TIDMAOT TIDMEPG
4 February 2011
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION INTO ANY JURISDICTION OTHER THAN
THE EEA, THE CHANNEL ISLANDS OR THE ISLE OF MAN
Anglo & Overseas Plc (the "Company")
Proposals for the voluntary winding-up and reconstruction of the Company
The Company announces today proposals for the voluntary winding-up and
reconstruction of the Company. Under the Proposals, Shareholders will be able
to exchange some or all of their investment in the Company for shares in EP
Global Opportunities Trust plc ("EP Global"), an existing investment trust
managed by Edinburgh Partners, and/or 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.
The Proposals are conditional, inter alia, on the approval of Shareholders at
general meetings to be held on Thursday, 3 March 2011 and Thursday, 10 March
2011. The Board of the Company (the "Board") recommends Shareholders to vote in
favour of the resolutions required to implement the Proposals at both Meetings.
Notices of the Meetings are set out in the circular of the Company (the
"Circular") which is being published today. Capitalised terms used in this
announcement have the same meaning as set out in the Circular.
Background to the Proposals
The Board has been concerned for some time at the level of the discount at
which the Shares trade to NAV. The average discount to NAV over the 12 months
to 31 December 2010 was 14.8 per cent. and at 2 February 2011 (the latest
practicable date before the release of this announcement) the discount stood at
13.4 per cent.
Given the Company's size, the Board believes that it would be difficult for the
Company to remain attractive to a sufficient number of investors if it were to
reduce the discount to an acceptable level through a buy-back programme. After
careful consideration of a number of possible options, the Board has concluded
that the best way forward would be to merge the assets of the Company with
those of EP Global, an existing investment trust with a broadly similar
investment objective and strategy to that of the Company and which is also
managed by Edinburgh Partners, with a view to creating a larger and more liquid
trust. EP Global Shares have in recent years traded at a much narrower discount
to NAV than have the Shares of the Company.
The Proposals
Under the Proposals, the Company will be wound up voluntarily and a scheme of
reconstruction under section 110 of the Insolvency Act 1986 put in place, under
which Shareholders may elect to:
* roll over all or part of their investment in the Company into shares in EP
Global (the Rollover Option); or
* receive cash in respect of some or all of their investment in the Company
(the Cash Option); or
* any combination of the above options.
Shareholders can make different elections in respect of different parts of
their holdings.
Shareholders (other than Overseas Holders) who do not make a valid election
under the Proposals will be deemed to have elected for EP Global Shares in
respect of their entire holding. Overseas Holders will be deemed to have
elected for cash unless the Directors and the EP Global Directors are satisfied
that the relevant Overseas Holder can be issued EP Global Shares without
breaching any relevant securities laws.
Shareholders' entitlements to both EP Global Shares and cash will be determined
by reference to the formula asset value of the Company (FAV), which will be the
Company's NAV as at the Calculation Date after providing for all the Company's
liabilities and the fixed costs incurred by the Company in implementing the
Proposals, including the contribution of up to GBP440,000 to EP Global's costs
and expenses in connection with the Proposals which the Company has agreed to
make (the Costs Contribution).
Shareholders who elect for the Cash Option will bear (i) the Management
Agreement Termination Costs (which will comprise the annual management fees
that would have been payable by reference to that part of the Company's assets
attributable to Shareholders who elect (or are deemed to have elected) for the
Cash Option (cash exiters) and the current annual administration fee of
GBP116,337) and (ii) an amount equal to 0.25 per cent. of that part of the FAV
which is attributable to cash exiters (the Cash Exit Charge). Shareholders who
elect for the Rollover Option will benefit from the Cash Exit Charge borne by
cash exiters, but will bear the Stamp Duty Costs (which will reflect any stamp
duty or stamp duty reserve tax payable on the transfer of assets in the
Rollover Fund from the Company to EP Global by reference to the value of the
relevant assets at the Calculation Date).
