Third Point Offshore Investors Limited (the "Company")
(a closed-ended investment company incorporated with limited liability under the laws of
Guernsey with registered number 47161)
10 August 2018
Transfer to a Premium Listing (Closed-Ended Investment Fund)
Third Point Offshore Investors Limited (the "Company") announces that it is proposing to transfer the listing category of its Ordinary Shares from a standard listing to a premium listing (closed-ended investment fund) under Chapter 15 of the Listing Rules (“Premium Listing”). It is anticipated that this transfer will take effect at 8.00 a.m. on 10 September 2018 (“Admission”), conditional on the passing of the resolutions (the “Resolutions”) at the extraordinary general meeting of the Company, to be held on 31 August 2018. A notice of extraordinary general meeting and shareholder circular (the “Circular”) will be sent separately today to shareholders.
The Company is a closed-ended investment fund incorporated in Guernsey. The Company is a feeder fund that invests all of its capital (net of short-term working capital requirements) in Class E Shares of Third Point Offshore Fund, Ltd. (the “Master Fund”), which is a limited partner of Third Point Offshore Master Fund L.P. (the “Master Partnership”), of which Third Point Advisors II L.L.C., an affiliate of the Investment Manager, is the general partner. Third Point LLC is the investment manager to the Company, the Master Fund and the Master Partnership (the “Investment Manager”). The Company is a member of the Association of Investment Companies (“AIC”).
The Company’s performance is driven by the Investment Manager’s implementation of the Master Fund’s investment policy. The Master Fund’s investment objective is to seek to generate consistent long-term capital appreciation, by using an event driven, bottom-up, fundamental approach to evaluate various types of securities throughout companies’ capital structures. The Master Fund invests all of its investable assets in the Master Partnership, a corresponding open-ended investment partnership having the same investment objective as the Master Fund. The investments of the Master Fund and Master Partnership are managed in line with the Company’s investment policy. If the Master Fund fails to comply with the Company's investment policy, the Company is entitled to terminate the agreement with the Investment Manager and redeem its investment in the Master Fund.
Shares in the Master Fund may be presented to the Master Fund for redemption, in whole or in part, on 60 days’ prior written notice (subject to the discretion of the Master Fund’s board of directors (the “Master Fund Board”) to waive such notice), as of the last day of any calendar quarter or such other date otherwise permitted or required by the Master Fund (the “Redemption Date”). If redemption requests with respect to any Redemption Date exceed 20% of the Master Fund’s net asset value, the Master Fund Board may choose to invoke a gate, which would permit shareholders (including the Company) to redeem shares during any calendar quarter only up to 20% of the Master Fund’s Net Asset Value as of the first day of the calendar quarter, on a pro rata basis based on the size of redemption requests received (the "Gate"). If any shareholder (including the Company) is prohibited from redeeming some or all of the shares in respect of which it has submitted a redemption request as of a Redemption Date as a result of the operation of the Gate, then (i) with respect to the class of shares held by the Company, the shareholder will be deemed to have made a redemption request with respect to the excess shares for the immediately following Redemption Date (and any subsequent Redemption Date, as applicable) and will be subject to the imposition of the Gate, if applicable, for the following Redemption Date and any subsequent Redemption Date, as applicable. There are no lock-up periods applicable to the Shares held by the Company in the Master Fund.
The Company was established as a newly-formed closed-end investment company on 19 July 2007. On 23 July 2007, the Ordinary Shares were admitted to a secondary listing on the Official List pursuant to a prospectus approved by the Financial Services Authority (the predecessor to the Financial Conduct Authority), the Company's Home State Regulator, and published by the Company on 2 July 2007, in accordance with the Prospectus Rules and the Listing Rules (the "Prospectus"). The Company’s initial public offering raised $523 million from diverse, high-quality investors globally.
