TIDMCPE
RNS Number : 2394W
Charter European Trust plc
26 January 2012
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
INTO THE UNITED STATES, CANADA, AUSTRALIA, SOUTH AFRICA OR
JAPAN
Charter European Trust plc (the "Company")
Publication of circular in relation to recommended proposals for
the reconstruction and winding up of the Company
26 January 2012
The Board of Directors of the Company has today published a
circular (the "Circular") containing detailed proposals for the
reconstruction of the Company.
Introduction
On 15 December 2011, the Company announced that the Board had
undertaken a further review of the options available in respect of
the future of the Company and that it intended to put forward
proposals to Eligible Shareholders to rollover their investment in
the Company into BlackRock Greater Europe Investment Trust plc
("BRGE"), a European focused investment trust managed by BlackRock
Investment Management (UK) Limited. The Proposals set out in the
Circular, which are unanimously recommended by the Board, comprise
a members' voluntary liquidation and a scheme of reconstruction of
the Company pursuant to which Shareholders will exchange their
Shares in the Company for BRGE Ordinary Shares and BRGE
Subscription Shares and BRGE will acquire the net assets of the
Company.
In order to consider and approve the Proposals, general meetings
have been convened for 15 February 2012 (the "First GM") and 24
February 2012 (the "Second GM"). The Resolutions to be proposed at
the General Meetings, on which all Shareholders may vote, are
required in order to obtain certain Shareholder authorities in
accordance with the Companies Act 2006, the Insolvency Act 1986 and
the Listing Rules, as follows:
(i) at the First GM, amongst other things, to approve the terms
of the Scheme set out in Part IV of the Circular, to amend the
Articles of Association to give effect to the Scheme and to
authorise the Liquidators to enter into and give effect to the
Transfer Agreement with BRGE, to distribute BRGE Shares to Eligible
Shareholders in accordance with the Scheme and to purchase the
interests of any dissentients to the Scheme and to cancel the
listing of the Company's Shares, with effect from 25 February 2013
(or, in the event that the liquidation is concluded within one year
of the Winding-up Date, such earlier date as the Liquidators shall
determine); and
(ii) at the Second GM, amongst other things, to appoint the
Liquidators and to wind up the Company.
The Proposals are conditional, amongst other things, on
Shareholder approvals being given at the First GM and the Second GM
(or, in each case, at any adjournment of such Meeting). Notices of
the meetings, both of which will be held at 10.00 a.m. at the
offices of RCM (UK) Limited, 155 Bishopsgate, London EC2M 3AD, are
set out at the end of the Circular.
The Proposals have the support of the Company's major
shareholder, Midas Investment Management Limited ("Midas"), which,
through funds under its management currently controls approximately
26 per cent. of the Company's issued Share capital. Midas has
irrevocably undertaken to support the Proposals and to vote in
favour of the Proposals at the General Meetings.
Background to and reasons for the Proposals
On 22 August 2011, the Board announced that, notwithstanding the
Company's good long-term net asset value performance compared to
its benchmark, the Company had failed to attract sufficient new
long-term investors and remained small in size, particularly in
comparison to its peer group. Accordingly, the Board announced that
it would examine and evaluate the options available to the Company
and its Shareholders going forward, either as a continuing vehicle
or in the context of a reconstruction. Thereafter, the Board
contacted the Company's major Shareholders to ascertain their views
on the future of the Company and on the Board's initial proposal
which involved a rollover into a unit trust managed by Jupiter
Asset Management Limited. As part of this process, the Board was
informed that Midas would not support such proposals.
Following this, the Board re-evaluated the options available to
the Company and formulated the Proposals now set out in detail in
the Circular, which provide for a reconstruction of the Company
into BRGE. As noted above, the Proposals have the support of Midas
and its clients, and Midas has entered into an irrevocable
undertaking to vote in favour of the Proposals.
The Proposals
Under the Proposals, the Company will be wound up on 24 February
2012 by means of a members' voluntary liquidation and its net
assets transferred to BRGE, which will act as the successor vehicle
to the Company. In this way, Eligible Shareholders will be given a
tax-efficient rollover of their entitlements.