If the Proposals are implemented, Edinburgh Partners has agreed to set off
against the management fees otherwise payable to it by EP Global under the
terms of the EP Global Management Agreement an amount equal to the Management
Agreement Termination Costs. Edinburgh Partners has also agreed to amend the EP
Global Management Agreement so that the annual rate of the management fee
thereunder will be reduced from 0.75 per cent. to 0.65 per cent. in respect of
the portion (if any) of the market capitalisation of EP Global that exceeds
GBP100 million.
In the event that the Proposals are not approved or do not become effective,
the Company would continue as an investment trust.
Information on EP Global
EP Global is an existing investment trust which focuses on investments in
issuers throughout the world. Edinburgh Partners has been the investment
manager of EP Global since its launch in November 2003. At 2 February 2011 (the
latest practicable date before the release of this announcement) EP Global had
unaudited net assets (with current year income) of GBP52.6 million and 27,365,480
Ordinary Shares in issue (excluding treasury shares. Its market capitalisation
at that date was GBP50.7 million. EP Global has an indefinite life.
Investment objective and policy
EP Global's investment objective is to provide shareholders with an attractive
real long-term total return by investing globally in undervalued securities.
The portfolio is managed without reference to the composition of any stock
market index.
EP Global invests in a focused portfolio of approximately 30 to 40 securities
of issuers throughout the world, predominantly in quoted equities. EP Global
may also invest in unquoted securities, which are not anticipated to exceed 10
per cent. of EP Global's total assets at the time of investment (excluding
shares held in Edinburgh Partners). No investment in EP Global's portfolio may
exceed 15 per cent. of EP Global's total assets at the time of that investment
(being the maximum amount permitted for an investment trust in terms of Chapter
4 of Part 24 of the Corporation Tax Act 2010).
The investment objective and policy are intended to distinguish EP Global from
other investment vehicles which have relatively narrow investment objectives
and are thus constrained in their decision making and asset allocation. The
objective and policy allow EP Global to be constrained in its investment
selection only by valuation and to be pragmatic in portfolio construction by
only investing in securities which the investment manager considers to be
undervalued on an absolute basis.
Any material changes to EP Global's investment policy will require the approval
of EP Global Shareholders at a general meeting.
Performance track record
Since EP Global Shares commenced trading in December 2003, EP Global's
long-term performance has been sound. The table below compares the total return
(assuming all dividends are re-invested) to shareholders with the total
shareholder return on a notional investment made up of shares of the same kind
and number as those by reference to which the FTSE All-World Total Return Index
is calculated:
1 year 3 year 5 year From commencement
of trading
(15.12.03)
NAV return 11.3% 20.1% 27.4% 108.2%
Share price return 12.4% 34.5% 22.3% 99.4%
FTSE All-World Total Return 20.1% 23.1% 32.7% 84.8%
Index
Source: Edinburgh Partners/Datastream. All figures are calculated on a total
return basis over periods to 31 January 2011.
Discount control policy
The EP Global Board has adopted a strict approach to monitoring the level of
any discount to NAV at which the EP Global Shares trade and to the buy-back of
shares and has instructed the investment manager accordingly. The EP Global
Board is also committed to using its powers to allot or repurchase EP Global
Shares with a view to maintaining the middle market price at which the shares
trade at close to the NAV most recently published (taking into account the
effect on the NAV per EP Global Share of any rights to which those shares are
trading "ex"). The average discounts to NAV at which EP Global Shares traded
over the periods of 1 year and 3 years to 31 December 2010 were 3.1 per cent.
and 5.0 per cent. respectively, and at 2 February 2011 (the latest practicable
date before the release of this announcement) the discount stood at 3.5 per
cent.
During the year ended 31 December 2010 EP Global bought back 1,393,700 EP
Global Shares into treasury (2009: 782,000; 2008: 1,734,000) and nil EP Global
Shares for cancellation (2009: 1,218,000; 2008: nil).
Capital structure
Share capital
EP Global's issued share capital comprises ordinary shares only, all of which
are listed on the premium segment of the Official List and admitted to trading
on the London Stock Exchange's main market for listed securities.