The Company’s issued share capital consists of listed ordinary shares of no par value denominated in U.S. dollar ("Ordinary Shares"), in addition to unlisted B shares of no par value denominated in U.S. dollar ("B Shares"). Further to the conversion of the ordinary shares denominated in sterling into ordinary shares denominated in U.S. dollar, since 27 July 2018 a dual quote structure has been in place allowing the Ordinary Shares to be quoted in both U.S. dollar (LSE: TPOU) and sterling (LSE: TPOS). Further details in relation to the rights attaching to the Company's share classes and the new share capital structure that the Company proposes to adopt ahead of Admission are set out in more detail below and in the Circular.
Background and reasons for the proposed transfer
At the time of its launch, the Company was unable to fully comply with certain rules set out in Chapter 15 of the Listing Rules (prevailing at that time). The Company obtained a secondary listing (Chapter 14) on the Official List at launch in July 2007, which became a standard listing in April 2010 following changes to the Listing Rules. As at 31 July 2018, the Company’s Ordinary Shares had net assets of c.$974 million and a market capitalisation of c.$796 million.
The Company is now able to meet the relevant requirements of Chapter 15. The board of directors of the Company (the “Board”) believes that a Premium Listing will assist in increasing the ratings profile of the Company, providing it with exposure to a wider potential investor base and enhancing the liquidity of its Ordinary Shares. In addition, a Premium Listing will, subject to the Company satisfying certain other requirements, mean that the Ordinary Shares will be eligible for inclusion in certain financial market indices. It is anticipated that any such inclusion is likely to result in secondary market demand for the Ordinary Shares from investment vehicles which track such indices. Accordingly, the Board has concluded that it would be in the best interests of the Company and its shareholders as a whole to transfer the Company's listing to a Premium Listing under Chapter 15 of the Listing Rules.
The Company has today published the Circular which contains notice convening an extraordinary general meeting of its shareholders to be held on 31 August 2018. In order to satisfy the requirements for a Premium Listing, the Company proposes to revise its existing voting structure and make certain other amendments to its articles of incorporation in order to satisfy the specific requirements of the Listing Rules.
As detailed in the Circular, any failure by the Company to maintain its status as a "foreign private issuer" would result in the Company being treated as a US domestic issuer for US federal securities law purposes, which would have a range of serious consequences for the Company. The Company is principally managed in the United States by the Investment Manager and, historically, a significant majority of the Company's underlying assets have been based in the United States. As such, the Company can only preserve its status as a "foreign private issuer" by ensuring that US residents do not own in excess of 50 per cent. of its "voting securities" which, for this purpose, means securities that carry the right to vote in relation to the appointment or removal of directors.
Historically, the Company has mitigated the risk of US residents owning in excess of 50 per cent. of its "voting securities" by issuing B Shares to VoteCo, a Guernsey company, carrying 40 per cent. of the aggregate voting rights in the Company. In determining how to exercise the voting rights carried by the B Shares, the directors of VoteCo are required to take into consideration the best interests of the Company's shareholders taken as a whole.
Following Admission, where the provisions of the Listing Rules require a shareholder vote to be taken, the Company will need to ensure that such vote is decided by a resolution of the holders of securities which have been admitted to a Premium Listing, that is, by a resolution of the holders of the Ordinary Shares. Accordingly, the Company now proposes to amend its articles of incorporation ("Articles") such that, from Admission, the B Shares will, as currently, carry 40 per cent. of the aggregate voting rights in the Company on all matters, except matters on which the Listing Rules require a shareholder vote (the "Specified Matters"). The Specified Matters will be listed in the Articles to be adopted by the Company, further details of which are set out in the Circular.
Further, in order to comply with the UKLA's eligibility requirements for a Guernsey-domiciled investment company seeking admission to the Premium Segment, the proposed new Articles introduce pre-emption rights for all holders of Ordinary Shares. The proposed pre-emption rights provide that, subject to any modifications approved by special resolution, the Company may not allot and issue "equity securities" for cash unless it has made an offer to each person who holds Ordinary Shares to allot and issue to him on the same or more favourable terms a proportion of those securities that is as nearly as practicable equal to the proportion of the Ordinary Share capital of the Company held by such person.
The transfer of the Company's listing remains conditional on the Resolutions being passed. However the transfer of the Company's listing does not itself require shareholder approval.
