Conversus Capital, L.P. (NYSE Euronext Amsterdam: CCAP) ("Conversus") announces that it has adopted a permanent harvesting strategy under which it will discontinue all new private equity investments, other than funding existing commitments and protective follow-on investments, and will return capital to unit holders in a manner intended to maximize long-term unit holder value. In connection with this strategy, Conversus announces that it has declared a cash distribution of $1.55 per unit and amended its Services Agreement with Conversus Asset Management ("CAM") to reflect a 25% reduction in management fees.
Following Conversus´ press release on 11 August, CAM undertook a review of its investment policy with the board of Directors of Conversus GP, Limited (the "Conversus Board") in light of current market conditions, the levels at which Conversus´ units are trading compared to net asset value and input from holders of a substantial portion of its units who favor a harvesting strategy. The new investment strategy may be subject to regulatory approval by the Guernsey Financial Services Commission.
Under the harvesting strategy, CAM will manage the portfolio to maximize long-term unit holder value, including the consideration of opportunistic sales of assets when appropriate. CAM will discontinue all new private equity investments and investment commitments on behalf of Conversus other than funding existing commitments, making follow-on private equity investments to protect, support or enhance existing investments, and engaging in hedging activities related to the portfolio, unless otherwise approved by the Conversus Board.
Conversus will seek to maximize long-term unit holder value by returning capital to unit holders through a combination of methods deemed most appropriate under the circumstances, including cash distributions and unit repurchases. In connection with this strategy, Conversus will make a cash distribution of $1.55 per unit, representing $100 million in aggregate. The distribution will be payable on or about 16 September to unit holders of record as of 9 September. Going forward, Conversus expects to continue making quarterly distributions based on net cash flow during the quarter, the forecast for net cash flows and the maintenance of appropriate cash reserves based on the circumstances prevailing at the time. The ultimate timing and amount of any future distributions may vary and will remain subject to the discretion of the Conversus Board. In connection with the harvesting strategy, Conversus will indefinitely suspend repurchases of units under its Liquidity Enhancement Agreement with The Royal Bank of Scotland effective 2 September.
Conversus recognizes that some unit holders may prefer that all or a portion of their capital be reinvested in private equity. Depending on the level of unit holder interest in such an option, as well as commercial and legal feasibility, Conversus may seek to develop a structure in the future that offers a choice for those unit holders who prefer reinvestment. If such a structure is developed, no investor will be forced from harvesting to the new structure, regardless of the preferences of other investors.
In conjunction with the change to a permanent harvesting strategy, CAM offered to reduce its management fees and worked with the Conversus Board to set the appropriate terms of such reduction. Conversus and CAM have amended the Services Agreement to reduce aggregate management fees by 25% effective 1 September. In addition, Conversus will proactively work to reduce future operating expenses to a level commensurate with the new strategy and its on-going activities as a publicly listed entity.
An investor presentation summarizing these announcements and the amended Services Agreement, including the investment strategy attached thereto, can be found on Conversus´ website at www.conversus.com in the Investor Relations section under the heading "Monthly Updates."
About Conversus Capital
Conversus is a publicly traded portfolio of third party private equity funds with approximately $2.4 billion in assets under management. Conversus provides immediate exposure to a diversified portfolio of private equity assets managed by best-in-class general partners. Conversus´ objective is to maximize long-term unit holder value by harvesting its existing portfolio and returning capital to unit holders. CAM, an independent asset manager, implements Conversus´ investment policies and carries out the day to day operations of Conversus pursuant to a services agreement.
Legal Disclaimer
These materials are not an offer to sell, or a solicitation of an offer to buy, securities in the United States or elsewhere. Securities may not be sold in the United States absent registration with the U.S. Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended. Conversus is not a registered investment company under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act"), and the resale of Conversus securities in the United States or to U.S. persons other than to qualified purchasers as defined in the Investment Company Act is prohibited. Conversus does not intend to register any offering in the United States or to conduct a public offering of its securities in the United States. Conversus is an authorised closed-ended investment scheme for Guernsey regulatory purposes. Past performance is not necessarily indicative of future results.
The common units and related restricted depositary units of Conversus are subject to a number of ownership and transfer restrictions. Information concerning these ownership and transfer restrictions is included in the Investor Relations section of Conversus´ website at www.conversus.com.
Forward-Looking Statements
These materials contain certain forward-looking statements. In some cases, forward-looking statements can be identified by terms such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "potential," "should," "will" and "would," or the negative of those terms or other comparable terminology. Forward-looking statements speak only as of the date of these materials and include statements relating to expectations, beliefs, forecasts, projections (which may include statements regarding future economic performance, and the financial condition, results of operations, liquidity, cash flows, investments, business, net asset value and prospects of Conversus), future plans and strategies and anticipated results thereof, anticipated events or trends and similar matters that are not historical facts. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future, and there are many factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements including, but not limited to, the following: our ability to implement successful investment strategies; risks associated with private equity investments generally, the performance and financial condition of the funds in our portfolio and their portfolio companies, and the actual realized value of investments; the size, volume and timing of capital calls, distributions and other transactions involving our investments; changes in our relationship with CAM and its relationships; potential conflicts of interest; potential future changes in our investment policy in response to market conditions or other factors, changes in our financial condition, liquidity (including availability and cost of capital), cash flows and ability to meet our funding needs and satisfy our contractual obligations; general economic and political conditions and conditions in the equity, debt, credit, currency, foreign exchange and private equity markets; the trading price, liquidity and volatility of our common units; competitive conditions; regulatory and legislative developments; and the risks, uncertainties and other factors discussed elsewhere in these materials or in our public filings and documents on our website (www.conversus.com). Conversus does not undertake to update any of these forward-looking statements. Past performance is not necessarily indicative of future results.