The EP Global Shares issued pursuant to the Scheme will not qualify for the
interim dividend of EP Global expected to be paid on 18 March 2011 in respect
of the year ended 31 December 2010 referred to under "Dividend policy" below,
but otherwise will rank pari passu in all respects with the existing issued EP
Global Shares, including the right to receive all dividends and other
distributions (if any) declared, paid or made by reference to a record date
falling on or after the Effective Date.
Borrowings
EP Global's investment policy permits it to borrow for investment purposes up
to the equivalent of 25 per cent. of its total assets and, unlike the Company,
EP Global currently employs gearing. EP Global recently entered into a GBP5
million secured multicurrency revolving facility agreement with Scotiabank
Europe PLC, of which approximately GBP4.5 million has been drawn down in a
combination of US dollars and Japanese yen.
Directors and management of EP Global
Details of the current EP Global Directors, all of whom are non-executive and
independent of Edinburgh Partners, are contained in the Circular. It is
intended that Giles Weaver, a Director of the Company, will join the EP Global
Board if the Scheme becomes effective. Mr Weaver will be a non-executive
director and independent of Edinburgh Partners.
Edinburgh Partners manages EP Global's investments under an investment
management agreement dated 16 April 2008 (the EP Global Management Agreement),
details of which are contained in the Circular. Edinburgh Partners is an asset
manager in the UK with approximately GBP9.3 billion of funds under management at
31 December 2010.
Dr Sandy Nairn is the manager of EP Global's portfolio. Dr Nairn has managed EP
Global's portfolio since EP Global's shares commenced trading in December 2003.
Dr Nairn was one of the founders of Edinburgh Partners and is its Chief
Executive Officer. Prior to founding Edinburgh Partners, Dr Nairn had spent
time at Templeton Investment Management and Scottish Widows Investment
Partnership. Dr Nairn has also been primarily responsible for the management of
the Company's portfolio since the Company's launch in July 2005.
Dividend policy
EP Global does not place any emphasis on income in its choice of investments,
which are made solely to generate attractive real long-term total returns. EP
Global does not have any formal policy to achieve or maintain any specified
level of dividend, but intends primarily to ensure sufficient revenues to meet
expenses. The EP Global Board has previously stated that it would rather reduce
EP Global's dividend pay-out than compromise its investment policy, and has in
fact done so on one occasion. EP Global pays one dividend in respect of each
financial year, usually in May, either as an interim or final dividend. For the
year ended 31 December 2009 EP Global paid a dividend of 2.4p per share (2008:
3.1p per share).
EP Global expects to declare an interim dividend in respect of the year ended
31 December 2010 on 23 February 2011 and expects to pay such dividend on 18
March 2011. This dividend will be paid to EP Global Shareholders on the EP
Global Register at the close of business on 4 March 2011, and the holders of EP
Global Shares issued pursuant to the Scheme will not qualify to receive this
dividend in respect of their new EP Global Shares.
Entitlements under the Scheme
Under the Scheme, each Shareholder on the Register on the Record Date (other
than an Overseas Holder) may elect to receive:
* such number of EP Global Shares as have a value (at the EP Global FAV per
share) equal to the proportion of the Rollover FAV attributable to such
Shareholder's Shares; and/or
* an amount of cash equal to the proportion of the Cash Entitlement
attributable to such Shareholder's Shares.
Both the Rollover FAV and the Cash Entitlement (which will determine the
respective entitlements under the Scheme of Shareholders who elect for the Cash
Option and the Rollover Option) will be determined by reference to the FAV of
the Company. This will be calculated by the Board and will be the NAV of the
Company as at the Calculation Date (calculated in accordance with paragraph 5.1
of Part 3 of the Circular and the Company's accounting policies) after
providing for all of the Company's liabilities, including the proposed interim
dividend of the Company referred to under "Proposed interim dividend" below,
current and future, actual and contingent liabilities and the costs of
implementing the Proposals (including the Costs Contribution), other than the
Management Agreement Termination Costs and the Stamp Duty Costs.
