Company Announcements

17 March 2021

UIL LIMITED

(LEI Number: 213800CTZ7TEIE7YM468)

UIL FINANCE LIMITED

(LEI Number: 213800JPJWZ5P3QJX538)

UIL Limited ("UIL" or the "Company")
UIL Finance Limited ("UIL Finance")

Publication of Circular re Change of Investment Policy

The Boards of UIL and UIL Finance announce that a circular (the "Circular") will be posted later today to UIL Shareholders and ZDP Shareholders seeking approval to amend UIL's investment policy (the "Proposal").  This follows the statement by the Board of UIL in its recent half-yearly report for the six months ended 31 December 2020 of its intention to amend UIL's investment policy so as to permit investment of up to 50 per cent. of Gross Assets in any single Platform.

The proposed amendments are considered to constitute a material change to UIL's published investment policy and consequently UIL is seeking the approval of UIL Shareholders by way of an ordinary resolution. In addition, under the terms of the Subscription Agreement, UIL cannot materially change its investment policy without the sanction of a special resolution of each class of ZDP Shares.

A copy of the Circular will be submitted to the National Storage Mechanism and will shortly be available for inspection at: www.data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website: www.uil.limited.

Terms used and not defined in this announcement bear the meaning given to them in the Circular published today.

Chairman's Letter

"To the holders of Ordinary Shares, ZDP Shares and Depositary Interests

1.       INTRODUCTION

The Board announced in UIL's half yearly report last month its intention to amend UIL's investment policy so as to permit investment of up to 50 per cent. of Gross Assets in any single Platform.

The proposed amendments are considered to constitute a material change to UIL's published investment policy and consequently UIL is seeking the approval of UIL Shareholders by way of an ordinary resolution. In addition, under the terms of the Subscription Agreement, UIL cannot materially change its investment policy without the sanction of a special resolution of each class of ZDP Shares.

I am therefore writing to you today to set out further details of the Proposal, to provide you with details of the action you should take and explain why the Boards of UIL and UIL Finance are recommending that you vote in favour the Resolutions to be proposed at the SGM and the Class Meetings.

The Boards of UIL and UIL Finance consider that the Proposal is in the best interest of UIL Shareholders and ZDP Shareholders as a whole and accordingly recommend that UIL Shareholders and each class of ZDP Shareholders vote in favour of the Resolutions.

Capitalised terms used in this letter and the rest of this document are set out in Part III on pages 9 to 11 of this document.

2.       BACKGROUND TO THE PROPOSAL

UIL has historically established separate closed end investment companies, known as Platforms, to focus on investments in dedicated market sectors. Each Platform has a clearly defined strategy and dedicated research analysts and has been set up to provide a sharper focus, leading to better investment opportunities and decision making by analysts and managers within their defined sector.

In accordance with UIL's existing investment policy, no single investment (including in any Platform) may exceed 30 per cent. of Gross Assets at the time such investment is made (save upon the exercise of any warrants, options or similar convertible instruments acquired prior to the relevant investment reaching the 30 per cent. limit).

As at the date of this document, approximately 79.1 per cent. by value of UIL's portfolio is held through four Platforms, being Somers Limited (Somers), Utilico Emerging Markets Trust plc (UEM), Zeta Resources Limited (Zeta) and Allectus Limited (Allectus), each of which has a specific sector focus (Somers - financial services; UEM - emerging market utilities and transportation infrastructure; Zeta - natural resources; and Allectus - technology).

The Platforms have become an increasingly important element of the investment portfolio, increasing from 46.5 per cent. by value of UIL's portfolio as at 30 June 2012 to 79.1 per cent. as at the date of this document.

Furthermore, as at the date of this document, UIL's investment in Somers represents 37.3 per cent. of UIL's portfolio and comprises over ten investments, with its largest holding, Resimac, in which Somers has a 62.4 per cent. interest, accounting for 21.5 per cent. of UIL's portfolio on a look-through basis.

