Brookwell Limited
Brookwell Limited (“Brookwell”) is a Guernsey registered, closed-ended investment company which was formed to provide value and liquidity for its shareholders. The Company’s A Shares were admitted to trading on AIM (ticker: BKW) on 26 June 2008 and the B Shares were admitted to trading on AIM (ticker: BKWB) on 19 February 2009. The Company is an investing company for the purposes of the AIM Rules. The Company’s investment manager is Progressive AIM Realisation Limited (“PARL”), further details of which are set out under the tab marked “Investment management”.
The Company was established to acquire AIM Securities and Listed Securities from financial institutions, in consideration for which the Company issued new A Shares, pursuant to the Placing, at a price of 100p each. The Investment Manager believes that the portfolios of many UK financial institutions include holdings in AIM Securities and Listed Securities which are not central to their investment strategy and which may comprise a fairly small percentage of their overall holdings. It may not be economically viable for those financial institutions to commit the time and bear the costs of becoming actively involved in the management of such shares.
The Company provides such financial institutions with an opportunity to:
- dispose of their non-core holdings and then recycle the proceeds in accordance with their investment priorities; and
- rationalise their portfolios and thereby improve portfolio efficiency by focusing more resources on their core investments.
The Company has retained the services of PARL to manage its portfolio.
The Company raised £25,524,743 through a stock swap under the Placing of A Shares and acquired holdings in 84 AIM and Listed companies.
On 15 January 2009 the Company announced the proposed issue of a new and separate class of shares (“B Shares”). As part of the proposals the then existing shares were re-designated as A Shares. The proposals were approved by shareholders at an extraordinary general meeting held on 29 January 2009. The Company raised £12,960,844 through a stock swap under the Placing of B Shares and acquired holdings in 62 AIM and Listed companies.
Objective
The objective of the Company is to realise value from a portfolio of AIM Securities and Listed Securities and progressively to return cash to Shareholders.
Methodology
The Progressive Group identified some time ago that institutional portfolios often contain small holdings in illiquid stocks. Although these holdings might represent a small proportion of a portfolio’s value, they require a disproportionate amount of the manager’s time and resources that would be better employed in managing core investments and investigating new investment opportunities.
The Company’s methodology is based on the model of four investment companies which were managed by either PARL or its parent company, PVML. The first three companies have completed the realisation of their portfolios. The Company follows the methodology of those investment companies and, in particular, the corporate structure of Advance AIM Value Realisation Company Limited (“AIMVARC”). Further information concerning these investment companies can be found in Part III of the Admission document dated 15 January 2009.
The management team of PARL responsible for the Company’s portfolio comprises Robert Legget, who has been involved in the management of all the previous companies, and Ross Courtier, who has been involved in the management of the two most recent companies, TAVR and AIMVARC.
Capital structure and life of the Company
The Company’s issued share capital comprises the A Shares, the B Shares and two Founder Shares. The Founder Shares have negligible rights. The A Shares and the B Shares have been admitted to trading on AIM.
The assets and liabilities (other than the amount paid up on the Founder Shares and the liabilities considered by the Directors to be incurred in connection with the Amended Articles, the designation of the existing Shares as A Shares and the Placing and Admission of the B Shares) of the Company immediately prior to the Placing of the B Shares were attributed to the A Class Fund. The A Class Fund is (a) reduced by disposals of such assets and any liabilities attributed to the A Class Fund, and (b) augmented by any income deriving from such assets and the cash or other proceeds deriving from disposals of such assets. The A Shares and the B Shares are redeemable by the Company at any time at a price per Share as described in part III of the Admission document dated 15 January 2009. Neither the A Shares nor the B Shares are redeemable at the request of Shareholders. The A Shares and the B Shares carry the exclusive right to any dividend distributed by the Company, any such dividend being paid in respect of a class of Shares solely out of the returns or assets of the Class Fund attributed to that class of Shares.
On a winding up of a Class Fund, any surplus assets available for distribution will be distributed solely to Shareholders who hold shares of the relevant class pro rata based on the number of Shares of that class held by each Shareholder. On a winding up of the Company, any surplus assets of a Class Fund available for distribution will be distributed to Shareholders who hold Shares of the relevant class pro rata based on the number of Shares of the relevant class held by each Shareholder. Any assets not attributed to a Class Fund will be returned to the holders of the Founder Shares pro rata based on the number of Founder Shares held by each holder of the Founder Shares.
At separate class meetings of each of the A Shareholders and the B Shareholders to be held in the third quarter of 2011, Shareholders holding Shares of each class will be invited to consider the future of the Class Fund attributed to the relevant class of Shares and will be given an opportunity to initiate the winding up of the relevant Class Fund by passing a resolution by a simple majority requesting the directors of the Company to wind up the relevant Class Fund. On any such resolution, any Shareholder who votes in favour of the resolution will be entitled to 100 million votes for every Share held. This process is described in more detail in paragraph 5(i)(i) of Part V of the Admission document dated 15 January 2009.
Guernsey Law
As the company is incorporated in Guernsey (not in the UK), it is hereby stated that the rights of shareholders of the company may be different from the rights of shareholders in a UK incorporated company. A summary of certain material differences between Guernsey Law and English Corporate Law is set out in paragraph 4 of Part V of the Admission document dated 15 January 2009.
Transfer of Shares
Under the Articles of Association the Company may require that shares are transferred from a non-qualified person (as defined in the Articles) to a person who is not a non- qualified person. The details are summarised in paragraph 5(h) of Part V of the Admission document dated 15 January 2009.
Dividend policy
The Board and the Investment Manager will seek to achieve capital growth rather than dividend income. It is unlikely that the Company will pay any significant dividends.
Directors
The board comprises five non-executive directors including Christopher Clark as chairman. The Directors have between them a range of experience of investment companies, including closed-ended Guernsey based investment companies similar to Brookwell, and of smaller quoted companies.
Note capitalised terms have the meaning set out in the Admission document dated 15 January 2009 unless the context otherwise requires.