TIDMASCI
RNS Number : 1814H
abrdn Smaller Companies Inc Tst plc
26 July 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR
INDIRECTLY (IN WHOLE OR IN PART) IN, INTO OR FROM 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, ANY MEMBER STATE
OF THE EEA, OR ANY 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 upon in connection with, or act as an inducement to enter
into, any contract or commitment whatsoever.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended. On the publication of this
announcement via a Regulatory Information Service, this inside
information is now considered to be in the public domain.
For immediate release
26 July 2023
abrdn Smaller Companies Income Trust plc ("ASCI" or the
"Company")
Result of Strategic Review and proposed combination with Shires
Income plc ("Shires")
Introduction
Following the Company's announcement on 13 February 2023, the
Board of ASCI has conducted a thorough and extensive review of
options for the future of the Company. The Board was very pleased
with the interest shown, with proposals being received from more
than a dozen candidates. Most of the proposals envisaged a
combination of the Company's assets with another investment trust,
which was an outcome the Board expected to consider as part of the
strategic review.
After detailed negotiations the Board is pleased to announce
that it has agreed terms with the board of Shires for a combination
of the assets of ASCI and Shires (the "Proposals"). The terms of
the Proposal have been improved, substantially so in relation to
the Cash Option (as referred to below), from a proposal that Shires
presented to the Company in February prior to the commencement of
the strategic review. Both investment trusts, which are managed by
abrdn Fund Managers Limited ("abrdn"), have UK equity income as a
key part of their investment objectives, including exposure to UK
smaller companies.
The Proposals
The Proposals will be implemented through a scheme of
reconstruction and voluntary winding up of the Company under
section 110 of the Insolvency Act 1986 and the associated transfer
of assets to Shires (the "Scheme").
Subject to the approval of shareholders of both companies, the
Scheme will give ASCI's shareholders the choice between receiving
new ordinary shares of 50p each in the capital of Shires ("New
Ordinary Shares") (the "Rollover" and "Rollover Option"); and/or
cash (the "Cash Option"). If the Scheme is approved, ASCI's
shareholders will Rollover into Shires unless they specifically
elect for the Cash Option for all or part of their holding. For the
avoidance of doubt, the Cash Option will be unlimited, with all
valid elections to receive cash accepted.
The Company expects to pay out the vast majority of its
accumulated revenue reserves via a pre-liquidation dividend to all
of ASCI's shareholders, and intends to repay its floating rate
credit facility prior to the implementation of the Scheme.
Shires' entitlements as a shareholder in ASCI under the Scheme
will be satisfied on the Company's liquidation by the transfer of
the Rollover assets to Shires (which will include Shires' pro rata
share of ASCI's assets) without any issue of New Ordinary Shares to
Shires under the Scheme.
The enlarged Shires will continue to be managed by abrdn in
accordance with its existing investment objective: namely to
provide a high level of income together with the potential for
growth of both income and capital from a diversified portfolio,
substantially invested in UK equities but also in preference
shares, convertibles and other fixed income securities. Shires will
continue to have exposure to UK small caps, though holding assets
directly rather than indirectly via its shareholding in ASCI.
Shires will be managed on the same management terms, and with the
aim of providing the same dividend levels as Shires shareholders
have received in the year to 31 March 2023, namely 14.20p per
share, which represents a yield of 6.1 per cent. based on Shires'
share price as at 24 July 2023. Shires' shares have traded at an
average discount to net asset value ("NAV") of 1.5 per cent. over
the twelve months to 24 July 2023 and Shires has periodically
issued new shares to meet demand.
Benefits of the Proposals
Shareholders in the enlarged Shires are expected to benefit
from:
-- an increase in scale, allowing the enlarged Shires to spread
fixed costs over a larger asset base and to benefit from the tiered
management fee structure, while also potentially improving
secondary liquidity and aiding marketability; and
-- a differentiated UK equity income strategy with an attractive
dividend, with some exposure to smaller companies and fixed income
securities.
