TIDMJEFI
RNS Number : 4716B
Jupiter Emerging & Frontier Inc.Tst
11 February 2022
11 February 2022
LEI: 213800RLXLM87NO26S30
Jupiter Emerging & Frontier Income Trust PLC
("JEFI" or the "Company")
Publication of Circular and Notice of General Meeting
Further to the Company's announcement on 10 January 2022, the
Company has today published a circular to shareholders detailing
proposals to amend the terms of the Company's Redemption Facility,
which require amendments to the Company's Articles of Association,
and to introduce a regular vote on the continuation of the Company
(the "Circular"). The Circular contains a notice convening a
general meeting of the Company (the "General Meeting") to be held
at 3.00 p.m. on 10 March 2022 at the offices of Jupiter Asset
Management Limited, The Zig Zag Building, 70 Victoria Street,
London SW1E 6SQ.
The Circular, together with the full form of the proposed new
Articles (in the form of a comparison document showing the changes
between the proposed new Articles and the existing Articles), will
be available on the Company's website at www.jupiteram.com/JEFI ,
at the Company's registered office of The Zig Zag Building, 70
Victoria Street, London, United Kingdom, SW1E 6SQ and at the
National Storage Mechanism via
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Terms used and not defined in this announcement have the
meanings given to them in the Circular.
For further information please contact:
Magnus Spence
Head of Investment Trusts and Alternatives
Jupiter Asset Management Limited, Company Secretary
investmentcompanies@jupiteram.com
020 3817 1000
LETTER FROM THE CHAIRMAN
1. Introduction
On 10 January 2022 the Company announced Proposals to amend the
terms of the Company's Redemption Facility and to introduce a
regular Continuation Vote on the continuation of the Company.
The Board has recently carried out a Shareholder consultation
regarding the Company's Redemption Facility, through which
Shareholders are able to request the redemption of all or part of
their holding of Shares on an annual basis. Taking into account the
views of Shareholders, the Board is proposing that the Redemption
Facility be amended so that it is offered every three years, next
to occur in June 2024; and that the maximum number of Redemption
Requests that may be accepted at each Redemption Point will in
aggregate be 20 per cent. of the Company's outstanding Ordinary
Share capital. Operation of the Redemption Facility will continue
to be at the discretion of the Board.
Alongside the proposed changes to the Redemption Facility, the
Board intends to implement a Continuation Vote in respect of the
continuation of the Company every three years. Operation of the
Redemption Facility will be conditional on Shareholders approving
the Company's continuation at the preceding Continuation Vote of
the Company.
The proposed changes to the Redemption Facility require
amendments to the Company's Articles of Association, and the Board
is recommending that the Continuation Vote is also reflected in
amended Articles. The proposed amendments to the Articles require
the approval of Shareholders at the General Meeting that is being
convened pursuant to the Circular.
In addition, the Board is also proposing the 2022 Continuation
Resolution at the General Meeting, affording Shareholders the
opportunity to vote on the continuation of the Company.
The General Meeting will be held at the offices of Jupiter Asset
Management Limited, The Zig Zag Building, 70 Victoria Street,
London SW1E 6SQ, United Kingdom on 10 March 2022 at 3.00 p.m. The
formal notice convening the General Meeting is set out in the
Circular. Shareholders are asked to submit a proxy vote in advance
of the meeting. Please see paragraph 8 below for further
information.
The purpose of the Circular is to provide Shareholders with
details of the Proposals and to set out the reasons why the
Directors are recommending that Shareholders vote in favour of the
Resolutions at the General Meeting.
2. Background to, and Reasons for the Proposals
Background
The Redemption Facility
The Company was launched as a closed-ended investment company on
15 May 2017 with an investment objective to achieve capital growth
and income, both over the long term, through investment
predominantly in companies exposed directly or indirectly to
emerging markets and frontier markets worldwide. The Company
carries on business as an investment trust within the meaning of
Chapter 4 of Part 24 of the Corporation Tax Act 2010. The Ordinary
Shares of the Company are admitted to the premium segment of the
Official List of the FCA and are traded on the premium segment of
the London Stock Exchange's main market.
At launch, the Company established the Redemption Facility
through which Shareholders have been entitled to request the
redemption of all or part of their holding of Ordinary Shares on an
annual basis. The Directors have absolute discretion to operate the
annual redemption facility on any given Redemption Point and to
accept or decline in whole or part any Redemption Request.
Redemptions may, at the discretion of the Directors, be settled by
the payment of cash at a price calculated by reference to the
Dealing Value per Ordinary Share or, alternatively, by way of the
creation of a separate redemption pool of assets that may be
realised in an orderly manner and the proceeds of such realisation
paid to Shareholders in respect of Ordinary Shares that are
redeemed.
