Ludgate Environmental Fund : Proposed cancellation of AIM admission

Ludgate Environmental Fund Limited

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

26June 2017

Proposed cancellation of the admission to trading on AIM of the Ludgate Shares, adoption of new memorandum and articles of association, change of regulatory status, change of name and Notice of Extraordinary General Meeting

The Company will today post a circular to shareholders ('Circular') relating to the proposed cancellation of the admission to trading on AIM of the Ludgate Shares, such cancellation to take effect from 25 July 2017, adoption of new memorandum and articles of association, change of regulatory status and change of name. The Circular, which contains a notice of Extraordinary General Meeting to take place on 14 July 2017 at which the relevant resolutions will be put to shareholders, will also be available on the Company's websitewww.ludgateenvironmental.com.

Expected Timetable:

Notice of proposed Cancellation announced 26 June 2017

Publication of the Circular 26 June 2017

Latest time and date for receipt of Forms of Proxy 10.00 a.m. on 12 July 2017

Extraordinary General Meeting 10.00 a.m. on 14 July 2017

Announcement of results of EGM 14 July 2017

Expected last day of dealings in Ludgate Shares on AIM 24 July 2017

Cancellation becomes effective from 7.00 a.m. on 25 July 2017

Future dates are indicative only and are subject to change, in which event details of the new times and dates will be announced via a Regulatory Information Service. References to times in this announcement and the Circular are to London times.

1 Introduction

On 21 December 2016, the Ludgate Directors and Headway (acting by its general partner, HIP III GP L.P., acting through its own general partner, HIP III Management Limited) announced that they had reached agreement on the terms of a recommended cash offer to be made by Headway for the entire issued ordinary capital of Ludgate, to be effected by means of a takeover offer within the meaning of Article 116 of the Jersey Companies Law, at 16 pence per Ludgate Share.

On 18 January 2017, Headway and Ludgate announced that the Offer price had been increased to 16.3 pence per Ludgate Share and posted the Offer Document, containing the full terms and conditions of the Offer, the procedures for acceptance of the Offer, the notice of the Independent Ludgate Shareholders Meeting to approve the Proposed Amendments and the procedure for Independent Ludgate Shareholders to vote at the Independent Ludgate Shareholders Meeting, together with related forms of acceptance relating to the Offer and forms of proxy for the Independent Ludgate Shareholders Meeting, to Ludgate Shareholders.

On 8 February 2017, Ludgate announced that the Proposed Amendments, a condition of the Offer, had been approved by a requisite majority of Independent Ludgate Shareholders on a poll at the Independent Ludgate Shareholders Meeting held on that date. Later on the same date, Headway declared that the Offer was unconditional in all respects and that the Offer would remain open for acceptances until 1.00 p.m. on 22 February 2017 (the 'Final Closing Date').

By the Final Closing date Headway had received valid acceptances pursuant to the Offer in respect of 30,732,659 Ludgate Shares representing 57.6 per cent. of the Ludgate Shares in issue (the 'Headway Shareholding'). As the Headway Shareholding represents more than 50 per cent. but not more than 74.99 per cent. of the voting rights attaching to the Ludgate Shares, and now that Ludgate has obtained the necessary regulatory approvals from the JFSC, as set out in the Offer Document, the Ludgate Directors are convening an extraordinary general meeting of Ludgate in accordance with AIM Rule 41, at which a special resolution (the 'Cancellation Resolution') seeking the consent of Ludgate Shareholders to the cancellation of the admission to trading on AIM of the Ludgate Shares will be proposed. To be passed, the Cancellation Resolution will require not less than 75 per cent. of votes cast by Ludgate Shareholders (either in person or by proxy) to be in favour of the Cancellation Resolution.

Headway has irrevocably undertaken to Ludgate an undertaking that it will vote the Headway Shareholding (and any other Ludgate Shares it becomes the registered holder of prior to the date of the Extraordinary General Meeting) in favour of the Cancellation Resolution. As at the date of this Circular, the Headway Shareholding consisted of 30,732,659 Ludgate Shares, representing 57.6 per cent of the Ludgate Shares in issue.

