East Capital Explorer AB - East Capital Explorer proposes preference shares to be able to take advantage of attractive investment opportunities
* In addition, the Board also proposes amendments to the articles of
association to adapt to the new EU regulatory framework AIFMD.
The Board of East Capital Explorer AB (publ) ("East Capital Explorer" or the
"Company") convenes an Extraordinary General Meeting to be held on March
24, 2014, with proposals to resolve upon A) introduction of a new class of
shares, preference shares, through amendments to the articles of association,
and authorization for the Board to resolve to issue such preference shares, and
B) amendments to the articles of association in order to adapt the Company to
the new EU regulatory framework for managers of alternative investment funds
("AIFMD").
"We would like to be able to issue preference shares in order for East Capital
Explorer to be able to finance attractive investments in companies with strong
cash flows and good growth", says Paul Bergqvist, Chairman of the Board.
In brief:
* Proposal to introduce preference shares and authorization for the Board to
resolve to issue preference shares
* New capital is primarily intended to be invested in identified assets within
two areas which the Company currently considers to be of particular
interest: consumer companies driven by a growing middle class in especially
Russia and the Baltics, and commercial real estate with good yield in the
Baltics
* Proposal on amendments to the articles of association due to the new EU
regulatory framework for managers of alternative investment funds
A. Introduction of preference shares
Through the possibility to issue preference shares, East Capital Explorer would
like to create new financial possibilities to take advantage of attractive
investment opportunities in assets which are estimated to generate strong cash
flows and good growth. A potential issue of preference shares, in combination
with the return generated by new investments, creates conditions to provide a
higher return on invested capital for the holders of ordinary shares in the
Company.
Summary of the preference shares:
· The Board of East Capital Explorer proposes to introduce preference
shares with preference over the ordinary shares to an annual dividend of SEK
100 per preference share to be paid out quarterly with SEK 25 per quarter.
· The size of the preference dividend will be adjusted every fifth year
to the then prevailing reference interest rate.
· The Board proposes an authorisation to resolve, at one or several
occasions, upon an issue of no more than 1,000,000 preference shares.
· The Board has the right to resolve upon redemption of preference
shares at a redemption price equal to 120 per cent of the initial subscription
price of the preference shares during the first three years and, thereafter, at
105 per cent of the initial subscription price.
· Each preference share carries one-tenth (1/10) vote compared to the
ordinary shares.
The preference shares and the proposal in brief
According to the proposal to amend the articles of association of East Capital
Explorer, which the Extraordinary General Meeting has to resolve upon, the
preference shares will have preference over the ordinary shares to an annual
dividend of SEK 100 per preference share, which would be paid out quarterly with
SEK 25 per quarter. The size of the preference dividend will be adjusted every
fifth year according to the then prevailing reference interest rate.[1] The
prerequisites for payment of dividend are that East Capital Explorer has
sufficient distributable funds and that the General Meeting resolves to pay the
dividend. The preference to dividend is accumulated and is subject to interest
compensation if the paid out dividend should be less than the preference
dividend to which the preference shares are entitled. The preference shares have
no further right to dividends. In addition, some limitations for dividends on
preference shares and issuance of preference shares are proposed.
The Board has the right to resolve to redeem all or part of the outstanding
preference shares at a redemption price equal to 120 per cent of the initial
subscription price during the first three years following the first issue of
preference shares and, thereafter, at a redemption price equal to 105 per cent
of the initial subscription price. Each preference share is entitled to 1/10
vote compared to the ordinary shares of East Capital Explorer.
The Board propose that the Extraordinary General Meeting authorizes the Board
to, at one or several occasions before the Annual General Meeting 2014, with or
without deviation from the preferential rights of the shareholders, resolve upon
an issue of no more than 1,000,000 preference shares.
B. Adaptions to the new regulatory framework for managers of alternative
investment funds
The Board proposes that the Extraordinary General Meeting resolves upon certain
amendments to the articles of association in order to adapt East Capital
Explorer and its subsidiary East Capital Explorer Investments AB to the new EU
regulatory framework for managers of alternative investment funds (AIFMD).