The first Redemption Point for the Ordinary Shares was 29 June
2018, at which approximately 0.19 per cent. of the Ordinary Shares
then in issue were tendered for redemption. Subsequent Redemption
Points were held on 28 June 2019, at which approximately 4.2 per
cent. of the Ordinary Shares then in issue were tendered for
redemption, and 30 June 2020, at which approximately 5.1 per cent.
of the Ordinary Shares then in issue were tendered for redemption.
In each case the tenders for redemption of Ordinary Shares were
accepted in full by the Board. The most recent Redemption Point was
on 30 June 2021, at which 25,670,791 Ordinary Shares were tendered
for redemption. This was a significant proportion of the Company's
share capital, representing 30 per cent. of the Ordinary Shares
then in issue. Those tenders for redemption were also accepted in
full by Board, utilising the redemption pool method referred to
above.
The background to this significant redemption was the large
discount at which the Ordinary Shares have continued to trade to
the NAV per Ordinary Share, following a sharp fall in global equity
markets in early 2020 resulting from the Covid-19 pandemic. When
the Covid-19 pandemic struck in 2020, the markets into which the
Company invests were particularly badly affected, being quick to
fall and slower than the developed markets to recover. Having
traded at, or close to, a premium for most of the time since the
Company's launch in 2017 until the pandemic struck in March 2020,
the Ordinary Shares have subsequently traded at a significant
discount to Net Asset Value per Share, presenting the opportunity
for investors to buy in at a discount, in the knowledge that they
can redeem at close to the prevailing Net Asset Value per share
every June.
The purpose of the Redemption Facility was to provide a degree
of liquidity to Shareholders and a form of discount control for the
Company, beyond the discount control mechanisms that are commonly
available to a UK listed investment trust (being, primarily, a
regularly renewed share buyback authority that may be exercised at
the absolute discretion of the directors). The Redemption Facility
offers a structure through which Shareholders are able periodically
to request redemption of their Ordinary Shares, and subject to the
Board's discretion and acceptance of Redemption Requests, receive
back an amount calculated by reference to the prevailing Net Asset
Value of the Company, at the absolute discretion of the
Directors.
However, the experience of the 2021 Redemption Point, when some
30 per cent. of the Company's Ordinary Shares were redeemed, served
to demonstrate that the Redemption Facility as currently offered is
incompatible with the best interests of the Company and of
Shareholders as a whole, and with the long-term viability of the
Company.
Significant utilisation of the Redemption Facility would
materially reduce the size of the Company which would lead to a
more concentrated and less liquid portfolio of investments,
limiting the Investment Adviser's ability to effectively manage the
portfolio for maximum performance and value for the benefit of
Shareholders. It would also increase the ongoing charges figure as
the fixed costs of the Company would be spread over a smaller Net
Asset Value. Further, redemptions reduce the number of Ordinary
Shares in issue and so may adversely affect the secondary market
liquidity of the Ordinary Shares.
Taking into account the views of Shareholders, the Board
believes that the interests of the Company and of Shareholders as a
whole will be better served by amending the Redemption Facility in
a manner which will limit the scale of future outflows, while at
the same time offering Shareholders a range of protections,
including access to the Redemption Facility on a triennial basis
and, also, the triennial Continuation Vote.
Accordingly, the Board is proposing that the Redemption Facility
be amended so that it is offered every three years, next to occur
in June 2024. Further, the Board is proposing that the number of
Redemption Requests that may be accepted by the Board is capped,
with the maximum number at each Redemption Point being, in
aggregate, 20 per cent. of the Company's outstanding Ordinary Share
capital. Where, in respect of any Redemption Point, the Company
receives Redemption Requests in excess of that cap, redemptions
will be scaled back provided that each Ordinary Shareholder will be
entitled to tender for redemption up to a basic entitlement equal
to 20 per cent. of such Ordinary Shareholder's holding of Ordinary
Shares as at 5.00 p.m. on the date which is 20 Business Days prior
to the Redemption Point. Again, the Board believes that the
introduction of this cap best serves the long-term interests of the
Company and the Shareholders as a whole.
Operation of the Redemption Facility will continue to be at the
discretion of the Board.
The Continuation Vote
Following the consultation with Shareholders referred to above,
and given the proposals to offer the Redemption Facility
triennially and not annually, the Board believes that it would be
appropriate for Shareholders to be given the periodic opportunity
to vote on the continuation of the Company as an investment
company.
