TIDMJGGI
RNS Number : 1463V
JPMorgan Global Growth & Income PLC
05 August 2022
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO, THE UNITED STATES OF AMERICA
(INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED
STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, NEW
ZEALAND, THE REPUBLIC OF South Africa, In any Member State of the
EEA OR IN ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE
UNLAWFUL
This announcement is not an offer to sell, or a solicitation of
an offer to acquire, securities in the United States or in any
other jurisdiction in which the same would be unlawful. Neither
this announcement nor any part of it shall form the basis of or be
relied on in connection with or act as an inducement to enter into
any contract or commitment whatsoever.
Legal Entity Identifier: 5493007C3I0O5PJKR078
5 August 2022
JPMorgan Global Growth & Income plc
Proposed combination with The Scottish Investment Trust PLC
Publication of Prospectus and Circular
The Board of JPMorgan Global Growth & Income plc (the
"Company" or "JGGI") announced on 20 October 2021 that it had
agreed heads of terms for a combination of the Company with The
Scottish Investment Trust PLC ("SCIN") (the "Transaction"), to be
implemented through a scheme of reconstruction (the "Scheme") of
SCIN pursuant to section 110 of the Insolvency Act 1986 (the
"Proposals").
The Board announces that the Company has today published a
prospectus (the "Prospectus") in relation to the issue of new
ordinary shares in the Company (the "Issue") pursuant to the Scheme
("Scheme Shares"), together with a circular to provide the
Company's shareholders (the "JGGI Shareholders") with further
details of the Proposals and to convene a general meeting of the
Company (the "General Meeting") to seek approval from JGGI
Shareholders for the implementation of the Proposals (the
"Circular").
In connection with the issue of Scheme Shares pursuant to the
Scheme, the Company is required by the Prospectus Regulation to
publish a prospectus (the "Prospectus"). The Circular provides
details of the Proposals and a notice of the General Meeting at
which JGGI Shareholder approval will be sought for a number of
matters in connection with the Proposals.
The Prospectus and Circular have been submitted to the Financial
Conduct Authority and will shortly be available for inspection at
the National Storage Mechanism which is located at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the
Company's website at http://www.jpmglobalgrowthandincome.co.uk
.
The Chairman of JGGI, Tristan Hillgarth, commented:
"The Proposals will create a combined entity that will have
significant scale and both groups of shareholders will benefit from
the cost savings derived from the enlarged asset base and future
growth, alongside enhanced liquidity in the shares. The Company
will continue to benefit from the strength and depth of the
JPMorgan management team and an investment strategy that has
provided strong results for shareholders notwithstanding the
current challenging market environment."
Details of the Proposals
The combination, if approved by shareholders of each of the
Company and SCIN, will be implemented through a scheme of
reconstruction under section 110 of the Insolvency Act, resulting
in the voluntary liquidation of SCIN and the rollover of its assets
into the Company in exchange for the issue of Scheme Shares to
Eligible SCIN Shareholders.
Subject to the passing of the SCIN Resolutions, and satisfaction
of the other conditions of the Scheme (which are outlined below),
the Scheme will take effect on the Effective Date, expected to be
on or around 31 August 2022.
Under the Scheme, SCIN will be put into liquidation and its
assets split into the following two pools:
-- the pool of investments, cash and other assets (including
assets with a value equal to the fair value of the SCIN Bonds (and
accrued interest on the SCIN Bonds up to and including the
Calculation Date) and the obligations of the Company in respect of
the SIT Bonds (including interest accrued up to the Calculation
Date)) (see below for further details on the SCIN Bonds) to be
established under the Scheme and to be transferred to the Company,
in consideration for the issuance of the Scheme Shares, pursuant to
the Transfer Agreement (the "Rollover Pool"); and
-- the pool of investments, cash and other assets to be retained
by the Liquidators to meet all known and unknown liabilities of
SCIN and other contingencies (the "Liquidation Pool").
