UIL's board has decided not to proceed with the proposed investment in Somers Limited due to changes in market conditions over the last five months.
UIL announced on 18 May that it planned to buy 2.45 million shares in Somers Limited, a financial services company which is listed on the Bermuda Stock Exchange, from Permanent Investments.
The company announced on 14 July that two of the conditions under the sale and purchase agreement had been satisfied and that completion would be dependent upon satisfaction of the remaining conditions (which had to occur by not later than 31 December).
The company today said that although the final condition had now been satisfied, the board has decided not to proceed and that Permanent Investments Limited has consented to the proposed investment not proceeding.
The principal rationale for the proposed investment was to provide increased ZDP cover for the ZDP chares in light of the 2016 ZDP chare rollover offer and placing of 2020 ZDP shares and 2022 ZDP shares under the placing programme, details of which were also published on 18 May.
The circular stated that, based on UIL's NAV per ordinary share and Somers's share price and net asset value at that time, the acquisition would have led to pro forma dilution of 3.2% although the benefits of the proposed investment were expected to outweigh the initial pro forma dilution in UIL's NAV per ordinary share.
Since that time, UIL's NAV per ordinary share has increased from 203.55p to 334.25p, an increase of 64%.
As a result, following the 2016 ZDP share rollover offer and placing of 2020 ZDP shares and 2022 ZDP shares under the placing programme, the ZDP cover for the ZDP shares has also increased significantly from the levels disclosed in the prospectus published on 18 May.
In light of such material changes, since the proposed investment would still lead to dilution in the company's NAV per ordinary share, the board believes that it would be in shareholders' best interests if the Proposed onvestment did not proceed.
The company also announces today that, following the issue of 50 million 2022 ZDP shares under 2016 ZDP share rollover offer and initial placing and 14 million 2020 ZDP shares pursuant to the placing programme, the placing programme has now been closed.
(LON:UTL) Utilico Investments Limited share price was -0.5p at 181.25p
(LON:UTLC) Utilico Finance Ltd share price was 0p at 192.25p
(LON:UTLD) Utilico Finance Ltd share price was +0.13p at 152.75p