Recommended Merger
Alliance Trust PLC
20 March 2006
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO OR FROM AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA
RECOMMENDED MERGER OF THE ALLIANCE TRUST PLC AND THE SECOND ALLIANCE TRUST PLC
Press release
The boards of directors of The Alliance Trust PLC ('Alliance Trust') and The
Second Alliance Trust PLC ('Second Alliance Trust') have unanimously agreed the
terms of a recommended Merger of the two companies.
The Merger will create the UK's largest generalist investment company listed on
the London Stock Exchange with combined net assets of approximately £2.77
billion as at 16 March 2006.
Alliance Trust and Second Alliance Trust are separate listed public companies
which have worked closely together since 1918. The companies have the same
investment objective, investment policy, the same directors, and share the same
management. They have portfolios which contain almost identical investments and
which include their joint holdings of companies such as Alliance Trust Savings
Limited ('ATS').
Over the past few years, the companies have jointly worked on, and are carrying
out plans for, their future development. They are investing in shared staff and
shared technology and, together, they have each established a presence in Hong
Kong as well as increased their investment in ATS.
To ensure that both companies continue to maximise the potential of this
investment and to secure and consolidate the benefits which they have both
enjoyed by working together, the directors of Alliance Trust and Second Alliance
Trust believe that one company, not two, is the best way forward for all
shareholders.
The directors of both companies believe that the Merger will:
• Result in a simplified structure able to take advantage of market
opportunities in a more responsive and efficient manner;
• Raise the profile of the Combined Company in the market and increase
liquidity for its shares in the market;
• Give shareholders the benefit of quarterly dividends;
• Simplify corporate governance; and
• Facilitate the development of businesses such as ATS.
Following the Merger, the Combined Company will follow the same investment
objective and investment policy as Alliance Trust and Second Alliance Trust.
Whilst retaining their progressive dividend policy, the Combined Company will be
introducing the payment of quarterly dividends.
The Merger, which is subject, among other conditions, to the approval of the
shareholders of both companies, will be implemented by way of a scheme of
arrangement under section 425 of the Companies Act, as a result of which Second
Alliance Trust Shareholders will become Alliance Trust Shareholders. The Merger
is unanimously supported and recommended by the Alliance Trust directors and the
Second Alliance Trust directors.
Lesley Knox, Chairman, said 'These are two great companies and this merger will,
in our view, result in an even better combined company. This is an important
development in a relationship that started 88 years ago.'
'Our core values and the Alliance spirit will not change - many thousands of
private shareholders know we put their interests first - but these will be
carried on by a single, larger, simpler company that will be even better
equipped to deliver value over time.'
'We strongly recommend this course of action to shareholders of Alliance Trust
and Second Alliance Trust.'
-ends-
For further information, please contact:
Lesley Knox, Chairman - 01382 306041
Alan Harden, Chief Executive - 01382 306041
For investor enquiries contact:
Kelly O'Donnell - 01382 306036
For media enquiries contact:
Jane Holligan - 07745 783212
Amy Fisher, Lansons Communications - 07740 951021
David Masters, Lansons Communications - 07786 394688
Advisers to Alliance Trust:
Christopher Smith, JPMorgan Cazenove - 020 7588 2828
Angus Gordon Lennox, JPMorgan Cazenove - 020 7588 2828
Advisers to Second Alliance Trust:
Andrew Zychowski, Dresdner Kleinwort Wasserstein - 020 7475 2700
Robbie Robertson, Dresdner Kleinwort Wasserstein - 020 7475 2700
David Yovichic, Dresdner Kleinwort Wasserstein - 020 7475 2700
This announcement is an advertisement and not a prospectus and investors should
not subscribe for or purchase any shares referred to in this announcement except
on the basis of information in the Prospectus to be published by Alliance Trust
in due course in connection with the admission of new ordinary shares in the
capital of Alliance Trust to the Official List of the Financial Services
Authority and to trading on London Stock Exchange plc's main market for listed
securities. Copies of the Prospectus will, following publication, be available
from Alliance Trust's registered office.
This summary should be read in conjunction with the full text of the following
announcement. Appendix I to this announcement contains definitions of certain
words and expressions used in this summary and in the following announcement.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO OR FROM AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA
RECOMMENDED MERGER OF THE ALLIANCE TRUST PLC AND THE SECOND ALLIANCE TRUST PLC
Introduction
The boards of directors of The Alliance Trust PLC ('Alliance Trust') and The
Second Alliance Trust PLC ('Second Alliance Trust') have unanimously agreed the
terms of a recommended Merger of the two companies. The Merger, which is
subject, among other conditions, to the approval of the shareholders of both
companies, will be implemented by way of a scheme of arrangement under section
425 of the Companies Act, as a result of which Second Alliance Trust
Shareholders will become Alliance Trust Shareholders. The board of directors of
Alliance Trust has been advised by JPMorgan Cazenove and the board of directors
of Second Alliance Trust has been advised by Dresdner Kleinwort Wasserstein.
Alliance Trust and Second Alliance Trust, which are separate listed public
companies, have worked closely together since 1918. Today, both companies have
the same investment objective and investment policy, the same directors and
share the same management. They have portfolios which contain almost identical
investments and which include their joint holdings of companies such as Alliance
Trust Savings Limited ('ATS').
Over the past few years, the companies have jointly worked on, and are carrying
out plans for, their future development. They are investing in shared staff and
shared technology and, together, they have each established a presence in Hong
Kong as well as increased their investment in ATS.
To ensure that both companies continue to maximise the potential of this
investment and to secure and consolidate the benefits which they have both
enjoyed by working together, the directors of Alliance Trust and Second Alliance
Trust believe that one company, not two, is the best way forward for all
shareholders.
The Merger will result in no disruption to the portfolios or to the investment
management, staffing or administrative arrangements. The business of ATS will
continue under the ownership of the Combined Company which will be the largest
generalist investment company in the UK.
The directors of both companies believe that the Merger will:
• Result in a simplified structure able to take advantage of
market opportunities in a more responsive and efficient manner;
• Raise the profile of the Combined Company in the market and
increase liquidity for its shares in the market;
• Give shareholders the benefit of quarterly dividends;
• Simplify corporate governance; and
• Facilitate the development of businesses such as ATS.
Following the Merger, the Combined Company will follow the same investment
objective and investment policy as Alliance Trust and Second Alliance Trust.
Whilst retaining their progressive dividend policy, the Combined Company will be
introducing payment of quarterly dividends.
Alliance Trust will hold an Extraordinary General Meeting to approve the Merger
and at the same time will ask its shareholders, inter alia, for approval,
conditional upon the Merger, to subdivide its shares on the basis of ten
Subdivided Alliance Trust Shares for each Alliance Trust Share and to amend its
Articles of Association to provide for one vote for each share. Alliance Trust
will also ask for approval, conditional upon the Merger, to amend its Articles
of Association to give it the power to purchase its own shares, and for
authority for the purchase of up to 14.99% of its issued share capital.
The Merger is unanimously supported and recommended by the directors of both
companies. It is expected that documents convening the requisite meetings to
seek approval for the Merger will be despatched to shareholders on or around 31
March 2006.
1 Background to the Merger Proposal
Alliance Trust was established in Dundee in 1888, a product of the amalgamation
of several smaller Dundee companies whose main business activities were to take
deposits locally and lend overseas, primarily in the American Pacific North West
and the other American western states and territories.
Second Alliance Trust was established in Dundee in 1883 as the Western and
Hawaiian Investment Company Limited. Its original purpose was to take over the
Hawaiian Investment and Agency Company Limited which operated a mortgage
business in Hawaii and to expand that activity to other parts of the world,
including the continental United States.
In April 1918, the directors of the Western and Hawaiian Investment Company
Limited approached the directors of Alliance Trust to see if the operations of
that company could be conducted out of the offices of Alliance Trust, with
shared management, staff and administration costs. This was agreed and Alliance
Trust and Second Alliance Trust operate today with a single investment
management function with directly employed staff and a single administrative
structure, the costs of which are shared between them. Furthermore, for many
years the boards of directors of Alliance Trust and Second Alliance Trust have
been the same.
