BLACKROCK HEDGE SELECTOR LTD: Statement re Cash Exit for Cash Fund Shares NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN BlackRock Hedge Selector Ltd (the "Company") Cash Exit for Cash Fund Shares and Compulsory Conversion Introduction As announced on 6 November 2012, the Company has received a written notice from BNP Paribas Arbitrage ("BNPPA") requiring, in accordance with the Company's articles of association (the "Articles"), the Company to offer a cash exit to the holders of Cash Fund Shares (the "Cash Exit"). As at the date of this announcement, BNPPA is the holder of 3,799,634 Cash Fund Shares (which is equal to 97.98 per cent. of the total number of Cash Fund Shares in issue as at the date of this announcement). As also announced on 6 November 2012, the Cash Fund Share class is no longer compliant with the free float requirement of the UK Listing Rules. In a further announcement, published on 15 November 2012, the Company explained its intention to address this by redeeming the Cash Fund Shares in issue after the 31 December 2012 Share Conversion Date, subject to the requisite regulatory approvals and clearances being obtained and pursuant to the Articles. Further to these previous announcements, this communication sets out the mechanism for implementation of the Cash Exit requested by BNPPA, which Cash Exit will also be offered to all holders of Cash Fund Shares ("Cash Fund Shareholders") in accordance with the terms and conditions set out below, together with the steps proposed to be taken to address the breach of the free float requirement. Additional details are set out below. New discount management arrangements The Board recognises the importance that shareholders place on the liquidity and discount control mechanism provided by the Share Conversion facility and continues to consider proposals for an enhanced discount control and liquidity mechanism. A further announcement in relation to this will be made as soon as practicable. It is intended that a circular will be published by the Company in early 2013 convening an extraordinary general meeting of the Company at which proposals to remove the Cash Fund Share class and to adopt a new discount management arrangement will be tabled for shareholder approval. Cash Exit For Cash Fund Shareholders that elect to participate, the Cash Exit will be implemented by way of a redemption of some or all their Cash Fund Shares. Cash Fund Shareholders who DO NOT participate in the Cash Exit should note that, as set out below, any Cash Fund Shares remaining in issue following the Cash Exit will be COMPULSORILY CONVERTED to UK Emerging Companies Shares, pursuant to the powers contained in the Articles (the "Compulsory Conversion"). The terms and conditions of the Cash Exit are set out below. Please note that the Cash Exit will be implemented on 10 February 2013 in order that the Cash Exit may be offered to shareholders who have submitted Conversion Notices to the Company in respect of the 31 December 2012 Share Conversion Date. Terms and Conditions of the Cash Exit Subject to the Company being able to ensure compliance with Jersey company law, Cash Fund Shareholders will be entitled to redeem up to 100 per cent. of their holding of Cash Fund Shares and such redemption requests will be met in full. Cash Fund Shares are expected to be redeemed on 10 February 2013 at the prevailing net asset value ("NAV") per share as at 31 January 2013, less the costs of implementing such disposal and any other deductions as the Directors, in their absolute discretion, deem appropriate. Shareholders may request to redeem Cash Fund Shares by sending a redemption notice in the form described below (a "Cash Exit Redemption Notice") to the Company's registrar, Computershare Investor Services (Jersey) Limited (the "Registrar"). Cash Exit Redemption Notices must be received by the Registrar not later than 1.00p.m. (Jersey time) on 28 January 2013. Shareholders who do not submit a valid Cash Exit Redemption Notice by 28 January 2013, will be COMPULSORILY CONVERTED to UK Emerging Companies Shares. As announced on 15 November 2012, it will not be possible for shareholders to elect to convert UK Emerging Company Shares into Cash Fund Shares at the March 2013 Share Conversion Date, or to make subsequent conversion elections. Payment of the redemption proceeds (less the costs of implementing such disposal and any other deductions as the Directors, in their absolute discretion, deem appropriate) to Cash Fund Shareholders who elect to participate in the Cash Exit will be made on or around 11 February 2013, in the case of uncertificated Cash Fund Shareholders, and commencing on 18 February, in the case of certificated Cash Fund Shareholders. Form of Cash Exit Redemption Notice Cash Exit Redemption Notice for uncertificated Cash Fund Shareholders In the case of Cash Fund Shares held in uncertificated form, the relevant Unmatched Stock Event ("USE") instruction(s) must be received by the Registrar not later than 1.00 p.m.