TIDMTIGT
RNS Number : 8315U
Troy Income & Growth Trust Plc
28 November 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATON FOR THE PURPOSES OF
ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS
PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018, AS AMENDED. ON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
28 November 2023
Troy Income & Growth Trust plc
Combination with STS Global Income & Growth Trust plc
Introduction
Further to the Company's announcement on 2 November 2023, the
Board of Troy Income & Growth Trust plc ("TIGT") is pleased to
announce that heads of terms have been agreed for a proposed
combination of TIGT with STS Global Income & Growth Trust plc
("STS").
The combination, if approved by each company's shareholders,
will be implemented through a scheme of reconstruction pursuant to
section 110 of the Insolvency Act 1986 (the "Scheme"), resulting in
the voluntary liquidation of TIGT and the rollover of its assets
into STS in exchange for the issue of new shares of STS (the "New
STS Shares") to holders of TIGT shares (the "TIGT Shares") with
TIGT shareholders ("TIGT Shareholders") offered the option of up to
100% cash exit ( the "Cash Option") (the "Proposals").
Following implementation of the Proposals, the enlarged STS will
continue to be managed, on the same basis as currently, by Troy
Asset Management Limited ("Troy") with James Harries continuing as
the lead portfolio manager, supported by Tomasz Boniek and the
wider Troy investment team.
The Proposals are subject to the approval of TIGT and STS
Shareholders, and also to regulatory and tax approvals.
Bridget Guerin, Chair, commented:
"The Board is pleased to have reached an agreement with the
board of STS over the proposed combination of the two companies.
The combination will create a larger investment trust that is
expected to be more liquid and have reduced overall costs, and will
continue to follow Troy's long term, quality focussed, conservative
investment management style with a global opportunity set."
Benefits of the Proposals for TIGT Shareholders
-- Proposals provide continuity for TIGT Shareholders wishing to remain invested:
o STS is also an equity income investment trust which targets a
growing level of income and steady capital growth over the long
term;
o STS provides continued exposure to Troy's investment ethos and
process. STS is managed by Troy's global income management team,
led by James Harries who has managed global equity portfolios since
2002, following a quality focussed, long-term, conservative
investment approach;
o STS has a global approach to achieving its investment
objective, providing enhanced opportunities to invest in the
world's highest quality companies and to diversify sources of
income. However, STS has a similar view to TIGT that the UK is
currently an undervalued market and STS currently has 32% of its
gross portfolio invested in UK companies, and STS and TIGT
currently have 15 stocks in common representing 49% of TIGT's
current gross portfolio; and
o STS has operated a discount control mechanism since November
2020 which aims to ensure, in normal market conditions, that the
shares trade consistently close to their net asset value, providing
liquidity for all shareholders.
-- The Proposals include the following additional features which
are expected to have a beneficial effect for TIGT Shareholders:
o The proposed combination will result in reduced overall costs
for TIGT Shareholders, supported by STS's management fees being
reduced following implementation of the Proposals to align with
TIGT's;
o TIGT Shareholders receiving New STS Shares will have exposure
to a larger investment trust which is expected to be more
liquid;
o Significant cost contribution by Troy equivalent to an
eighteen-month fee waiver on the assets transferred from TIGT to
STS under the Scheme (the "Cost Contribution") which is expected to
reduce TIGT Shareholders' exposure to costs in connection with the
Proposals;
o TIGT Shareholders electing for the Cash Option will receive
cash at a 2% discount to NAV and will therefore receive value
equivalent to 98% of their TIGT NAV per share;
o Due to the effect of the Cost Contribution, the 2% discount on
the Cash Option, and the New STS Shares being issued on a
nil-premium basis, TIGT Shareholders receiving New STS Shares are
estimated to receive value equivalent to 99.7% of their TIGT NAV
per share through their STS shareholding (based on current
transaction assumptions including a 20% take up of the Cash
Option); and
o Assets to be transferred to STS from TIGT pursuant to the
Scheme are to be agreed by both parties prior to the transfer.
Given there are a number of common holdings between the two
companies, a material portion of the rollover assets is expected to
consist of TIGT existing holdings.
Further details of the Scheme
TIGT Shareholders will receive New STS Shares as the default
option if no election is made under the Scheme.
For each company a Formula Asset Value ("FAV") will be
calculated using the companies' respective net asset values (cum
income and debt at fair value) ("NAV"). New STS Shares will be
issued based on the ratio of the STS FAV per share to the TIGT FAV
per share. In calculating the FAVs, each party will bear its own
costs incurred in relation to the Proposals, with the Cost
Contribution applied first to offsetting STS's costs (to the point
that STS Shareholders will not suffer NAV per share dilutions) and
second with any surplus applied to offset TIGT's costs.
TIGT Shareholders may elect to receive cash in respect of all or
part of their holding, with no limit on the number of TIGT Shares
which can be elected for the Cash Option. TIGT Shareholders
electing for the Cash Option will receive an amount in cash equal
to the NAV per TIGT Share less 2%, multiplied by the number of TIGT
Shares elected for the Cash Option.
Under the terms of the Proposals, any costs of realignment
and/or realisation of the TIGT portfolio prior to the Scheme
becoming effective will be borne by TIGT. The anticipated costs of
stamp duty, stamp duty reserve tax or other transaction tax for the
acquisition of the TIGT portfolio by STS will be borne by TIGT,
together with the anticipated London Stock Exchange admission
fees.
In accordance with customary practice for such transactions, the
City Code on Takeovers and Mergers is not expected to apply to the
Proposals.
Cost Contribution and Troy fee reduction
Troy has agreed to contribute towards the costs of the Proposals
an amount equal to the management fees payable to it in respect of
the assets transferred to STS under the Scheme for a period of 18
months, subject to a cap of GBP1.1 million.
In addition, for the enlarged STS, Troy will reduce its annual
management fee to 0.55% of shareholders' funds up to GBP250m and
0.50% above GBP250m (currently 0.65% of shareholders' funds).
Troy will also waive the termination fee payable to it in
respect of the termination of the TIGT investment management
delegation agreement.
STS Board
Following completion of the Proposals, it is expected that the
STS Board will comprise the current STS Directors and two directors
from the current Board of TIGT. It is expected that two current STS
directors will retire from the Board at, or immediately or prior
to, the next STS AGM, which is expected to be held in July 2024,
and they will not stand for re-election. The Chairman of the Board
of STS will continue in that role.
Expected timetable
It is intended that the documentation in connection with the
Proposals will be posted to shareholders in February 2024, with a
view to convening general meetings and completing the Scheme by the
end of March 2024.
Enquiries
Troy Income & Growth Trust plc
Bridget Guerin (Chair)
Via Deutsche Numis
Juniper Partners Limited (Company Secretary)
Tel +44 (0)131 378 0500
Deutsche Numis (Corporate Broker and Financial Adviser)
Nathan Brown / Matt Goss
Tel +44 (0)20 7260 1426/1642
Important Information
This announcement is released by the Company and the information
contained within this announcement is deemed by the Company to
constitute inside information for the purposes of Article 7 of the
UK version of the EU Market Abuse Regulation (Regulation (EU) No.
596/2014) which forms part of UK law by virtue of the European
Union (Withdrawal) Act 2018, as amended. Upon the publication of
this announcement via a Regulatory Information Service, such
information is now considered to be in the public domain.
Legal Entity Identifier (LEI): 213800HLNMQ1R6VBLU75
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