AGM Information • May 29, 2018
AGM Information
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. IT CONTAINS PROPOSALS RELATING TO BIOPHARMA CREDIT PLC (THE ''COMPANY'') ON WHICH YOU ARE BEING ASKED TO VOTE.
If you are in any doubt about the contents of this Circular or the action you should take, you are recommended to seek immediately your own personal financial advice from an appropriately qualified independent adviser authorised pursuant to the UK Financial Services and Markets Act 2000 if in the United Kingdom or otherwise regulated under the laws of your own country.
If you have sold or otherwise transferred all of your Shares, please send this Circular together with the accompanying Proxy Appointment at once to the purchaser or transferee or to the stockbroker, banker or other agent through whom the sale or transfer was effected, for onward transmission to the purchaser or transferee.
This Circular should be read as a whole. Your attention is drawn in particular to the letter from your Chairman which is set out on pages 4 to 10 of this Circular and which recommends that you vote in favour of the Resolutions to be proposed at the annual general meeting of the Company (''AGM'') referred to in this Circular. Your attention is also drawn to the section entitled ''Action to be Taken'' on page 8 of this Circular.
(Incorporated in England and Wales with registered no.10443190 and registered as an investment company under section 833 of the Companies Act 2006)
The Proposals described in this Circular are conditional on Shareholder approval at the AGM. Notice of the AGM to be held at 11 a.m. on 29 June 2018 at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG is set out at the end of this Circular.
Shareholders are requested to return a Proxy Appointment by one of the following methods: (i) in hard copy form by post, by courier or by hand to Link Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU; or (ii) in the case of CREST members, by utilising the CREST electronic proxy appointment service (details of which are contained in this Circular), in any case so as to be received by the Company's registrar, Link Asset Services, as soon as possible and, in any event, not less than 48 hours before the time at which the AGM (or any adjournment thereof) is to begin. In calculating such 48 hour period, no account shall be taken of any part of a day that is not a Business Day. Completion of a Proxy Appointment will not preclude a Shareholder from attending, speaking and voting in person at the AGM.
Defined terms used in this Circular have the meanings ascribed to them in the section headed ''Definitions'' on page 19.
This Circular is not a prospectus and is not an offer to sell or a solicitation of any offer to buy any securities in the United States or in any other jurisdiction. The Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended, and the Company has not been, and will not be, registered under the U.S. Investment Company Act of 1940, as amended.
The Listing Rules applicable to closed-ended investment companies which are listed on the Premium Listing Segment of the Official List of the UK Listing Authority do not apply to the Company. However, the Directors intend that, as a matter of best practice and good corporate governance, the Company conducts its affairs in accordance with certain key provisions of the Listing Rules in such manner as they would apply to the Company were it admitted to the Official List under Chapter 15 of the Listing Rules. The UK Listing Authority will not monitor the Company's voluntary compliance with the Listing Rules applicable to closed-ended investment companies which are listed on the Premium Listing Segment of the Official List of the UK Listing Authority nor will it impose sanctions in respect of any failure of such compliance by the Company. The UK Listing Authority has not reviewed the contents of this Circular.
| Headings | Page | |
|---|---|---|
| TIMETABLE | ||
| Part I : | LETTER FROM THE CHAIRMAN | 4 |
| 1. | INTRODUCTION | 4 |
| 2. | THE PROPOSALS | 4 |
| 3. | RESOLUTIONS | 8 |
| 4. | ACTION TO BE TAKEN | 8 |
| 5. | DOCUMENTS ON DISPLAY | 9 |
| 6. | RECOMMENDATION | 10 |
| Part II : | ADDITIONAL INFORMATION | 11 |
| 1. | MATERIAL CONTRACTS | 11 |
| 2. | MAJOR SHAREHOLDERS | 14 |
| 3. | SIGNIFICANT CHANGE | 14 |
| PART III: | SUMMARY OF THE PERFORMANCE FEE | 15 |
| PART IV: | DEFINITIONS | 19 |
| NOTICE OF ANNUAL GENERAL MEETING | 21 |
Latest time and date for receipt of Proxy Appointment for the AGM 11 a.m. on 27 June 2018
Annual General Meeting 11 a.m. on 29 June 2018
All references to times in this document are to London times, unless otherwise stated.
(Incorporated in England and Wales with registered no.10443190 and registered as an investment company under section 833 of the Companies Act 2006)
Jeremy Sillem (Chairman) Colin Bond Duncan Budge Harry Hyman
Registered Office: Beaufort House 51 New North Road Exeter EX4 4EP
29 May 2018
Dear Shareholder
At the AGM of the Company, Shareholders will be asked to consider the approval of, and vote on, the various items of business to be considered at the AGM, being:
(together, the ''Proposals'').
