TR European Growth Trust PLC
24 March 2005
TR European Growth Trust plc - Tender Offer and related matters
The Board of TR European Growth Trust plc (the 'Company') announces its
intention to put forward a set of proposals (the 'Proposals') to Shareholders. A
circular will shortly be sent to Shareholders setting out the full terms and
conditions of the Proposals and giving notice of an Extraordinary General
Meeting of the Company ('EGM') at which approval will be sought for
implementation of the Proposals.
The Proposals involve:
- a Tender Offer for up to 30 per cent. of the Company's issued share
capital at a price representing a discount of 6.5 per cent. to the Net Asset
Value per Share. The Tender Offer will be coupled with a Matching Facility
under which Shareholders who wish to do so may purchase Shares at the same
- the introduction of a Discount Protection Mechanism pursuant to which the
Company will undertake a further tender offer for up to 10 per cent. of its
issued share capital at a price representing a discount of 6.5 per cent. to
the then Net Asset Value per Share on each occasion that the Company's
average month end discount rating over the course of any financial year
exceeds 10 per cent.; and
- the Company's continuation vote, which is currently due to be put to
Shareholders at the annual general meeting to be held in December 2005,
being brought forward to the Extraordinary General Meeting.
The Directors believe that the Proposals are in the best interests of
Shareholders as a whole. The Directors do not intend to tender any of their
beneficial holdings of Shares under the Tender Offer.
Background to the Proposals
In light of the forthcoming continuation vote of the Company, the Board has been
future of the Company. Following discussions with the Company's largest
Shareholder, which has indicated its intention to seek a full exit from its
Shareholding, the Board believes that it would be in the best interests of
Shareholders as a whole to propose arrangements that would allow Shareholders
who wish to realise their investment to have an opportunity to do so, while
allowing other Shareholders to maintain or increase their investment in the
Company. Having considered the options available to it, the Board believes that
the Tender Offer, coupled with the Matching Facility, provides the most
appropriate method for doing so. The Company is therefore making the Tender
Offer to Shareholders on the share register as at the Record Date, being 15th
The Directors have set the maximum number of Shares available for purchase under
the Tender Offer at a level which should result in the Company remaining at a
substantial size while providing those Shareholders who wish to exit with the
opportunity to realise all or a substantial part of their Shareholding at close
to the realisable value of the underlying assets, after taking account of the
costs of implementing the Proposals.
The Directors are also aware that some Shareholders may wish to invest further
in the Company. Consequently the Matching Facility is being made available to
enable Shareholders who wish to do so to acquire further Shares in the Company
at the relevant Repurchase Price (i.e. the Repurchase Price for shares
repurchased in the First Tranche of the Tender Offer, as described further
below) plus commission.
In December of last year the Board announced its intention to undertake a more
active policy of repurchasing its Shares with a view to limiting the discount to
Net Asset Value at which the Company's Shares trade. It also indicated that,
subject to prevailing market conditions and in the context of the Company's
performance and discount level at the relevant time, it would consider
undertaking further corporate action with the aim of maintaining the discount at
such levels. The Board's objective is that the discount to Net Asset Value at
which the Shares trade in the future should be at as narrow a level as is
practical in the prevailing circumstances. Accordingly, the Board also proposes
to introduce a Discount Protection Mechanism which will allow Shareholders to
realise Shares if the average month end discount at which the Shares trade over
the course of any financial year exceeds 10 per cent.
In accordance with the Company's Articles of Association, Shareholders are due
to vote on the continuation of the Company at the annual general meeting of the
Company to be held at the end of this year. However, the Board feels that there
would be little merit in seeking to implement the Tender Offer, Matching
Facility and Discount Protection Mechanism unless Shareholders as a whole are
committed to the long-term future of the Company. Accordingly, it is also
proposed that the continuation vote be brought forward so as to form part of the
Proposals being put to Shareholders at this time.
The Tender Offer is designed to enable those Shareholders who wish to realise
their Shares in the Company to do so at a price which is close to their fair
realisable value, while ensuring that ongoing Shareholders who do not wish to
tender their Shares are not disadvantaged by the Proposals. Shareholders are not
obliged to tender any Shares.
Under the terms of the Tender Offer, Shareholders will be entitled to have up to
30 per cent. of their Shareholding purchased by the Company, which represents
Shareholders' Basic Entitlement. Shareholders will, however, be entitled to
tender any percentage of their holdings for purchase under the Tender Offer,
but tenders in excess of the Basic Entitlement will only be satisfied, on a pro
rata basis, to the extent that other Shareholders tender less than their Basic
Entitlement. Tenders will be rounded down to the nearest whole number of Shares.
Savings Plans Participants will be treated, in the aggregate, in the same way as
Shareholders for the purpose of pro rating.
