RNS Number : 7876M
PME African Infrastructure Opps PLC
01 August 2017

1 August 2017


PME African Infrastructure Opportunities plc

("PME" or the "Company")



Notice of EGM, Circular and Current Tender Offer


PME African Infrastructure Opportunities plc confirms that a notice convening an Extraordinary General Meeting ("Notice") to be held at 10.00 a.m. (UK time) on 6 September 2017 at the offices of Galileo Fund Services Limited, Millennium House, 46 Athol Street, Douglas, Isle of Man IM1 1JB, is to be sent to Shareholders today. 


Accompanying the Notice is a circular (the "Tender Offer Document") which sets out the Company's proposal ("Proposal") to renew Shareholder authority for the Company to return capital to Shareholders via a series of Tender Offers (which require approval under the Isle of Man Companies Acts 1931 to 2004 (as amended)) and sets out details of a current tender offer (the "Current Tender Offer"). The Tender Offer Document will shortly be available from the Company's website at www.pmeinfrastructure.com.


Under the Current Tender Offer, the Board is proposing to return up to approximately US$3.4 million of cash through the purchase by the Company of up to 16,389,294 existing Ordinary Shares from Eligible Shareholders, representing approximately 40.0 per cent. of the Ordinary Shares in issue at the Record Time at the Tender Offer Price of US$0.21 per Ordinary Share.


Eligible Shareholders are entitled to have accepted in the Current Tender Offer valid tenders of up to a maximum of 40.0 per cent. of their holding of Ordinary Shares at the Record Time at the Tender Price, subject to the terms and conditions of the Current Tender Offer.


This represents 2 Ordinary Shares for every 5 Ordinary Shares held by the Eligible Shareholder at the Record Time.


In addition, Eligible Shareholders may tender Ordinary Shares in excess of their Basic Entitlement. Such Excess Applications will be satisfied (subject to scaling back as described in the Tender Offer Document) to the extent that  other Eligible Shareholder do not tender the full amount of their Basic Entitlements and to the extent that there are Overseas Shareholders in Restricted Territories who cannot participate in the Current Tender Offer.


Capitalised terms used but not defined in this announcement have the meanings given to them in the Tender Offer Document referred to above.


Background to and reasons for the Tender Offer


The Company's investing policy is to realise the remaining assets of the Company at a time and under such conditions as the Directors may determine in order to maximise value on behalf of the Shareholders of the Company, and to return both existing cash reserves and the proceeds of realisation of the remaining assets to Shareholders. Since 2012 the Company has returned a total of

approximately US$26.7 million to Shareholders.


As first announced by the Company on 17 April 2015, the Company agreed the sale to PCF Investments of 100 per cent. of the equity of Sheltam (Mauritius), the entity which held the Group's 50 per cent. interest in Sheltam, together with certain intercompany loans, and of seven C30 locomotives then owned by PME Locomotives, for an aggregate cash consideration of US$11.5 million (the ''Disposal''). The Disposal completed on 5 May 2015.


Following the Disposal, the Group owned three C30 locomotives and a commercial property in Dares-

Salaam, Tanzania (the ''Dar-es-Salaam Property''). The three C30 locomotives were being used in South Africa on short term contracts and this produced additional rental income for the Company


The three C30 locomotives were held through the Company's wholly owned subsidiary PME Locomotives. On 2 February 2017, PME Locomotives exercised a put option (the ''Option'') granted under a Put Option Agreement dated 17 April 2015 between PME Locomotives and Sheltam (Mauritius), as amended on 2 February 2017 and as further amended on 12 June 2017, requiring the

Company's former subsidiary, Sheltam (Mauritius), to purchase the three locomotives for US$1,416,666 per locomotive and US$4,249,998 in total (the ''Option Price''), plus interest payable to PME Locomotives in consideration of its agreement, as announced on 2 February 2017, to extend the completion date for the sale of the locomotives under the Option . The purchase of the locomotives by Sheltam (Mauritius) pursuant to the Option completed on 29 June 2017 for a total consideration of US$4,412,998, made up of the Option Price plus interest.


The Dar-es-Salaam Property, which is managed by a local Tanzanian managing agent, was 54 per cent. let as at 31 December 2016 (increasing to 63 per cent. from 15 February 2017) and continues to

trade profitably notwithstanding that further renovations to the building have been carried out during

the period.


In 2010, a subsidiary of the Company acquired the Dar-es-Salaam Property from Dovetel (T) Limited

(''Dovetel''), the Company's former telecommunication investee company in Tanzania. Dovetel was also a tenant of part of the Dar-es-Salaam Property but was in default on the payment of rent. As previously reported to shareholders, the Company served a winding-up petition on Dovetel in January 2013 and has separately been pursuing proceedings to evict Dovetel from the Dar-es-Salaam Property. On 24 May 2016 Dovetel's lease on the property expired and the Directors have appointed

an experienced operator to carry out the eviction process. This process is ongoing.


