Statement re proposed liquidation and rollover
24 Gennaio 2008 - 1:48PM
UK Regulatory
FOR IMMEDIATE RELEASE
The New Zealand Investment Trust plc ("the Company")
24 January 2008
Proposals for the voluntary winding-up and reconstruction of the Company
Further to the announcement released on 28 November 2007, the board of the
Company is today announcing recommended Proposals for the reconstruction and
members' voluntary liquidation of the Company, through a scheme under section
110 of the Insolvency Act 1986 and a unitisation (the "Scheme"). Under the
Proposals, Shareholders will be able to elect to receive their entitlement upon
the winding-up of the Company either in cash or to roll over some or all of
their investment into, for New Zealand Shareholders the Brook Tasman Fund (a
New Zealand unit trust), and for UK Shareholders the CF iimia Growth and Income
Fund (a sub-fund of a UK open-ended investment company).
Introduction
As confirmed in the statement accompanying the Company's interim results for
the period to 30 April 2007, at the annual general meeting held on 10 May 2007
Shareholders supported the Board's recommendation to vote against the Company's
continuation as a UK investment trust. The recommendation to vote against the
continuation followed recent major tax reforms in New Zealand which have
resulted in a UK investment trust no longer being the optimal structure for an
investment by those of our Shareholders resident in New Zealand.
Following the vote against the continuation of the Company as an investment
trust, under the Articles the Board is required to present proposals for the
voluntary liquidation, unitisation or other reorganisation of the Company for
submission to Shareholders by no later than the date of the Annual General
Meeting in 2008.
After a review by the Board, in consultation with its advisers, of options
regarding the Company's future, the Board has concluded that it is in
Shareholders' interests to submit recommended proposals described herein.
For regulatory reasons, Brook Tasman Fund cannot be made available under the
Proposals to UK Shareholders or Overseas Holders (except those Overseas Holders
who have satisfied the Directors that it is lawful for Brook Tasman Fund Units
to be issued to them under any relevant overseas laws and regulations) and,
similarly, CF iimia Growth and Income Fund cannot be made available to New
Zealand Shareholders or Overseas Holders. Accordingly, the options available
are as follows:
UK Shareholders
UK Shareholders may elect for:
* the CF iimia Growth and Income Fund Option - to receive income shares in a
sub-fund of a UK open-ended investment company which aims to provide
capital growth and a reasonable level of income by investing primarily in a
full range of both open-ended and closed-ended funds. CF iimia Growth and
Income Fund is managed by iimia plc; and/or
* the Cash Option - to receive cash in the liquidation of the Company.
Accompanying the Circular for UK Shareholders is a Key Features Document for CF
iimia Growth and Income Fund and (for all UK Shareholders on the New Zealand
branch register and those UK Shareholders on the UK register who hold their
Shares in certificated form) a personalised UK Form of Election.
New Zealand Shareholders
New Zealand Shareholders may elect for:
* the Brook Tasman Fund Option - to receive units in a New Zealand unit
trust, which aims to outperform the market over the long term by investing
on a long term basis in New Zealand and Australian securities, the majority
of which will be listed equities. Brook Tasman Fund is managed by Brook
Asset Management Limited, the Company's existing investment adviser; and/or
* the Cash Option - to receive cash in the liquidation of the Company.
Accompanying the Circular for New Zealand Shareholders is an Investment
Statement for Brook Tasman Fund (including an Application Form) and a
personalised New Zealand Form of Election.
Shareholders on the New Zealand branch register will receive their entitlement
under the Cash Option in New Zealand dollars and, subject to any existing
payment arrangements with Shareholders, Shareholders on the UK register will
receive their entitlement in pounds sterling.
Overseas Holders
Overseas Holders will not receive a Form of Election and will (unless the
Directors determine otherwise) be deemed to have elected for the Cash Option
and accordingly will receive cash from the Company in respect of their entire
holding of Shares (unless they have satisfied the Directors that it is lawful
for Brook Tasman Fund Units to be issued to them under any relevant overseas
laws and regulations). Overseas Holders on the New Zealand branch register will
receive cash in the form of New Zealand dollars and Overseas Holders on the UK
register will receive cash in the form of pounds sterling.
