Bonus Issue of Subscription S

RNS Number : 7548E

JPMorgan Indian Invest Trust PLC

01 October 2008

 



JPMorgan Indian Investment Trust plc

Bonus Issue of Subscription Shares, Placing and Offer for Subscription of New Ordinary Shares (with Subscription Shares attached) and Extraordinary General Meeting

INTRODUCTION

JPMorgan Indian Investment Trust plc (the 'Company') has published a prospectus (the 'Prospectus') detailing proposals to enlarge the Company through a bonus issue of Subscription Shares and a placing and offer for subscription of New Ordinary Shares with Subscription Shares attached to raise further monies for investment. It also contains proposals for the adoption of new Articles of Association and a renewal of the Company's share buy-back and share issuance authorities. The Company is also proposing to bring forward the continuation vote that is due to be held at the 2009 Annual General Meeting ('AGM') to the General Meeting to be held in connection with the Proposals.

BONUS ISSUE OF SUBSCRIPTION SHARES

The Company is proposing to issue Subscription Shares to Qualifying Shareholders on the basis of one Subscription Share for every five Existing Ordinary Shares held. Fractions of Subscription Shares will not be allotted or issued and entitlements will be rounded down to the nearest whole number of Subscription Shares. 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 on any Business Day during the period from 2 January 2009 until 2 January 2014 (both dates inclusive), after which the rights under the Subscription Shares will lapse. Each Subscription Share will be capable of conversion into one Ordinary Share upon exercise of the Subscription Share Rights and on payment of the Conversion Price as set out below. 

Notice of exercise may be given at any time from 2 January 2009 until 2 January 2014 (both dates inclusive) and the Ordinary Shares arising on conversion will be issued on the first Business Day of the calendar month following the month in which the relevant notices are received by the Company's Registrars.

Qualifying Shareholders' entitlements will be assessed against the register of members on the Record Date, expected to be 3 November 2008. 

Subscription Shares will not be entitled to receive any dividends from the Company. 

The Conversion Price will be equal to the unaudited Net Asset Value ('NAV') per Ordinary Share as at 5.00 p.m. on 29 October 2008, plus a percentage premium to such amount, rounded up to the nearest whole penny as follows: 

(a)    if exercised on any day between and including 2 January 2009 and 2 January 2010 - a 1 per cent. premium to such NAV per Ordinary Share; 

(b)    if exercised on any day between and including 3 January 2010 and 2 January 2012 - a 10 per cent. premium to such NAV per Ordinary Share; and 

(c)    if exercised on any day between and including 3 January 2012 and 2 January 2014 - a 30 per cent. premium to such NAV per Ordinary Share.

The percentage premiums applying upon exercise and the resulting Conversion Prices reflect the Board's confidence in the Company's prospects and its hope that Qualifying Shareholders will be able to exercise their Subscription Share Rights and acquire Ordinary Shares on favourable terms in the future. 

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

•    at no additional cost, Qualifying Shareholders will receive readily tradable securities with financial value which they may convert into Ordinary Shares in order to benefit from the Company's future growth or realise for cash; 

•    Shareholders will receive securities that have similar characteristics to warrants, but unlike warrants are qualifying investments for the purposes of a stocks and shares ISA; 

•    on any exercise of 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 the total expense ratio to fall; and 

•    the Company will broaden its Shareholder base which should improve liquidity in the market for its Ordinary Shares.

CONTINUATION VOTE

When the Company was launched in 1994, the Directors felt that it was important to give Shareholders the opportunity to consider the future of the Company at regular intervals. 

The Company's Articles currently require that, at the AGM to be held in 2009 and every fifth year thereafter, the Directors will propose an ordinary resolution that the Company continues as an investment trust for the period until the end of the AGM to be held five years later. 

The Bonus Issue and the Placing and Offer, if approved, will create Subscription Shares with a five year life. In order that the Subscription Share Rights are not affected by the Company's five yearly continuation vote schedule, it is proposed to bring forward the 2009 continuation vote and hold the vote at the General Meeting to be held in connection with the Proposals rather than at the Company's AGM to be held in 2009. 

The Directors have considered the viability of the Company and its mandate and concluded that the investment outlook for India is positive over the medium to long term. The Directors also believe that the continuing appointment of the present manager, JPMorgan Asset Management (UK) Limited is in the best interests of Shareholders as a whole and that the Company should continue in its current form. 

PLACING AND OFFER FOR SUBSCRIPTION

The Board believes that there may be an interest in acquiring New Ordinary Shares from a range of investors, and accordingly has decided to conduct a Placing and Offer for Subscription of New Ordinary Shares. 

