WTAN Witan Investment Trust Plc

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.

12 September 2024

Witan Investment Trust plc

Legal Entity Identifier: 213800XMW68XFT6D1X59

Publication of Circular in connection with the recommended proposals for the voluntary winding-up of the Company and combination with Alliance Trust PLC (to be renamed Alliance Witan PLC)

Introduction

The Board of Witan Investment Trust plc (the "Company" or "WTAN") announces that it has today published a shareholder circular (the "Circular") setting out proposals for the recommended winding-up of the Company and combination with Alliance Trust PLC ("ATST") (the "Transaction"). Defined terms used in this announcement shall, unless the context requires otherwise, have the meanings ascribed to them in the Circular.

The Board announced on 26 June 2024 that it had entered into heads of terms with ATST for a combination of the two companies to form an enlarged company ("Enlarged ATST"), proposed to be renamed Alliance Witan PLC, by means of a scheme of reconstruction and winding-up of the Company under section 110 of the Insolvency Act 1986 (the "Scheme").

The Scheme comprises a members' voluntary liquidation and a scheme of reconstruction of the Company under which, subject to the conditions to the Transaction described below, Ordinary Shareholders will be entitled to elect to receive in respect of some or all of their Ordinary Shares:

(a)   New ATST Shares (the "Rollover Option"); and/or

(b)   cash (subject to an overall limit of 17.5 per cent. of the Ordinary Shares (excluding Ordinary Shares held in treasury) in issue) (the "Cash Option").

The Cash Option will be offered at a discount of 2.5 per cent. to the WTAN NAV per Share as at the Calculation Date.

Ordinary Shareholders can make different Elections in respect of different parts of their holdings. Ordinary Shareholders (other than Excluded Shareholders) who make no Election (or no valid Election) will be deemed to have elected for the default option, being the Rollover Option, in respect of their entire holding of Ordinary Shares.

Each Excluded Shareholder will be deemed to have elected for the Cash Option in respect of 100 per cent. of their holding of Ordinary Shares. Excluded Shareholders should refer to the section entitled "Excluded Shareholders" below.

The choice between the options available under the Transaction will be a matter for each Shareholder to decide and will be influenced by their investment objectives and by their personal, financial and tax circumstances. Accordingly, Ordinary Shareholders should, before making any Election, read carefully all the information in the Circular and in the ATST Prospectus and take financial advice where required.

The purpose of the Circular is to provide Shareholders with further details of the Transaction, including the background to and rationale for the Transaction and the actions required to be taken by Shareholders in order for it to be implemented, and to convene a meeting of the Ordinary Shareholders (the "Ordinary Shareholders' Class Meeting") and two general meetings of Shareholders (the "General Meetings") (notices of which are set out at the end of the Circular) to seek approval from Shareholders to implement the Transaction. Details of the Resolutions to be proposed at the Ordinary Shareholders' Class Meeting and the General Meetings are set out in the Circular. The expected timetable associated with the Transaction is provided at the end of this announcement.

Background to and rationale for the Transaction

As announced on 18 March 2024, the Board had been informed by the Company's CEO, Andrew Bell, that he intended to retire. As a consequence, the Board decided to conduct a comprehensive review of the Company's investment management arrangements and invited proposals for the future management of the Company's portfolio. The Board received a large number of very high-quality proposals, but was unanimous in concluding that a combination with ATST was the best proposal received. 

The Board believes that the Transaction will enable those Ordinary Shareholders rolling over into ATST to enjoy, among other things, continued exposure to a successful multi-manager strategy led by one of the leading global investment managers, and also the benefits of scale that are expected to result from the enlarged asset base of ATST following the Transaction, including cost efficiencies and greater liquidity in the ATST Shares. The investment proposition seeks to reduce relative risk and volatility, meaning investors are not left vulnerable to the underperformance risk concomitant with a single manager at the top of its performance cycle.

Both the Company and ATST invest for capital growth and income in diversified portfolios of global equities, and there is a similarity of overall approach stemming from their respective multi-manager strategies.

Benefits of the Transaction

The Board notes a number of attractions to a combination with ATST:

·      Best-in-class investment management: The enlarged portfolio will be invested in WTW's successful multi-manager strategy, providing access to best-in-class[1] managers globally, many of whom are not otherwise readily accessible by UK retail investors. The investment proposition seeks to reduce risk and volatility relative to the MSCI All Country World Index (ATST's comparative benchmark index (the "Benchmark") in the near term, compared to an individual manager strategy, meaning investors should not be left vulnerable to the underperformance risk concomitant with a single manager at the top of its performance cycle. As at 6 September 2024, the ATST portfolio consisted of selections by 10 Stock Pickers and centrally held cash or cash equivalents.