The original business of Alliance Trust and Second Alliance Trust, mortgage
lending, was gradually discontinued as both companies concentrated on
investment, initially in fixed interest investments. For approximately the last
50 years, equity investment has been actively pursued by each company. Currently
each company is predominantly an equity investor and they have identical
investment objectives.
2 Benefits of and reasons for the Merger
The boards of directors of both companies believe the principal benefits of the
Merger are:
• A simplified structure able to take advantage of market
opportunities in a more responsive and efficient manner
The directors of both companies believe that Alliance Trust's close relationship
with Second Alliance Trust has been of great benefit to each company and its
respective shareholders through the shared management and the sharing of costs
and economies of scale, and that these benefits should be protected. The most
effective means of preserving and safeguarding these benefits for the future is
to consolidate the relationship between Alliance Trust and Second Alliance
Trust. This will provide the opportunity to build on the success of the two
companies and to focus more readily on current and future business
opportunities.
Although Alliance Trust and Second Alliance Trust already enjoy cost savings and
economies of scale by reason of the arrangement between them, there is still
duplication of administration which will be eliminated by the Merger. For
example, each company has its own board and its own board committees, even
though the agendas for both companies are substantially the same, as well as
separate audit, remuneration and nomination committees. Each company has to be
separately audited and to prepare its own annual report and accounts and hold
its own annual general meeting in each year.
The current arrangement between Alliance Trust and Second Alliance Trust also
gives rise to the need for complex structures for co-investment in certain
assets, such as real estate. The implementation of the Merger will mean that the
costs and management time spent on establishing such structures will be avoided.
The directors of both companies believe that a single, simplified structure with
all subsidiaries wholly owned by one company will facilitate the management and
development of jointly owned companies such as ATS.
• A raised profile for the Combined Company in the market and
increased liquidity for its shares in the market
Following the Merger, the Combined Company will be the largest generalist
investment company listed on the London Stock Exchange with combined net assets
of approximately £2.77 billion as at 16 March 2006. This should increase its
profile in the market and draw the Combined Company to the attention of a wider
audience, making it better known to potential investors. A single investment
company will also provide increased clarity to potential investors and to
customers of ATS.
The Combined Company's asset base and share capital, coupled with the proposed
Alliance Trust Share Split, should provide a higher level of liquidity than is
presently enjoyed by shareholders.
• Quarterly dividends
Shareholders currently receive bi-annual dividends, with each dividend paid
approximately three months following the six monthly period to which it relates.
Following the Merger, the Combined Company will start paying dividends on a
quarterly basis, so that shareholders will receive dividend income more
frequently than under the current regime.
• Simplification of corporate governance
The growth of corporate governance requirements has led to the directors of both
companies spending an increased amount of time and effort in ensuring that the
arrangements between the companies are transparent and on an arm's length basis.
The Merger will provide greater clarity and simplify corporate governance
requirements.
• To facilitate the development of businesses such as that of ATS
Alliance Trust and Second Alliance Trust jointly own a financial services
business, ATS. ATS provides investment plans, personal equity plans, individual
savings accounts and self-invested personal pensions as well as operating
related banking services. The simplification of the structure in a single group
and the increased profile of the Combined Company will, in the opinion of the
directors of both companies, facilitate the development of businesses such as
that of ATS.
3 How the Merger works
Under the terms of the Merger, Alliance Trust will acquire Second Alliance
Trust. Second Alliance Trust's existing ordinary share capital will be cancelled
and will be reissued to Alliance Trust credited as fully paid and Alliance Trust
will issue New Alliance Trust Shares to the former Second Alliance Trust
Shareholders. As a result of the Scheme, Second Alliance Trust will become a
subsidiary of Alliance Trust and Second Alliance Trust Shareholders will become
Alliance Trust Shareholders. Alliance Trust Shareholders will retain their
shares in Alliance Trust which will be subdivided so as to have the same nominal
value of 2.5p as the New Alliance Trust Shares.
Second Alliance Trust Shareholders' entitlement to New Alliance Trust Shares
will be calculated so that there is no transfer of value between Second Alliance
Trust Shareholders and Alliance Trust Shareholders. This will be done by
calculating the exchange ratio on the basis of the adjusted net asset values of
Second Alliance Trust and Alliance Trust (the 'Formula Asset Value' or 'FAV').
Each Second Alliance Trust Shareholder will receive that number of New Alliance
Trust Shares equal to the ratio of the Second Alliance Trust FAV to the Alliance
Trust FAV (which takes account of the share split) multiplied by the number of
Second Alliance Trust Shares held at the Scheme Record Time, as more fully
described in Appendix III. This will result in Alliance Trust Shareholders in
aggregate and Second Alliance Trust Shareholders in aggregate holding shares in
the Combined Company pro rata to the value of the assets contributed by each of
Alliance Trust and Second Alliance Trust to the Combined Company.
The Alliance Trust FAV and the Second Alliance Trust FAV will be determined as
at the FAV Calculation Date (expected to be 15 June 2006), and it is, therefore,
not possible prior to that date to specify the exact exchange ratio of New
Alliance Trust Shares for Second Alliance Trust Shares or the total number of
New Alliance Trust Shares which will be issued to Second Alliance Trust
Shareholders upon completion of the Merger.
The Alliance Trust FAV and the Second Alliance Trust FAV at the FAV Calculation
Date will differ slightly from their respective NAVs at that date. The FAV of
each company will include income accruing to the relevant company to the FAV
Calculation Date less accruals made for certain non-Merger costs and any
dividends declared prior to the FAV Calculation Date so far as not previously
paid. In addition, in preparing the FAV of each company, the directors of
Alliance Trust and of Second Alliance Trust will review the last periodic
valuation of each unlisted investment which has been used in calculating the NAV
of the relevant company, and will consider whether there should be any change to
that valuation. The FAV of each company will be based on the entire issued share
capital of the relevant company; in contrast, for the purposes of the
calculation of the NAV, each company excludes shares held to the order of the
relevant company by the trustee of the relevant Employee Benefit Trust for the
purposes of the matching awards under the relevant Senior Management Equity
Incentive Plan. The calculation of the FAV for each company will also exclude
the costs of the Merger, some of which may have been reflected in the relevant
Company's NAV, and which will be charged after completion of the Merger to the
Combined Group to ensure that the expenses of the Merger will be borne by the
shareholders of Alliance Trust and Second Alliance Trust in proportion to their
interests in the Combined Company.
For illustrative purposes only, however, had the FAV Calculation Date been 16
March 2006 (being the latest practicable date prior to the publication of this
announcement), the Second Alliance Trust FAV and the Alliance Trust FAV per
Subdivided Alliance Trust Share would have been 3641.21698p and 415.59304p,
respectively, and the Merger would have resulted in the issue of 876.15 New
Alliance Trust Shares for every 100 Second Alliance Trust Shares.
The calculation of the illustrative Alliance Trust FAV takes account of the
proposed Alliance Trust Share Split. This calculation effectively adds the
accrued income of 71p per Alliance Trust Share to the NAV of 4122p as at 16
March 2006 and assumes that the recommended Alliance Trust dividend of 37p
announced today had been declared on that date and so deducted from the
illustrative Alliance Trust FAV. Similarly, the Second Alliance Trust FAV takes
into account 19p of accrued income per Second Alliance Trust Share as at 16
March 2006.
The New Alliance Trust Shares to be received by Second Alliance Trust
Shareholders pursuant to the Scheme will have the same nominal value and voting
rights as, and rank pari passu in all respects with, the Subdivided Alliance
Trust Shares held by Alliance Trust Shareholders.
Expenses of the Merger
The expenses of the Merger, which are expected to be approximately £4.5 million
in aggregate for both the companies, will not be taken into account in the
calculation of the Alliance Trust FAV or the Second Alliance Trust FAV. The
Merger expenses will be charged to the Combined Group after the completion of
the Merger. The impact of this is that expenses will be borne by the
shareholders of Alliance Trust and Second Alliance Trust in proportion to their
interests in the Combined Company.
Effect of the Merger on net asset value
The only appreciable effect upon the net asset value (calculated including any
undistributed net revenues and ignoring fractional entitlements) attributable to
an Alliance Trust Shareholder or a Second Alliance Trust Shareholder will be the
expenses of the Merger. These expenses amount to approximately 0.16% of the NAV
of an Alliance Trust Share and a Second Alliance Trust Share.
