HENDERSON INVESTMENT FUNDS LIMITED
HENDERSON HIGH INCOME TRUST PLC
LEGAL ENTITY IDENTIFIER 213800OEXAGFSF7Y6G11
17 March 2017
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Henderson High Income Trust plc (the "Company" or "HHI")
Proposed issue of new ordinary shares in connection with the scheme of reconstruction of Threadneedle UK Select Trust Limited and 12 month share issuance programme
Against the backdrop of the Board's stated desire to see the Company grow, the Board of HHI is pleased to announce the following proposals (the "Proposals") in respect of the Company:
§ it has agreed heads of terms with the Board of Threadneedle UK Select Trust Limited ("UKT") and Henderson Investment Funds Limited ("Henderson") in respect of the issue of new Ordinary Shares to shareholders in UKT who elect to roll-over their investment, to be effected by way of a scheme of reconstruction of UKT (the "Scheme"); and
§ in the light of ongoing investor demand for the Company's Ordinary Shares, the Company intends, in addition to the issue of new Ordinary Shares in connection with the Scheme, to put in place a prospectus for a 12 month share issuance programme (the "Issuance Programme"), which will enable the Company to issue further new Ordinary Shares at a small premium to net asset value, commencing with an initial offer of new Ordinary Shares at a one per cent. premium to net asset value to complete at the same time as the Scheme.
The Scheme and Issuance Programme together constitute the "Proposals".
The Board believes the Proposals have a number of benefits for existing HHI shareholders:
§ increasing the size of HHI's asset base, spreading the Company's fixed costs over a larger capital base which should reduce the total expense ratio;
§ improving the liquidity of the HHI shares on the secondary market to the benefit of all shareholders; and
§ introducing a wider range of investors to the Company.
Proposed scheme of reconstruction of Threadneedle UK Select Trust Limited
Under the heads of terms agreed by the Board, the Scheme will involve the roll-over of part of the assets and undertaking of UKT to HHI by way of a members' voluntary solvent scheme of reconstruction (under the laws of Guernsey) of UKT. The merger proposals will be subject to shareholder approval of both companies as well as regulatory and tax approvals. It is expected that the Scheme will become effective by the end of June 2017.
Under the Scheme, UKT qualifying shareholders will be able to elect to receive new Ordinary Shares (the "Rollover Option") and/or cash (the "Cash Option"). UKT Shareholders who fail to make an election will be deemed to have elected for the Rollover Option.
The rollover portfolio will consist of cash, cash equivalents and UK quoted securities which fall within the HHI investment policy and have been approved in advance by the Company's investment manager.
New Ordinary Shares will be issued to UKT shareholders who have elected, or are deemed to have elected, for the Rollover Option based on the ratio of the HHI NAV (cum income, debt at par value) to the UKT NAV, taking into account certain adjustments.
The relevant net asset values for the purposes of the Scheme will be calculated in accordance with the respective company's normal accounting policies and will exclude any dividends to which UKT shareholders are not entitled. UKT shareholders will not qualify for any HHI dividends declared prior to the Scheme becoming effective, in particular the second interim dividend expected to be declared ex on or around 22 June 2017.
Each party intends to bear its own costs (including in any abort scenario) incurred in relation to the Proposals, subject to any contribution from Henderson or its group to HHI and UKT as set out below.
Proposed initial offer and 12 month issuance programme
The Issuance Programme has been proposed in principle by the Board to allow the Company to issue new Ordinary Shares to satisfy demand from investors at times when Ordinary Shares are trading at a premium to the net asset value per Ordinary Share.
The Directors intend to apply the net proceeds of any issue associated with the Issuance Programme in accordance with the Company's investment policy.
New Ordinary Shares will be issued under the Issuance Programme only (i) at a premium to net asset value; and (ii) when the Directors believe that it is in the best interests of the Company to do so. As a result of the new Ordinary Shares being issued under the Scheme and the costs contribution from Henderson, referred to below, the Company proposes to issue new Ordinary Shares under the initial offer at a one per cent. premium to the HHI NAV. This premium should not be taken as a guide as to the future issue prices that may apply to further shares issued under the Issuance Programme.
The Company intends to convene a general meeting of shareholders to authorise the issue of new Ordinary Shares under the Scheme and under the Issuance Programme.
Henderson has proposed a contribution to the costs of the Scheme, equating to a sum that is equivalent to 18 months base management fee of the total assets that rollover from UKT into HHI. The financial value of this amount will be credited against the proportion of the HHI prospectus costs represented by the new Ordinary Shares issued to UKT shareholders and the balance will be paid to UKT. Henderson has also proposed a contribution to HHI's prospectus costs, not attributable to new Ordinary Shares issued under the Scheme, to the extent that these costs are not covered by the one per cent. premium to the HHI NAV charged on the new Ordinary Shares issued pursuant to the initial offer.
Accordingly, the Board does not expect to bear any costs in putting in place the Prospectus and participating in the Scheme since all HHI costs are to be underwritten by Henderson.
It is currently envisaged that a shareholder circular, prospectus and notice of general meeting setting out details of the Scheme and seeking shareholder approval for the Scheme and Issuance Programme will be sent to shareholders at the end of May 2017 and that the Scheme and first issue under the Issuance Programme will become effective by the end of June 2017.
The Scheme will be conditional on, amongst other things, the recommendation of the Boards of both companies, the necessary shareholder approvals by the shareholders of both companies and the appropriate regulatory and tax approvals in due course.
Margaret Littlejohns, Chairman, commented:
"The Board of Henderson High Income Trust plc is delighted to be supporting this transaction. We believe that our long term track record of delivering regular high income and capital growth over time from a portfolio predominantly invested in UK equities will be a compelling rollover opportunity for Threadneedle UK Select shareholders."
For further information, please contact:
James de Sausmarez
Director and Head of Investment Trusts
Henderson Global Investors
Telephone: 020 7818 3349
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service this inside information is now considered to be in the public domain.