The Dar-es-Salaam Property currently has three tenants (not including Dovetel). One tenant reduced

the space occupied by it from November 2016 from 1,702 square meters to 809 square meters, but extended its lease on the remaining part of the building at a higher rent for a further three years. The lease with the second tenant to rent 628 square meters has been extended for five years with rental increases built into the agreement. The third tenant had originally rented 310 square meters but has, this year, agreed to increase the rental space to 603 square meters and has also extended the duration of the lease for a further three years, but at rents lower than had previously been achieved.


The Directors have increased the carrying value of the Dar-es-Salaam Property from US$3.8 million as at 31 December 2015 (reflecting the legal uncertainty regarding Dovetel's occupation) to US$5.0 million as at 31 December 2016. Whilst demand for Tanzanian high end offices is currently subdued, this valuation is in line with the Dar-es-Salaam Property value assessed by the local expert of US$5.0 million as at 31 December 2016 accounting for both the vacancy levels and the economic climate at that date, (31 December 2015 appraised unencumbered market value of US$6.5 million).


The Directors have recently considered the cash reserves required to be retained by the Company for

foreseeable working capital purposes. The Directors now propose to carry out the Current Tender Offer in order to return the proceeds from completion of the Option, less funds required to be retained for working capital purposes, to Shareholders.


The Board will continue to review on a regular basis the continuing requirements of the Company and to the extent that the Company holds cash in excess of anticipated requirements, the Directors will seek to return such cash to Shareholders by way of one or more further Tender Offers.


Details of the Current Tender Offer


The Board is proposing to return up to approximately US$3.4 million of cash through the purchase by the Company of up to 16,389,294 existing Ordinary Shares from Eligible Shareholders. Once purchased by the Company, those Ordinary Shares will be cancelled so that such Ordinary Shares will no longer be in issue but the Company's authorised share capital will remain unchanged.


The Current Tender Offer is being made by the Company on the terms and subject to the conditions set out in this Tender Offer Document and the Tender Form, in respect of up to 16,389,294 Ordinary Shares, representing 40.0 per cent. of the Ordinary Shares in issue on the Record Time at the Tender Price of US$0.21 per Ordinary Share. The Tender Price represents a premium of approximately 100.0 per cent. over the middle market closing price (as derived from the AIM Appendix to the Daily Official List of the London Stock Exchange) of US$0.105 per Ordinary Share on 31 July 2017, being the latest practicable date before the publication of this announcement. The Tender Price has been calculated by reference to the Net Asset Value per Ordinary Share as at 31 December 2016 of US$0.23.


The Current Tender Offer is only available to Eligible Shareholders and in respect of the number of Ordinary Shares registered in those Shareholders' names at the Record Time.


Risks relating to the Tender Offers


The risks described below should be carefully considered by Shareholders when deciding what action to take in relation to the Resolution to be proposed at the EGM.


If any Ordinary Shares permitted to be tendered pursuant to the Tender Offers are tendered, the issued share capital of the Company will be reduced. As a result, (i) the fixed costs of the Company would be spread over fewer Ordinary Shares and the Company's total expense ratio may increase; and (ii) the ability to trade Ordinary Shares in the secondary market would be likely to be reduced as the Company's share capital becomes smaller through the execution of the Tender Offers.


 The Tender Offers would contribute to increased asset concentration and, therefore, increased portfolio risk. The amount that the Company would be able to return to Shareholders in future would, therefore, be  significantly dependent on the performance of the remaining investment in the Dar-es-Salaam property and the proceeds realised from it.


If the Current Tender Offer does not proceed for any reason, the Company would bear costs in relation to the Current Tender Offer.


Although the taxation consequences of the Current Tender Offer are set out in the Tender Offer Document, such tax treatment may change as a result of changes in the law or HM Revenue & Customs custom and practice.


Recommendation in respect of the Resolution


The Board unanimously considers that approval of the Resolution is in the best interests of the Company and its Shareholders as a whole. The Board unanimously recommends that Shareholders vote in favour of the Resolution as Lawrence Kearns (being the only Director who holds an interest in the Company) intends to do in respect of his own beneficial holding, which amounts to 37,000 Shares representing approximately 0.09 per cent. of the Company's current issued share capital.


Expected Timetable of Events


Tender Offer Document, Notice of Extraordinary General Meeting, Tender Forms and Forms of Proxy posted


1 August 2017

Current Tender Offer opens


1 August 2017



Latest time and date for receipt of Forms of Proxy


10.00 a.m. on 4 September 2017

Extraordinary General Meeting


10.00 a.m. on 6 September 2017

Latest time and date for receipt of Tender Forms and for settlement of TTE instructions in respect of the Current Tender Offer


1.00 p.m. on 13 September 2017



Record Time for the Current Tender Offer


5.00 p.m. on13 September 2017

Announcement of results of the Current Tender Offer


15 September 2017

CREST accounts credited with Current Tender Offer proceeds and holdings of uncertificated Ordinary Shares revised


19 September 2017

Despatch of cheques for Current Tender Offer proceeds for

certificated Ordinary Shares and where applicable balance



19 September 2017


For further information please contact:


Smith & Williamson Corporate Finance Limited 

Azhic Basirov / Ben Jeynes


+44 20 7131 4000

Stifel Nicolaus Europe Limited

Neil Winward / Tom Yeadon

+44 20 7710 7600



This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.






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