in connection with the Placing and the contents of this announcement or any other matter referred to herein.
This announcement includes statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause the Company’s actual results to differ materially from those indicated in these statements. Any forward-looking statements in this announcement reflect the Directors’ current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the Company’s operations, results of operations and growth strategy. Prospective investors should specifically consider the factors identified in this announcement and the Prospectus which could cause actual results to differ before making an investment decision. These forward looking statements speak only as of the date of this announcement. Subject to its legal and regulatory requirements, the Company expressly disclaims any obligation to update or revise any forward-looking statement contained herein to reflect changes in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based, unless required to do so by law or any appropriate regulatory authority, including FSMA, the London Stock Exchange, the GFSC, the RCIS Rules, the Prospectus Rules, MAR and the Disclosure Guidance and Transparency Rules.
This announcement does not constitute an invitation to engage in investment activity.
The value of investments may go down as well as up, and all of an investment in the Company would be at risk. Past performance is not a guide to future performance and the information in this announcement or any documents relating to the Placing Programme cannot be relied on as a guide to future performance. Persons needing advice should contact a professional adviser.