The purpose of this Circular is to provide Shareholders with details of, and to seek Shareholder approval for, each of the Resolutions together comprising the Proposals. This Circular includes the notice of the AGM to be held at 11 a.m. on 29 June 2018 at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG.
The Board considers that the related party transaction is fair and reasonable and believes that the Proposals are in the best interests of the Company and its Shareholders as a whole and recommends that you vote in favour of each of the Resolutions at the AGM. You are therefore urged to complete and return your Proxy Appointment without delay, whether or not you intend to attend the AGM.
Resolutions 1 to 10, 13 and 15 will be proposed as ordinary resolutions and Resolutions 11, 12 and 14 will be proposed as special resolutions. Only Independent Shareholders are eligible to vote on Resolution 15.
The Directors are required to present the Strategic Report, Directors' Report and Auditor's Report and the financial statements for the period ended 31 December 2017 to the meeting. These are contained in the Annual Report which is included in this mailing.
Shareholders have an annual advisory vote on the report on Directors' remuneration and a binding vote, to be held at least every three years, on the remuneration policy of the Directors. Shareholders are being requested to vote on the receipt and approval of the Directors' Remuneration Report and Directors' Remuneration Policy as set out on pages 39 and 40 of the Annual Report.
Under the Articles and in accordance with the AIC Code of Corporate Governance, Directors are subject to election by Shareholders at the first annual general meeting (being the AGM) after their appointment. Thereafter, at each annual general meeting any Director who has not stood for re-election at either of the two preceding annual general meetings shall retire. In addition, one-third of the Directors eligible to retire by rotation shall retire from office at each annual general meeting. Beyond these requirements, the Board has agreed a policy whereby all Directors will seek annual re-election at the Company's annual general meetings.
In accordance with the above policy, all Directors will be standing for election at the AGM, being the Company's first annual general meeting.
The Board confirms that the performance of each of the Directors seeking election is effective and demonstrates commitment to the role and the Board believes that it is therefore in the best interests of Shareholders that these Directors be elected. The Directors also believe that the Board has an appropriate balance of skills, experience and knowledge.
Full biographies of all the Directors are set out on pages 28 and 29 of the Annual Report and are also available for viewing on the Company's website www.bpcruk.com/management-board/.
At each general meeting at which the Company's financial statements are presented to its members, the Company is required to appoint an auditor to serve from the conclusion of that meeting until the conclusion of the next such meeting. The Board, on the recommendation of the Audit and Risk Committee, recommends the appointment of Pricewaterhouse Coopers LLP. Resolution 9 gives authority to the Directors to determine the Auditor's remuneration.
The Company pays dividends in U.S. dollars or GBP Sterling (at the Shareholder's election) on a quarterly basis. The Company may, where the Directors consider it appropriate, use the reserve created by the cancellation of its share premium account to pay dividends.
The Company's target dividend for the first financial year following IPO was 4 per cent. (calculated by reference to the US\$1.00 per Ordinary Share issue price at IPO) and, once substantially invested, the Company will target an annual dividend yield of 7 per cent. on the Ordinary Shares (calculated by reference to the US\$1.00 per Ordinary Share issue price at IPO), together with a net total return on NAV of 8 to 9 per cent. per annum on the Ordinary Shares in the medium term.
The Board is conscious that this means that Shareholders will not be given the opportunity to vote on the payment of a final dividend. Accordingly, it has been decided that Shareholders will be asked to confirm their ongoing approval of the Company's current dividend payment policy. This is set out in Resolution 10.
At a general meeting of the Company held on 27 February 2017, the Company was granted authority to purchase up to 14.99 per cent. of the Company's ordinary share capital issued at IPO, amounting to 114,205,416 Ordinary Shares. No Ordinary Shares have been bought back under this authority.
Resolution 11, a special resolution, will renew the Company's authority to make market purchases of up to 137,046,499 Ordinary Shares (being 14.99 per cent. of the Company's Ordinary Shares at the date of this Circular), either for cancellation or placing into treasury at the determination of the Directors. Purchases of Ordinary Shares will be made within guidelines established from time to time by the Board. Any purchase of such shares would be made only out of the available cash resources of the Company. The maximum price which may be paid for any Ordinary Share is the higher of: (i) 5% above the average of the mid-market values of such share for the five business days before the purchase is made, or (ii) the higher of the price of the last independent trade and the highest current independent bid for such share. The minimum price which may be paid per any Ordinary Share is US\$0.01.
As at 25 May 2018 (the latest practicable date prior to the publication of this Circular), there were no warrants or options to subscribe for shares in the capital of the Company.
The Directors would use this authority to address any significant imbalance between the supply and demand for the Company's Ordinary Shares and to manage the discount to Net Asset Value per Ordinary Share at which the Ordinary Shares trade. Ordinary Shares will be repurchased only at prices below the Net Asset Value per Ordinary Share, which should have the effect of increasing the Net Asset Value per Share for remaining Shareholders. This authority will expire at the annual general meeting to be held in 2019 when a resolution to renew this authority will be proposed.