In addition, as highlighted in the Offer Document, Headway has received irrevocable undertakings from certain other Ludgate Shareholders to vote, inter alia, in favour of the Cancellation Resolution in respect of 15,964,139 Ludgate Shares in aggregate, representing approximately 29.9 per cent. of the Ludgate Shares in issue (the 'Cancellation Undertakings').

The Ludgate Shares represented by the Headway Shareholding and the Cancellation Undertakings equate, in aggregate, to 87.5 per cent. of the Ludgate Shares in issue.

As a consequence of the passing of the Cancellation Resolution, the Company will no longer meet the criteria to be regulated as a Listed Fund pursuant to the JFSC's Listed Fund Guide and related legislation, regulation and guidance and, therefore, its regulatory status in Jersey needs to change. Following consultation with the JFSC, the Ludgate Directors have agreed with the JFSC that, with effect from the Cancellation, the Company will be subject to Deregulation.

Subject to the passing of the Cancellation Resolution, and in order to better reflect the position of the Company following the Cancellation and Deregulation, the Change of Status Resolutions are being proposed in order to:

(i) change the status of the Company from a public company to a private company;

(ii) change the name of the Company to 'Ludgate Environmental Limited'; and

(iii) adopt the New Articles.

The Change of Status Resolutions will require not less than two thirds of votes cast by Ludgate Shareholders on a poll (either in person or by proxy) to be in favour of each of the Change of Status Resolutions.

On behalf of the Ludgate Directors the Chairman is now writing to Shareholders to outline details of the Proposals and to give notice of the Extraordinary General Meeting. In this context, Shareholders' attention is also drawn to the recent announcement made by the Company on 21 April 2017 which referred to potential transactions in relation to the Ludgate Assets. Commercial negotiations remain ongoing in respect of these transactions, one of which may potentially lead to the Ludgate Directors recommending that a distribution be made to Ludgate Shareholders, however the outcome remains uncertain at this point in time.

2.1 Reasons for the Cancellation

The Ludgate Directors note the following statements which were contained in the Offer Document:

'Headway Capital advised Headway to evaluate Ludgate as an investment opportunity as it believed that Headway could positively influence the run-off of the Ludgate Assets once it became a major Ludgate Shareholder.

Headway believes that the financial burden of managing and operating Ludgate as a company with shares admitted to trading on AIM has been disproportionate to the value of the Ludgate Assets. It further believes that very low liquidity in the Ludgate Shares will present significant difficulties for Ludgate Shareholders who seek to realise their investment in Ludgate at market prices.' (p.18)

and

'…On the assumption that the Cancellation occurs… and that Ludgate is operated and regulated as an unlisted entity, Headway believes that, excluding the Management Fee and any Carried Interest payable under the New IMA, cost savings may be able to be achieved over the current cost base of Ludgate which will help to minimise the cash expense drag on the value of the Ludgate Assets.' (p.22)

The Ludgate Directors further note that, in aggregating the Ludgate Shares represented by the Headway Shareholding and the Cancellation Undertakings, at least 87.5 per cent. of the Ludgate Shares in issue will be voted in favour of the Cancellation Resolution, a percentage which is in excess of the 75 per cent. minimum threshold required to approve the Cancellation Resolution.

In light of the above and in accordance with their intentions set out in the Offer Document, the Ludgate Directors believe that the Cancellation is in the best interests of Ludgate and the Ludgate Shareholders as a whole.

