TIDMAJG
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 any member state of the European Economic Area, the United States,
Australia, Canada, Japan or the Republic of South Africa or any jurisdiction for
which the same could be unlawful.
ATLANTIS JAPAN GROWTH FUND LIMITED
("AJGF" or the "Company")
(A closed-ended investment company incorporated in Guernsey with registration
number 30709)
LEI: 54930041W0LDG00PGL69
Publication of a circular in relation to the recommended proposals for the
voluntary winding up of the Company and combination with Nippon Active Value
Fund plc
12 September 2023
The Board of Atlantis Japan Growth Fund Limited announces that it has today
published a shareholder circular (the "Circular") setting out proposals for the
reconstruction and voluntary winding-up of the Company.
Introduction
On 11 August 2023, the Board announced that it had agreed heads of terms with
Nippon Active Value Fund plc ("NAVF") in respect of a proposed merger of the
Company with NAVF to be effected by way of a scheme of reconstruction pursuant
to article 134.3 of the Articles and voluntary winding up of the Company under
Section 391(1)(b) of the Companies (Guernsey) Law, 2008, (the "Scheme") and the
issue of New NAVF Shares to Shareholders who elect, or are deemed to have
elected, to roll over their investments in the Company into NAVF (the
"Proposals"). The background and rationale to the Proposals is set out below.
The Proposals, which are conditional upon, amongst other things, the approval of
Shareholders at the Extraordinary General Meeting, comprise a voluntary winding
up and a scheme of reconstruction of the Company under which Shareholders will
be entitled to elect to receive in respect of some or all of their Shares:
a) New NAVF Shares (the "Rollover Option"); and/or
b) cash (subject to an overall limit of 25 per cent. of the Ordinary Shares
in issue) (the "Cash Option").
The default option under the Scheme is for eligible Shareholders to receive New
NAVF Shares meaning that Shareholders who, in respect of all or part of their
holding of Shares, do not make a valid Election or who do not make an Election
at all under the Scheme will be deemed to have elected for New NAVF Shares in
respect of such holding.
In order to effect the Scheme, Shareholder approval is required. Shareholder
approval is sought at the Extraordinary General Meeting to approve and authorise
the implementation of the Scheme by the Liquidators, once appointed, and place
the Company into voluntary winding up. Further details of the Scheme Resolutions
to be proposed at the Extraordinary General Meeting are provided below.
The Board considers the Proposals to be in the best interests of Shareholders as
a whole and recommends that Shareholders vote in favour of the Resolutions
required to implement the Proposals at the Extraordinary General Meeting.
Background to and Rationale for the Proposal
The Proposals follow an active review by the Board of the options to address the
relative small size of the Company, recent poor performance and the discount at
which the Ordinary Shares trade to their net asset value. The Board considers
that NAVF's strategy of taking advantage of the ongoing reforms and improvements
in corporate governance to invest in undervalued Japanese listed companies,
particularly cash-rich smaller Japanese companies, where NAVF has performed
strongly, and actively engage with them to deliver returns for shareholders, is
an attractive strategy. The Proposals provide Shareholders with the opportunity
to continue with attractive ongoing exposure to Japanese equities in a larger
continuing investment trust structure with improved liquidity, alongside an
option to elect for a cash exit, at a modest discount to NAV in respect of at
least 25 per cent. of their holdings. The combination, if completed, will be
implemented through a scheme of reconstruction under article 134.3 of the
Articles and section 391(1)(b) of the Companies (Guernsey) Law, 2008, resulting
in the reconstruction and voluntary winding up of the Company.
Subject to the adoption of the New NAVF Investment Policy, NAVF's investment
objective is to provide its shareholders with attractive long-term capital
growth primarily through the active management of a focused portfolio of quoted
companies that have the majority of their operations in, or revenue derived
from, Japan, or a majority of whose consolidated net assets are held in Japan,
or that are included in the TOPIX, and that have been identified by NAVF's
investment adviser, Rising Sun Management Limited ("Rising Sun") as being
undervalued.
