Thalassa : Statement regarding LSR's Response Circular

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Thalassa Holdings Limited ­ THAL Statement regarding LSR's Response Circular Released 12:02 19­Mar­2019

RNS Number : 3265T

Thalassa Holdings Limited 19 March 2019

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE

OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO

DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT

LAWS OF SUCH JURISDICTION. IN PARTICULAR, THIS

ANNOUNCEMENT SHOULD NOT BE RELEASED, PUBLISHED,

DISTRIBUTED, FORWARDED OR TRANSMITTED, IN WHOLE OR IN

PART, IN, INTO OR FROM ANY RESTRICTED JURISDICTION,

INCLUDING THE UNITED STATES.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A

PROSPECTUS OR PROSPECTUS EQUIVALENT DOCUMENT AND

NO INVESTMENT DECISION IN RELATION TO THE OFFER OR THE

THALASSA CONSIDERATION SHARES SHOULD BE MADE

EXCEPT ON THE BASIS OF INFORMATION IN THE OFFER

DOCUMENT AND THE PROSPECTUS EQUIVALENT DOCUMENT.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR

THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE

REGULATION (EU) NO. 596/2014.

FOR IMMEDIATE RELEASE

19 March 2019

Thalassa Holdings Ltd

("Thalassa", "THAL" or the "Company")

Statement regarding LSR's Response Circular

The Thalassa Board considers the circular posted by LSR on 12 March 2019 (the "Response Circular") as a feeble attempt by the LSR Board to divert attention away from their own spectacular failure.

 THALASSA'S OFFER REPRESENTS A

DELIVERABLE AND CERTAIN EXIT AT ANATTRACTIVE VALUE OF 35.7 PENCE PER OFFER SHARE

X

THE THALASSA BOARD BELIEVES THAT THE LSR BOARD'S PROPOSAL DOES NOT PRESENT A CREDIBLE ALTERNATIVE BECAUSE:

·

it lacks any substance and is expressed without any certainty or binding commitment as to timing or value

·

it can only add further costs, to be borne by LSR Shareholders, further eroding LSR's NAV

• · it will further extend the five and a half years that LSR Shareholders have already waited for any return under LSR's investment policy

LSR SHAREHOLDERS ARE INVITED TO ACCEPT THALASSA'S DELIVERABLE OFFER AS SOON AS POSSIBLE. THE FIRST CLOSING DATE OF THE OFFER IS 1.00 p.m on 27 MARCH 2019.

Commenting on the Response Circular, Duncan Soukup, Chairman of Thalassa, stated:

"I strongly urge the LSR Shareholders to consider our Offer on its merits rather than listening to the weak and misleading statements of a failed board that has only ever destroyed shareholder value".

THALASSA IS OFFERING A CURRENT VALUE OF 35.7 PENCE PER LSR SHARE, WHICH REPRESENTS NOT ONLY AN ATTRACTIVE PREMIUM TO THE CURRENT LSR SHARE PRICE BUT ALSO A CERTAIN EXIT FROM A DISASTROUS INVESTMENT.

"Our Offer provides LSR Shareholders with an attractive premium to both the prevailing LSR share price as well as the company's most recent (but now out of date) indication of a realisable NAV per LSR Share"

The Thalassa Board strongly believes that the Response Circular lacks substance. In particular, it provides no indication of how much money could be returned to LSR Shareholders or, worryingly, how much more of LSR Shareholders' money will be wasted pursuing the LSR Board's uncertain strategy.

In contrast, the Thalassa Board believes that the Offer provides a fair and viable exit opportunity for LSR Shareholders, the benefits of which include:

• ­ a certain return at an attractive value per share with cash and clear upside potential through the Thalassa Consideration Shares; and

• ­ immediate value upon completion and for those LSR Shareholders who decide not to hold the Thalassa Consideration Shares, the opportunity to participate in a substantial and long­standing buy­back programme.

Thalassa has bought back a total of approximately 8 million of its own shares (at an average price of 70.54p per share) since the programme's inception on 11 September 2014. Thalassa continues to buy back its shares, which in the Thalassa Board's opinion, provides a significant liquidity opportunity for Thalassa shareholders, while at the same time enhancing shareholder value.