BRGE Ordinary Shares
The number of BRGE Ordinary Shares to be issued to Eligible
Shareholders will be calculated by reference to the net asset value
of a BRGE Ordinary Share (the "BRGE FAV per Share") and the
adjusted net asset value of a Share in the Company (the "Charter
FAV per Share"). The BRGE FAV per Share and the Charter FAV per
Share will be calculated as at 5.00 p.m. on the Calculation Date
using each company's respective accounting policies (which are
substantially the same). Investments which are listed, quoted or
traded on a recognised stock exchange will be valued by reference
to the bid price on the principal stock exchange on which the
relevant investment is listed, quoted or dealt.
The BRGE FAV per Share will be the cum income undiluted net
asset value of a BRGE Ordinary Share.
The Charter FAV per Share will be the net asset value of a
Share, including accrued income, adjusted to reflect the Net Costs
in implementing the Proposals and the Retention.
Eligible Shareholders will be issued such number of BRGE
Ordinary Shares as have (at the BRGE FAV per Share) an aggregate
FAV equal to the FAV of their Charter Shares (subject to rounding
down in respect of fractional entitlements).
The number of BRGE Ordinary Shares to be issued pursuant to the
Scheme, the BRGE FAV per Share and the Charter FAV per Share will
be announced through a Regulatory Information Service as soon as
practicable following the Calculation Date.
The BRGE Ordinary Shares to be issued to Eligible Shareholders
pursuant to the Proposals will rank pari passu with the existing
BRGE Ordinary Shares already in issue.
BRGE Subscription Shares
The BRGE Subscription Shares entitle their holders to subscribe
for BRGE Ordinary Shares on 30 April 2012, 31 July 2012 and 31
October 2012. The subscription price is 183p per BRGE Ordinary
Share.
BRGE Subscription Shares will (subject to rounding down in
respect of fractional entitlements) be issued to Eligible
Shareholders in a ratio to the number of BRGE Ordinary Shares
issued to them pursuant to the Scheme that is equal to the ratio of
BRGE Subscription Shares to BRGE Ordinary Shares already in issue
(excluding any BRGE Ordinary Shares held in treasury) as at 5.00
p.m. on the Calculation Date. This will (save for the impact of any
rounding down in relation to fractional entitlements) maintain the
ratio of Ordinary Shares to Subscription Shares in issue in BRGE
and therefore ensure that there is no material effect on the
diluted NAV per BRGE Share.
The issue of Subscription Shares to Shareholders under the
Scheme will mean that the underlying NAV attributable to an
Eligible Shareholder's investment in BRGE will not be diluted
should the BRGE NAV growth exceed the 183p subscription price per
BRGE Ordinary Share and such Eligible Shareholders elect to
exercise their Subscription Share Rights.
As at 23 January 2012 (being the last practicable date prior to
the publication of this document), there was one BRGE Subscription
Share in issue for every 5.17 BRGE Ordinary Shares in issue.
The BRGE Subscription Shares issued to Eligible Shareholders
pursuant to the Proposals will rank pari passu with the existing
BRGE Subscription Shares already in issue.
Potential cash exit from BRGE
Whilst Shareholders will not be offered an immediate cash exit
under the Scheme, the board of directors of BRGE has confirmed that
it will implement a tender offer in May 2012 (the "Tender Offer").
Other than the passing of the BRGE Resolution, the Tender Offer
will not be subject to further BRGE shareholder approval. The
Tender Offer will enable BRGE Ordinary Shareholders (including
Eligible Shareholders who have received BRGE Ordinary Shares
pursuant to the Scheme) to tender all or part of their holdings of
BRGE Ordinary Shares for cash, subject to a maximum of 20 per cent.
in aggregate of the BRGE Ordinary Shares then in issue (excluding
any BRGE Ordinary Shares held in treasury). The board of directors
of BRGE has confirmed that the Tender Offer calculation date will
be 31 May 2012 and that the Tender Offer price will be 98 per cent.
of the fully diluted Net Asset Value per BRGE Ordinary Share at
that date. Holders of BRGE Ordinary Shares will be entitled to have
up to 20 per cent. of their respective holdings (the "Basic
Entitlement") purchased under the Tender Offer and will be able to
tender additional BRGE Ordinary Shares, but such excess tenders
will only be satisfied, (on a pro rata basis), to the extent that
other holders of BRGE Ordinary Shares tender less than their Basic
Entitlement. Following the implementation of the Scheme, former
Shareholders of the Company are expected to represent approximately
22 per cent. of BRGE as enlarged by the Proposals. Under the most
recent tender offer made by BRGE in November 2011, only 1.55 per
cent. of the BRGE Ordinary Shares then in issue were tendered.