Under the Scheme, each Eligible SCIN Shareholder will receive
such number of Scheme Shares as have a value (at the FAV per JGGI
Share) equal to the proportion of the Rollover Pool attributable to
the number of SCIN Shares held.
Further details of the Proposals are included at the end of this
announcement.
Benefits of the Proposals
The Proposals will create an enlarged entity with net assets in
excess of GBP1.3 billion. The Board believes that the enlarged
asset base resulting from the Proposals may have the following
benefits for JGGI Shareholders:
-- The combined entity is expected to benefit from an enhanced
profile which has the potential to generate further interest in the
JGGI Shares.
-- The Proposals will result in a greater number of JGGI Shares
in issue, which, in turn, will enlarge the free float and result in
a broader Shareholder base, which should improve liquidity.
-- The fixed costs of the Company will be spread over a larger
asset base and so is expected to reduce the fixed costs per JGGI
Share.
-- Under the new Management Fee arrangements, the increase in
net assets of the Company reduces the effective rate of the
Management Fee which, in turn, should reduce the total expense
ratio of the Company.
Conditions of the Scheme
The Scheme is conditional on, among other things:
-- the passing of the SCIN Resolution to be proposed at the
First SCIN General Meeting and the SCIN Resolution to be proposed
at the Second SCIN General Meeting or any adjournment of those
meetings and such SCIN Resolutions becoming unconditional in all
respects;
-- approval of the Allotment Resolution by JGGI Shareholders at
the General Meeting of the Company and such Resolution becoming
unconditional in all respects;
-- the approval of the FCA and the London Stock Exchange to the
Admission of the Scheme Shares to listing on the premium listing
category of the Official List and to trading on the Main Market of
the London Stock Exchange, respectively occurring before 31
December 2022, or such other date as may be agreed between the
Company and the Sponsor; and
-- the SCIN Board resolving to proceed with the Scheme.
Board structure
It is intended that, following completion of the Scheme, four
current directors of SCIN, being James Will, Jane Lewis, Mick
Brewis and Neil Rogan, will be appointed as non-executive directors
of the Company, such that the Board will initially consist of eight
directors, comprising four directors from the current Board and
four directors from the board of SCIN. It is intended currently
that James Will and Gay Collins will subsequently retire from the
Board at the Company's Annual General Meeting expected to be held
in November 2022.
Each of the prospective directors is independent of the Manager
and the Investment Manager.
Costs and Expenses of the Proposals
To the extent that the Company has already incurred or accrued
costs in connection with the Scheme as at the Calculation Date,
such costs will be added back to the Company's NAV for the purposes
of calculating the JGGI FAV. In addition, any costs incurred or
accrued by SCIN in connection with the Scheme will be added back to
SCIN's net asset value for the purpose of calculating the SCIN FAV.
Those costs and any other costs in respect of the Scheme will then
be apportioned between the two companies on the following basis.
The costs and expenses in connection with the Scheme will be split
between the Company and SCIN so as to provide for an equitable
apportionment of the costs incurred in implementing the Scheme
between the two parties, having regard for, inter alia, the
estimated respective expenses of the two companies and the relative
benefits which the Scheme will provide to each set of shareholders.
In summary:
(i) The direct costs incurred by the two companies will (to the
extent they do not exceed the limits set out in (ii) below) be
aggregated with the SCIN Pension Costs and the SCIN Portfolio
Realignment Costs. The Manager's Contribution (defined below) will
then be deducted from the aggregate amount to determine the net
costs of the Scheme to be apportioned (the " Net Scheme Costs for
Apportionment "). The Net Scheme Costs for Apportionment will be
borne by each of the Company and SCIN pro rata by reference to
their respective FAVs (subject to the JGGI Cost Limit of GBP2.1
million, with SCIN bearing any Net Scheme Costs for Apportionment
incurred or accrued by the Company in excess thereof).
