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3i UK Select Trust (UKT)

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Thursday 28 February, 2002

3i UK Select Trust

Tender Offer/New Manager

3i UK Select Trust Ld
28 February 2002





                           3i UK Select Trust Limited

Tender Offer and Change of Investment Manager



Introduction



3i UK Select Trust Limited (the 'Company') announced on 23 November 2001 that it
had received notification from its largest shareholder, 3i Group plc ('3i'),
that 3i wished to realise its 25.7% holding in the Company and that the
Company's investment manager, 3i Investments plc (a wholly owned subsidiary of
3i) had indicated that it therefore intended to step down as investment manager.



Summary of the Proposals



•     The Company announces that it is proposing to effect a tender offer for up
to two-thirds of the Company's issued shares at a tender price calculated on the
basis of 97% of a formula asset value



•     The Company also announces that, following approaches and presentations
from several leading fund management companies, the Board has invited Scottish
Widows Investment Partnership Limited ('SWIP') to become the Company's new
investment manager with effect from, and conditional upon, approval of the
tender offer proposals by shareholders



Tender Offer



The Board has worked with its advisers on proposals seeking to address the
interests of those shareholders who wish to realise their investment in the
Company and of those wishing to remain invested in the Company.



The Company announces that it is proposing to effect a tender offer for up to
two-thirds of the Company's issued shares. The proposals will give shareholders
the opportunity, subject to the level of tender elections received, to realise
all or a substantial part of their shareholding at close to the realisable value
of the underlying assets after taking account of associated costs.



The Company's new investment manager, SWIP, intends (acting on behalf of
clients) to purchase shares in the Company in the market or at the tender price
as part of the tender offer proposals so as to become a 20% shareholder in the
continuing Company.  As a result, the Company will only be repurchasing for
cancellation those validly tendered shares which are not so purchased by SWIP.



SWIP may acquire shares in the market prior to the tender offer being made if it
believes that it may do so at attractive prices.  In such circumstances the
aggregate size of the tender offer would be reduced to reflect the fact that
SWIP's shares would not be tendered.  All shareholders other than SWIP would
effectively retain their entitlement to tender in respect of two-thirds of their
holding.  In any event it is intended that SWIP's holding in the Company post
tender will be approximately 20%.



In setting the maximum size of the tender offer at two-thirds of the Company's
issued shares, the Directors have sought to ensure that, having taken into
account SWIP's purchase of shares, the minimum size of the continuing Company
will be approximately £25 million, based on the unaudited net asset value of
100.2p per share as at 25 February 2002.



Subject to the tender offer proposals being approved by shareholders by way of
an ordinary resolution at the extraordinary general meeting referred to below,
the Company would realise the relevant proportion of its portfolio to finance
the repurchase of shares.  The tender offer price will be calculated on the
basis of 97% of a formula asset value which will itself be calculated by taking
the net assets of the Company at the close of business on the relevant
calculation date (being the date on which the relevant proportion of the
portfolio has been realised) attributable to the shares accepted for tender
(after including the Company's undistributed revenue reserves up to the
calculation date) and deducting an amount equal to the costs of the proposals,
including the costs of the early repayment of such proportion of the Company's
bank loan as represents the proportion of shares being repurchased.  The
resultant figure will be divided by the number of shares validly tendered to
provide the tender price per share.  To the extent that SWIP purchases shares as
part of the proposals this will proportionately reduce the loan breakage costs.



The tender price will vary according to the number of shares validly tendered in
the tender offer. The greater the number of shares validly tendered, the less
the fixed costs of the tender will be as a proportion of those shares. Assuming
a net asset value ('NAV') of 100.2p as at 25 February 2002, if two thirds of the
Company's shares were tendered it is estimated that the tender price would be
approximately 95.5p, a discount of 4.7% to NAV, if one half of the Company's
shares were tendered it is estimated that the tender price would be
approximately 95.1p, a discount of 5.1% to NAV, and if one third of the
Company's shares were tendered it is estimated that the tender price would be
approximately 94.1p, a discount of 6.1% to NAV.  The NAV of 100.2p per share as
at 25 February 2002 includes an estimate of the existing undistributed revenue
reserves to 25 February 2002 of 2.4p per share less the proposed 1.96p final
dividend for the previous year to 31 December 2001 which will be payable to
continuing and tendering shareholders from these reserves. As with previous
dividends, shareholders will be able to elect to receive such dividend in the
form of a scrip dividend.  The tender price may vary significantly from the
above illustrations depending principally on movements in the NAV.



Shareholders who wish to remain with the Company will benefit from an increase
in the continuing NAV per share of the Company, estimated to be 3.8% if
two-thirds of the Company's shares are tendered and 1.3% if one half of the
Company's shares are tendered. The continuing NAV per share will remain broadly
unchanged if one third of the Company's shares are tendered.