Portfolio Composition
In light of the proposed reconstruction of the Company, the composition of the
portfolio has significantly changed in recent weeks. As at 22 January 2008, the
portfolio comprised around 25 per cent. in quoted New Zealand companies'
shares, 8 per cent. in quoted Australian companies' shares and 67 per cent. in
cash or cash equivalents.
Interim Dividend
An interim dividend for the period ended 31 October 2007 of 7.5 pence per Share
was declared on 11 December 2007 and was paid on 18 January 2008 to
Shareholders on the Register on 21 December 2007.
The Directors may declare and pay a final interim dividend prior to the
liquidation of the Company if this is considered necessary to ensure that the
Company continues to comply with the requirement for approval as an investment
trust under Section 842 of the Taxes Act.
Directors' Share Options
There are currently options to subscribe for 77,000 Shares issued to the
Directors. Pursuant to the Share Option Scheme, the exercise period commences
on the third anniversary of the date of grant and ends on the tenth anniversary
of the date of grant. The rules of the Share Option Scheme also provide,
however, that in the event of a voluntary winding-up of the Company the
exercise period for share options is the period of six months commencing on the
date when the resolution for winding-up is passed. In order to avoid the
technical difficulties associated with permitting the exercise of share options
following the commencement of liquidation in the context of a scheme of
reconstruction, it is proposed that the Liquidators will pay an amount to the
option holders for the cancellation of all their share options such that,
financially, the Directors and Shareholders will be in the same position as if
the Directors had exercised their options (other than any options where the
exercise price is greater than the Cash Option value) and elected for the Cash
Option in respect of the Shares received.
On the basis of the unaudited net asset value as at 16 January 2008 announced
on 18 January 2008 (being the latest practicable date prior to the printing of
the Circular) and the aggregate subscription amount of �178,454 in respect of
the exercise of all the share options, the cancellation payments would amount
in aggregate to approximately �170,000. If in respect of any option(s) the
amount calculated to be paid in consideration for its cancellation is a
negative figure, no payment will be made and such option(s) shall lapse.
The Proposals
Under the Proposals the Company will be wound up on 29 February 2008.
Subject to the Scheme becoming unconditional in all respects, Shareholders will
have a choice between continuing their investment by electing for one of the
Rollover Options listed above and/or realising some or all of their investment
for cash under the Cash Option. Shareholders will be entitled to receive their
Residual Net Asset Value per Share in respect of their Rollover Options. The
Residual Net Value per Share for these purposes is an amount equal to the net
asset value of the Company at the Calculation Date minus the Retention, divided
by the number of Shares in issue.
For illustrative purposes, the net assets of the Company as at 16 January 2008
published on 18 January 2008 (being the latest practicable date prior to the
printing of the Circular) were approximately �44.04 million. The amount of
these net assets takes into account the estimated cancellation payment in
respect of the share options but does not provide for the anticipated costs of
the Proposals and of liquidating the Company (estimated at approximately �
500,000) or the retention anticipated to be required by the Liquidators (to
meet contingent and unknown liabilities) of �100,000.
Based on the net assets of the Company adjusted for the costs described above
and adding back current period revenue and assuming that there is no change in
those net assets between now and 29 February 2008; that income shares in CF
iimia Growth and Income Fund are issued at 126.48p (being their issue price as
at close of business on 22 January 2008); that units in Brook Tasman Fund are
issued at NZ$0.9519 (being their issue price as at close of business on 22
January 2008); and that the exchange rate between NZ$ and pounds sterling is
NZ$2.5562:�1 (being the exchange rate on 16 January 2008 and used for the
purposes of calculating the net asset value of the Company on that date), this
would give rise to the following payments per Share in cash or Rollover
Securities under the Proposals:
453.05p or NZ$11.58 in cash; or
3.582 income shares in CF iimia Growth and Income Fund; or
12.1660 units in Brook Tasman Fund.
