TIDMJGGI
RNS Number : 5929P
JPMorgan Global Growth & Income PLC
20 October 2021
20 October 2021
JPMorgan Global Growth & Income plc
Legal Entity Identifier: 5493007C3I0O5PJKR078
Proposed combination with The Scottish Investment Trust PLC
Introduction
The Board of JPMorgan Global Growth & Income plc (" JGGI "
or the "Company") is pleased to announce that it has signed Heads
of Terms with the Board of The Scottish Investment Trust PLC ("SCIN
") in respect of a proposed combination with SCIN (the
"Transaction") to be effected by way of a section 110 scheme of
reconstruction by SCIN and a transfer of assets to JGGI (the
"Scheme").
JGGI shall continue to be managed by JPMorgan Funds Limited
("JPMorgan") and the Company shall continue to implement its
existing investment strategy and dividend policy.
The Transaction is the outcome of a strategic review undertaken
by the Board of SCIN and will bring together two of the oldest
investment trusts in the sector, having both been incorporated in
1887, creating an enlarged entity that, on the basis of the
existing net assets of JGGI and SCIN, will have net assets in
excess of GBP1.2 billion.
(The above proposals are referred to herein as the
"Proposals".)
The Board of JGGI believes that the Proposals will enable JGGI
shareholders to benefit from the greater economies of scale that
are expected to result from the enlarged asset base, in particular,
an enhanced profile, greater liquidity in JGGI shares and cost
efficiencies. The Company has agreed a new tiered management fee
structure with JPMorgan, details of which are set out below, and
the Transaction is expected to generate a reduction in ongoing
charges of 11bps (under the revised management fee structure) as a
result of the tiering arrangements and the fixed costs of the
Company being spread across a larger asset base.
The Proposals will be subject to the approval by the
shareholders of both JGGI and SCIN in addition to regulatory and
tax approvals. A timetable and further details of the Proposals
will be announced in due course.
Summary of the Scheme
The Transaction will be effected by way of a scheme of
reconstruction of SCIN under section 110 of the Insolvency Act
1986, resulting in the voluntary liquidation of SCIN and transfer
of assets to JGGI. In accordance with customary practice for such
transactions involving investment trusts, the City Code on
Takeovers and Mergers is not expected to apply to the Transaction.
However, the Transaction will be subject to other regulatory and
tax approvals. The Transaction will also be subject to, inter alia,
approval by the shareholders and debt holders of each of SCIN and
JGGI.
The Scheme will be implemented on a Formula Asset Value ("FAV")
for FAV basis with shareholders in SCIN receiving new ordinary
shares in JGGI on implementation of the Scheme. The FAV of each
company will be calculated using the net asset values of each
company, adjusted for their respective allocations of costs and, in
the case of SCIN, excluding SCIN's property, pension scheme,
wholly-owned subsidiary (SIT Savings), and a liquidator's
retention.
Allocation of costs will be determined by pooling the costs
incurred by the two companies in connection with the transaction,
offsetting the aggregate amount by the fee contribution from
JPMorgan (as detailed below), and then apportioning the net costs
pro rata by reference to their respective FAVs, subject to a
maximum figure to be allocated to JGGI. Direct transactional costs
incurred by either company in excess of an agreed cap will be
disregarded for the purposes of pooling costs and will instead be
met solely by the relevant company.
JPMorgan has agreed to make a contribution to the costs of the
transaction in an amount equivalent to eight months of management
fee payable by the enlarged vehicle, calculated by reference to
JGGI's new management fee arrangements (as detailed below) and the
value of the net assets of the enlarged JGGI (determined by
reference to the FAVs of each company).
SCIN's property at 6 Albyn Place, Edinburgh, The Scottish
Investment Trust pension scheme and SCIN's wholly-owned subsidiary
(SIT Savings) will not transfer to JGGI, but will instead remain
with the liquidator of SCIN, along with sufficient assets to meet
SCIN's liabilities. The remaining assets will transfer to JGGI and
it is intended that SCIN's secured notes due 2030 will be novated
to JGGI on conclusion of the Scheme.
On completion of the Transaction, the JGGI Board will have
representation from both JGGI and SCIN. As set out in the annual
report and accounts for the year to 30 June 2021, JGGI will
continue to be chaired by Nigel Wightman until his upcoming
retirement at the 2021 AGM (on 27 October 2021), when he will be
succeeded by Tristan Hillgarth.
It is intended that, following the implementation of the Scheme,
the Annual General Meetings of JGGI will be held in London and
Edinburgh on alternate years to reflect both the English and
Scottish heritage of the combined entity.
JPMorgan has agreed to be appointed as alternative investment
fund manager of SCIN prior to implementation of the Scheme and will
realign, and thereafter, manage the SCIN investment portfolio
substantially in line with the investment policy and strategy of
JGGI until implementation of the Scheme.
Management Fees
The Board of JGGI has agreed revised management fee arrangements
with JPMorgan replacing the existing management fee and performance
fee structure with a tiered management fee on the following
basis:
-- 0.55% on net assets up to GBP750 million;
-- 0.40% on net assets between GBP750 million and GBP1.5bn; and
-- 0.30% on net assets in excess of GBP1.5bn.
The revised fees shall be implemented with effect from 1 January
2022 and any performance fees accrued to that date shall be paid in
full. No performance fee shall accrue or be payable following 1
January 2022.
Expected timetable
It is currently envisaged that a circular and notice of the
general meeting setting out the details of the Scheme will be sent
to the Company's shareholders in due course. The Transaction is
anticipated to conclude in Q1 2022.
The Chairman of JGGI, Nigel Wightman , commented:
"The Proposals will create a combined entity that will have
significant scale and a revised fee structure that will allow both
groups of shareholders to benefit from the greater scale and future
growth of the trust. The Board expects that the enlarged company
will have broad appeal among investors and is expected to be of
sufficient size to enter the FTSE250 in due course. The Company
will continue to benefit from the strength and depth of the
JPMorgan management team and an investment strategy and process
that has delivered strong results for shareholders. The Transaction
brings together two of the oldest investment trusts in the sector,
both incorporated in 1887, and creates a vehicle that can continue
to serve shareholders' interests for many years to come."
For further information please contact:
JPMorgan Global Growth & Income plc Contact via Lansons
Nigel Wightman
Tristan Hillgarth
JPMorgan Funds Limited
Simon Crinage +44 (0) 20 7742 3445
Fin Bodman +44 (0) 20 7742 8651
Winterflood Securities Limited
Neil Langford
Hande Derinkok +44 (0) 20 3100 0000
Lansons +44 (0) 7788 454
Henrietta Gutherie 776
Important Information
This announcement contains information that is inside
information for the purposes of the Market Abuse Regulation (EU)
No. 596/2014. The person responsible for arranging for the release
of this announcement on behalf of JPMorgan Global Growth &
Income plc is Divya Amin of JPMorgan Funds Limited. Upon the
publication of this announcement, this information is considered to
be in the public domain.
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