However, there is no guarantee that, if the Proposals are
implemented and Eligible Shareholders rollover into BRGE Ordinary
Shares, such Shareholders will be able to realise more than 20 per
cent. of their holdings of BRGE Ordinary Shares through the Tender
Offer.
Transfer arrangements
Under the Transfer Agreement, to be entered into between the
Company, the Liquidators and BRGE, the Liquidators will transfer
the Company's net assets (after making provision for the Net Costs
of the implementation of the Proposals, and the Retention) to BRGE.
Further details regarding the Transfer Agreement are set out in
Part III of the Circular.
Portfolio management and management of the realisation of
certain investments
In anticipation of the Scheme becoming effective and in order to
provide for a timely realisation process, the Board will instruct
RCM (UK) Limited, the Company's manager (the "Manager") to commence
the realisation of the Company's UK investments, and any stocks
with a market capitalisation of less than EUR3 billion. The
proceeds of this realisation will be reinvested in securities which
comprise the ten largest holdings in BRGE's portfolio. Such
investments are also within the Company's investment policy. In
this way, this part of the Company's portfolio will be partially
realigned so as to be suitable to be held by BRGE following
implementation of the Scheme. As at close of business on 23 January
2012, the investments subject to the realisation process described
immediately above accounted for approximately 34 per cent. of the
Company's total portfolio.
The Board believes that the Manager is the most appropriate
party to reorganise and dispose of this part of the Company's
portfolio, particularly given its knowledge of the portfolio and
its relationships with many of the companies in which the Company
is invested, and accordingly the Manager will be retained as the
manager of the Company's portfolio until the date of the Second
General Meeting.
BlackRock Greater Europe Investment Trust plc
Summary
BRGE is a UK investment trust with an indefinite life, which was
established on 1 June 2004 as a successor company to Merrill Lynch
European Investment Trust plc.
As at 23 January 2012 (being the last practicable date prior to
the publication of this document), BRGE had an unaudited NAV of
178.24p, 94,873,100 BRGE Ordinary Shares (excluding treasury
shares) and 18,342,725 BRGE Subscription Shares in issue, net
assets of approximately GBP169.1 million and a market
capitalisation of approximately GBP164.1 million.
Over the last year, the BRGE Ordinary Shares have traded at an
average discount to NAV of 1.1 per cent. (with debt at market and
cum income) against a sector average discount of 11.0 per cent.
(source: Morningstar). Since its launch on 20 September 2004 to 23
January 2012, BRGE has returned 105.65 per cent. versus 66.87 per
cent. for the FTSE World Europe ex UK (both with income
reinvested).
Investment Objective and Policy of BRGE
BRGE's investment objective is the achievement of capital
growth, primarily through investment in a focused portfolio
constructed from a combination of the securities of large, mid and
small capitalisation European companies, together with some
investment in the developing markets of Europe.
BRGE's policy is that its portfolio should consist of
approximately 30 to 70 securities and that the majority of the
portfolio will be invested in larger capitalisation companies,
being companies with a market capitalisation of over EUR5 billion.
Up to 25 per cent. may be invested in companies in developing
Europe with the flexibility to invest up to 5 per cent. of the
portfolio in unquoted investments. However, overall exposure to
developing European companies and unquoted investments together
will not exceed 25 per cent. of BRGE's portfolio. Direct investment
in Russia is limited to 10 per cent. of BRGE's assets. Investments
may also include depositary receipts or similar instruments
representing underlying securities. BRGE also has the flexibility
to invest up to 20 per cent. of the portfolio in debt securities,
such as convertible bonds and corporate bonds. The use of any
derivative instruments such as financial futures, options and
warrants and the entering into of stock lending arrangements will
only be for the purposes of efficient portfolio management.
Investment in developing European securities may be either
direct or through other funds, including those managed by
BlackRock, subject to a maximum of 15 per cent. of the
portfolio.
While BRGE may hold shares in other investment companies
(including investment trusts), BRGE will not (save in certain
circumstances) invest more than 10 per cent., in aggregate, of the
value of its total assets in other listed closed-ended investment
funds.
