The Board of Directors of ALTIN AG is to implement a further share buyback for the purpose of a capital reduction through the issuance of tradable put options.
The put options will be assigned for free to all shareholders with a strike price set at an attractive premium to the market price.
ALTIN's Board of Directors reaffirms its strong commitment to better align the share price of the company with its NAV and hence to reduce the discount in the best interest of all shareholders. As stated in January 2014, the key element for investors is simply the share price performance over the medium term. As the share price performance in 2014, albeit by a very narrow margin, did not achieve the stated target, a capital reduction of up to 10% will be undertaken as quickly as technically feasible.
The Board reiterates its commitment to implement further capital buybacks at the end of any given calendar year during which the share price may have failed to appreciate by less than 10% to 12%, whilst the discount to NAV remains at significant levels. The Board remains of the opinion that further capital reductions will be far more effective if used as a mechanism to compensate investors during periods of lower share price appreciation, rather than as an indiscriminate discount reduction instrument. By boosting share price performance and transferring intrinsic value to shareholders, these capital reductions should prove an effective compensatory measure.
The ALTIN share price appreciated by 8.6% and 10.2% on the SIX Swiss Exchange and London Stock Exchange respectively. The share price performance was underpinned by an NAV that, on estimated numbers to the end of December 2014, grew by about 5.8% and by a further narrowing of the discount. The NAV performance is close to the stated target and meaningfully ahead of hedge fund indices and Fund of Fund peers. The strategic repositioning of the portfolio in 2013, which has allowed the fund to exploit the significant advantage offered by its permanent capital base, is continuing to bear fruits.
Buying back shares through tradable put options continues to offer several advantages over the conventional buyback on a second trading line on the SIX Swiss Exchange. Firstly, given the strong limitations on the daily buyback volume, a put options solution allows for a much faster capital reduction process. Secondly, as the strike price will be set at an attractive premium to the market price, the put options benefits will be clear to all shareholders. This solution provides an equal treatment of all investors, since shareholders can directly or indirectly participate in the buyback plan.
The Board intends to implement the share buyback as rapidly as technically possible. A further press release will be issued in due course to announce the timing, strike price and other technical aspects. However, at this stage the Board reminds shareholders that they will be in a position to either tender ALTIN shares at a fixed strike price via the exercise of their put options, or, since the puts are freely tradable during a limited time period, sell them in the market.
The Board of Directors will determine a strike price at a level that better reflects its understanding of a fair valuation of the company, making the tendering of the shares attractive and, at the same time, ensuring that the put options will have intrinsic value. Tendered shares will then be cancelled after AGM approval, which will result in the intended capital reduction as well as NAV per share accretion.