·      Robust investment performance track record: Since the appointment of WTW (and its predecessor, Towers Watson Investment Management (Ireland) Limited) as manager of ATST at the beginning of April 2017 to 30 August 2024, ATST's NAV total return was 102.2 per cent. against 101.7 per cent. for the Benchmark. Over the past three years to the same date, its NAV total return was 23.1 per cent., against 23.9 per cent. for the Benchmark.[2]

·      Attractive and progressive dividend policy: As at 6 September 2024, ATST's dividend yield was 2.25 per cent. ATST intends to increase its third and fourth interim dividends for the financial year ending 31 December 2024 so that they are commensurate with the Company's first interim dividend payment to Ordinary Shareholders of 1.51 pence per Ordinary Share. This is currently estimated to represent an increase of 1.66 per cent. on the first ATST interim dividend of the current financial year and a 6.15 per cent. increase on the fourth ATST interim dividend for the year ended 31 December 2023. Furthermore, it is expected that ATST's dividend for the financial year ending 31 December 2025 will be increased compared with the prior financial year so that an Ordinary Shareholder who rolls over into ATST will continue to see a progression in their income in both 2024 and 2025.

·      Greater scale and prospect of FTSE 100 inclusion: ATST is expected to have net assets of c. £4.8 billion on completion of the Transaction (based on the last published net asset values of the two companies as at 6 September 2024). The Enlarged ATST may also be eligible for inclusion in the FTSE 100 Index in due course and should benefit from improved profile, which should help to attract new investors to the Enlarged ATST, and secondary market liquidity.

·      Lower management fees: WTW has agreed a new management fee structure for the Enlarged ATST (see further the section entitled "Management fees and ongoing expenses" in Part 2 of the Circular) which will result in a more competitive blended fee rate for the Enlarged ATST and its shareholders than is currently enjoyed by the Company's and ATST's respective shareholders.

·      Lower ongoing charges: The new management fee structure and the economies of scale which the combination will bring is expected to allow the Enlarged ATST to target an ongoing charges ratio in the high 50s (in basis points terms) in future financial years, an improvement on both the Company's and ATST's current ongoing charge ratios, which are 76bps and 62bps, respectively.

·      Significant contribution to costs from WTW: WTW has agreed to make a significant contribution to the costs of the Transaction. The value of the WTW Contribution will be applied initially to offset ATST Implementation Costs, with any excess applied firstly to offset any remaining Company Implementation Costs, and then accruing for the benefit of shareholders in the Enlarged ATST. This contribution, when combined with the benefit of the discount on the cash exit, means that Ordinary Shareholders who roll over into ATST are therefore expected to suffer minimal or no dilution, depending upon the level of take-up of the Cash Option. See further the section entitled "WTW Contribution" below.

·      Improved rating: Over the three-year period to 6 September 2024, ATST Shares traded at an average 5.6 per cent. discount to their underlying NAV, compared with the Company's Ordinary Shares which traded at an average 8.2 per cent. discount to NAV. As well as benefiting from an improved average rating, to the extent that ATST Shares continue to trade at a tighter discount to NAV as at the Effective Date, Ordinary Shareholders who roll over into the Enlarged ATST should benefit from this narrower discount.

·      Liquidity opportunity: Ordinary Shareholders also have the opportunity to elect for a cash exit at a price close to NAV per Ordinary Share, for some or all of their holding, as part of the Scheme. The benefit of the discount on the cash exit will be applied first to the Company Implementation Costs, and any amount remaining thereafter will be for the benefit of all shareholders in the Enlarged ATST. Ordinary Shareholders who roll over into ATST are therefore expected to suffer minimal or no NAV dilution, depending upon the level of take-up of the Cash Option and any residual benefit flowing from the WTW Contribution.

·      Realisation opportunity for Preference Shareholders: The Transaction will give Preference Shareholders the ability to realise at par their investment in an illiquid stock with no fixed redemption date that has typically traded at a material discount to par.

