Macau Property Opportunities Fund : Circular and Notice of AGM

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, SOUTH AFRICA, CANADA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

12 October 2016

Macau Property Opportunities Fund Limited

('MPO' or the 'Company')

Discontinuation Vote, Proposed Adoption of New Articles of Incorporation, Amendment to Management Agreement and Notice of Annual General Meeting

Further to its announcement of 21 September 2016, the Board of MPO announces that it has today posted to Shareholders a circular (the 'Circular') setting out the ordinary business of the Annual General Meeting, as well as important proposals relating to the Discontinuation Vote, the future continuation of the Company, adoption of New Articles and amendments to the Management Agreement (together, 'the Proposals').

The Proposals comprise:

· the consideration of the Discontinuation Vote,which provides that the Company should cease to continue as presently constituted. If Shareholders vote against discontinuation, and approve the associated amendment to the Company's Articles of Incorporation, the next opportunity for Shareholders to vote on the Company's future will be no later than 30 November 2018.

· the adoption of the New Articles which:

o incorporate amendments to provide for an annual continuation vote, the first such vote being proposed at the annual general meeting of the Company to be held in November 2018; and

o have been updated for amendments to the Guernsey Companies Law which came into effect in September 2015, and to bring them into line with current market practice.

· amendments to the Management Agreement in order to:

o remove provisions which will become obsolete in the case that the Discontinuation Vote is not passed;

o insert a provision to make the Management Agreement terminable on 12 months' written notice; and

o provide that any performance fee to be paid to the Manager by the Company will only become due and payable if and when accumulated distributions per Share to Shareholders exceed the relevant high-water mark in respect of a performance period.

Each of the Proposals requires the approval of Shareholders which will be sought at the Annual General Meeting to be held at 10.00 a.m. on 14 November 2016. Further details of the Proposals are set out in the Appendix below.

A copy of the Circular will shortly be submitted to the National Storage Mechanism and will shortly be available for inspection atwww.hemscott.com/nsm.do. Defined terms used in this announcement shall have the same meaning as ascribed to them in the Circular.

For further information:

Investor Relations

Sniper Capital

Doris Boo

Tel: +65 6222 1440

Public Relations

MHP Communications

Andrew Jaques / Simon Hockridge / Kelsey Traynor

Tel: +44 20 3128 8100

Company Secretary & Administrator

Heritage International Fund Managers

Mark Huntley / Laurence McNairn

Tel: +44 14 8171 6000

Corporate Broker

Liberum Capital

Richard Crawley / Richard Bootle

Tel: +44 20 3100 2222

Appendix

1. Background and Benefits of the Proposals

Requirement for Discontinuation Vote

The Articles require that a general meeting be held no later than 31 December 2016 to propose that the Company cease to continue as constituted. The Discontinuation Vote is therefore required to be held at the Annual General Meeting.

The Company's portfolio and Macau property outlook

The Company's portfolio registered a drop in value for the second consecutive year in 2016 amid the continued decline in Macau's gaming revenue and the slowing economy, largely attributable to China's anti-corruption campaign.

The Manager believes that the pace of Macau's economic slowdown is easing and the gaming industry, the driver of Macau's economy, is stabilising, with gross gaming revenues in both August and September 2016 growing for the first time in over two years. A recovery in property market values, albeit a gradual and cautious one, may now be in sight. Low-value property transactions have recovered with some improvement in prices. The Company posted its first quarter-on-quarter Adjusted NAV growth of 0.3 per cent in Q2 2016, after six consecutive quarters of decline. The Manager believes that completion of infrastructure projects in the next few years, including the Hong Kong-Zhuhai-Macau bridge, together with the progressive opening of new mega-resorts in the next two years, will also help to stimulate a recovery in property market values (and, consequently, the value of the Company's portfolio).

Shareholders are directed to pages 14 to 29 of the Annual Report and Accounts for further commentary relating to the Company's portfolio and current market conditions.

Benefits of the Proposals

The Board notes the following benefits of the Proposals:

· Against the backdrop of an anticipated recovery in Macau property values due to improved economic conditions, the Board sees corresponding upside potential for the Company's portfolio.