Within the EEA, managers of alternative investment fund are currently adapting
to a new regulatory framework. The motives of the regulation are, inter alia, to
strengthen the financial system, increase the transparency and to create an
internal market for managers of alternative investment funds. The new rules
require licensing from, and that the operations are being supervised by, the
Swedish Financial Supervisory Authority. The new rules also comprise capital
requirements, certain requirements on organization (for example risk management
and compliance functions), to appoint a depository and to report to the
investors and the Swedish Financial Supervisory Authority. East Capital Explorer
and other companies which are subject to the new rules are now preparing to
adapt to the regulatory framework. For the listed parent company East Capital
Explorer this means that the Company must apply for a license as a so called
internally managed alternative investment fund by July 22, 2014.
Also East Capital Explorer's investment operations, which currently are
conducted by the subsidiary East Capital Explorer Investments AB, will be
subject to the new rules. The Board of East Capital Explorer has identified a
possibility to cost-efficiently adapt its operations to the new rules by moving
the operations currently run by East Capital Explorer Investments AB, to East
Capital Explorer Investments S.A., a company domiciled in Luxembourg, in order
to take advantage of East Capital's existing organization and resources which
are adapted to the rules for managers of alternative investment funds.
For practical reasons, the adaptations processes for the parent company and the
subsidiary respectively may occur at two different occasions. Therefore, the
Board proposes that the General Meeting resolves upon two different amendments
to the provision in the articles of association on the operations of the Company
which may be implemented at different occasions.
1. The Board proposes that § 3, § 7 and § 13 of the Company's articles of
association are adapted to reflect that East Capital Explorer Investments AB is
replaced with East Capital Explorer Investments S.A. and that the investment
management agreement in the future will be named investment agreement.
2. The Board proposes that § 3 "Operations" of the articles of association
of the Company is amended to have the following wording: "The company shall be
an internally managed alternative investment fund which shall own and manage
shares or other securities in East Capital Explorer Investments S.A., reg. no. B
184482, other documents of value and liquid funds and to conduct such other
therewith compatible business which the company is permitted to conduct under
the Swedish Alternative Investment Fund Managers Act."
Complete proposals
The Board's complete proposals for authorization and amendments to the articles
of association can be found in the notice of the Extraordinary General Meeting,
published through a separate press release today. The decisions regarding the
preference shares require the support of at least two-thirds (2/3) of the votes
cast and the shares represented at the Extra General Meeting. The decision
regarding the amendments to the articles of associations' provision on the
operations of the Company requires support of at least three-fourths (3/4) of
the votes cast and the shares represented at the Extra General Meeting.
Certain East Capital Partners with companies as well as Paul Bergqvist, Chairman
of the Board, who together hold approximately 16 per cent of the shares and
votes, have committed to vote in favour of the Board's proposal on the
Extraordinary General Meeting to be held on March 24, 2014.
Contact information
Catharina Hagberg, CEO, East Capital Explorer, +46 8 505 885 52
Lena Krauss, Head of IR & Finance, East Capital Explorer, +46 8 505 885 94
About East Capital Explorer
East Capital Explorer AB (publ) is a Swedish investment company that offers
unique investment opportunities in Eastern European to a wider customer base.
The Company makes direct investments into private and public companies,
investments are also made through East Capital's Private Equity, Real Estate and
Alternative investment funds. East Capital Explorers key investment theme is
strong domestic demand and companies that focuses on sectors with high growth
potential such as retail, finance and real estate. East Capital Explorer has
appointed East Capital to manage its investments. East Capital Explorer is
listed at NASDAQ OMX Stockholm, Mid Cap.
Listing: NASDAQ OMX Stockholm, Mid Cap - Ticker: ECEX - ISIN: SE0002158568 -
Reuters: ECEX.ST - Bloomberg: ECEX SS Equity
This information is made public according to the Financial Markets Act and the
Financial Instruments Trading Act or requirements in listing agreements. The
information was handed in for publication on February 20, 2014 at 08:00 CET.
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[1]The reference interest is the 5-year annual interest for interest swap
transactions in SEK "OMX SEK SWAP 5Y".
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Source: East Capital Explorer AB via GlobeNewswire