7th Feb 2014 09:30
LONDON (Alliance News) - Origo Partners PLC Friday said wealth manager Brooks Macdonald Group PLC has raised a complaint, and may even start legal proceedings, over the terms of about GBP30 million in convertible zero-dividend preference shares (CPS), which the China-focused private equity firm says would be unlikely to succeed.
The issue centres on 60 million convertible zero-dividend preference shares that Origo issued in March 2011 at USD1.00 each and what should occur in the case of a change of control of Origo Partners.
Under the current terms, the CPS would be automatically converted into shares in the case of a change of control, but Origo says Brooks Macdonald "contends" the provisions should have included an option to redeem the CPS instead.
The private equity firm said Brooks Macdonald has "indicated" that it "may commence legal proceedings" if the terms aren't amended to include a redemption option.
However, after consulting a "limited number of its key shareholders", Origo says they are unlikely to approve the amendments to the terms, while it said it has sought legal advice in relation to Brooks Macdonald's complaint.
"On the basis of that legal advice, Origo considers that a legal claim against Origo, if initiated by Brooks Macdonald, would be unlikely to succeed," Origo said.
According to Origo, Spearpoint Ltd subscribed for a "significant proportion" of the CPS, with Brooks Macdonald now controlling 85.7% - some GBP30 million - of the CPS after acquiring Spearpoint in November 2012.
"The CPS Term Sheet contained only brief details of the CPS, and Spearpoint's subscription was subject, amongst other things, to detailed documentation being produced and approved, i.e. the CPS Admission Document and the Articles, as amended. Spearpoint had the opportunity to review this detailed documentation prior to its acquisition of the CPS and should have made its actual subscription for the CPS based on the final information contained in the CPS Admission Document and the Articles," Origo said in a statement.
"No query regarding the non-inclusion in the terms of the CPS of a CPS COC Redemption Option was raised by Spearpoint at the time of issue of the CPS in 2011 or subsequently (including at the time of the 2013 CPS Amendment), until the communication by Brooks Macdonald of its complaint," Origo said.
The CPS was amended in March 2013 to extend their maturity date by 18 months to the current date of September 17, 2017.
"Origo intends to work with Brooks Macdonald to achieve a mutually acceptable resolution to the complaint that Brooks MacDonald has raised. Further announcements with regards to this matter will be made in due course, as appropriate," Origo said.
Liberum Capital Ltd acted as Origo's nominated adviser and broker in relation to the issue and placing of the CPS.
Brooks Macdonald and Origo were not immediately available for comment.
Origo shares were down 3.9% at 6.85 pence, while Brooks Macdonald shares were up 2.8% at 1,520.00p, Friday morning.
By Samuel Agini; [email protected]; @samuelagini
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