JPMorgan Fleming Overseas IT PLC
03 March 2006
JPMORGAN FLEMING OVERSEAS INVESTMENT TRUST PLC
Correction to announcement regarding
Proposed tender offer and change in share repurchase policy
Please note that the announcement released by JPMorgan Fleming Overseas
Investment Trust plc at 7.01 a.m. today requires correcting. The estimated
Repurchase Price stated in the third paragraph of the Tender Offer section
should have read 'approximately 624.79 pence per Share' rather than
'approximately 627.45 pence per Share' as previously announced. The full text of
the corrected announcement is set out below.
JPMORGAN FLEMING OVERSEAS INVESTMENT TRUST PLC
Proposed tender offer and change in share repurchase policy
Following the Board's strategic review of the future of the Company, the Company
today announces a proposed Tender Offer and a change in its share repurchase
policy. A circular containing full details of the Tender Offer and of this
change (the 'Circular') is being posted to Shareholders today.
Background to the Tender Offer
Following the announcement made on 25 October 2005 the Board has undertaken a
strategic review of the future of the Company and has concluded that the Company
remains an attractive investment vehicle to provide exposure to overseas equity
markets under the continuing management of JPMorgan Asset Management.
The Board also recognises that Shareholders representing a significant
proportion of the Company's share capital may wish to realise all or a
substantial part of their investment for cash at a price close to NAV.
The Board has formulated the Tender Offer and the change in the Company's Share
repurchase policy to address the conclusions of its strategic review.
The Directors propose a Tender Offer to be made for up to 34,781,032 Shares,
representing 50 per cent. of the Company's issued share capital, at a price
designed to enable those Shareholders who wish to realise Shares in the Company
to do so at a price which is close to their net asset value, while ensuring that
ongoing Shareholders who do not wish to tender their Shares are not
Under the Tender Offer, Shareholders (other than certain Overseas Persons) will
be able to tender up to 50 per cent. of their holdings (their 'Basic
Entitlement'). Further, Shareholders will be able to tender additional Shares,
but such tenders will only be satisfied pro rata, to the extent that other
Shareholders tender less than their Basic Entitlement. For the purpose of the
Tender Offer, Plan Participants will be treated in the same way as Shareholders.
The Tender Offer is being made at a Repurchase Price that represents a discount
of 3.5 per cent. to the NAV per Share on the Calculation Date. The NAV per Share
will be calculated before deduction of the expenses of the Tender Offer which
will be borne by the Company. For illustrative purposes only and assuming the
resolution to approve the Tender Offer is passed by Shareholders, had the
Repurchase Price been calculated as at 1 March 2006 (the latest practicable date
before publication of this document), the Repurchase Price would have been
approximately 624.79 pence per Share. Depending on the number of Shares
repurchased under the Tender Offer, Shareholders who retain and do not tender
their Shares may benefit from an uplift in Net Asset Value per Share of up to
2.0 per cent.
The Tender Offer is being made by Winterflood Securities. Winterflood Securities
will, as principal, purchase the Shares tendered by means of on-market purchases
and, immediately upon the completion of those purchases, sell them to the
Company or place them as explained below.
All Shares acquired by the Company under the Tender Offer will be cancelled. The
repurchase of Shares by the Company will be funded from the Company's cash
resources and by the sale of investments in the Company's portfolio.
The Directors believe that certain investors may wish to increase their
investment in the Company and accordingly have reviewed the available options
with their advisers. Concurrently with the Tender Offer, the Directors have
arranged for Winterflood Securities to use reasonable endeavours to place any
tendered Shares with a limited group of investors so as to avoid triggering the
requirement to produce a prospectus under section 85 FSMA. Shares purchased by
Winterflood Securities under the Tender Offer will first be placed by
Winterflood Securities and any balance will be repurchased by the Company. This
placing has not been underwritten and there is no assurance as to the number of
Shares for which purchasers will be found.
The Tender Offer and the placing are subject inter alia to the approval of
Shareholders by special resolution.
The Company has received an irrevocable undertaking from Carrousel Capital
Limited to vote in favour of the resolution to be proposed at the Extraordinary
General Meeting and to accept the Tender Offer, in respect of the 15,505,128
Shares of which Carrousel Capital Limited is the legal and or beneficial owner
or discretionary fund manager, representing 22.23 per cent of the Company's
issued share capital.
Share Repurchase Policy
The Board recognises that the possibility of a widening discount can be a key
disadvantage of investment trusts that can discourage retail investors. The
Board will therefore adopt a new Share repurchase policy designed to give
comfort that the Company's Shares will trade at a stable and relatively narrow
Under the new policy, the Company will repurchase its Shares with the aim of
maintaining an average discount of five per cent. with any borrowings valued at
book value. The introduction of the new Share repurchase policy is not
conditional on Shareholder approval.