The Company has therefore requested and, subject to the Resolutions being passed, it is anticipated that the UKLA will approve the transfer of the listing category of the Ordinary Shares to a Premium Listing with effect from 8.00 a.m. on 10 September 2018. The B Shares will continue to be unlisted.
Effect of the transfer to Premium Listing
The effect of the transfer to a Premium Listing is that the provisions of Chapters 7 to 13 (inclusive) and the Chapter 15 of the Listing Rules will apply to the Company. In summary, these requirements relate to the following matters:
· the application of certain generic 'Premium Listing Principles' (Chapter 7);
· the requirement to appoint a sponsor in certain circumstances (Chapter 8);
· the requirement to comply with various continuing obligations, including the adoption of pre-emption rights (which may be disapplied by shareholders) and compliance with all relevant provisions of the UK Corporate Governance Code (or provide an explanation for any non-compliance, if applicable, in its annual financial report) (Chapter 9);
· various specific contents requirements will apply to circulars issued by the Company to shareholders (Chapter 13);
· the requirement to announce, or obtain shareholder approval for, certain transactions outside the scope of its published investment policy (depending on their size and nature) and for certain transactions with 'related parties' of the Company (Chapters 10 and 11);
· certain restrictions in relation to the Company dealing in its own securities and treasury shares (Chapter 12); and
· certain requirements, as set out in more detail below, which are specific to investment entities, including in relation to corporate governance, investment policy and investment diversification (Chapter 15).
From the date of transfer, the Company will also comply with the requirements imposed by Chapter 15, the more significant of which include:
· Listing Rule 15.2.2. the Company must invest and manage its assets in a way which is consistent with its object of spreading investment risk.
· Listing Rule 15.2.3A. the Company must not conduct any trading activity which is significant in the context of its group as a whole.
· Listing Rule 15.2.4A. the Company must avoid cross-financing between the businesses forming part of its portfolio and the operation of treasury functions as between the Company and its investee companies.
· Listing Rule 15.4.2. the Company must, at all times, invest and manage its assets in accordance with its published investment policy. The revised investment policy which the Company will adopt upon the transfer to a Premium Listing becoming effective is set out in full below.
· The rules relating to the independence of the Board and the Board's ability to act independently of the Investment Manager being set out in Listing Rules 15.2.11 to 15.2.13A.
· The rules relating to obtaining shareholder approval for material changes to the published investment policy of the Company set out in Listing Rules 15.4.8 and 15.4.9.
· The rules relating to further issues of shares set out in Listing Rule 15.4.11 such that the Company must not issue any further shares of a class for cash at a price below the Net Asset Value per share of that class unless first offered pro rata to existing holders of shares of that class (unless authorised by its shareholders).
The Company’s investment objective is to provide its shareholders with consistent long term capital appreciation, utilising the investment skills of the Investment Manager, through investment of all of its capital (net of short-term working capital requirements) in Class E shares of Third Point Offshore Fund, Ltd. (the “Master Fund”), an exempted company formed under the laws of the Cayman Islands in October 1996. The Master Fund’s investment objective is to seek to generate consistent long-term capital appreciation, by using an event driven, bottom-up, fundamental approach to evaluate various types of securities throughout companies’ capital structures. The Master Fund is managed by the Investment Manager and the Investment Manager’s implementation of the Master Fund’s investment policy is the main driver of the Company’s performance.
The Master Fund is a limited partner of Third Point Offshore Master Fund L.P. (the “Master Partnership”), an exempted limited partnership organised under the laws of the Cayman Islands, of which Third Point Advisors II L.L.C., an affiliate of the Investment Manager, is the general partner. Third Point LLC is the Investment Manager to the Company, the Master Fund and the Master Partnership. The Master Fund invests all of its investable assets in the Master Partnership, a corresponding open-ended investment partnership having the same investment objective as the Master Fund. The investments of the Master Fund and Master Partnership are managed in line with the Company’s investment policy.
