RNS Number:0065M
Henderson Far East Income Trust PLC
14 November 2006
HENDERSON GLOBAL INVESTORS
HENDERSON FAR EAST INCOME TRUST PLC
14 NOVEMBER 2006
This announcement is not for release, publication or distribution in or into the
United States, Canada, Australia, Japan or South Africa
Henderson Far East Income Trust plc (the "Company")
Recommended Proposals for the voluntary winding up of the Company and
the rollover of Shareholders' interests into Henderson Far East Income Limited
On 13 July 2006 the Company announced that it was considering proposals for the
Company to be re-domiciled in Jersey in order to achieve tax savings that should
result in an increase in the amount of income available for distribution to
Shareholders.
The Company today announces that it is posting a Circular to its Shareholders
providing details of the Proposals and seeking approval for their
implementation. To this end extraordinary general meetings of the Company to
approve the Proposals are being convened for 7 and 15 December 2006. Notices of
the Meetings are set out at the end of the Circular. Accompanying the Circular
is a prospectus for Henderson Far East Income Limited ("HFEIL"), a newly-formed
Jersey-incorporated closed-ended investment company, which will be the successor
to Henderson Far East Income Trust plc if the Proposals are approved and
implemented.
The Board, advised by Teather & Greenwood, is unanimously recommending the
Proposals. The procedure for voting at the Meetings is set out in the Circular.
Background
The Company is resident in the United Kingdom for tax purposes and has,
historically, been approved as an investment trust. UK companies which qualify
for tax purposes as investment trusts are exempt from UK corporation tax on
realised capital gains. The exemption from tax applies to capital gains, but the
Company is subject to tax on its income. Because the Company's income is derived
predominantly from overseas sources, its net income incurs the burden of UK
corporation tax, at the current rate of 30 per cent. This tax charge therefore
makes a significant and recurring impact on distributable revenues and hence
depletes total shareholder returns. Furthermore, the Company's status as a UK
listed investment trust has meant that it has been subject to constraints on the
range of investments it has made.
It is believed that if the Company were to be established today, it would serve
Shareholders' interests best by being established offshore.
Page 2
Benefits of the Proposals to the Company
The Proposals are intended to provide the following long-term benefits:
* HFEIL will not be subject to UK corporation tax, which should
significantly increase its net distributable income and thereby enhance total
returns; and
* HFEIL may enjoy increased investment flexibility because it will not need to
seek to be approved as an investment trust.
The Proposals are intended to achieve these benefits with a small increase in
annual costs of the Company. In addition, if the Proposals become effective, the
Company will pay the Special Dividend of 8.5p per share shortly before the
Effective Date.
The Company's total tax charge for the year ended 31 August 2006 was some #3.7
million (2005: #3.7 million). Of this amount, some #2.3 million was UK
corporation tax which the Board has been advised would not have been payable had
the Company been incorporated and resident offshore. The balance, some #1.4
million, largely represents irrecoverable taxes deducted at source on income
received from companies in the Company's investment portfolio. The effective
migration of the Company offshore is expected to result in a small increase in
these irrecoverable withholding taxes. It is the intention of the Company to
incorporate one or more subsidiaries in Malta which should assist in keeping
this increase to a minimum.
The Board estimates that the net saving in tax for the year ended 31 August
2006, had the Company been outside the scope of UK corporation tax, would have
been approximately #2.2 million. This tax saving would have resulted in a 30 per
cent. increase in the Company's net income available for distribution to
Shareholders. It should be noted that the figures above are estimates based on
historic data, they are for illustrative purposes only and that there is no
guarantee that such tax savings can be made as a result of the implementation of
the Proposals.
Impact of the Proposals on Shareholders
If the Proposals are approved and implemented, the Company's assets will be
transferred to HFEIL and Shareholders will receive one HFEIL Share for each
Share held on the Record Date. Shareholders will therefore receive their
dividends from HFEIL following the Scheme becoming effective. In the case of
some Shareholders, such dividends may be subject to a higher rate of tax than is
payable on dividends received from the Company. However, the Board believes
that, taking the Shareholders as a whole, the expected increase in dividends
available for distribution to Shareholders by HFEIL will, in the case of a
substantial majority of Shareholders, more than compensate for any increase in
the tax paid by shareholders on the dividends they receive from HFEIL.
Dividends
In the preliminary statement of its annual results announced on 23 October 2006,
the Company declared its intention to pay a fourth interim dividend of 2.3p per
share, making a total for the year of 9p per share (compared with 8.6p per share
in the previous year). The fourth interim dividend will be paid on 14 December
2006 to Shareholders on the register on 8 December 2006, regardless of whether
the Proposals are approved at the EGMs.
