THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION
BH Global Limited (the “Company”)
(a closed-ended collective investment
scheme established as a company with limited liability under the
laws of Guernsey with registered number 48555)
LEI: 549300BIIO4DTKEMXV14
12 March 2021
Publication of Shareholder
Circular
Further to its announcement of 16 February, the Board of
Directors of BH Global Limited announces that it has today
published a shareholder circular giving notice of an Extraordinary
General Meeting (the “EGM”). At the EGM shareholders will be asked
to consider and, if thought appropriate, approve a proposal to
amend the Company’s management fee arrangements in conjunction with
an undertaking by the Board to facilitate an exit for those
Shareholders who do not wish to remain invested in the Company on
the new fee basis. Further details of the EGM, which will be held
on 25 March 2021 at 3.30 p.m., are set out below.
Background
On 22 January 2021, the Company
received a letter (the “BH Letter”) from its Manager, Brevan Howard
Capital Management LP, proposing an increase in the Manager’s fees
for managing the Company and requesting that the Board should take
certain steps by 17 February 2021,
failing which the Manager advised that it would be serving notice
to terminate the Management Agreement. The Company forthwith
released the entire text of the BH Letter by way of an announcement
on 22 January 2021.
The Board has made, in good faith, various proposals regarding
alternative fee arrangements to the Manager and the Manager has
been unwilling to adopt any Board-proposed alternative to the fee
structure set out in the BH Letter. Consequently, the Board has
decided that Shareholders, as a whole, should determine whether the
new fee arrangements should be put in place. At the same time, the
Board is conscious that some Shareholders may not want to remain
invested in the Company if the new fee arrangements are
implemented. Accordingly, the Board intends to facilitate an exit
for such Shareholders by means of a tender offer prior to any
change in the management fee taking effect. The Board is therefore
convening an Extraordinary General Meeting to allow Shareholders to
vote on this proposal as a whole (the “Proposal”).
Amendments to the management fee
arrangements
The Current Management Fee
Pursuant to the Management Agreement, the Manager currently
receives the following fees from the Company in respect of its
services to the Company:
- a fee equal to 1/12 of 1.0 per
cent per month of the “Reference Net Asset Value” of each class of
Shares (before deduction of that month’s management fee and before
making any deduction for any accrued Performance Fees). The
“Reference Net Asset Value” is defined as the lower of:
(A) the
Net Asset Value for the relevant class of Shares; and
(B) the
“Base NAV” for that class of Shares, being the Net Asset
Value for that class of Shares as at 3
October 2016, adjusted for any increases or decreases in the
Net Asset
Value arising from issues, repurchases, redemptions,
cancellations or conversions between currency classes of
Shares,
(the “Current Management Fee”); and
- a performance fee (the
“Performance Fee”) calculated by reference to the increase
(if any) in the Net Asset Value per Share of each class of Shares
since the end of the Calculation Period in respect of which a
Performance Fee was last earned. The Performance Fee in respect of
each class of Shares is equal to (A) 20 per cent of the extent to
which (if any) the Net Asset Value per Share of the relevant class
of Shares as at the final Brevan Howard Multi-Strategy Master Fund
NAV Calculation Date in that Calculation Period (adjusted for any
increases or decreases in the Net Asset Value arising from issues,
repurchases, redemptions, cancellations or conversions between
currency classes of Shares) exceeds the “Base Net Asset Value per
Share” of the relevant class of Shares multiplied by (B) the number
of Shares of such class in issue on the final date of such
Calculation Period and calculated before deduction of the
Performance Fee in respect of that Calculation Period. The “Base
Net Asset Value per Share” is the greater of (a) the Net Asset
Value per Share of the relevant class as at 31 December 2016 and (b) the highest Net Asset
Value per Share of the relevant class of Shares achieved as at the
final Brevan Howard Multi-Strategy Master Fund NAV Calculation Date
as at the end of any Calculation Period after the Calculation
Period ending on 31 December
2016.
These fee arrangements were agreed with the Manager in the
Management Agreement that was entered into on 4 July 2017. For the avoidance of doubt, the
Company is invested in a share class in the Master Fund to which no
management or performance fees are charged to the Company by the
Manager nor any affiliate of the Manager.
In respect of the Current Management Fee, the Base NAV
calculation does not take into account an increase in the Net Asset
Value of a class of Shares by reason of an increase in the value of
the Master Fund through positive performance alone. This means
that, in effect, the Company paid the Manager a management fee
equivalent to:
(A) 0.82 per
cent. of Net Asset Value in the financial year ended 31 December 2020 in respect of the US Dollar
Share class; and
(B) 0.88 per
cent. of Net Asset Value in the financial year ended 31 December 2020 in respect of the Sterling Share
class.
