TIDMET.
RNS Number : 7053B
Establishment Inv. Trust PLC (The)
10 June 2019
10 June 2019
The Establishment Investment Trust plc (the "Company")
LEI: 213800I9IT25LOQ1UW49
Publication of Circular
Further to the announcement on 12 April 2019 in connection with
the proposals for the reconstruction and voluntary winding-up of
the Company (the 'Proposals'), the Board is today publishing a
Circular (the "Circular") in connection with the Proposals, which
includes notices convening the required general meetings.
Introduction
The continuation of the Company is subject to a resolution to be
put to Shareholders at the Annual General Meeting to be held on 10
July 2019.
While the Company has returned 7.4 per cent. per annum in Net
Asset Value total returns from listing in 2002 to 31 March 2019,
the small size of the Company, perennial and persistent discount,
besides the increasing regulatory and governance obligations and
increased costs, all present mounting and significant challenges.
The Board therefore considers that the Company continuing in its
current form is not an attractive option for Shareholders.
Therefore, the Board strongly recommends that shareholders vote
against the continuation resolution. The Proposals described in
this announcement are conditional on the continuation resolution
not being passed.
The Proposals
Under the Proposals, the Company will be wound up on the
Winding-up Date by means of a members' voluntary liquidation
pursuant to a scheme of reconstruction under section 110 of the
Insolvency Act 1986 and Shareholders may elect:
-- to receive ordinary shares in Henderson International Income Trust plc ('HINT')
-- and/or class R sterling net income shares in Garraway Asian
Centric Global Growth Fund ('Garraway Asian Centric')
-- and/or cash in respect of all or part of their holding of Ordinary Shares in the Company.
Shareholders who elect to roll over their investment into one or
both of the Rollover Funds will receive HINT Ordinary Shares and/or
Garraway Net Income Shares (as applicable) and, in consideration of
such issue, the Company will transfer a portion of its net assets
to each of HINT and Garraway ICVC (for the benefit of Garraway
Asian Centric). In this way, it is envisaged that UK resident
Shareholders will be given a tax-efficient rollover of their
entitlements.
The number of HINT Ordinary Shares to be issued will be
calculated by reference to the net asset value of the HINT Ordinary
Shares (including current year income) as at the Calculation Date
taking into account the HINT Manager Contribution.
The Garraway Net Income Shares will be issued at GBP1.00 per
share (which shall be the net asset value per share immediately
following the issue of such shares).
Shareholders' approval is required to implement parts of the
Proposals which will involve the reclassification of the Company's
existing Ordinary Shares to give effect to the respective options
that each Shareholder has elected for, the voluntary winding-up of
the Company and the appointment of the Liquidators. The Proposals
are also subject to the approval of shareholders of HINT and to the
Continuation Vote being rejected at the Company's forthcoming
Annual General Meeting.
In order to consider and approve the Proposals, general meetings
have been convened for 10 July 2019 (the "First General Meeting")
and 18 July 2019 (the "Second General Meeting").
Benefits of the Proposals
The Directors consider that the Proposals make available to all
Shareholders some or all of the following benefits, depending on
Shareholders' choices, as compared to their current position, or
under a liquidation:
(i) they enable Shareholders to roll over some or all of their
investments into HINT, a global income investment trust, with a
consistent track record of delivering dividend growth which may be
attractive to Shareholders in the current market environment as
well as seeking to provide capital appreciation and which is
managed by an experienced team of investment professionals;
(ii) they enable Shareholders to roll over some or all of their
investments into Garraway Asian Centric, a sub-fund of Garraway
ICVC, which aims to provide shareholders with capital growth and
income over the longer term and which is managed by an experienced
team with a consistent track record (and which will include Henry
Thornton, one of the current members of the Company's management
team);
(iii) Shareholders will not suffer the full dealing costs that
would be incurred on the realisation of the Company's portfolio in
the event of a simple winding-up;
(iv) Shareholders who may be subject to UK capital gains tax or
corporation tax on chargeable gains should be able to roll over
their investment into HINT and/or Garraway Asian Centric and
thereby continue to receive investment returns without triggering
an immediate liability to UK capital gains tax or corporation tax
on chargeable gains;
(v) the use of HINT as a rollover vehicle will enable
Shareholders to avoid dealing and other costs associated with a
purchase of HINT Ordinary Shares in the secondary market;
(vi) Shareholders who elect for the HINT Option may benefit from
the HINT Manager Contribution, of which any amount in excess of
HINT's costs in connection with the Proposals will be allocated to
the HINT Rollover Pool;
(vii) Garraway ICVC is an open-ended investment vehicle and
Garraway Net Income Shares can be redeemed on any business day in
England and Wales on which the London Stock Exchange is open for
trading. Shareholders who elect for the Garraway Option will
therefore be able to redeem their investment on request (subject to
the terms of the Garraway Prospectus) and without the price
potentially being subject to a discount to net asset value;
(viii) Shareholders who elect for the Garraway Option will not
be required to cover Garraway Asian Centric's costs in connection
with the Proposals as these will be met by the Garraway Investment
Adviser; and
(ix) Shareholders who elect for the Cash Option in respect of
some or all of their investments will be able to receive cash in
the liquidation of the Company. Shareholders should note that,
depending on their particular circumstances, this may trigger a
chargeable gains tax liability.