Thalassa is indeed seeking to acquire control of LSR but through an Offer which values LSR not only at a premium to LSR's cash but which also provides the opportunity to benefit from the successful, active management of the Thalassa Board.

LSR SHAREHOLDERS ARE INVITED TO ACCEPT THE CERTAIN AND DELIVERABLE THALASSA OFFER AS SOON AS POSSIBLE. THE FIRST CLOSING DATE OF THE OFFER IS 1.00 p.m. on 27 MARCH 2019

Capitalised terms in this announcement ("Announcement"), unless otherwise defined, have the same meanings as set out in the Offer Document. Copies of this Announcement, the Offer Document and the Prospectus are available free of charge (subject to certain restrictions relating to persons in Restricted Jurisdictions) on Thalassa's website athttps://thalassaholdingsltd.com/offer.htm up to and including the Effective Date or by calling the Receiving Agent, Link Asset Services on 0371 664 0321 or, if calling from outside the UK, [phone]. The contents of Thalassa's websites are not incorporated into, and do not form part of, this Announcement

A more detailed response is set out below.

Enquiries:

Thalassa Holdings Ltd

Thalassa's comments on the verbose, repetitive and vague Response Circular

The LSR Board's counter proposal ("LSR Proposal") is, seemingly, designed to create the belief that it offers greater certainty and value than that offered by the Thalassa Offer.

The Thalassa Offer will deliver cash and shares into the hands of LSR Shareholders, which combined have a current value of 35.7 pence per Offer Share, representing:

• · a premium of approximately 28.0 per cent to the Closing Price of an LSR Share on the last practicable date; and

• · a premium of 27.5 per cent to the Closing Price of an LSR Share on the last practicable date prior to the commencement of the Offer Period.

In contrast:

The Response Circular does not quantify any potential return to LSR Shareholders even if such a return was possible.

·

Previous references to a potential return under the MVL of between 33p and 34.5p per share have been undermined by LSR's own statements that acknowledge assets have continued to be sold at a loss.

CURRENT NAV PER SHARE UNKNOWN, AND NO EVIDENCE THAT THIS

IS NOT STILL DECLINING

·

The LSR Board has not provided any update as to the cash they might now return to LSR Shareholders, which strongly suggests in the opinion of the Thalassa Board that the LSR Board acknowledges that previously disclosed potential returns are no longer viable.

THE LSR BOARD NEEDS TO TELL LSR SHAREHOLDERS THE TRUTH

ABOUT THE COMPANY'S NET ASSET VALUE PER SHARE

·

LSR would be exposed to as­yet unidentified transaction costs associated with their proposed opaque liquidation strategy, including potentially significant legal costs with regard to a Court process, further eroding the cash available to return to LSR Shareholders.

LSR BOARD STILL SPENDING SHAREHOLDERS' MONEY AS THOUGH IT

GROWS ON TREES

The Thalassa Board notes the chances of the Court approving a petition to wind up LSR can only be assessed as "good". The Thalassa Board views the fact that LSR cannot use a more reassuring adjective as an acknowledgement that there is a continuing degree of risk that such a petition would not be granted.

LSR BOARD'S BEST IDEA…SPEND MORE MONEY IN PURSUIT OF AN

UNCERTAIN OUTCOME

Thalassa reserves the right as an LSR Shareholder to oppose such a petition and are seeking legal advice in that regard.

The Thalassa Board contends that LSR's track record is a case study in how NOT to run a business. LSR Shareholders should therefore be concerned that, should they not accept the Offer, they will remain exposed to the ongoing mismanagement of LSR:

·

Between 2007 and 2018, LSR has written down its asset by, in aggregate, £103.2 million.

ONE HUNDRED AND THREE MILLION POUNDS IN WRITE DOWNS

·

During the period 2007 to 2018, LSR generated in aggregate, Gross Rental Income of £145.1million but generated an aggregate NET AFTER TAX LOSS over the same period of £99.8million.

ALMOST ONE HUNDRED MILLION POUNDS IN AFTER TAX LOSSES

·

LSR's NAV per share has been destroyed from IPO in 2007 to 30 September 2018 the LSR NAV per share has collapsed by 79.6% from 164.9 pence per share to 33.6p pence per share.

