TIDMABD
RNS Number : 7233G
abrdn New Dawn Invest Trust plc
21 July 2023
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO, THE UNITED STATES OF AMERICA
(INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED
STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, NEW
ZEALAND, THE REPUBLIC OF SOUTH AFRICA, IN ANY MEMBER STATE OF THE
EEA OR IN ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE
UNLAWFUL
This announcement is not an offer to sell, or a solicitation of
an offer to acquire, securities in the United States or in any
other jurisdiction in which the same would be unlawful. Neither
this announcement nor any part of it shall form the basis of or be
relied on in connection with or act as an inducement to enter into
any contract or commitment whatsoever.
21 July 2023
abrdn New Dawn Investment Trust plc
Legal Entity Identifier: 5493002K00AHWEME3J36
Proposed combination with Asia Dragon Trust plc
Introduction
The Board of abrdn New Dawn Investment Trust plc ("abrdn New
Dawn " or the "Company") is pleased to announce that it has agreed
heads of terms with the Board of Asia Dragon Trust plc (" Asia
Dragon ") in respect of a proposed combination of abrdn New Dawn
with Asia Dragon. The combination, if approved by each company's
shareholders, will be effected by way of a scheme of reconstruction
and winding up of abrdn New Dawn under section 110 of the
Insolvency Act 1986 and the associated transfer of part of the
assets and undertaking of abrdn New Dawn to Asia Dragon in exchange
for the issue of new ordinary shares in Asia Dragon ("New Asia
Dragon Shares") (the "Scheme"). Under the terms of the Scheme an up
to 25 per cent. cash exit opportunity will be offered to abrdn New
Dawn shareholders to realise part of their investment in the
Company.
The current investment manager of both companies, abrdn Fund
Managers Limited ("AFML"), will, following implementation of the
Scheme, continue to manage the enlarged Asia Dragon. The Asia
Dragon board will propose certain amendments to Asia Dragon's
investment policy to its shareholders (the "Investment Policy
Change") which will principally align Asia Dragon's policy with the
Company's current investment policy in order to permit investment
into Australasia and provide the management team with equivalent
geographic flexibility. Asia Dragon's existing benchmark
comparative index (MSCI AC Asia (ex-Japan) Index) will be retained.
The portfolio managers of the enlarged Asia Dragon will be Pruksa
Iamthongthong and James Thom.
The Scheme and the Investment Policy Change are together
referred to as the "Proposals".
The Board of abrdn New Dawn believes that, if the Proposals are
implemented, abrdn New Dawn shareholders rolling over into Asia
Dragon will benefit from, amongst other things, the greater
economies of scale that are expected to result from the enlarged
asset base, including greater secondary liquidity in Asia Dragon
shares and cost efficiencies.
abrdn New Dawn and Asia Dragon have received irrevocable
undertakings to support the Proposals from shareholders
representing 27.0 per cent. of abrdn New Dawn's issued share
capital and 29.7 per cent. of Asia Dragon's issued share capital
(as at 20 July 2023).
Summary of the Scheme
The Proposals will be effected by way of a scheme of
reconstruction of abrdn New Dawn under section 110 of the
Insolvency Act 1986, resulting in the voluntary winding up of abrdn
New Dawn and the transfer of part of abrdn New Dawn's assets to
Asia Dragon on a Formula Asset Value ("FAV") for FAV basis. In
accordance with customary practice for such transactions involving
investment trusts, the City Code on Takeovers and Mergers is not
expected to apply to the Proposals. However, the Proposals will be
subject to other regulatory and tax approvals. The Proposals will
also be subject to, inter alia, approval by the shareholders of
each of abrdn New Dawn and Asia Dragon.
Under the Scheme, abrdn New Dawn's shareholders will be entitled
to elect to receive in respect of some or all of their abrdn New
Dawn shares:
-- New Asia Dragon Shares (the "Rollover Option"); and/or
-- cash (the "Cash Option").
The Cash Option is limited to 25 per cent. of abrdn New Dawn's
shares in issue (excluding treasury shares). Should total elections
for the Cash Option exceed 25 per cent. of abrdn New Dawn's shares
in issue (excluding treasury shares), excess elections for the Cash
Option will be scaled back into New Asia Dragon Shares on a pro
rata basis.
