Bermuda National Limited - Proposed Private Placing To Raise US$15 million

Hamilton, Bermuda – 16 November, 2012 – Bermuda National Limited (the "Company" or "BNL"; Ticker: BNL.BH) a Bermuda exempt financial services investment holding company, today announces a proposed Private Placing with Utilico Investments Limited (“Utilico”), the acquisition of Utilico’s interest in Ascot Lloyd Holdings Limited (“Ascot Lloyd”) and an Amendment to the Bye-laws.

Highlights:

• Placing of approximately, but no more than, 1,200,000 new common shares in BNL with Utilico to raise US$15 million (before expenses) and the issue of warrants over approximately, but not more than, 240,000 common shares in BNL to Utilico;
• Proposed acquisition of Utilico’s interest in Ascot Lloyd, a UK independent financial adviser, for approximately US$2 million, to be satisfied by the issue to Utilico of approximately, but not more than, an additional 150,000 common shares of BNL and the issue of warrants over approximately, but not more than, an additional 30,000 common shares in BNL to Utilico;
• The Placing Price shall be equal to the audited diluted net asset value per share of Bermuda Commercial Bank Limited (“BCB”), BNL’s wholly owned subsidiary, as at 30 September 2012 less any divided declared by BNL in lieu of BCB’s final dividend. It is expected that BCB’s audited diluted net asset value per share will be published on or around 6 December 2012;
• The Warrants will be issued to Utilico on the basis of one warrant for every five Placing Shares issued to Utilico pursuant to the Private Placing. The Warrants will have an exercise price equal to the Placing Price and will be exercisable at any time up to and including 31 December 2015;
• An Amendment to the Bye-laws of the Company such that BNL will not be required to send any notice of BNL or document to an address shown for any particular shareholder of BNL which the Directors of the Company consider that the legal or practical problems associated with sending any such document are such that it is not necessary or expedient not to do so;
• The Private Placing is conditional upon, amongst other things, shareholder approval which will be sought at the SGM of the Company to be held on 7 December 2012. A Circular setting out the proposed Private Placing is being posted to BNL Shareholders today, 16 November 2012.

Commenting on the proposed Private Placing, Warren McLeland, Chairman of BNL said: “It is very pleasing that the Company’s major shareholder has agreed to invest US$15 million in the Company at what will be a premium to the existing share price. This will enable the Company to complete its acquisition of certain financial service investments from BCB, its wholly owned subsidiary, and to continue the stated strategy of looking for investments in the financial services sector. To this end we are pleased to make an investment in Ascot Lloyd, a company which has exciting opportunities in the financial advisory market in the UK.“

Unless otherwise defined, capitalized terms above shall have the same meaning ascribed to them below.

Media Contacts:

Alasdair Younie

Director

Bermuda National Limited

Tel: 441-299-2897

Email: ay@icm.bm

Introduction

The Company announces its intention to raise approximately US$15 million (before expenses) by way of a cash placing of approximately, but not more than, 1,200,000 common shares in BNL with Utilico, an existing shareholder of BNL and the issue of warrants over approximately, but not more than, 240,000 common shares in BNL to Utilico.

In line with BNL’s strategy to make investments and acquisitions in the financial services sector, BNL has also agreed to acquire Utilico’s interest in Ascot Lloyd, a UK independent financial adviser, for US$2 million, to be settled by the issue to Utilico of approximately, but not more than, an additional 150,000 common shares of BNL and the issue of warrants over approximately, but not more than, an additional 30,000 common shares in BNL to Utilico. BNL has therefore agreed to issue in total to Utilico approximately, but not more than, 1,350,000 common shares (the “Placing Shares”) in BNL and warrants over approximately, but not more than, 270,000 common shares in BNL (the “Warrants”) (together the “Private Placing”).