2.2 Effects of the Cancellation and Deregulation

The principal effects of the Cancellation are considered by the Ludgate Directors to be as follows:

(a) the liquidity and marketability of Ludgate Shares is likely to be significantly reduced as there will be no secondary market in the Ludgate Shares and no price for Ludgate Shares will be quoted by any market maker. As such, interests in Ludgate Shares are unlikely to be readily capable of sale and, even where a buyer is identified, it may be difficult to place a fair value on any such sale;

(b) under Jersey law Ludgate will still be subject to reporting and corporate governance obligations following the Cancellation, however, these will be less onerous for the Company to comply with than the level of compliance and disclosure required by the AIM Rules;

(c) the Company would no longer be required to comply with the ongoing obligations set out in the AIM Rules (or to have a nominated adviser), including the requirements to follow an investment policy in accordance with AIM Rule 8 and to disclose material events, such as interim or final results, substantial transactions or other developments to the market, and Ludgate Shareholders would no longer have the ability to vote on certain matters prescribed by the AIM Rules, thereby removing the layer of protection in respect of the interests of minority Ludgate Shareholders afforded by the AIM Rules; and

(d) the Company would cease to be a regulated collective investment fund in Jersey and as such will no longer be subject to the requirements set out in the CIF Law and the Listed Fund Guide published by the JSFC; instead becoming a private holding vehicle for the Ludgate Assets.

2.3 The Cancellation procedure

Under the AIM Rules, the Cancellation can only be effected by the Company after securing the consent of Ludgate Shareholders by special resolution in a general meeting, whereby at least 75 per cent. of votes cast by Ludgate Shareholders (either in person or by proxy) must be in favour of the resolution. A period of at least five Business Days following the Ludgate Shareholders' approval of the Cancellation Resolution is required before the Cancellation may take place.

Resolution 1 contained in the Notice of EGM at the end of this Circular seeks Ludgate Shareholder approval for the Cancellation. Assuming that Ludgate Shareholders approve the Cancellation Resolution, it is expected that the Cancellation will take place no earlier than 7:00 a.m. on 25 July 2017.

3 Possible on-market purchases of Ludgate Shares by Headway

Headway has informed Ludgate that (subject always to ongoing compliance with the City Code) it is willing to acquire additional Ludgate Shares at prices of up to 16.3 pence per Ludgate Share by way of on-market purchases prior to the Cancellation. The Ludgate Directors note that this should provide any Ludgate Shareholders who did not accept the Offer but who wish to sell their Ludgate Shares and exit their investment in the Company with a further opportunity to do so prior to the Cancellation.

Headway has informed Ludgate that any Ludgate Shareholder wishing to sell their Ludgate Shares should contact Marc Downes or Paul Brotherhood at Arden Partners, whom Headway has appointed to act on its behalf for this purpose, on [phone].

Neither Headway, Ludgate nor the Ludgate Directors nor any of their respective advisers will be responsible for advising or providing any recommendation to Ludgate Shareholders with regard to any sale of their Ludgate Shares. Ludgate Shareholders wishing to sell their Ludgate Shares therefore do so at their own risk and are advised to seek their own independent financial advice from a duly authorised independent financial adviser before taking any action.

4 Regulatory status of Ludgate following the Cancellation and Deregulation

The Company is currently a regulated collective investment fund in Jersey pursuant to the CIF Law and the Listed Fund Guide published by the JFSC. Once the Cancellation and Deregulation takes effect this regulated status will cease and the Company will become a holding vehicle for the Ludgate Assets. As such, the Company will no longer be subject to the requirements, set out in the CIF Law and the Listed Fund Guide published by the JFSC.

5 The Board following the Cancellation and Deregulation

It is the intention of the Ludgate Directors to step down from the board of Ludgate as soon as reasonably practicable after the Cancellation and Deregulation become effective.

6 The investment policy of the Company following the Cancellation

Following the Cancellation, the Company will no longer be required to state and follow an investment policy in accordance with AIM Rule 8 and there will be no requirement under Jersey law or regulations for the Company to have an investment policy. Accordingly, the Ludgate Directors intend that the investment policy of the Company shall cease to apply from the date on which the Cancellation becomes effective.

7 Proposed conversion to private company, change of name and adoption of the New Articles following the Cancellation

The Change of Status Resolutions are being proposed in order to:

(i) change the status of the Company from a public company to a private company;

(ii) change the name of the Company to 'Ludgate Environmental Limited'; and

(iii) adopt the New Articles.