· Accordingly, the Board, having consulted with the Manager, considers that the best path to maximise Shareholder value and realise the value from the Company's property portfolio is to extend the Company's life by a two-year period and, if necessary, annually thereafter.

· The extension of the Company's life will allow flexibility for the Company to take advantage of the expected recovery and afford the potential to realise the full value of its property portfolio rather than undertake a realisation of the Company's assets at potentially lower valuations in the event the life of the Company was not extended beyond 2016.

2. Discontinuation Vote

In accordance with the Articles, an extraordinary resolution (being the Discontinuation Vote) will be put to Shareholders at the Annual General Meeting that the Company should cease to continue as presently constituted.

The Directors believe that the continuation of the Company will allow for an orderly wind-down of the Company's portfolio and the opportunity to maximise the return of value to Shareholders. Accordingly, the Directors are recommending that Shareholders vote AGAINSTthe resolution for the Discontinuation Vote.

If, however, the Discontinuation Vote is passed, the Directors will be required to put proposals to Shareholders for the reorganisation, unitisation, reconstruction or winding-up of the Company. If the Discontinuation Vote is passed, the Board considers there is a risk that the value obtained by Shareholders may be significantly lower than if the Discontinuation Vote is not passed.

To be passed, a majority of not less than three quarters of Shareholders present in person or by proxy would be required to vote in favour of the resolution for the Discontinuation Vote.

3. Adoption of New Articles

A special resolution (being the New Articles Resolution) will be put to Shareholders at the Annual General Meeting to adopt the New Articles. The New Articles incorporate amendments: (i) to provide for an annual continuation vote, the first such vote being proposed at the annual general meeting of the Company to be held in November 2018; and (ii) for the update of the Articles for recent amendments to the Law and to bring them into line with current market practice.

Continuation Resolution

The New Articles will require the Board to put an ordinary resolution to Shareholders each year to extend the life of the Company for a period of one year (the 'Continuation Resolution').

The first Continuation Resolution will be proposed to Shareholders at the annual general meeting of the Company in November 2018.

Under the New Articles, a majority of Shareholders present in person or by proxy must vote in favour of a Continuation Resolution for it to be passed. This is different to the position for the resolution for the Discontinuation Vote which requires a majority of not less than three quarters of Shareholders present in person or by proxy to vote in favour of the resolution for the Discontinuation Vote for it to be passed.

The New Articles delete the following wording at Article 38:

'The Company shall, no later than 31 December 2016, convene a general meeting (which may be an annual general meeting) at which an Extraordinary Resolution will be proposed that the Company cease to continue as constituted. If that resolution is passed, the Directors shall formulate proposals to be put to the shareholders to reorganise, unitise, reconstruct, or wind up the Company.'

And insert the following new wording at Article 38:

'The Company shall, no later than 30 November 2018, convene a general meeting (which may be an annual general meeting) at which an Ordinary Resolution will be proposed that the life of the Company be extended for a period of one year. Provided such resolution is passed, the Directors shall, no later than 30 November in each year thereafter, convene a general meeting (which may be an annual general meeting) at which an Ordinary Resolution will be proposed that the life of the Company be extended for a period for one year. If, in any year, such Ordinary Resolution is not passed, the Directors shall formulate proposals to be put to the shareholders to reorganise, unitise, reconstruct, or wind up the Company. '

Other amendments to the Articles

In addition, the New Articles have been updated for the amendments to the Law which came into effect in September 2015 and to bring them into line with current market practice. The principal changes being proposed in the New Articles are in relation to the introduction of the Uncertificated Securities (Guernsey) Regulations, 2009 (as amended) which replaces the Guernsey CREST rules and which are mostly technical in nature. Other changes are minor and relate to technical or clarifying matters. A summary of these principal changes is set out below:

· amendments are proposed to reflect the adoption of the Uncertificated Securities (Guernsey) Regulations, 2009 (as amended) in Guernsey and to remove the wording relating to the CREST Guernsey requirements which is no longer applicable;

