SST Scottish Oriental Smaller Companies Trust Plc

TIDMSST

RNS Number : 2896T

Scottish Oriental Smlr Co Tst PLC

23 November 2021

Introduction of conditional tender offers

   To:                          RNS 
   From:                     The Scottish Oriental Smaller Companies Trust plc 
   LEI:                          213800DBSW6WJXKNXL87 
   Date:                      23 November 2021 

This announcement contains inside information as defined under the Market Abuse Regulation (EU) No. 596/2014

Performance of the Company

As noted in the recent annual reports and accounts, having suffered a period of underperformance, t he Board is pleased to announce that over the six months to 31 October 2021, the NAV total return of the Company has exceeded the MSCI AC Asia ex Japan Index by 17.0% and the MSCI AC Asia ex Japan Small Cap Index by 6.7%.

The Board is encouraged by this improvement in relative performance following its detailed review of FSSA (the "Manager") and having given active consideration to conducting a search to replace the Manager. In light of this review and the subsequent implementation of a plan targeted at improving investment performance, the Board believes that the Manager's performance should be assessed over an appropriate time period and against a suitable comparator index. Accordingly, the Board intends to adopt the MSCI AC Asia ex Japan Small Cap Index (in sterling) as its principal comparator index (the "Comparator index").

Conditional five-yearly tender offers

The Board also intends to introduce a performance-related conditional tender offer. Under the proposal, a tender offer will be made to shareholders for up to 25 per cent. of the Company's outstanding share capital at a 2 per cent. discount to formula asset value ("FAV"), being the net asset value of the tendered shares less the costs and expenses of the tender offer. The offer would be made if, over the next five years (from the start of the current financial year being 1 September 2021), and five yearly thereafter, the Company's NAV total return in sterling on a cum income basis does not exceed the total return of the Comparator index net of fees over the five year period on a cumulative basis. If the tender offer is triggered, it will be subject to shareholder approval at the relevant time. The five-yearly period has been chosen as this best corresponds with the Manager's typical investment time horizon.

Fixed rate borrowings

The Company has in place GBP30 million of long-term fixed rate borrowings repayable in 2041. In the event that these borrowings were to be repaid at today's date, the cost of doing so would be GBP35 million. This has been calculated based on a discounted principal amount and includes all future interest, discounted by a comparable US Treasury Bond yield plus a margin. The Board and the Manager will carefully consider the level of gearing (and potential repayment costs) prior to any conditional tender offer.

Share buy backs

The introduction of conditional tender offers will not affect the Board's current approach to discount management. The Board will continue to exercise its right to buy back shares when it believes this to be value accretive and in shareholders' interests. Since 1 January 2021 the Board has bought back 1,893,343 shares, representing 7.1% of the issued share capital.

The Board

As noted in the Chairman's statement in the recent annual report, succession planning is a regular item on the Board agenda, with the balance between diverse experience and longevity of service a consistent focus of discussions. The Chairman has indicated his intention to retire within the next 12 months and the Board will continue to evolve and be replenished with the best interests of shareholders as its primary objective.

Contact:

Juniper Partners Limited

Company Secretary

0131 378 0500

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November 23, 2021 05:52 ET (10:52 GMT)

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