For immediate release
19 September 2007
Notice of extraordinary general meeting requisitioned on behalf of QVT Fund LP
Introduction
On 31 August 2007 the Board announced that it had received notice from Vidacos Nominees Limited, on behalf of QVT Fund LP, on 29 August 2007, requisitioning an extraordinary general meeting of the Fund to consider ordinary resolutions for the removal of Melville Trimble and Roger Maddock from the Board and for the appointment of John Chapman, Angelo Moskov, Andrey Kruglykhin and Anthony Gardner-Hillman as directors of the Fund. This Fund has published today a circular convening that extraordinary general meeting. That circular summarises the key points which the existing Directors believe Shareholders should consider when deciding how they should vote on the QVT Resolutions and includes the unanimous recommendation of the existing Directors that Shareholders vote against the QVT Resolutions.
Key Considerations for Shareholders
When deciding how they should vote on the QVT Resolutions, the existing Directors believe that Shareholders should consider the following points:
- The Board has been concerned for some time about the Fund's performance and steps have already been taken to address weaknesses which had been identified
These steps include:
- The Fund has moved towards a model of buying and developing land in reaction to the difficulties encountered with the Fund's original off-plan investment model (particularly where developers were unrealistic in the sales prices expected) and the increased availability of competing bank financing. As sole owner of its most recent projects, the Fund will be in a position to control the feasibility, commercial positioning and sales prices of units built without interference from a third party developer. This is demonstrated by the progress of the Fund’s Malinova Dolina project in Sofia. The Fund has also moved its focus away from the coastal market, which is experiencing over supply in some areas, towards the mountains and the capital Sofia.
- The local experience on the Board has been strengthened with the appointments of William Drysdale, Irena Komitova and Bogdan Stanchev, all of whom have considerable experience in Bulgaria.
William Drysdale is a founder member and was the first chairman of the Bulgarian Business Leaders Forum and worked for two years as an adviser in the office of the then Bulgarian Prime Minister, Simeon Saxe-Coburg. He is a chartered accountant and spent 38 years with KPMG, 29 of which as a partner. In particular, he was managing partner of KPMG Bulgaria and KPMG Poland, as well as being a member of the Central and Eastern Europe Executive Board. William Drysdale splits his time between the UK and Bulgaria and is currently a member of the senior management team and a practising principal consultant at AIMS Human Capital, a leading Bulgarian executive search and management development consultancy.
Irena Komitova has an extensive background and contacts in the Bulgarian business community. She is currently the managing partner of a management and financial consultancy company in Sofia and a non-executive director of Orgachim, a Bulgarian listed company. She has worked for various organisations in Bulgaria, including Allianz Bulgaria Holding, the American University in Bulgaria and as general manager of Kamor Auto Ltd, the official representative for BMW in Bulgaria. She has acted as a consultant in staging the Economist Conferences, designed for the international business community interested in investing in Bulgaria. Irena Komitova has won a number of awards, including recognition as a Global Leader for Tomorrow in 2000 by the World Economic Forum, and is a Sloan Fellow, having earned a Master of Science in Management Degree from Stanford University, USA, in 2001.
Bogdan Stanchev has wide experience in the management and administration of Bulgarian businesses. Since early 2005, he has been the chief executive officer of the Varna Business Park, a project consisting of nine buildings with 250,000 sq.m. of total built up area. The first two buildings have now been completed and are currently 100 per cent let. Prior to this role Bogdan Stanchev was the commercial director of a manufacturing company, where he was responsible for the financial management, administration and operations of an 800 person business. He has an MBA from Warwick University, UK.
- The office of the Fund's manager in Bulgaria has been restructured and progressively strengthened as the Fund’s portfolio has matured, with the appointment of project management staff and most recently an increased sales function. The Bulgarian-based team now comprises 12 individuals, which compares with three at the time of the Fund's launch.
- The Board announced on 24 August 2007 that it was undertaking a strategic review of the options available for enhancing Shareholder value and that it had appointed Intelli Corporate Finance to act as its financial adviser in connection with this review. The number of options open to the Company at this juncture is considerable and Intelli Corporate Finance, on behalf of the Board, is in early stage discussions with a number of parties who may be interested in submitting proposals regarding the Fund's future. In assessing any proposals, the existing Board will consider whether they are in the best interests of Shareholders as a whole. •
The independence of the Board may be compromised if the QVT Resolutions are passed
At present, the Board comprises six directors, five of whom are independent (Roger Maddock is not independent as he is also a director of the Fund's manager). If the QVT Resolutions are passed and assuming each of William Drysdale, Roger King, Irena Komitova and Bogdan Stanchev remain on the Board, the Board will comprise eight directors, thereby increasing the Fund's operating costs associated with the Board. The enlarged Board would then comprise four nominees of QVT, three of whom are employed by or consultants to QVT.
