Circ re. Reconstruction Proposals and Winding UP

RNS Number : 6590F

Edinburgh New Income Trust plc

28 April 2011

 



28 April 2011

EDINBURGH NEW INCOME TRUST PLC (THE "COMPANY")

PUBLICATION OF CIRCULAR

Further to the announcement made by the Company on 4 April 2011, the Company has today issued a circular (the "Circular") to its shareholders ("Shareholders") in connection with recommended proposals for the winding up and reconstruction of the Company (the "Proposals").

The Proposals

Under the Proposals, which will be effected by way of a scheme of reconstruction of the Company under section 110 of the Insolvency Act 1986, both Ordinary Shareholders and ZDP Shareholders will be able to elect:

·      to realise some or all of their investment in the Company for cash (the "Cash Option"); or

·      to roll over some or all of their investment into net income A class shares in the Aberdeen UK Equity Income Fund (the "Rollover Option").

The Aberdeen UK Equity Income Fund is a sub-fund of Aberdeen Investment Funds ICVC, a UK authorised open-ended investment company. The Fund invests primarily in UK equity and equity-related securities and aims to achieve an attractive level of income combined with capital growth. As at 26 April 2011, the Fund had net assets of approximately £157.7 million and an estimated yield of 3.75 per cent.

The Proposals will offer Shareholders (including Unitholders) the opportunity to retain market exposure and to continue to receive investment returns without triggering an immediate liability to tax on capital gains, while avoiding the dealing and other costs that would be associated with the reinvestment in the secondary market of the proceeds of liquidation.

Before deciding to offer Shareholders the opportunity to roll over their investments into shares in the Fund, the Board gave careful consideration to offering Shareholders a rollover vehicle similar in structure to the Company, whether in the form of a split capital investment trust or some other suitably structured closed ended vehicle. However, after intensive consultation the Board and its advisers concluded that the increased costs involved in offering a closed ended alternative to Shareholders (notably, the high costs involved in the preparation of a prospectus by any closed ended alternative for the sole purpose of participating in a rollover) would render such an offering uneconomic.

The Board is nonetheless satisfied that the Fund, albeit a sub-fund of an open-ended investment company, is a suitable rollover alternative for Shareholders who wish to continue, in a tax efficient manner, with an investment portfolio of UK equities very similar to the UK equity portfolio of the Company but offers no recommendation in this regard. Over the past two years, the Fund has been managed by the same members of the Aberdeen investment team that have managed the Company's portfolio.

ZDP Shareholders should note that the Fund Shares have investment characteristics which are very different to those of the ZDP Shares: the Fund Shares carry the right to receive periodic distributions of income and, in particular, the Fund Shares do not have a pre-determined capital entitlement.  Ordinary Shareholders should note that, unlike the Company's Ordinary Shares, the Fund Shares are ungeared.

Whether or not the Proposals become effective, a resolution to place the Company into members' voluntary liquidation (the "Liquidation Resolution") will be proposed at the Second General Meeting, as required under the Articles.  In accordance with the Articles, all Shareholders who vote on the Liquidation Resolution at the Second General Meeting will be deemed to have voted in favour of the Liquidation Resolution.  The Company will, therefore, be placed into members' voluntary liquidation on 31 May 2011 whether or not the Proposals become effective.

Shareholders who do not make a valid Election will be deemed to have elected for the Cash Option in respect of their entire holding of Shares.  Accordingly, Shareholders who wish to receive cash in respect of their entire holding of Shares need not submit a Form of Election. 

Shareholders who have a registered address (or who are resident in or citizens of jurisdictions) outside the United Kingdom, the Republic of Ireland, the Channel Islands and the Isle of Man will also be deemed to have made an election for cash unless they are able to satisfy the Company and the authorised corporate director of the Fund that they are permitted to hold Fund Shares without breaching the laws of any relevant jurisdictions.

The Circular contains details of the action to be taken by Shareholders in order to make elections under the Proposals.

Unitholders are reminded that each "Unit" comprises three Ordinary Shares and one ZDP Share.  Accordingly, a Unitholder's entitlement under the Proposals is simply made up of the separate entitlements which attach to the individual class of share held within that Unitholder's Units.  That being the case, Unitholders should note that references in this announcement to "Shareholders" include Unitholders in respect of the Shares held by them within their Units.