Effect of the Merger on dividend income
The Combined Company will have the same investment policy as both the Alliance
Trust and the Second Alliance Trust, and its portfolio will include the
investments held in both companies' portfolios prior to the Merger. Given that
Alliance Trust and Second Alliance Trust have portfolios that contain almost
identical investments, the Combined Company is expected to receive a similar
revenue return on its assets to that received by both companies. The Combined
Company will also maintain the same dividend policy as Alliance Trust and Second
Alliance Trust, although it will pay dividends on a quarterly basis. Further
details on dividends are set out below.
4 Implementation of the Scheme
A meeting of Second Alliance Trust Shareholders will be convened by order of the
Court to approve the terms of the Scheme. In addition, the Second Alliance Trust
Extraordinary General Meeting and the Alliance Trust Extraordinary General
Meeting will be convened, inter alia, to obtain necessary approvals and
authorities in connection with the Merger. Implementation of the Scheme will
also require, inter alia, the sanction of the Court. At the Alliance Trust
Extraordinary General Meeting, a special resolution will be proposed to approve,
among other things, the Merger and, conditionally upon the Merger being
implemented, the Alliance Trust Share Split, an increase in the authorised share
capital of Alliance Trust, the authorisation of the board of directors of
Alliance Trust to allot New Alliance Trust Shares in Alliance Trust, and
amendments to the Articles of Association of Alliance Trust to alter the voting
rights of Alliance Trust Shareholders, to give Alliance Trust the power to
purchase its own shares and to increase the limit on the aggregate amount of
remuneration of the Alliance Trust directors.
If Second Alliance Trust Shareholders and Alliance Trust Shareholders approve
the Merger, the appropriate Court Order is obtained and the Scheme becomes
effective, it is expected that Admission will become effective, and that
dealings in the New Alliance Trust Shares will commence, on 21 June 2006. Upon
completion of the Merger, the listing of Second Alliance Trust Shares will be
cancelled.
5 Conditions and approvals of the Scheme and the Merger
The Conditions to the Merger are set out in full in Appendix II.
6 Description of the business of Alliance Trust and Second
Alliance Trust
Investment objective and policy
Alliance Trust and Second Alliance Trust are self-managed investment companies
with investment trust status. Alliance Trust and Second Alliance Trust each have
the investment objective of being a core investment for investors seeking a long
term store of increasing value. Each company allocates its capital across a
broad range of asset classes to enhance and preserve total returns and to
provide shareholders with real growth over the medium to long term. Each company
can use investment techniques such as gearing and hedging to enhance returns and
reduce risks within its portfolio. Neither company benchmarks against any equity
index as each retains its freedom not only to move between equity markets as
opportunities arise but also to invest in other asset classes.
Both companies pursue their objective by:
• investing in both quoted and unquoted equities across the globe
in different sectors and industries;
• investing internationally in preference shares and in debt
securities including government and corporate bonds;
• investing in other assets, including property, cash and other
financial instruments and investment vehicles;
• retaining the ability to borrow, from time to time, and thereby
to gear their respective portfolios; and
• investing in subsidiary and associated businesses which allows
them to expand into other related activities with the objective of enhancing
shareholder value.
The above investment objective and policy will be continued by the Combined
Company following the Merger.
Asset allocation
The majority of each company's investments is currently held in equities but the
portfolios also include property, fixed income holdings and other assets such as
private equity and oil and mineral rights in the US.
Asset, Liability and Income Committees
In order to control the process of efficiently allocating capital across the
various asset classes, each of Alliance Trust and Second Alliance Trust has
established an Asset Liability & Income Committee ('ALICo') which meets monthly,
and on an ad hoc basis if necessary, to manage the capital within the investment
and asset allocation strategies agreed with the boards of directors. Each ALICo
also considers and judges the merits, timing and risks of gearing, or of hedging
other exposures such as foreign currencies.
Investment management
Alliance Trust and Second Alliance Trust's investment team is employed by both
Alliance Trust and Second Alliance Trust and, as at 16 March 2006 comprised 10
managers, including the Investment Director, the Head of Equities, the Head of
Property, and 13 analysts. Alliance Trust and Second Alliance Trust intend to
recruit further expertise for the private equity and fixed income portfolios.
The equity portfolio of each company is managed on a country or regional basis.
This structure allows efficient monitoring for the purposes of tracking
performance and managing risk. Each of Alliance Trust and Second Alliance Trust
is registered as an overseas corporation in Hong Kong where a shared office is
maintained and where both companies are establishing an asset management
business. This facilitates increased investment opportunities in the Asia
Pacific region.
Alliance Trust Savings Limited
ATS, which is owned by Alliance Trust and Second Alliance Trust, provides and
administers investment plans, personal equity plans, individual savings accounts
and self-invested personal pensions. It recently purchased Wolanski & Co.
Trustees Limited ('Wolanski Trustees'), which specialises in self-invested
personal pensions and small self-administered schemes. As at 31 January 2006,
ATS and Wolanski Trustees administered over £3.3 billion of assets on behalf of
approximately 39,000 customers. To maximise ATS's potential, considerable
investment is being made in upgrading ATS's technology and in developing and
broadening its range of products and services.
Market and Net Asset Values
As at 16 March 2006 (being the latest practicable date prior to the publication
of this announcement), Alliance Trust Shares had a mid-market value of 3611p per
share, representing a discount of 12.4% to their unaudited Net Asset Value of
4122p per share. As at 16 March 2006 (being the latest practicable date prior to
the publication of this announcement), Second Alliance Trust Shares had a
mid-market value of 3140p per share, representing a discount of 13.3% to their
unaudited Net Asset Value of 3623p per share. Shareholders should note that
Alliance Trust and Second Alliance Trust Shares have historically traded on
average at similar discount levels and indeed have both traded at an average
discount of 14.5% over the twelve month period ended 16 March 2006.
At the close of business on 16 March 2006 (being the latest practicable date
prior to the publication of this announcement), Alliance Trust's unaudited Net
Asset Value was approximately £2,077 million and Second Alliance Trust's
unaudited Net Asset Value was approximately £695.5 million. Based on these
figures and taking into account the expenses of the Merger which are expected to
be approximately £4.5 million, the net asset value of the Combined Company would
be approximately £2,768 million immediately following the Merger, which reflects
a reduction in the aggregate unaudited Net Asset Value of Alliance Trust and
Second Alliance Trust of approximately 0.16%.
7 Further information on the Combined Company
Investment Objective and Policy
The investment objective and policy of the companies will be continued by the
Combined Company following the Merger.
Quarterly Dividend Policy
In Alliance Trust's announcement of its preliminary results for the year ended
31 January 2006, Alliance Trust proposed a final dividend of 37p per Alliance
Trust Share. Assuming Alliance Trust Shareholders approve this dividend at the
Alliance Trust Annual General Meeting to be held on 10 May 2006, this dividend
will be payable on 12 May 2006 to those Alliance Trust Shareholders who are on
the Alliance Trust register as at 21 April 2006.
For the six month period ended 31 July 2006 Alliance Trust would normally pay an
interim dividend to its shareholders around October 2006. In view of the Merger
however the Alliance Trust directors intend to declare a dividend for that
period to Alliance Trust Shareholders before the Scheme Effective Date. A
further announcement will be made by Alliance Trust in due course.
In Second Alliance Trust's announcement of its interim results for the six month
period ended 31 January 2006, Second Alliance Trust declared an interim dividend
of 32.5p per Second Alliance Trust Share. This will be payable on 28 March 2006
to shareholders on the Second Alliance Trust register as at 10 March 2006.
Second Alliance Trust also announced that it expected to be able to recommend a
final dividend for the year ended 31 July 2006 of at least 33p per Second
Alliance Trust Share, payable in November 2006. In view of the Merger the
Second Alliance Trust directors intend to declare this dividend before the
Scheme Effective Date. A further announcement will be made by Second Alliance
Trust in due course.
Dividends declared to Alliance Trust Shareholders and Second Alliance Trust
Shareholders before the Scheme Effective Date will accelerate the payment of
dividends in respect of the period to 31 July 2006.
Following the Merger, the Combined Company will be introducing a quarterly
dividend policy and will pay four interim dividends in each financial year.