At the annual general meeting held on 30 November 2005, Shareholders granted the
Company authority to make market repurchases of up to 10,454,335 Shares subject
to certain conditions, including that the price paid must represent a discount
to NAV. Assuming that the Tender Offer is accepted in full, such authority would
represent 29.98 per cent of the Shares in issue but the Company will limit
repurchases following the Tender becoming effective to 14.99 per cent. of the
then outstanding Shares. The authority to repurchase up to 14.99 per cent. in
the market will be renewed at each future annual general meeting of the Company,
and the authority will be renewed at an extraordinary general meeting of the
Company if necessary.
Any Shares repurchased under this policy may be held in treasury or cancelled.
Shares held in treasury will only be re-issued at a premium to NAV.
Under the direction of the Board, the Manager has reduced the number of holdings
to 80. The Board and the Manager believe that concentrating the portfolio on the
investments identified through the process described below has led to an
improvement in performance.
The investment process employed by the Manager starts with investment ideas for
the portfolio which are generated initially in JPMorgan Asset Management's
extensive network of local offices. Within this network, more than 160 regional
specialists conduct detailed investment research into companies operating in
their region and, in many cases, manage regional or specialist portfolios.
A team of ten sector specialists in the global portfolios group ('GPG') take the
regional specialists' strongly sponsored stocks and conduct global research to
determine the most promising ideas within each sector, making truly global
comparisons between companies in the same sector. The Board and the Manager
believe that significant value can be generated at this stage both by exploiting
valuation anomalies and through having a global viewpoint on key industry
Ed Walker, the portfolio manager responsible for the Company's investments, is a
member of GPG. His role is to construct the portfolio from the highest ranked
stocks to ensure that the value created by the regional and global specialists
is captured and that risk is controlled such that no single factor should
dominate the overall investment performance of the portfolio. This is achieved
through building a portfolio from a diverse range of companies rather than
focussing on a particular geography or sector. This reflects the breadth of
research coverage available to the Manager and the Company's primary investment
policy of investing in a broad range of world equity markets.
The Board and the Manager recognise that, over shorter periods, the investment
strategy adopted by the Company may lead to periods of underperformance relative
to the Company's nearest peers which may take more concentrated regional or
sector positions. This has occurred recently as small capitalisation stocks have
outperformed their larger counterparts and US stocks have underperformed non-US
stocks. However, the Board and the Manager believe that, over the long term, the
Company's approach is more conducive to consistent and sustainable investment
performance and will continue to meet the investment needs of a broad range of
current and potential Shareholders.
The making of the Tender Offer to persons outside the United Kingdom, the
Channel Islands, the Isle of Man or New Zealand may be prohibited or affected by
the relevant laws of the overseas jurisdiction. Shareholders and Plan
Participants with registered or mailing addresses outside the United Kingdom,
the Channel Islands, the Isle of Man or New Zealand or who are citizens or
nationals of, or resident in, a jurisdiction other than the United Kingdom, the
Channel Islands, the Isle of Man or New Zealand should read the relevant section
of the Circular.
Shareholders who are resident for tax purposes in the United Kingdom and who
sell Shares in the Tender Offer should, subject to the potential application of
Section 703 ICTA 1988, be treated as selling their Shares in the normal way and
may, depending on their individual circumstances, incur a liability to taxation
on chargeable gains as a result. Shareholders who are resident for tax purposes
in New Zealand and who sell their Shares under the Tender Offer may incur a
higher tax exposure on the sale proceeds than would result from selling their
Shares in the open market outside the Tender Offer. Further information on the
UK and New Zealand taxation consequences of the Tender Offer is set out in the
Extraordinary General Meeting
The Tender Offer is subject to Shareholder approval. The circular to
shareholders contains a notice convening an Extraordinary General Meeting of the
Company to be held at 10.00 a.m. on 30 March 2006. At this meeting, a special
resolution will be proposed to sanction the Tender Offer.
Participants in the JPMorgan Savings Plans
Plan Participants are being sent a letter from JPMorgan Asset Management setting
out the action they must take to vote at the Extraordinary General Meeting and,
if they wish, to tender Shares. Plan Participants will be treated in the same
way as Shareholders for the purposes of any pro-rating of tenders in excess of
their Basic Entitlement.
Defined terms in this announcement have the same meaning as in the Circular.
3 March 2006
George Paul, Chairman, tel. 020 7742 7214
David Barron, JPMorgan Asset Management, tel. 020 7742 3475
Howard Myles, Ernst & Young LLP, tel. 020 7951 5324
David Benda/Nathan Brown, Winterflood Securities, tel. 020 7621 5562/5572
An analyst briefing will be held at 8.30 a.m. this morning at the offices of
JPMorgan Asset Management, Finsbury Dials, 20 Finsbury Street, London EC2Y 9AQ.
This information is provided by RNS
The company news service from the London Stock Exchange