Bonus Issue of Subscription S

RNS Number : 5376W

Standard Life Equity Income Tst PLC

19 November 2010

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO AUSTRALIA, CANADA, JAPAN, OR THE UNITED STATES OF AMERICA OR ANY JURISDICTION IN WHICH THE SAME COULD BE UNLAWFUL OR TO U.S. PERSONS

Standard Life Equity Income Trust PLC (the "Company")

19th November 2010

The Board of Standard Life Equity Income Trust PLC today announce proposals for a Bonus Issue of Subscription Shares to existing Shareholders. In respect to this, the Company has published a prospectus (the Prospectus) providing details of the Bonus Issue and describing the proposed changes to the Articles to provide for the rights of the Subscription Shares.

The Bonus Issue is conditional on Shareholders passing the Continuation Vote at the forthcoming AGM on 17 December 2010 and on the passing of the Resolution to be proposed at the General Meeting of the Company, to be held immediately following the AGM. Terms used in this announcement have the same meaning as set out in the Prospectus.

The Bonus Issue

The Company is proposing to issue Subscription Shares to Qualifying Shareholders on the basis of one Subscription Share for every five Ordinary Shares held on the Record Date, subject to the passing of the Resolution set out in the Notice of General Meeting. The Subscription Shares will be issued by way of a bonus issue to Qualifying Shareholders.

Each Subscription Share will confer the right (but not the obligation) to subscribe for one Ordinary Share upon exercise of the Subscription Share Rights and on payment of the Subscription Price, as set out below.

The Subscription Share Rights may be exercised to have effect on the last business day of June and December in each year commencing in June 2011 and finishing on the last business day in December 2016, after which the Subscription Share Rights will lapse. The Ordinary Shares arising on exercise of the Subscription Share Rights will be allotted within ten Business Days of the relevant exercise date and will rank pari passu with the existing Ordinary Shares on the date of issue. To be exercised, a notice of exercise must be received by the Registrars no later than ten Business Days prior to the relevant exercise date. It is expected that the Company will pay the interim dividend and final dividend in each year in June and December respectively, i.e. immediately prior to the next exercise date for the Subscription Shares.

Qualifying Shareholders' entitlements will be assessed against the register of members on the Record Date, which is expected to be 5.00 p.m. on 15 December 2010. Subscription Shares will rank equally with each other and will not carry the right to receive any dividends from the Company or the right to attend and vote at general meetings of the Company. The Subscription Price will be equal to the published NAV per Ordinary Share as at 5.00 p.m. on 15 December 2010, plus a one per cent. premium to such NAV per Ordinary Share, rounded up to the nearest whole penny.

The NAV for the purpose of calculating the Subscription Price will be the unaudited value of the Company's assets calculated in accordance with the Company's accounting policies (including revenue items for the current financial year) less all prior charges and other creditors at their fair value (including the costs of the Bonus Issue and the final dividend for the financial year ended 30 September 2010).

The New Articles provide that the Subscription Price is subject to adjustment upon the occurrence of certain corporate events by or affecting the Company before the last business day of December 2016. The relevant corporate events include consolidations or sub-divisions of share capital, pre-emptive offers of securities to Ordinary Shareholders, takeover offers and the liquidation of the Company. Such adjustments seek to protect either the intrinsic value or the time value of the Subscription Shares or both. The next continuation vote, if the Continuation Resolution being proposed at the AGM is passed, is to be proposed at the annual general meeting in 2016.

It is expected that an announcement setting out the Subscription Price will be made on 17 December 2010. Fractions of Subscription Shares will not be allotted or issued and entitlements will be rounded down to the nearest whole number of Subscription Shares.

Rationale of the Bonus Issue

The Directors believe that the Bonus Issue of Subscription Shares will have the following advantages:

(a)        following the exercise of any Subscription Shares Rights, the Company will have an increased number of Ordinary Shares in issue, which should in due course improve the liquidity in the market for its Ordinary Shares;

(b)        on any exercise of the Subscription Share Rights, the capital base of the Company will increase, allowing operating costs to be spread across a larger number of Ordinary Shares and this should cause the total expense ratio to fall;

(c)        Qualifying Shareholders will receive securities with a monetary value which may be traded in a similar fashion to their Existing Ordinary Shares or converted into Ordinary Shares; and

(d)        Qualifying Shareholders will receive securities which are qualifying investments for the purposes of a stocks and shares ISA and permitted investments for the purposes of a SIPP.