The Change of Status Resolutions will require not less than two thirds of votes cast by Ludgate Shareholders on a poll (either in person or by proxy) to be in favour of each of the Change of Status Resolutions.

These proposals are designed better to reflect the position of the Company as a deregulated holding vehicle after the Cancellation has become effective.

Given the small number of Ludgate Shareholders and the fact that the Ludgate Shares will no longer be admitted to trading on AIM or any other public market following the Cancellation, the Ludgate Directors consider that converting the Company to a private company is more appropriate than retaining the Company's status as a public company.

The proposed change of name is to reflect the fact that the Company will no longer be a fund after the Cancellation.

The proposed New Articles are short form private company articles which are considered by the Ludgate Directors (in consultation with their professional advisers) better to reflect the nature and intended operation of the Company going forward than the Articles. A copy of the New Articles are available on the Company's website www.ludgateenvironmental.com and will be available for inspection during the EGM.

8 Corporate governance following the Cancellation and Deregulation

Historically, the Ludgate Directors have considered it to be best practice for Ludgate (as a public company with shares admitted to trading on AIM) to voluntarily adopt the AIC Code of Corporate Governance.

The Ludgate Directors believe that, following the Cancellation and Deregulation, it will no longer be relevant or appropriate for the Company to comply with this code and the Company will instead have regard to its obligations under Jersey law as a private company.

9 Ludgate Shareholder communications and compliance with anti-money laundering legislation following the Cancellation and Deregulation

Following the Cancellation and Deregulation the Company will conduct an overarching review of its administration to ensure that it is appropriate for its status as a private company. The outcome of this review and any action which results from it will be communicated to Ludgate Shareholders in due course.

Following the Cancellation the Company will continue to be subject to applicable anti-money laundering (AML) and know your client (KYC) legislation, regulations and guidance in Jersey. In order to ensure compliance with these requirements, Ludgate Investments will, on behalf of the Company, write to Ludgate Shareholders to check that any verification of identity information held by the Company remains up to date or to request verification of identity information where this information is either not held or is out of date. Failure to provide information which is required to ensure compliance with the applicable legislation, regulations and guidance in Jersey may result in Ludgate being unable to make distributions to Ludgate Shareholders or to otherwise allow any dealings by Ludgate Shareholders in Ludgate Shares until such time as these requirements are complied with.

10 Trading in Ludgate Shares following the Cancellation

In the event that the Cancellation proceeds in accordance with the expected timetable, there will be no ongoing market facility for dealing in Ludgate Shares and no price will be publicly quoted for Ludgate Shares as from the close of business on 24 July 2017. As a result, interests in Ludgate Shares are unlikely to be readily capable of sale and, even where a buyer is identified, it may be difficult to place a fair value on any such sale.

Following the Cancellation, it is intended that the Company will cancel the facility for the Ludgate Shares to be settled electronically through CREST and that any Ludgate Shares then held in uncertificated form will be rematerialised. The Company intends to make arrangements to send share certificates to those Ludgate Shareholders (at their risk) which currently hold their Ludgate Shares in uncertificated form.

Following the Cancellation, transfers of Ludgate Shares may be effected in accordance with those provisions of the Articles or (in the event the relevant Change of Status Resolution is passed) the New Articles concerning off-market transfers of shares as summarised below.

All transfers of Ludgate Shares under the New Articles shall be effected using an instrument of transfer. The instrument of transfer of any Ludgate Share shall be in writing in any usual common form or any form approved by the Board. The instrument of transfer of any Ludgate Share shall be signed by or on behalf of the transferor and in the case of an unpaid or partly paid Ludgate Share by the transferee. The transferor shall be deemed to remain the holder of the Ludgate Share until the name of the transferee is entered in the register of members in respect thereof. The Board may in its absolute discretion and without assigning any reason therefor refuse to register the transfer of a Ludgate Share including without limitation a transfer of Ludgate Shares to a person of whom they do not approve and a transfer of a Ludgate Share on which the Company has a lien.