Under the Companies Act 2006, the notice period of general meetings (other than an annual general meeting) is 21 clear days' notice unless the Company: (i) has gained shareholder approval for the holding of general meetings on 14 clear days' notice by passing a special resolution at the most recent annual general meeting; and (ii) offers the facility for all Shareholders to vote by electronic means. The Company would like to preserve its ability to call general meetings (other than an annual general meeting) on less than 21 clear days' notice. The shorter notice period proposed by Resolution 12 would not be used as a matter of routine, but only where the flexibility is merited by the business of the meeting and is thought to be in the interests of Shareholders as a whole. The approval will be effective until the date of the annual general meeting to be held in 2019, when it is intended that a similar resolution will be proposed.
The Company is seeking to take advantage of the provisions of the Companies Act 2006 to allow electronic communications with its Shareholders, including making important documents available through its website, and an ordinary resolution authorising this is included within the Notice of AGM.
The Resolution, if passed, would allow the Company to use electronic communications with Shareholders by placing documents such as the Annual Report on a website rather than sending them in hard copy. The Company will notify those Shareholders who have elected for electronic communication, by post or email if they have provided an email address, that the document is available on the website. Shareholders can, however, ask for a hard copy of any document at any time.
If this Resolution is passed, the new arrangements are expected to result in potential administrative, printing and postage cost savings for the Company, while preserving Shareholders' rights to receive hard copy documents if they so wish.
The Directors are mindful that the current Articles do not currently allow Board and Committee meetings to take place by electronic communication. Accordingly, the Directors are seeking authority to amend the Articles to facilitate Board and Committee meetings to take place in this way. This is set out in Resolution 14.
The Investment Management Agreement entered into on IPO provided that, subject to (i) the total return on NAV (calculated per Ordinary Share) exceeding 6 per cent. over a performance period (the ''Annual Condition''), (ii) the total return on NAV (calculated per Ordinary Share) as at the end of such performance period representing an increase of at least 6 per cent. per annum compounded on the issue price of the Ordinary Shares at IPO (the ''Compounding Condition''), and (iii) a high watermark (which is the total return on NAV (calculated per Ordinary Share) as at the end of the last performance period in respect of which a performance fee was payable to the Investment Manager) (the ''High Watermark Condition''), the Investment Manager was entitled to receive a performance fee equating to 10 per cent. of the total return over such performance period, on the basis of catch up arrangements whereby the Investment Manager would receive 50 per cent. of the total return above 6 per cent. (the ''Excess Total Return'') up to the point at which it had received 10 per cent. of the overall total return allocated to itself and Shareholders in this manner, and thereafter 10 per cent. of the remaining Excess Total Return; provided always that the amount of any performance fee payable to the Investment Manager would be reduced to the extent necessary to ensure that, after account is taken of such fee, conditions (i), (ii) and (iii) above are still satisfied.
Since no provision was made in the Investment Management Agreement for the deferral of a performance fee, this meant that even if the Annual Condition and the High Watermark Condition were met in respect of a given performance period, if the Compounding Condition was not also satisfied, the Investment Manager would not be entitled to a performance fee in respect of such period even once the Compounding Condition was subsequently satisfied at the end of a subsequent performance period.
At IPO, the Company communicated a lower initial year return expectation versus its longerterm target, which reflected the expenses incurred in relation to the IPO and the cash drag expected to arise from the pace of deployment of the IPO proceeds.
As disclosed in the prospectus related to the Company's placing programme dated 14 March 2018, the Investment Manager intended to seek the Board's and the shareholders' approval to amend the terms of the performance fee payable to the Investment Manager under the Investment Management Agreement. The purpose of this amendment is to address more fairly the consequence (in terms of the ability to earn future performance fees) of the low return generated (as expected for the reasons set out above) during 2017 (which affects the Investment Manager's ability to meet the Compounding Condition for subsequent performance periods).
As described in more detail below, the amendment seeks to provide to the Investment Manager an opportunity to earn a performance fee for a particular performance period where all the conditions to the payment of such performance fee (as detailed above) are satisfied except for the Compounding Condition by deferring (rather than forfeiting) such performance fee for that particular period to a future performance period wherein the Compounding Condition is satisfied. This amendment will only affect performance fees earned for the performance periods commencing after 1 January 2018. No performance fee is payable in any event with respect to the period between IPO and 31 December 2017.
Further, upon a detailed review of the performance fee in the above context, the performance fee has been redrafted in order to simplify the calculations of what, if any, performance fee is payable to the Investment Manager in respect of any particular period.
An overview of the key changes to the performance fee is set out below and the consequent revisions to the Investment Management Agreement are detailed in Part III of this Circular.