· in line with the Law amendments, the Directors will no longer be required to disclose to the Board the monetary value of any interest in a transaction or proposed transaction with the Company but will need to disclose the nature and extent of such interest;

· the notice periods for deemed receipt in respect of the service of documents on shareholders by post have been changed to notices being deemed to be received two Business Days after posting in the case of shareholders resident in the UK, the Channel Islands and the Isle of Man and three Business Days in all other cases. The electronic communications provisions will be updated in line with the amendments to the Law. These changes reflect amendments to the Law and bring the Company into line with market practice;

· an amendment to make clear that the Directors may resolve, in their absolute discretion, to adopt an electronic Seal; and

· general amendments are proposed to update the Current Articles for recent developments to Guernsey tax legislation, in particular to update the wording empowering Directors to request information from shareholders to ensure that the Company complies with its obligations under FATCA and the Common Reporting Standard issued by the Organisation for Economic Co-operation and Development.

The passing of the New Articles Resolution is conditional on the resolution for the Discontinuation Vote NOTbeing passed.

4. Amendment to the Management Agreement

Conditional on the Discontinuation Vote NOTbeing passed and the New Articles Resolution and Management Agreement Resolution being passed, the Board and the Manager have agreed to amend the terms of the Management Agreement to:

· insert a new provision for the termination of the Management Agreement on 12 months' written notice from the Company or the Manager; and

· modify when any performance fee payable by the Company to the Manager pursuant to the Management Agreement will be paid.

Existing performance fee arrangements

Currently, under the existing fee arrangements, the Manager is entitled to a performance fee payable by reference to the increase in Adjusted NAV per Share over the course of each calculation period. The first calculation period ended on 30 June 2007, each subsequent performance period is a period of one financial year.

Payment of the performance fee is subject to:

(i) the achievement of a performance hurdle condition: Adjusted NAV per Share at the end of the relevant performance period must exceed an amount equal to the US Dollar equivalent of the Placing Price increased at a rate of 10 per cent. per annum on a compounding basis up to the end of the relevant performance period (the Performance Hurdle); and

(ii) the achievement of a 'high watermark': Adjusted NAV per Share at the end of the relevant performance period must be higher than the highest previously reported Adjusted NAV per Share at the end of a performance period in relation to which a performance fee, if any, was last earned.

If the Performance Hurdle is met, and the high watermark exceeded, the performance fee will be an amount equal to 20 per cent. of the excess of the Adjusted NAV per Share at the end of the relevant performance period over the higher of: (i) the Performance Hurdle; (ii) the Adjusted NAV per Share at the start of the relevant performance period; and (iii) the high watermark (in each case on a per share basis), multiplied by the time weighted average of the number of Shares in issue in the performance period (or since Admission in the first performance period) (together, if applicable, with an amount equal to the VAT thereon).

Amendment to Management Agreement - changes to performance fee payment arrangements

Under the new arrangements, subject to the passing of the Management Agreement Resolution, the method of calculation of the performance fee will remain unchanged, however (in addition to the criteria for the payment of the a performance fee set out above) the Manager will (following the Annual General Meeting) only be entitled to the payment of a performance fee in respect of a Performance Period if and when accumulated distributions per Share to Shareholders exceed the high water mark (as defined above).

The Board believes that payment of any performance fee on such basis will better reflect the market standard for such fees in comparable funds.

Amendment to Management Agreement - other changes

In addition to the changes to the performance fee payment arrangements, subject to the passing of the Management Agreement Resolution, the Management Agreement will be amended to provide that the Management Agreement shall not have a fixed term and shall be terminable by either the Company or the Manager giving not less than 12 months' written notice to the other.

Shareholders should note that under the current terms of the Management Agreement, in the case that the Discontinuation Vote is not passed (i.e. the Company continues) and the Management Agreement Resolution is not passed, the term of the Management Agreement will end automatically on conclusion of the Annual General Meeting. In the case that the Discontinuation Vote is passed, the term of the Management Agreement will continue until the completion of any reorganisation, unitisation, reconstruction, or winding up of the Company.