As I noted in my Chairman's statement in UIL's half-yearly report for the six months ended 31 December 2020, Somers is delivering an outstanding performance for UIL. UIL's existing investment policy has no fixed sector limits so keeping Somers' structure as a Platform, focussed on investments in the financial services sector, is considered a positive.

The UIL Board considers that the existing 30 per cent. limit on any single investment has become outdated in the context of UIL's use of Platforms whereby each of the existing Platforms invests in a number of investee companies, thereby achieving a spread of investment risk for UIL on a look-through basis. UIL is therefore seeking the approval of UIL Shareholders and each class of ZDP Shareholder to amend its existing investment policy to permit UIL to invest up to 50 per cent of Gross Assets in any single Platform (including any new platform which may be established from time to time). However, it should be emphasised that the existing 30 per cent. single investment limit will be applied to investee companies held by such Platforms on a look-through basis and will also continue to apply to any investments made directly by UIL which are held outside of any of the Platforms.

The Ordinary Shares of UIL are admitted to the Specialist Fund Segment and therefore the Listing Rules do not technically apply to it. However, as a matter of best practice and good corporate governance, UIL conducts its affairs in accordance with certain key provisions of the Listing Rules in such a manner as they would apply to it were the Ordinary Shares admitted to the Premium Segment under Chapter 15 of the Listing Rules. As a result, UIL is seeking approval for the change in investment policy from its Ordinary Shareholders by way of an Ordinary Resolution. In addition, as referred to above, UIL is seeking approval by way of a Special Resolution from each class of ZDP Shareholder in accordance with the terms of the Subscription Agreement.

3.       AMENDED INVESTMENT POLICY

UIL's current investment policy with the proposed changes highlighted is set out in Appendix 1 to this document. If the Proposal is approved by the passing of all the Resolutions at the Special General Meeting and the Class Meetings, the new investment policy of UIL will be as follows with immediate effect:

"Investment Policy of UIL

UIL's investment policy is to identify and invest in opportunities where the underlying value is not reflected in the market price. This perceived undervaluation may arise from factors such as technological change, market motivation, prospective financial engineering opportunities, competition, underperforming management or shareholder apathy.

UIL aims to maximise value for Shareholders through a relatively concentrated portfolio of investments including separate closed end investment companies (Platforms) which have been or will be established to focus on investments in dedicated market sectors.

UIL has the flexibility to invest in shares, bonds, convertibles and other types of securities, including non-investment grade bonds and to invest in unlisted securities. UIL may also invest in other investment companies or vehicles, including any managed by the Joint Portfolio Managers, where such investment would be complementary to UIL's investment objective and policy.

UIL may also use derivative instruments such as American Depositary Receipts, promissory notes, foreign currency hedges, interest rate hedges, contracts for difference, financial futures, call and put options and warrants and similar instruments for investment purposes and efficient portfolio management, including protecting UIL's portfolio and balance sheet from major corrections and reducing, transferring or eliminating investment risks in its investments. These investments will be long term in nature.

UIL has the flexibility to invest in markets worldwide although investments in the utilities and infrastructure sectors are principally made in the developed markets of Australasia, Western Europe and North America, as UIL's exposure to the emerging markets infrastructure and utility sectors is primarily through its holding in Utilico Emerging Markets Trust plc. UIL has the flexibility to invest directly in these sectors in emerging markets with the prior agreement of Utilico Emerging Markets Trust plc.

UIL believes it is appropriate to support investee companies with their capital requirements whilst at the same time maintaining an active and constructive shareholder approach through encouraging a review of the capital structure and business efficiencies. The Joint Portfolio Managers' team maintains regular contact with investee companies and UIL may often be among the largest shareholders. There are no limits on the proportion of an investee company that UIL may hold and UIL may take legal or management control of a company from time to time.

Investment limits

The UIL Board has prescribed the following limits on the investment policy, all of which are at the time of investment unless otherwise stated.

