OREANDA-NEWS. August 26, 2014. Investor information in respect to Domestic Merger of investment funds “Citadele Caspian Sea Equity Fund”, “Citadele Ukrainian Equity Fund” and “Citadele Eastern European Small and Mid Cap Fund” proposed by „Citadele Asset Management” IPAS

Considering the way things have been developing in the countries of the Caspian Sea region and in Ukraine, the „Citadele Asset Management” IPAS (hereinafter - the Managment Company) has made an assessment of the future development perspectives of open investment funds: Citadele Caspian Sea Equity Fund and Citadele Ukrainian Equity Fund, incl. assessment of criteria such as investment policy according to the fund prospectus, economic and political development of the investment region in recent years, quantity, variety and liquidity of financial instruments listed on target markets, extent of the fund, prospective customer profile, investor structure etc.

As a result, managers of the funds have come forward with a proposal to expand this fund investment region in order to improve results of operation of the funds. This expansion would be beneficial to investment liquidity and, concurrently, to the expected potential of value growth as well.

The Management Company hereby informs that, as a result of the analysis referred to above, the Management Company has resolved to propose a domestic merger of investment fund “Citadele Caspian Sea Equity Fund” (ISIN LV0000400273) and investment fund “Citadele Ukrainian Equity Fund” (ISIN LV0000400422) (hereinafter – the Merging UCITS), with the newly-established “Citadele Eastern European Small and Mid Cap Fund”, ISIN LV0000400851, (hereinafter – the Receiving UCITS) all established by the Management Company.

The Finance and Capital Market Commission of the Republic of Latvia has notified its decision to authorise the merger of the Merging UCITS and the Receiving UCITS.

Please be informed, that the merger of the UCITS shall have the following consequences:

-      all assets and liabilities of the Merging UCITS will be transferred to the Receiving UCITS;
-      the unit-holders of the Merging UCITS will become unit-holders of the Receiving UCITS, taking into consideration the exchange ratio applicable to the exchange of units of the Merging UCITS and units of the Receiving UCITS at the time of the merger;
-      the Merging UCITS will cease to exist.

I.  Effect of the ucits merger on investors, and investor rights

Whereas the two UCITS to be merged operate pursuant to the Investment Management Companies Act (Ieguldijumu parvaldes sabiedribu likums) and other legal enactments of the Republic of Latvia, and further considering that the policy, investment strategy and current investment structure of the Receiving UCITS corresponds to the investment policy and strategy established by the Merging UCITS, the merger will not have essential material effect to unit-holders of the Merging UCITS and the Receiving UCITS.

All three Receiving and the Merging UCITS have similar costs, periodic reporting, and expected outcome. Similarly, no rebalancing of the investment portfolio of the Merging UCITS and the Receiving UCITS will be undertaken before the merger of the UCITS.

Whereas all three UCITS to be merged are established and operate pursuant to legislative enactments of the Republic of Latvia, there exist no circumstances at the time of the merger that would cause any changes to the taxes or duties applicable to the unit-holders until now.

In respect to the proposed merger the unit-holders of the Merging and the Receiving UCITS will be entitled:

-      to request the Management Company to repurchase their units of the Merging UCITS free of charge till September 15, 2014;

-      the units will be repurchased in accordance with the procedure established by the respective fund prospectus;

-      to obtain additional information from the Management Company about the proposed merger of the UCITS;

-      to obtain a copy of the opinion of AS “Citadele banka”, custodian of the Receiving UCITS, at the bank’s address (Republikas laukums 2A, Riga, LV-1010, LATVIA) concerning:

a.     the criteria adopted for the valuation of the assets and the liabilities of the Merging and the Receiving UCITS on the date for calculating the exchange ratio of units of the Merging and the Receiving UCITS;

b.     cash payment amount per unit of the Merging UCITS;

c.       the calculation method of the exchange ratio of units.

II.   Material aspects of the merger of the ucits

According to legislative enactments of the Republic of Latvia, the decision by the Finance and Capital Market Commission to authorise the domestic merger of the UCITS shall become effective on the fortieth calendar day from the date of notification of the decision to the Management Company. Thus the merger of the Merging UCITS and the Receiving UCITS is going to take place on September 22, 2014, and the Merging UCITS will cease to exist after this date.

The following activities will be carried out in order to ensure the merger of the UCITS:

b)    an assessment shall be made of the assets of the Merging and the Receiving UCITS;

b)     identification of the unit-holders of the Merging UCITS will be carried out;

c)     the Management Company shall give instructions to its custodian to transfer the assets to the Receiving UCITS to the Receiving UCITS;

d)     the Management Company shall perform a calculation of the exchange ratio of units of the UCITS and send the figures to the fund custodian for approval and to the Latvian Central Depositary (LCD) for co-ordination;

e)     the Management Company shall draw up a list of unit-holders of units of the Receiving UCITS stating in it the number of units of the Merging UCITS owned by unit-holders and the number of units of the Receiving UCITS due to unit-holders as a result of the merger;

f)     the Management Company of the Merging UCITS shall give instructions to its custodian to cancel all units of the Merging UCITS with the LCD;

g)     the Management Company of the Receiving UCITS shall give instructions to its custodian to issue a new issue of units of the Receiving UCITS with the LCD according to an approved list pursuant to subparagraph (e) hereof.

In order to ensure a successful merger of the UCITS, repurchase of units of the Merging UCITS will be suspended on September 16, 2014, as well as the units of the Merging UCITS shall be blocked within LCD and therefore no transactions with the units will not be possible.

Unit-holders of the Receiving UCITS are free to use their units starting from September 26, 2014.

Key investor information for unit-holders of the Receiving UCITS is available on the website of IPAS „Citadele Asset Management”: www.citadeleam.lv, or at the head office of the IPAS „Citadele Asset Management” at Republikas laukums 2A, Riga, LATVIA during its business hours.