City of London Investment Trust PLC
03 February 2003
3 February 2003
THE CITY OF LONDON INVESTMENT TRUST PLC
The City of London Investment Trust plc ("City of London") - issue of new
The directors of City of London are pleased to announce that up to 8 million
new City of London shares will be made available to shareholders of
Henderson Geared Income & Growth Trust plc as an option under the proposed
reconstruction of Henderson Geared Income & Growth announced today.
Henderson Geared Income & Growth is an investment trust managed by Henderson
Global Investors with a broadly similar investment policy and portfolio
construction to City of London. Henderson Geared Income & Growth was
established with a fixed life to 8 March 2003. As part of the proposed
reconstruction at the end of Henderson Geared Income & Growth's planned
life, shareholders of Henderson Geared Income & Growth may elect to receive
either shares in City of London, shares in the Henderson Preference & Bond
Fund (a sub-fund of an open ended investment company managed by Henderson)
or cash, in any combination.
2. Issue mechanism
At the Annual General Meeting on 18 October 2002, City of London
shareholders approved the issue of up to 10,262,548 new ordinary shares
without pre-emption rights at any time up to the 2003 Annual General
Meeting. Using this authority, the Directors have, to date, issued 806,854
shares. The Directors have agreed to use this authority to make up to 8
million new City of London shares available to Henderson Geared Income &
Growth shareholders who make valid elections under the proposals for the
reconstruction of Henderson Geared Income & Growth. City of London shares
will only be made available to Henderson Geared Income & Growth shareholders
actively electing for them.
City of London shares will be issued to Henderson Geared Income & Growth
shareholders who elect to receive them at a price of 100.5 per cent. of City
of London shares' net asset value as at close of business on 6 March 2003.
As a result of City of London issuing shares at this price, Henderson Geared
Income & Growth shareholders will acquire shares in City of London at a
value where all costs (including stamp duty on equities to be transferred to
City of London) will be met by those acquiring the new shares.
In consideration for the issue of new shares, Henderson Geared Income &
Growth will transfer to City of London a portfolio of shares. This portfolio
will be compatible with City of London's existing portfolio (which will
therefore not require realignment) and will be acquired at mid-market prices
and free of brokers' commissions.
City of London's quarterly dividend payment timetable will remain unchanged
and, in particular, the third interim dividend for the current accounting
year will be paid, as in previous years, on 31 May. However, the Directors
intend that the announcement date for the third interim dividend will be
brought forward to Friday 14 February and shares will trade ex-dividend with
regard to this payment from Wednesday 5 March 2003. Any new shares issued to
Henderson Geared Income & Growth shareholders as a result of the proposed
reconstruction will not be entitled to receive this third interim dividend.
In City of London's annual accounts for the year ended 30 June 2002, the
Chairman's statement indicated that dividends for the current accounting
year would be paid at the rate of 2p per quarter, with any possible increase
in the total annual dividend to be reviewed at the time of the fourth
4. Advantages for City of London shareholders
The issue of City of London shares to existing Henderson Geared Income & Growth
shareholders, which has arisen through the specific circumstances of Henderson
Geared Income & Growth's proposed reconstruction, has a number of advantages to
existing City of London shareholders:
• Increasing the number of shares in issue will reduce overall costs per
share by spreading the fixed costs of running City of London and debt
servicing costs across a larger share base. There potentially will be a
small reduction in management fees per share, due to the stepped nature of
City of London's base management fee.
• The issue of new shares will broaden City of London's shareholder base. In
particular, Henderson Geared Income & Growth is widely held by private
All costs to City of London of the reconstruction will be met by the new
There will be no effect on City of London's net asset value per share with debt
valued at par. However, there will be a small improvement in City of London's
net asset value per share as adjusted for the market value of long term debt.
5. No action required by City of London shareholders
City of London shareholders need take no action as a result of this announcement
since the power to issue new ordinary shares was approved by shareholders at the
last Annual General Meeting.
Shareholders should however note the new timetable that the directors intend to
announce for the ex-dividend date for the third interim dividend for the 3
months ending 31 March 2003 payable on 31 May 2003.
For further information please contact :
Portfolio Manager, The City of London Investment Trust plc
Telephone: 020 7818 4367
Head of Investment Trusts, Henderson Global Investors
Telephone: 020 7818 5517
Investor Relations Manager, Henderson Global Investors
Telephone: 020 7818 6417
Henderson Press Office
Telephone: 020 7818 4222
This information is provided by RNS
The company news service from the London Stock Exchange