The Scheme

Subject to the passing of the Resolutions (and satisfaction of the other conditions of the Scheme, full details of which are set out in the section entitled "Conditions to the Transaction" in Part 1 and paragraph 14 of Part 4 of the Circular), the Company will be placed into members' voluntary liquidation and the Scheme will take effect from the Effective Date (which is expected to be 9 October 2024). On the Effective Date, the cash, undertaking and other assets of the Company (consisting of investments which are in accordance with ATST's current investment policy, including investment company holdings as well as futures, cash, cash equivalents and other appropriate securities (including assets corresponding to the liabilities under the WTAN Secured Notes)) and certain of its liabilities will be transferred to ATST pursuant to the Transfer Agreement and the Novation Documents. In consideration for the transfer of the Rollover Pool to ATST under the Transfer Agreement: (a) the relevant number of New ATST Shares will be allotted to the Liquidators, who will renounce the New ATST Shares in favour of the Ordinary Shareholders who elect (or are deemed to have elected) for the Rollover Option (save for any Excluded Shareholders); and (b) ATST will assume the obligations under the WTAN Secured Notes pursuant to the Novation.

The issue of New ATST Shares under the Rollover Option will be effected on a formula asset value for formula asset value ("FAV") basis as at the Calculation Date, as described in Part 4 of the Circular. Shareholders who elect (or are deemed to elect) for the Rollover Option will be entitled to receive New ATST Shares on the basis of the ratio of the WTAN FAV per Share to the ATST FAV per Share, multiplied by the number of Shares so elected.

The New ATST Shares will rank fully pari passu with the existing ATST Shares for all dividends declared by ATST on or after the date of their issue (expected to be 10 October 2024), but will not qualify for the second interim dividend declared by ATST on 25 July 2024.

The Cash Option

Under the Scheme, Shareholders may elect to receive cash instead of New ATST Shares in respect of some or all of their holdings of Ordinary Shares. The maximum number of Ordinary Shares that can be elected for the Cash Option is 17.5 per cent. of the total number of Ordinary Shares (excluding Ordinary Shares held in treasury) in issue as at the Calculation Date. Ordinary Shareholders are entitled to elect for the Cash Option in respect of more than 17.5 per cent. of their individual holdings of Ordinary Shares (the "Basic Entitlement", such excess amount being an "Excess Application"). However, if aggregate Elections have been made for the Cash Option which exceed 17.5 per cent. of the issued Ordinary Shares (excluding Ordinary Shares held in treasury), Ordinary Shareholders who have made an Election for the Cash Option in excess of their Basic Entitlement shall have their Excess Applications scaled back in a manner which is, as near as practicable, pari passu and pro rata among all Ordinary Shareholders who have made such Excess Applications. Ordinary Shareholders (including Excluded Shareholders) will be deemed to have made an Election for the Rollover Option in respect of any Ordinary Shares held by them in respect of which their Excess Applications are scaled back.

Shareholders who elect (or are deemed to elect) for the Cash Option will receive an amount of cash equal to the WTAN NAV per Share less a 2.5 per cent. discount (the "Cash Option Discount") multiplied by the number of Ordinary Shares so elected (calculated to six decimal places), less the costs and expenses of realising the assets appropriated to the Cash Pool (and subject to any changes in value after the Calculation Date). The value arising from the application of the Cash Option Discount (the "Cash Uplift") will be applied initially to offset the Company Implementation Costs, with any part of the Cash Uplift not required to offset the Company Implementation Costs accruing for the benefit of shareholders in Enlarged ATST (including those Ordinary Shareholders who elect or are deemed to have elected for the Rollover Option and receive New ATST Shares pursuant to the Scheme).

It is expected that in the week commencing 14 October 2024, the Liquidators shall distribute via the Company's Registrar to Ordinary Shareholders who have elected (or are deemed to have elected) for the Cash Option for all or part of their holding their Cash Entitlements (being an amount equal to such Shareholder's proportional entitlement to the net realisation proceeds of the Cash Pool pursuant to the Scheme, rounded down to the nearest penny).

Illustrative entitlements

For illustrative purposes only, had the Calculation Date been 6 September 2024 and assuming full participation by Ordinary Shareholders under the Cash Option and no Dissenting Shareholders, taking into account the repayment of the nominal amount of, and the dividend entitlement to the Effective Date on, the Preference Shares, the Company's pre-liquidation dividend (described below) of 1.75 pence per Ordinary Share, and any expected costs not currently accrued in the WTAN NAV or ATST NAV, the WTAN FAV per Share would have been 275.928856 pence and the ATST FAV per Share would have been 1,228.070474 pence.

On the basis of the above figures, the Rollover Option would have produced a conversion ratio of 0.224684 and, in aggregate, 110,459,662 New ATST Shares would have been issued to Ordinary Shareholders in respect of 491,622,286 Ordinary Shares under the Scheme, representing approximately 28.2 per cent. of the issued ordinary share capital of the Enlarged ATST.