The Board may also refuse to register the transfer of a Ludgate Share unless the instrument of transfer:

(i) is lodged at the registered office or at such other place as the Board may appoint accompanied by the certificate for the Ludgate Shares to which it relates and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer;

(ii) is in respect of only one class of shares; and

(iii) is in favour of not more than four transferees.

If the Board refuses to register a transfer of a Ludgate Share it shall within two months after the date on which the instrument of transfer was lodged with the Company send to the proposed transferor and transferee notice of the refusal.

All instruments of transfer relating to transfers of Ludgate Shares which are registered shall be retained by the Company but any instrument of transfer relating to transfers of Ludgate Shares which the Board declines to register shall (except in any case of fraud) be returned to the person depositing the same.

The registration of transfers of Ludgate Shares or of transfers of any class of shares may be suspended at such times and for such periods as the Board may determine.

Unless otherwise decided by the Board in its sole discretion no fee shall be charged in respect of the registration of any instrument of transfer or other document relating to or affecting the title to any Ludgate Share.

11 The application of the City Code following the Cancellation

The City Code is issued and administered by the Panel. The City Code currently applies to the Company and will continue to apply to the Company notwithstanding the Cancellation. The City Code will only cease to apply to the Company upon the expiry of the 10-year period from the date of the Cancellation or, if earlier, the date on which the Company is dissolved.

12 Taxation

Shareholders who are in any doubt about their tax position should consult an appropriate independent professional adviser. Following the Cancellation, the Ludgate Shares will no longer be admitted to trading on AIM or any other public market and Ludgate will no longer be a regulated collective investment fund in Jersey.

13 Extraordinary General Meeting

Set out at the end of the Circular is a notice convening the EGM to be held at 10.00 a.m. on 14 July 2017 at Lime Grove House, Green Street, St Helier, Jersey, JE1 2ST. At the EGM, the Cancellation Resolution and the Change of Status Resolutions will be proposed.

14 Voting intentions

Headway has irrevocably undertaken to Ludgate that it will vote the Headway Shareholding (and any other Ludgate Shares it acquires and becomes the registered holder of prior to the date of the Extraordinary General Meeting) in favour of all of the Resolutions. As at the date of this Circular, the Headway Shareholding consisted of 30,732,659 Ludgate Shares represented 57.6 per cent of the Ludgate Shares in issue.

Ludgate Investments and Ocean Capital Holdings II B.V. (the investment vehicle of Gijs and Jeroen Voskamp who are both directors of Ludgate Investments) have irrevocably undertaken to Headway to vote in favour of all of the Resolutions in respect of 6,503,757 Ludgate Shares in aggregate, representing approximately 12.2 per cent. of the Ludgate Shares in issue.

In addition, as set out in the Offer Document, the Ludgate Directors note that Headway has received irrevocable undertakings from Flintshire County Council and South Yorkshire Pensions Authority to vote in favour of the Cancellation Resolution in respect of 9,460,382 Ludgate Shares in aggregate, representing approximately 17.7 per cent. of the Ludgate Shares in issue.

In aggregate, therefore, Ludgate Shareholders controlling at least 46,696,798 Ludgate Shares in aggregate, representing approximately 87.5 per cent of the Ludgate Shares in issue, have undertaken to vote in favour of the Cancellation Resolution and Ludgate Shareholders controlling at least 37,236,416 Ludgate Shares in aggregate, representing approximately 69.8 per cent of the Ludgate Shares in issue, have undertaken to vote in favour of the Change of Status Resolutions.

Save for expressions defined in this announcement, words and expressions defined in the Circular shall have the same meaning in this announcement.

Enquiries

Ludgate Environmental Fund Limited Tel: [phone]

John Shakeshaft (Chairman)

Panmure Gordon (Nominated Adviser) Tel: [phone]

Paul Fincham / Jonathan Becher