Implementation of the Bonus Issue

Implementation of the Bonus Issue requires Shareholders to approve the Resolution to be proposed at the General Meeting. The Resolution, on which all Shareholders may vote, is necessary to obtain certain authorities required in terms of the 2006 Act. If passed, the Resolution will:

(a)  approve the adoption of the New Articles containing the rights attaching to the Subscription Shares;

(b)  authorise the Directors to allot the Subscription Shares pursuant to the Bonus Issue and Ordinary Shares pursuant to the exercise of the Subscription Share Rights;

(c)  waive statutory pre-emption rights in relation to the grant of the Subscription Rights and the allotment of Ordinary Shares pursuant to the exercise of the Subscription Share Rights;

(d)  authorise the capitalisation of sums standing to the credit of the Company's share premium account, capital redemption reserve, special reserve and any other applicable reserve (excluding the revenue reserve) in paying up the Subscription Shares to be issued pursuant to the Bonus Issue;

(e)  authorise the consolidation, sub-division or redemption of any share capital in connection with the exercise of the Subscription Share Rights so as to enable conversion of the Subscription Shares into Ordinary Shares in accordance with the Subscription Share Rights; and

(f)  authorise the repurchase by the Company of Subscription Shares representing up to 14.99 per cent. of the Company's issued subscription share capital following Admission (subject to certain conditions), as more fully described below.

Authority to repurchase Subscription Shares

In order to allow the Company to repurchase Subscription Shares, the Resolution will also grant the Company authority to buy back up to 14.99 per cent. of the issued subscription share capital following Admission.

Repurchases of Subscription Shares will be made at the discretion of the Board, and will only be made when market conditions are considered to be appropriate and in accordance with the Listing Rules. Purchases through the market will not be at prices (exclusive of expenses) that exceed the higher of (i) five per cent. above the average of the middle market quotations (as derived from the London Stock Exchange Daily Official List) for the five consecutive dealing days ending on the dealing day immediately preceding the date on which the purchase is made, and (ii) the higher of the price quoted for (a) the last independent trade of, or (b) the highest current independent bid for, any number of Subscription Shares on the trading venue where the purchase is carried out. Repurchases will only be made when they will result in an increase in the fully diluted NAV per Ordinary Share. Any Subscription Shares repurchased by the Company will be cancelled and will not be held in treasury for reissue or resale.

It is anticipated that authorisation for repurchases of Subscription Shares will be sought at the Company's annual general meetings in 2011 and beyond.

New Articles

If the Resolution is approved, the New Articles will be adopted. The New Articles will set out the rights attaching to the Subscription Shares and remove the requirement for a continuation vote to be proposed at the annual general meeting of the Company in 2011. The New Articles will not otherwise vary from the existing Articles.

The New Articles will be on display at the registered office of the Company from today until the end of the General Meeting and at the General Meeting itself for the duration of the meeting and for at least 15 minutes prior to the General Meeting.

Continuation Vote

Under the Articles, the Company is required to propose a continuation vote as an ordinary resolution at every fifth AGM. If a continuation vote is not passed the Directors are required to convene a general meeting within three months, at which proposals for the winding up or other reconstruction of the Company would be considered.

The last continuation vote took place at the annual general meeting in December 2006 and the next is due at the annual general meeting to be held in 2011. In the light of the Bonus Issue and the exercise period for the Subscription Shares up to December 2016, the Board is proposing a continuation vote at this year's AGM. Assuming the Continuation Resolution is passed at the AGM and the Resolution to approve the Bonus Issue and the amendments to the Articles is approved at the General Meeting then the Board will not be required to propose the continuation resolution at the annual general meeting in 2011 and the next continuation resolution will be proposed at the annual general meeting in 2016.

The Bonus Issue is conditional on the Continuation Resolution being passed at the AGM.

Admission and Dealings

The Subscription Shares will be in registered form and may be issued either in certificated or uncertificated form. No temporary documents of title will be issued. Pending despatch of definitive certificates, transfers of Subscription Shares in certificated form will be certified against the Register. All documents or remittances sent by or to Shareholders will be sent through the post at the risk of Shareholders.

