AOF Board Announcement of August 21, 2017 about C share conversion and Contingent Value Rights Creation

21 August 2017

Africa Opportunity Fund Limited
(the “Company”) 

C Share Conversion and creation of
Contingent Value Rights

The Board of Africa Opportunity Fund Limited announces the creation and issue of Contingent Value Rights to holders of its Existing Ordinary Shares (details of which are set out below) and conversion of the outstanding C Shares into New Ordinary Shares.

The Company issued 29,200,000 C Shares pursuant to the terms of the Prospectus published in March 2014.  Ordinarily, after the net proceeds of the C Share issue had become substantially invested, the C Shares would have converted into Ordinary Shares by reference to the net assets attributable to the C Shares and the Existing Ordinary Shares.  However, at the time of the publication of the Prospectus, a dispute relating to title to the Company’s Shoprite Shares was ongoing and therefore, as set out in the Prospectus, the Board reserved the right to extend the date upon which Conversion was to occur until such time as the Shoprite Dispute was resolved.

On 1 February 2017 the Company announced that in respect of the Shoprite Dispute the arbitrator had concluded that the Company had not obtained good title to 637,528 of the 679,145 Shoprite Shares which the Company believed it owned.  The estimated loss to the Company was circa US $5 million, which equated to a reduction in NAV of approximately US$0.12 per Existing Ordinary Share.  The Company subsequently announced in its quarterly report for the period ended 31 December 2016 that it would appeal the arbitrator’s award.  That appeal is currently ongoing.

Notwithstanding the appeal, and after consultation with its auditors, the Board determined to make a provision of US $0.12 per Existing Ordinary Share to reflect the arbitrators’ award and subsequent NAV announcements of the Company have been made on that basis.

The Board has, after consultation with major holders of the Existing Ordinary Shares and C Shares, determined that it is now in the best interests of the Company, its Shareholders and its C Shareholders that the C Shares convert into New Ordinary Shares.  Such Conversion will have logistical and administrative advantages to the Company (as it would no longer have to segregate and maintain its assets in two separate pools) as well as saving costs (including the costs of maintaining two separate lines of listed shares) and with an enlarged single class of shares could lead to improved marketability and stock liquidity.

The Net Asset Value attributable to the Existing Ordinary Shares and the C Shares as at the Calculation Date (being the close of business on 11 August 2017) were $0.868 per Existing Ordinary Share and $0.910 per C Share.  Accordingly, the Conversion Ratio, as calculated in accordance with the Articles and the Prospectus, is 1.1034 New Ordinary Shares for every C Share.  The Conversion Date (at which time Conversion will take place) shall be 23 August 2017.  The NAV of the Existing Ordinary Shares includes an accrual to reflect the Board’s best estimate of the costs and expenses to be incurred by the Company in respect of the future conduct of the Shoprite Dispute.

Contingent Value Rights

The Board has determined Existing Ordinary Shareholders should benefit from any ultimate favourable conclusion to the Shoprite Dispute and has resolved to issue Contingent Value Rights (CVRs) to Existing Ordinary Shareholders prior to the C Shares converting into New Ordinary Shares.

The CVRs will represent a contractual obligation on the Company under the terms of which the Company will agree to pay to the holders of the CVRs the amount in cash or any net benefit of a successful conclusion or settlement of the Shoprite Dispute.

Other characteristics of the CVRs are as follows:

  • they will be created on the basis of one CVR for every Existing Ordinary Share;
  • they will not be listed or quoted on any stock exchange;
  • they will be issued directly to the underlying holders of the Existing Ordinary Shares;
  • they will not be held in Euroclear/Clearstream;
  • they will be freely transferable by way of private treaty;
  • their value is highly contingent and dependent on the outcome of the Shoprite Dispute. There can be no guarantee that the Shoprite Dispute will be concluded in a manner that is favourable to the Company and will result in a payment being made by the Company in respect of the CVRs;
  • they are passive instruments with no votes and the conduct of the Shoprite Dispute is vested in the Company which shall, without reference to the holders or the CVRs, be entitled to take all decisions (including as to settlement and/or continuance of the Shoprite Dispute) in respect of the Shoprite Dispute as it in its sole discretion shall determine; and
  • the Company’s obligation to make payment to the holders of the CVRs is subject to compliance by the Company with all laws and regulatory requirements applicable to it.

The full terms and conditions attaching to the CVRs are contained in the instrument by which they are constituted that can be inspected at

Expected Timetable

The expected timetable for Conversion and the creation and issue of the CVRs is as follows:

Calculation Date 11 August 2017
Announcement of Conversion Ratio 21 August 2017
Creation and issue of the CVRs 21 August 2017
Record time and date for Conversion and closure of C Share register 5:30pm 22 August 2017
Cancellation of the C Shares 23 August 2017
Dealings in New Ordinary Shares commences 23 August 2017
Crediting of Euroclear/Clearstream stock accounts in respect of the New Ordinary Shares 23 August 2017
Share certificates in respect of New Ordinary Shares in certificated form dispatched by 1 September 2017
Certificates in respect of CVRs dispatched by 30 October 2017



Africa Opportunity Fund Limited
Francis Daniels                                                             +2711 684 1528

Liberum Capital Limited (Corporate Broker)
Andrew Davis / Anastasia Mikhailova (Sales)
Henry Freeman (Investment Banking)                             +44 20 3100 2000



In this announcement the terms have the following meanings:

“Board” the board of directors of the Company
“C Shareholders” holders of C Shares
“C Shares” C Shares of US$0.10 each in the capital of the Company
“Calculation Date” the date upon which the Conversion Ratio is calculated
“Conversion” the conversion (by way of re-designation) of C Shares into New Ordinary Shares as detailed in the Prospectus
“Conversion Date” the date upon which Conversion occurs
“Conversion Ratio” the ratio of the NAV per C Share to the NAV per Existing Ordinary Share on which the C Shares convert into New Ordinary Shares as detailed in the Prospectus
“CVRs” or “Contingent Value Rights” the contingent value rights to be created by the Company
“Existing Ordinary Shareholders” holders of Existing Ordinary Shares
“Existing Ordinary Shares” Ordinary Shares in issue at the date of this announcement;
“NAV” net asset value
“New Ordinary Shares” new Ordinary Shares arising on Conversion
“Ordinary Shares” ordinary shares of US$0.01 each in the capital of the Company
“Prospectus” the prospectus published by the Company on 28 March 2014
“Shareholders” holders of Existing Ordinary Shares or C Shares as the case may be
“Shoprite Dispute” a dispute between Africa Opportunity Fund, L.P., a subsidiary of the Company, Africa Opportunity Cayman Limited, Shoprite Holdings Limited, and Shoprite Checkers (Pty) Ltd (“Shoprite Holdings Limited” and “Shoprite Checkers” referred to jointly and severally herein as “Shoprite”), about whether purchase of Shoprite Shares on the Lusaka Stock Exchange between October 2009 and July 2011, by Africa Opportunity Fund, L.P. or Africa Opportunity Cayman Limited from Shoprite resulted in transfers of good title to said Shoprite Shares from Shoprite to the purchasers, which dispute has been the subject of an arbitral award in January 2017 affirming that good title in respect of 637528 ordinary shares of Shoprite did not pass to Africa Opportunity Fund, L.P., plus current or future appeals, proceedings, arbitrations, or judicial or regulatory actions arising out of, or relating to, those Shoprite share purchases in South Africa, Zambia, or any other jurisdiction
“Shoprite Shares” ordinary shares of Shoprite