Subject to the approval of the Proposals at the First EGM, the Directors intend
to pay a Special Dividend of 8.5p per share comprising: (a) an amount which is
approximately equivalent to the accumulated undistributed revenue reserves of
the Company as at 31 August 2006; and (b) the aggregate distributable net
revenue for the period from 1 September 2006 to the effective date for
implementation of the Proposals.
Page 3
This Special Dividend will be paid together with the fourth interim dividend on
14 December 2006 to Shareholders on the register at 6.00 p.m. on 8 December
2006.
In the Prospectus, the board of HFEIL states that, for the period ending 31
August 2007, it will initially target a dividend at an annual rate of 11p per
HFEIL Share.
This represents an increase of 2p on the total of 9p per Share paid by the
Company for the year ended 31 August 2006 and would represent a dividend yield
of approximately 4.9 per cent. on the basis of the Company's net assets as at 9
November 2006, and is equivalent to a dividend yield of approximately 5.2 per
cent. on the basis of the Company's closing share price of 222.75p per share at
that date (adjusted, as appropriate, to take account of the Special Dividend and
the costs of the Proposals).
This is a target dividend level which is based on certain assumptions, and does
not constitute a profit forecast. There can be no guarantee that the target
dividend level will be achieved.
The board of HFEIL expects that, in respect of the period from Admission to 31
August 2007, HFEIL will pay three interim dividends covering the periods to 28
February 2007, 31 May 2007 and 31 August 2007, which will be payable in May,
August, and November 2007 respectively. In respect of the year ending 31 August
2008, the board of HFEIL expects to pay the first two interim dividends in
February and May 2008 respectively.
On an ongoing basis, the board of HFEIL intends to declare dividends in respect
of quarterly accounting periods ending in November, February, May and August
with dividends being payable in February, May, August and November each year in
respect of these periods.
Summary of the Scheme
In order to implement the Proposals, Shareholders' approval is sought to
implement a scheme of reconstruction whereby the Company will be placed into
members' voluntary liquidation. Following liquidation, the Company's
investments and other assets, after providing for its liabilities (including
contingent liabilities, the Liquidation Fund and the costs incurred by the
Company in relation to the Proposals as referred to below) will be transferred
in specie to HFEIL.
Shareholders will then receive one share in HFEIL for every Share held by them.
HFEIL will be managed on the same commercial terms by Henderson Global Investors
Limited, the Company's existing investment manager, and its shares will be
listed on the London and the New Zealand stock exchanges in the same way that
the Shares are currently listed.
Henderson Far East Income Limited
Investment objective and policies
HFEIL will have a similar investment objective to the Company, which is to seek
to provide a high level of dividends, as well as capital appreciation over the
long term, from a portfolio of investments traded on the Pacific, Australasian,
Japanese and Indian stock markets (the "Asia Pacific region").
HFEIL will primarily invest in:
* companies listed on stock exchanges in the Asia Pacific region;
Page 4
* securities listed elsewhere of companies which are either based in the
region or whose business activities are concentrated on the region;
* debt instruments (whether denominated in Asia Pacific currencies or
otherwise) issued by Asia Pacific companies or governments in the
Asia Pacific region.
HFEIL will invest primarily in listed equities but may also invest in preference
shares, debt, convertible securities, warrants and other equity related
securities and, to a limited extent, in unlisted securities, particularly where
these are expected to obtain a quote or listing in the near term. HFEIL may also
continue to hold securities that cease to be quoted or listed. Exposure to the
Asia Pacific region may also be obtained by investing in other collective
investment schemes including closed ended funds.
For the purposes of efficient portfolio management, which may include the
enhancement of income and the protection of the portfolio from undue risks,
HFEIL may invest in derivatives and other instruments providing synthetic
exposure to underlying companies or markets as well as in money market
instruments and currencies.
HFEIL is expected to be fully or substantially invested in its underlying
markets while normal market conditions prevail. However, during periods in which
changes in economic circumstances, market conditions or other factors so
warrant, HFEIL may reduce its exposure to securities and increase its position
in cash, money market instruments and derivative instruments in order to seek
protection from stock market volatility.
Board composition
After 22 years' service as a Director of the Company and 16 years' service as
Chairman, Sir Victor Garland has decided to stand down should the Scheme proceed
and John Russell, who has been a Director of the Company since October 2000, has
agreed to serve as Chairman of HFEIL. Simon Meredith Hardy, who has been a
Director of the Company since January 2003, has also agreed to join the board of
HFEIL along with three new Channel Islands resident directors, David Mashiter,
Richard Povey and Christopher Spencer. These appointments satisfy the
requirement for HFEIL to have a majority of non-UK resident directors in order
for it to be tax resident offshore.
It is believed that the composition of the board of HFEIL under John Russell's
chairmanship reflects an appropriate range of skills and experience whilst also
providing a balance between the requirement for offshore directors to be
appointed and the Company's wish to provide continuity.