Note: the above is provided for illustrative purposes only.
Only UK Shareholders are entitled to receive CF iimia Growth and Income Fund
Shares pursuant to the Scheme. UK Shareholders are not entitled to receive
Brook Tasman Fund Units pursuant to the Scheme.
Due to the interval between the Calculation Date (28 February 2008) and the
Transfer Date, being the date on which it is anticipated that the Company's
assets will be transferred to the Rollover Funds (29 February 2008 or in the
case of the Brook Tasman Fund, 3 March 2008), Shareholders who elect for a
Rollover Option will be exposed to any movement over that interval in the
market value of the assets to be transferred as part of the relevant Rollover
Pool.
Shareholders should note that any further payments over and above the Residual
Net Asset Value per Share would be made in cash to all Shareholders regardless
of the Rollover Option they choose. Such payments would be made in the event
that any funds retained in the Liquidation Pool are not required to meet costs
or liabilities of the Company.
Advantages of the Proposals
The Directors believe that the Proposals are in the best interests of
Shareholders because:
* they should allow New Zealand Shareholders who elect to roll over into
Brook Tasman Fund to retain their investment exposure to New Zealand and
Australia in a more tax efficient manner as those Shareholders should enjoy
the benefits of dividend imputation credits and, in many cases, lower
marginal tax rates;
* they should allow UK Shareholders to elect to receive CF iimia Growth and
Income Fund Shares without triggering a disposal for capital gains purposes
until disposing of such securities at a time of their choosing;
* Shareholders who elect for the Cash Option will be able to receive cash in
the liquidation of the Company;
* Brook Asset Management Limited, in its capacity as manager of Brook Tasman
Fund, has agreed to waive any minimum investment levels for New Zealand
Shareholders electing for the Brook Tasman Fund Option; and
* UK Shareholders who acquire CF iimia Growth and Income Fund Shares pursuant
to the Proposals will acquire those Shares on terms which are more
favourable than the terms on which Shareholders could generally purchase
such shares since they will not be charged an initial fee on the value of
the shares issued by CF iimia Growth and Income Fund. The ACD has further
agreed to waive any minimum investment levels for UK Shareholders electing
for the CF iimia Growth and Income Fund Option.
The choice between the options available under the Proposals will be a matter
for each Shareholder to decide and will be influenced by their individual
circumstances and investment objectives. Shareholders should accordingly,
before making any Election, read carefully the information on the choices
available to them as set out in the Circular.
Shareholders who are in any doubt as to the contents of the Circular or as to
the action to be taken should immediately seek their own personal financial
advice from their independent professional adviser authorised under the
Financial Services and Markets Act 2000, or in the case of recipients outside
the United Kingdom, their stockbroker, bank manager, solicitor, accountant and/
or other financial adviser.
Rollover Options
UK Shareholders will be sent with the Circular a Key Features Document,
Simplified Prospectus and factsheet relating to CF iimia Growth and Income
Fund. CF iimia Growth and Income Fund aims to provide capital growth and a
reasonable level of income by investing primarily in a range of open-ended and
closed-ended funds. Only UK Shareholders are entitled to receive CF iimia
Growth and Income Fund Shares pursuant to the Scheme.
New Zealand Shareholders will be sent with the Circular an Investment Statement
relating to Brook Tasman Fund. Brook Tasman Fund aims to outperform the market
over the long term by investing on a long term basis in New Zealand and
Australian securities. UK Shareholders are not entitled to receive Brook Tasman
Fund Units pursuant to the Scheme. Brook Tasman Fund is a unit trust regulated
in New Zealand but for UK purposes is an unregulated collective investment
scheme pursuant to the provisions of Section 238 of the Financial Services and
Markets Act 2000 and its promotion in the UK is therefore restricted.