The Board and its advisers concluded that the Scheme will offer Shareholders the
best way to continue their investment in a closed-ended investment vehicle with
exposure to the attractive fundamental drivers operating in the Japanese market,
but in a vehicle which has delivered top ranking performance and which has a
much better rating than the Company whose Ordinary Shares have traded at a
persistently wide discount to net asset value historically. The Proposals also
allow Shareholders the opportunity for a partial cash exit at formula asset
value ("FAV") (less a 2 per cent. discount to the AJG FAV per Share).
Conditional upon the Scheme becoming effective, the Proposals would result in
those assets in the Company which are to be transferred to NAVF pursuant to the
Scheme forming part of NAVF's portfolio.
As Shareholders will be aware from the 2022 annual report, the Board announced
at the 2019 Annual General Meeting ("AGM") that a continuation vote will be
called every fourth year. Accordingly, the next continuation vote is due to be
held at the 2023 AGM. As noted in our announcement of 11 August 2023, the
Extraordinary General Meeting required to implement the Proposals will be held
before the planned AGM, such that (assuming the Proposals are approved at the
EGM) the Company will be in liquidation by the date of the planned AGM, and the
AGM may therefore be adjourned sine die. If the Proposals are not approved, the
AGM will be held as planned and the continuation vote will be voted upon at the
AGM. As noted below, if the winding up does not go ahead, the Board will in any
case reassess the options available to the Company.
Benefits of the Proposals
The Directors believe that the Proposals will have the following benefits for
Shareholders:
a) NAVF active management - Shareholders may roll their investment in the
Company into NAVF, therefore allowing exposure to NAVF's active management
approach. The Board believes that NAVF's approach is differentiated from many of
its peers, focuses on unlocking value in cash-rich small and mid-cap Japanese
companies and is well aligned with recent developments in Japanese corporate
governance and with its structure as a listed UK investment trust.
b) Cost contribution - Rising Sun, the investment manager of NAVF, has
demonstrated its conviction in the combined fund by offering to underwrite the
Company's current estimated costs of the proposed merger up to £800,000
including advisory and termination fees and associated VAT (the "Rising Sun
Contribution"). The current estimate of costs associated with the Proposals is
approximately £700,000 and therefore it is likely that the Company will not bear
any of the costs of the Proposals.
c) Injection of capital - The Proposals, together with the AJIT
Combination, will result in an inflow of capital into NAVF which can be deployed
at an advantageous time in the cycle, when recent government reforms support,
more than ever in the Board's view, NAVF's strategy of finding undervalued
Japanese listed companies and actively engaging with them to deliver improved
returns for shareholders.
d) Increase in scale, spread of costs - The combination with NAVF is
expected to improve the enlarged fund's liquidity for all shareholders as well
as spreading the fixed costs of NAVF, as the continuing entity, over a larger
pool of assets. As at the Latest Practicable Date (being prior to the
enlargement of NAVF through the Proposals and the AJIT Combination), the net
asset value of the Company was £76.8 million and the net asset value of NAVF was
£168.0 million.
e) Uplift in market value - The Proposals also have the potential to
deliver an uplift in the market value of a Shareholder's investment due to the
narrower discount to net asset value at which the NAVF Shares might reasonably
be expected to trade over the longer term.
f) Opportunity for substantial cash exit - The Proposals include a cash
exit opportunity of up to 25 per cent. of the Company's Ordinary Shares in
issue, providing Shareholders with the ability to realise part (or potentially
all) of their investment at a 2 per cent. discount to the AJG FAV per Share,
which is at a tighter level than the current discount to net asset value.
g) Premium segment, main market listing - In connection with (but prior to
completion of) the Scheme and the proposed combination of abrdn Japan Investment
Trust plc and NAVF ("AJIT Combination"), NAVF is proposing to migrate from the
Specialist Fund Segment of the Main Market of the London Stock Exchange to a
premium listing on the Main Market of the London Stock Exchange, which is
expected to improve the access of retail investors to the enlarged fund and
therefore potentially improve its share rating and liquidity. The Scheme is
conditional on the Migration but not the AJIT Combination.