There are no fixed limits on the allocation of investments between sectors and markets, however the following investment limits apply:

·    investments in unlisted companies will, in aggregate, not exceed 25 per cent. of Gross Assets at the time that any new unlisted investment is made. This restriction does not apply to loans to listed Platforms;

·    no single investment will exceed 30 per cent. of Gross Assets at the time such investment is made, save that this limit shall not prevent the exercise of warrants, options or similar convertible instruments acquired prior to the relevant investment reaching the 30 per cent. limit. This restriction does not apply to investments in any Platform; and

·    no single investment in any Platform will exceed 50 per cent. of Gross Assets at the time such investment is made, save that this limit shall not prevent the exercise of warrants, options or similar convertible instruments acquired prior to the relevant investment reaching the 50 per cent. limit and provided that no single investment held by a Platform will exceed 30 per cent. of the Gross Assets at the time such investment is made on a look-through basis.

None of the above restrictions will require the realisation of any of UIL's assets where any restriction is breached as a result of an event outside the control of the Joint Portfolio Managers which occurs after the investment is made, but no further relevant assets may be acquired or loans made by UIL until the relevant restriction can again be complied with.

Borrowing limits

Under UIL's bye-laws, the Group is permitted to borrow (excluding the gearing provided through the Group's capital structure) an aggregate amount equal to 100 per cent. of its Gross Assets. Borrowings may be drawn down in any currency appropriate for the portfolio.

However, the UIL Board has set a current limit on gearing (being total borrowings excluding ZDP Shares measured against Gross Assets) not exceeding 33.3 per cent. at the time of draw down. Borrowings may be drawn down in Sterling, US Dollars or any currency for which there is a corresponding asset within the portfolio (at the time of draw down, the value drawn must not exceed the value of the relevant asset in the portfolio)."

4.       RISKS ASSOCIATED WITH THE PROPOSAL

The UIL Board considers there to be few risks associated with the Proposal since the existing limit of 30 per cent. of Gross Assets will continue to apply to each Platform's investee companies on a look-through basis. However, Shareholders should note that increasing the maximum exposure of UIL to any single Platform may result in UIL's portfolio being more concentrated in specific market sectors.

5.       THE SGM AND THE CLASS MEETINGS

Set out at the end of this document are notices of the following meetings:

·    the SGM;

·    the 2022 ZDP Class Meeting;

·    the 2024 ZDP Class Meeting; and

·    the 2026 ZDP Class Meeting.

All of the Meetings will be held on 9 April 2021, with the first meeting, the SGM, commencing at 9.00 a.m. (Bermuda time). All of the Meetings will be held at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

The Resolution to be proposed at the SGM and each Class Meeting will be to amend UIL's existing investment policy and replace it with the new investment policy set out above.

The Resolution to be proposed at the SGM will be proposed as an ordinary resolution requiring the approval of a simple majority of the votes cast in respect of it. All UIL Shareholders will be entitled to vote at the SGM.

The Resolution to be proposed at each of the Class Meetings will be proposed as a special resolution requiring the approval of 75 per cent. of the votes cast in respect of it at each Class Meeting. All holders of 2022 ZDP Shares will be entitled to vote at the 2022 ZDP Class Meeting, all holders of 2024 ZDP Shares will be entitled to vote at the 2024 ZDP Class Meeting and all holders of 2026 ZDP Shares will be entitled to vote at the 2026 ZDP Class Meeting.

The proposed amendments to the investment policy are conditional on, and will only become effective, if all the Resolutions are passed by the requisite majorities.

6.       ACTION TO BE TAKEN

Shareholders who hold Ordinary Shares or ZDP Shares in certificated form

UIL Shareholders and ZDP Shareholders who hold their Ordinary Shares or ZDP Shares in certificated form will find enclosed with this document the following Forms of Proxy for use in relation to the Meetings:

·    a Form of Proxy for use at the SGM;

·    a Form of Proxy for use at the 2022 ZDP Class Meeting;

·    a Form of Proxy for use at the 2024 ZDP Class Meeting; and

·    a Form of Proxy for use at the 2026 ZDP Class Meeting.