Shareholders will, with respect to each financial year ending 31 January,
receive their dividends on or around 31 July, 31 October, 31 January and 30
April.
The first quarterly dividend paid by the Combined Company will be for the period
from 1 August 2006 to 31 October 2006, which will be paid on or around 31
January 2007, and the final quarterly dividend for the Combined Company's
financial year ending 31 January 2007 will be paid on or around 30 April 2007.
Alliance Trust Shareholders would, under the current dividend timetable,
normally receive a dividend equal to the aggregate of these amounts in late
April or early May of each year.
The Combined Company will continue to invest its capital to generate the long
term returns required to maintain the progressive dividend policy of Alliance
Trust and Second Alliance Trust. This policy aims, subject to there being
sufficient distributable reserves, to increase the total dividend payable to
shareholders in respect of each financial year.
The above statements are an estimate of dividends only and are not intended to
be, and should not be taken as, a forecast of profits.
The Board of the Combined Company
Upon the completion of the Merger, the directors of the Combined Company will be
the current directors of Alliance Trust (who are currently also the directors of
Second Alliance Trust).
8 The Alliance Trust Share Split
Each Alliance Trust share has a relatively high price quotation compared to many
other investment companies which, in common with Alliance Trust, have many
private investors. Accordingly, the Alliance Trust directors have decided that
the Alliance Trust Share Split, which will be subject to and conditional upon
the Merger becoming unconditional, should be put to the Alliance Trust
Shareholders for approval at the Extraordinary General Meeting. The directors of
Alliance Trust consider that this share split will be welcomed particularly by
those shareholders who wish as fully as possible to reinvest their dividends in
the various plans provided and administered by ATS. The Alliance Trust Share
Split will result in Alliance Trust Shareholders holding ten times as many
shares in Alliance Trust but each Subdivided Alliance Trust Share will have a
nominal value of one tenth of what it was prior to the Alliance Trust Share
Split. The Alliance Trust Share Split will have no effect on the attributable
net asset value of a holding of Alliance Trust Shares.
The New Alliance Trust Shares to be issued to Second Alliance Trust Shareholders
pursuant to the Scheme will have the same nominal value and voting rights as,
and will rank pari passu in all respects with, the Subdivided Alliance Trust
Shares held by Alliance Trust Shareholders after the Alliance Trust Share Split.
For the avoidance of doubt, Second Alliance Trust Shareholders will not,
however, be eligible to receive the Alliance Trust final dividend in respect of
the financial year ended 31 January 2006, which will be paid on 12 May 2006, or
the interim dividend in respect of the period from 1 February 2006 to 31 July
2006 which, if the Merger is approved, will be declared before the Scheme
Effective Date.
9 Alliance Trust's power to purchase its own shares
Alliance Trust is also asking its shareholders to approve, conditional on the
Merger, an amendment to its Articles of Association to give it the power to
purchase its own shares, and to give it the authority for the purchase of up to
14.99% of its issued share capital. Renewal of this authority will be sought at
each annual general meeting of the Combined Company.
The directors of Alliance Trust consider that it is in the best interests of the
shareholders as a whole for the Combined Company to have the power to purchase
its own shares in appropriate circumstances. The directors of Alliance Trust
would only exercise this power if they believed it to be in the best interests
of the Combined Company.
10 Meetings of shareholders
Meetings of Second Alliance Trust Shareholders and Alliance Trust Shareholders
are expected to be held on 10 May 2006 in order for shareholders to consider
resolutions to approve the Merger. Set out below is the expected timetable of
principal events relating to the Merger. Shareholder circulars in relation to
the Scheme and a prospectus are expected to be despatched on or around 31 March
2006.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Event Time and/or date
Second Alliance Trust dividend payment 28 March 2006
date.....................................
Second Alliance Trust Court 10.00 a.m. on 10 May 2006
Meeting................................................
Second Alliance Trust Extraordinary General Meeting........................ 10.30 a.m. on 10 May 2006 1
Alliance Trust Annual General Meeting 11.30 a.m. on 10 May 2006 2
............................................
Alliance Trust Extraordinary General 2.00 p.m. on 10 May 2006 3
Meeting....................................
Alliance Trust dividend payment 12 May 2006
date................................................
Alliance Trust pre-Merger June 2006
dividend...................................................
Second Alliance Trust pre-Merger June 2006
dividend........................................
FAV Calculation the close of business on 15 June 4
Date...................................................................... 2006
Scheme Record Time........................................................... 6.00 p.m. on 20 June 2006 4
Court Hearing 20 June 2006 4
Date.........................................................................
Scheme Effective Date 21 June 2006 4
...................................................................
Alliance Trust Share Split 21 June 2006 4
effective...................................................
Delisting of Second Alliance Trust 21 June 2006 4
Shares..........................................
Commencement of dealings on the London Stock Exchange in New Alliance Trust 8.00 a.m. on 21 June 2006 4
Shares.......................................................................
1 The Second Alliance Trust Extraordinary General Meeting will commence at 10.30 a.m. on 10 May 2006 or as soon
thereafter as the Second Alliance Trust Court Meeting shall have concluded or been adjourned.
2 The Alliance Trust Annual General Meeting will commence at 11.30 a.m. on 10 May 2006 or as soon thereafter as
the Second Alliance Trust Extraordinary General Meeting shall have concluded or been adjourned.
3 The Alliance Trust Extraordinary General Meeting will commence at 2.00 p.m. on 10 May 2006 or as soon thereafter
as the Alliance Trust Annual General Meeting shall have concluded or been adjourned.
4 Each of these times and dates are subject to change as the Court Hearing Date will not be allocated until after
the publication of this announcement. These dates are indicative only and will depend, inter alia, on the date upon
which the Conditions are either satisfied or waived (to the extent that they are capable of being waived), the Court
sanctions the Scheme and confirms the associated reduction of capital, and the Court Order sanctioning the Scheme and
confirming the reduction of capital is delivered to the Registrar of Companies in Scotland and, in respect of the
reduction of capital, is registered by the Registrar of Companies in Scotland.
For further information, please contact:
Lesley Knox, Chairman - 01382 306041
Alan Harden, Chief Executive - 01382 306041
For investor enquiries contact:
Kelly O'Donnell - 01382 306036
For Media enquiries contact:
Jane Holligan - 07745 783212
Amy Fisher, Lansons Communications - 07740 951021
David Masters, Lansons Communications - 07786 394688
Advisers to Alliance Trust:
Christopher Smith, JP Morgan Cazenove - 020 7588 2828
Angus Gordon Lennox, JP Morgan Cazenove - 020 7588 2828
Advisers to Second Alliance Trust:
Andrew Zychowski, Dresdner Kleinwort Wasserstein - 020 7475 2700
Robbie Robertson, Dresdner Kleinwort Wasserstein - 020 7475 2700
David Yovichic, Dresdner Kleinwort Wasserstein - 020 7475 2700
This announcement is an advertisement and not a prospectus and investors should
not subscribe for or purchase any shares referred to in this announcement except
on the basis of information in the prospectus to be published by Alliance Trust
in due course in connection with the admission of new ordinary shares in the
capital of Alliance Trust to the Official List of the Financial Services
Authority and to trading on London Stock Exchange plc's main market for listed
securities. Copies of the Prospectus will, following publication, be available
from Alliance Trust's registered office.
The contents of this announcement, which have been prepared by and are the sole
responsibility of the Companies, have been approved solely for the purposes of
section 21(2)(b) of the Financial Services and Markets Act 2000 by JPMorgan
Cazenove Limited of 20 Moorgate, London, EC2R 6DA and Dresdner Kleinwort
Wasserstein Limited of PO Box 560, 20 Fenchurch Street, London, EC3P 3DB.
JPMorgan Cazenove is acting exclusively for Alliance Trust and no one else in
connection with the Merger. Dresdner Kleinwort Wasserstein is acting exclusively
for Second Alliance Trust and no one else in connection with the Merger. They
will not regard any other person (whether or not a recipient of this
announcement) as their respective clients and will not be responsible to anyone
other than Alliance Trust and Second Alliance Trust respectively for providing
the protections afforded to their respective clients nor for giving advice in
relation to the Merger, the contents of this announcement or any transaction or
arrangement referred to herein.
This announcement may not be distributed, directly or indirectly, in or into
Australia, Canada, Japan or South Africa or any other jurisdiction where
offering the New Alliance Trust Shares or making them available for subscription
or purchase would breach any applicable law. This announcement does not
constitute or form part of an offer to sell or issue, or any solicitation of an
offer to buy or subscribe for, any securities referred to herein. The Merger and
the distribution of this announcement and other information in connection with
the Merger in certain jurisdictions may be restricted by law and persons into
whose possession any document or other information referred to herein comes
should inform themselves about and observe any such restriction. Any failure to
comply with these restrictions may constitute a violation of the securities laws
of any such jurisdiction.
The New Alliance Trust Shares have not been and will not be registered with the
US Securities and Exchanges Commission under the US Securities Act or the
securities laws of any state of the United States and will be distributed
pursuant to exemptions from, or in transactions not subject to, the registration
requirements of the US Securities Act, including the exemption provided by
Section 3(a)(10) of that act.
This announcement includes statements that are, or may be deemed to be,
'forward-looking statements'. These forward looking statements can be identified
by the use of forward looking terminology, including the terms 'believes',
'estimates', 'plans', 'projects', 'anticipates', 'expects', 'intends', 'may',
'will', or 'should' or, in each case, their negative or other variations or
comparable terminology. These forward looking statements include matters that
are not historical facts and include statements regarding the companies'
intentions, beliefs or current expectations concerning, among other things, the
companies' results of operations, financial condition, liquidity, prospects,
growth and strategies and the market which the companies operate within.
By their nature, forward looking statements involve risk and uncertainty because
they relate to future events and circumstances. A number of factors could cause
actual results and developments to differ materially from those expressed or
implied by the forward looking statements including, without limitation, the
factors to be described in the risk factors section of the Prospectus, and the
factors to be described in the financial review and prospects section of the
Prospectus.
Forward looking statements may and often do differ materially from actual
results. Any forward looking statements in this announcement reflect the
companies' views with respect to future events as at the date of this
announcement and are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the companies' operations, results of
operations, growth strategy and liquidity. Save as required by law or by the
Listing Rules of the Financial Services Authority, the companies undertake no
obligation publicly to release the results of any revisions to any forward
looking statements in this announcement that may occur due to any change in its
expectations or to reflect events or circumstances after the date of this
announcement.
Information in this announcement or any of the documents relating to the Merger
cannot be relied upon as a guide to future performance.
The market values of an Alliance Trust Share and of a Second Alliance Trust
Share have been derived from the Daily Official List as at 16 March 2006.
The net asset value of Alliance Trust as at the close of business on 16 March
2006 is as announced publicly and delivered to a regulatory information service
by Alliance Trust on 17 March 2006.
The net asset value of Second Alliance Trust as at the close of business on 16
March 2006 is as announced publicly and delivered to a regulatory information
service by Second Alliance Trust on 17 March 2006.
The valuations and statements in this announcement relating to or involving the
entire issued share capital of Alliance Trust and Second Alliance Trust are
based on
(i) The issued share capital of Alliance Trust as at 16 March
2006 comprising 50,400,000 ordinary shares of 25p each and;
(ii) The issued share capital of Second Alliance Trust as at 16
March 2006 comprising 19,200,000 ordinary shares of 25p each.
The average discounts at which Alliance Trust and Second Alliance Trust shares
have traded in the 12 months ended 16 March 2006 (being the latest practicable
date prior to this announcement) have been taken from Datastream.
The Merger will comply with the applicable rules and regulations of the City
Code and the UK Listing Authority. The Merger will be governed by Scots law and
will be subject to the terms and conditions set out in this announcement and to
be set out in the Merger documents. The Merger documents will be sent to
shareholders in due course and, in any event, within 28 days of this
announcement.
The directors of Alliance Trust and Second Alliance Trust accept responsibility
for the information contained in this announcement. To the best of the knowledge
and belief of the directors of Alliance Trust, who have taken all reasonable
care to ensure that such is the case, the information contained in this document
is in accordance with the facts and does not omit anything likely to affect the
import of such information.
Shareholdings
As at 16 March 2006 (being the latest practicable date prior to this
announcement), the directors and their connected persons, which are deemed to be
acting in concert with Alliance Trust, owned the following Alliance Trust and
Second Alliance Trust Shares (including deposited shares purchased on the
relevant Director's behalf pursuant to the Alliance Trust or Second Alliance
Trust Senior Management Equity Incentive Plan):
Director Number of Percentage of Number of Second Percentage of issued
Alliance Trust issued Alliance Alliance Trust Shares Second Alliance
Shares Trust Shares Trust Shares
Lesley Knox 2,191 0.0043% 915 0.0048%
Alan Harden 1,545 0.0031% 1,454 0.0076%
David Deards 1,816 0.0036% 2,585 0.0135%
William Jack 1,000 0.0020% 1,000 0.0052%
Christopher Masters 525 0.0010% 562 0.0029%
Gordon McQueen 200 0.0004% 200 0.0010%
Sheila Ruckley 2,641 0.0052% 3,323 0.0173%
Clare Salmon 200 0.0004% 200 0.0010%
Alan Young 3,486 0.0069% 1,864 0.0097%
Total 13,604 0.0270% 12,103 0.0630%
Under the Companies Act, Executive Directors also have a disclosable interest as
potential beneficiaries, along with other employees, in Alliance Trust and
Second Alliance Trust shares held by the trustee of the Alliance Trust EBT and
Second Alliance Trust EBT respectively. These interests are not reflected in
the above table.
As at 16 March 2006 the Executive Directors had been granted the following
additional rights to acquire Second Alliance Trust Shares in the form of
matching awards under the Alliance Trust and Second Alliance Trust Senior
Management Equity Incentive Plan:
Director Number of Alliance Trust Shares Number of Second Alliance Trust
subject to matching award - Shares subject to matching award -
granted on 9 June 2005 granted on 6 October 2005
David Deards 894 627
Alan Harden 1,694 1,189
Sheila Ruckley 796 552
Alan Young 1,016 776
Total 4,400 3,144
As at 16 March 2006 (being the latest practicable date prior to this
announcement), certain individuals employed by JPMorgan Cazenove, who are
involved in giving its financial advice to Alliance Trust, and their connected
persons, had beneficial interests in 976 Alliance Trust Shares (0.0019% of
Alliance Trust's issued share capital) of which 837 were held non-beneficially,
and 1,500 Second Alliance Trust Shares (0.0078% of Second Alliance Trust's
issued share capital).
As at 16 March 2006 (being the latest practicable date prior to this
announcement), certain individuals employed by Dresdner Kleinwort Wasserstein
who are involved in giving its financial advice to Second Alliance Trust, and
their connected persons, had beneficial interests in 3,573 Alliance Trust Shares
(0.0071% of Alliance Trust's issued share capital) and 2,268 Second Alliance
Trust Shares (0.0118% of Second Alliance Trust's issued share capital).
As at 17 March 2006 (being the latest practicable date prior to the publication
of this announcement), ATS had an interest in a total of 9,002,734 Alliance
Trust Shares (representing 17.86 per cent of issued share capital), which were
held in plans for customers of ATS.
As at 17 March 2006 (being the latest practicable date prior to the publication
of this announcement), ATS had an interest in a total of 4,955,563 Second
Alliance Trust Shares (representing 25.81 per cent of issued share capital),
which were held in plans for customers of ATS.
Save for these interests, neither Alliance Trust nor any of its directors, nor
any person acting in concert with it, owns or controls any Alliance Trust Shares
or Second Alliance Trust Shares or has entered into any derivative referenced to
Alliance Trust Shares or Second Alliance Trust Shares.
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes,
'interested' (directly or indirectly) in 1% or more of any class of 'relevant
securities' of Alliance Trust or of Second Alliance Trust, all 'dealings' in any
'relevant securities' of that company (including by means of an option in
respect of, or a derivative referenced to, any such 'relevant securities') must
be publicly disclosed by no later than 3.30 p.m. (London time) on the London
business day following the date of the relevant transaction. This requirement
will continue until the Effective Date or the date on which the Scheme is
withdrawn. If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire an 'interest' in 'relevant
securities' of Alliance Trust or Second Alliance Trust, they will be deemed to
be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all 'dealings' in 'relevant
securities' of Alliance Trust or of Second Alliance Trust by Alliance Trust or
Second Alliance Trust, or by any of their respective 'associates', must be
disclosed by no later than 12.00 noon (London time) on the London business day
following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose 'relevant
securities' 'dealings' should be disclosed, and the number of such securities in
issue, can be found on the Takeover Panel's website at
www.thetakeoverpanel.org.uk.
'Interests in securities' arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an 'interest' by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found
on the Takeover Panel's website. If you are in any doubt as to whether or not
you are required to disclose a 'dealing' under Rule 8, you should consult the
Takeover Panel (www.thetakeoverpanel.org.uk; telephone number +44 (0) 20 7382
9026; fax +44 (0) 20 7236 7005).
Appendix I
Definitions
The following definitions apply throughout this announcement unless the context
requires otherwise:
Admission Admission of the New Alliance Trust Shares to the Official List
and to trading on the London Stock Exchange's market for listed
securities becoming effective.
ALICo The Asset, Liability & Income Committee of Alliance Trust or
Second Alliance Trust, as the context may require.
Alliance Trust The Alliance Trust PLC.
Alliance Trust Annual The annual general meeting of Alliance Trust (and any adjournment
General Meeting thereof) convened for 11.30 a.m. on 10 May 2006 (or as soon
thereafter as the Second Alliance Trust Extraordinary General
Meeting shall have been concluded or adjourned).
Alliance Trust EBT The Alliance Trust PLC Employee Benefit Trust, established by
deed of trust dated 12 May 2005.
Alliance Trust The extraordinary general meeting of Alliance Trust (and any
Extraordinary General adjournment thereof) convened for 2.00 p.m. on 10 May 2006 (or as
Meeting or Extraordinary soon thereafter as the Alliance Trust Annual General Meeting
General Meeting shall have been concluded or adjourned).
Alliance Trust FAV The Formula Asset Value attributable to the Subdivided Alliance
Trust Shares.
Alliance Trust Share Split The subdivision of the ordinary share capital of Alliance Trust,
conditional upon and with effect from the Merger becoming
unconditional, on the basis of ten Subdivided Alliance Trust
Shares for each Alliance Trust Share.
Alliance Trust Shareholders Holders of Alliance Trust Shares, Subdivided Alliance Trust
Shares or New Alliance Trust Shares, as the context may require.
Alliance Trust Shares Ordinary shares of 25p each in the capital of Alliance Trust.
Articles of Association or The articles of association of Alliance Trust.
Articles
ATS Alliance Trust Savings Limited, a company incorporated in
Scotland with registered number SC98767, with registered business
address of Meadow House, 64 Reform Street, Dundee, DD1 9YP.
Business Day Any day (excluding Saturdays, Sundays and public holidays) on
which banks are open for business in London and Edinburgh.
City Code The City Code on Takeovers and Mergers.
Combined Company Alliance Trust as enlarged after the implementation of the Scheme
and the Merger.
Combined Group The Group following the Effective Date.
Companies Act The Companies Act 1985 (as amended).
Conditions The conditions to the implementation of the Scheme and the Merger
set out Appendix II of this announcement.
Court The Court of Session in Scotland.
Court Hearing The hearing of the petition to sanction the Scheme and to confirm
the reduction of capital provided for by the Scheme.
Court Hearing Date The date of the commencement of the Court Hearing.
Court Order The interlocutor of the Court sanctioning the Scheme under
Section 425 of the Act and confirming the reduction of capital
provided for by the Scheme under Section 137 of the Act.
Dresdner Kleinwort Dresdner Kleinwort Wasserstein Limited.
Wasserstein
Effective Date The date on which the Scheme becomes effective in accordance with
its terms, which is expected to be 21 June 2006.
FAV or Formula Asset Value The relevant formula asset values in respect of the Subdivided
Alliance Trust Shares and Second Alliance Trust Shares as
determined in accordance with the formula as set out in Appendix
III of this announcement.
FAV Calculation Date The date at the close of business of which the Alliance Trust FAV
and the Second Alliance Trust FAV are to be calculated, which is
expected to be 15 June 2006.
Financial Services The Financial Services Authority of the United Kingdom in its
Authority or FSA capacity as the competent authority for the purposes of Part VI
of FSMA and in the exercise of its functions in respect of the
admission to the Official List otherwise than in accordance with
Part VI of FSMA.
FSMA The Financial Services and Markets Act 2000 (as amended).
Group Alliance Trust and its subsidiary undertakings from time to time
(being the Combined Group following the Effective Date).
HMRC Her Majesty's Revenue and Customs.
JPMorgan Cazenove JPMorgan Cazenove Limited.
Listing Rules The rules relating to admission to the Official List made in
accordance with s.73A(2) of FSMA.
London Stock Exchange The London Stock Exchange plc.
Merger The proposed merger between Alliance Trust and Second Alliance
Trust by means of the Scheme.
Net Asset Value or NAV The unaudited net asset value of the relevant company, or the
shares of the relevant company, calculated in accordance with the
relevant company's normal reporting policies (which, when
calculated per share, excludes the shares held in the Alliance
Trust EBT or the Second Alliance Trust EBT, as the case may be).
New Alliance Trust Shares Ordinary shares of 2.5p each in Alliance Trust, to be issued to
the Second Alliance Trust Shareholders pursuant to the Scheme.
New Second Alliance Trust The Second Alliance Trust Shares to be issued by Second Alliance
Shares Trust pursuant to the Scheme.
Official List The Official List of the Financial Services Authority.
Panel The Panel on Takeovers and Mergers.
Prospectus The prospectus to be issued by Alliance Trust relating to the
Combined Company and the New Alliance Trust Shares.
Scheme or Scheme of The proposed scheme of arrangement under Section 425 of the
Arrangement Companies Act between Second Alliance Trust and the Second
Alliance Trust Shareholders, together with the associated
reduction of capital.
Scheme Circular The document to be sent to Second Alliance Trust Shareholders
setting out details of the Scheme.
Scheme Record Time 6.00 p.m. on the last Business Day immediately prior to the
Effective Date.
Second Alliance Trust The Second Alliance Trust PLC.
Second Alliance Trust Court The meeting of Second Alliance Trust Shareholders (and any
Meeting adjournment thereof) convened pursuant to an order of the Court
under Section 425 of the Companies Act, to be held at 10.00 a.m.
on 10 May 2006 for the purpose of considering and, if thought
fit, approving the Scheme (with or without amendment).
Second Alliance Trust EBT The Second Alliance Trust plc Employee Benefit Trust, established
by deed of trust dated 12 May 2005.
Second Alliance Trust The extraordinary general meeting of Second Alliance Trust (and
Extraordinary General any adjournment thereof) convened in connection with the Scheme,
Meeting to be held at 10.30 a.m. on 10 May 2006 (or as soon thereafter as
the Second Alliance Trust Court Meeting shall have been concluded
or adjourned).
Second Alliance Trust FAV The Formula Asset Value attributable to the Second Alliance Trust
Shares.
Second Alliance Trust Group Second Alliance Trust and its subsidiary undertakings.
Second Alliance Trust Holders of Second Alliance Trust Shares.
Shareholders
Second Alliance Trust Fully-paid ordinary shares of 25p each in the capital of Second
Shares Alliance Trust.
Subdivided Alliance Trust Alliance Trust Shares which have been, pursuant to the Alliance
Shares Trust Share Split, subdivided into ordinary shares of 2.5p each.
Taxes Act The Income and Corporation Taxes Act 1988, as amended.
UK or United Kingdom The United Kingdom of Great Britain and Northern Ireland.
US Securities Act The United States Securities Act of 1933, as amended.
Wolanski Trustees Wolanski & Co. Trustees Limited, a company incorporated in
England and Wales with registered number 02178783.
Appendix II
CONDITIONS OF THE SCHEME AND THE MERGER
The Merger is conditional upon the Scheme becoming unconditional and becoming
effective, subject to the City Code, by not later than 30 September 2006 or such
later date (if any) as Alliance Trust and Second Alliance Trust may agree and
(if required) the Court may allow.
