TIDMCPE
RNS Number : 1243P
Charter European Trust plc
28 September 2011
CHARTER EUROPEAN TRUST PLC (the "Company")
Proposals for the reconstruction of the Company
28 September 2011
As explained in its announcement of 22 August 2011, the Board of
Charter European Trust plc has been reviewing options available to
the Company and its shareholders going forward. To this end, the
Board has received proposals from both the Company's investment
manager, RCM (UK) Limited (the "Manager"), and several third party
investment management houses. Having completed its review, and
having consulted with the Company's major shareholders as far as
practicable, the Board has concluded that it would be in the best
interests of shareholders as a whole for the Company to undertake a
scheme of reconstruction which would result in the liquidation of
the Company. The scheme would provide shareholders with the choice
of realising their investment in whole or in part for cash at
realisable net asset value and/or to roll over some or all of their
investment into the Jupiter European Fund ("Jupiter European").
Jupiter European is an award winning UK authorised unit trust
managed by Alexander Darwall of Jupiter Asset Management Limited
("Jupiter"). Jupiter European has a strong performance record: over
the past one, three and five years to 31 August 2011, it has
returned 9.4 per cent., 23.4 per cent. and 50.3 per cent.,
respectively and has been consistently ranked top quartile over the
periods. The annual management fee applicable to the units in
Jupiter European to be made available to shareholders is 0.75 per
cent. Under a scheme of reconstruction, shareholders would be able
to roll over their investment into Jupiter European without
crystallising any latent capital gains tax liability. In addition,
shareholders who roll over into Jupiter European will be able to
realise their investment on any business day in the United Kingdom
at a price that fully reflects its underlying net asset value.
Midas Investment Management Limited ("Midas") has, over the past
few months, been aggressively acquiring shares in the Company. At
present, funds under the management of Midas hold approximately 25
per cent. of the Company's issued share capital and, as a result,
would have sufficient votes to block the scheme if it so wished.
The Board has endeavoured to engage with Midas on the proposals but
Midas has not been prepared to enter into meaningful discussions on
the subject at this juncture.
Midas has however made it clear that it will only support a set
of proposals which includes Manchester & London Investment
Trust plc ("M&L"), a fund ultimately controlled by Mr B.S
Sheppard and his immediate family, and managed by Midas, which is
controlled by Mr B.S Sheppard and his immediate family, as a
rollover option. The Board does not feel that M&L is an
appropriate rollover option for the following reasons:
1. M&L's shares stood at a 10.4 per cent. discount on 20
September 2011 (being the date of the last published NAV) to their
net asset value and over the past 12 months the average discount
has been 9.4 per cent. (source: Morningstar). It is difficult to
see why the Company's shareholders would want to suffer such an
immediate loss of value by rolling over their interest into M&L
at net asset value. Only shareholders with very significant capital
gains tax liabilities would, if they wish to be invested in
M&L, do better to roll over into M&L rather than take cash
and buy M&L in the secondary market;
2. M&L's investment policy is significantly different to the
Company's. M&L is not a European focussed fund and therefore
would not provide a continuing, similar investment exposure for
shareholders. The Board sees no particular merit in M&L when
compared to a large number of other investment funds outside the
European subsector which have better performance records, share
ratings and trading liquidity in their shares. The Board believes
that to the extent that there may be shareholders who wish to
change their asset allocation to another subsector, they are best
placed to make that judgment themselves and should do so by
electing for cash and reinvesting in a fund of their choice;
3. M&L's portfolio is relatively concentrated, with one
investment accounting for approximately 14 per cent. of asset value
and the top 10 holdings accounting for approximately 63 per cent.
(source: M&L 31 August 2011 factsheet). Such a fund should be
considered higher risk and, as such, not one that the Board
considers suitable to be put forward as an additional rollover
option;
4. Manchester & Metropolitan Investment Limited ("M&M"),
ultimately controlled by Mr B.S Sheppard and his immediate family,
owns over 50 per cent. of M&L. As a result, M&M has
effective control of M&L and is able, amongst other things, to
decide the future of M&L and change the investment policy.
Third party shareholders in such a fund will have limited
influence;
5. The Board is not aware of demand from among the Company's
shareholders, other than from Midas, for M&L as a rollover
option; and
6. Inclusion of M&L as a rollover option will increase the
costs of implementing a scheme as well as making it more complex
and extending the timetable for its implementation.
Notwithstanding the above, in the interests of pragmatism, the
Board is reluctantly prepared to put M&L forward as a secondary
rollover option. The Board awaits Midas' confirmation that it will
support such a scheme and trusts that it will do so given that
M&L will be included.
Midas has sought to focus debate on the Alliance Trust Savings
Scheme (the "ATS Savings Scheme") voting arrangements which, in the
Board's view, are not relevant to the implementation of the scheme.
Midas has requisitioned an extraordinary general meeting to put
forward a special resolution to shareholders to alter the ATS
Savings Scheme voting arrangements. In light of this, the Board
would make the following observations about the ATS Savings
Scheme:
1. The ATS Savings Scheme consists of approximately 1400 private
individuals, many of whom have been long-standing investors in the
Company. For the avoidance of doubt, neither the Directors nor the
manager holds shares in the Company through the ATS Savings
Scheme.
2. The purpose of the voting arrangements under the ATS Scheme
is to provide a democratic process through which ATS Savings Scheme
members are able to express their views as to how the ATS Savings
Scheme should vote its shares; the ATS Savings Scheme will then
vote its shares in such a way as to reflect the views so expressed.
It is clearly in Midas' interests to reduce the total number of
shares voted by the ATS Savings Scheme so that Midas' shareholding
has greater influence on the Company's future.
The Board believes the scheme of reconstruction described above
should meet the objectives of all shareholders and, as a result,
have the support of all shareholders. Accordingly, the Board will
continue to encourage Midas to engage in discussions about the
Company's future and give its support for these proposals.
Contacts:
Giles Weaver (Chairman) 020 7523 8000
Collins Stewart Europe Limited 020 7523 8000
Robbie Robertson
Andrew Zychowski
Lucy Lewis
Collins Stewart Europe Limited, which is authorised and
regulated in the United Kingdom by the Financial Services
Authority, is acting as adviser to Charter European Trust plc and
is acting for no-one else in connection with the contents of this
announcement, and will not be responsible to anyone other than the
Company for providing the protections afforded to clients of
Collins Stewart Europe Limited nor for providing advice in
connection with the contents of this announcement or any other
matter referred to herein. Collins Stewart Europe Limited is not
responsible for the contents of this announcement. This does not
exclude or limit any responsibilities which Collins Stewart Europe
Limited may have under the Financial Services and Markets Act 2000
or the regulatory regime established thereunder.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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