Applications will be made to the UK Listing Authority for the Subscription Shares to be admitted to the Official List with a Standard Listing and to the London Stock Exchange for such shares to be admitted to trading on its main market for listed securities. It is expected that Admission will occur, and that dealings will commence, on 20 December 2010. On Admission, the Subscription Shares will confer rights to subscribe for new Ordinary Shares representing, in aggregate, up to 20 per cent. of the then issued ordinary share capital of the Company.

The Ordinary Shares resulting from the exercise of the Subscription Share Rights will rank pari passu with the Ordinary Shares then in issue (save for any dividends or other distributions declared, made or paid on the Ordinary Shares by reference to a record date prior to the allotment of the relevant Ordinary Shares).

Overseas Shareholders

The issue of the Subscription Shares to persons who have a registered or mailing address in countries outside the EEA may be affected by the law or regulatory requirements of the relevant jurisdiction.

The Subscription Shares to be issued under the Bonus Issue are not being issued to Overseas Shareholders. The Board will allot any Subscription Shares due under the Bonus Issue to Overseas Shareholders to a market maker who will sell such Subscription Shares promptly at the best price obtainable. The proceeds of sale will be paid to the Overseas Shareholders entitled to them save that entitlements of less than £5 per Overseas Shareholder will be retained by the Company for its own account.

Notwithstanding any other provision of the Prospectus, the Company reserves the right to permit any Shareholder to take up Subscription Shares under the Bonus Issue if the Company, in its sole and absolute discretion, is satisfied at any time prior to the General Meeting that the transaction in question is exempt from, or not subject to, the legislation or regulations giving rise to the restrictions in question.

Overseas Shareholders who believe that they are entitled to take up Subscription Shares under the Bonus Issue should contact the Company as soon as possible to discuss the matter.

Any Shareholder who is in any doubt as to his position should consult an appropriate independent professional adviser without delay.

Taxation

The attention of Shareholders is drawn to the summary of United Kingdom tax matters set out in paragraph 10 of Part V of the Prospectus.

Shareholders should note that the Subscription Shares are qualifying investments for a stocks and shares ISA and will constitute permitted investments for the purposes of a SIPP. The exercise of Subscription Share Rights may affect the annual subscription limit available for further investment into an ISA in the relevant year. Shareholders who are in any doubt about their tax position or who may be subject to tax in a jurisdiction other than the United Kingdom should consult their independent professional adviser.

Costs of the Bonus Issue

The Company's expenses in connection with the Bonus Issue are estimated to amount to approximately £285,000 (inclusive of VAT). These expenses will be chargeable against the capital reserves of the Company. In the event that the Bonus Issue does not proceed, the Company will incur abort costs of approximately £130,000 (inclusive of VAT) and these costs will be charged against the revenue reserves of the Company.

Net Proceeds from Subscription Shares

There can be no certainty as to whether any or all of the Subscription Share Rights will be exercised, but if the Bonus Issue proceeds and all of the Subscription Share Rights are exercised, the net proceeds that could arise on such exercise would be approximately £25.0 million.  This is based on the NAV of 311.7 pence per Ordinary Share on 17 November 2010, the latest practicable date prior to the publication of the Prospectus, and assuming 7,948,000 Subscription Shares are issued pursuant to the Bonus Issue. It should be noted, however, that the Subscription Price will be calculated as at the Record Date and therefore the above figures are illustrative only.

Expected Timetable

	2010
Latest time and date for receipt of Voting Instruction Forms from Savings Scheme Participants	11.00 a.m. on 10 December
Latest time and date for receipt of Forms of Proxy	11.00 a.m. on 15 December
Record Date for the Bonus Issue	5.00 p.m. on 15 December
Subscription Price of Subscription Shares calculated	close of business on 15 December
Annual General Meeting	10.30 a.m. on 17 December
General Meeting	11.00 a.m. on 17 December or as soon thereafter as the AGM  has concluded or been adjourned
Announcement of the Subscription Price	17 December
Admission of the Subscription Shares to the Official List and dealings in the Subscription Shares commence	8.00 a.m. on 20 December
Crediting of CREST stock accounts in respect of the Subscription Shares	week commencing 20 December
Share certificates despatched in respect of the Subscription Shares	week commencing 27 December

Enquiries

Gordon Humphries Standard Life Investments Limited	0131 225 2345
William Simmonds J.P. Morgan Cazenove	020 7588 2828

 

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