In light of the ongoing Covid-19 situation and measures in place to prevent the spread of the virus, Shareholders are asked not to attend the SGM and/or the relevant Class Meeting(s) in person. Voting on the Resolutions will be conducted on a poll and UIL Shareholders and ZDP Shareholders are therefore strongly encouraged to register their votes in advance by completing and returning the relevant Forms of Proxy, appointing the chairman of the relevant Meeting as their proxy to ensure their votes are counted, so as to be received by the Company's Registrars, Computershare Investor Services (Bermuda) Limited, c/o The Pavilions, Bridgwater Road, Bristol BS99 6ZY not less than 48 hours before the time appointed for holding the SGM and the Class Meetings.

Shareholders who hold Ordinary Shares or ZDP Shares through Depositary Interests

UIL Shareholders and ZDP Shareholders who hold their Ordinary Shares or ZDP Shares through Depositary Interests will find enclosed with this document the following Forms of Instruction for use in respect of the Meetings to instruct the DI Depositary how to vote on their behalf:

·    a Form of Instruction for use at the SGM;

·    a Form of Instruction for use at the 2022 ZDP Class Meeting;

·    a Form of Instruction for use at the 2024 ZDP Class Meeting; and

·    a Form of Instruction for use at the 2026 ZDP Class Meeting.

Such UIL Shareholders and ZDP Shareholders are requested to complete and return the relevant Forms of Instruction so as to be received by the Depositary, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by not later than 1.00 p.m. (London time) on 6 April 2021.

Savings Plan Participants

Savings Plan Participants will find enclosed with this document the following Forms of Direction for use at the Meetings to indicate the way in which they wish their votes to be cast at the Meetings:

·    a Form of Direction for use at the SGM; and

·    a Form of Direction for use at the 2024 ZDP Class Meeting.

Savings Plan Participants are requested to complete and return the relevant Forms of Direction so as to be received by Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY by not later than 1.00 p.m. (London time) on 29 March 2021.

7.       IRREVOCABLE UNDERTAKINGS

The Directors have received irrevocable undertakings to vote in favour of the Resolution to be proposed at the SGM from General Provincial Life Pension Fund Limited and Union Mutual Pension Fund Limited in respect of their respective holdings of 54,851,533 Ordinary Shares and 7,479,538 Ordinary Shares (representing in aggregate approximately 73.8 per cent. of the total voting rights exercisable at the SGM as at the Latest Practicable Date).

8.       RECOMMENDATION

The Boards of UIL and UIL Finance consider the Proposal to be in the best interests UIL Shareholders and ZDP Shareholders as a whole. Accordingly, the Boards unanimously recommend that UIL Shareholders and ZDP Shareholders vote in favour of the Resolutions to be proposed at the Meetings, as the Directors intend to do in respect of their own personal beneficial holdings.

Yours faithfully,

Peter Burrows

Chairman"

Expected Timetable of Principal Events

Appendix

Proposed Amended Investment Policy

If the proposed amendments to the investment policy are approved at the SGM and each of the Class Meetings by the passing of the Resolutions by the requisite majorities, the full text of the amended investment policy will be set out below, with the deleted text shown struck out and the new text shown in bold and underlined:

"INVESTMENT POLICY OF UIL

UIL's investment policy is to identify and invest in opportunities where the underlying value is not reflected in the market price. This perceived undervaluation may arise from factors such as technological 

change, market motivation, prospective financial engineering opportunities, competition, underperforming 

management or shareholder apathy.

UIL aims to maximise value for Shareholders through a relatively concentrated portfolio of investments including separate closed end investment companies ("Platforms") which have been or will be established to focus on investments in dedicated market sectors.