The New Management Fee
In respect of the Current Management Fee, the Manager is
proposing to:
(A) increase the applicable percentage rate from 1.0
per cent. to 2.0 per cent.; and
(B) apply the increased rate to the Net Asset Value
of the relevant class of Shares, removing the concepts of Reference
Net Asset Value and Base NAV from the calculation.
Accordingly, the new management fee would be equal to 1/12 of
2.0 per cent. per month of the Net Asset Value for the relevant
class of Shares (the “New Management Fee”). The New Management Fee
would apply from 1 July 2021 by which
time it is expected that the proposed tender offer shall have been
completed.
The New Management Fee would equate to more than double the
Current Management Fee payable in respect of the financial year
ended 31 December 2020.
No changes have been proposed by the Manager to the Performance
Fee.
The Manager is a related party of the Company for the purposes
of the Listing Rules. While the amendments made pursuant to the
Proposal only constitute a smaller related party transaction
between the Company and the Manager for the purposes of Listing
Rule 11.1.10R, Shareholders will be asked to vote on the Proposal
as the Board believes it appropriate in the circumstances for
Shareholders to have the opportunity to opine on the amendments as
part of the Proposal. The changes to the management fee will
therefore only take effect if Shareholders approve the Proposal at
the EGM.
Planned Tender Offer
As noted above, the Board believes it appropriate as part of the
Proposal to provide an exit opportunity for those Shareholders who
do not wish to remain invested in the Company in the event that the
amendments to the fee arrangements are implemented. The provisions
of the Management Agreement do not prevent the Board considering,
and implementing, a return of capital to Shareholders should it
wish to do so following the EGM. However, any return of capital
would be subject to the provisions of the Management Agreement; in
particular, if the Net Asset Value of either class of the Company’s
Shares were to be reduced by a return of capital, the Company would
be required to pay to the Manager an amount equal to 2 per cent. of
the amount by which the Net Asset Value of that class is reduced
(save to the extent that the Annual Buyback Allowance in respect of
that Share class was being utilised for the relevant calendar
year).
The Board has however reached agreement with the Manager that,
provided that a return of capital as part of the Proposal is
effected by way of a tender offer limited to no greater than 40 per
cent. of each Share class, and that the pricing of such tender
offer represents the prevailing Net Asset Value per Share less 2
per cent. plus the associated costs of the tender, the Manager will
waive its right under the Management Agreement to receive 2 per
cent. of the amount by which the Net Asset Value of either class is
reduced in excess of the Annual Buyback Allowance; and that such
sum will instead accrue to the benefit of the Company’s continuing
Shareholders.
Accordingly, the Board currently intends to undertake a tender
offer to Shareholders on these terms in the weeks following the EGM
if the Proposal is approved. The precise form in which the exit
will be effected will be determined by the Board following the EGM,
with a further shareholder circular to be published, if
required.
The EGM
The implementation of the Proposal requires the approval of
Shareholders at the EGM. The EGM has been convened for 25 March 2021 at 3.30
p.m. at 7 New Street, St Peter Port, Guernsey GY1 2PF. At
the EGM, Shareholders will be asked to consider and, if thought
fit, pass an ordinary resolution to approve the Proposal. The
majority required for the passing of the Resolution to be proposed
at the EGM is a simple majority of the voting rights cast (in
person or by proxy) on that Resolution at the EGM.
If Guernsey’s existing restrictions to address the COVID-19
pandemic remain in place at the relevant time, physical attendance
at the EGM will not be possible. Accordingly, attendance at the EGM
is expected to be limited to the minimum necessary quorum of two
Shareholders entitled to vote and attending in person or by proxy.
All votes on the resolutions contained in the Notice of EGM will be
held by poll, so that all proxy votes will be counted.
Neither the Manager nor any of its associates (as such term is
defined in the Listing Rules) own any Shares in the Company. The
Manager will not vote on the Resolution and has taken all
reasonable steps to ensure that none of its associates (as such
term is defined in the Listing Rules) will vote on the relevant
resolution.
In addition, Alan Howard, who is
the co-founder of Brevan Howard and
indirect majority owner of the Manager, has agreed to procure that
any Shares in which he has a beneficial interest will not be voted
on the Resolution.
Defined terms in this announcement will have the same meaning as
defined in the Company’s shareholder circular dated 12 March 2021. A copy of the circular will be
available shortly on the Company’s
website www.bhglobal.com.
Enquiries:
Sir Michael Bunbury
Chairman
David Yovichic
Investec Bank plc
Tel: +44 (0)20 7597 5970