A summary of the material terms of the Investment Management Agreement (other than the revisions of the performance fee) is contained in paragraph 1 of Part II of this Circular.
For the reasons set out above, subject to approval by the Independent Shareholders, the terms of the performance fee payable to the Investment Manager shall be replaced with the terms set out in Part III of this Circular. The amendments provide that when the Compounding Condition is not satisfied in respect of a performance period, the Investment Manager's entitlement to the performance fee which would otherwise arise is deferred to the end of the first subsequent performance period in respect of which the Compounding Condition is satisfied. There is, however, no change to the provision that the Investment Manager loses its performance fee entitlement if the Annual Condition (requiring a 6 per cent. annual return hurdle to be met) or the High Watermark Condition is not met.
Separately, having a full year of input data to these calculations (results of IPO, revenues, expenses, the tap issue, dividends, etc.) the replacement language offers a better expression of these concepts. Consequently, the basis for calculating the performance fee, Compounding Condition and the High Watermark Condition is proposed to be changed from a per Ordinary Share basis to a total NAV attributable to Ordinary Shares basis. While it is expected that the change from a per Ordinary Share basis to a total NAV attributable to Ordinary Shares basis will, by itself, not have a material economic impact on the performance fee payable to the Investment Manager, this change would simplify and clarify the calculations.
The drafting of the Compounding Condition and High Watermark Condition is also proposed to be amended to clarify certain points of detail and to state that these calculations (which were previously based on NAV growth plus dividends) are made on the basis of an annualised rate of return on the gross proceeds of the IPO (with such calculations taking into account the impact of share issuances, dividends and NAV growth). The precise calculations and adjustments are set out in an agreed financial model, which will be used by the Company, Investment Manager and the Company's Auditor, as an aid for interpretation. These changes would also clarify the calculations going forward.
Finally, the ''Total Return'' for calculating the performance fee is now proposed to be determined by reference to the ''Net Income'' of the Company (as shown in its audited annual accounts) rather than per Ordinary Share return calculations which require a number of additional steps and complex calculations. If there is a disagreement between the Company and the Investment Manager on the performance fee payable in respect of a particular period, the matter will be referred to independent accountants whose decision, as experts, shall be treated as final.
The Independent Shareholders will vote on the Related Party Transaction through Resolution 15, which is to be proposed as an ordinary resolution at the AGM. The Investment Manager is not a Shareholder and accordingly is not able to vote on Resolution 15, and it has undertaken to take all reasonable steps to ensure that members of the Investment Manager's group, to the extent they are Shareholders, will not vote on Resolution 15.
Details of the current shareholdings of major Shareholders are set out in paragraph 2 of Part II of this Circular.
You will find set out at the end of this Circular, a notice convening an AGM of the Company to be held at 11 a.m. on 29 June 2018.
All persons holding Shares at close of business on 27 June 2018, or if the AGM is adjourned, on the register of Shareholders of the Company 48 hours before the time of any adjourned AGM, shall be entitled to attend, speak or vote at the AGM and shall be entitled on a poll to one vote per Share held. As at 25 May 2018 (being the latest practicable date prior to publication of this Circular), there were 914,252,831 Ordinary Shares and 163,782,307 C Shares in issue (with no Ordinary Shares or C Shares held in treasury).
Whether or not you intend to attend the AGM, you should ensure that your Proxy Appointment is returned to the Company's registrar, Link Asset Services, by one of the following means:
(1) in hard copy form by post, by courier or by hand to, Link Asset Services, PXS, 34 Beckenham Road, Beckenham, Kent BR3 4TU; or
When completing the enclosed Proxy Appointment, in accordance with the Company's Articles and to comply with certain US federal securities laws, for the purposes of Resolutions 4 to 7, shareholders are required to indicate whether or not they (including any person on whose behalf they are acting) are a US Person or a resident of the United States. Please refer to Article 70 of the Articles for more information.
Each shareholder (including any person on whose behalf they are acting) that IS NOT a US Person and NOT a resident of the United States can confirm their status to us in the following manner:
Each shareholder (including any person on whose behalf they are acting) that IS a US Person or a resident of the United States can confirm their status to us in the following manner:
In each case, the Proxy Appointment must be received by the Company not less than 48 hours before the time for holding of the AGM. In calculating such 48 hour period, no account shall be taken of any part of a day that it not a Business Day. To be valid, the relevant Proxy Appointment should be completed in accordance with the instructions accompanying it and lodged with the Company's registrars by the relevant time.
Completion and return of the Proxy Appointment will not affect a Shareholder's right to attend, speak and vote at the AGM.
A quorum consisting of two Shareholders present in person or by proxy is required for the AGM.