Investment manager and other service providers
As stated above, the Company's existing investment manager, Henderson Global
Investors Limited, will be appointed to act as investment manager of HFEIL. The
current investment management agreement between the Company and Henderson Global
Investors Limited will be terminated on the Scheme becoming effective.
As reported in the Chairman's statement in the annual report and accounts of the
Company for the year ended 31 August 2006 (which accompany this Circular)
Michael Watt, the current portfolio manager, will retire from Henderson Global
Investors and Michael Kerley will take over day-to-day responsibility for the
management of the portfolio in February 2007.
Page 5
Michael Watt has agreed to serve as a consultant to HFEIL on an annually
renewable contract. HFEIL will appoint BNP Paribas as its administrator and
JPMorgan Chase, NA (Jersey branch) will be appointed as custodian.
The appointments referred to above, which in all cases are conditional on the
Proposals being approved and implemented, are on the same commercial terms as
for the Company except that Henderson Global Investors Limited will pay the fees
due to the Administrator. This reflects the fact that the duties to be performed
by the Administrator for HFEIL have historically been performed for the Company
by Henderson Global Investors Limited.
Regulatory and corporate governance impact
HFEIL will be subject to the Listing Rules and the New Zealand Listing Rules (in
the same way that the Company is at present) and in addition will be subject to
regulation by the Jersey Financial Services Commission. The City Code on
Takeovers and Mergers will apply to HFEIL in the same way as it applies to the
Company. HFEIL will also comply with the Combined Code and the AITC Code in the
same way as the Company does currently.
Share issues and repurchase authorities
The Company has historically sought authority from Shareholders at annual
general meetings for the Company to issue new shares when they are trading at a
premium to Net Asset Value and to repurchase shares when they are trading at a
discount to Net Asset Value. As a Jersey company, HFEIL will not require
shareholder approval to issue shares, but the HFEIL directors have stated that
no issues of shares will be made at a discount to HFEIL's Net Asset Value
without shareholder approval, except where HFEIL shareholders are permitted to
participate in the issue pro rata to their existing holdings. HFEIL will have
similar share repurchase authorities to those of the Company and plans to manage
actively the premium or discount to Net Asset Value at which the Shares trade
through repurchases or further share issues.
Costs of implementation of the Proposals
The costs and expenses relating to the Proposals to be paid by the Company,
including legal and other professional costs and the costs relating to the
liquidation of the Company are estimated to amount to #400,000 excluding VAT
(the Company has provided for this amount in full). A further #500,000 is
estimated to be payable in connection with the launch of HFEIL and the listing
of its shares on the London and New Zealand stock exchanges. This amount will be
payable by HFEIL and will be provided for upon its launch. Taking the estimated
net tax savings of the Proposals as #2.2 million (based on the assumptions set
out above), the total transaction costs payable by the Company and HFEIL would
be covered in approximately 5 months.
Taxation
A summary of the tax consequences of the Proposals for Shareholders is set out
in Part IV of the Circular.
New Zealand Dealing Facility
New Zealand Shareholders should note the information in Part IV of the Circular
under the heading "New Zealand Taxation". The Company has arranged for a dealing
facility to be made available to Shareholders with registered addresses in New
Zealand who are entitled to receive HFEIL Shares pursuant to the Scheme.
Page 6
Subject to the terms of the dealing facility, Teather & Greenwood will agree to
purchase Shares held by such Shareholders, and in consideration will transfer
HFEIL Shares to such accepting Shareholders following the Scheme becoming
effective. Shareholders with
registered addresses in New Zealand will receive with this circular a form of
election which contains further details of the terms of the dealing facility,
and sets out the action they should take if they wish to elect to participate
in, the dealing facility. Details of the expected tax treatment for New Zealand
Shareholders who participate in the dealing facility are set out under the
heading "New Zealand Taxation" in Part IV of the Circular.
ISA, PEP, SIPP and SSAS investors
HFEIL Shares will be eligible for inclusion within a PEP and the stocks and
shares component of an ISA. HFEIL Shares will also qualify as an investment that
may be held in a SIPP or SSAS. Accordingly, where existing Shares are held in a
PEP, ISA, SIPP or SSAS, HFEIL Shares received by Shareholders pursuant to the
Scheme in respect of those Shares can be retained (subject to the specific terms
applicable to the relevant PEP, ISA, SIPP or SSAS) within the PEP, ISA, SIPP or
SSAS.
Further information
The Proposals are described in more detail in the Circular.
A copy of the Annual Report of the Company for the year ended 31 August 2006, is
being despatched to Shareholders along with the Circular and the Prospectus.
The Proposals are conditional on the resolutions to be proposed at the Meetings
being passed and on the other conditions referred to in paragraph 6 of Part III
of the Circular.