The Proposals are also expected to deliver benefits (1) to
ASCI's shareholders, whether they wish to Rollover into Shires or
wish to elect for the Cash Option:
-- Payout of revenue reserves via pre-liquidation dividend :
o It is expected that the vast majority of ASCI's accumulated
revenue reserves will be paid out before the Scheme becomes
effective
o All of ASCI's shareholders will be entitled to receive the
pre-liquidation dividend, whether they elect for the Rollover
Option or the Cash Option
For those shareholders electing to Rollover into Shires:
-- Increased dividend :
o An expected increase of 44.7 per cent. per annum in dividend
income based on the most recent four dividends for each company
(i.e. a full year's dividend)
-- Reduced costs :
o Expected decrease of 31.9 per cent. in ongoing charges ratio
based on the pro forma OCR of the enlarged Shires as compared with
the last published OCR of the Company
o A large part of this reduction is due to Shires' management
fee, being 0.45 per cent. of NAV (including any borrowings up to a
maximum of GBP30m, and excluding commonly managed funds) per annum
up to and including GBP100m and 0.40 per cent. of NAV (as above)
per annum in excess of GBP100m
-- Improved average rating :
o Over the twelve months to 24 July 2023, Shires' shares traded
at an average 1.5 per cent. discount to NAV, compared to ASCI's
shares which traded at an average 13.2 per cent. discount to
NAV
o As at 24 July 2023, the latest practicable date prior to
publication of this announcement, the discounts to NAV at which
ASCI's shares and Shires' shares traded were, respectively, 17.1
per cent. and 7.9 per cent.
-- Shires' historic investment performance (2) :
o Shires' NAV total return over 1, 3 and 5 years (measured to 24
July 2023) has been 4.5 per cent., 25.8 per cent. and 16.1 per
cent. respectively
o Shires' share price total return over 1, 3 and 5 years
(measured to 24 July 2023) has been -3.4 per cent., 20.5 per cent.
and 12.2 per cent. respectively
-- Significant cost contribution by abrdn and notice period waiver :
o abrdn will offer a cost contribution to the Scheme by waiving
the management fee payable by Shires to abrdn that would have been
due in respect of the ASCI assets rolling over to Shires for a
period of six months following implementation of the Scheme (to the
benefit of all shareholders of the enlarged Shires). The reduction
will be calculated by reference to the percentage that those assets
represent of the enlarged Shires at the point of implementation of
the Scheme
o abrdn has also undertaken to waive, in full, the period of
notice to which it is contractually entitled under the management
contract that it has with the Company and has agreed that no
compensation will be payable by the Company to abrdn in respect of
such wavier
-- Continued UK smaller companies exposure :
o Circa 40 per cent. of the Company's portfolio is expected to
be transferred in specie to Shires , ensuring continued UK small
cap exposure for all Shires shareholders, with the expectation
being that UK small cap exposure will represent up to 20 per cent.
of Shires ' portfolio on an ongoing basis
For those electing for the Cash Option:
-- Unlimited cash exit :
o All of the Company's shareholders will have the ability to
elect up to 100 per cent. of their holding in ASCI for cash
Further details on the Proposals
The Proposals will be subject to inter alia the approval of
shareholders of the Company and Shires, as well as regulatory and
tax approvals.
The formula asset value ("FAV") of ASCI (the "ASCI FAV") and the
FAV of Shires (the "Shires FAV") will be calculated, for the
purposes of the Scheme, in accordance with the respective company's
normal accounting policies. FAVs will be calculated based on the
NAV (cum income with debt at fair value) of each company, on a
calculation date to be agreed by both parties, with any necessary
adjustments made, and will be reviewed by an independent
accountant.
Shires will be protected from asset and income dilution under
the Proposals through the issue of New Ordinary Shares at a 0.80
per cent. premium to NAV. As part of the Scheme, Shires, the
largest beneficial shareholder in ASCI, holding approximately 13.6
per cent. of the Company's issued share capital as at 24 July 2023,
will vote its full holding in favour of the Scheme.
Shareholders of ASCI who elect for the Cash Option for all of
part of their shareholding will receive an amount in cash equal to
98.5 per cent. of the value of assets attributable to the Cash
Option (after realising any non-cash assets so attributed), with
the balance being applied for the benefit of the Rollover
Option.
Each party will bear its own costs in respect of the Proposals,
whether or not the Proposals proceed.
For the avoidance of doubt, any costs of realignment and/or
realisation of the Company's portfolio prior to the Scheme becoming
effective will be borne by the Company. Any stamp duty, stamp duty
reserve tax or other transaction tax, or investment costs incurred
by Shires for the acquisition of the ASCI portfolio or the
deployment of the cash therein upon receipt shall be borne by the
enlarged Shires. The London Stock Exchange admission fees payable
in connection with the issue of New Ordinary Shares to ASCI's
shareholders will also be borne by the enlarged Shires.
Shires following implementation of the Scheme
It is intended that the Shires portfolio will continue to be
managed on the same basis as it is currently, though Shires'
exposure to UK small caps will be through direct investments rather
than via its shareholding in ASCI. It is expected that up to 20 per
cent. of the enlarged Shires' portfolio will be UK small caps on an
ongoing basis.