Shareholders with registered addresses outside the United Kingdom and New
Zealand should read the section headed "Overseas Holders" in Part II of the
Circular. Overseas Holders will not receive a Form of Election and will (unless
the Directors determine otherwise) be deemed to have elected for the Cash
Option and accordingly will receive cash from the Company in respect of their
entire holding of Shares (unless they have satisfied the Directors that it is
lawful for Brook Tasman Fund Units to be issued to them under any relevant
overseas laws and regulations). Overseas Holders on the New Zealand branch
register will receive cash in the form of New Zealand dollars and Overseas
Holders on the UK register will receive cash in the form of pounds sterling.
Cash Option
Shareholders on the UK register who elect (or are deemed to elect) for the Cash
Option will receive in respect of their entitlement a cheque if they hold
Shares in certificated form or a payment through CREST if they hold Shares in
uncertificated form. Shareholders on the New Zealand branch register who elect
(or are deemed to elect) for the Cash Option will receive a cheque in respect
of their entitlement.
Shareholders on the New Zealand branch register will receive their entitlement
under the Cash Option in New Zealand dollars. Subject to any existing payment
arrangements with Shareholders, Shareholders on the UK register will receive
their entitlement in pounds sterling.
Failure to make an Election
Shareholders who make no valid Election will be deemed to have elected for the
Cash Option.
Liquidation Pool
Under the Proposals, the Company will be wound up by means of a members'
voluntary liquidation. The Liquidators will set aside sufficient assets in the
Liquidation Pool to meet all estimated liabilities and contingencies. The
Liquidators will also provide in the Liquidation Pool for a Retention which
they consider sufficient to meet any contingent and unknown liabilities of the
Company. The Retention is currently expected to amount to approximately �
100,000. To the extent that funds in the Liquidation Pool are not required they
will be distributed by the Liquidators at a later date, in cash, to all
Shareholders on the Record Date, regardless of the option(s) they choose.
Details of the Proposals
As part of the reconstruction and winding-up of the Company it is necessary,
for technical reasons, to amend the Articles in order to reorganise its share
capital. Set out in the Circular are the notices convening the GMs.
At the First GM, special resolutions will be proposed to (i) re-classify the
rights attaching to the Shares such that those Shareholders who elect to roll
over some or all of their Shares into CF iimia Growth and Income Fund will, in
respect of such Shares, hold shares with "A" rights giving them the right to
receive CF iimia Growth and Income Fund Shares on a winding-up of the Company,
those Shareholders who elect to roll over some or all of their Shares into
Brook Tasman Fund will, in respect of such Shares, hold shares with "B" rights
giving them the right to receive Brook Tasman Fund Units on a winding-up of the
Company and those Shareholders who elect, or are deemed to elect, to receive
cash in respect of some or all of their Shares will, in respect of such Shares,
hold Shares with "C" rights giving them the right to receive cash on a
winding-up of the Company; (ii) authorise the implementation of the Scheme by
the Liquidators including an application to delist the Company's Shares from
the Official List of the UK Listing Authority and the NZSX; and (iii) amend the
Articles for the purposes of its implementation.
At the Second GM, special resolutions will be proposed to wind the Company up
voluntarily, to appoint the Liquidators and to confer certain powers on the
Liquidators.
At the First GM and the Second GM, every member present in person or (being a
corporation) by representative or by proxy shall on a show of hands have one
vote, and on a poll shall have one vote for every Share held by him.
In the event that the special resolutions are not passed at the First GM or the
Second GM, a special resolution will instead be proposed at the Third GM to
wind up the Company voluntarily. Weighted voting rights will apply at the Third
GM, pursuant to article 150(B) of the Articles, which will have the effect of
ensuring that the Company will be wound up.
In order to implement the Scheme, the assets of the Company will be divided
into four Pools, the Cash Pool, the CF iimia Rollover Pool, the Brook Tasman
Rollover Pool and the Liquidation Pool, on the Calculation Date. The assets of
the Company will comprise cash and securities. The division of the assets of
the Company will be on the basis of the value attributable to Elections for
each of the Rollover Options and the value attributable to Elections (and
deemed Elections) for the Cash Option as a proportion of the total value
attributable to Elections. In order to make the division between the four
Pools, the Manager in consultation with the Liquidators will calculate for the
purposes of determining Residual Net Asset Value the aggregate value of the
Company in accordance with the Scheme as at 5.00 p.m. on the Calculation Date.