(ii) To the extent that:
a) SCIN's Direct Costs exceed GBP2.7 million, such SCIN Excess
Costs will be borne solely by SCIN and will be reflected
accordingly in the calculation of its FAV; and
b) the Company's direct costs exceed GBP1.2 million, such excess
costs will be borne solely by the Company and will be reflected
accordingly in the calculation of its FAV (such excess costs being
the " JGGI Excess Costs ").
The total costs that the Company will incur in relation to the
Transaction will be equal to the JGGI Apportioned Costs (as
apportioned pursuant to paragraph (i) above) and the JGGI Excess
Costs (as defined in paragraph (ii)(b) above). On this basis: the
costs to be borne by JGGI Shareholders, after the Manager's
Contribution (as defined below) and cost apportionment, are
estimated to be approximately GBP2.98 million (including VAT),
equivalent to 0.41 per cent. of the Company's Net Asset Value as at
3 August 2022.
The costs to be borne by SCIN Shareholders, after the Manager's
Contribution (as defined below) and cost apportionment, are
estimated to be approximately GBP8.17 million (including VAT),
equivalent to 1.36 per cent. of SCIN's net asset value as at 3
August 2022.
The Manager has agreed to make a contribution to the costs of
the Scheme equal to the Contribution Amount (the "Manager's
Contribution"). The "Contribution Amount" shall be calculated by
reference to the Management Fee that would be payable by the
Company to the Manager for the eight month period commencing on
Admission based on the value of the net assets of the enlarged
Company following completion of the Scheme (determined by reference
to the FAVs of the Company and SCIN). In satisfaction of the
Manager's Contribution, the Manager will waive its entitlement to
be paid a Management Fee with effect from Admission until such time
as the value of such waived Management Fee equals the Contribution
Amount.
Future dividends
Assuming that Admission of the Scheme Shares occurs on 1
September 2022, SCIN Shareholders who receive Scheme Shares will be
entitled to receive the interim dividend in respect of the quarter
ending 30 September 2022, which was announced on 1 July 2022 and
will be paid to JGGI Shareholders on the Company's register of
members at the close of business on 2 September 2022.
Investment Management Agreement
Pursuant to the Investment Management Agreement and with effect
from 1 January 2022, the annual management fee payable by the
Company to the Manager (the "Management Fee") is calculated, on a
tiered basis by reference to the Net Asset Value of the Company, on
the following basis:
-- 0.55 per cent. on the first GBP750 million of the Company's Net Asset Value;
-- 0.40 per cent. on the Company's Net Asset Value in excess of
GBP750 million and up to GBP1.5 billion; and
-- 0.30 per cent on the Company's Net Asset Value in excess of GBP1.5 billion.
The Manager has agreed to make the Manager's Contribution to the
costs of the Scheme equal to the Contribution Amount pursuant to
which the Manager will waive its entitlement to be paid a
Management Fee with effect from Admission until such time as the
value of such waived Management Fee equals the Contribution Amount.
For further details, please see paragraph 9 (Costs and Expenses of
the Proposals) of the Circular.
Details of the Issue
The number of Scheme Shares to be issued to Eligible SCIN
Shareholders, and to the Liquidators appointed in respect of
Overseas Excluded SCIN Shareholders, will be based on the FAV of
the Company and of SCIN. FAVs will be calculated based on the Net
Asset Values (cum income, debt at fair value) of a JGGI Share and
of a SCIN Share, respectively. The FAV per JGGI Share and the FAV
per SCIN Share will be calculated to six decimal places (with
0.0000005 rounded down) as at the Calculation Date in accordance
with each company's respective normal accounting policies.
Eligible SCIN Shareholders will be issued Scheme Shares based on
the FAV per SCIN Share divided by the FAV per JGGI Share,
multiplied by the number of SCIN Shares owned by such Eligible SCIN
Shareholder as at the Record Date.
