NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES, OR INTO OR FROM CANADA, AUSTRALIA, JAPAN, NEW ZEALAND AND THE REPUBLIC OF SOUTH AFRICA.
This announcement is an advertisement and not a prospectus. This announcement 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 securities in Aberforth Geared Income Trust plc (the "Company") or Aberforth Split Level Income Trust plc ("ASLIT") or securities in any other entity, in any jurisdiction, including the United States, 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 announcement does not constitute a recommendation regarding any securities. Any investment decision must be made exclusively on the basis of the final prospectus published by ASLIT and any supplement thereto or the final circular published by the Company.
19 May 2017
Aberforth Geared Income Trust plc (the "Company")
Proposals for the reconstruction and voluntary winding up of the Company
As announced by the Board on 27 April 2017, the Company has reached agreement with Aberforth Split Level Income Trust plc (ASLIT) on the terms of the reconstruction and winding up of the Company, under which ASLIT will act as a rollover option for investors in the Company. The Company has today published a circular in respect of the Proposals, which are conditional on, among other matters, the approval by Ordinary Shareholders at general meetings of the Company to be held on 15 June 2017 and 30 June 2017.
Under the terms of the proposed reconstruction, Ordinary Shareholders (other than Overseas Shareholders) will be able to exchange some or all of their investment in the Company for ASLIT Ordinary Shares and ZDP Shareholders (other than Overseas Holders) will be able to exchange some or all of their investment in the Company for ASLIT Ordinary Shares and/or ASLIT ZDP Shares. Shareholders will also be able to realise some or all of their investment in the Company for cash. Overseas Holders will, if the Proposals become effective, receive cash in respect of their holdings.
Under the Proposals, ZDP Shareholders will be entitled to elect to receive a cash amount in respect of their final capital entitlement of 159.7 pence per ZDP Share. ZDP Shareholders who do not make a valid Election under the Proposals will be deemed to have elected for the ZDP Cash Option. This being the case, in accordance with the Articles, ZDP Shareholders are not entitled to vote on the Proposals.
Information on Aberforth Split Level Income Trust plc
ASLIT is a new split capital investment trust launching on 3 July 2017 which will invest in a diversified portfolio of small UK quoted companies. ASLIT will have two classes of shares in issue: the ASLIT Ordinary Shares and the ASLIT ZDP Shares. On Admission, there will be four ASLIT Ordinary Shares in issue for every one ASLIT ZDP Share. ASLIT's investment objective is to provide ASLIT Ordinary Shareholders with a high level of income, with the potential for income and capital growth, and to provide ASLIT ZDP Shareholders with a pre-determined final capital entitlement on the planned ASLIT winding up date of 1 July 2024. ASLIT has a similar investment policy to that of the Company and it will also be managed by Aberforth Partners, the Company's investment manager. On its launch, ASLIT is not expected to be larger than the Company.
ASLIT's dividend policy, similar to that of the Company, is to distribute a significant proportion of its net revenue (after the payment of expenses and taxation) in the form of dividends and the ASLIT Ordinary Shareholders will be entitled to receive all such dividends. In the absence of unforeseen circumstances, ASLIT is expecting to pay dividends totalling not less than 4 pence1 per Ordinary Share in respect of the period from its Admission to 30 June 2018. The ASLIT ZDP Shareholders will not be entitled to receive dividend payments. The final capital entitlement for ASLIT ZDP Shareholders on ASLIT's planned winding up date of 1 July 2024 will be 127.25 pence. This represents a Gross Redemption Yield of 3.5 per cent. per annum over the life of the ASLIT ZDP Shares, based on their issue price of 100 pence per ASLIT ZDP Share under the Issues.
ASLIT is proposing to issue ASLIT Ordinary Shares and ASLIT ZDP Shares to existing Shareholders who elect to participate in the Rollover Options in consideration for the Rollover Funds.