The Private Placing is conditional upon, amongst other things, shareholder approval which will be sought at the special general meeting (the “SGM”) of BNL to be held at Bermuda Commercial Bank Building, 19 Par-la-Ville Road, Hamilton HM 11, Bermuda on 7 December 2012 at 10.00 a.m. (Bermuda time).

Approximately US$10.4 million of the proceeds of the Private Placing will be used to finance the acquisition from BCB, a wholly owned subsidiary of BNL, of certain of BCB’s financial services sector investments.

In addition, the Directors of BNL wish to amend BNL’s Bye-laws to provide that BNL shall not be required to send any notice or document to a shareholder if the Directors of BNL consider that the legal or practical problems under the laws of the territory in which that shareholder is situated are such that it is necessary or expedient not to send the notice or document concerned to such shareholder and may require the shareholder to provide BNL with an alternative acceptable address for delivery of notices by BNL (the “Amendment to the Bye-laws”).

Reasons for the Private Placing

As set out in the circular to the BCB shareholders dated 31 August 2012 (the “BCB Circular”) relating to the restructuring of BCB, it was proposed that BNL acquire from BCB for approximately US$10.4 million, certain of BCB’s financial services sector investments in Westhouse Holdings plc, Private and Commercial Financial Group PLC and Die Schweizerische Nationalbank (the “BNL Acquisition”). In order to finance the BNL Acquisition, it is proposed that BNL will enter into the Private Placing with Utilico.

The acquisition of Utilico’s investment in Ascot Lloyd, is in line with BNL’s stated strategy to make corporate investments and acquisitions in the financial services sector. Ascot Lloyd is a UK independent financial adviser which is regulated by the UK’s Financial Services Authority. BNL is acquiring from Utilico its interest in a £2 million 6% convertible loan note (the “Note”).

As at the date of this announcement, £1.25 million of the Note has been drawn down by Ascot Lloyd. If the full £2 million is drawn down by Ascot Lloyd and then converted into ordinary shares in Ascot Lloyd, BNL would have an interest in 22.5% of Ascot Lloyd’s issued share capital. The Note, at the discretion of BNL, is convertible and must be redeemed on or before 2 July 2017. It is anticipated that a Director of BNL will be appointed to the Board of Ascot Lloyd.

The independent financial advisory market in the UK is undergoing a process of consolidation following recent regulatory changes and as such the Directors of BNL believe that Ascot Lloyd is well placed to be a consolidator in the market and therefore benefit from the synergies and market opportunities that will be created by the regulatory changes. For the nine months ended 30 September 2012, Ascot Lloyd reported an unaudited profit of approximately £111,000.

The balance of the proceeds of the Private Placing will be used to make further investments in the financial services sector. The Directors of BNL continue to believe that following the credit crisis in 2008, there continues to be significant opportunities in this sector. As set out in the BCB Circular, the BNL Acquisition will enhance BCB’s already transparent and liquid balance sheet by ensuring that certain investments are held at the BNL level rather than at the BCB level.

As BNL’s investments and subsidiaries grow it is anticipated that the shareholders of BNL (the “BNL Shareholders”) will benefit from increased liquidity in the shares of BNL. As BNL and its subsidiaries (the “BNL Group”) expand, it is anticipated that BNL will become a more attractive investment to outside investors which will improve the valuation multiples and hence the value and liquidity of shares of BNL.

The Directors of BNL continue to believe that having a number of financial service companies under one umbrella should also improve the overall operating efficiency of these organisations by facilitating the more effective utilisation of core competencies in particular in the areas of compliance, risk management and IT across the BNL Group and provide a broader outlet and scope for key executive talent within the BNL Group.

Details of the Private Placing

The subscription price for each Placing Share shall be equal to the audited diluted net asset value per share of BCB as at 30 September 2012 less any dividend declared by BNL in lieu of BCB’s final dividend (the “Placing Price”). It is expected that BCB’s audited diluted net asset value per share will be published on or around 6 December 2012.