The number of Scheme Shares which will be issued to Eligible
SCIN Shareholders and the Liquidators appointed in respect of
Overseas Excluded SCIN Shareholders is not known at the date of the
Circular as it will be calculated in accordance with the formula
stated above at the Calculation Date. The number of Scheme Shares
to be issued will be announced through an RIS announcement as soon
as practicable following the Calculation Date. The Issue is not
being underwritten.
For illustrative purposes only , had the Calculation Date been
5.00 p.m. on 29 July 2022 and assuming that no SCIN Shareholders
had exercised their right to dissent from participation in the
Scheme and after deduction of the SCIN pre-liquidation interim
dividend of 9.4 pence per SCIN Share, the FAV per SCIN Share would
have been 876.20 pence. The FAV per SCIN Share may be compared with
the SCIN share price and cum-income NAV per SCIN Share as at 29
July 2022 which, when adjusted on a pro forma basis for the
deduction of the interim dividend of 9.4 pence per SCIN Share, were
840.6 pence and 886.86 pence respectively.
The FAV per JGGI Share would have been 437.505691 pence, which
would have produced a conversion ratio of 2.002730 and, in
aggregate, 132,526,986 Scheme Shares would have been issued to SCIN
Shareholders under the Scheme, representing approximately 44.2 per
cent. of the issued ordinary share capital of the enlarged
Company.
Admission and Dealings
Applications will be made by the Company to the FCA for the
Scheme Shares to be admitted to the premium listing category of the
Official List and to the London Stock Exchange for the Scheme
Shares to be admitted to trading on the premium segment of the Main
Market. If the Proposals become effective, it is expected that the
Scheme Shares will be admitted to the Official List and the first
day of dealings in such shares on the Main Market will be 1
September 2022.
SCIN Bonds
On 17 April 2000, SCIN issued GBP150 million in aggregate
principal amount of the SCIN Bonds (of which GBP82,827,000 in
aggregate principal amount remain outstanding) The SCIN Bonds were
constituted by the Existing Trust Deed and are governed by English
law. In connection with the issuance of the SCIN Bonds and in
accordance with the terms of the Existing Trust Deed, SCIN entered
into the Existing Instrument of Floating Charge in favour of the
Trustee as security for the payment of all sums due and that may
become due in respect of the SCIN Bonds. The SCIN Bonds are listed
and traded on the London Stock Exchange.
On 29 July 2022, the SCIN Bondholders voted in favour of the
SCIN Bonds Extraordinary Resolution to, among other things,
substitute the Company as issuer of the SCIN Bonds with effect on
the Effective Date.
On the Effective Date:
-- the Company will be substituted as issuer of the SCIN Bonds
and will assume the rights and obligations of SCIN under the SCIN
Bonds and the Amended and Restated Trust Deed; and
-- the Company and the Security Trustee will enter into the
Instrument of Floating Charge to replace the Existing Instrument of
Floating Charge.
Following the substitution on the Effective Date it is intended
that the SCIN Bonds will remain listed and traded on the London
Stock Exchange.
The terms and conditions of the SCIN Bonds contain customary
events of default and include certain covenants, which restrict the
ability of the Company to, among other things, incur certain liens
and redeem or repurchase capital stock. The Amended and Restated
Trust Deed includes the SCIN Bonds Financial Covenant.
JGGI Notes
On 9 January 2018, the Company entered into the 2018 Note
Purchase Agreement, pursuant to which the Company issued the 2018
Loan Notes. On 12 March 2021, the Company entered into the 2021
Note Purchase Agreement, pursuant to which the Company issued the
2021 Series A Loan Notes and authorised the issue of additional
notes from time to time after the date of the 2021 Note Purchase
Agreement up to the Available Facility Amount (as defined in the
2021 Note Purchase Agreement).
The Note Purchase Agreements include a number of customary
covenants, which restrict the ability of the Company and its
subsidiaries to, among other things, incur certain liens, merge or
consolidate, enter into transactions with affiliates and sell or
transfer assets, in each case subject to certain permissons and
exceptions.
