Phase 2 – Cash shell attracts unexpected investors with demands

AIM LISTED CASH SHELL FORMERLY INVESTED IN BULGARIAN PROPERTY, HAVING REALISED AND DISTRIBUTED ITS CASH IN PREPARATION FOR INTENDED WINDING UP, IS ACQUIRED BY NEW INVESTORS FROM BULGARIA AND IS REINVIGORATED USING NEW INVESTORS FUNDING TO RECOMMENCE INVESTING IN BULGARIA

My involvement

This client was a closed ended Jersey investment company, with its shares admitted to trading on AIM in London, regulated in Jersey as a “listed fund”. The company had realised, and was in the course of returning to its shareholders, its portfolio of Bulgarian property in accordance with its divestment policy. Three new Bulgarian investors, apparently each acting independently of the others, then appeared on the share register, having acquired over 70% of the shares between them.

I met with all three investors, to try and establish their intentions and explore their willingness to provide new funding to implement a reinvesting policy and remain on AIM. That process involved negotiating with the Jersey Financial Services Commission (JFSC) for an extension of the original authorisation, which had been given in line with the originally intended life expectancy of the company. That was achieved on the basis that an exit would be provided for shareholders who did not wish the company’s existence to be extended.

Ultimately, however, AIM did not regard the new funding to be sufficiently substantial to meet the AIM rules requirement for the new investing policy to be implemented within a certain period, and so AIM cancelled the company’s admission to trading.

Consequentially the decision was made to re-list on NEX Exchange (now Aquis Stock Exchange). NEX Exchange was not a recognised stock exchange or market for Jersey listed fund purposes so the company needed to be re-domiciled. I carried out a comparative study between alternative jurisdictions and proposed re-domiciliation to the Isle of Man. Shareholders, having already received their value return, voted in favour. I saw through to their respective conclusions the re-domiciliation project, the unravelling of the JFSC regulatory authorisation, and the new listing on NEX Exchange. Job done, I then stepped down from the board as the company was no longer a Jersey incorporated listed fund and had no ongoing need for the cost of a Jersey-resident director.

Outcome

By the time I stepped down the “original” shareholder base had received its value-return from the realisation of the property portfolio and those who chose to remain retained a diluted stake in the re-invigorated company following its re-listing and move to the Isle of Man, whereafter in effect they received a “free carry” in following the fortunes of a re-constituted board funded by the three new shareholders.