Squarestone Brasil Limited, the Anglo-Brazilian real estate investment and development company specialising in the Brazilian shopping mall sector, intends to apply to cancel the trading of its Shares and Warrants on AIM. 

Accordingly, the Board is proposing to convene an Extraordinary General Meeting and a Meeting of Warrant Holders to put to Shareholders a special resolution and to put to Warrant Holders an extraordinary resolution to cancel admission of the Company's Shares and Warrants to trading on AIM respectively.

Pursuant to the AIM Rules for Companies, the Cancellation of each of the Shares and Warrants is conditional upon, (i) the approval of not less than 75 per cent. of the votes cast by Shareholders (whether present in person or by proxy) at the Extraordinary General Meeting; and (ii) the approval of not less than 75 per cent. of the votes cast by Warrant Holders (whether present in person or by proxy) at the Meeting of Warrant Holders.
 
In the event that Shareholders and Warrant Holders each approve the Cancellation, it is anticipated that the last day of dealings in the Shares and Warrants will be 13 January 2012 and that the effective date of the Cancellation will be 16 January 2012.
  
The Company will have to raise further funds to continue to take advantage of the opportunities in the Brazilian shopping mall market. The outlook for raising new equity funding for the foreseeable future through the AIM market remains extremely bleak, given continuing concerns over the European sovereign debt crisis and uncertain global macroeconomic conditions. This removes one of the key attractions for maintaining a quotation on AIM.
 
Conversely, through the marketing activities undertaken by the Company, it is clear that private equity investors remain focused on the Brazilian market and, in particular, the retail sector. However, it is clear that major private equity investors are not interested in investing in public equities (such as the Shares), but wish to make direct investments into Brazil at the underlying asset level. The Company's public quotation on AIM has therefore proved to have little practical value for many potential investors approached by the Company and has been a hindrance.
 
The Board believes that the medium term outlook for Brazil and, in particular, the retail sector within the country, remains positive. With a population of 194 million people, an under-provision of retail facilities and a rapidly growing middle class, with disposable income and an appetite for consumer goods, the Board is confident that growth in the retail sector will continue. This is underlined by The Westfield Group’s recent announcement about entering the Brazilian shopping mall market and many other overseas investors are seeking to do likewise. The Board believes that good value remains to be realised from the Golden Square Mall Project, as the project gets closer to opening and as the project is thereby de-risked. The Board also believes that there is value in the Company's development and operating platform.
 
The Company will require additional operational working capital and the Company will be seeking the support of its existing Shareholders in the short-term. The Board feels that, taking into account the apparent lack of value attributed to the AIM quotation, and the size and revenues of the Company, the ongoing costs and regulatory requirements of a quotation on AIM can no longer be justified, and that greater Shareholder value will ultimately be derived by operating the Company's business without this burden. In addition, as noted above, the Board believes that the Cancellation will provide the Company with greater flexibility to seek private equity investment in the short to medium term.
 
The Board has accordingly concluded that it is in the best interests of Shareholders and Warrant Holders as a whole that the Cancellation be approved.