Copies of each of: (i) the current Articles and the proposed amendment to the Articles to allow for electronic Board meetings; (ii) the published annual report and audited accounts of the Company for the period ended 31 December 2017; and (iii) the proposed amended Investment Management Agreement, will be available for inspection at: the registered office of the Company at Beaufort House, 51 New North Road, Exeter EX4 4EP and the offices of Herbert Smith Freehills LLP at Exchange House, Primrose Street, London EC2A 2EG, during normal business hours on any Business Day, from the date of this Circular until the conclusion of the AGM, and at the place of the AGM for at least 15 minutes prior to, and during, the AGM.
The Board considers that the related party transaction is fair and reasonable and believes that the Proposals are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of each of the Resolutions at the AGM.
The Directors intend to vote in favour of each of the Resolutions in respect of their own beneficial holdings of Shares (amounting to an aggregate 600,000 Ordinary Shares1 , representing approximately 0.066 per cent. of the issued share capital of the Company) as at the date of this Circular.
Yours faithfully
Jeremy Sillem Chairman
1 The legal and beneficial interest in 50 per cent. of Mr Budge's 100,000 Ordinary Shares is held by Mrs Budge.
1.1 The Company and the Investment Manager entered into the Investment Management Agreement dated 1 March 2017, pursuant to which the Investment Manager is appointed to act as investment manager of the Company, with responsibility to perform investment management and risk management functions for the Company, and to advise the Company on a day to day basis in accordance with the investment policy of the Company, subject to the overall policies, supervision, review and control of the Board. Under the terms of the Investment Management Agreement and subject always to the investment guidelines contained in the Investment Management Agreement, the Investment Manager has discretion to buy, sell, retain, exchange or otherwise deal in investment assets for the account of the Company. The Investment Manager is also required to comply with such regulatory requirements as may apply to it from time to time as the alternative investment fund manager of the Company for the purposes of the AIFM Directive.
1.2 The key person under the Investment Management Agreement is Pedro Gonzalez de Cosio or such other person designated as such by the Investment Manager with the Board's prior written consent.
1.8 The Investment Manager is required, under the terms of the Investment Management Agreement, to perform its obligations with such skill and care as would be reasonably expected of a professional discretionary investment manager managing in good faith an investment company of comparable size and complexity to the Company and having a materially similar investment objective and investment policy and to ensure that its obligations under the Investment Management Agreement are performed by a team of appropriately qualified, trained and experienced professionals (the ''Service Standard'').
Termination
to suffer a loss of an amount equal to or greater than 10 per cent. of NAV as at the date of such breach, directly or indirectly arising out of or in connection with such breach;
been so substituted within 180 days of the Key Person Event occurring, the Board may, at its discretion, direct the Investment Manager to not make any new investments until further notice,
provided that nothing in this paragraph 1.18 shall prevent the Investment Manager from making: (i) payments to discharge existing obligations in respect of existing investments; or (ii) Follow On Investments.
Governing law
1.19 The Investment Management Agreement is governed by the laws of England and Wales.
First Amendment to the Investment Management Agreement
1.20 The Investment Management Agreement was amended on 14 March 2018 to clarify that the Performance Fee would only be payable on the performance of the Ordinary Shares.
Second Amendment to the Investment Management Agreement
1.21 The Investment Management Agreement was amended on 24 May 2018 for certain regulatory changes as well as to amend the performance fee payable to the Investment Manager as described in Part III of this Circular which is subject to approval by the Independent Shareholders. The amendment agreement also clarified that both, the Management Fee and any performance fee payable under the Investment Management Agreement shall be exclusive of any value added tax (or equivalent tax) that may be applicable.
As at the date hereof, insofar as is known to the Company, the following persons are directly or indirectly interested in 3 per cent., or more of the Company's total voting rights:
| Number of Ordinary |
Number of | Percentage of Voting |
|
|---|---|---|---|
| Name | Shares | C Shares | Rights |
| Invesco Limited | 180,002,730 | 32,246,290 | 19.68 |
| Prudential plc | 137,258,250 | 5,520,200 | 13.24 |
| Adage Capital Management LP | 25,284,247 | 66,000,000 | 8.47 |
| Pablo Legorreta | 76,742,549 | 0 | 7.12 |
| Interseguro Compania de Seguros S.A. | 72,791,326 | 0 | 6.75 |
| Inteligo Bank Ltd | 58,782,562 | 3,300,000 | 5.76 |
As at the date of this Circular, save as otherwise previously announced by RIS, there has been no significant change in the financial or trading position of the Group since 31 December 2017, the date to which the Company's first annual financial statements have been drawn up.
The defined terms in this Part III ''Summary of the Performance Fee'' shall have the meanings given in paragraph 3 (Definitions) of this Part III below. Any defined terms not given a meaning in paragraph 3 (Definitions) shall have the meanings ascribed to them in the section headed ''Definitions'' on page 19. Unless otherwise indicated, references to any paragraph are to a paragraph in this Part III of the Circular.