Following the calculation of the FAV, the Company will allocate the FAV between
those Shareholders who have elected (or are deemed to have elected) for the
Cash Option and the Rollover Option respectively pro rata according to their
Elections. The Cash Entitlement will be an amount equal to the proportion of
FAV attributable to cash exiters less (i) the Management Agreement Termination
Costs and (ii) the Cash Exit Charge, which charge will be applied for the
benefit of Shareholders who have elected (or are deemed to have elected) for
the Rollover Option. Shareholders who elect for the Cash Option will thus bear
all the costs of terminating the Management Agreement.
The Rollover FAV will be an amount equal to the proportion of the FAV
attributable to those Shareholders who have elected (or are deemed to have
elected) for the Rollover Option plus the Cash Exit Charge less any Stamp Duty
Costs. Shareholders who elect for the Rollover Option will thus benefit from
the Cash Exit Charge borne by cash exiters, but will bear the cost of any stamp
duty or stamp duty reserve tax payable on the transfer of securities forming
part of the Rollover Fund (calculated by reference to the value of those
securities as at the Calculation Date) from the Company to EP Global.
The EP Global FAV will be the NAV of EP Global as at the Calculation Date
calculated on the basis described in paragraph 5.4 of Part 3 of the Circular
adjusted to reflect the interim dividend expected to be paid by EP Global in
respect of the year ended 31 December 2010 referred to above (which
Shareholders electing for the Rollover Option will not receive) and any costs
and expenses of the Proposals to be borne by EP Global after allowing for the
Costs Contribution and the Stamp Duty Costs, which are to be paid by the
Company.
Illustrative financial effects of the Proposals
Had the Scheme been implemented on 2 February 2011 (the latest practicable date
before the release of this announcement) and assuming (for illustrative
purposes only) that the holders of 75 per cent. of the Shares in issue elect
for the Rollover Option and the remaining Shareholders elect for the Cash
Option, based on the other assumptions set out below the FAV would have been
GBP85.9 million, the Rollover FAV and the Rollover FAV per Share would have been
GBP64.4 million and 117.40p respectively, the Cash Entitlement and the Cash
Entitlement per Share would have been GBP21.2 million and 115.94p respectively
and the EP Global FAV and the EP Global FAV per share would have been GBP52.6
million and 192.04p respectively. On this basis, the exchange ratio under the
Rollover Option would have been 0.6113 of an EP Global Share for each Share in
the Company. All of these calculations exclude the dividends proposed to be
paid by the Company and expected to be paid by EP Global referred to in this
announcement.
On the above basis, a holder of 1,000 Shares who elects for the Rollover Option
would receive 611 EP Global Shares and a holder of 1,000 Shares who elects for
the Cash Option would receive GBP1,159.
On the basis of the assumptions set out below, the impact on NAV and market
value for Shareholders would, on this basis, be as follows:
% impact
NAV impact for Shareholders electing for EP Global Shares -1.50
Market value impact for Shareholders electing for EP 9.68
Global Shares
NAV impact for Shareholders electing for cash -2.72
Market value impact for Shareholders electing for cash 12.29
Assumptions
The illustrative figures set out above are based on the following assumptions:
i. The NAV (cum income) of the Company is GBP87.2million.
ii. The total costs payable by the Company in respect of the Proposals to be
deducted in calculating FAV are GBP1.12 million (including in respect of the
Costs Contribution).
iii. The Management Agreement Termination Costs are GBP0.2million.
iv. The Cash Exit Charge borne by the cash exiters which is applied for the
benefit of Shareholders who elect (or are deemed to have elected) for the
Rollover Option is GBP53,661.
v. The Stamp Duty Costs are GBP45,000.
vi. There are no portfolio realisation costs.
vii. The Company's overseas withholding tax asset at 2 February 2011 of
GBP192,000 is deducted for the purposes of arriving at the FAV and the
illustrative figures. It is expected that all or a significant proportion
of the Company's overseas withholding tax asset at the Calculation Date
will be recovered in the first year of the liquidation, but there is a risk
that part will not be recovered during such period or at all.
viii. The Liquidators' retention of GBP50,000 is excluded.
ix. The number of Shares in issue on the Calculation Date is 73,142,881.
x. The NAV (with current year income) of EP Global is GBP52.6 million.
xi. The number of EP Global Shares in issue on the Calculation Date is
27,365,480.
xii. The price at which EP Global Shares trade will represent a discount of
3.54 per cent. to the NAV per EP Global Share.
xiii. After allowing for the Costs Contribution and payment by the Company of
the Stamp Duty Costs, there are no costs to EP Global in implementing the
Proposals.
xiv. Holders of 75 per cent. of the Shares in issue elect for the Rollover
Option, while the remaining Shareholders elect for the Cash Option.