Under the terms agreed with ASLIT (but subject to the success of a placing and offer for subscription by ASLIT), ASLIT is also expecting to acquire part or all of the Company's remaining assets including securities and cash. The consideration for these assets will be paid by ASLIT in cash. ASLIT is not seeking to raise funds, pursuant to the ASLIT Placing and Offer, in excess of an amount which would enable ASLIT to acquire all of the remaining assets of the Company and to pay certain costs and expenses associated with the Proposals. In the event that the net proceeds of the ASLIT Placing and Offer exceed the value of the Remaining AGIT Portfolio, applications under the ASLIT Placing and Offer will be scaled back accordingly. On launch, ASLIT will therefore not be larger than the Company. Furthermore, the total number of ASLIT Ordinary Shares and ASLIT ZDP Shares issued by ASLIT pursuant to the Proposals and its placing and offer for subscription will be in the ratio of 4:1 respectively.
Background to the Proposals
The Articles require the Directors to convene a general meeting of the Company for no later than 30 June 2017, at which a special resolution will be proposed to wind up the Company voluntarily by not later than 30 June 2017. In determining the structure and timing of the Proposals, the Board has sought to balance the interests of the Ordinary Shareholders and the ZDP Shareholders. A straightforward liquidation of the Company (in the absence of a rollover alternative) would require the Company's entire investment portfolio to be realised in the market in advance of 30 June 2017. It is expected that the portfolio realisation costs in these circumstances would be significantly higher than under the Proposals and this additional cost would be borne by the Ordinary Shareholders. Under the Proposals, it is anticipated that a material proportion of the investments of the Company will be transferred to ASLIT at significantly lower realisation cost to Ordinary Shareholders than would be the case under a straightforward liquidation. There is no guarantee that ASLIT will raise sufficient cash under the ASLIT Placing and Offer to acquire the Remaining AGIT Portfolio, and as a result the Company is likely to incur costs in realising such part of its portfolio which is not acquired by ASLIT.
For illustrative purposes only, the costs of the Proposals (excluding any portfolio realisation costs) which are expected to be incurred by the Company would be expected to represent a reduction of 0.36 pence or 0.14 per cent. in the NAV per Ordinary Share of 252.97 pence at the Latest Practicable Date after taking into account the final capital entitlement of the ZDP Shares.
Based on the Assumptions, Ordinary Shareholders who elect, or are deemed to elect, to rollover into ASLIT Ordinary Shares will suffer cumulative costs of the Proposals and the launch of ASLIT which would be expected to represent a reduction of 4.43 pence or 1.75 per cent. in the NAV per Ordinary Share of 252.97 pence at the Latest Practicable Date after taking into account the final capital entitlement of the ZDP Shares. Based on the Assumptions, ZDP Shareholders who elect to rollover into ASLIT Ordinary Shares will suffer costs of the launch of ASLIT which would be expected to represent a reduction of 2.54 pence or 1.59 per cent. in the TAV per ZDP Share of 159.7 pence.
Under the Proposals, the Company will be wound up voluntarily and a scheme of reconstruction under section 110 of the Insolvency Act 1986 will be implemented. Under the terms of the Scheme, Shareholders may elect for the options set out below. Shareholders can make different Elections in respect of different Shares which they hold. Overseas Holders will, if the Proposals become effective, receive cash in respect of their holdings.
Ordinary Shareholders may elect to:
- rollover some or all of their investment in the Company into ASLIT Ordinary Shares at 100 pence per ASLIT Ordinary Share (the Ordinary Rollover Option); or
- receive cash in respect of some or all of their investment in the Company (the Ordinary Cash Option).
Ordinary Shareholders (other than Overseas Holders) who do not make a valid Election under the Proposals will be deemed to have elected for ASLIT Ordinary Shares. Accordingly, Ordinary Shareholders who wish to receive ASLIT Ordinary Shares under the Proposals in respect of their entire holding of Ordinary Shares need not submit a Form of Election.
Ordinary Shareholders will have the opportunity to acquire ASLIT ZDP Shares and additional ASLIT Ordinary Shares through the ASLIT Placing and Offer.
