Tender Offer and Notice of Me

RNS Number : 0559Z

Schroder AsiaPacific Fund PLC

06 January 2011

 



Schroder AsiaPacific Fund plc (the "Company")

Tender Offer and Notice of General Meeting

Further to the announcement made on 16 December 2010, a Circular explaining the terms of a tender offer for up to 15 per cent of the issued share capital of the Company and providing notice of a General Meeting to be held on 31 January 2011 has been posted to shareholders.

1. Introduction

The Articles of Association contain provisions which require the Board to put to shareholders a resolution at the Annual General Meeting to be held on 31 January 2011, that the Company continues as an investment trust for a further five years.

The Board is unanimously recommending that the Company continues as an investment trust and the Directors intend to vote their shares accordingly. The Board considers that the Company is well established as an investment vehicle in its peer group and that its long-term investment objectives remain appropriate and the structure beneficial to Shareholders. The Board believes that the Company can continue to meet its investment objectives given its belief that the Asia-Pacific region will continue to provide opportunities for the Manager.

The Board maintains an ongoing dialogue with Shareholders and is aware that one of the Company's larger Shareholders believes that continuation votes should be accompanied by an event such as a partial tender offer.

The Board, having taken this Shareholder's position into account and consulted with its advisers, therefore intends to propose a Tender Offer of up to 15 per cent of the Company's issued shares at a discount of 2 per cent. to Formula Asset Value on the Calculation Date. The total number of Shares to be purchased under the Tender Offer will not exceed 25,711,701 Shares, representing 15 per cent. of the Company's issued Shares as at 23 December 2010.

The purpose of the Circular is to explain the mechanics of the Tender Offer and to provide Shareholders with terms and conditions relating to the Tender Offer and to explain how they may tender their Shares, should they wish to do so, and to convene a General Meeting of the Company as required by the 2006 Act to seek Shareholder approval of the Tender Offer.

The Board recommends that Shareholders vote in favour of the Resolution to enable those Shareholders who wish to do so to realise all or part of their investment in the Company under the Tender Offer.

2. Background

The Company is an investment trust company, incorporated in 1995. The principal investment

objective of the Company is to achieve capital growth from investment primarily in equities of companies located in the continent of Asia (excluding the Middle East and Japan), together with the Far Eastern countries bordering the Pacific Ocean (excluding Australasia), with the aim of achieving growth in excess of the MSCI All Countries Far East excluding Japan Index in Sterling, over the longer term. As at 31 December 2010 (the latest practicable date prior to publication of the Circular) the Company has gross assets of £449 million, net assets of £442 million and a market capitalisation of £349 million.

The Company's investment objective is to achieve capital growth with the aim of achieving outperformance of the benchmark, the MSCI All Countries Far East excluding Japan Index. Over the five years ended 30 September 2010, the benchmark produced a total return of 102.7 per cent. while the Company's net asset value produced a total return of 102.2 per cent., and its share price a total return of 99.8 per cent.

The Board is changing the Company's benchmark to the MSCI All Countries Asia ex Japan index with effect from the date of the Annual General Meeting to be held on 31 January 2011. The main effect of this change will be to include the Indian stock market in the Company's benchmark.

3. The Tender Offer

Introduction

The Tender Offer is designed to enable those Shareholders (other than certain Overseas Persons) who wish to realise Shares or their beneficial interest in Shares (as the case may be) in the Company to do so. Shareholders who successfully tender their shares will receive a Tender Price per Share which will be equal to the Net Asset Value per Share (inclusive of undistributed revenue reserves) on the Calculation Date, from which the direct costs and expenses of the Tender Offer (including stamp duty), together with a 2 per cent. discount, have been deducted.

If the Tender Offer is more than 15 per cent. taken up, the Board expects that all of the costs of the Tender offer will be borne by those Shareholders who tender Shares. If the Tender Offer is less than 15 per cent. taken up, it is expected that some of the costs will be borne by the Company to ensure that those Shareholders who tender Shares do not suffer more than a 5 per cent. deduction from the Diluted Net Asset Value on the Calculation Date.

Benefits of the Tender Offer

The Board believes that proposing the Tender Offer on the terms set out here and in Part IV of the Circular is in the interests of Shareholders as a whole because:

·     a tender offer for up to 15 per cent. of the Shares in issue provides opportunity for exit for those Shareholders who wish to receive cash, while maintaining the Company as a viable investment vehicle;

·     a tender offer conducted on a formula asset value basis is designed to protect Shareholders who do not tender any shares from the cost of the Tender Offer; and

·     a tender offer conducted at a discount to formula asset value may provide continuing Shareholders with a small uplift to their Net Asset Value per Share following completion of the Tender Offer.

Shareholders are not obliged to tender any Shares and, if they do not wish to participate

in the Tender Offer, Shareholders should not complete or return their Tender Form.

Under the terms of the Tender Offer, Shareholders (other than certain Overseas Persons) will be entitled to tender up to 15 per cent. of the Shares they hold as at the Record Date (their "Basic Entitlement"). Such Shareholders will be able to tender additional Shares but such excess tenders will only be satisfied to the extent that other Shareholders tender less than their aggregate Basic Entitlements, and will be satisfied on a pro rata basis. Tenders will be rounded down to the nearest whole number of Shares.