It should be emphasised that the figures above are given for illustrative
purposes only and should not be regarded as a forecast of the actual FAV,
Rollover FAV, Rollover FAV per Share, Cash Entitlement, Cash Entitlement per
Share, EP Global FAV or EP Global FAV per share, all of which will be
calculated as at the Calculation Date.
Proposed interim dividend
The Board proposes that the Company should pay an interim dividend in respect
of the year ending 31 July 2011 to Shareholders on the Register at the close of
business on 4 March 2011. This dividend will be paid prior to, and is not
dependent on, the implementation of the Proposals. The Shares will go ex
dividend on 2 March 2011. Shareholders who have a dividend re-investment
instruction in place should note that this dividend will not be re-invested in
further Shares.
Benefits of the Proposals
The Board believes that the Proposals are the best way forward for
Shareholders, as they give each Shareholder the choice of continuing to invest
in an investment trust with a broadly similar investment objective to that of
the Company or receiving cash. In particular, the Board believes that the
Proposals have the following beneficial features:
* Shareholders who elect for EP Global Shares:
* will be able to maintain their exposure to global securities through a
closed-ended investment vehicle without incurring an immediate liability to
UK capital gains tax;
* will be able to continue to benefit from access to Edinburgh Partners'
management expertise; and
* should benefit from a market value uplift to their shares, as EP Global
Shares have in recent years traded at a much smaller discount to NAV than
have the Shares of the Company.
* Shareholders who wish to realise some or all of their investment for cash
will be able to do so at close to net asset value.
One of the aims of the Proposals is to create the opportunity for Shareholders
to invest in a larger and more liquid company. However, the size of EP Global
following implementation of the Proposals will depend on the Elections made by
Shareholders. As at 2 February 2011, the unaudited NAV of EP Global (with
current year income) was GBP52.6 million. On the assumptions set out under
"Illustrative financial statistics" above, including that the holders of 75 per
cent. of the Shares elect for the Rollover Option, the unaudited NAV of EP
Global (with current year income) would be approximately GBP117.0 million
compared with the Company's unaudited NAV at 2 February 2011 of GBP87.2 million.
However, the Proposals are not conditional on a minimum level of Elections for
the Rollover Option and therefore there can be no guarantee that if the
Proposals are implemented, EP Global's NAV will be greater than that of the
Company at the present time.
The choice between the options available under the Proposals will be a matter
for each Shareholder to decide and will be influenced by his or her investment
objectives and by his or her personal, financial and tax circumstances.
Accordingly, Shareholders should, before making any Election, read carefully
all the information in the Circular and in the EP Global Prospectus which will
accompany it.
Shareholders who are in any doubt as to the contents of the Circular or as to
the action to be taken should seek their own personal financial advice from
their financial adviser authorised under FSMA.
Management of the Company's portfolio
The Directors intend that the Company should remain fully invested until the
First Meeting, by which time Shareholders' elections will be known. The
portfolio will then be re-designed, having regard to the extent of the
Elections for EP Global Shares, so as largely to comprise securities which
Edinburgh Partners has indicated that it wishes to receive which are in line
with EP Global's investment objective and policy.
Apportionment of the Company's assets on liquidation
On liquidation, the Liquidators will set aside cash and other assets in a
Liquidation Fund in an amount which they consider sufficient to provide for all
current and future, actual and contingent liabilities of the Company, including
a retention (estimated at GBP50,000) 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 Option. The remaining assets of the
Company will be allocated to the Rollover Fund, which will be transferred to EP
Global.