ZDP Shareholders may elect to:
- rollover some or all of their investment in the Company into ASLIT ZDP Shares at 100 pence per ASLIT ZDP Share (the ZDP Rollover Zero Option);
- rollover some or all of their investment in the Company into ASLIT Ordinary Shares at 100 pence per ASLIT Ordinary Share (the ZDP Rollover Ordinary Option); or
- receive cash in respect of some or all of their investment in the Company (the ZDP Cash Option).
ZDP Shareholders who do not make a valid Election under the Proposals will be deemed to have elected for the ZDP Cash Option. Accordingly, ZDP Shareholders who wish to receive cash under the Proposals in respect of their entire holding of ZDP Shares need not submit a Form of Election.
ZDP Shareholders will have the option to request (by completing the relevant boxes on their Form of Election) that, if they are scaled back in respect of any part of their election for ASLIT Shares (such scaled back elections being the Scaled Back ZDP Election) they receive ASLIT Ordinary Shares and ASLIT ZDP Shares in respect of the Scaled Back ZDP Election in the Ratio, subject to ASLIT not being larger than the Company.
Under the Proposals:
the Company will be placed into members' voluntary liquidation and its business and assets will be divided into three pools on the basis of a valuation undertaken as at the Calculation Date, namely:
- the Ordinary Rollover Fund and the (separate) ZDP Rollover Fund, each of which will comprise investments and other assets (including cash) which are capable of being held by ASLIT in order to facilitate the transfer of assets to ASLIT and which will represent the respective entitlements of holders of Ordinary Shares and ZDP Shares in respect of which elections have been made (or are deemed to have been made) for the Rollover Options; and
- the Liquidation Fund, which will comprise such of the cash and other assets of the Company as are estimated by the Liquidators to be sufficient to provide for all current and future, actual and contingent liabilities of the Company, including a retention (estimated at £50,000) in respect of unascertained and unknown liabilities, and the entitlements of those Shareholders who have elected (or are deemed to have elected) for the Cash Options; and
ASLIT will acquire part or all of the investments and other assets of the Company (including cash), the consideration for which will be satisfied by:
- the issue by ASLIT of ASLIT Ordinary Shares and ASLIT ZDP Shares to those Shareholders who elect (or are deemed to have elected) for the Rollover Options under the Proposals; and
- a cash payment by ASLIT to the Company in an amount equal to the ASLIT Net Issue Proceeds.
As noted above, in order to finance its intended acquisition of all or part of the Remaining AGIT Portfolio, ASLIT is proposing to issue new ASLIT Ordinary Shares and ASLIT ZDP Shares through the ASLIT Placing and Offer. ASLIT is not seeking to raise new capital beyond the amount required to purchase all of the Remaining AGIT Portfolio and to meet certain costs.
Final interim dividend
As announced by the Company on 27 April 2017, the Board has declared a final interim dividend of 8 pence per Ordinary Share. This dividend will be paid on 31 May 2017 to Ordinary Shareholders on the Company's register of members on 12 May 2017. No further dividends are expected to be paid by the Company after the payment of this final interim dividend. Ordinary Shareholders are entitled to the undistributed revenue reserves of the Company. These will form part of the Ordinary FAV and will therefore either be rolled over into ASLIT Ordinary Shares or paid out as cash under the Ordinary Cash Option.
Benefits of the Proposals
The Directors consider that the Proposals have the following benefits for Shareholders:
they offer Shareholders the opportunity to rollover their investments in a tax efficient manner (without incurring an immediate liability to UK capital gains tax) into ASLIT Shares;
they enable Shareholders to maintain their exposure to a diversified portfolio of small UK quoted companies through a closed-ended, split capital investment vehicle with a fixed life without incurring significant realisation costs or portfolio reorganisation costs;
they enable Shareholders who elect for the Rollover Options to continue to benefit from the management expertise of Aberforth Partners;
they offer Ordinary Shareholders who wish to realise some or all of their investment the opportunity to do so at close to NAV; and
they avoid the need to realise all of the Company's small cap investment portfolio in the market, to the extent that all or part of it is transferred to ASLIT under the Proposals, thereby saving potential realisation costs which would otherwise be borne by Ordinary Shareholders on the winding up of the Company.
