DR Funds Secondary Market Transaction

Transcription

1 DR Funds Secondary Market Transaction May 2012 Alternative The funds in scope of this transaction are as follows: DR AllWeather Fund, DR2 AllWeather Fund, DR AllWeather Strategies II Fund, DR2 AllWeather Strategies II Fund, DR DebtMaster Fund and DR Meteor Opportunities Fund, all class funds of DR Funds Limited, a Bermuda based mutual fund company and collectively known as the DR Funds. A Background on the Formal Sale Process As per the update provided in April 2012, DR Funds Limited (the Company ) appointed UBS Securities LLC ( UBS ) to act as placement agent to assess the feasibility of a potential secondary market sale process in order to offer liquidity options to existing shareholders of DR Funds (the DR Shareholders ). Shareholders of several distinct DR Funds, each with varying allocations to illiquid underlying hedge funds, will be given the opportunity to participate in this transaction. Although DR Funds hold allocations to numerous underlying hedge funds, DR Funds holdings are primarily concentrated within three hedge funds Cerberus International Ltd. (including Cerberus International SPV Ltd.), Styx International Ltd. and Cerberus Institutional Partners L.P. Series 4, which are all managed by Cerberus Capital Management, L.P. Overview of Fund Investments as at the 31/03/2012 % of DR Fund 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 14.7% 18.5% 5.4% 14.6% 31.8% 33.6% 34.4% 13.2% 13.9% 17.3% 4.2% 1.4% 11.2% 43.7% 70.8% 67.6% 58.4% 54.4% 64.2% 20.3% 6.6% DR AW Dr AWII DR2 AW DR2 AWII DR Meteor Opps DR DebtMaster DR Fund Cerberus International Ltd & Cerberus International SPV Ltd Sty x International, Ltd. Cerberus Institutional Partners, L.P. Series Four Other Page 1

2 Prospective bidders were invited to submit a bid(s) on each of the DR Funds post completion of their due diligence. Multiple bids were received and submitted to the Board of Directors of the Company ( Directors ) for their consideration. The winning bids were retained and upon completion of the process there will be a single bid price for each of the DR Funds. B Bid Results The following table gives the potential purchase price for each DR Funds based on the best bid(s) received. Please note that DR AllWeather Fund and DR AllWeather Strategies II Fund have received several bids and you will find their price range in the table below. Purchase prices for each DR Fund in NAV and in % of March 2012 NAV Bid Prices Bid Price(s) As a % of DR Fund NAV Per Share NAV 1 DR AllWeather Fund $ $ $ % % 2 DR AllWeather Strategies II Fund $ $ $ % % 3 DR2 AllWeather Fund $ $ % 4 DR2 AllWeather Strategies II Fund $ $ % 5 DR Meteor Opportunities Fund $ $ % 6 DR DebtMaster Fund $ $ % The final price will depend on the number of shares being sold C Acceptance by Shareholders DR Shareholders on the shareholder register of the DR Funds will receive a letter from the Directors detailing the process on how to participate in the secondary market transaction together with a Form of Acceptance. Any decision by DR Shareholders on whether or not to participate in any secondary transaction is a matter for each DR Shareholder to determine based on their own assessment of the merits of the formal offer. DR Shareholders should consult their professional advisors before accepting any offer as part of this transaction. Those DR Shareholders who do not wish to sell their shares do not need to take any action. DR Shareholders who wish to participate in the transaction will be given the option to sell either all or a portion of their DR Funds. Investors who hold their positions through a financial intermediary (e.g. Merrill Lynch) should contact their financial adviser for instruction on how to participate in the transaction. D Completion of Transaction In the event of a successful transaction, the winning bidder(s) will be required to make a full cash payment for the amount of shares they have bought to HSBC Securities Services (Luxembourg) S.A. for onward payment to the participating DR Shareholders. Following payment, those DR Shareholders who elected to sell their shares in full (where a full purchase could be facilitated) will no longer remain DR Shareholders in the DR Funds. Pioneer Investment Management Limited will continue to manage the DR Funds for both new and existing investors in its capacity as Investment Manager. There are currently no management or performance fees associated with DR Funds but DR Funds Limited will continue to bear its own operational costs and expenses. This arrangement will remain in effect following the completion of the transaction. Page 2

3 Questions and Answers Why is this transaction being facilitated? A number of shareholders are seeking a liquidity option for their DR Fund shares. DR Funds Limited is seeking to facilitate a sale of shares in the DR Funds ( DR Shares ) to provide liquidity opportunity to their investors. However, any liquidity will be provided at a discount. What is Pioneers view of the process? Neither Pioneer Investments nor DR Funds Limited is issuing a recommendation to either accept or decline the offer. This decision rests solely with each shareholder. What do DR Shareholders do if they do not wish to participate? Shareholders who wish not to participate need not take any action. These shareholders will continue holding their DR Fund shares and will receive cash payouts as has been the case since the creation of the DR Funds. If an investor does not want to participate in this transaction, will they get another similar opportunity in the future? Any future secondary transactions would need to be privately arranged. Pioneer Investments will not be involved in initiating any such future transactions. Will shareholders who do not wish to take part in this sale be able to transfer their current DR shares? For DR Shareholders who do not wish to take part in this sale, please be aware that it will not be possible to transfer your DR Fund shares from the 15 th of May 2012 until the process is completed. Will DR Shareholders be able to sell a partial holding in the DR Fund shares? Yes, the DR Shareholders can elect to sell only a portion of their DR Shares, should they choose to. How will the final bid price be calculated? A number of DR Funds have received multiple bids at varying prices and volumes. The final price paid to DR Shareholders will be a blend of these bids. The intention is to maximise the price by allocating to higher bids in priority. In a case where the highest bid received can cover 100% of the shares in a single DR Fund then that price will be offered. In all case the prices in the table below are net of all costs associated with the transaction. Purchase prices for each DR Fund in NAV and in % of March 2012 NAV Bid Prices Bid Price(s) As a % of DR Fund NAV Per Share NAV 1 DR AllWeather Fund $ $ $ % % 2 DR AllWeather Strategies II Fund $ $ $ % % 3 DR2 AllWeather Fund $ $ % 4 DR2 AllWeather Strategies II Fund $ $ % 5 DR Meteor Opportunities Fund $ $ % 6 DR DebtMaster Fund $ $ % The final price will depend on the number of shares being sold Page 3