Subject to approval by the Independent Shareholders, with effect from 1 January 2018, the performance fee of the Company shall be replaced with the performance fee as follows:
the amounts payable to the Investment Manager (or its associate) in accordance with this paragraph 1.1, being the ''Performance Fee''.
not result in the failure of the Compounding Condition and the difference would become part of the Deferred Performance Fee and be payable in accordance with paragraph 1.3.1; and
2.1.1 shall not apply to the extent that the acquisition of the Performance Shares would require the Investment Manager to make a mandatory bid under Rule 9 of the UK City Code on Takeovers and Mergers (the ''Code''); and
2.1.2 shall expire at the end of the Performance Period which immediately follows the Performance Period to which the obligation relates.
the Investment Manager shall be entitled to receive a one-time termination fee equal to 2 per cent. of the Invested NAV as at the Termination Date.
2.7 Upon termination of this Agreement pursuant to paragraph 1.15.8 of Part II of this Circular for any reason other than the death or disability of a Key Person, the Investment Manager shall be entitled to receive a one-time termination fee equal to 1 per cent. of the Invested NAV as at the Termination Date.
3.1 For the purposes of this Schedule, the following terms have the meanings set forth below:
''Admission'' means 30 March 2017;
''Closing NAV'' means the NAV attributable to the Ordinary Shares on the last day of the relevant Performance Period as reported by the Company;
''Deferred Performance Fee'' has the meaning given in paragraph 1.3.1;
''Excess Total Return'' means, in relation to each Performance Period, the amount by which the Total Return exceeds the Performance Hurdle;
''Ex-Dividend Date'' means, with respect to a dividend declared by the Company, the date on which Shares trade ex-dividend;
''First Performance Period'' means the period from Admission up to and including 31 December 2017;
''Gross Proceeds'' means \$761,877,360.00;
''Invested NAV'' means the Net Asset Value attributable to the Ordinary Shares less any amounts held by the Company in cash or near-cash equivalents;
''Model'' has the meaning given in paragraph 1.5;
''Month'' means a calendar month;
''Net Capital Increase'' means ''I'' less ''R'' where:
I is the aggregate of, for each Ordinary Share issue during a Performance Period, the number of days between admission to listing of such issue until the end of the Performance Period divided by 365, such percentage multiplied by the net proceeds of such Ordinary Share issue, and
R is the aggregate of, for each Ordinary Share repurchase/redemption (including into treasury) during a Performance Period the number of days between settlement of such repurchase until the end of the Performance Period divided by 365, such percentage multiplied by the actual amount disbursed by the Company to effect such Ordinary Share repurchase;
''Net Income'' means, in relation to a Performance Period, the ''Return on ordinary activities after finance costs and taxation'' (Total including revenue and capital account) as set out in the Company's audited annual financial statements attributable to the Ordinary Shares relating to such Performance Period;
''Performance Conditions'' has the meaning given in paragraph 1.3;
''Performance Fee'' has the meaning given in paragraph 1.1;
''Performance Hurdle'' means, in relation to each Performance Period, ''A'' multiplied by ''B'', where:
''A'' is 6 per cent.; and
''B'' is the Starting NAV, less any dividends which are unpaid and are declared in respect of a prior Performance Period but, for accounting purposes such dividend has not yet reduced the Starting NAV, plus the Net Capital Increase during the Performance Period;
''Performance Period'' means the First Performance Period and/or a Subsequent Performance Period, as the context so requires;
''Starting NAV'' means the NAV attributable to the Ordinary Shares on the first day of the relevant Performance Period as reported by the Company;
''Subsequent Performance Period'' means each 12-month period subsequent to the First Performance Period, commencing on the relevant 1 January and ending on the relevant 31 December (inclusive); and
''Total Return'' means, in relation to a Performance Period, the Net Income for such Performance Period (which, for the avoidance of doubt, shall be before the deduction of any Performance Fee or Deferred Performance Fee payable in respect of any Performance Period. To the extent Net Income is a negative number, it shall be deemed as zero.