The ASLIT Board shall have discretion (after consultation with the Investment Managers and J.P. Morgan Cazenove) to scale back Elections and/or applications under the Issues to ensure that ASLIT: (i) will not be larger than the Company; and (ii) will have a ratio of ASLIT Ordinary Shares to ASLIT ZDP Shares of 4:1. In exercising its discretion, the ASLIT Board intends to seek to ensure a fair allocation between Shareholders who elect for the Rollover Options and, in allocating ASLIT Ordinary Shares, give preference, so far as is practicable, to those existing Ordinary Shareholders who have elected (or are deemed to elect) for the Ordinary Rollover Option and, in allocating ASLIT ZDP Shares, the ASLIT Board intends to give preference, so far as is practicable, to those investors who have subscribed for or rolled into ASLIT Ordinary Shares.
It should be noted that in the event that a Shareholder receives cash under the Scheme (whether by Election or as a result of scaling back or default), they may incur a liability to UK taxation of chargeable gains in respect of such disposal of Shares depending on the particular circumstances of the Shareholder concerned.
Costs and expenses
The Company will bear all of its own costs in relation to the Proposals. It is estimated that the costs of the Proposals (which would be borne entirely by the Ordinary Shareholders and exclude any portfolio realisation costs) will be approximately £396,000 (including irrecoverable VAT) in aggregate (amounting to approximately 0.36 pence per Ordinary Share).
If the Proposals do not become effective, the Company will proceed to liquidation in accordance with the provisions of its Articles and will suffer the costs in relation to the Proposals and is also expected to suffer increased portfolio realisation costs.
The Directors intend to vote in favour of the Scheme Resolutions to approve the Proposals at the Meetings in respect of their own beneficial holdings of Ordinary Shares, which total 324,001 Ordinary Shares (representing 0.3 per cent. of the total voting rights in the Company exercisable at each Meeting).
Aberforth Partners' intentions
The partners of Aberforth Partners have indicated that they, and their connected persons, intend to elect for the relevant Rollover Options for ASLIT Ordinary Shares in respect of their interests in Shares (valued, in aggregate, at approximately £14.4 million as at 17 May 2017). In addition, the partners and their connected persons intend to subscribe for at least £2 million of ASLIT Ordinary Shares under the ASLIT Placing and Offer.
|All references are to UK time.||2017|
|Latest time and date for receipt of blue forms of proxy for the First Meeting||10.00 a.m. on Tuesday, 13 June|
|Time and date from which it is advised that dealings in Shares should only be for cash settlement and immediate delivery of documents of title||8.00 a.m. on Thursday, 15 June|
|First Meeting||10.00 a.m. on Thursday, 15 June|
|Latest time and date for receipt of Forms of Election or TTE instructions from Shareholders||1.00 p.m. on Monday, 19 June|
|Latest time and date for the receipt of Application Forms under the Offer*||1.00 p.m. on Monday, 19 June|
|Record Date for the Scheme||the close of business on|
Monday, 19 June
|Calculation Date||the close of business on Friday, 23 June|
|Latest time and date for receipt of applications under the Placing*||3.00 p.m. on Monday, 26 June|
|Latest time and date for receipt of green forms of proxy for the Second Meeting||11.00 a.m. on Wednesday, 28 June|
|Shares disabled in CREST||7.30 a.m. on Wednesday, 28 June|
|Regulatory Information Service announcement of the results of the ASLIT Placing and Offer and the number of ASLIT Ordinary Shares and ASLIT ZDP Shares to be issued pursuant to the Scheme||29 June|
|Amendment to the Of?cial List and dealings in Reclassi?ed Shares commence on the London Stock Exchange||8.00 a.m. on Thursday, 29 June|
|Dealings in Reclassi?ed Shares suspended||7.30 a.m. on Friday, 30 June|
|Second Meeting||11.00 a.m. on Friday, 30 June|
|Effective Date for implementation of the Proposals and commencement of the liquidation of the Company||Friday, 30 June|
|Admission to listing of the ASLIT Shares to be issued pursuant to the Scheme and of the ASLIT Shares to be issued pursuant to the ASLIT Placing and Offer||8.00 a.m. on Monday, 3 July|
|ASLIT Shares issued in uncerti?cated form credited to CREST accounts of Shareholders under the Scheme||8.00 a.m. on Monday, 3 July|
|ASLIT Shares issued in uncerti?cated form credited to CREST accounts of ASLIT Shareholders under the Placing and Offer||11.00 a.m. on Monday, 3 July|