Accordingly, it is proposed that at a general meeting of the
Company to be held in 2024 and in every third year thereafter, the
Directors shall propose an ordinary resolution to the Shareholders
that the Company continues in existence as an investment company.
Such resolution shall be proposed at the Company's annual general
meeting to be held in each relevant year or, at the discretion of
the Directors, at a specially convened general meeting, and in any
event prior to the Redemption Point in the same year. If any such
resolution is not passed, then the Directors shall, within three
months after the date of the resolution, put forward to
Shareholders proposals to the effect that the Company be wound up,
liquidated, reorganised or unitised. In addition, the operation of
the Redemption Facility will be conditional on the passing of the
Continuation Vote in the same year.
The next Continuation Vote under the Articles, as amended, is
therefore expected to be held in March 2024, with the first
Redemption Point under the amended Redemption Facility being
scheduled for June that year.
The Board is recommending that Shareholders vote in favour of
Resolution 1 at the General Meeting in order to implement the
regular Continuation Vote and the proposed changes to the
Redemption Facility.
The 2022 Continuation Resolution
In addition to establishing the regular Continuation Vote, the
Board is offering Shareholders the opportunity to vote on the
continuation of the Company at the General Meeting to be held on 10
March 2022.
The Board believes that the continuation of the Company would be
in the best interests of Shareholders, to allow the Investment
Adviser to more fully pursue the investment opportunity of the
Company in accordance with the Company's investment policy.
The Company's portfolio holdings have proven their resilience
through what has been an unprecedented and challenging period since
the start of the Covid-19 pandemic for many emerging and frontier
market businesses. Income generation has already recovered to above
pre-Covid levels and the Investment Adviser believes that a
combination of attractive portfolio valuations and continued
earnings growth should be conducive to a positive outlook for the
Company's total returns in 2022. The Board retains its confidence
in the Investment Adviser and takes great encouragement from the
recovery both in the Company's Net Asset Value and in the earnings
from investments.
The Board is therefore recommending that Shareholders vote in
favour of the 2022 Continuation Resolution at the General
Meeting.
Summary of the Proposals
The Proposals involve:
Proposal 1: the introduction of a regular Continuation Vote (to
be implemented by Resolution 1 at the General Meeting);
Proposal 2: the amendment of the Redemption Facility such that,
conditional on the passing of the Continuation Vote in the same
year, it is held once every three years with the next Redemption
Point to occur in June 2024, and with redemptions capped at 20 per
cent. of Ordinary Shares in any year (to be implemented by
Resolution 1 at the General Meeting); and
Proposal 3: the 2022 Continuation Resolution being put to
shareholders at the General Meeting (to be implemented by
Resolution 2 at the General Meeting).
Resolution 1 seeks to amend the Articles of Association in order
to implement Proposals 1 and 2 above. Resolution 1 is conditional
on the approval by Shareholders of Resolution 2.
If Resolution 2 is approved by Shareholders, the Company will
continue as presently constituted as an investment company, with
the next opportunity to vote on the Company's continuance being in
2024.
3. The proposed amendments to the Company's Articles of Association
If the Resolutions are approved by Shareholders at the General
Meeting, the Company's Articles of Association will be amended with
effect from the end of the General Meeting.
The proposed amendments to the Articles are set out in Part 2 of
the Circular.
In addition, the full form of the proposed new Articles (in the
form of a comparison document showing the changes between the
proposed new Articles and the existing Articles) will be available
for inspection on the Company's website at www.jupiteram.com/JEFI,
on the FCA's National Storage Mechanism and at the General Meeting
for at least 15 minutes before and during the meeting.
4. Benefits of the Proposals
The Directors consider that the Proposals will offer the
following benefits to Shareholders:
-- As further described in paragraph 2 of the Circular, the
proposed changes to the Redemption Facility should help minimise
the risk that the Company's Net Asset Value is reduced to such an
extent that the viability of the Company's investment policy, and
the future of the Company, is prejudiced.
-- The continued access to the Redemption Facility will give
Shareholders the triennial opportunity to redeem some of their
Ordinary Shares, should they wish to do so, at a price calculated
by reference to Net Asset Value or the realisation value of a
redemption pool and which is not dependent on the market liquidity
of the Shares.
-- The introduction of the Continuation Vote will allow
Shareholders a regular opportunity to consider the future of the
Company once every three years, which may also help to minimise any
discount at which the Shares trade.
5. Costs and expenses of the Proposals
The costs and expenses of the Proposals will be borne by the
Company and are not expected to exceed an aggregate of
approximately GBP30,000 (plus VAT).
6. Associated with the Proposals
Shareholders should have regard to the following when
considering the Proposals:
-- The Dealing Value per Ordinary Share, at which Ordinary
Shares may be tendered for redemption in the Redemption Facility,
may not always equal the published unaudited NAV per Ordinary
Share.
