RNS Announcements

10 March 2010

Dexion Equity Alternative Limited

2010 Continuation Resolution

Introduction

The Company is today posting a Circular to Shareholders in connection with the 2010 Continuation Resolution.  

The Company's discount management provisions were triggered for the first time in January 2009 and, at the relevant class meeting held on 26 May 2009, the 2009 Continuation Resolution was passed. Approximately 72.7 per cent. of the issued Shares were voted on the 2009 Continuation Resolution of which 79.5 per cent. were voted in favour of continuation.

Notwithstanding (i) the improvement in the NAV performance of the Shares (the NAV of the Shares rose by 10.96 per cent. over the year ended 31 December 2009) and (ii) the continued recovery of the Share price (which rose by 17.09 per cent. over the same period), over the 12 month period ended 18 January 2010, the Shares traded, on average, at a discount to NAV of 17.02 per cent. Accordingly, the Board is required under the Articles to propose the 2010 Continuation Resolution within 4 months of the discount floor provision being triggered.

The Board, having consulted with the Investment Manager, believes that it is in the best interests of Shareholders for such 2010 Continuation Resolution to be considered as soon as reasonably practicable.

Notice convening the Meeting of Shareholders to be held at 12.00 p.m. on 1 April 2010 is set out in the Circular. At the Meeting an ordinary class resolution will be proposed that the Shares continue in issue.

Share price rating and Share buybacks

As at 8 March 2010, the Shares were trading at a discount to their prevailing estimated NAV of 12.0 per cent., narrower than the peer group average discount for the London listed fund of hedge funds sector.

Following the passing of the 2009 Continuation Resolution, the Board put forward a voluntary redemption offer to redeem 20 per cent. of the Company's then issued share capital at the prevailing NAV (less the costs of implementing the redemption offer). This redemption offer was fully taken up and was completed in August 2009 with full settlement of redemption offer proceeds made in September 2009.

In addition, over the period from 26 May 2009 (the date of the 2009 Continuation Resolution) to 8 March 2010, the Company repurchased 497,000 Shares, representing 0.62 per cent. of the Company's outstanding issued Shares as at the date of the Company's last Annual General Meeting in June 2009. As at 8 March 2010, 567,000 Shares were held in treasury with the balance of Shares repurchased having been cancelled.

The Board intends to continue to actively use the Company's share repurchase authority in attempting to manage the share price discount in the future, utilising its credit facility or other suitable cash resources (which may be restricted by Settlement Obstructions).

Portfolio liquidity

On the basis of the Portfolio as at 31 January 2010 and the assumptions set out in the table immediately below, the Investment Adviser's current expectation is that the entire Portfolio could be realised in accordance with the following indicative timetable (which should not be relied upon for any purpose), assuming no requirement to maintain a balanced investment portfolio during the realisation period:

Source: Investment Adviser

1 The above table is based on a pro forma NAV of the Company. The pro forma NAV includes the estimated valuations of the Portfolio as at 31 January 2010 and assumes such valuations are unchanged from that date. Such valuations may be estimated and/or unaudited and may be inaccurate and/or subject to conflicts of interest. Investments may not realise the assumed cash sum or percentage of such valuations at the times assumed or at all. The pro forma NAV takes into account the actual cash balances held by the Company as at 5 February 2010.

2 The above table assumes that Portfolio realisations are made with effect from 31 July 2010 and further assumes no Settlement Obstructions other than those of which the Investment Adviser had actual knowledge as at 8 March 2010. There may be other matters or factors which affect the availability, amount or timing of receipt of the proceeds of realisation of some or all of the Company's investments. The expected realisation proceeds do not include costs of realisation, including redemption penalties. However, the Investment Adviser does not currently expect to incur redemption penalties on a realisation of investments in accordance with the indicative timetable above. The expected realisation proceeds take no account of ongoing fees and expenses or the impact of currency hedging on the Company's cash resources.

3 Of the remaining 17.2 per cent. of the Portfolio, 8.0 per cent. is invested in 11 underlying funds that have side pocketed such investments, 1.9 per cent. is invested in 3 underlying funds that are in liquidation and 5.8 per cent. is invested in one underlying fund which is subject to certain redemption restrictions. It is currently uncertain when those investments can be realised and accordingly they have not been reflected in the realisation schedule above. The information in this table has not been subject to audit.

Realisations of investments in a Redemption Portfolio created pursuant to acceptances of any Redemption Proposal could be expected to take place in accordance with the indicative timetable above with a pro rata amount of the cash sums referred to being realised (on a winding up basis) but subject to the same assumptions and caveats as mentioned above.

However it is emphasised that there is no guarantee that the Portfolio will realise the amounts referred to above (or that a Redemption Portfolio would realise a pro rata amount thereof) or that the Portfolio (or a Redemption Portfolio) can be realised in accordance with the above indicative timetable, or at all. Furthermore the Portfolio is dynamic and, until further notice (and, in particular, until such time as a Redemption Portfolio is created), the Investment Adviser will continue to manage the Portfolio with a view to achieving the Company's investment objective which, amongst other things, may result in the Company being invested in less liquid investments from time to time. It is also emphasised that the values of any underlying investments as at the time of realisation, and hence the amounts returned to Shareholders on a redemption of Shares (or on a winding up of the Company), may differ significantly from the values used in the Circular.

Expected nature of any Redemption Proposal

Until the outcome of the 2010 Continuation Resolution is known, and given changes that may occur between the date of this announcement and the making of any Redemption Proposal in, for instance, the liquidity profile of the Portfolio, Settlement Obstructions or general market conditions, the Board is currently unable to say with certainty what the mechanics and timing of any Redemption Proposal will be.

However, the Board's current expectation as to the nature of any Redemption Proposal is as follows: