ACORN INCOME FUND LIMITED
(a closed-ended investment company incorporated in
Guernsey with registration number 34778)
LEI 213800UAZN7G46AHQM67
01 September
2021
Acorn Income Fund
Limited (“Acorn” or the “Company”)
Update on Future
of the Company
Further to the Company’s announcements on 17 May and
12 August 2021 on the future of the
Company, the Board announces that it is proposing a scheme of
reconstruction. Having reviewed proposals regarding the future of
the Company and following consultation with some of the Company’s
shareholders, the Board has concluded that offering a rollover of
its assets into Unicorn UK Income Fund, an open ended vehicle
managed by Unicorn Asset Management (“Unicorn”), and an option for
a cash exit (together, the “Proposals”) is in the best interests of
shareholders as a whole.
Reasons for the Proposals
Given a combination of factors, including the existing dual
portfolio structure, likely future cut in dividends, historic
discount to NAV and size of the Company, the Board does not believe
that the Company can viably continue in its existing form. However,
some shareholders have confirmed their endorsement of the Company’s
Smaller Companies portfolio investment strategy under Unicorn’s
management and others have indicated a preference for a cash exit
at close to NAV. After careful consideration, the Board therefore
recommends a scheme of reconstruction of the Company, which would
result in the voluntary liquidation of the Company. Shareholders
would be entitled, in respect of their shareholdings in the
Company, to elect to:
- roll over all or part of their holding into Unicorn UK Income
Fund, an open ended vehicle managed by Unicorn (a sub-fund of
Unicorn Investment Funds), with rollover entitlements being
calculated on an NAV for NAV basis; and/or
- receive cash as all of or part of their entitlement upon the
liquidation of the Company at a price which will be close to the
prevailing net asset value per share (“Cash Option”).
Unicorn UK Income Fund
The Unicorn UK Income Fund (the “Fund”) was launched in 2004 and
is the best performing Fund in the UK Equity Income sector since
launch1. The Fund follows the same long-term
approach as the Acorn Income Fund Smaller Companies portfolio with
a focus on generating a differentiated and high quality income
stream from a high conviction portfolio of predominantly small and
medium sized UK equities. The Fund is currently £527 million
in size and has an historic dividend yield of 3.4%, which is paid
quarterly. Fraser Mackersie
and Simon Moon have been managers of
the portfolio since 2013. The Fund is also currently top
quartile in the UK Equity Income sector over 3, 5 and 10
years2.
As at 31 August 2021, Unicorn
estimates that the Company’s existing Smaller Companies portfolio
that it manages has a circa 67% commonality with the Unicorn UK
Income Fund and that the balance of the portfolio can be realigned
in an efficient manner ahead of the rollover.
The Company has signed Heads of Terms with Unicorn and Unicorn
Investment Funds in relation to the Proposals. Costs of the
Proposals will be borne by the Company. However, Unicorn has
agreed:
- to make a cost contribution to the Company in the amount of
£100,000, reduced by the proportion of Ordinary Shares in respect
of which elections are made for the Cash Option, subject to a
minimum contribution of £50,000;
- to waive its management fees for Unicorn UK Income Fund for a
period of 12 months for those Acorn shareholders choosing to roll
over some or all of their holding; and
- to waive the entry charge to shareholders choosing to
rollover.
Zero dividend preference shares
As part of the Proposals, the holders of zero dividend
preference shares in Acorn will be paid an amount in cash equal to
their final capital entitlement as at 28
February 2022, on completion of the rollover and
liquidation, expected to be in October/November 2021.
General Meetings
The Proposals are conditional on, inter alia, shareholder and
regulatory approvals. Shareholder documentation setting out full
details of the proposals will be put forward in a circular to be
sent to shareholders as soon as practicable, including a notice for
the necessary general meeting to seek shareholder approval of the
Proposals. If the Proposals are subsequently approved by
shareholders, the conditions to the Proposals are fulfilled and the
scheme of reconstruction is effected, it is expected that the
Company will go into voluntary winding up.
Shareholders will also receive a notice for the Company’s
upcoming Annual General Meeting, which will include a
discontinuation resolution. In light of the Proposals recommended
by the Board, the Board recommends voting in favour of the
discontinuation resolution.
- Source: FE Analytics from 24 May
2004 to 31 August 2021
- Source: FE Analytics as at 31 August
2021
For information please contact:
Nigel Ward (Chairman)
via Singer Capital Markets or Company Secretary
Northern Trust International Fund Administration Services
(Guernsey) Limited
Company Secretary +44 (0) 1481 745498
Singer Capital Markets (Corporate Broker)
Paul Glover / Alan Ray / Alaina Wong + 44 (0) 207 496
3000
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014. This
announcement has been authorised for release by the Company's Board
of Directors.