The above figures are for illustrative purposes only and do not represent forecasts. The WTAN FAV per Share, ATST FAV per Share and Shareholders' entitlements under the Scheme may change materially up to the Effective Date as a result of, among other things, changes in the value of the Company's or ATST's investments.

Summary information on ATST

As noted above, if the Scheme becomes effective, Ordinary Shareholders will roll over some or all of their holdings of Ordinary Shares into New ATST Shares. Further details on ATST are set out in Part 2 of the Circular and in the ATST Prospectus (which will be available on or around 12 September 2024 at https://www.alliancetrust.co.uk).

ATST is a closed-ended public limited company incorporated on 21 April 1888 in Scotland with registered number SC001731. The ATST Shares are listed on the closed-ended investment funds listing category of the Official List and traded on the Main Market. As at 6 September 2024, ATST had a net asset value of approximately £3.5 billion.

A shareholder meeting of ATST has been convened for 1 October 2024 at which authority will be sought to allot the New ATST Shares.

Subject to the successful completion of the Transaction and to the passing of the relevant resolution by the ATST Shareholders to be proposed at the shareholder meeting on 1 October 2024, the ATST Board will resolve to rename the Enlarged ATST as Alliance Witan PLC.

ATST strategy and investment team

ATST aims to be a core equity holding for investors that delivers a real return over the long term through a combination of capital growth and a rising dividend. ATST invests primarily in global equities across a wide range of industries and sectors to achieve its objective.

WTW has appointed a number of Stock Pickers with different styles, each of whom is unconstrained by the Benchmark (the MSCI All Country World Index) and only buys a limited number of stocks in which they have strong conviction.

WTW has overall responsibility for managing ATST's portfolio, researching, selecting and monitoring the Stock Pickers, and constructing the portfolio of ATST to ensure it is diversified and well balanced in terms of risk exposures. WTW blends Stock Pickers with complementary investment approaches or styles, which can be expected to perform differently in different market conditions. This is intended to smooth out the peaks and troughs of performance associated with concentrated single-manager strategies.

As at 6 September 2024 (being the latest practicable date before publication of the Circular), the Stock Pickers were ARGA Investment Management LP, Black Creek Investment Management Inc., Dalton Investments Inc., GQG Partners LLC, Lyrical Asset Management LP, Metropolis Capital Limited, Sands Capital Management LLC, Sustainable Growth Advisers LP, Veritas Asset Management LLP and Vulcan Value Partners LLC.

ATST's performance track record

ATST has achieved robust returns, outperforming the Benchmark over the long term net of fees. In recent years, stock markets have become more concentrated in larger capitalisation, faster growing companies, with index returns dominated, in particular, by a small number of technology giants. This was a challenging environment for active management and more diversified strategies like ATST's. Despite this headwind ATST has delivered good outcomes for the ATST Shareholders with the total ATST Shareholder return outperforming the Benchmark over the long term and delivering robust returns versus peers.

ATST's cumulative performance to 30 August 2024 over various time periods is set out in the following table.

Source: WTW, Juniper Partners, Morningstar and MSCI Inc. Past performance does not predict future returns and the value of shares and the income from them can rise and fall, so investors may not get back the amount originally invested.

1.     1 April 2017 was the date on which WTW's predecessor, Towers Watson Investment Management (Ireland) Limited, was appointed investment manager of ATST. Please see paragraph 11.1 of Part 7 of the ATST Prospectus for further information on the transfer of management functions from the Towers Watson Investment Management (Ireland) Limited to WTW.

2.     NAV total return is based on NAV including income with debt at fair value, after all manager fees (including WTW's fees) and allows for any tax reclaims when they are achieved.

3.     MSCI All Country World Index Net Dividends Reinvested.

ATST dividends

For the year ended 31 December 2023, ATST declared dividends totalling 25.2 pence per ATST Share, which represented 2.14 per cent. of the NAV per ATST Share as at 31 December 2023.

On 25 July 2024, ATST declared a second interim dividend of 6.62 pence per ATST Share for its shareholders for the year ending 31 December 2024 (the "ATST Second Interim Dividend"). The record date of 30 August 2024 for the ATST Second Interim Dividend falls prior to the date upon which the Scheme becomes effective and the New ATST Shares are issued to Shareholders. Shareholders therefore will not qualify for the ATST Second Interim Dividend, but the New ATST Shares will rank fully pari passu with the existing ATST Shares for all dividends declared by ATST on or after the date of their issue (expected to be 10 October 2024).