The Tender Offer is being made by Dresdner Kleinwort Wasserstein. Subject as
referred to above, Dresdner Kleinwort Wasserstein will purchase the Shares
tendered as principal and, following the completion of all those purchases, sell
the relevant Shares (less any Shares to be purchased under the Matching
Facility) on to the Company at the relevant Repurchase Price by way of an
on-market transaction. Those Shares which the Company acquires from Dresdner
Kleinwort Wasserstein will be cancelled on acquisition. All transactions will be
carried out on the London Stock Exchange.
Implementation of the Tender Offer will require approval by Shareholders at an
Extraordinary General Meeting, which is to be held at 11.00 a.m. on 20th April
The Company's existing authority to repurchase its own Shares, which was granted
at the 2004 Annual General Meeting in respect of up to 14.99 per cent. of the
Company's issued share capital as at the date of that meeting (equivalent to
21,830,966 Shares) will remain in force and unaffected by the Tender Offer.
Pursuant to this authority, as at 23rd March 2005 the Company had made market
purchases for cancellation of 340,000 Shares and is therefore able to purchase a
further 21,490,966 Shares, currently representing 14.79 per cent. of the
Company's issued Shares, under such authority.
(b) First Tranche and Second Tranche of the Tender Offer and Repurchase Price
applicable to each Tranche
The Manager will realise as much of the Company's portfolio as is necessary,
when added to the Company's existing cash reserves, to meet the cash
requirements of the Tender Offer. To the extent that the market moves downwards
during this realisation process, the Company may be required to realise
significantly more of its portfolio than initially envisaged in order to meet
those cash requirements, which would be disadvantageous to continuing
Shareholders. In order to reduce this exposure to the market, it is expected
that, subject to what is said below, the Tender Offer will be carried out in two
Tranches. To the extent that Shares are to be repurchased from Shareholders,
half of each Shareholders' tendered Shares will be repurchased in the First
Tranche and the remaining half in the Second Tranche.
A separate Repurchase Price will be calculated in respect of each Tranche, which
in each case will be 93.5 per cent of the Net Asset Value per Share as at the
relevant Calculation Date. The 6.5 per cent. discount to the Net Asset Value per
Share represented by the Repurchase Price is close to the realisable value of
the underlying assets of the Company after taking account of the costs of
implementing the Proposals. This compares with the current discount to Net Asset
Value at which the Shares trade (being 8.3 per cent. as at close of business on
21st March 2005). In this way, although the costs of the Proposals will be borne
by all Shareholders, the Board believes that continuing Shareholders should
receive a small uplift in Net Asset Value by virtue of the 6.5 per cent.
discount at which Shares are to be repurchased.
For illustrative purposes only, had the Repurchase Price been calculated as at
21st March 2005 it would have been approximately 269.5p.
Shareholders should note that the Repurchase Price in respect of the Second
Tranche (if applicable) will be enhanced through an uplift to the Net Asset
Value per Share arising from the discount to Net Asset Value per Share at which
Shares are repurchased under the First Tranche (to the extent that such uplift
exceeds the costs attributable to that repurchase).
Whilst it is anticipated that the Tender Offer will comprise two Tranches, the
Company reserves the right to carry out the Tender Offer in a single Tranche if
(i) after consultation with the Manager, market conditions make it appropriate
to do so, or (ii) the number of Shares offered to be purchased under the
Matching Facility and the number of Shares offered by Shareholders under the
Tender Offer would result in the net number of Shares to be purchased by the
Company under the Tender Offer representing less than 20 per cent. of the
Company's issued share capital.
The Directors have arranged for Dresdner Kleinwort Wasserstein to operate a
Matching Facility to facilitate purchases of Shares by Shareholders. This
Matching Facility will operate alongside the Tender Offer. Shareholders will be
able to purchase Shares at the Repurchase Price for the First Tranche (plus
commission). Shares purchased by Dresdner Kleinwort Wasserstein under the Tender
Offer will first be allocated to this facility and any balance will be
repurchased by the Company.
To the extent that more Shares are requested for purchase under the Matching
Facility than are tendered under the Tender Offer, tendered Shares will be
allocated amongst Shareholders pro rata to the number of Shares requested on
each Shareholder's Purchase Form.
The Matching Facility is conditional upon the Tender Offer proceeding. The
Company will scale back any purchase instruction under the Matching Facility
where the fulfilment of the instruction would otherwise result in any
Shareholder or any person acting in concert with them owning 30 per cent. or
more of the issued share capital of the Company.
Discount Protection Mechanism
As part of the Proposals, the Company will introduce a provision to its Articles
of Association pursuant to which Shareholders will be entitled to tender up to
10 per cent. of their Shareholding for purchase by the Company if the Shares
have traded at an average month end discount of greater than 10 per cent. over
the course of any financial year of the Company. Any such tender offer will be
carried out at a price representing a discount of 6.5 per cent. to the Net Asset
Value per Share on the calculation date for such tender offer. Tenders by
Shareholders in excess of their basic entitlement of 10 per cent. will be
satisfied, on a pro rata basis, to the extent that other Shareholders tender
less than their basic entitlement. Details of any such subsequent tender offer
to be made to Shareholders in such circumstances will be contained in or will
accompany the Company's annual report and accounts.