The Note Purchase Agreements also contain a "most favoured
lender" covenant, pursuant to which any financial covenant that is
included in a Principal Financing Agreement (as defined in the Note
Purchase Agreements), but:
-- is not included in the Note Purchase Agreements; or
-- is in any respect more beneficial to the holders of the JGGI
Notes than any similar financial covenant included in the Note
Purchase Agreements,
will be deemed to be automatically incorporated into the Note
Purchase Agreements as of the date such financial covenant became
effective under such Principal Financing Agreement. The Amended and
Restated Trust Deed, which qualifies as a Principal Financing
Agreement, includes the SCIN Bonds Financial Covenant. On
completion of the substitution of the Company as issuer of the SCIN
Bonds which is expected to occur on the Effective Date, the SCIN
Bonds Financial Covenant will be deemed to be automatically
incorporated into the Note Purchase Agreements.
The terms of the Note Purchase Agreements restrict the Company
from granting security in respect of the indebtedness evidenced by
the SCIN Bonds unless the obligations of the Company under the Note
Purchase Agreements and the JGGI Notes are concurrently secured
equally and rateably with the SCIN Bonds. Accordingly, on the
Effective Date, the Company and the Security Trustee will enter
into the Instrument of Floating Charge and the Company, the
Trustee, the holders of the JGGI Notes and the Security Trustee
(acting on behalf of the Secured Parties) will enter into the
Security Trust and Intercreditor Agreement.
Security Trust and Intercreditor Agreement
On the Effective Date, the Company, the Trustee, the holders of
the JGGI Notes and the Security Trustee (on behalf of the Secured
Parties) will enter into the Security Trust and Intercreditor
Agreement. The Security Trust and Intercreditor Agreement governs
the intercreditor relationship between the holders of the JGGI
Notes and the SCIN Bondholders and regulates the enforcement of the
security created pursuant to the Instrument of Floating Charge.
SCIN Pension Fund
The trustees of the SCIN Pension Fund ("SPF Trustees") have
entered into a transaction with an insurance company which secures
in full the benefits for and in respect of all members and
beneficiaries of the SCIN Pension Fund through a policy in the name
of the SPF Trustees (the "SCIN Buy-in"). The SCIN Buy-in policy
contains the option (exercisable at the trustees' discretion, and
subject to the terms of the SCIN Buy-in policy) to move to
"buy-out"' (being a transaction between the trustee and the
insurance company which secures in full the benefits for and in
respect of all members and beneficiaries of the SCIN Pension Fund
through individual annuities).
Following SCIN entering into liquidation, the SCIN Pension Fund
will be placed into winding up with effect from the date of the
liquidation and the SPF Trustees will proceed with converting the
SCIN Buy-in policy into a buy-out policy (the "SCIN Buy-out"). To
ensure that the SCIN Pension Fund can be wound up and the buyout
achieved, there will be retained in the Liquidation Pool for the
benefit of the SCIN Pension Fund (in addition to the assets which
the Liquidators would otherwise have retained) cash in the amount
of GBP5,000,000 (the "SCIN Pension Buffer").
For the avoidance of doubt, the Liquidators cannot distribute or
otherwise utilise the SCIN Pension Buffer until the winding up of
the SCIN Pension Fund has been completed and the SCIN Pension
Buffer will be solely available to meet the costs and expenses of
securing benefits in the SCIN Buy-out and of winding up the SCIN
Pension Fund until that time. Further, the Liquidators will not
distribute or otherwise utilise any part of the non-SCIN Pension
Buffer assets of the Liquidation Pool, including in particular the
Liquidators' Retention, otherwise than to meet SCIN's actual
liabilities identified for the purposes of the Scheme or contingent
liabilities plus the Liquidators' own costs and expenses, until
such time as the winding up of the SCIN Pension Fund has been
completed.