|CREST payments made in respect of cash entitlements of Shareholders under the Scheme||Friday, 7 July|
|Cheques despatched in respect of cash entitlements of Shareholders under the Scheme||Friday, 7 July|
|De?nitive certi?cates in respect of ASLIT Shares issued in certi?cated form pursuant to the Scheme despatched to Shareholders entitled thereto||week commencing Monday, 10 July|
|Cancellation of listing of the Reclassi?ed Shares||Monday, 10 July|
Each of the times and dates in the above expected timetable (other than in relation to the Meetings) may be extended or brought forward without further notice. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be noti?ed to Shareholders by an announcement through a Regulatory Information Service provider.
*The Directors may, with the prior approval of J.P. Morgan Cazenove, alter such dates and thereby lengthen the period for returning Application Forms under the Offer making commitments under the Placing to a date no later than 30 June 2017 and/or the date of Admission to a date or dates no later than 31 July 2017. The Company will notify investors of any such changes to these dates by making an announcement via a Regulatory Information Service. All references in the announcement to times are to London times.
A copy of the Circular and Prospectus will be submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM.
Terms used in this announcement shall have the same meaning as set out in the Circular.
For further information, please contact:
Aberforth Partners LLP +44 (0) 131 220 0733
Advisers to the Company
Dickson Minto W.S. +44 (0) 207 649 6823
Advisers to ASLIT
J.P. Morgan Cazenove (JPMC) +44 (0) 207 742 4000
Kepler Partners LLP +44 (0) 203 384 8796
Hugh van Cutsem
 This is not a profit forecast. There can be no guarantee that any dividends will be paid by ASLIT. The level of dividend will be based inter alia on the yield of ASLIT's underlying portfolio.
The information contained in this announcement is given at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment from time to time.
Dickson Minto W.S., which is authorised and regulated by the Financial Conduct Authority, is acting only for the Company in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Dickson Minto W.S. or advice to any other person in relation to the matters contained herein.
J.P. Morgan Cazenove, which is authorised and regulated by the Financial Conduct Authority, is acting only for ASLIT in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible to anyone other than the ASLIT for providing the protections afforded to clients of J.P. Morgan Cazenove or advice to any other person in relation to the matters contained herein.
Kepler Partners LLP, which is authorised and regulated by the Financial Conduct Authority, is acting only for ASLIT in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible to anyone other than the ASLIT for providing the protections afforded to clients of Kepler Partners LLP or advice to any other person in relation to the matters contained herein.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. All statements other than statements on historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.
Forward-looking statements are subject to risks and uncertainties and, accordingly, ASLIT's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. Aberforth Partners LLP and Dickson Minto W.S. expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Prospectus Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.
None of the Company, ASLIT, Aberforth Partners LLP, J.P. Morgan Cazenove or Dickson Minto W.S., or any of their respective affiliates, accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of this information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. The Company, ASLIT, Aberforth Partners LLP and Dickson Minto W.S., and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.
This announcement does not constitute a prospectus relating to ASLIT, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company or ASLIT in any jurisdiction 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 or act as any inducement to enter into, any contract therefor. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information contained in the prospectus being considered for publication by ASLIT in due course. The contents of such prospectus will, if published, supersede the information in this announcement.
Nothing in this announcement constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Copies of the prospectus will be available from www.morningstar.co.uk/uk/nsm.