NAVF
Shareholders who elect (or are deemed to elect) for the Rollover Option will be
electing to receive New NAVF Shares.
NAVF seeks to achieve its investment objective by taking advantage of the
corporate governance reforms in Japan and utilising the increased focus on good
corporate governance to engage with management teams, unlock value and encourage
investee companies to improve returns to their shareholders.
Further details on NAVF and its investment strategy are set out in Part 5 of the
Circular and in the NAVF Prospectus published on 1 September 2023.
It is expected that Noel Lamb, currently the Chairman of the Company, will join
the NAVF Board on completion of the Scheme.
Conditions of the Proposal
At a general meeting of NAVF to be held on 20 September 2023, the required
allotment and disapplication authorities will be sought, as well as NAVF
Shareholder approval for a revised investment policy in connection with the
Migration.
Implementation of the Proposals is subject to a number of conditions, including:
a) admission of the existing NAVF Shares to the FCA's Official List and to
trading on the Premium Segment of the Main Market pursuant to the Migration;
b) the recommendation of the boards of the Company and NAVF, to proceed
with the Proposals which may be withdrawn at any time (including, without limit,
for material adverse change reasons);
c) the NAVF Share Allotment Authorities relating, inter alia, to the
Scheme being approved by NAVF Shareholders and not having been revoked or
superseded;
d) passing of the Resolutions to be proposed at the Extraordinary General
Meeting or any adjournment thereof and upon any conditions of such Resolutions
being fulfilled; and
e) admission of the New NAVF Shares to the FCA's Official List and to
trading on the Premium Segment of the Main Market of the LSE.
Any condition may, subject to compliance with legal requirements, be waived with
the mutual agreement of each of the Company, NAVF and Rising Sun at any time up
to completion of the Scheme.
If any condition is not satisfied (or waived), the Proposals will not become
effective, the Company will not proceed with the winding-up and instead will
continue in existence. Shareholders of the Company will bear any abort costs
incurred if the Proposals do not become effective. In these circumstances, the
Directors will reassess the options available to the Company at that time.
Cost of Implementing the Scheme
The costs of the Scheme payable by the Company are expected to be approximately
£700,000 which, for the purposes of this calculation, is assumed to be
irrecoverable where applicable. Rising Sun has agreed to pay the Company's costs
of the Scheme up to £800,000, and therefore it is likely that the Company will
not bear any of the costs of the Scheme. To the extent that the Company's costs
of the Scheme are above £800,000, the Company will bear these costs.
The estimate of the Company's costs excludes the Liquidators' retention to cover
unknown liabilities (estimated at £100,000) and does not take account of any
dealing costs which will be incurred by the Company in disposing of assets in
order to fund the Cash Option and fund the Liquidation Pool.
Except for these purposes, it is expected that the Company will not liquidate
its portfolio but will remain invested in accordance with its published
investment policy and will largely transfer its portfolio to NAVF in specie
rather than as cash or cash equivalents. This structure has been agreed to
protect the investment trust status of the Company, to avoid unnecessary dealing
costs in connection with the disposal of the Company's portfolio and to avoid
unnecessary periods when Shareholders funds are not invested in the Japanese
market in accordance with the Company's investment policy.
Although there are not expected to be any costs incurred in connection with the
realignment of the portfolio in respect of the Rollover Pool, there may be
dealing costs incurred by NAVF following the completion of the Scheme to the
extent that NAVF disposes of the Company's existing portfolio and redeploys into
activist opportunities.
In the event that the Scheme does not proceed then each party will bear their
own costs in connection with the Proposals.