Conditions to the Transaction

Implementation of the Transaction is subject to a number of conditions, including:

a)   the passing of the Resolutions to be proposed at the Ordinary Shareholders' Class Meeting and the General Meetings, or any adjournment of those meetings, and any conditions of such Resolutions being fulfilled;

b)   the ATST Resolution being passed and becoming unconditional in all respects;

c)   the unconditional approval of the ATST Board and the ATST Noteholders to the entering into of the Novation Documents, the entering into of the Novation Documents by the parties thereto and the Novation Documents becoming unconditional in all respects other than any condition relating to the Scheme becoming effective and other ancillary conditions precedent thereunder;

d)   the FCA and the London Stock Exchange having acknowledged the applications for the Admission of the New ATST Shares to the Official List and to trading on the Main Market of the London Stock Exchange, respectively; and

e)   the Directors resolving to proceed with the Scheme. If Shareholders holding more than 10 per cent. in aggregate of the issued Ordinary Share capital of the Company as at the Calculation Date validly exercise their rights under section 111(2) of the Insolvency Act to dissent to the Scheme, the Directors have discretion to decide that the Scheme should not proceed.

Unless each condition is satisfied, the Transaction will not become effective, the Company will not proceed with the liquidation and instead the Company will continue in existence managed in accordance with its current investment policy. In such circumstances, the Directors would reassess the options available to the Company at that time.

Transfer Agreement

If the resolution to be proposed at the Second General Meeting is passed, the Company will enter into the Transfer Agreement on the Effective Date, pursuant to which the Liquidators will procure the transfer of the cash, undertaking and other assets of the Company comprising the Rollover Pool (including, in relation to the Novation of the obligations under the WTAN Secured Notes to ATST, assets equal to the fair value of the WTAN Secured Notes, together with interest accrued up to and including the Calculation Date on the WTAN Secured Notes and a further amount in respect of the period to the Effective Date) to ATST (or its nominee), in consideration for: (a) the allotment of New ATST Shares to the Liquidators (as nominees for the Shareholders entitled to them), such allotments to be renounced by the Liquidators in favour of the Shareholders who have elected (or are deemed to have elected) for the Rollover Option, and (b) the assumption by ATST of the obligations under the WTAN Secured Notes pursuant to the Novation.

WTAN Secured Notes

The WTAN Secured Notes (being the Company's (i) 3.29 per cent. secured notes due 2035, (ii) 3.47 per cent. secured notes due 2045, (iii) 2.39 per cent. secured notes due 2051 and (iv) 2.74 per cent. secured notes due 2054) are secured by floating charges over the assets of the Company held by M&G Trustee Company Limited (formerly known as Prudential Trustee Company Limited) ("M&G") in favour of the WTAN Noteholders and have a total principal amount of £155 million. Under the Transaction, the current floating charges held by M&G will be released, the WTAN Secured Notes will be novated to ATST and ATST will be substituted as the issuer and sole debtor of the WTAN Secured Notes in place of the Company. The WTAN Secured Notes shall be secured following the Novation by a new English floating charge and Scottish floating charge granted in favour of The Law Debenture Trust Corporation P.L.C. as security trustee for the WTAN Noteholders and the existing ATST secured creditors. On 11 September 2024, the WTAN Noteholders entered into the WTAN Deeds of Novation, Amendment and Restatement approving, among other matters, the Novation to occur on completion of the Transaction. Pursuant to the Substitution, the Company and the existing security trustee will enter into a deed of release in connection with the release of the existing floating charges securing the WTAN Secured Notes, and ATST and the new security trustee will enter into the New ATST Floating Charges.

WTAN Preference Shares

Preference Shareholders will not participate in the Scheme but will instead receive their entitlements under the Company's Articles of Association in cash under the winding-up of the Company and accordingly will not receive a Form of Election.

On a winding-up, the Preference Shareholders have the right to have net assets of the Company available for distribution paid to them in priority to the Ordinary Shareholders in repaying the nominal amount of Preference Shares outstanding together with any arrears of dividend on the Preference Shares up to the date of repayment (being the Effective Date).

By way of illustration, if the Effective Date were 9 October 2024, the amount of assets required to satisfy the entitlements of the Preference Shares in full would be equal to £2,575,388, representing the aggregate of £2,555,000 (being the amount of Preference Shares outstanding) and £20,388 (being the accrued dividend for the period from the last Preference Share dividend payment date in each case to the Effective Date).

WTAN dividends

The Board has announced a pre-liquidation dividend of 1.75 pence per Ordinary Share which will be paid to Ordinary Shareholders prior to the Effective Date in lieu of a normal second interim dividend for the year ending 31 December 2024. The pre-liquidation dividend will be paid in cash. It is not anticipated that there will be any further dividends paid by the Company in relation to the current financial period or for the period up to the liquidation of the Company.