Continuation of the Company
The Company's Articles of Association provide that at the Annual General Meeting
in 2005, and at five-yearly intervals thereafter, an ordinary resolution is to
be proposed for the Company to continue for a further five years. The Articles
of Association further provide that if this resolution is not approved,
proposals for the Company's liquidation or reconstruction will be put to
Shareholders within three months.
The Board feels that there would be little merit in seeking to implement the
Tender Offer, Matching Facility and Discount Protection Mechanism unless
Shareholders as a whole are committed to the long-term future of the Company.
Accordingly, the Proposals include seeking Shareholder approval at the EGM for
the continuation of the Company rather than at the 2005 Annual General Meeting
and the Articles of Association will be amended so that Shareholders will next
consider the continuation of the Company in 2010.
The continuation vote will be put to Shareholders at the EGM rather than at the
2005 Annual General Meeting and the Articles of Association will be amended so
that Shareholders will next consider the continuation of the Company in 2010.
If the Resolution is not passed at the EGM, a resolution to approve the
continuation of the Company for a further five years will be put to Shareholders
at the Company's 2005 Annual General Meeting in accordance with the current
Articles of Association.
Net Asset Value
For the purposes of this announcement 'Net Asset Value' means the net asset
value of the Company as calculated by the Company in accordance with its normal
accounting policies. For the avoidance of doubt, this will include all
undistributed revenue reserves up to the date of calculation, provision for
management performance fees and revaluation of the Company's unquoted
investments as at the date of calculation on the basis of the Company's normal
valuation policy (but will take no account of the costs of the Proposals). 'Net
Asset Value per Share' on any relevant date shall be calculated by dividing the
Net Asset Value by the number of Shares in issue on that date.
The strong rise in stock markets is increasingly in contrast with the somewhat
more mixed outlook on the economic front. This suggests that an element of
caution is required; however, the Board believes that the Manager's approach of
careful stock-picking should allow the Company to take advantage of the
opportunities that any period of uncertainty inevitably generates.
Issued share capital
The Company had 145,296,869 Shares in issue as at 23rd March 2005.
Commitment to support the Proposals
The Directors have received an irrevocable undertaking from the Company's
largest Shareholder, Carrousel Capital Ltd., which owns 16.63% of the Company's
issued share capital (as at 7th March 2005), to vote in favour of the Proposals
and to tender its entire holding of Shares under the Tender Offer.
Extraordinary General Meeting
The Proposals are subject to Shareholders' approval, at an Extraordinary General
Meeting of the Company, which has been convened for 11.00 a.m. on 20 April 2005
to be held at 4 Broadgate, London EC2M 2DA.
Latest time and date for receipt of Tender 5.00 p.m. on 12 April
Instructions from Savings Plans Participants in
respect of the Tender Offer
Latest time and date for receipt of Letters of 5.00 p.m. on 13 April
Direction from Savings Plans Participants in respect
of the EGM
Latest time and date for receipt of Tender Forms from 5.00 p.m. on 15 April
Shareholders in respect of the Tender Offer
Latest time and date for receipt of Purchase Forms 5.00 p.m. on 15 April
from Shareholders and Savings Plans Participants in
respect of the Matching Facility
Closing Date for the Tender Offer and the Matching 5.00 p.m. on 15 April
Record Date for the Tender Offer and the Matching close of business on 15 April
Latest time and date for receipt of Forms of Proxy 11.00 a.m. on 18 April
from Shareholders in respect of the EGM
Extraordinary General Meeting 11.00 a.m. on 20 April
Results of the Tender Offer and the Matching Facility 20 April
Unsuccessfully tendered Shares released from escrow 20 April
Calculation Date for First Tranche close of business on 20 April
Repurchase Price for First Tranche announced 21 April
Settlement Date: Cheques despatched and CREST as soon as practicable after 11 May
payments made for the First Tranche
Share certificates despatched and CREST accounts as soon as practicable after 11 May
settled for the Matching Facility
Calculation Date for Second Tranche close of business on 13 May
Repurchase Price for Second Tranche announced 14 May
Settlement Date: Cheques despatched and CREST as soon as practicable after 31 May
payments made for the Second Tranche
Share certificates despatched 6 June
Audley Twiston-Davies 020 7378 4500
Chairman, TR European Growth Trust plc
James de Sausmarez 020 7818 1818
Henderson Global Investors
Andrew Zychowski 020 7623 8000
Dresdner Kleinwort Wasserstein
Dresdner Kleinwort Wasserstein Securities Limited, which is authorised and
regulated by the Financial Services Authority in the conduct of investment
business, is acting for the Company in connection with the Proposals and no one
else and will not be responsible to anyone other than the Company for providing
the protections afforded to clients of Dresdner Kleinwort Wasserstein Securities
Limited nor for providing advice in relation to the Proposals.
This information is provided by RNS
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