1. Conditions of the Scheme
The Scheme is conditional upon:
1.1 the approval of the Scheme by a majority in number representing
three-fourths or more in value of the Second Alliance Trust Shareholders present
and voting, either in person or by proxy, at the Second Alliance Trust Court
Meeting, or at any adjournment thereof;
1.2 the special resolution to approve matters to give effect to and implement
the Scheme and the associated reduction of capital, to increase the authorised
share capital of Second Alliance Trust, to authorise the allotment of New Second
Alliance Trust Shares, to increase the authorised share capital of Second
Alliance Trust by the creation of one 'Deferred Share', to amend the articles of
association of Second Alliance Trust in respect of that Deferred Share
accordingly and to authorise the allotment of the Deferred Share, being duly
passed by the requisite majority of Second Alliance Trust Shareholders at the
Second Alliance Trust Extraordinary General Meeting, or at any adjournment
thereof;
1.3 the passing at the Alliance Trust Extraordinary General Meeting, or at any
adjournment thereof, of a special resolution to approve the Merger, to subdivide
the share capital of Alliance Trust, to increase the authorised share capital of
Alliance Trust, to authorise the allotment of New Alliance Trust Shares pursuant
to the Scheme and to amend the Articles of Association of Alliance Trust, as set
out in the notice of the Alliance Trust Extraordinary General Meeting;
1.4 the sanction (with or without modification, on terms agreed by Alliance
Trust and Second Alliance Trust) of the Scheme and confirmation of the reduction
of capital provided for by the Scheme by the Court and a certified copy of the
Court Order and the minute of such reduction attached thereto being delivered
for registration to the Registrar of Companies in Scotland and, in relation to
the reduction of capital provided for by the Scheme, being registered by the
Registrar of Companies in Scotland; and
1.5 the admission to the Official List of the New Alliance Trust Shares becoming
effective in accordance with the Listing Rules and the admission of such shares
to the London Stock Exchange's market for larger and established companies
becoming effective or (if Second Alliance Trust and Alliance Trust so determine
and subject to the consent of the Panel) the FSA agreeing or confirming its
decision to admit such shares to the Official List and the London Stock Exchange
agreeing or confirming its decision to admit such shares to trading subject only
to (i) the allotment of such shares and/or (ii) the Scheme becoming
unconditional in all respects.
2. Conditions of the Merger
Alliance Trust and Second Alliance Trust have agreed that, subject as stated in
paragraph 3 below, application to the Court to sanction the Scheme and to
confirm the reduction of capital provided for by the Scheme will not be made
unless conditions 1.1, 1.2 and 1.3 above have been fulfilled and unless
immediately prior to the hearing of the petition to sanction the Scheme the
following conditions (as amended if appropriate) are satisfied or waived as
referred to below:
2.1 no notice having been given or action taken by the HMRC which indicates that
Second Alliance Trust or Alliance Trust may not remain approved as an investment
trust company pursuant to Section 842 of the Taxes Act up to the time when the
Scheme becomes effective, or that the Merger and/or the transfer of Second
Alliance Trust's assets to Alliance Trust might cause Alliance Trust to cease to
be approved as an investment trust company;
2.2 no governmental authority, regulatory body, court or other person having
instituted or threatened any action, proceedings or investigation, or enacted or
proposed any statute, regulation or order, which would or might make
implementation of the Scheme and the other steps involved in the Merger void or
illegal, or restrict or prohibit the implementation of the Merger, or impose
material additional conditions in relation to that implementation, or otherwise
adversely affect in any material respect the business of Alliance Trust or
Second Alliance Trust;
2.3 there being no material pending or threatened litigation, arbitration
proceedings, prosecution or other legal proceedings against Alliance Trust or
Second Alliance Trust; and
2.4 except as publicly disclosed before 20 March 2006 or contemplated by the
Scheme, neither Second Alliance Trust nor Alliance Trust having issued any
ordinary shares or other securities or securities convertible into, or warrants
or options to subscribe for, its ordinary shares or other securities, or entered
into any commitment to do so, or made any material change in its investment
policies other than as agreed between Second Alliance Trust and Alliance Trust,
or entered into any material agreement or commitment which is of a long term or
unusual (by reference to the prior practice of Second Alliance Trust or Alliance
Trust, as the case may be) nature or magnitude, other than agreements the
existence of which has been disclosed in writing to Second Alliance Trust or
Alliance Trust as the case my be before 20 March 2006.
3. Waiver of Conditions
Subject to the requirements of the Panel, Second Alliance Trust and Alliance
Trust, acting together, may waive all or any of the conditions contained in
paragraphs 1.5 and 2 above (or, where appropriate, by the party for whose
benefit the condition exists), in whole or in part.
Appendix III
FORMULA ASSET VALUE
Entitlement of Second Alliance Trust Shareholders
The aggregate number of New Alliance Trust Shares that each Second Alliance
Trust Shareholder will be entitled to receive in respect of the cancellation of
his Second Alliance Trust Shares will be calculated by dividing the Second
Alliance Trust FAV by the Alliance Trust FAV (the 'FAV Ratio') and multiplying
the Second Alliance Trust Shareholder's holding of Second Alliance Trust Shares
by the FAV Ratio. The number of Second Alliance Trust Shares held by a Second
Alliance Trust Shareholder will be taken as at the Scheme Record Time. The FAV
Ratio will be calculated to five decimal places, with 0.000005 being rounded
downwards.
Entitlements to less than one New Alliance Trust Share will not be issued to
Second Alliance Trust Shareholders but will be aggregated and sold in the
market. The net proceeds of sale will be paid by cheque to the relevant Second
Alliance Trust Shareholder in due proportions, except that individual
entitlements of less than £3.00 shall be retained for the benefit of the
Combined Company.
Formulae for calculations of the Alliance Trust FAV and Second Alliance Trust
FAV
The FAV of (i) Alliance Trust (the 'Alliance Trust FAV') and (ii) Second
Alliance Trust (the 'Second Alliance Trust FAV') shall be calculated as provided
below, separately, in relation to Alliance Trust and Second Alliance Trust (each
of which for the purposes of this Appendix is, unless the context otherwise
requires, referred to as the relevant company) as at the close of business on
the FAV Calculation Date. Both FAVs will be calculated in pence, rounded to five
decimal places, with 0.000005 pence being rounded downwards.
The Alliance Trust Share Split is conditional upon the Merger becoming
unconditional, which is expected to be on 21 June 2006, which is post the FAV
Calculation Date. However, the Alliance Trust FAV calculation takes account of
the Alliance Trust Share Split.