Final interim dividend

In accordance with the Articles, the Company intends to pay a final interim dividend to Ordinary Shareholders (including Unitholders in respect of the Ordinary Shares comprised in their Units) prior to the winding up of the Company in an aggregate amount equal to the Company's undistributed revenue reserves and undistributed net revenues arising in the current financial year up to the Winding Up Date.  The Board will announce the level of the Final Interim Dividend in due course and it will be paid, prior to the Scheme becoming effective, to Ordinary Shareholders on the register of members on 20 May 2011.

Costs of the Proposals

The direct costs of the Proposals which will be borne by the Company are expected to be approximately £260,000.  This cost estimate takes into account that Aberdeen Asset Managers Limited has agreed, conditional upon the Proposals becoming effective, to pay a contribution to the costs of the Proposals of £50,000.  If the Proposals are not approved by Shareholders, the direct costs of the Proposals (which include the costs of winding up the Company) shall nonetheless be met by the Company but Aberdeen Asset Managers Limited will not make a contribution to the costs of the Proposals.   Accordingly, the costs incurred by the Company are expected to be approximately £310,000 if the Company is simply wound up without the Proposals being implemented.

General Meetings

The implementation of the Proposals will require Shareholders to vote in favour of resolutions to be proposed at general meetings of the Company (the "General Meetings") which have been convened for 10.00 a.m. on 23 May 2011 and 10.00 a.m. on 31 May 2011. The notices convening the General Meetings, which set out in full the terms of the resolutions which are to be proposed, are set out in the Circular.  The General Meetings will be held at the offices of Aberdeen Asset Managers Limited, 7th Floor, 40 Princes Street, Edinburgh EH2 2BY.

Expected Timetable

2011
Ex-dividend date for Final Interim Dividend	18 May
Record date for Final Interim Dividend	20 May
Latest time and date for receipt of Voting Direction Forms in respect of the First General Meeting and Letters of Election from Savings Scheme Participants	5.00 p.m. on 16 May
Date from which it is advised that dealings in Shares should only be for cash settlement and immediate delivery of documents of title	19 May
Latest time and date for receipt of Forms of Proxy from Shareholders in respect of the First General Meeting	10.00 a.m. on 19 May
Final Interim Dividend declared	23 May
First General Meeting	10.00 a.m. on 23 May
Latest time and date for receipt of Forms of Election or TTE Instructions from Shareholders	11.00 a.m. on 23 May
Latest time and date for receipt of Voting Direction Forms in respect of the Second General Meeting	5.00 p.m. on 23 May
Record Date for the calculation of Shareholders' entitlements under the Scheme	close of business on 23 May
Shares disabled in CREST*	7.30 a.m. on 24 May
Latest time and date for receipt of Forms of Proxy from Shareholders in respect of the Second General Meeting	10.00 a.m. on 26 May
Shares reclassified as Reclassified Shares in the Official List and dealings in Reclassified Shares commence**	8.00 a.m. on 27 May
Calculation Date	close of business on 27 May
Listing of Reclassified Shares on the Official List suspended	7.30 a.m. on 31 May
Second General Meeting	10.00 a.m. on 31 May
Effective Date for implementation of the Scheme and commencement of the liquidation	31 May
Dealings commence in Fund Shares issued under the Scheme	2 June
Contract notes in respect of Fund Shares issued under the Scheme despatched to Shareholders	2 June (or as soon as practicable thereafter)
Cheques expected to be despatched and CREST payments made to Shareholders in respect of cash elections under the Scheme	as soon as practicable following 31 May
Cheques expected to be despatched and CREST payments made to Savings Scheme Participants in respect of cash elections under the Scheme	as soon as practicable following 31 May
Cancellation of listing of Reclassified Shares on the Official List**	8.00 a.m. on 31 May 2012

* For the avoidance of doubt, the Company's register of members will remain open until the Effective Date.

** Reclassified Shares are a technical requirement of the Scheme and will be created if the resolutions to be proposed at the First General Meeting are passed and become effective.

Each of the times and dates in the expected timetable may be extended or brought forward without further notice.  If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service provider. Words and expressions defined in the Circular have the same respective meanings in this announcement.

A copy of the Circular has been submitted to the National Storage Mechanism and will shortly be available for inspection at http://www.hemscott.com/nsm.do

Enquiries:

Valerie MacKenzie	Aberdeen Asset Managers Limited	Tel: [phone]
Robin Archibald	Winterflood Investment Trusts	Tel: [phone]
Robert Peel	Winterflood Investment Trusts	Tel: [phone]

 

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