The Master Partnership invests in securities and other instruments in select asset classes, sectors, and geographies, by taking long and short positions. The Master Partnership’s investment portfolio is composed of selected investments from certain strategies, including long or short special situation and value equities, long or short performing corporate credit (high-yield or investment grade), long or short distressed corporate credit or other distressed instruments, including preferred stock, liquidating trusts certificates, trade claims and the like, long or short asset-backed securities, risk arbitrage, long or short physical and exchange-traded commodities, long or short currencies or government debt, and other strategies.
The Company, through its investment in the Master Fund, will maintain a diversified portfolio of investments. In particular, the maximum exposure to a single issuer of securities will not exceed 25% of the Master Partnership's gross assets attributable to the Company, calculated at the time of investment.
The Company will not invest more than 10 per cent., in aggregate, of its total assets in other UK-listed closed-ended investment funds.
The Company may borrow up to 15 per cent. of the NAV of the Company in order to fund ongoing working capital requirements and share buy-backs.
In the opinion of the Company, the working capital available to the Company is sufficient for its present requirements, that is for at least the next 12 months from the date of this announcement.
Appointment of sponsor
Jefferies International Limited is acting as sponsor and corporate broker to the Company. Jefferies International Limited has given and have not withdrawn their written consent to the inclusion in this announcement of the reference to its name in the form and context in which it is included.
|Third Point Offshore Investor Relations||+1 212 715 6707|
|Jefferies International Limited (Sole Sponsor)
|+44 (0)20 7029 8000|
This announcement appears as a matter of record only and does not constitute an offer to issue or sell, or a solicitation of an offer to purchase, subscribe for or otherwise acquire, any securities in any jurisdiction.
The information contained in this announcement is given at the date of its publication and is subject to updating, revision and amendment. The contents of this announcement have not been approved by any competent regulatory or supervisory authority.
All investments are subject to risk. Past performance is no guarantee of future returns. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results. This document is not intended to constitute legal, tax or accounting advice or investment recommendations.
Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. Statements contained in this document that are not historical facts are "forward-looking statements" which are based on current expectations, estimates, projections, opinions and beliefs of the Company's investment manager. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon.
Forward-looking statements can be identified in some cases by the use of forward-looking terminology, including terms such as "intends", "intention", "will", "continue", "believe", "view" or, in each case, variations or comparable terminology. Forward-looking statements are not guarantees of future events or performance. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company's ability to control or predict. Examples of such circumstances include required regulatory or stock exchange approvals. Actual events or results or the actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements.
The distribution of this announcement in certain jurisdictions may be restricted by law and persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions.
The Company has not been and will not be registered under the US Investment Company Act of 1940, as amended (the "Investment Company Act"). The Ordinary Shares have not been and will not be registered under the US Securities Act of 1933 (the "Securities Act"), or under the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold, pledged or otherwise transferred, directly or indirectly, into or within the United States, or to or for the benefit of "U.S. persons" as defined in Regulation S under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States and in a manner which would not require the Company to register under the Investment Company Act.
Jefferies is authorised and regulated by the FCA and is acting as the Company's sponsor (the "Sponsor") in connection with the Admission and will not be acting for any other person, will not regard any other person as a client in relation to the Admission, and will not be responsible to any person other than the Company for providing the protections afforded to clients of Jefferies or for advising any other person in respect of the proposed Admission. Jefferies does not seek to limit or exclude its responsibilities and liabilities which may arise under FSMA or the regulatory regime established there under.
This announcement has been prepared by the Company and its investment manager, Third Point LLC (the "Investment Manager"). No liability whatsoever (whether in negligence or otherwise) arising directly or indirectly from the use of this announcement is accepted and no representation, warranty or undertaking, express or implied, is or will be made by the Company, the Investment Manager, the Sponsor or any of their respective directors, officers, employees, advisers, representatives or other agents ("Agents") for any information or any of the opinions contained herein or for any errors, omissions or misstatements. None of the Investment Manager, the Sponsor nor any of their respective Agents makes or has been authorised to make any representation or warranties (express or implied) in relation to the Company or as to the truth, accuracy or completeness of this announcement, or any other written or oral statement provided. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, estimates or forecasts contained in this announcement and nothing in this announcement is or should be relied on as a promise or representation as to the future.