BRGE achieves an appropriate spread of risk by investing in a
diversified portfolio of securities.
Gearing of BRGE
BRGE may, from time to time, use borrowings to gear its
investment policy or in order to fund the market purchase of BRGE
Ordinary Shares. Under the BRGE Articles, the net borrowings of
BRGE may not exceed 100 per cent. of the value of the gross assets
of BRGE. However, in normal market conditions, borrowings are not
expected to exceed 15 per cent. of the value of the net assets of
BRGE at the time of draw-down of the relevant borrowings. This
gearing typically is in the form of an overdraft which can be
repaid at any time.
Manager of BRGE
BRGE is managed by BlackRock Investment Management (UK) Limited
("BlackRock"), a company incorporated in England and Wales on 16
May 1986 under the Companies Act 1985 as a private company with
registered number 02020394. BlackRock, with its affiliated global
entities, had approximately US$3.513 trillion of funds under
management as at 31 December 2011. BlackRock manages assets for
open-ended and closed-ended funds, and institutional and private
clients throughout the world. Nine of the funds under management
are investment trusts, investing in Europe, Latin America and
globally in various sectors, with assets ranging from approximately
GBP76 million to GBP1,480 million (information in relation to funds
under management has been sourced from BlackRock).
Management Fee
The management fee payable to BlackRock is comprised of a basic
fee and, if applicable, a performance fee.
The basic fee is calculated and accrued monthly and is payable
in arrears in respect of each quarter ending on 31 August, 30
November, the last day of February and 31 May, at a rate of 0.70
per cent. per annum of the value of the market capitalisation of
BRGE on the last business day of the relevant calendar month.
Should any assets be invested in funds managed by BlackRock or its
associates which have their own management fees, these charges will
be taken into account when calculating the fee payable to BlackRock
(in order to avoid double charging).
BlackRock is also entitled to a performance fee where the
annualised percentage change in BRGE's share price outperforms the
annualised percentage change in the FTSE World Europe (ex UK) Index
over a rolling three year period. The performance fee is calculated
by (i) determining the amount by which the percentage change in the
share price outperforms the percentage change in the FTSE World
Europe (ex UK) Index; (ii) multiplying the difference calculated in
(i) by the average market capitalisation of BRGE (as calculated on
specified dates each year and adjusted to take account of unclaimed
dividends in each preceding 12 month period) over the rolling three
year period; and (iii) multiplying the product of (ii) by 15%.
Where payable, the performance fee accrues monthly and is invoiced
at the end of each rolling three year period, ending 31 August in
the relevant year. The aggregate of the basic fee and the
performance fee will be capped at 1.15 per cent. of the actual
market capitalisation (as adjusted to take account of unclaimed
dividends in each preceding 12 month period) of BRGE as calculated
on 31 August in the relevant year.
Benefits of the Proposals
The Directors consider that the Proposals should have the
following benefits for Shareholders as compared to their current
position, or under a liquidation:
(i) they enable Eligible Shareholders to maintain their European
investment exposure through an investment trust;
(ii) investment in BRGE will provide Eligible Shareholders with
a holding in a substantially larger investment trust than the
Company, with greater secondary market liquidity;
(iii) BRGE Ordinary Shares have historically traded at prices
close to NAV. This reflects in part BRGE's practice of conducting
regular bi-annual tender offers (at the BRGE Board's discretion)
for up to 20 per cent. of BRGE's issued ordinary shares;
(iv) the board of directors of BRGE has confirmed that it will
implement the Tender Offer in May 2012. The Tender Offer will
enable BRGE Ordinary Shareholders (including Eligible Shareholders)
to tender all or part of their holdings of BRGE Ordinary Shares for
cash, subject to a maximum of 20 per cent. in aggregate of the BRGE
Ordinary Shares then in issue;
(v) BRGE has historically conducted bi-annual tender offers in
order to allow BRGE Ordinary Shareholders to tender all or part of
their holdings of BRGE Ordinary Shares (although there is no
guarantee that BRGE will conduct such tender offers in the
future);
(vi) Shareholders will not suffer the dealing costs that would
be incurred on the full realisation of the Company's portfolio in
the event of a simple winding-up;
(vii) Shareholders who may be subject to UK CGT should be able
to rollover their investment into BRGE and thereby continue to
receive investment returns without triggering an immediate
liability to UK CGT; and
(viii) the use of a rollover vehicle will enable Shareholders to
avoid dealing and other costs associated with a share purchase in
the secondary market.
