Completion of Secondary Fundraising

4 June 2008

ACP Mezzanine Limited (“ACP Mezzanine” or the “Company”: ACPM.LN), the closed-ended investment company focused on lending to European small and medium-sized enterprises (“SMEs”), is pleased to announce a secondary fundraising by way of a placing of 133,333,333 new ordinary shares (“Placing Shares”) at €0.60 per ordinary share to new and existing institutional investors, raising €80 million (“Placing”).

The successful fundraising will allow the Company to complete the acquisition of several identified lending opportunities in the SME sector within its core markets. ACP Mezzanine expects to close shortly the following investment opportunities:

  • with Conpair AG, a c. €250 million portfolio of c. 80 German SME mezzanine loan assets, in conjunction with a proposed c. € 215 m senior debt facility;
  • a committed funding line of €30 million to Leasecom, a French leasing business and one of the origination platforms of the Company’s investment manager, ACP Capital Limited (“ACP Capital”: APL.LN); and
  • a further c. €15 million portfolio of small loans (average size c. €5 million), sourced either directly through ACP Capital or indirectly through ACP Capital’s network of origination platforms, such as GCI Management AG (“GCI”).

In addition to the capital raised in this fundraising, the Company intends to use its existing committed leverage facilities (which currently amount to approximately €150 million) and the proposed seven-year senior debt facility mentioned above for the Conpair portfolio to fund these opportunities. On completion of the above investments, the Company will have c. 65% leverage with total assets under management of c. €425 million.

Together with its existing investments, ACP Mezzanine anticipates achieving, by year-end, an annualised dividend yield in excess of 17.5% based on the Placing price of €0.60 per ordinary share.

The Placing Shares are expected to be admitted to trading on AIM and the CISX on 10 June 2008 (“Admission”).

The Board of ACP Mezzanine today also declares an interim dividend of 3.75 cents per existing ordinary share in respect of the five months ended 31 May 2008, to be paid on 11 July 2008 to Shareholders on the share register on 13 June 2008 (ex-dividend date is 11 June 2008). The Placing Shares shall not carry the right to receive the interim dividend in respect of the five months ended 31 May 2008, but shall otherwise rank pari passu in all respects with the existing ordinary shares of the Company on Admission. The Board of ACP Mezzanine is committed to moving to quarterly dividend payments on a calendar basis with the next dividend announcement occurring for the period to 30 September 2008, as well as an intended move to a recognised exchange by no later than first quarter of 2009.

In connection with its support of the Company’s fundraising, ACP Capital has informed ACP Mezzanine of its intention to exercise part of the options issued to it under an option deed dated 20 July 2006 (“Option Deed”) and subscribe to 1,000,000 new ordinary shares pursuant to the Option Deed at €1 per share. Once ACP Capital has been issued with the 1,000,000 new ordinary shares, ACP Capital and the members of the concert party deemed to exist at the time of the Company’s admission to AIM in July 2006 (“Concert Party”) will own in aggregate 50.03% of the issued share capital of ACP Mezzanine, of which ACP Capital at that stage will own 47.34%. As disclosed in the admission document issued by the Company in July 2006, the exercise of part of the options under the Option Deed will not result in ACP Capital being obliged to make a general offer to acquire all shares in the Company. Furthermore, following exercise of the options under the Option Deed which would increase the Concert Party’s interest in the Company to more than 50%, any member of the Concert Party may increase its aggregate interests in shares without incurring any obligation to make a general offer to acquire all shares in the Company under Rule 9 of the City Code.

Following its subscription for 1,000,000 new ordinary shares pursuant to the Option Deed, ACP Capital intends to subscribe for 79,219,798 Placing Shares. ACP Capital’s aggregate holding of shares in the Company following the Placing will be 127,699,798 shares, representing 54.17% of the shares in issue.

Management of the investment manager, including the Executive Directors Derek Vago and Eric Youngblood, have committed to a combined minimum subscription of €1.25 million in the Placing.

The independent Directors of ACP Mezzanine consider, having consulted with the Company’s nominated adviser, that the terms of these intended subscriptions by ACP Capital, Derek Vago and Eric Youngblood under the Placing are fair and reasonable in so far as its shareholders are concerned.

Following the admission of the shares subscribed by ACP Capital under the Option Deed and the Placing Shares, the Company will have a total of 235,745,333 ordinary shares of no par value, which is equivalent to a market capitalisation of approximately €186 million at the Company’s current mid-market share price of €0.79 per ordinary share.

Commenting on the fundraising, Derek Vago, Director of ACP Mezzanine commented:

“We are pleased to have successfully raised €80 million of equity to fund these excellent loan portfolios in the SME sector and in our core markets of Germany and France. The proposed resultant loan portfolio of c. €425 million will enable us to be well positioned to exceed our three-year target of €550 million assets under management, as stated at the IPO. As a result, we are confident of achieving for shareholders an enhanced annualised dividend yield by year-end of 17.5% based on the Placing price of €0.60 per ordinary share. Furthermore, ACP Capital is already identifying further SME loans of similar diversification in our core markets of Italy, France, Germany and the UK, anticipated to be in place by year-end.”

Enquiries:

  • Financial Dynamics (Media Relations) Rob Bailhache & Nick Henderson +44 (0) 207 269 7200
  • ACP Mezzanine Limited Derek Vago/Eric Youngblood +44 (0) 207 938 2300
  • Grant Thornton Corporate Finance (NOMAD) Philip Secrett/Fraser Campbell +44 (0) 20 7383 5100
  • Liberum Capital Limited (Financial adviser and broker) Simon Atkinson/Simon Stilwell +44 (0) 20 3100 2000

About ACP Mezzanine

ACP Mezzanine Limited (LSE AIM: ACPM) is a Jersey-incorporated, closed ended investment company listed on AIM. It is a provider of sub-investment grade finance to European small and mid-sized enterprises – with a primary focus on the UK, France, Germany and Italy – originating, structuring and underwriting the majority of its investments through ACP Capital Limited (“ACP Capital”: APL.LN) and ACP Capital’s European network. ACP Mezzanine aims to optimise risk-adjusted returns by actively managing its portfolio and to distribute at least 85% of profits as dividends. ACP Capital Limited owns 47% of ACP Mezzanine and, through a subsidiary, acts as its investment manager.