Shareholders receiving New ATST Shares under the Scheme will rank fully for all dividends declared by ATST with a record date falling after the date of the issue of those New ATST Shares to them. Assuming the Scheme becomes effective on or before the relevant record date (which is expected to be in late November 2024), Shareholders rolling over into ATST will be entitled to receive ATST's third interim dividend for the year ending 31 December 2024, which is expected to be payable in late December 2024.

Costs of implementing the Scheme

Costs of the Company

The costs incurred by the Company in relation to the Transaction include both direct costs, being the costs necessary for the implementation of the Transaction, and indirect costs in disposing of certain investments in the Company's portfolio in order to raise portfolio liquidity.

Direct costs

The costs directly incurred (or to be incurred) by the Company in implementing the Transaction primarily comprise corporate finance, broking and financial advisory fees, legal fees, Liquidators' fees, employment costs and costs incurred in relation to the Novation of the WTAN Secured Notes, in each case including any related VAT and disbursements (the "Company Implementation Costs"). The Company Implementation Costs include the Liquidators' Retention of £100,000 to cover unknown or unascertained liabilities.

The Company Implementation Costs will be payable by the Company and are estimated to be approximately £6.0 million (including irrecoverable VAT), prior to taking into account:

·      the application of the Cash Uplift described above and in the section of the Circular entitled "Cash Option", assuming full participation by Ordinary Shareholders under the Cash Option and no Dissenting Shareholders; and

·      the application of the WTW Contribution described below and in the section of the Circular entitled "WTW Contribution".

However, the net Company Implementation Costs payable by the Company are expected to be nil after taking into account the estimated Cash Uplift (assuming full participation by Shareholders under the Cash Option and no Dissenting Shareholders).

Indirect costs

The Company will also incur indirect costs in disposing of certain investments in the Company's portfolio (the "Portfolio Realisation Costs") in order to raise portfolio liquidity, including to pay the Cash Entitlements of Ordinary Shareholders who elect (or are deemed to have elected) for the Cash Option. The Portfolio Realisation Costs will be borne by the Company (including those Ordinary Shareholders who elect or are deemed to have elected for the Rollover Option and receive New ATST Shares pursuant to the Scheme).

Costs of ATST

Direct costs

The costs incurred (or to be incurred) by ATST in implementing the Transaction primarily comprise legal fees, financial advisory fees, costs incurred in relation to documentation of the Novation of the WTAN Secured Notes, other professional advisory fees, printing costs and other applicable expenses, in each case including any related VAT and disbursements (the "ATST Implementation Costs").

The ATST Implementation Costs will be borne by existing ATST Shareholders. However, the ATST Implementation Costs payable by ATST are expected to be nil, after taking into account the WTW Contribution (which shall be applied initially to offset the ATST Implementation Costs, as described below in the section entitled "WTW Contribution"), based on ATST's and the Company's respective net asset values as at 6 September 2024.

Acquisition costs

The Enlarged ATST (including those Ordinary Shareholders who elect or are deemed to have elected for the Rollover Option and receive New ATST Shares pursuant to the Scheme) will bear:

·      any stamp duty, stamp duty reserve tax or other transaction tax, or investment costs incurred by ATST for the acquisition of the Rollover Pool or the deployment of the cash in the Rollover Pool upon receipt; and

·      any London Stock Exchange listing or admission fees payable in respect of the New ATST Shares,

(together, the "ATST Acquisition Costs").

In the event that the Transaction does not complete, each party will bear its own costs in respect of the Transaction.

WTW Contribution

WTW has agreed to make a contribution (the "WTW Contribution") to the costs of the Transaction by way of a waiver of part of the ongoing management fee payable by ATST, equal to 0.52375 per cent. of the assets to be transferred by the Company to ATST under the Scheme (excluding the value attributable to the WTW Contribution). The financial value of the WTW Contribution will be satisfied by WTW by means of a partial waiver of its fees payable by the Enlarged ATST over a period of no more than 12 months following completion of the Scheme.

The financial value of the WTW Contribution is estimated at approximately £7.1 million based on the estimated unaudited net asset value of the assets to be transferred to ATST as at 6 September 2024 (being the latest practicable date before publication of the Circular) assuming full participation by Ordinary Shareholders under the Cash Option and no Dissenting Shareholders.