The Company is seeking to raise further monies for investment through the Placing and Offer for Subscription of New Ordinary Shares. Subscription Shares will be attached to the New Ordinary Shares on the basis of one Subscription Share for every five New Ordinary Shares subscribed. The proceeds of the Placing and Offer will be invested in line with the Company's investment policy. The Placing and Offer are not being underwritten. 

The New Ordinary Shares will be issued at a price equal to the unaudited NAV per Ordinary Share as at 29 October 2008 plus a premium of 1 per cent., rounded up to the nearest pence per Share (the Issue Price). 

The number of New Ordinary Shares allotted will be determined by the amount subscribed divided by the Issue Price, rounded down to the nearest New Ordinary Share. 

The issuance of the New Ordinary Shares at a premium to the unaudited NAV per Ordinary Share is intended to cover the payment of the costs of the Issue and the costs of investing the proceeds of the Issue. Subscription monies of £3 or more not used to acquire New Ordinary Shares will be refunded. Subscription monies of less than £3 which are not used to acquire New Ordinary Shares will be retained by the Company for its own account. 

For illustrative purposes only, based on the Net Asset Value as at 24 September 2008 of 306.5 p per Ordinary Share, the New Ordinary Shares would have been issued at 310p per Share. The final Issue Price may be higher or lower than this and will be determined by the published unaudited NAV as at 29 October 2008, which is subject to market conditions. 

JPMorgan Cazenove has conditionally agreed, as agent for the Company, to use its reasonable endeavours to procure placees under the Placing in order to raise further monies for investment for the Company. JPMorgan Cazenove has agreed to act as sponsor and assist the Company in the implementation of the Offer for Subscription. 

The issue of New Ordinary Shares will enable the Company to meet demand from Shareholders and new investors for Ordinary Shares at a premium to NAV per Ordinary Share. The Directors consider that the issue of New Ordinary Shares will lead to: 

•    an increase in the capital of the Company, broadening investment options for the Investment Manager enabling the Company to take advantage of new opportunities in India; 

•    the raising of additional funds for the Company without diluting the holdings of existing Shareholders; 

•    a broadening of the Shareholder base, improving liquidity in the market for the Company's Ordinary Shares; and 

•    the spreading of the Company's costs over a greater number of Ordinary Shares, reducing the Company's total expense ratio. 

AUTHORITY TO REPURCHASE SHARES

Shareholder resolutions were passed at the AGM on 24 January 2008 granting the Company authority to make market purchases of Ordinary Shares representing (subject to certain conditions) up to 14.99 per cent. of the Company's issued ordinary share capital. The Company's authority to repurchase Ordinary Shares is due to expire on 25 July 2009 unless previously renewed. The Company is proposing to renew this authority to buy back up to 14.99 per cent. of the Ordinary Share capital which will be in issue following implementation of the Issue and the exercise of any of the Subscription Share Rights prior to the date of such purchase and to seek authority to buy back up to 14.99 per cent. of the issued Subscription Share capital. 

Repurchases of Ordinary Shares will be made at the discretion of the Board, and will only be made in the market at prices below the prevailing NAV per Ordinary Share as and when market conditions are appropriate and in accordance with the Listing Rules. The minimum price which may be paid for an Ordinary Share shall be 25 pence (being its nominal value), the maximum price which may be paid for an Ordinary Share shall be an amount equal to the higher of (i) 5 per cent. above the average of the middle market quotations (as derived from the Official List) for the 5 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 Ordinary Shares on the trading venue where the purchase is carried out. 

Ordinary Shares repurchased might not be cancelled but rather held as treasury shares and may be subsequently re-issued at a premium. Purchases of Ordinary Shares to be held in treasury will be made in accordance with the Listing Rules and the Companies (Acquisitions of Own Shares) (Treasury Shares) Regulations 2003 (as amended). Currently, the Company holds 1,979,788 Ordinary Shares in treasury (representing 1.9 per cent. of the Company's ordinary share capital in issue (excluding treasury shares as at 24 September 2008)). 

Repurchases of Subscription Shares will be made at the discretion of the Board and will only be made when market conditions are appropriate. 

AUTHORITY TO ISSUE SHARES

Shareholder resolutions were passed at the AGM on 24 January 2008 granting the Board authority to issue new shares or shares held in treasury other than by a pro rata issue to existing Shareholders, for cash up to an aggregate nominal amount of approximately £2,620,167 representing 10,480,668 Ordinary Shares, such amount being approximately equivalent to 10 per cent. of the issued share capital at the time of the annual general meeting. In addition to the authorities required to implement the Bonus Issue and the Placing and Offer for Subscription, the Company is proposing to renew its authority to issue new shares or shares held in treasury other than by a pro rata issue to existing Shareholders for cash up to an aggregate nominal amount of £4,642,500 (representing 18,570,000 Ordinary Shares) or if less, 10 per cent. of the total ordinary share capital in issue following implementation of the Issue and the exercise of any of the Subscription Share Rights prior to the relevant date of issue. Share issues pursuant to this authority would only be undertaken at prices which are at a premium to the prevailing Net Asset Value per Share. 

