MUMBAI, LONDON- Trikona Advisers Limited (“TAL”) today confirms that it will lodge a claim with the London Court of International Arbitration for £112,000,000 for the unlawful attempt by Trikona Trinity Capital Plc (Code “TRC” on AIM) to terminate its management agreement with the Fund six years early. The agreement was for ten years from 16 April 2006.
A spokesman for TAL today said “For over two years now TRC has been under attack from two hedge funds. They took a position in the Fund because of the successful performance and returns created under the management of TAL, but are now seeking an exit. These hedge funds have a track record of activism and for closing down Funds early in the cycle to realise cash for short term gains, and this is what it is happening to TRC. Other recent examples of their activism involve Treveria plc (AIM:TRV) the German retail focused real estate investment company, which had been under pressure to remove four directors including the Chairman. These funds have also targeted others such as South African Property Opportunities (AIM:SAPO) and Hirco plc, (AIM:HRCO).
Our management contract stands in the way of their strategy, because it lasts for ten years, so we are being unfairly treated publicly and falling victim to their strategy. This has included TRC making public announcements about alleged breaches under the contract, all of which are denied. We sent a long, detailed letter to TRC explaining this, and setting out our claims. TAL will invoke its contractual rights in the strongest terms. TAL will also look beyond TRC if necessary to recover all of its losses. In the next two weeks, TAL will commence the process of seeking and obtaining relevant orders from the London Court of International Arbitration for all due remuneration under our management contract, which totals approximately £112,000,000. ”
TAL has instructed a number of law firms to invoke its contractual rights, including London law firm SJ Berwin LLP to pursue TRC through the London Court of International Arbitration.
Under the Portfolio Management Agreement with TRC, TAL is engaged to carry out management services to TRC for a period of ten years from 16 April 2006. The claim comprises management fees and estimated Profit Share payments due to TAL for the remainder of the term and for opportunities and projects already introduced and managed by TAL on behalf by the Fund.
ABOUT TRIKONA ADVISERS LIMITED’s Performance:
TAL is a leading investment adviser for real estate and infrastructure assets in India. Preqin analysed private equity real estate returns to 31st March 2009 in order to provide an independent and unbiased description of the industry’s performance in a period of unprecedented global turmoil. To quote ‘Industry Returns are deep in the red over the 12-month period to March 2009. The asset class only performed marginally worse than the public markets, however, with returns of -40.5% compared with -38.1% for Standard & Poor’s 500 index’.
TAL has advised in realising returns of approximately £86 million with an internal rate of return of 97% for TRC.
TAL has also enabled the release of approximately £20.9 million of cash by renegotiating and reworking certain contractual commitments per the instructions of Trikona Trinity.
In addition, in the past nine months TAL has enabled through its advise on investments by TRC in two companies a gain of over 109.47 million pounds of potential liquidity by way of IPO’s of PSL and DBR. TRC invested GBP 39.9 million in the two transactions, representing a return of over 2.74 times and an IRR of 41.2%.
PSL is the largest diversified shipyard in India with capabilities to tap the potential in Offshore and Defense applications. TRC holds 45.9 million shares representing a 6.9% interest in PSL. The shareholding is subject to a one year lock-in under Indian securities regulations. TRC acquired the shares at a price of INR 25 per share in January 2007. TRC invested GBP13.5 million in PSL in January 2007. The INR 54.50 opening price per share on 22 February 2010 implies a market value of approximately GBP 35.07 million at current exchange rates(GBP 1 = INR 71.3329)
DB Realty is one of the premier Real Estate developer primarily focussed on Redevelopment Projects in and around Mumbai. DB Realty is scheduled to list on the 24 February 2010. The DB Realty IPO has been subscribed 2.95 times. TRC, holds 11.34 million shares representing about 4.66% interest in the equity share capital of DB Realty. TRC acquired the shares at a price of INR 190 per share in April 2007 by investing GBP 26.4 million. At the lower price band of INR 468 per share, it implies a market value of GBP 74.40 million at current exchange rates and an IRR of 44.1% with multiple of 2.82x on an original investment. With this DB Realty has become one of the most profitable deals for TRC as an Investment in the Indian Real Estate Market.
A third investment viz., ITNL has announced its IPO which is scheduled for next month. IL&FS Transportation Networks Ltd. (ITNL) is an established ISO 9000:2001 surface transportation infrastructure company, and is one of the largest private sector BOT road operators in India. ITNL is a developer, operator and facilitator of surface transportation infrastructure projects, taking projects from conceptualization through commissioning to operations and maintenance. ITNL was incorporated in 2000 by IL&FS, an infrastructure development and finance company, in order to consolidate their existing road infrastructure projects and to pursue various new project initiatives in the area of surface transportation infrastructure. TRC holds 4.28 million shares representing about 2.50% interest in the equity share capital of ITNL. TRC acquired the shares at a price of INR 100 per share in October 2006 by investing GBP 5.10 million. At the Pre-IPO placement price of INR 242 per share, it implies a market value of GBP 14.52 million at current exchange rates and an IRR of 36.20% with multiple of 2.85x on an original investment.
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