The Cash Option will be offered at a discount of 2 per cent. to
the abrdn New Dawn FAV (the "Cash Discount") less the costs of
realising the assets allocated to the cash pool for the benefit of
the shareholders electing for the Cash Option. The Cash Discount
will be for the benefit of the enlarged Asia Dragon.
New Asia Dragon Shares will be issued as the default option
under the Scheme in the event that abrdn New Dawn shareholders do
not make a valid election under the Scheme or to the extent
elections for the Cash Option are scaled back as a result of the
Cash Option being oversubscribed.
Rationale and Benefits of the Scheme
abrdn New Dawn and Asia Dragon both invest in the Asia Pacific
(ex-Japan) region and both are managed by AFML with a high level of
commonality across their shareholder bases. In light of these
similarities, the Boards believe a combination of the companies
will create an enlarged vehicle that offers similar investment
exposure for each set of shareholders while offering shareholders
in the enlarged Asia Dragon the following benefits:
-- Enhanced profile : The enlarged Asia Dragon is expected to
have net assets in excess of GBP700 million (as at 20 July 2023),
creating a leading closed-ended vehicle for investment in the Asia
Pacific (ex-Japan) region managed by abrdn. On the basis of the
current market capitalisations of abrdn New Dawn and Asia Dragon,
the enlarged Asia Dragon would be expected to qualify for inclusion
in the FTSE 250 raising the profile and enhancing the marketability
of the enlarged Asia Dragon.
-- Lower tiered management fee : AFML has agreed that, with
effect from the admission to listing and trading of the New Asia
Dragon Shares ("Admission"), the management fee payable by Asia
Dragon to AFML will be reduced to 0.75 per cent. (currently 0.85
per cent.) on the initial GBP350 million of Asia Dragon's net
assets and 0.5 per cent. on Asia Dragon's net assets in excess of
GBP350 million. In addition, the enlarged Asia Dragon will benefit
from lower costs following implementation of the Proposals as Asia
Dragon's tiered fee structure will have the effect of reducing the
weighted average fee given the increase in Asia Dragon's net
assets.
-- Lower ongoing charges : Existing and new shareholders in Asia
Dragon are expected to benefit from a lower ongoing expense ratio
with the enlarged Asia Dragon's fixed costs spread over a larger
asset base.
-- Enhanced liquidity : The scale of the enlarged company is
expected to improve the secondary market liquidity of Asia Dragon's
shares.
-- Shareholder register : The Proposals will allow a number of
shareholders to consolidate their holdings across the two companies
while also creating a more diversified shareholder base through a
combination of the balance of the two share registers.
-- Contribution to costs : As described below, AFML has agreed
to make a cost contribution in respect of the Proposals which, in
addition to the contribution to the costs from the Cash Discount
described above, is expected to offset the direct transaction costs
for Asia Dragon shareholders.
-- Conditional tender offer: Asia Dragon offers a five-yearly
performance related conditional tender ("Conditional Tender") with
the current performance period running from 1 September 2021 to 31
August 2026 ("2026 CTO"). It is proposed that, in the light of the
Proposals and conditional on the Scheme being implemented, the 2026
CTO will be amended such that, in the event Asia Dragon
underperforms the Benchmark over the performance period, Asia
Dragon will offer shareholders the opportunity to tender up to a
maximum of 15 per cent. of their shares; a reduction from the
maximum of 25 per cent. previously proposed. This reflects the
revised Conditional Tender being of broadly a similar size to that
previously proposed for the 2026 CTO, given the greater scale of
the enlarged Asia Dragon.
-- Continuation Vote: Asia Dragon shareholders will have the
opportunity to vote on the continuation of Asia Dragon at every
fifth AGM (" Continuation Vote ") with the next Continuation Vote
to be put forward at the AGM in December 2026.
Costs of the Proposals and AFML Contribution
Each company intends to bear its own costs incurred in relation
to the Proposals and the direct costs will be reflected in the FAV
for each company.