The Tender Offer is being made by Numis Securities. Numis Securities will purchase the Shares tendered as principal and, following the completion of all such purchases, will sell the relevant Shares on to the Company pursuant to the Repurchase Agreement at the Tender Price by way of a market transaction.

Those Shares which the Company acquires from Numis Securities will be cancelled on acquisition. The repurchase of Shares by the Company under the Tender Offer will be funded from the sale of investments in the Company's portfolio and/or the Company's resources which could include short term borrowings. Subscription Shares are not included in the Tender Offer and no offer is being made to purchase Subscription Shares.

Conditions

Implementation of the Tender Offer will require approval by Shareholders at the General Meeting, which is to be held at 12.00 noon on 31 January 2011. The Tender Offer is also conditional upon Numis Securities being satisfied that the Company has sufficient funds available to meet its obligations under the Repurchase Agreement. In addition, the Tender Offer may be postponed or terminated in certain other circumstances.

Other

The Company's authority to repurchase its own Shares, to be proposed at the Company's Annual General Meeting on 31 January 2011 in respect of up to 14.99 per cent. of the Company's issued share capital as at 23 December 2010, will, if approved by Shareholders, remain in force and unaffected by the Tender Offer.

4. Overseas Persons

The making of the Tender Offer to persons outside the United Kingdom, the Channel Islands or the Isle of Man may be prohibited or affected by the relevant laws of the relevant overseas jurisdictions.

It is the responsibility of all Overseas Persons to satisfy themselves as to the observance of any legal requirements in their jurisdiction including, without limitation, any relevant requirements in relation to the ability of such persons to complete and return a Form of Proxy or Tender Form or to make a TTE Instruction.

The Tender Offer is not being made directly or indirectly in, into, or from the United States, Australia, Canada, Japan or the Republic of South Africa, except where permitted by applicable law. Accordingly, the Tender Form may not be distributed or sent in, into or from (whether by use of mails or by any means or instrumentality of interstate or foreign commerce) the United States, Australia, Canada, Japan or the Republic of South Africa and doing so may render invalid any purported tender. Any person (including, without limitation, custodians, nominees and trustees) who may have a contractual or legal obligation to forward the Tender Form should read paragraph 9 of Part IV of the Circular before taking any action.

Any Shareholder who is unable to give the warranties set out in paragraphs 6.1.8, 6.1.9 and 6.1.10 in Part IV of the Circular will be deemed not to have tendered their Shares pursuant to the Tender Offer and their Tender Forms may be rejected.

5. Taxation

The following paragraphs are intended only as a general guide to certain aspects of current UK tax law and HM Revenue & Customs' published practice, and do not constitute tax advice. They are of a general nature and only apply to Shareholders who are resident or ordinarily resident in the UK (except where indicated) and who hold their Shares beneficially as an investment.

Shareholders who sell Shares in the Tender Offer should, subject to the following, be treated as having sold their Shares in the normal way and may, depending on their individual circumstances, incur a liability to taxation on chargeable gains. UK individual Shareholders and trustee Shareholders should be aware that HM Revenue & Customs may seek to treat part of the disposal proceeds of their Shares as income under the provisions of Chapter 1 of Part 13 ITA 2007, although it is not expected that these provisions would apply to sales made for genuine commercial reasons.

Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other than the UK should consult an appropriate professional adviser.

6. General Meeting

The Tender Offer set out in the Circular is subject to Shareholder approval at the General Meeting that has been convened for 12.00 noon on 31 January 2011, to be held at 31 Gresham Street London EC2V 7QA. Notice of the General Meeting is set out at the end of the Circular. The Resolution to be proposed is:

·     to authorise the Company to make market purchases of its Shares pursuant to the Tender Offer on the terms set out in the Circular; and

·     if approved at the Annual General Meeting to be held on 31 January 2011, to continue the effect of any authority of the Company to make market purchases of its Shares.

7. Recommendation

The Board, which has received advice from Numis Securities, considers that the Tender Offer is in the interests of Shareholders as a whole. Accordingly, the Board recommends that Shareholders vote in favour of the Resolution to be proposed at the General Meeting, as those Directors who hold beneficial interests in Shares intend to do in respect of their own beneficial holdings of Shares which, in aggregate, amount to 323,800 Shares representing approximately 0.116 per cent. of the issued share capital of the Company.

Whether or not Shareholders decide to tender any of their Shares will depend, among other things, on their individual circumstances including their tax position and on their view of the Company's prospects. Shareholders in any doubt as to the action they should take should consult an appropriately qualified independent financial adviser, authorised under the Financial Services and Market Act 2000, without delay.

Copies of the Circular have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do. The Circular will also shortly be available on the Company's website at www.schroderasiapacificfund.com. 

Enquiries:

John Spedding

Schroder Investment Management Limited Tel: [phone]

Hugh Jonathan

Numis Securities Limited 0207 260 1000

 

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