(Jersey time) on 28 January 2013 using the CREST information provided below. However, uncertificated Cash Fund Shareholders should note that the facility for CREST elections to be processed in respect of this Cash Exit will not be available and live in CREST until 14 January 2013. A redeeming Cash Fund Shareholder's USE instruction must be properly authenticated in accordance with the specifications of Euroclear UK & Ireland Limited and must contain, in addition to the other information that is required for settlement in CREST, the following details: 1. the number of Cash Fund Shares to be redeemed; 2. the participant ID of the holder of the Cash Fund Shares; 3. the member account ID of the holder of the Cash Fund Shares from which the current shares held are to be debited; 4. the participant ID of the Registrar, i.e. 3RA54; 5. the member account ID of the Registrar, i.e. REDEEM; 6. the corporate action number (which will be allocated by Euroclear UK & Ireland Limited and can be found by viewing the relevant corporate action details); 7. the Corporate Action ISIN, i.e. JE00B40HG889 8. the intended settlement date (which must be not later than 1.00 p.m. (Jersey time) on 28 January 2013); 9. input with a standard USE delivery instruction of priority 80; and 10. contact name and telephone number in the shared note field. In order for an uncertificated redemption to be valid, the USE instruction must comply with the requirements as to authentication and contents set out above. CREST members and (where applicable) their CREST sponsors should note that the latest time at which a USE instruction may settle is 3.00 p.m. GMT (the CREST deadline for settlement). Cash Exit Redemption Notice for certificated Cash Fund Shareholders In the case of Cash Fund Shares held in certificated form, a Cash Exit Redemption Form for certificated shareholdings may be obtained from the Company's website www.blackrock.co.uk/BRHS/library/ReportsForms/index.htm, or requested from the Company's Registrar at the following address: Computershare Investor Services PLC Corporate Actions Projects Bristol BS99 6AH To be valid, the Cash Exit Redemption Form for certificated shareholdings and the appropriate Cash Fund Share certificate(s) must be received at the above address not later than 1.00 p.m. (Jersey time) on 28 January 2013. Shareholders should note that a Cash Exit Redemption Notice once submitted may not be withdrawn without the consent of the Company and that they will not be able to sell their Cash Fund Shares once a Cash Exit Redemption Notice is received by the Company. The Directors may, in their absolute discretion, reject any Cash Exit Redemption Notice. Compulsory Conversion Further to the Company's announcement on 15 November 2012, following implementation of the Cash Exit the Board expects that the Cash Fund Shares will continue to be in breach of the "public hands" requirement of the Listing Rules and/or will be of such a size that such breaches are likely to reoccur in future. Consequently the Directors have determined that it is in the interests of the Company as a whole to exercise their rights under the Articles to compulsorily convert any Cash Fund Shares in issue immediately following implementation of the Cash Exit into UK Emerging Companies Shares. Cash Fund Shareholders should therefore carefully consider whether they wish to participate in the Cash Exit and so redeem their Cash Fund Shares, or alternatively have such shares compulsorily converted into UK Emerging Companies Shares. If there are any Cash Fund Shares outstanding following the Cash Exit, the Compulsory Conversion will be implemented on 10 February 2013. Following the Cash Exit and, if required, Compulsory Conversion, as there will be no Cash Fund Shares in issue, the Company intends to proceed to delist the Cash Fund Share class. Takeover Code implications of the Cash Exit being offered to Cash Fund Shareholders As a Jersey company which has its shares admitted to trading on the Main Market of the London Stock Exchange, the Company is subject to the City Code on Takeovers and Mergers (the "Code"). Under Rule 9 of the Code, any person who acquires an interest (as defined in the Code) in shares which, taken together with shares in which he is already interested in and which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares. Similarly, when any person, together with persons acting in concert with him, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of such a company, but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person. Rule 37.1 of the Code further provides that when a company redeems or purchases its own voting shares, any resulting increase in the percentage of shares carrying voting rights in which a person or group of persons acting in concert is interested will be treated as an acquisition for the purposes of Rule 9. As at the date of this announcement, BlackRock, Inc. and its subsidiaries (which includes BlackRock (Channel Islands) Limited, the Company's investment manager) (the "BlackRock Group") are currently