The Liquidators' retention is estimated at £100,000 and will be retained by the
Liquidators to meet any unknown or unascertained liabilities of the Company. To
the extent that some or all of the Liquidators' retention remains when the
Liquidators decide to close the liquidation, this will be returned to
Shareholders that were on the Register as at the Record Date.
Entitlements under the Scheme
Under the Scheme, each Shareholder on the Register on the Record Date may elect
to receive:
a) such number of New NAVF Shares as have a value equal to the proportion
of the Rollover Pool attributable to the number of Ordinary Shares so elected,
for the Rollover Option; or
b) subject to an overall 25 per cent. cap on such Elections (in aggregate),
an amount of cash equal to the Cash Pool NAV per Share multiplied by the number
of Ordinary Shares so elected, being the Cash Option.
Shareholders can make different Elections in respect of different parts of their
holdings.
The default option under the Scheme is to receive New NAVF Shares, meaning that
eligible Shareholders who, in respect of all or part of their holding of
Ordinary Shares, do not make a valid Election, or who do not make an Election,
will be deemed to have elected for New NAVF Shares in respect of such holding.
After allocating cash and other assets to the Liquidation Pool to meet all known
and unknown liabilities of the Company and other contingencies, there shall be
appropriated to the Cash Pool and the Rollover Pool the remaining assets of the
Company in the manner described in paragraph 3.3 in Part 3 of this document.
Such appropriation includes the application of a discount of 2 per cent. to the
AJG FAV per Share in relation to those Ordinary Shares in respect of which
Shareholders have elected to receive cash. The value arising from the
application of the Cash Option Discount shall be allocated to the Rollover Pool
for the benefit of Shareholders electing, or deemed to have elected for, the
Rollover Option. In the week commencing 16 October 2023, it is expected that the
Liquidators shall distribute to Shareholders who have elected for the Cash
Option their Cash Entitlements, being rounded down to the nearest penny.
For illustrative purposes only, had the Calculation Date been 5.00 p.m. on the
Latest Practicable Date, after deduction of the Dividend and assuming that the
maximum amount is elected for the Cash Option, the AJG FAV per Share would have
been 189.22 pence and the NAVF FAV per Share would have been 148.24 pence which,
for the Rollover Option, would have produced a conversion ratio of 1.28, meaning
for every Share held in AJG, 1.28 New NAVF Shares would be issued to
Shareholders who elected for the Rollover Option under the Scheme and, in
aggregate, 38,987,891 New NAVF Shares would have been issued to Shareholders who
elected for the Rollover Option under the Scheme.
The above figures are for illustrative purposes only and do not represent
forecasts. The AJG FAV per Share and NAVF FAV per Share and Shareholders'
entitlements under the Proposals may materially change up to the Calculation
Date as a result of, inter alia, changes in the value of investments.
Scaling back of Elections for the Cash Option
The maximum number of Ordinary Shares (in aggregate) that can be elected for the
Cash Option is 25 per cent. of the total number of Ordinary Shares in issue
(excluding Ordinary Shares held in treasury) as at the Calculation Date. Each
Shareholder who validly elects to receive the Cash Option in respect of up to 25
per cent. of their individual holding of Ordinary Shares as at the Calculation
Date, rounded down to the nearest whole share, will receive the full amount of
cash for which they have elected (the "Basic Entitlement"). Shareholders are
also entitled to elect to receive cash in respect of more than 25 per cent. of
their individual holdings of Ordinary Shares (such excess amount being an
"Excess Application"). However, if aggregate Elections are made for the Cash
Option which exceed 25 per cent. of the issued Ordinary Shares (excluding
Ordinary Shares held in treasury) as at the Calculation Date, Shareholders who
have made an Election for the Cash Option in excess of their Basic Entitlement
will have their Excess Applications scaled back in a manner which is, as near as
practicable, pro rata to the number of Ordinary Shares elected under such Excess
Applications. Ordinary Shares which are subject to such scaling back will be
deemed to have elected for the Rollover Option.