The WTW Contribution will be applied initially to offset the ATST Implementation Costs (or, if those costs exceed the amount of the WTW Contribution, the WTW Contribution will be included in full), and any amount of the WTW Contribution remaining thereafter will be applied first towards offsetting any of the Company Implementation Costs which have not been covered by the Cash Uplift on the basis described above, and then for the benefit of shareholders in the Enlarged ATST. Since the WTW Contribution is a fee waiver within the Enlarged ATST rather than a cash payment, any benefit of the WTW Contribution accruing to the Company will be reflected in an upwards adjustment to the WTAN FAV.

The WTW Contribution is subject to a clawback provision such that, in the event of the termination of WTW's appointment as AIFM and investment manager to Enlarged ATST on a no-fault basis within 36 months of the Effective Date, WTW will be entitled to claim back some or all of the WTW Contribution from the Enlarged ATST. All of the WTW Contribution will be subject to clawback in the event of such termination occurring within 12 months of the Effective Date; two thirds of the WTW Contribution will be subject to clawback in the event of such termination occurring between 12 and 24 months of the Effective Date; and one third of the WTW Contribution will be subject to clawback in the event of such termination occurring after more than 24 months (but less than 36 months) of the Effective Date.

Liquidation Pool and Liquidators' Retention

Under the Scheme, the Company will be wound up by means of a members' voluntary liquidation. In consultation with the Liquidators, the Directors will set aside sufficient assets in the Liquidation Pool to meet all estimated liabilities and contingencies, including the costs of implementing the Scheme and the prior entitlements on a liquidation of the Preference Shares.

The Directors will also provide in the Liquidation Pool for a Liquidators' Retention which they, together with the Liquidators, consider sufficient to meet any contingent and unknown or unascertained liabilities of the Company. The Liquidators' Retention is estimated at £100,000 (which represents 0.01 per cent. of the Company's unaudited NAV as at 6 September 2024)

The Liquidation Pool (including the Liquidators' Retention) will be applied by the Liquidators in discharging all current and future actual and contingent liabilities of the Company. To the extent that some or all of the Liquidation Pool remains when the Liquidators are in a position to close the liquidation, such amount will be returned to Ordinary Shareholders on the Register as at the Effective Date. If, however, any such amount payable to any Ordinary Shareholder is less than £5.00 (after taking into account any expenses associated with making the distribution), it will not be paid to the Ordinary Shareholders but instead will be paid by the Liquidators to the Nominated Charity (The Royal Marsden Cancer Charity).

Ordinary Shareholders' Class Meeting and General Meetings

The implementation of the Transaction will require approval of the Shareholders at a separate class meeting of Ordinary Shareholders and two General Meetings of the Company. The Ordinary Shareholders' Class Meeting and the General Meetings will be held at the offices of Herbert Smith Freehills LLP, Exchange House, Primrose Street, London EC2A 2EG.

Only Ordinary Shareholders are entitled to attend and vote at the Ordinary Shareholders' Class Meeting, which will be held at 11.00 a.m. on 30 September 2024.

All Shareholders are entitled to attend the First General Meeting, which will be held at 11.30 a.m. on 30 September 2024, but only Ordinary Shareholders are entitled to vote.

All Shareholders are entitled to attend and vote at the Second General Meeting, which will be held at 9.30 a.m. on 9 October 2024.

Notices of the Ordinary Shareholders' Class Meeting and the General Meetings, and the Resolutions to be proposed at the meetings, are set out at the end of the Circular. The Scheme will not become effective unless and until, amongst other things, the Resolution to be proposed at the Second General Meeting has been passed.

ACTION TO BE TAKEN

Before taking any action, Shareholders are recommended to read the further information set out in the Circular and in the ATST Prospectus.

Elections

A Form of Election (which has been personalised) accompanies the Circular for Ordinary Shareholders who hold their Ordinary Shares in certificated form.

Shareholders who wish to receive cash in respect of all or part of their holding of Ordinary Shares must either complete and return the personalised Form of Election (for Ordinary Shares in certificated form) or submit a TTE Instruction (for Ordinary Shares in uncertificated form) in respect of the number of Ordinary Shares for which they wish to receive cash, so that the Form of Election or TTE Instruction is received no later than 1.00 p.m. on 30 September 2024. Shareholders will be deemed to have elected to receive New ATST Shares in respect of the remainder of their holding.

Shareholders who wish to receive New ATST Shares in respect of all of their Ordinary Shares do not need to return a Form of Election or submit a TTE Instruction. The default option for Ordinary Shareholders under the Scheme (other than for Excluded Shareholders) is to receive New ATST Shares, meaning that Ordinary Shareholders who, in respect of all or part of their holding of Ordinary Shares, do not make a valid Election will be deemed to have elected for New ATST Shares in respect of the entirety of their holding.