4 What impact will participation in the transaction have on redemptions paid to date? The tables below are illustrative examples of cumulative totals based on a full redemption from the relevant master fund. These totals include the cash received at the original redemption point, all cash payments received from DR Funds and assume participation in the transaction If a shareholder had redeemed on the 1 st of January 2009 and holds only DR shares: % of Redeemed on 1 Jan 2009 (holds DR only) redemption value received DR AllWeather Fund 99.20% DR AllWeather Strategies II Fund 99.40% DR Meteor Opportunities Fund 98.90% DR DebtMaster Fund 94.30% If a shareholder had redeemed on the 1 st of April 2009 and holds DR and DR2 shares: % of Redeemed on 1 April 2009 (holds DR & DR2) redemption value received DR & DR2 AllWeather Fund 99.50% DR & DR2 AllWeather Strategies II Fund % What are the costs of the transaction? The UBS fee (1.5%), along with other legal and transactional costs will be built into the bid price for each DR Fund. How will DR Funds be managed after the sale? The DR Funds will continue to be managed by Pioneer Investment Management Limited in its capacity as investment manager for the DR Funds. When should investors receive their cash? We anticipate a settlement as soon as possible after the 29 th of June. Page 4

5 Important Information Unless otherwise stated all information contained in this document is from Pioneer Alternative Investments and is as of 31 March This document seeks to provide an overview of a potential sales opportunity for information purposes only. In the case of discrepancies between this document and any formal offer agreement, the formal offer agreement shall prevail. This document was prepared by the staff and management of Pioneer Global Investments Limited. In preparing this document, information has been received and collated from various companies comprising the Pioneer Global Asset Management S.p.A. group of companies. Whilst every effort has been made to ensure that all factual data provided is accurate based on the most current information available at the time of preparation, Pioneer Global Investments Limited cannot accept liability for any errors or omissions contained within and expressly disclaim any liability whether in contract or negligence to the addressee of this document or any third party who may review it or use any material from it in respect of any loss or damage occasioned whether direct or consequential. DR AllWeather Fund, DR2 AllWeather Fund, DR AllWeather Strategies II Fund, DR2 AllWeather Strategies II Fund, DR Meteor Opportunities Fund and DR DebtMaster Fund (the Funds ) are class funds of DR Funds Limited, a Bermuda based mutual fund company. Additional reporting comprising the ten largest holdings in the Funds portfolios is available on request. In addition, further portfolio reporting may be available subject to the satisfaction of certain circumstances This document may not be circulated to third parties or distributed to the public. The document is not intended for and no reliance can be placed on this document by retail clients to whom this document should not be provided. This material is provided for information purposes only and should not be used for solicitation purposes. Unless otherwise stated, all views expressed are those of Pioneer Alternative Investments. These views are subject to change at any time based on market and other conditions and there can be no assurances that countries, markets or sectors will perform as expected. Past performance does not guarantee and is not indicative of future results. Investments involve certain risks, including political and currency risks. Investment return and principal value may go down as well as up and could result in the loss of all capital invested. Investments employing the strategies described in this document are by nature highly speculative and may be volatile, involve leverage, be affected by lack of liquidity or lack a readily assessable market value. This material is not a prospectus and does not constitute an offer to buy or a solicitation to sell any shares of any fund or any services. This information is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities or services in the United States or in any of its territories or possessions subject to its jurisdiction to or for the benefit of any United States person (being residents and citizens of the United States or partnerships or corporations organized under United States laws). The Funds have not been registered in the United States under the Investment Company Act of 1940 and shares of the Funds are not registered in the United States under the Securities Act of The content of this document is approved by Pioneer Global Investments Limited ( PGIL ). In the UK, it is directed at professional clients and not at retail clients and it is approved for distribution by Pioneer Global Investments Limited (London Branch), Portland House, 8 Floor, Bressenden Place, London SW1E 5BH, authorised by the Central Bank of Ireland in Ireland and regulated by the Financial Services Authority for the conduct of UK business. The Funds are unregulated collective investment schemes under the UK Financial Services and Markets Act 2000 and therefore do not carry the protection provided by the UK regulatory system. Pioneer Funds Distributor, Inc., 60 State Street, Boston, MA ( PFD ), a U.S.-registered broker-dealer, provides marketing services in connection with the distribution of Pioneer Alternative Investments products. PFD markets these products to financial intermediaries, both within and outside of the U.S. (in jurisdictions where permitted to do so) for sale to clients who are not United States persons. Only For Use by Merrill Lynch and, in Merrill Lynch s sole discretion, for use with existing investors in the Fund. It may not be distributed to the public or other third parties. PGIL takes no responsibility for determining the suitability or appropriateness of this document for clients of Merrill Lynch. Pioneer Alternative Investments and Pioneer Investments are trading names of the Pioneer Global Asset Management S.p.A. group of companies. Date of First Use: 21 May 2012 Page 5