Directors' intentions
Each of the Directors intends to vote in favour of the resolutions to approve
the Proposals at the Meetings and to elect for EP Global Shares in respect of
his own beneficial holding, which total 389,042 Shares (representing 0.53 per
cent. of the Company's total voting rights).
Expected timetable
2011
Proposed interim dividend announced Wednesday, 23 February
Time and date from which it is advised that 8.00 a.m. on Friday, 25
dealings in Shares should only be for cash February
settlement and immediate delivery of documents
of title
Latest time and date for receipt of forms of 11.00 a.m. on Tuesday, 1 March
proxy for the First Meeting
Latest time and date for receipt of Forms of 5.00 p.m. on Tuesday, 1 March
Election or TTE instructions from Shareholders
Record Date for the Scheme the close of business on
Tuesday, 1 March
Shares disabled in CREST1 Tuesday, 1 March
Ex-dividend date for the Shares Wednesday, 2 March
First Meeting 11.00 a.m. on Thursday, 3 March
Record date for the proposed interim dividend the close of business on
Friday, 4 March
Calculation Date the close of business on
Monday, 7 March
Latest time and date for receipt of forms of 11.00 a.m. on Tuesday, 8 March
proxy for the Second Meeting
Amendment to the Official List and dealings in 8.00 a.m. on Wednesday, 9 March
Reclassified Shares commence on the London
Stock Exchange2
Dealings in Reclassified Shares suspended 7.30 a.m. on Thursday, 10 March
Payment of the proposed interim dividend Thursday, 10 March
Second Meeting 11.00 a.m. on Thursday, 10
March
Effective Date for implementation of the Thursday, 10 March
Proposals and commencement of the liquidation
of the Company
Admission to listing of EP Global Shares issued 8.00 a.m. on Friday, 11 March
pursuant to the Scheme
EP Global Shares issued in uncertificated form Friday, 11 March
pursuant to the Scheme credited to CREST
accounts of Shareholders entitled thereto
CREST payments made in respect of cash Friday, 11 March
entitlements
Cheques despatched to Shareholders in respect by Monday, 14 March
of cash entitlements
Definitive certificates in respect of EP Global week commencing Monday, 14
Shares issued in certificated form pursuant to March
the Scheme despatched to Shareholders entitled
thereto
1 For the avoidance of doubt, the Register will remain open until the Effective
Date.
2 Reclassified Shares are a technical requirement of the Scheme and will be
created if the resolution to be proposed at the First Meeting is passed and
becomes effective.
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 changes, the revised time(s) and
/or date(s) will be notified to Shareholders by an announcement through a
Regulatory Information Service provider. Save where otherwise provided, all
references to times are to London times.
Enquiries
Kenneth Greig 0131 270 3800
Edinburgh Partners Limited
William Simmonds 020 7588 2828
Edward Gibson-Watt
J.P. Morgan Cazenove
A copy of the Circular has been submitted to the National Storage Mechanism and
will shortly be available for inspection at: www.Hemscott.com/nsm.do
Note to Shareholders with registered addresses in New Zealand
Shareholders with registered addresses in New Zealand may elect, subject as
mentioned below, for the Rollover Option and receive EP Global Shares in
respect of their entire holding of Shares.
The ability for New Zealand Shareholders to participate in the Rollover Option
is conditional on EP Global being granted a specific exemption by the New
Zealand Securities Commission from certain provisions of the New Zealand
Securities Act 1978 and the Securities Regulations 2009. It is expected that
such exemption will be published in the New Zealand Gazette on Monday, 7
February 2011 (New Zealand time), at which time the exemption will become
effective. Notwithstanding any other provision of the Circular, until that
exemption has been published in the New Zealand Gazette, New Zealand
Shareholders will not be entitled to elect (nor be deemed to have elected) to
receive EP Global Shares and will instead be treated as Overseas Holders for
the purposes of the Circular.
The Circularis not a New Zealand prospectus or investment statement and has not
been registered, filed with or approved by any New Zealand regulatory authority
under or in accordance with the New Zealand Securities Act 1978 (or any other
relevant New Zealand law).
END
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