Accordingly the Alliance Trust FAV will be:
(A + B + C + D + E + F + G) - (H + I + J + K)
10X
And the Second Alliance Trust FAV will be:
(A + B + C + D + E + F + G) - (H + I + J + K)
Y
where in relation to each company:
A is the value of those investments of the relevant company, as at the
close of business on the FAV Calculation Date, which are listed or dealt in, on
a recognised stock exchange, including AIM, calculated by reference to bid
prices as at the close of business on the FAV Calculation Date. In the case of
debt-related securities (including convertible debt securities), the value of
the investment is the bid price as at the close of business on the FAV
Calculation Date, subject to adjustment to exclude any accrual of interest up to
the close of business on the FAV Calculation Date. The quotation or price shall
be taken from the principal stock exchange or market where the relevant
investment is listed or dealt in, as shown by the exchange's or market's
recognised method of publication of prices for such investments;
B is the value of those investments of the relevant company, as at the
close of business on the FAV Calculation Date, which are dealt in on an 'over
the counter' market, calculated by reference to the average of the average
prices marked for those investments on such of the five business days up to and
including the FAV Calculation Date on which there were dealings recorded, as
shown by the relevant market's recognised method of publication of prices for
such investments;
C is the value of those investments of the relevant company, as at the
close of business on the FAV Calculation Date, which comprise units in unit
trusts or OEICs, calculated by reference to the bid price quoted as at the FAV
Calculation Date by the relevant unit trust or OEIC managers for holdings of the
amount held by the relevant company;
D is the value of all those traded options and futures contracts to which
the relevant company is party as at the close of business on the FAV Calculation
Date which are traded on a stock, commodities, financial futures or other
securities exchange, calculated by reference to the closing bid prices on the
FAV Calculation Date, as shown by the relevant exchange's recognised method of
publication of such prices;
E is the value of all other investments of the relevant company, which
will be valued as at the close of business on the FAV Calculation Date at fair
values on a basis as agreed between the boards of Second Alliance Trust and
Alliance Trust or, failing such agreement within seven days after the FAV
Calculation Date, as determined by an independent expert;
F is the actual amount as at the close of business on the FAV Calculation
Date of any sums due from debtors (for these purposes including any dividends
receivable on investments quoted as ex-dividend and any accrual of interest up
to the close of business on the FAV Calculation Date, on debt related securities
but excluding any dividend, distribution or interest unlikely to be received or
the amount of which has been taken into account in the value of any of the
investments comprised in A to E above), any prepaid expenses, any tax
recoverable, any cash and deposits with or balances at banks, bills receivable
or money market instruments of the relevant company (together in each case with
accrued interest less an accrual for any associated tax) and the fair value of
any other tangible assets and intangible assets not otherwise accounted for,
determined by agreement between the boards of Second Alliance Trust and Alliance
Trust or, failing such agreement within seven days after the FAV Calculation
Date, as determined by an independent expert;
G is the costs and expenses of the Merger which have been paid by the
relevant company before the FAV Calculation Date;
H is the principal amount as at the close of business on the FAV
Calculation Date of any outstanding borrowings of the relevant company plus
accrued but unpaid interest, commitment fees incurred but not paid and other
charges up to and including that date;
I is the amount of any dividend or other distribution declared or
announced on or before the close of business on the FAV Calculation Date so far
as not previously paid to holders of shares of the relevant company as agreed
between the boards of Second Alliance Trust and Alliance Trust or, failing such
agreement within seven days after the FAV Calculation Date, as determined by an
independent expert;
J is the amount of any taxation payable to any taxation authority
including HM Revenue & Customs (net of any repayment receivable from HM Revenue
& Customs), making provision for a corporation tax charge on the net profits for
all applicable periods up to the FAV Calculation Date, and offsetting from such
sum any recoverable foreign withholding taxes and any recoverable UK income tax
not included in F above in the period to date as agreed between the boards of
Second Alliance Trust and Alliance Trust or, failing such agreement within seven
days after the FAV Calculation Date, as determined by an independent expert;
K is the amount which fairly reflects at the close of business on the FAV
Calculation Date all other accrued liabilities of the relevant company including
a fair provision for any contingent liabilities (including liabilities on
account of purchases of investments not settled, liabilities to taxation,
whether or not deferred) or losses (including disputed claims) in so far as not
taken into account from H to and including J above but excluding the costs and
expenses of the Merger (other than those falling within G above), determined by
agreement between the boards of Second Alliance Trust and Alliance Trust or,
failing such agreement within seven days after the FAV Calculation Date, as
determined by an independent expert;
X is the number of Alliance Trust Shares in issue, including those shares
held by the trustee of the Alliance Trust EBT, at the close of business on the
FAV Calculation Date; and
Y is the number of Second Alliance Trust Shares in issue, including those
shares held by the trustee of the Second Alliance Trust EBT, at the close of
business on the FAV Calculation Date.
Notes:
1. For the purpose of the above calculations, the value of assets
and liabilities denominated in currencies other than sterling shall be converted
at the bid rates of exchange between sterling and such other currencies in
London at the close of business on the FAV Calculation Date, as agreed by the
boards of Second Alliance Trust and Alliance Trust or, failing such agreement
within seven days after the FAV Calculation Date, as determined by an
independent expert.
2. In the case of A, B and D above, if there has been any general
suspension of trading on the relevant stock exchange or market, or if it was
closed for business on the FAV Calculation Date, the value of the investments
concerned shall be taken as at the close of business on the immediately
preceding date on which there was trading on the relevant stock exchange or
market, save that if there has been a material adverse change in the financial
position of the underlying investment, a fair provision determined by agreement
between the boards of Second Alliance Trust and Alliance Trust or, failing such
agreement within seven days after the FAV Calculation Date, as determined by an
independent expert, shall be made to reflect the adverse change in the value of
the investment.
3. Subject to Note 2 above, in the case of A to E above:
(a) where no price is quoted in respect of any such investment or
where dealings in any investment have been suspended on any relevant date or, in
the case of B above, if there have been no dealings recorded in respect of any
such investment for any of the five business days up to and including the FAV
Calculation Date or, in the case of C above, if the relevant unit trust or OEIC
manager is not required to purchase units in the relevant unit trust or OEIC on
the FAV Calculation Date or has not quoted published bid and published offer
prices on any of the five business days up to and including the FAV Calculation
Date, the value shall be determined in accordance with E above; and
(b) where any such investment as is referred to therein is, as at the
close of business on the FAV Calculation Date, subject to any legally binding
right of any person to acquire the same or any legally binding obligation on the
relevant company to dispose of the same, whether as a result of the Merger or
otherwise, at a price other than that determined in accordance with A to E
above, as the case may be, then such investment shall be valued at such other
price unless such obligation or entitlement is unconditionally and irrevocably
waived or lapses prior to the close of business on the FAV Calculation Date or
unless the third party has the right (but no obligation) to acquire the
investment at a higher price than that determined as aforesaid.
4. With regard to E, any unquoted investments shall be valued by
the boards of Second Alliance Trust and Alliance Trust on the basis of the
accounting policies used by Alliance Trust in its audited financial statements
for the year ended 31 January 2006 and by Second Alliance Trust in its unaudited
interim results for the six month period ended 31 January 2006.
5. Subject to Note 4 above, with regard to E and/or F above, the
boards of Second Alliance Trust and Alliance Trust and, if appointed, any
independent expert, shall have regard, inter alia, to the following when
determining the valuation of any investment or other asset (which shall be
calculated on the basis of a notional sale by a willing seller to a willing
buyer, without regard to any additional value that might be attributed to the
investment or asset by any special category of potential purchaser):
(a) the existence of any pre-emption rights or obligations in relation
to such investment or asset or any other restrictions on the transfer or
disposal of the same which may exist or which may arise as a consequence of the
proposed transfer of such investment or asset or as a consequence of the
transfer of such investment or asset to any party on the winding up of the
relevant company;
(b) the marketability of such investment or asset; and
(c) the terms and volumes of any recent dealings in such investment or
asset.
6. With regard to F above, the boards of Second Alliance Trust and
Alliance Trust, and, if appointed, the independent expert, shall, except in the
case of debtors and tangible assets, be bound by the actual amount of such items
and, in the case of debtors and tangible assets, shall have regard to but shall
not be bound by the accounting policies used by Alliance Trust in its audited
financial statements for the year ended 31 January 2006 and by Second Alliance
Trust in its unaudited interim financial results for the six month period ended
31 January 2006.
7. References in this Appendix to an independent expert shall mean
a member of the London Investment Banking Association or a member firm of the
London Stock Exchange or a member of the Institute of Chartered Accountants in
England and Wales or the Institute of Chartered Accountants of Scotland (not
connected with any of the parties to this transaction) selected by the boards of
Second Alliance Trust and Alliance Trust. In making any determination referred
to in this Appendix III, the boards of Second Alliance Trust and Alliance Trust,
or any independent expert, as the case may be, shall act as experts and not as
arbitrators, and their determination shall, in the absence of fraud (and subject
to any agreement otherwise between Alliance Trust and Second Alliance Trust), be
final and binding on all interested parties and, in the absence of fraud, none
of them shall be under any liability to any person by reason thereof or by
anything done or omitted to be done by them for the purposes thereof or in
connection therewith.
8. The directors of the relevant company will prepare the
calculations of the FAV of the relevant company on the FAV Calculation Date.
Such calculations will be submitted to the other party's financial advisers,
namely JPMorgan Cazenove on behalf of Alliance Trust and Dresdner Kleinwort
Wasserstein on behalf of Second Alliance Trust.
9. Notwithstanding any of the above provisions, in the event that
the valuation of any investment or other asset of the relevant company or the
amount of any deduction made in accordance with the provisions is, in the
opinion of the boards of Second Alliance Trust and Alliance Trust, unavailable
from the prescribed source, incorrect or unfair, they may, if they so agree,
adopt an alternative method of valuation or deduction, as the case may be.
END
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