The Shires portfolio is managed by abrdn, led by Iain Pyle and
Charles Luke. Shires also has access to abrdn's Smaller Companies
team, including drawing on the expertise of the Company's portfolio
managers Abby Glennie and Amanda Yeaman. Shires' existing
management fees of 0.45 per cent. of NAV (including any borrowings
up to a maximum of GBP30m, and excluding commonly managed funds) up
to and including GBP100m and 0.40 per cent. of NAV (as above) in
excess of GBP100m per annum will continue to be charged. A new
administration fee of GBP120,000 plus VAT per annum, effective from
the completion of the Scheme, will also be payable by Shires to
abrdn. Shires' gearing will remain subject to a maximum equity
gearing level of 35 per cent. of net assets at the time of draw
down (for information, net gearing was 22.2 per cent. drawn down as
at 31 March 2023 ) and the Shires board has no current intention of
increasing the Company's borrowings above the loan facility already
in place following implementation of the Proposals.
A role on the enlarged Shires board was not offered to ASCI's
directors as part of the revised proposals.
Timetable
It is anticipated that the documentation in connection with the
Scheme will be posted to shareholders in September 2023, with a
view to convening general meetings in October/November 2023 in
order to complete the transaction by that time.
A further announcement is expected when the Company and Shires
publish their respective Scheme documents.
Dagmar Kent Kershaw, ASCI's chairman, commented "After a
thorough review process, during which a number of excellent
proposals were received, the Board of ASCI is pleased to recommend
the Proposals to shareholders. For shareholders who wish to
continue their investment we believe this will provide them with an
attractive and potentially growing level of dividend and the
potential for future capital growth, whilst also retaining an
exposure to smaller companies overseen by the UK Equities team at
abrdn. ASCI's shareholders will also be able to elect to receive
cash for some or all of their shareholding as part of the Scheme
and to do so on materially improved terms to those which Shires
proposed to the Company in February. The Board would like to thank
ASCI's investment managers Abby Glennie and Amanda Yeaman for all
their hard work, dedication and expert stewardship of the Company's
investments, through some very challenging times for the Smaller
Companies sector."
Important Information
This announcement contains information that is inside
information for the purposes of the Market Abuse Regulation (EU)
No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018, as amended. The person
responsible for arranging for the release of this announcement on
behalf of the Company is Holly Kidd of abrdn Holdings Limited.
This announcement is not for publication or distribution,
directly or indirectly, in or into the United States of America.
This announcement is not an offer of securities for sale into the
United States. The securities referred to herein have not been and
will not be registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold in the United States,
except pursuant to an applicable exemption from registration. No
public offering of securities is being made in the United
States.
Past performance is not a guide to future performance. The value
of investments, and the income or capital entitlement which may
derive from them, if any, may go down as well as up and is not
guaranteed. The information contained in this announcement is for
background purposes only and does not purport to be full or
complete and may not be used in making any investment decision.
Nothing in this announcement constitutes investment advice and any
recommendations that may be contained herein have not been based
upon a consideration of the investment objectives, financial
situation or particular needs of any specific recipient. No
representation or warranty is given to the achievement or
reasonableness of future projections, management targets,
estimates, prospects or returns, if any. T he information contained
in this announcement will not be updated.
(1) Unless otherwise stated illustrative financial effects
within this section are based on figures as at or to 24 July 2023
and exclude any impact from the Company's portfolio realisation
costs. All figures are illustrative only, using currently available
information and estimates. Assumes 25 per cent. of the Company's
issued share capital will elect for the Cash Option. All figures
are subject to change. Past performance is not a guide to future
performance. The value of investments, and the income or capital
entitlement which may derive from them, if any, may go down as well
as up and is not guaranteed.
(2) Source: Refinitiv Datastream
Enquiries:
Dagmar Kent Kershaw, Chair
0131 372 2200
Neil Morgan, Winterflood Securities
0203 100 0292
Legal Entity Identifier: 213800J6D2TVHRGKBG24
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
MSCFFFSFDFIEFIV
(END) Dow Jones Newswires
July 26, 2023 02:00 ET (06:00 GMT)
Grafico Azioni Abrdn Smaller Companies ... (LSE:ASCI)
Storico
Da Ott 2024 a Nov 2024
Grafico Azioni Abrdn Smaller Companies ... (LSE:ASCI)
Storico
Da Nov 2023 a Nov 2024