SEVENTY NINE PERCENT DECLINE IN NAV PER SHARE SINCE IPO

The Thalassa Board believes that not only does the Offer provide LSR Shareholders with an attractive value per Offer Share with a certain cash component but also further investment returns potential by way of the Thalassa Consideration Shares.

In the Response Circular, the LSR Board has failed to note that:

·

The NAV per Thalassa Share has increased by approximately 305 per cent. since inception.

THALASSA'S PERFORMANCE SINCE INCEPTION ­ UP 305%

LSR'S PERFORMANCE SINCE INCEPTION ­ DOWN 79%

• · Over the six years of ownership of its investment in WGP, the Thalassa Board will have generated a compound annual growth rate of 65.18 per cent.

COMPOUND ANNUAL GROWTH ON WGP INVESTMENT 65.18%

In addition, the Thalassa Board believes that the Response Circular is asking LSR Shareholders to pursue a vague strategy that provides LSRShareholders with no comfort of deliverability, the value that may be returned to an LSR Shareholder or the time they may have to wait to receive such return.

The Thalassa Board contends that given past performance, previously undisclosed relationships between the LSR Board and Internos, and the absence of any binding undertaking to deliver superior value to an LSR Shareholders, a LSR Shareholder should ask itself the question whether it would be sensible to entrust the LSR Board to deliver their alternative.

LSR'S QUESTIONABLE CORPORATE GOVERNANCE

Whilst LSR Shareholder value has been destroyed as set out above, Internos Global Investors Limited ("Internos") has benefited greatly:

• · Internos were awarded what, in the Thalassa Board's opinion, was a highly lucrative Investment Management Contract, whose conditional appointment was announced on 8 July 2013, peculiarly just days prior to LSR Shareholders voting on 25 July 2013 to liquidate the Company's assets.

• · By 30 September 2018, since their appointment, Internos have been paid a total of approximately £5 million whilst during that time, LSR Shareholders have received no cash returns.

  INTERNOS PAID ALMOST FIVE MILLION POUNDS

  LSR SHAREHOLDERS HAVE GOT NOTHING

  INTERNOS £5,000,000 VERSUS LSR SHAREHOLDERS' £ ZERO

• · During the period of Internos' tenure, LSR has written down assets by £8.4 million and, notwithstanding these write downs, recorded losses on disposals of £4.9 million. Total losses and write downs during Internos' tenure amount to approximately £13.4m, whilst long suffering LSR Shareholders received £ Zero.

LSR SHAREHOLDERS' REWARD FOR INTERNOS' COMPENSATION…

THIRTEEN MILLION POUNDS OF WRITEDOWNS AND LOSSES

OR

FOR EVERY £1 PAID TO INTERNOS, LSR SHAREHOLDERS HAVE BEEN

REWARDED WITH LOSSES AND WRITE DOWNS OF £2.69

And if LSR's losses weren't more than enough to disappoint its shareholders, maybe LSR Shareholders should question why, given the magnitude of the Internos contract, they were never fully informed of the relationships between the members of the LSR Board and Internos:

·

The July 2013 circular to LSR Shareholders noted that Mr Jos Short, Chairman of Internos, and Mr Nicholas Vetch, a director of LSR, was limited to Mr Short's service to the boards of Big Yellow plc and Bluespace Holdings SARL. That document did not, however, note the following:

• o Mr Vetch was registered by the FCA as a "CF4 Partner" of Internos from March 5th, 2008 to May 21st 2009 and a "CF30 Customer Advisor" for Internos from March 5th 2008 to November 23rd 2010;

• o both Messrs Short and Vetch were FCA­registered "CF4 Partners" in Lowndes Partners LLP from March 4th, 2008 to January 14th, 2011 and from February 7th, 2007 to January 14th 2011 respectively; and

• o At the time of Big Yellow plc's (a company founded by Mr Vetch) AIM IPO in May 2000, Mr Short was the managing director of PRICOA Property Private Equity Limited, a subsidiary of the Prudential Insurance Company of America, which had an aggregate post­IPO shareholding in Big Yellow valued at £28.2m, including £13.6m of new money invested in the IPO fundraise.

The Thalassa Board would question why, when such a lucrative management contract was being awarded, would the LSR Board not