Historically UIL has invested a significant proportion of its gross assets in existing infrastructure, utility and related sectors but, following the change in mandate in 2007, this direct exposure has reduced as UIL has, in addition, invested in other sectors. UIL is classified in the AIC's database as 

a "Flexible Investment".

UIL has the flexibility to invest in shares, bonds, convertibles and other types of securities, including non-investment grade bonds and to invest in unlisted securities. UIL may also invest in other investment companies

 or vehicles, including any managed by the Joint Portfolio Managers, where such investment would be 

complementary to UIL's investment objective and policy.

UIL may also use derivative instruments such as American Depositary Receipts, promissory notes, foreign currency hedges, interest rate hedges, contracts for difference, financial futures, call and put options and warrants and similar instruments for investment purposes and efficient portfolio management,

 including protecting UIL's portfolio and balance sheet from major corrections and reducing, transferring or eliminating investment risks in its investments. These investments will be long term in nature.

UIL has the flexibility to invest in markets worldwide although investments in the utilities and infrastructure sectors are principally made in the developed markets of Australasia, Western Europe and North America, as UIL's exposure to the emerging markets infrastructure and utility sectors is primarily through its holding in Utilico Emerging Markets Trust plc. UIL has the flexibility to invest directly in these sectors in emerging markets with the prior agreement of Utilico Emerging Markets Trust plc.

UIL believes it is appropriate to support investee companies with their capital requirements whilst at the same time maintaining an active and constructive shareholder approach through encouraging a review of the capital structure and business efficiencies. The Joint Portfolio Managers' team maintains 

regular contact with investee companies and UIL may often be among the largest shareholders. There are no 

limits on the proportion of an investee company that UIL may hold and UIL may take legal or management 

control of a company from time to time.

Investment limits

The UIL Board has prescribed the following limits on the investment policy, all of which are at the time  of 

investment unless otherwise stated.

There are no fixed limits on the allocation of investments between sectors and markets, however the  following 

investment limits apply:

l      investments in unlisted companies will, in aggregate, not exceed 25 per cent. of Gross Assets   at the time that any new unlisted investment is made. This restriction does not apply to loans to listed platform companies Platforms; and

l    no single investment will exceed 30 per cent. of Gross Assets at the time such investment is made, save that this limit shall not prevent the exercise of warrants, options or similar convertible instruments acquired prior to the relevant investment reaching the 30 per cent. limit.

          This restriction does not apply to investments in any Platform; and

l        no single investment in a Platform will exceed 50 per cent. of Gross Assets at the time such investment is made, save that this limit shall not prevent the exercise of warrants, options or similar convertible instruments acquired prior to the relevant investment

        reaching the 50 per cent. limit and provided that no single investment held by such Platform will exceed 30 per cent. of the Gross Assets at the time such investment is made on a look-through basis.

None of the above restrictions will require the realisation of any of UIL's assets where any restriction is breached as a result of an event outside the control of the Joint Portfolio Managers which occurs after the investment is made, but no further relevant assets may be acquired or loans made by  UIL until the relevant restriction can again be complied with.

Borrowing limits

Under UIL's bye-laws, the Group is permitted to borrow (excluding the gearing provided through the Group's capital structure) an aggregate amount equal to 100 per cent. of its Gross Assets. Borrowings may

 be drawn down in any currency appropriate for the portfolio.

However, the UIL Board has set a current limit on gearing (being total borrowings excluding ZDP Shares measured against Gross Assets) not exceeding 33.3 per cent. at the time of draw down. Borrowings may be drawn down in Sterling, US Dollars or any currency for which there is a corresponding asset within the portfolio (at the time of draw down, the value drawn must not exceed the value of the relevant asset in the portfolio)."

Name of contact and telephone number for enquiries:

ICM Investment Management Limited                                 

Charles Jillings / Alastair Moreton                             +44(0) 1372 271486

Shore Capital                                                                                    

Rose Ramsden / Hugo Masefield                              +44(0) 20 7408 4090