Overseas Holders
Overseas Holders will not receive a Form of Election and will (unless the
Directors determine otherwise) be deemed to have elected for the Cash Option
and accordingly will receive cash from the Company in respect of their entire
holding of Shares (unless they have satisfied the Directors that it is lawful
for Brook Tasman Fund Units to be issued to them under any relevant overseas
laws and regulations). Overseas Holders on the New Zealand branch register will
receive cash in the form of New Zealand dollars and Overseas Holders on the UK
register will receive cash in the form of pounds sterling.
Costs and Expenses
The total costs in connection with the Proposals and the liquidation are
estimated to be approximately �500,000 (inclusive of VAT and the estimated
Liquidators' costs but excluding the Retention).
Conditions to the Proposals
The Proposals which provide for, and which will effect, the Rollover Options,
are conditional upon (i) the resolutions at the First GM and the Second GM
being passed; (ii) the admission to the Official List of the UK Listing
Authority of the Reclassified Shares; and (iii) the Directors not resolving to
abandon the Scheme. In the event that the Proposals do not become
unconditional, the Company will proceed to a straight liquidation pursuant to
the resolutions contained in the notice of the Second GM and, if necessary,
pursuant to the resolution contained in the notice of the Third GM. Such a
straight liquidation of the Company would constitute a disposal for UK capital
gains tax purposes.
Certain considerations relating to the Proposals
The implementation of, and an Election for one or more options under, the
Proposals carry with them certain considerations for Shareholders as described
below:
* in the event that any of the Resolutions to be proposed at the First GM and
the Second GM are not passed, the Scheme will not be implemented and the
Company will be wound up on 29 February 2008;
* due to the interval between the Calculation Date (28 February 2008) and the
date on which the Rollover Funds will issue their respective securities (29
February 2008 or, in the case of the Brook Tasman Fund, 3 March 2008),
Shareholders who elect for Rollover Securities will be exposed to movements
over that interval in the market value of the assets of the Company to be
transferred to the Rollover Funds and therefore the number of Rollover
Securities to which they are entitled;
* if UK Shareholders elect to roll over some or all of their entitlement into
CF iimia Growth and Income Fund, the subsequent disposal by such
Shareholders of shares in that fund will constitute a disposal for the
purposes of crystallising a liability to capital gains tax;
* there can be no assurance that CF iimia Growth and Income Fund and/or Brook
Tasman Fund will not raise its annual management charge and/or other fees
in the future; or that there will not be any changes to key personnel
within iimia plc and/or Brook Asset Management; or that the investment
objective and policy of CF iimia Growth and Income Fund and/or Brook Tasman
Fund will not change; and
* New Zealand Shareholders not subject to the Fair Dividend Rate rules who
did not acquire their Shares with the purpose of resale or as part of a
business trading in shares may wish to consider selling their Shares rather
than participating in the liquidation process because they could otherwise
be subject to tax on some or all of the proceeds distributed as part of the
liquidation of the Company.
Risk Factors
Shareholders' attention is drawn to the risk factors relating to an investment
in the Rollover Funds as set out in the Key Features Document or Investment
Statement, as the case may be.
For the purposes of the Proposals, the assets attributable to the Rollover
Pools will be valued at the close of business on the Calculation Date, being 28
February 2008. For the purposes of calculating the number of Rollover
Securities to be issued, the value of those assets to be transferred to the CF
iimia Growth and Income Fund will be calculated on the basis of their value as
at 10.00 a.m. on 29 February 2008 and the value of the assets to be transferred
to the Brook Tasman Fund will be calculated on the basis of their value as at
5.00 p.m. on the date of receipt of the assets by the trustee of the Brook
Tasman Fund. Any movement in the value of the assets during the interim period
may have a positive or negative effect on the value of the entitlements of
those Shareholders who have made an Election for a Rollover Option.