Conditions to the Scheme
The Scheme is conditional, among other things, upon:
(i) the Continuation Vote not being passed at the Annual General Meeting;
(ii) the passing of all Resolutions to be proposed at (a) the
First General Meeting and (b) the Second General Meeting (or at any
adjournments thereof) and upon any conditions of such Resolutions
being fulfilled;
(iii) the passing of the HINT Resolution;
(iv) the FCA agreeing to amend the listing of the Ordinary
Shares to reflect their reclassification as Reclassified Shares for
the purpose of implementing the Scheme;
(v) the FCA having agreed to admit the HINT Ordinary Shares to
be issued to Shareholders pursuant to the Scheme to listing on the
premium segment of the Official List and the London Stock Exchange
having agreed to admit such shares to trading on the premium
segment of the London Stock Exchange's main market; and
(vi) the Directors resolving to proceed with the Scheme.
In the event that condition (i) fails, both General Meetings
will be adjourned indefinitely and the Scheme will not become
effective. In the event that any of conditions (ii)(a), (iii),
(iv), or (v) fails, the Second GM will be adjourned indefinitely
and the Scheme will lapse.
Henderson International Income Trust plc
HINT is a closed-ended investment company incorporated in
England and Wales on 2 March 2011 with an investment objective of
providing a growing total annual dividend, as well as capital
appreciation, from a focused and internationally diversified
portfolio of securities outside the UK. Ben Lofthouse is the fund
manager responsible for the management of the Company's portfolio
and he is supported by the wider Janus Henderson Global Equity
Income team. HINT carries on business as an investment trust within
the meaning of Chapter 4 of Part 24 of the Corporation Tax Act
2010.
As at the Latest Practicable Date, HINT had unaudited net assets
of GBP287.4 million, the net asset value (cum income) per HINT
Ordinary Share (unaudited) was 160.3 pence and its market
capitalisation was GBP286.0 million.
The following table sets out HINT's cumulative performance
(including income) from launch to 30 April 2019:
Since launch(*) 5y 3y 1y
Performance over (%) (%) (%) (%)
------------------------ ---------------- ----- ----- -----
Share price (total
return) 112.5 73.1 52.0 6.6
Net Asset Value (total
return) 119.0 67.7 43.3 5.2
* The Company launched on 28 April 2011
Source: Morningstar
The HINT Ordinary Shares traded at an average premium to the
prevailing cum income net asset value of 0.6 per cent. over the 12
months to the Latest Practicable Date compared to an average
discount for the AIC Global Equity Income sector of 0.4 per
cent.
VT Garraway Asian Centric Global Growth Fund
Garraway Asian Centric is a new open-ended investment fund which
aims to provide shareholders with capital growth and income over
the longer term by investing in a diversified global portfolio of
equities, combining both developed and emerging markets exposure,
and the flexibility to invest in government bonds and precious
metal ETFs. The fund management team will comprise Malcolm
Schembri, Tim Hall, Darran Goodwin and Henry Thornton. Henry is
presently at Blackfriars Asset Management Limited, the Company's
outgoing investment manager and will be joining Garraway Capital
Management LLP as a fund manager, responsible for Asian
equities.