Related party transaction

The Manager is a 'related party' for the purposes of the Listing Rules. In addition, an associate of the Manager, Sniper Investments Limited ('SIL'), is also a related party for the purposes of the Listing Rules because it is both an associate (as defined by the Listing Rules) of the Manager and a substantial shareholder (as defined by the Listing Rules) of the Company. The Manager and SIL are the 'Related Parties'.

Tom Ashworth is a director of the Manager and also holds a beneficial interest in each of the Related Parties.

As the Manager is a party to the Management Agreement, the proposed amendments to the Management Agreement will constitute a related party transaction for the purposes of the Listing Rules. The amendments to the Management Agreement therefore require Shareholder approval by ordinary resolution, with the Related Parties abstaining from voting on the Management Agreement Resolution. The proposed changes to the Management Agreement are set out above.

Each of the Related Parties has confirmed to the Company that it will not vote on the Management Agreement Resolution and that it will take all reasonable steps to ensure that its associates will not vote on the Management Agreement Resolution.

As at 11 October 2016, the Related Parties were interested, directly and indirectly, in 12,693,215 Shares or 16.61 per cent. of the issued Share capital of the Company.

Guernsey arm's length requirements

In accordance with the conflict of interest provisions set out in The Authorised Closed-Ended Collective Investment Schemes Rules 2008, a 'relevant person' may not provide services to a scheme unless the services are provided on terms which satisfy the arm's length requirement. The arm's length requirement is satisfied if the arrangements between the relevant person and the scheme are at least as favourable to the scheme as would be any comparable arrangement effected on normal commercial terms negotiated at arm's length. The Manager is a 'relevant person' for the purposes of The Authorised Closed-Ended Collective Investment Schemes Rules 2008 and the Directors are of the opinion that the services provided by the Manager under the terms of the Management Agreement to be amended as set out above satisfy the arm's length requirement.

5. Expected timetable of principal events

Important Information:

This document has been issued by Macau Property Opportunities Fund Limited (the 'Company'), and should not be taken as an inducement to engage in any investment activity and is for the purpose of providing information about the Company. This document does not constitute or form part of, and should not be construed as, any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any share in the Company or securities in any other entity, in any jurisdiction, including the United States, Canada, Japan or South Africa nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract or investment decision whatsoever, in any jurisdiction.

This document, and the information contained therein, is not for viewing, release, distribution or publication in or into the United States, Australia, Canada, Japan, South Africa or any other jurisdiction where applicable laws prohibit its release, distribution or publication, and will not be made available to any national, resident or citizen of the United States, Australia, Canada, Japan or South Africa. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes must inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the federal securities law of the United States and the laws of other jurisdictions.

This document is directed only at: (i) persons having professional experience in matters relating to investments who fall within the definition of 'investment professionals' in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005; or (ii) high net worth bodies corporate, unincorporated associations and partnerships and trustees of high value trusts as described in Article 49(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and persons who receive this document who do not fall within (i) or (ii) above should not rely on or act upon this document.

No liability whatsoever (whether in negligence or otherwise) arising directly or indirectly from the use of this document is accepted and no representation, warranty or undertaking, express or implied, is or will be made by the Company, or any of their respective directors, officers, employees, advisers, representatives or other agents ('Agents') for any information or any of the opinions contained herein or for any errors, omissions or misstatements. None of the Agents makes or has been authorised to make any representation or warranties (express or implied) in relation to the Company or as to the truth, accuracy or completeness of this document, or any other written or oral statement provided. In particular, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on any projections, targets, estimates or forecasts contained in this document and nothing in this document is or should be relied on as a promise or representation as to the future. Unless otherwise indicated, the information provided herein is based on matters as they exist as of the date of preparation and not as of any future date.

All investments are subject to risk, including the loss of the principal amount invested. Any reference herein to future returns or distributions is a target and not a forecast and there can be no guarantee or assurance that it will be achieved. Forward-looking statements are not guarantees of future performance. Past performance is no guarantee of future returns. All investments to be held by the Company involve a substantial degree of risk, including the risk of total loss. The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. You should always seek expert legal, financial, tax and other professional advice before making any investment decision.