Black Sea Property requisition

BKSA : Black Sea Property requisition

The Board of Black Sea Property has published a response to a requisition it has received requesting that it not wind up, recommence investing in Bulgarian property and appoint a new fund manager. The response is quite detailed so we have reproduced it in full below.

Dear Shareholders, Fitel Nominees, the registered holder of 28.6 per cent of the Company’s ordinary shares has requisitioned an extraordinary general meeting of the Company to remove three of the four Company directors and in their place appoint Trevor Hunt and Alexander Borrelli as new directors. If the requisition is successful the board would then comprise Messrs Hunt and Borrelli as well as Anthony Gardner-Hillman, who is a current Company director.

Fitel Nominees is the nominee for Mamferay Holdings Limited, a Cypriot entity, which we are informed is entirely owned by AG Capital, a Bulgarian entity. As shareholders will know, the Company had a limited lifespan and a limited objective. It has been in what would commonly be called liquidation since 2012 and this past June sold its last remaining property asset, Borovets.

Following a final cash distribution in August 2014 and in accordance with the shareholder vote in 2012, the Black Sea board expected to cancel the Company’s admission on AIM and to wind up the Company following a shareholder vote. Shareholders should note that at the same time as the final cash distribution, the Company became an investing company under Rule 15 of the AIM Rules for the Companies. As an investing company under Rule 15, Black Sea would be required to make an acquisition or acquisitions which constitute a reverse takeover under the AIM Rules or otherwise implement an investing policy approved at general meeting to the satisfaction of the London Stock Exchange within twelve months of becoming an AIM Rule 15 investing company. If this were not fulfilled, the Company would be suspended pursuant to AIM Rule 40. 

AG Capital, which had acquired in excess of 28 per cent of the Company’s shares this past Spring (a holding sufficient to block the AIM cancellation and wind up process) informed us that it opposed the resolution to wind up the Company and instead wanted the Company to continue in business and to retain its AIM quotation. At a later date we were approached by Peterhouse Corporate Finance on behalf of AG Capital with an alternative proposal to recommence investing in Bulgarian property assets (with AG Capital as a proposed new investment manager) under a new investing policy and to remain quoted on the AIM Market. 

Over the last few months there has been a lot of back and forth with AG Capital and Peterhouse as well as the Jersey regulator concerning the future of Black Sea. Most recently, in a letter dated 30 October 2014, the Company asked Fitel Nominees to confirm on whose behalf the requisition was being made and whether it wished any supplementary details to be sent to shareholders for them to consider. The only response was confirmation that the shares were held on behalf of Mamferay Holdings Limited. A further suggestion to Peterhouse that they deliver an explanation of AG Capital’s intentions (as had been provided in the earlier back and forth) was ignored. The Company and its advisors consequently have no verifiable information about AG Capital’s track record as a fiduciary or how it would implement any reinvestment strategy. 

AG Capital has described itself as the manager for Bulgarian Land Development or “BLD,” an AIM quoted Isle of Man company that was floated in 2006 and delisted in 2010. BLD’s website does not appear to be current and that company’s last published financial statements are for the year ended 2012.

Given the opaque nature of the various events preceding this requisition, three of the four Black Sea board members, administrator and lawyers have decided not to participate in any new strategy under the aegis of AG Capital and have indicated an intention to resign regardless of the outcome of this requisition. In addition, the Company’s nominated adviser and broker indicated its intention to resign with effect from the earlier of the date that both Stephen Coe and I cease to be directors of Black Sea and the date of any delisting from AIM. Although it is understood that a replacement nominated adviser will be appointed at the same time as the current nominated adviser steps down, shareholders should note the Company’s shares will be suspended pursuant to AIM Rule 1 if a replacement nominated adviser has not been appointed at that time, and will continue to be suspended until such time as the new nominated adviser’s appointment has been announced. Furthermore, if within one month of the Company’s suspension it still has not appointed a replacement nominated adviser, the admission of the Company’s securities will be cancelled from AIM. 

Following receipt of the Fitel requisition notice, the Black Sea board constituted a Special Committee of disinterested directors to consider the requisition notice. The Special Committee comprises Stephen Coe, Andrew Wignall and me. Because the Special Committee has not received any information about the future proposals of AG Capital as part of this requisition it recommends that shareholders do not support the requisition.

Very truly yours, John D. Chapman, Chairman

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