It is expected that the Placing Price will be greater than the BNL share price of US$12.00 as at the date of this announcement. The BCB diluted net asset value per share as at 31 March 2012 was US$12.76. It is anticipated that the BCB audited diluted net asset value per share as at 30 September 2012 will be greater than the unaudited diluted net asset value per share as at 31 March 2012 as BCB has continued its progress in the second half of its financial year.

The Private Placing will involve the subscription by Utilico of the Placing Shares at the Placing Price. The Placing Shares will represent approximately 15.7 per cent. of the enlarged issued share capital of the Company. The exact number of Placing Shares will not be known until BCB publishes its audited diluted net asset value per share as at 30 September 2012 which is expected to be on or around 6 December 2012. However, if Utilico subscribes for approximately 1,350,000 common shares of BNL as part of the Private Placing, Utilico will be interested in approximately 47.1% of the BNL enlarged issued share capital.

The Private Placing is expected to raise approximately US$15 million (before expenses).

The Placing Shares will, when issued and fully paid, rank pari passu in all respects with the existing common shares of BNL, including the right to receive all dividends or other distributions declared, made or paid after the date of their issue.

BNL has agreed to issue the Warrants to Utilico. The Warrants will be issued to Utilico on the basis of one warrant for every five Placing Shares issued to Utilico pursuant to the Private Placing. The Warrants will have an exercise price equal to the Placing Price and will be exercisable at any time up to and including 31 December 2015.

The Private Placing is conditional upon, amongst other things:

• the Bermuda Stock Exchange's (the “BSX”) authorisation for listing of the Placing Shares, subject to official notice of issuance, and approval in principle with respect to the shares of BNL issuable pursuant to the Warrants;
• approval of the Private Placing by the BNL Shareholders at the SGM in accordance with Section IIA, Regulation 6.21 of the Listing Regulations of the BSX; and
• approval of the Private Placing as a related party transaction by the shareholders of Utilico at a special general meeting of Utilico to be held on 7 December 2012 in accordance with UK Listing Rules.

An application for admission of the Placing Shares to trading (and for approval in principle with respect to the shares issuable pursuant to the Warrants) will be submitted to the BSX and it is expected that admission to trading will become effective and that dealings in the Placing Shares will commence on the BSX at 9.00 a.m. on or around 14 December 2012.

Structure of the Private Placing

The Directors of BNL believe that it is in the interests of BNL and the BNL Shareholders as a whole to structure the financing of the BNL Acquisition by way of a private placing rather than other forms of fundraising such as a rights issue. It is anticipated that the Placing Price is likely to be at a significant premium to BNL’s existing market price and therefore unlikely to prove attractive to the market.

Amendment to the Bye-laws

The Directors of BNL wish to amend BNL’s Bye-laws to provide that BNL shall not be required to send any notice of BNL or document to an address shown for any particular shareholder in the Register of Members if the Directors of BNL consider that the legal or practical problems under the laws of, or the requirements of any regulatory body or stock exchange in, the territory in which that that address is situated are such that it is necessary or expedient not to send the notice or document concerned to such shareholder at such an address and may require the shareholder to provide BNL with an alternative acceptable address for delivery of notices by BNL. Given the geographical diversity of BNL’s shareholder base, the Directors of BNL believe that the proposed Amendment to the Bye-laws will facilitate administration of service of notice and documents in a more cost effective and efficient manner.

Bermuda National Limited is a listed Bermuda exempted financial services investment holding company whose major asset is its 100% owned subsidiary, Bermuda Commercial Bank Limited, one of Bermuda’s four licensed banks which is focused purely on corporate and private wealth. The Company’s other main investments include a 19.9% stake in the London Stock Exchange listed Private & Commercial Finance Group plc, a UK asset financing company and a 46% stake in the London Stock Exchange listed Westhouse Holdings plc, a corporate and institutional stockbroking group with particular sectoral expertise in natural resources, investment funds, UK industrial and environmental technology.