| ''Advisers Act'' | the United States Investment Advisers Act of 1940, as amended |
|---|---|
| ''AGM'' | the annual general meeting of the Company convened for 11 a.m. on 29 June 2018 (or any adjournment thereof), notice of which is set out at the end of this Circular |
| ''Articles'' | the articles of association of the Company adopted from time to time |
| ''Auditors'' | the Company's auditors from time to time |
| ''Board'', ''Committee'' or ''Directors'' |
the board of directors of the Company, including any duly constituted committee of the board of directors of the Company |
| ''BioPharma III Interest'' | the limited partnership interest in BioPharma Secured Investments III Holdings Cayman, LP acquired by the Company in connection with the IPO |
| ''Business Day'' | a day (excluding Saturdays and Sundays or public holidays in England and Wales) on which banks generally are open in London for the transaction of normal, non-automatic business |
| ''C Shares'' | redeemable C shares of US\$0.01 each in the capital of the Company carrying the rights set out in the Articles |
| ''Circular'' | this document |
| ''Company'' | BioPharma Credit PLC, a limited liability company incorporated under the Act in England and Wales with registration number 10443190, whose registered office is at Beaufort House, 51 New North Road, Exeter EX4 4EP |
| ''Follow On Investments'' | means an investment or prospective investment subject to a commitment (being an offer and acceptance of heads of terms or a letter of intent in respect to such investment (whether or not such heads of terms or letters of intent are legally binding)) made by the Company or the Investment Manager (acting on behalf of the Company) on or prior to the termination of, or a material amendment (as appropriate) to, the Shared Services Agreement; |
| ''FSMA'' | the UK Financial Services and Markets Act 2000, as amended from time to time |
| ''GBP Sterling'' | the lawful currency of the United Kingdom |
| ''Group'' | the Company and its subsidiaries for the time being and, as at the date of this Circular, means the Company and BPCR Ongdapa Ltd |
| ''Independent Shareholders'' | the Shareholders excluding the Investment Manager and members of the Investment Manager's group for the purposes of Resolution 15 |
| ''Investment Management Agreement'' |
the investment management agreement between the Company and the Investment Manager, dated 1 March 2017 |
| ''Investment Manager'' | Pharmakon Advisors L.P., a limited partnership established under the laws of the State of Delaware registered as an investment adviser with the SEC under the Advisers Act |
| ''IPO'' | the Company's initial public offering of Ordinary Shares made in March 2017 |
| ''Listing Rules'' | the listing rules made by the UK Listing Authority under section 73A of FSMA |
| ''London Stock Exchange'' or ''LSE'' |
London Stock Exchange plc |
| ''Net Asset Value'' or ''NAV' | the value of the assets of the Company less its liabilities determined in accordance with the accounting policies and principles adopted by the Board from time to time |
| ''Net Asset Value per Ordinary Share'' |
the Net Asset Value attributable to the Ordinary Shares divided by the number of Ordinary Shares in issue at the relevant time |
|---|---|
| ''Ordinary Shares'' | ordinary shares of US\$0.01 each in the capital of the Company |
| ''Proposals'' | the business of the AGM and the approval by Independent Shareholders of the Related Party Transaction |
| ''Proxy Appointment'' | the form of appointment of a proxy on behalf of a Shareholder in accordance with the procedures described in this Circular |
| ''Regulatory Information Service'' or ''RIS'' |
a service authorised by the UK Listing Authority to release regulatory announcements to the London Stock Exchange |
| ''Related Party Transaction'' | the amendments proposed to be made to the Investment Management Agreement, as described in this Circular |
| ''Resolutions'' | the resolutions to be proposed at the AGM and contained in the notice of AGM at the end of this Circular |
| ''RPS Note'' | together, a credit agreement entered into between the Company and RPS BioPharma Investments, LP, an exempted limited partnership established under the laws of the Cayman Islands and a promissory note in favour of the Company issued by RPS BioPharma Investments, LP |
| ''SEC'' | the United States Securities and Exchange Commission |
| ''Shared Services Agreement'' | the shared services agreement dated 30 November 2016 between the Investment Manager and RP Management LLC, a limited liability corporation established under the laws of the State of Delaware registered as an investment adviser with the SEC under the Advisers Act |
| ''Shareholder'' | a holder of Shares |
| ''Shares'' | all shares of any class in the capital of the Company in issue at any time |
| ''U.S. Dollars'' or ''US\$'' | the lawful currency of the United States |
| ''US Person'' | a ''US person'' as defined in Regulation S under the United States Securities Act of 1933 (as amended) |
(Incorporated in England and Wales with registered no.10443190 and registered as an investment company under section 833 of the Companies Act 2006)
NOTICE will be hereby given that an annual general meeting of the Company will be held at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG at 11 a.m. on 29 June 2018 to consider and, if thought fit, to pass the following resolutions.