Voting

Shareholders are encouraged to vote in favour of the Resolutions to be proposed at the Ordinary Shareholders' Class Meeting and the General Meetings (as applicable) and, if their Shares are not held directly, to arrange for their nominee to vote on their behalf.

Shareholders are requested to complete and return proxy appointments (as applicable) to the Registrar by one of the following means:

i.          by logging on to www.investorcente.co.uk/eproxy and following the instructions; or

ii.         by completing and signing:

a.   the GREEN Form of Proxy for use in relation to the Ordinary Shareholders' Class Meeting;

b.   the BLUE Form of Proxy for use in relation to the First General Meeting; and

c.   the PINK Form of Proxy for use by Ordinary Shareholders or the YELLOW Form of Proxy for use by Preference Shareholders (as relevant) in relation to the Second General Meeting,

in each case in accordance with the instructions printed thereon and returning by post, by courier or by hand; or

iii.         in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the notes to the respective notice of the Ordinary Shareholders' Class Meeting or General Meeting (as relevant).

In each case, the proxy appointments must be received by the Company as soon as possible and, in any event, so as to arrive by no later than 48 hours (excluding non-working days) before the time of the relevant meeting. To be valid, the relevant proxy appointment should be completed in accordance with the instructions accompanying it and lodged with the Registrar by the relevant time.

Appointment of a proxy will not prevent Shareholders from attending and voting in person at the Ordinary Shareholders' Class Meeting or the General Meetings should they wish to do so.

Excluded Shareholders

Each Excluded Shareholder (i.e. Sanctions Restriction Shareholders and Overseas Excluded Shareholders) will be deemed to have elected for the Cash Option in respect of 100 per cent. of their holding of Ordinary Shares. Such deemed elections will be subject to scaling back in accordance with paragraph 2.1 of Part 4 of the Circular.

However, Excluded Shareholders will not receive New ATST Shares pursuant to the Scheme. To the extent that an Excluded Shareholder is due to receive New ATST Shares under the Scheme (i.e. to the extent that the Excluded Shareholder's deemed election for the Cash Option is scaled back), then such New ATST Shares will instead be issued to the Liquidators (as nominee on behalf of such Excluded Shareholder) and then sold in the market (which will be done by the Liquidators without regard to the personal circumstances of the relevant Excluded Shareholder or the value of the Ordinary Shares held by the relevant Excluded Shareholder). The net proceeds of such sale (after deduction of any costs incurred in effecting such sale) may be paid to Excluded Shareholders as described in the Circular.

The attention of Excluded Shareholders is drawn to the section entitled "Excluded Shareholders" in Part 1 of the Circular.

Taxation

Shareholders are advised to read carefully the section entitled "Taxation" in Part 3 of the Circular which sets out a general guide to certain aspects of current UK tax law and HMRC published practice.

Shareholders who are in any doubt as to their tax position, or who may be subject to tax in any jurisdiction other than the UK, are strongly advised to consult their own professional advisers.

Recommendation

The Board, which has received financial advice from J.P. Morgan Cazenove ("JPMC"), considers the Transaction and the Resolutions to be proposed at the Ordinary Shareholders' Class Meeting and the General Meetings to be in the best interests of the Company and of its Shareholders as a whole. In providing advice to the Board, JPMC has relied on the Board's commercial assessment of the Transaction.

Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions to be proposed at the Ordinary Shareholders' Class Meeting and the General Meetings, as the Directors intend to do in respect of their own beneficial holdings of Ordinary Shares, which in aggregate amount to 1,357,295 Ordinary Shares (representing approximately 0.23 per cent. of the Company's voting rights as at 6 September 2024). The Directors intend to roll over their entire beneficial holdings of Ordinary Shares into New ATST Shares.

The Board cannot, and does not, give any advice or recommendation to Ordinary Shareholders as to whether, or as to what extent, they should elect for any of the options under the Scheme. The choice between the options available under the Scheme will be a matter for each Ordinary Shareholder to decide and will be influenced by their individual investment objectives and by their personal, financial and tax circumstances. Accordingly, Ordinary Shareholders should, before deciding what action to take, read carefully all the information in the Circular and in the ATST Prospectus. Ordinary Shareholders who are in any doubt as to the contents of the Circular or the ATST Prospectus or as to the action to be taken by them should consult their stockbroker, bank manager, solicitor, accountant or other financial adviser authorised under FSMA without delay.

Expected Timetable

The Circular has been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website at www.witan.com/investor-information/alliance-witan. The ATST Prospectus will also shortly be available on ATST's website at https://www.alliancetrust.co.uk.