Dividend
The Directors have declared a dividend of 2.65p in respect of
the period to 30 November 2011 (the "Dividend"). This is the same
amount as the final dividend paid in respect of the financial year
to 30 November 2010. The Directors do not expect to pay a dividend
for the period from 1 December 2011 to 23 February 2012. The
Dividend is proposed to be paid on 21 February 2012 to Shareholders
on the Register as at 5.00 p.m. on 3 February 2012. The ex-dividend
date will be 1 February 2012.
As the Company will be entering members' voluntary liquidation
shortly after the payment of the Dividend, the dividend
reinvestment plan operated by the Company will be suspended and
will not be available for the purposes of the Dividend.
Conditions to the Scheme
The Scheme is conditional, among other things, upon:
-- the passing of all Resolutions to be proposed at the First GM
and the Second GM (or at any adjournments thereof) and upon any
conditions of such Resolutions being fulfilled;
-- the passing of the BRGE Resolution;
-- admission of the BRGE Shares to be issued to Eligible
Shareholders pursuant to the Scheme to listing on the Official List
of the UKLA and to trading on the London Stock Exchange; and
-- the Directors resolving to proceed with the Scheme.
In the event that the BRGE Resolution is not passed, or the
Directors do not resolve to proceed with the Scheme, the Second GM
will be adjourned indefinitely and the Scheme will lapse.
Further details of the Proposals and the Scheme which will
implement the reconstruction of the Company, are set out in Parts
III and IV of this document and further details of BRGE are set out
in the BRGE Prospectus.
Plan Participants holding Shares with Alliance Trust Savings
Limited
Plan Participants should be aware that they will continue to be
able to hold any BRGE Shares received by them by virtue of the
Proposals as part of the share scheme for retail investors operated
by Alliance Trust Savings Limited.
Timetable
2012
Ex dividend date for the Dividend 1 February
Dividend Record Date 5.00 p.m. 3 February
Latest time for receipt of Plan Forms of close of business
Direction for the First GM and the Second on 8 February
GM from Plan Participants
Latest time for receipt of Forms of Proxy 10.00 a.m. on 13 February
from Shareholders for First GM
First GM to approve Proposals 10.00 a.m. on 15 February
Dividend paid to Shareholders 21 February
Latest time for receipt of Forms of Proxy 10.00 a.m. on 22 February
from Shareholders for Second GM
Calculation Date 5.00 p.m. on 22 February
Proposal Record Date, Register of Shareholders close of business
closed and Shares disabled in CREST on 23 February
Suspension of listing of Shares 7.30 a.m. on 24 February
Second GM 10.00 a.m. on 24 February
Winding-Up Date and Transfer Agreement executed 24 February
Effective Date and Transfer Agreement implemented 27 February
CREST accounts credited with BRGE Ordinary 27 February
Shares and BRGE Subscription Shares
Certificates dispatched in respect of new on or as soon as practicable
BRGE Ordinary Shares and BRGE Subscription after 5 March
Shares
2013
Cancellation of listing of Charter Shares 25 February*
* Or, in the event that the liquidation is concluded within one
year of the Winding-up Date, such earlier date as the Liquidator
shall determine.
National Storage Mechanism
Copies of the Circular and the BRGE Prospectus have been
submitted to the National Storage Mechanism will shortly be
available for inspection at:
www.hemscott.com/nsm.do
All references in this announcement are to London times.
Unless otherwise stated in the announcement, capitalised terms
are as defined in the Circular.
This announcement does not contain all the information which is
contained in the Circular and Shareholders should read the Circular
and the prospectus published by BRGE today in their entirety.
Contacts:
Giles Weaver (Chairman) 020 7523 8000
Peter Ingram (Company Secretary) 020 7065 1467
Andrew Zychowski 020 7523 8363
Lucy Lewis 020 7523 8360
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 Investment
Trust plc and is acting for no-one else in connection with the
Proposals and 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 strategic review
and 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.
Collins Stewart Europe Limited is acting as sponsor to BlackRock
Greater Europe Investment Trust plc in relation to the publication
of the BRGE Prospectus but, as set out above, is not advising BRGE
in relation to the Proposals.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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