Garraway Asian Centric is a sub-fund of VT Garraway Investment
Funds ICVC. VT Garraway Investment Funds ICVC is an open-ended
investment company with variable capital incorporated in England
and authorised by the Financial Conduct Authority as an undertaking
for collective investment in transferable securities (UCITS) with
effect from 26 March 2012. Garraway Asian Centric was itself
authorised as a sub-fund of VT Garraway Investment Funds ICVC on 31
May 2019.
The Garraway Net Income Shares will not be admitted to listing
and/or to trading by any authority or stock exchange.
Interim Dividends
The Directors have declared a second interim dividend of 1.75
pence per Ordinary Share in respect of the financial year ended 31
March 2019. In relation to the period from 1 April 2019 to 31 May
2019, the Directors have also declared an interim dividend of 1.25
pence per Ordinary Share, in order to ensure the Company meets the
distribution requirements to maintain investment trust status
during the period from 1 April 2019 to the Winding-up Date. Both
dividends will be paid on 4 July 2019 to Shareholders who are on
the Register as at close of business on 14 June 2019. The
ex-dividend date for both dividends is 13 June 2019.
It is not anticipated that there will be further dividends paid
in relation to the year ending 31 March 2019 or for the period up
to the liquidation of the Company.
Costs of proposals
The costs payable by the Company in connection with the
implementation of the Proposals are expected to be approximately
GBP400,000 (including VAT, where applicable). These costs have not
been accrued in the Company's net assets as at close of business on
the Latest Practicable Date, but will be accrued in the Company NAV
on the Calculation Date.
Expected Timetable
2019
Ex dividend date for the Interim Dividends 13 June
Record date for the Interim Dividends close of business on 14 June
Payment of the Interim Dividends 4 July
Latest time and date for receipt of Forms of Proxy from 12.05 p.m. on 8 July
Shareholders for First General Meeting
Latest time and date for receipt of the Forms of Election 1.00 p.m. on 8 July
and/or TTE Instructions from Shareholders
Record Date for entitlement to the Scheme close of business on 8 July
Annual General Meeting 12.00 noon on 10 July
First General Meeting 12.05 p.m.(1) on 10 July
Calculation Date 11.59 p.m. on 12 July
Latest time for receipt of Forms of Proxy from 10.00 a.m. on 16 July
Shareholders for Second General Meeting
Ordinary Shares disabled in CREST close of business on 16 July
Reclassification of the Ordinary Shares 8.00 a.m. on 17 July
Publication of Residual Net Asset Value per Share and HINT 17 July
FAV per Share
Suspension of dealings in Reclassified Shares 7.00 a.m. on 18 July
Second General Meeting 10.00 a.m. on 18 July
Effective Date and Transfer Agreements executed and 18 July
implemented
CREST accounts credited with new HINT Ordinary Shares 19 July
Admission of HINT Ordinary Shares issued under the Scheme 8.00 a.m. on 19 July
and dealings in HINT Ordinary Shares
commence
Garraway Net Income Shares issued pursuant to the Scheme 9.00 a.m. on 19 July
and first day of dealings in Garraway
Net Income Shares
Cheques expected to be despatched and CREST payments made week commencing 22 July
to Shareholders in respect of the
Cash Option
Contract notes expected to be despatched in respect of week commencing 22 July
Garraway Net Income Shares issued pursuant
to the Scheme
Certificates expected to be despatched in respect of HINT week commencing 22 July
Ordinary Shares issued pursuant
to the Scheme
Cancellation of listing of Reclassified Shares as soon as practicable after the Effective Date
[1] Or as soon thereafter as the immediately preceding Annual
General Meeting shall have been concluded or adjourned
The times and dates set out in the expected timetable of events
above and mentioned may be adjusted by the Company, in which event
details of the new times and dates will be notified, as requested,
to the Financial Conduct Authority, the London Stock Exchange and,
where appropriate, Shareholders.
All references to time are to UK time.
Defined terms used in this announcement have the meanings given
in the Circular unless the context otherwise requires.
Enquiries:
Henry Willcocks / Robert Finlay 020 7601 6100
Shore Capital
Broker
Anthony Lee
PraxisIFM Fund Services (UK) Limited 020 7653 9690
Company Secretary
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END
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