interested (through the shareholdings of investment vehicles and accounts managed by members of the BlackRock Group) in 13,840,000 UK Emerging Companies Shares (the "BlackRock Shares"). For the purposes of the Code, therefore, the BlackRock Group is currently deemed to be interested in 28.9 per cent. of the Company's total voting rights. Assuming that all Cash Fund Shareholders serve a Cash Exit Redemption Notice (in accordance with the terms and conditions of the Cash Exit contained in this announcement), the BlackRock Shares will carry voting rights equal to approximately 33 per cent. of the aggregate voting rights in the Company. On the basis that no member of the BlackRock Group (or any of their respective directors or officers) participated in the decision making process of BNPPA which culminated in BNPPA serving a Cash Exit Notice, The Panel on Takeovers and Mergers has confirmed on an ex-parte basis that no member of the BlackRock Group or any investment vehicle or account managed by a member of the BlackRock Group will be required to make an offer for the Company's remaining issued shares pursuant to Rule 9 as a consequence of either: i. if less than 30 per cent. of the Company's total voting rights are attributable to the BlackRock Shares at the time of the Cash Exit, the voting rights attaching to the BlackRock Shares exceeding 30 per cent. of the total voting rights in the Company as a result of the Cash Exit; or ii. if between 30 per cent. and 50 per cent. of the Company's total voting rights are attributable to the BlackRock Shares at the time of the Cash Exit, an increase in the percentage of total voting rights attributable to the BlackRock Shares as a result of the Cash Exit. Shareholders should note that any further increase in the voting rights in the Company in which the BlackRock Group is deemed to be interested as a result of the acquisition of further shares by any member of the BlackRock Group or any vehicle or account managed by any member of the BlackRock Group will be subject to the provisions of Rule 9 of the Code. Pursuant to the Waiver Resolution passed at the 2012 AGM of the Company, any further increase in the voting rights in the Company in which the BlackRock Group is deemed to be interested as a result of the repurchase or redemption of shares by the Company will not be subject to the provisions of Rule 9 of the Code for a 12-month period commencing on 3 July 2012. Expected Timetable The expected timetable for the Cash Exit and, if required, Compulsory Conversion is as follows: Action Date Stock Exchange announcement in respect of the Cash 17 December 2012 Exit and Cash Exit Redemption Form published on the Company's website NAV valuation point for conversion into Cash Fund 31 December 2012 Share class CREST live and available for USE instructions 14 January 2013 to be made by Uncertificated Cash Fund Shareholders Latest date for submission of relevant USE 1.00 p.m. (Jersey time) 28 instruction(s) or receipt of the Cash Exit January 2013 Redemption Form for certificated shareholdings and share certificate(s) (as appropriate) Results of Cash Exit announced 29 January 2013 NAV valuation point for Cash Exit 31 January 2013 NAV valuation point for Compulsory Conversion of 31 January 2013 Cash Fund Shares into UK Emerging Companies Shares (if required) Cash Exit and, if required, Compulsory Conversion 10 February 2013 Issue of UK Emerging Companies Shares following 10 February 2013 Compulsory Conversion CREST accounts credited with redemption 11 February 2013 consideration in respect of uncertificated Cash Fund Shares redeemed pursuant to the Cash Exit Despatch of cheques for redemption consideration Week commencing 18 in respect of certificated Cash Fund Shares February 2013 redeemed pursuant to the Cash Exit Additional information If any of the above times and/or dates change, the revised time(s) and/or date (s) will be notified to shareholders by announcement through a Regulatory Information Service. This notice is for information only. Any Cash Fund Shareholder who is in any doubt whether or not to redeem Cash Fund Shares pursuant to the Cash Exit is recommended to contact an independent financial adviser. The Directors make no recommendations to Cash Fund Shareholders in relation to participation in the Cash Exit. Whether or not holders decide to elect to redeem their Cash Fund Shares is a matter for each Cash Fund Shareholder and will depend, among other things, on their view of the Company's prospects and their individual circumstances, including their tax position. In making their own decisions Cash Fund Shareholders are recommended to consult their duly authorised independent financial and tax adviser. Enquiries Ian Webster - 01534 600 802 BlackRock (Channel Islands) Limited Will Rogers - 020 7397 1920 Sapna Shah - 020 7397 1922 Cenkos Securities plc Date: 17 December 2012 END -0- Dec/17/2012 17:38 GMT
BLACKROCK HEDGE SELECTOR LTD: Statement re Cash Exit for Cash Fund Shares
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