Shareholder Meetings
The consent of Shareholders to the Proposals is required under the Companies Act
1985 and the Insolvency Act 1986.
First Extraordinary General Meeting
The First Extraordinary General Meeting will be held at 3.00 p.m. on 7 December
2006. A special resolution will be proposed at that meeting to amend the
Company's Articles of Association to sanction the Liquidators' powers for the
purposes of the Scheme, to approve the Scheme and to authorise its
implementation by the Liquidators. The Scheme will not in any event become
effective until the resolutions to be proposed at the Second Extraordinary
General Meeting have been passed.
Second Extraordinary General Meeting
The Second Extraordinary General Meeting will be held at 3.00 p.m. on 15
December 2006. A special resolution will be proposed at that Meeting to wind up
the Company voluntarily and appoint the Liquidators.
An extraordinary resolution will also be proposed at the Second Extraordinary
General Meeting for the purpose of authorising the Liquidators to exercise
certain powers for which the express sanction of Shareholders is required under
the Insolvency Act 1986, such as paying classes of creditors in full.
Page 7
Such resolutions are conditional, inter alia, on the resolution to be proposed
at the First Extraordinary General Meeting having been passed. The Scheme will
become effective following the passing of the resolutions at the Second
Extraordinary General Meeting if the resolution to be proposed at the First
Extraordinary General Meeting has been passed and the other conditions of the
Scheme are satisfied prior to the Second Extraordinary General Meeting.
The majority required for the passing of all resolutions to be put at the
Meetings is not less than three quarters of the votes cast in person or by
proxy. On a show of hands each Shareholder present in person or by duly
authorised representative will have one vote and on a poll each Shareholder
present in person or by proxy will have one vote for each share held. The quorum
at the Meetings is any two Shareholders present in person or by proxy and
entitled to vote.
Expected Timetable
2006
Latest time for receipt of Henderson savings scheme voting
instruction forms for the First EGM 3.00 pm on 30 November
Latest time for receipt of forms of proxy for the First
Extraordinary General Meeting 3.00 pm on 5 December
First Extraordinary General Meeting 3.00 pm on 7 December
Latest time for receipt of Henderson savings scheme voting
instruction forms for the Second EGM 5.00 pm on 8 December
Record date for the Special Dividend 6.00 pm on 8 December
Latest time for receipt of forms of proxy for the Second
Extraordinary General Meeting 3.00 pm on 13 December
Payment of Special Dividend 14 December
Record date for the Scheme 6.00 pm on 14 December
Listing of Shares suspended 7.30 am on 15 December
Second Extraordinary General Meeting 3.00 pm on 15 December
Effective date for implementation of Proposals 15 December
Date on which the Company's assets are transferred to HFEIL 18 December
Dealings commence in HFEIL Shares 8.00 am on 18 December
Shareholders holding Shares in uncertificated form credited with
HFEIL Shares 8.00 am on 18 December
Certificates for HFEIL Shares despatched 22 December
Page 8
Relevant dates for New Zealand Shareholders:
2006
Dealing in Shares on NZSX suspended 5.00 p.m. (New Zealand time) on 8 December
Shares delisted from NZSX 18 December
Dealings commence in HFEIL Shares on NZSX 10.00 a.m. (New Zealand time) on 19 December
References to time and dates in this document are, unless otherwise stated, to
United Kingdom times and dates.
Terms used in this announcement shall, unless the context otherwise requires,
bear the meanings given to them in the Circular dated 13 November 2006.
Circular to Shareholders
A circular containing full details of the Proposals and including notices
convening the Shareholder Meetings at which the requisite approvals will be
sought is being posted to Shareholders today. Copies of that circular and the
Prospectus will be forwarded to the UK Listing Authority and will shortly be
available for inspection at the UK Listing Authority's Document Viewing
Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Tel: 020 7066 1000
Further enquiries:
Michael Watt
Portfolio Manager
Henderson Far East Income Trust plc
Telephone: 020 7818 4339
James de Sausmarez
Head of Investment Trusts
Henderson Global Investors
Telephone: 020 7818 3349
Paul Fincham
Teather and Greenwood
Telephone: 020 7426 7736
Teather & Greenwood Limited, which is authorised and regulated in the United
Kingdom by the Financial Services Authority, is acting exclusively for the
Company and for no one else in connection with the Proposals or any matter
referred to in this announcement and will not be responsible to anyone other
than the Company for providing the protections afforded to clients of Teather &
Greenwood Limited or for affording advice in relation to the Proposals or any
matter referred to in this announcement. This announcement does not constitute,
or form part of, any offer for, or any solicitation of any offer for,
securities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCILFIDLFLVLIR
Henderson Far East Income (LSE:HFE)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Henderson Far East Income (LSE:HFE)
Gráfica de Acción Histórica
De May 2023 a May 2024