Expected timetable
2008
20 February 10.30 a.m. Latest time and date for receipt of Forms of
Proxy for the First GM
(11.30 p.m.)
*
21 February 1.00 p.m. Latest time and date for receipt of the Forms of
Election (and, if applicable, Application Forms)
(1.00 p.m.)* from Shareholders on the UK register and the New
Zealand branch register and TTE Instructions
from CREST Shareholders
21 February 5.00 p.m. Record Date for entitlement to the Scheme and
share register closes
22 February 10.30 a.m. First GM and Shares reclassified into
Reclassified Shares**
(11.30 p.m.)
*
22 February Results of elections announced
23 February 8.00 a.m. Shares reclassified into Reclassified Shares in
the Official List and share register opens
27 February Latest time and date for receipt of Forms of
Proxy for the Second GM (10.30 a.m.)/(11.30 p.m.
*) and the Third GM (10.40 a.m.)/(11.40 p.m.*)
28 February 5.00 p.m. Calculation Date
29 February 7.30 a.m. Listing of Reclassified Shares on the Official
List suspended
29 February 10.30 a.m. Second GM and (i) if the Scheme becomes
unconditional, Effective Date for the
(11.30 p.m.) implementation of the Proposals and commencement
* of liquidation or (ii) if the Scheme does not
become unconditional, requirement for Third GM
(10.40 a.m.)/(11.40 p.m.*)
29 February 10.40 a.m. In the event the resolutions are not passed at
the Second GM, Third GM is held
(11.40 p.m.)
*
3 March Contract notes for CF iimia Growth and Income
Fund Shares despatched and CREST participants to
be credited through the CREST system
Week commencing Cheques expected to be despatched to
Shareholders who elect for the Cash Option
10 March
It is expected that the listing of Shares on the Official list of the UK
Listing Authority will be cancelled on 2 March 2009.
Additional relevant dates for New Zealand Shareholders
2008
14 February 5.00 p.m.* Trading halt commences for trading of Shares on
NZSX. No further trading on NZSX
3 March 8.00 a.m.* Quotation of Shares and listing of Company on
NZSX cancelled
Week commencing Transaction statements for units in Brook Tasman
3 March Fund despatched
Week commencing Cheques expected to be despatched to
10 March Shareholders who elect for the Cash Option
References to time and dates in this document are, unless otherwise indicated,
to United Kingdom times and dates.
* References to time and date in New Zealand.
** Reclassified Shares are a technical requirement of the Scheme and will be
created if the first resolution to be proposed at the First GM is passed and
becomes effective.
General
Full details of the Proposals and the notices of the general meeting of the
Company are set out in a circular which is being despatched to the Company's
Shareholders today ("Circular"). Terms used in this announcement shall have the
same meaning as in the Circular. Copies of the Circular have been forwarded for
publication through the UK Listing Authority and are available at:
UKLA Document Viewing Facility
The Financial Services Authority
25 The North Colonnade
Canary Wharf
London, E14 5HS
Telephone No (0207) 066 1000
Enquiries
Landsbanki Securities (UK) Limited
Paul Fincham/Jonathan Becher
+44 (0)20 7426 9000
First NZ Capital Securities Limited
Peter Irwin
+64 4 496 5316
Note: This announcement is made by the Company in compliance with its
objectives as a company whose shares are listed on both the Official List of
the UK Listing Authority and on the New Zealand Stock Exchange. This
announcement, which is not made by or on behalf of Brook or iimia, does not
contain or constitute an offer of securities in any of the investment vehicles
referred to in this announcement and does not contain or comprise any
recommendation, opinion or guidance to shareholders in relation to acquiring or
subscribing for, or agreeing to acquire or subscribe for, any of those
securities.
Landsbanki Securities (UK) Limited, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting for the Company
and for no one else in connection with the Proposals and other matters referred
to herein or the Circular and will not be responsible to anyone other than the
Company for providing the protections afforded to customers of Landsbanki
Securities (UK) Limited or for affording advice in relation to the Proposals or
any matter referred to in this document or the Circular.
END
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