NEW ARTICLES OF ASSOCIATION

It is also proposed that new Articles be adopted to replace the existing Articles. The New Articles, as well as providing for the rights attaching to the Subscription Shares, making some minor technical changes and amending the provisions relating to the continuation vote, will also incorporate a number of changes to reflect recent legal developments, in particular certain provisions of the Companies Act 2006 which came, or will come, into effect in 2007 and 2008. 

As the 2006 Act will not be fully in force until October 2009 (on the current timetable), it is not yet possible to reflect fully the 2006 Act changes and it is anticipated that Shareholders will be asked to approve further changes to the Articles at the AGM to be held in 2010. 

The principal changes in connection with the 2006 Act to be included in the New Articles relate to electronic communication with shareholders, shareholder meetings and resolutions, directors' indemnities, transfers of shares and directors' conflicts of interest. 

ADMISSION AND DEALING

The Subscription Shares and the New Ordinary 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 and New Ordinary Shares in certificated form will be certified against the Company's Share register. 

Applications will be made to the UK Listing Authority for the Subscription Shares and New Ordinary Shares to be admitted to the Official List and to the London Stock Exchange for such shares to be admitted to trading on its main market. It is expected that Admission will occur, and that dealings will commence, on 5 November 2008 in respect of the Subscription Shares and New Ordinary Shares. On Admission of the Subscription Shares, 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. 

New Ordinary Shares and the Ordinary Shares resulting from the exercise of the Subscription Share Rights will rank pari passu with Ordinary Shares then in issue.

OVERSEAS SHAREHOLDERS

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

The Board will allot any Subscription Shares due under the Bonus Issue to Overseas Shareholders (other than those resident in the EEA States) to a market maker who will sell such Subscription Shares promptly at the best price obtainable. The proceeds of sale will be paid to such Overseas Shareholders entitled to them save that entitlements of less than £3 per Overseas Shareholder will be retained by the Company. Any Shareholder who is in any doubt as to their position should consult an appropriate professional adviser without delay. 

TAXATION

Shareholders should note that both the Ordinary Shares and the Subscription Shares are qualifying investments for a stocks and shares ISA, but that 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 professional adviser.

General Meeting

The Proposals are conditional on, amongst other things, the approval by Shareholders of the Resolutions to be proposed at a General Meeting of the Company which has been convened for 30 October 2008.

Timetable

Event	2008
Latest time and date for applications under the Offer from Plan participants (other than those who hold their Ordinary Shares through the Pension Plan)	10.30 a.m. on 24 October
Latest time and date for receipt of Voting Instruction Forms (other than those who hold their Ordinary Shares through the Pension Plan)	10.30 a.m. on 24 October
Latest time and date for receipt of Voting Instruction Forms from Plan participants who hold their Ordinary Shares through the Pension Plan	5.00 p.m. on 24 October
Latest time and date for applications under the Offer from Plan participants who hold their Ordinary Shares through the Pension Plan	5.00 p.m. on 24 October
Latest time and date for receipt of Forms of Proxy	10.30 a.m. on 28 October
Latest time and date for applications under the Offer from Shareholders (other than participants in the Plans)	3.00 p.m. on 28 October
Issue Price of New Ordinary Shares and Conversion Price of Subscription Shares calculated	close of business on 29 October
General Meeting	10.30 a.m. on 30 October
Latest time and date for commitments under the Placing	12.00 noon on 30 October
Supplementary prospectus stating Conversion Price of Subscription Shares and Issue Price of New Ordinary Shares published	30 October
Issue Price of New Ordinary Shares and Conversion Price announced	30 October
Announcement of the results of the Issue	31 October
Record date for Bonus Issue	3 November
Dealings in Subscription Shares and New Ordinary Shares commence	8.00 a.m. on 5 November
Expected date for crediting of Subscription Shares and New Ordinary Shares to CREST accounts	5 November
Despatch of share certificates in respect of Subscription Shares and New Ordinary Shares	week commencing 10 November

Notes: 

(1)    The dates set out in the Expected Timetable of Principal Events may be adjusted by the Company, in which event details of the new dates will be notified to the UK Listing Authority and the London Stock Exchange and, where appropriate, to Shareholders. 

(2)     All references to time in this document are to time in London.

Enquiries

JPMorgan Cazenove

Angus Gordon Lennox                                              020 7588 2828

JPMorgan Asset Management (UK) Limited 

David Barron                                                            0207 742 3475

Richard Plaskett                                                        020 7742 3422

 

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