| Delayed Escrowed 15% Penalty Payment | 07:00 15 Feb 2010 |
15 February 2010
STIRLING MORTIMER GLOBAL PROPERTY FUND PCC LIMITED
Stirling Mortimer No 4 Fund Cape Verde
(Incorporated in Guernsey with registered number 46547)
Delayed Escrowed 15% Penalty Payment
The directors announce that the penalty payment representing 15% of the sums invested in property contracts and held in escrow and due to the No 4 Cape Verde Cell (“the Fund”) in respect of unsold properties has not been paid on the due date of 31st January 2010.
Shortly after the close of business of Friday 29th January 2010 the board of directors (“the Board”) were notified by a partner of ELS International Lawyers LLP (formerly European Legal Solutions LLP) (“ELS”) that a payment of €9,774,505 (“the Escrow Cash Amount”) could not be paid to the Fund as a result of a misappropriation of monies by a former partner of ELS.
These monies were being held in escrow by ELS pursuant to individual investment contracts for each property. The Board had received regular confirmations from ELS up to and including 3rd December 2009 that this cash amount was held in escrow by ELS.
The Escrow Cash Amount is held by ELS pursuant to the terms of a series of identical property investment contracts (“the Contracts”). Under the terms of the Contracts, if individual properties were sold within 24 months with a return that exceeded 15% of the initial purchase price, the Escrow Cash Amount for each property sold would be released to the Property Manager, Stately Investments International Limited. In the event that properties were not sold by 31st January 2010 then the Escrow Cash Amount would be paid to the Fund by ELS.
ELS have acknowledged that the Escrow Cash Amount is due to the Fund in accordance with the escrow arrangements more fully described in the Offer for Subscription relating to the Fund. A further sum of €26,761 relating to 2 potential sales pending may also be payable if these sales do not proceed.
On 1st February 2010 the Board engaged legal advisers in Guernsey and the UK and advised ELS of the Fund’s claim in respect of the Escrow Cash Amount. The Board, and its advisers, are also considering further actions in respect of the Escrow Cash Amount. In this regard a worldwide freezing order has been obtained by ELS in the UK High Court of Justice against the former ELS partner’s assets. ELS have confirmed that they have notified their insurers and the Solicitors Regulatory Authority.
On the information currently available the Board believes that the Escrow Cash Amount will be reclaimed.
The Escrow Cash Amount represents up to 14.86% of the net assets of the Fund (based on 30th June 2009 Audited Accounts) and the Board views this as a material amount. The Board has considered a market suspension of the shares listed on the Channel Islands Stock Exchange LBG. The Board are of the view that as there has not been a market in the shares and no shares have traded to date that it would not be advantageous to the Fund or to the Shareholders to seek a suspension of the Fund shares at this time. The Board will however keep this decision under regular review.
Should material facts emerge, as the action to recover the Escrow Cash Amount continues, then further announcements will be made as, and when, the Board becomes aware of them.
For further information, please contact:
Phil Bowman +44 (0)1242 251087
Director
Stirling Mortimer Global Property Fund PCC Limited
Tim Clink +44 (0)1242 251087
Director
Stirling Mortimer Global Property Fund PCC Limited
Mark Huntley / Kevin Smith +44 (0)1481 716000
Heritage International Fund Managers Limited
Administrator