SCIN has agreed to indemnify the SPF Trustees in respect of any
claim or liability which the SPF Trustees incur or suffer or are
liable to pay, directly or indirectly in any way whatsoever from or
relating to the SCIN Buy-in, the SCIN Buy-out or the winding up of
the SCIN Pension Fund, subject to a cap equal to the SCIN Pension
Buffer plus the remaining Liquidation Pool (being aggregate value
(as determined by the Liquidators, acting reasonably) of the
Liquidation Pool remaining in the control of the Liquidators at the
relevant time). As is common in transactions where the buyer is
acquiring an entity which operates a defined benefit pension scheme
similar to the SCIN Pension Fund, the Company is providing support
for the SCIN Pension Fund by way of entering into SCIN Indemnity
Letter, pursuant to which it has agreed to indemnify SCIN in
respect of any claims against SCIN by the SPF Trustee, but only if
and to the extent that such liability cannot be met in full from
the SCIN Pension Buffer and any other assets in the remaining
Liquidation Pool. Due to the size of the Pension Buffer, the Board
does not consider it likely that the indemnity from the Company to
SCIN will be called upon at all. The Company's indemnity pursuant
to the SCIN Indemnity Letter ceases on completion of the winding up
of the SCIN Pension Fund. It is expected that the SCIN Pension Fund
will be wound up within approximately five months of SCIN entering
liquidation (although this is indicative timing only and depends on
a variety of factors). Details of the SCIN Indemnity Letter are
summarised in paragraph 12.6 of Part VI (Additional Information on
the Company) of the Prospectus.
General Meeting
The Proposals are subject to JGGI Shareholder approval. The GM
Notice convening the General Meeting, to be held at 3.30 p.m. on 30
August 2022 at 60 Victoria Embankment, London, EC4Y 0JP, is set out
on page 29 of the Circular. The GM Notice includes the full text of
the Resolutions.
Expected Timetable
GENERAL MEETING
Posting of Circular and Forms 5 August 2022
of Proxy for the General Meeting
Latest time and date for receipt 3.30 p.m. on 25 August 2022
of Forms of Proxy for the General
Meeting
General Meeting 3.30 p.m. on 30 August 2022
Announcement of results of the 30 August 2022
General Meeting
SCHEME
Publication of the Circular and 5 August 2022
the Prospectus
First SCIN General Meeting 11.00 a.m. on 22 August 2022
Record Date for entitlements under 6.00 p.m. on 22 August 2022
the Scheme
SCIN Shares disabled in CREST 6.00 p.m. on 22 August 2022
Calculation Date for the Scheme 5.00 p.m. on 25 August 2022
Suspension of listing of SCIN 7.30 a.m. on 31 August 2022
Shares and SCIN's register of
members closes
Second SCIN General Meeting 9.30 a.m. on 31 August 2022
Effective Date for implementation 31 August 2022
of the Scheme
Announcement of results of Scheme 31 August 2022
and respective FAVs per share
Admission and dealings in Scheme 8.00 a.m. on 1 September
Shares commence 2022
CREST accounts credited to SCIN 8.00 a.m. on 1 September
Shareholders in respect of Scheme 2022
Shares in uncertificated form
Certificates despatched by post 9 September 2022 (or as soon
in respect of Scheme Shares as practicable thereafter)
Cancellation of listing of SCIN as soon as practicable after
Shares the Effective Date
All times are UK times. Times and dates are subject to
change.
Capitalised terms used but not defined in this announcement will
have the same meaning as set out in the Circular.
For further information:
JPMorgan Global Growth & Income
plc Contact via Company Secretary
Tristan Hillgarth
JPMorgan Funds Limited
Simon Crinage
Fin Bodman 020 7742 4000
JPMorgan Funds Limited (Company
Secretary)
Divya Amin 020 7742 4000
Winterflood Investment Trusts
Neil Langford
Chris Mills 020 3100 0000
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