-- Shareholders should note that the operation of the Redemption
Facility is and will continue to be entirely at the discretion of
the Board, and no expectation or reliance should be placed on such
discretion being exercised on any one or more occasions or as to
the proportion of Ordinary Shares that may be redeemed.
-- Although the position is not exacerbated by the Proposals,
Shareholders should note that the Redemption Facility could have
implications under Rule 9 of the Takeover Code for Shareholders
with significant shareholdings. The nature of the Redemption
Facility should enable the Company to anticipate the possibility of
such a situation arising and prior to implementing any redemption
the Board will seek to identify any Shareholders who they are aware
may be deemed to be acting in concert under note 1 of Rule 37 of
the Takeover Code and will seek an appropriate waiver in accordance
with note 3 of Rule 37. However, neither the Company, nor any of
the Directors, nor the Manager will incur any liability to any
Shareholder(s) if they fail to identify the possibility of a
mandatory offer arising or, if having identified such a
possibility, they fail to notify the relevant Shareholder(s) or if
the relevant Shareholder(s) fail(s) to take appropriate action.
-- Shareholders should be aware that the past performance of the
Company or of the Investment Adviser or its principals is not
necessarily indicative of likely future performance.
7. General Meeting
The Proposals are conditional on the approval by Shareholders of
the Resolutions to be proposed at the General Meeting which has
been convened for 3.00 p.m. on 10 March 2022.
Resolution 1, which will be proposed as a special resolution,
will, if passed adopt amended Articles to implement the proposed
changes to the Redemption Facility and the introduction of the
Continuation Vote. Resolution 1 is conditional on the approval by
Shareholders of Resolution 2.
If Resolution 2, which will be proposed as an ordinary
resolution, is passed then the Company will continue as an
investment company. If Resolution 2 is not passed, then the Board
will put forward to Shareholders proposals for the future of the
Company.
An ordinary resolution requires a simple majority of members
entitled to vote and present in person or by proxy to vote in
favour in order for it to be passed. A special resolution requires
a majority of at least 75 per cent. of members entitled to vote and
present in person or by proxy to vote in favour in order for it to
be passed.
In accordance with the Articles, all Shareholders present in
person or by proxy shall upon a show of hands have one vote and
upon a poll shall have one vote in respect of each Ordinary Share
held. In order to ensure that a quorum is present at the General
Meeting, it is necessary for two Shareholders entitled to vote to
be present, whether in person or by proxy (or, if a corporation, by
a representative).
The formal notice convening the General Meeting is set out in
the Circular.
The Board is pleased to be able to give Shareholders the
opportunity to attend the General Meeting in person at the address
set out in the notice convening the General Meeting in the
Circular, with an option to view the proceedings online.
Information on how to join the General Meeting virtually is set out
in the notes to the notice convening the General Meeting.
8. Action to be taken in respect of the General Meeting
Shareholders are asked to submit proxy appointments in advance
of the General Meeting, either online or by completing a hard copy
form of proxy in accordance with the instructions set out in the
Circular.
Recipients of the Circular who are the beneficial owners of
Shares held through a nominee should follow the instructions
provided by their nominee or their professional adviser if no
instructions have been provided.
Please complete and submit your proxy vote online via the share
portal at signalshares.com. You will need to log into your Signal
Shares account, or register if you have not previously done so. To
register you will need your Investor Code which can be found on
your share certificate.
If you are unable to locate any of the documents on the
Company's website, need help with voting online or require a paper
proxy form sent to you, please contact our Registrar, Link Group,
by email at enquiries@linkgroup.co.uk, or by calling +44 (0)371 664
0321. Lines are open from 9.00 a.m. to 5.30 p.m. Monday to Friday,
calls are charged at the standard geographic rate and will vary by
provider. Calls outside the UK will be charged at the applicable
international rate.
Shareholders who request a paper form of proxy are asked to
complete and return the form, in accordance with the instructions
printed thereon, to the Company's Registrar Link Group, 10th Floor,
Central Square, 29 Wellington Street, Leeds LS1 4DL, United
Kingdom.
Shareholders who are CREST members may utilise the CREST
electronic proxy appointment service.
In order for a proxy appointment to be valid, you must ensure
that you have recorded proxy details using one of the methods set
out above by 3.00 p.m. on 8 March 2022.