Shareholders will be entitled to tender any percentage of their holdings for
repurchase under the tender offer.  However, repurchases of shares from
shareholders in excess of two-thirds of their shareholding (the 'basic
entitlement') will only be satisfied, on a pro-rata basis, to the extent that
other shareholders do not tender their basic entitlement.  In any event,
shareholders are not obliged to tender any of their Shares for repurchase.



Those Directors of the Company who hold shares (representing 2.56% of the
Company's issued share capital) have indicated that they will not be tendering
any of those shares as part of these proposals.



The Company intends to despatch a circular with full details of the tender offer
at the same time as it despatches the report and accounts for the year ended 31
December 2001.  It is expected that the tender offer will open at the end of
March 2002 and close in mid-April 2002 and that the tender price will be
calculated shortly thereafter.  An extraordinary general meeting of shareholders
will be convened for 25 April 2002.  This will immediately follow the Company's
AGM at which an ordinary resolution for the continuation of the Company will be
put.  An ordinary resolution will be put to the extraordinary general meeting,
conditional on the passing of the continuation vote at the AGM, to approve the
proposals.  The tender offer will be conditional on such resolutions being
passed.  Providing the tender offer becomes unconditional it is expected that
tender offer proceeds will be despatched by cheque/telegraphic transfer to
tendering shareholders in early-May 2002.



Change of Manager



In conjunction with formulating the above proposals in respect of the tender
offer, the Board has undertaken a review of selected prospective investment
managers that had declared an interest in taking over the management of the
Company.  Following presentations to the Board and further discussions, the
Board has invited SWIP to become the Company's new investment manager with
effect from, and conditional upon, approval of the tender offer proposals at the
EGM.



SWIP is the asset management arm of Lloyds TSB, with approximately £78 billion
of assets under management as at 31 December 2001, making it one of the UK and
Europe's largest fund managers.  SWIP has a diverse client base, including
investment trusts, unit trusts, pension funds, charities and specialist equity,
bond, property and cash mandates for both UK and international clients across
all asset classes.



The Board were impressed with SWIP's commitment to investment trusts and other
closed end funds and the investment trust experience of SWIP's new senior
management team.  SWIP has assigned Graham Campbell and David Erskine to manage
the Company's portfolio.  Graham and David joined SWIP 9 months ago as part of a
management restructuring within SWIP's investment management group and have 35
years of investment management experience between them.  Graham was previously a
director at Edinburgh Fund Managers plc and David was investment director at
Standard Life Investments for 12 years.  Of the ten funds actively managed by
Graham and David in the UK All Companies Sector since they joined SWIP, nine are
above median and four of these are in the top quartile for the six months to 31
December 2001.





The key terms of SWIP taking on the management contract are as follows:



•     SWIP will be appointed on terms materially the same as those contained in
the existing 3i management agreement, including the management fee of 0.5% of
gross assets per annum and a performance fee calculated by reference to the
outpeformance of the total return of the Company's net assets over the total
return of the FTSE All Share Index, capped at 0.25% of gross assets in any year;

•     the contract will be terminable on one year's notice by either side;

•     as discussed above SWIP intends to acquire 20% of the Company's issued
shares (by reference to post-tender size) either in the market prior to the
tender offer or, at the tender price, as part of the tender proposals.



3i has agreed to support these proposals and vote in favour of the continuation
vote at the AGM and the tender offer proposals at the extraordinary general
meeting.  In addition 3i Investments plc will agree to the ending of its
management contract on short notice without seeking compensation.



3i Investments plc will continue to manage the Company's investment portfolio in
line with its existing investment policy and objectives until such time as SWIP
takes full management control, which is expected to be immediately following the
approval of the tender offer proposals at the extraordinary general meeting.  3i
Investments plc and SWIP will work closely in the run up to such meeting in
order that SWIP may familiarise itself with the portfolio.



In connection with the change of investment manager, a resolution will be put to
the extraordinary general meeting for a change to the Company's name.



Enquiries:

Jim Le Pelley                                    01481 721234
Chairman, 3i UK Select Trust Limited

Andrew Zychowski                                 020 7623 8000
Dresdner Kleinwort Wasserstein

Caroline Partridge                               0131 655 6527
Head of Corporate Communications
Scottish Widows Investment Partnership

Liz Hewitt                                       020 7975 3283
Director of Corporate Affairs
3i Group plc

In relation to the tender offer, Dresdner Kleinwort Wasserstein, which is
regulated by the Financial Services Authority, is acting for 3i UK Select Trust
Limited and no one else and will not be responsible to any other person for
providing the protections afforded to its clients or for providing advice in
relation to the tender offer or any other matter referred to herein. Dresdner
Kleinwort Wasserstein is the marketing name for the investment bank of Dresdner
Bank AG, a member of the Allianz Group.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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