Whilst QVT is a major Shareholder, this does not mean that its interests are necessarily aligned with the best interests of other Shareholders. The existing Directors are committed to acting in the best interests of Shareholders as a whole, rather than the interests of any individual Shareholder. The existing Board is committed to ensuring full consultation with Shareholders throughout the strategic review process.
• Despite the Board's repeated requests to do so, QVT has refused to present details of its proposals regarding the Fund's future - is QVT trying to gain control of the Fund without making an offer for the Shares that it does not hold?
Until such time as QVT presents details of its proposals for the Fund, the Board is unable to assess whether they are in the best interests of Shareholders as a whole. The existing Directors are willing to work with QVT in a constructive manner if their proposals offer the best option for enhancing value for Shareholders as a whole. In the Board's opinion, QVT's refusal to present details of its proposals should be of concern to all Shareholders.
A further circular providing an up-date on the progress of the strategic review will be sent to Shareholders in advance of the EGM. In the meantime, the Board is recommending Shareholders to vote against the QVT Resolutions so as to ensure that the Fund continues to have a Board that will act in the best interests of Shareholders as a whole and that the existing Board, on behalf of all Shareholders, has the opportunity to properly review the full range of options for the future of the Fund.
Extraordinary General Meeting
The Extraordinary General Meeting has been convened for 3.00 p.m. on Monday, 29 October 2007 and will be held at BNP House, Anley Street, St. Helier, Jersey. All Shareholders are entitled to vote on the QVT Resolutions to be proposed at the EGM, all of which will be proposed as ordinary resolutions.
Recommendation
The existing Board, which has so been advised by Intelli Corporate Finance, considers that the QVT Resolutions are not in the best interests of Shareholders as a whole. Accordingly, the Board is unanimously recommending all Shareholders to vote against the QVT Resolutions.
Enquiries
| Sue Inglis/Chris Whittingslow | Intelli Corporate Finance Limited (Financial adviser) | T: 020 7653 6300 |
| Charles Farquhar/ Nick Westlake | Numis Securities Ltd (NOMAD and Broker) | T: 020 7260 1000 |
Notes
Intelli Corporate Finance, which is authorised and regulated in the United Kingdom for the conduct of investment business by the Financial Services Authority, is acting solely for The Black Sea Property Fund Limited and for no one else in connection with the matters referred to in this announcement and will not be responsible to anyone other than The Black Sea Property Fund Limited for providing the protections afforded to clients of Intelli Corporate Finance or for affording advice in relation to the matters referred to in this announcement.
Definitions
The following definitions apply throughout this announcement unless the context otherwise requires:
| "Board" or "Directors" | the directors of the Fund |
| "EGM" or "Extraordinary General Meeting" | the extraordinary general meeting of the Fund to be held on Monday, 29 October 2007 at 3.00 p.m. at BNP House, Anley Street, St. Helier, Jersey, Channel Islands, (or any adjournment thereof) |
| "Fund" or "Company" | The Black Sea Property Fund Limited |
| "Intelli Corporate Finance" | Intelli Corporate Finance Limited |
| "QVT" | QVT Fund LP |
| "QVT-nominated Directors" | John Chapman, Anthony Gardner-Hillman, Andrey Kruglykhin and Angelo Moskov |
| "QVT Requisition" | the requisition served by Vidacos Nominees Limited, on behalf of QVT, that requisitions, pursuant to article 80 of the Companies (Jersey) Law, 1991 and in accordance with article 26.01 of the articles of association of the Fund, an extraordinary general meeting of the Fund to be convened to consider the resolutions referred to under the heading "Introduction" in this announcement |
| "QVT Resolutions" | the resolutions proposed by Vidacos Nominees Limited, on behalf of QVT, and set out in the QVT Requisition |
| "Shareholders" | holders of Shares |
| Shares" | ordinary shares of no par value in the capital of the Fund |