AFML has agreed to make a contribution to the costs of the
Scheme by means of a reduction in the management fee payable by
Asia Dragon to AFML. The fee reduction will constitute a waiver of
the management fee that would otherwise be payable to AFML in
respect of the assets transferred by abrdn New Dawn to Asia Dragon
pursuant to the Scheme for the first six months following the
completion of the Scheme (the " AFML Contribution "). The AFML
Contribution will be for the benefit of the shareholders of the
enlarged Asia Dragon following implementation of the Scheme.
Debt Facilities
It is expected that abrdn New Dawn's existing fixed rate and
revolving credit facilities, which are currently drawn at GBP28.55
million (as at 20 July 2023), will be repaid and closed prior to
the implementation of the Scheme.
Change of Asia Dragon Investment Policy
It is intended that Asia Dragon will seek shareholder approval
for the Investment Policy Change at the general meeting to be held
by Asia Dragon in connection with the Proposals. The proposed
amendments to the Asia Dragon investment policy will, inter alia,
allow for investment in Australasia in order to provide the
management team greater geographic flexibility, already reflected
in abrdn New Dawn's current investment policy . Asia Dragon's
existing benchmark comparative index (MSCI AC Asia (ex-Japan)
Index) will be retained.
Board Structure
Following completion of the Proposals, it is expected that the
Board of the enlarged Asia Dragon will consist of eight directors
and will include the five existing Asia Dragon directors and three
of the existing abrdn New Dawn directors. After a transition period
that will end on the six month anniversary of Admission, it is
intended that the Board of the enlarged Asia Dragon will reduce to
five directors consisting of three existing Asia Dragon directors
and two existing abrdn New Dawn directors.
Annual Financial Statements and Second Interim Dividend
In light of the Proposals, the Company's annual financial report
for the year ended 30 April 2023 will be published in August 2023.
A second interim dividend for the year then ended is expected to be
declared at the end of July 2023.
Expected Timetable
A circular to shareholders of the Company, providing further
details of the Scheme and convening general meetings to approve the
Scheme, together with a prospectus published by Asia Dragon in
respect of the issue of New Asia Dragon Shares in connection with
the Scheme are expected to be published in September 2023. The
Proposals are anticipated to become effective in October 2023.
The Chairman of abrdn New Dawn, Donald Workman , commented:
"The combination of abrdn New Dawn Investment Trust plc with
Asia Dragon Trust plc will provide additional scale and liquidity
for continuing shareholders, whilst broadly retaining abrdn New
Dawn's existing investment policy. Both companies already benefit
from a similar investment approach and management style within the
same investment group. This additional scale and Asia Dragon's
tiered fee structure, combined with the reduced fee arrangements,
will also result in a lower ongoing charges ratio for continuing
shareholders. As part of the transaction abrdn New Dawn
shareholders will be offered the opportunity to benefit from a
partial realisation of their holding at a small discount to the
formula asset value. The enlarged scale should also make Asia
Dragon more attractive for potential new investors over time."
For further information please contact:
abrdn New Dawn Investment Trust plc Contact via AFML
Donald Workman
abrdn Fund Managers Limited
Maria Allen +44 (0) 20 3680 0305
Luke Mason +44 (0) 20 7463 5971
Stephanie Hocking +44 (0) 7514 064 988
Panmure Gordon (UK) Limited
Alex Collins +44 (0) 20 7886 2500
Sapna Shah +44 (0) 20 7886 2783
Ashwin Kohli +44 (0) 20 7886 2786
Important Information
This announcement contains information that is inside
information for the purposes of Article 7 of the UK version of
Regulation (EU) No. 596/2014 which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018, as amended (the Market
Abuse Regulation). abrdn Holdings Limited, Company Secretary to
abrdn New Dawn Investment Trust plc has arranged the release of
this announcement.
This announcement is not for publication or distribution,
directly or indirectly, in or into the United States of America.
This announcement is not an offer of securities for sale into the
United States. The securities referred to herein have not been and
will not be registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold in the United States,
except pursuant to an applicable exemption from registration. No
public offering of securities is being made in the United
States.
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END
MSCFFFSIDIIIFIV
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July 21, 2023 02:00 ET (06:00 GMT)
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