9. Recommendation to Shareholders
The Board considers that the Proposals are in the best interests
of the Company and its Shareholders as a whole. Accordingly the
Board unanimously recommends that Shareholders vote in favour of
the Resolutions to be proposed at the General Meeting. The
Directors intend to vote in favour of the Resolutions in respect of
their holdings of Ordinary Shares, amounting to 468,236 Ordinary
Shares in aggregate (representing approximately 0.78 per cent. of
the issued share capital of the Company as at the date of the
Circular).
The Investment Adviser, as investment manager or adviser to
certain Jupiter-managed investment funds, exercises discretion
over, and intends to vote in favour of the Resolutions in respect
of, 7,065,000 Ordinary Shares in aggregate (representing
approximately 11.82 per cent. of the issued share capital of the
Company as at the date of the Circular).
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
If the Resolutions are approved by Shareholders at the General
Meeting, the Company's Articles of Association will be amended with
effect from the end of the General Meeting as set out below.
1 The definition of Redemption Point will be amended as follows:
"5.00 p.m. on the last Business Day in June each year 2024 and
on the last Business Day in June every third year thereafter (or
such other date and/or time as the Directors may determine) on
which date holders of Ordinary Shares which have submitted valid
Redemption Requests to have their Ordinary Shares redeemed will be
considered for redemption at the discretion of the Board".
2 At Article 191.1, the following new sub-Articles will be inserted:
"191.1.7 The Company shall not be bound to accept any requests
to redeem any Ordinary Shares in respect of any Redemption Point.
The acceptance of any Redemption Request shall be at the absolute
discretion of the Directors who may accept such request in whole or
in part. In exercising such discretion, the Directors shall limit
the aggregate number of Ordinary Shares to be redeemed (and/or, if
applicable, sold to an incoming investor or purchased by the
Company as referred to in article 191.2) at any Redemption Point to
20 per cent. of the Company's issued Ordinary Share capital
(excluding Ordinary Shares held in treasury) (the "20 per cent.
Limit").
191.1.8 If, in respect of any Redemption Point, the Directors
shall receive Redemption Requests for Ordinary Shares in excess of
the 20 per cent. Limit then redemptions under consideration by the
Directors (or, if applicable, sales to an incoming investor or
purchases by the Company) shall be scaled back (the "Scale Back")
so that each holder of Ordinary Shares which has submitted a valid
Redemption Request will have considered for redemption (or, if
applicable, as aforesaid) such number of Ordinary Shares, rounded
down to the nearest whole number, as represents 20 per cent. of
such Ordinary Shareholder's holding of Ordinary Shares as at 5.00
p.m. on the date which is 20 Business Days prior to the Redemption
Point (the "basic entitlement") or, if lower, the number of
Ordinary Shares tendered as set out in such Redemption Request, and
to the extent that, following any Scale Back, the aggregate number
of such tendered Ordinary Shares is less than the 20 per cent.
Limit, excess tenders for redemption pursuant to the relevant
Redemption Request above an Ordinary Shareholder's basic
entitlement may, at the discretion of the Directors, be satisfied
(subject to the 20 per cent. Limit) pro rata and in proportion to
the number of Ordinary Shares tendered for redemption by Ordinary
Shareholders in aggregate in excess of their basic entitlement
(rounded to the nearest whole number of Ordinary Shares). The basic
entitlement will apply to each registered Ordinary Shareholder.
191.1.9 The provisions of this Article 191 (redemption facility)
shall not be applied by the Directors if any Ordinary Resolution
for the continuation of the Company proposed in accordance with
Article 193.1 is not passed at any preceding General Meeting of the
Company."
3 A new Article 193 will be inserted headed "Duration of the
Company" and providing as follows:
"193.1 At a General Meeting to be held in 2024 and in every
third year thereafter, the Directors shall propose an Ordinary
Resolution to the Shareholders that the Company continues in
existence as an investment company. Such resolution shall be
proposed at the Company's Annual General Meeting to be held in each
relevant year or, at the discretion of the Directors, at a
specially convened General Meeting, and in any event prior to the
Redemption Point in the same year.
193.2 If the resolution proposed in accordance with Article
193.1 is not passed, then the Directors shall, within three months
after the date of the resolution, put forward proposals to
Shareholders to the effect that the Company be wound up,
liquidated, reorganised or unitised."
4 Certain minor amendments will be made to implement the
addition of the new Articles set out above.
In the case of any discrepancy between this announcement, the
Circular and the proposed new Articles then, following their
adoption, the terms of the Articles will prevail.
The full form of the proposed new Articles (in the form of a
comparison document showing the changes between the proposed new
Articles and the existing Articles) will be available for
inspection on the Company's website at www.jupiteram.com/JEFI, on
the FCA's National Storage Mechanism and at the General Meeting for
at least 15 minutes before and during the meeting.
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