DCI Advisors Ltd. (“DCI”), a prominent real estate investment and development company, is undergoing significant changes aimed at strengthening its governance and advancing its asset realization strategy. The recent notice of an Extraordinary General Meeting (EGM) highlights pivotal resolutions designed to reposition the company for success, while also reflecting on the progress achieved since transitioning to internal management. This article examines the key updates, challenges, and strategic milestones for DCI.
Internal Management: A New Era
Since March 2023, following the termination of its management contract with Dolphin Capital Partners Limited (DCP), DCI has been self-managed by joint Managing Directors Nicolai Huls and Nick Paris. This change marked a significant shift, enabling the company to focus directly on its Realisation Strategy, approved by shareholders in December 2021. The strategy aims to monetize all remaining investments to maximize shareholder returns.
Challenges during the transition included undisclosed invoices, disputes over SPV control, and legal battles with DCP. Despite these hurdles, DCI has stabilized operations and resumed progress on key projects, demonstrating resilience and effective leadership.
Progress on Major Projects
Kilada Project, Greece
The Kilada Project, encompassing a luxury 18-hole golf course and country club, has been a cornerstone of DCI’s portfolio. Following the management transition, the company replaced Zoniro S.A., previously responsible for Greek assets, with a new service provider. Despite the upheaval, milestones such as the approval of €1.5 million in Greek government grants and the successful debut of the initial 9-hole golf course have been achieved. Negotiations with potential buyers continue, signaling positive interest and potential value realization.
Livka Bay, Croatia
In Croatia, DCI initiated a sale process for Livka Bay, attracting strong buyer interest. The selected buyer agreed to a €22 million purchase price—15% above its carrying value. While delays in buyer financing persist, the transaction is progressing, representing a significant step in the company’s asset monetization efforts.
Aristo Developers, Cyprus
The Cypriot property market’s recovery post-COVID has spurred interest in DCI’s stake in Aristo Developers. A Greek investment bank is leading the sale process, with ongoing discussions showing promise for a favorable outcome.
Strategic Redomicile to Guernsey
One of the EGM’s primary resolutions involves migrating DCI’s domicile from the British Virgin Islands (BVI) to Guernsey. This move addresses the reputational and regulatory challenges associated with the BVI while leveraging Guernsey’s robust legal and financial framework. Guernsey offers enhanced shareholder protections, adherence to international tax standards, and a strong presence in the London Stock Exchange-listed company ecosystem. The migration is expected to be completed by the end of 2024.
Introducing a Management Incentive Scheme
To incentivize and reward its leadership team, DCI proposes a management incentive scheme funded by an interest-free loan of €2.5 million. This scheme aligns executive rewards with shareholder interests by tying vesting to the successful realization of €152.27 million in shareholder returns by mid-2027. Structured to minimize costs, the initiative aims to ensure sustained management focus on asset optimization.
Litigation and Recovery Efforts
Legal disputes with DCP in the UK, BVI, and Greece continue, reflecting the complexities of the management transition. Notably, DCI has launched civil and criminal claims in Greece seeking damages exceeding €57 million, with potential increases based on ongoing investigations. These cases are supported by third-party litigation funding, limiting the financial burden on the company.
Shareholder Capital Returns
DCI plans to implement a B Share Scheme to streamline the return of proceeds from asset sales to shareholders. This mechanism ensures equitable treatment and eliminates the need for shareholders to take additional actions. The scheme underscores DCI’s commitment to maximizing shareholder value.
Looking Ahead
DCI’s transformation reflects its commitment to overcoming legacy challenges while unlocking the value of its diverse real estate portfolio. From advancing iconic developments like Kilada to pursuing favorable asset sales and enhancing governance through redomiciliation, DCI is strategically positioned for success. The outcomes of the December 2024 EGM will set the stage for the next phase of the company’s journey, promising an exciting future for its stakeholders.
For further updates, shareholders and investors are encouraged to review DCI’s announcements and attend the EGM to participate in shaping the company’s future.
DCI Advisors currently is a 1.26% position in our portfolio. As always and especially for companies listed on the AIM: DYODD.