Resolutions 1 to 10, 13 and 15 will be proposed as ordinary resolutions; this means that for each of those ordinary resolutions to be passed, more than half of the votes cast must be in favour. In the case of resolution 15 only the Independent Shareholders are eligible to vote. Resolutions 11, 12 and 14 will be proposed as special resolutions; this means that for each of those resolutions to be passed, at least three-quarters of the votes cast must be in favour.
d. this authority shall expire at the end of the Company's annual general meeting to be held in 2019, unless previously renewed, varied or revoked by the Company in general meeting;
e. the Company may make a contract to purchase its Ordinary Shares under the authority hereby conferred prior to the expiry of such authority, which contract would or might require the Company to purchase its Ordinary Shares after such expiry and the Company shall be entitled to purchase its Ordinary Shares pursuant to any such contract as if the power conferred hereby had not expired; and
By order of the Board BIOPHARMA CREDIT PLC
Registered Office: Beaufort House 51 New North Road Exeter EX4 4EP
Date: 29 May 2018
(i) Holders of Ordinary Shares and C Shares are entitled to attend, speak and vote at the AGM. A member entitled to attend, speak and vote at this meeting may appoint one or more persons as his/her proxy to attend, speak and vote on his/her behalf at the meeting. A proxy need not be a member of the Company. If multiple proxies are appointed, they must not be appointed in respect of the same shares. To be effective, the enclosed form of proxy, together with any power of attorney or other authority under which it is signed or a certified copy thereof, should be lodged at the office of the Company's Registrar at the address printed on the form of proxy no later than 11 a.m. on 27 June 2018. As an alternative to completing a paper copy of the proxy form, shareholders may submit their proxy vote electronically via the Registrar's website by visiting www.signalshares.com. From there, shareholders can log in to their Link Signal Shares account or register for Link Signal Shares by following the onscreen instructions. You will need to enter your Investor Code, which can be found on your proxy form. For an electronic proxy to be valid, the appointment must be received by the Company's Registrar, Link Asset Services, by no later than 11 a.m. on 27 June 2018. If you return more than one proxy appointment, either by paper or electronic communication, that received last by Link Asset Services before the latest time for the receipt of proxies will take precedence. A member may not use any electronic address provided to communicate with the Company for any purpose other than that stated. You are advised to read the terms and conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not be disadvantaged. The appointment of a proxy will not prevent a member from attending the meeting and voting in person if he/ she so wishes. A member present in person or by proxy shall have one vote on a show of hands and on a poll every member present in person or by proxy shall have one vote for every Ordinary Share or C Share of which he/she is the holder. The termination of the authority of a person to act as proxy must be notified to the Company in writing. Amended instructions must be received by the Company's Registrar by the deadline for receipt of proxies.
To appoint more than one proxy, shareholders will need to complete a separate proxy form in relation to each appointment (you may photocopy the proxy form), stating clearly on each proxy form the number of shares in relation to which the proxy is appointed. A failure to specify the number of shares to which each proxy appointment relates or specifying an aggregate number of shares in excess of those held by the member will result in the proxy appointment being invalid. Please indicate if the proxy instruction is one of multiple instructions being given. All proxy forms must be signed and should be returned together in the same envelope if possible.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's Register of Members in respect of the joint holders (the first named being the most senior).
Only those shareholders registered in the register of members of the Company as at close of business on 27 June 2018 (the ''specified time'') shall be entitled to attend or vote at the aforesaid Annual General Meeting in respect of the number of shares registered in their name at that time.
Changes to entries on the relevant register of securities after close of business on 27 June 2018 shall be disregarded in determining the rights of any person to attend or vote at the meeting. If the meeting is adjourned to a time not more than 48 hours after the specified time applicable to the original meeting, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purpose of determining the number of votes they may cast) at the adjourned meeting. If however the meeting is adjourned for a longer period then, to be so entitled, members must be entered on the Company's register of members at the time which is 48 hours before the time fixed for the adjourned meeting, or if the Company gives notice of the adjourned meeting, at the time specified in that notice.
(ii) Shareholders who hold their shares electronically may submit their votes through CREST. Instructions on how to vote through CREST can be found by accessing the following website: www.euroclear.com/CREST. Shareholders are advised that CREST and the internet are the only methods by which completed proxies can be submitted electronically.
CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for this meeting and any adjournment thereof by following the procedures described in the CREST manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a ''CREST Proxy Instruction'') must be properly authenticated in accordance with Euroclear UK & Ireland Limited's specifications and must contain the information required for such instructions, as described in the CREST manual (available via www.euroclear.com/CREST). The message, in order to be valid, must be transmitted so as to be received by the Company's agent (ID RA 10) by the latest time for receipt of proxy appointments specified in Note (i) above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time.
In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a) of the Uncertificated Securities Regulations 2001.
(v) As at 25 May 2018 (being the last business day prior to the publication of this notice), the Company's issued share capital amounted to 914,252,831 Ordinary Shares and 163,782,307 C Shares carrying one vote each. No shares were held in treasury. Therefore, the total voting rights of the Company as at the date of this notice of meeting were 1,078,035,138.
(vi) Any corporation which is a member may appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not do so in relation to the same shares. To be able to attend and vote at the meeting, corporate representatives will be required to produce prior to their entry to the meeting evidence satisfactory to the Company of their appointment. Corporate shareholders may also appoint one or more proxies in accordance with Note (i).
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