Dividends
The Company has declared a Dividend, in respect of the financial quarter ended
31 July 2023, of 1.96p per Ordinary Share with a record date of 25 August 2023
which will be paid on 29 September 2023.
It is not anticipated that any further dividends will be paid by the Company in
relation to the current financial period or for the period up to the liquidation
of the Company.
Shareholder Meeting
The implementation of the Proposals will require a general meeting of the
Company. The notice convening the Extraordinary General Meeting (to be held at
3.00 p.m. on 10 October 2023) is set out in the Circular.
The Resolutions to be considered at the Extraordinary General Meeting will, if
passed, approve the terms of the Scheme and associated amendments to the
Company's Articles set out in Part 3 of the Circular, place the Company into
liquidation, appoint the Liquidators, agree the basis of their remuneration,
authorise the Liquidators to enter into and give effect to the Transfer
Agreement with NAVF to renounce New NAVF Shares in favour of Shareholders in
accordance with the Scheme and authorise the Liquidators to apply to cancel the
listing of the Ordinary Shares with effect from such date as the Liquidators may
determine.
Each Resolution to be proposed either as a special resolution or an
extraordinary resolution will require at least 75 per cent. of the votes cast in
respect of it to be voted in favour, whether in person or by proxy, in order for
it to be passed.
If relevant, the Company will notify Shareholders of any changes to the proposed
format for the Extraordinary General Meeting as soon as possible via a
Regulatory Information Service and its website.
Recommendation and Voting Intentions
The Board considers the Proposals and the Resolutions to be proposed at the
Extraordinary General Meeting to be in the best interests of Shareholders as a
whole.
Accordingly, the Board unanimously recommends Shareholders to vote in favour of
the Resolutions, as the Directors intend to do in respect of their own
beneficial holdings, which total 170,000 Ordinary Shares (representing 0.42 per
cent. of the Company's total voting rights) as at 11 September 2023. The
Directors who hold Ordinary Shares (being Noel Lamb, Philip Ehrmann, Richard
Pavry and Michael Moule) intend to roll over their entire beneficial holdings of
Ordinary Shares into New NAVF Shares.
Expected Timetable
2023
Ex dividend date for the 24 August
Dividend
Record date for the Dividend 25 August
Dividend paid to Shareholders 29 September
Latest time and date for 1.00 p.m. on 5 October
receipt of Forms of Election
and TTE instructions from
Shareholders wishing to elect
for the Cash Option
Calculation Date 5.00 p.m. on 5 October
Record Date for entitlements 6.00 p.m. on 5 October
under the Scheme
Latest time and date for 3.00 p.m. on 6 October
receipt of Forms of Proxy and
CREST voting instructions
from Shareholders for the
Extraordinary General Meeting
Ordinary Shares disabled in close of business on 6 October
CREST
Trading in Ordinary Shares 7.30 a.m. on 10 October
suspended
Extraordinary General Meeting 3.00 p.m. on 10 October
Reclassification of Ordinary 10 October
Shares
Appointment of Liquidators 10 October
Effective Date for 10 October
implementation of the Scheme
Announcement of the results 10 October
of Elections, the AJG FAV per
Share, the Cash Pool NAV per
Share and the NAVF FAV per
Share
CREST accounts credited with, 8.00 a.m. on 11 October
and dealings commence in, New
NAVF Shares
Certificates despatched in week commencing 16 October
respect of New NAVF Shares
during or as soon as
practicable after
Cheques despatched to week commencing 16 October
Shareholders who elect for
the Cash Option in accordance
with their entitlements and
CREST accounts credited with
cash
Cancellation of listing of as soon as practicable after the Effective Date
Reclassified Shares
Note: All references to time in this document are to UK time. Each of the times
and dates in the above expected timetable (other than in relation to the
Extraordinary General Meeting) may be extended or brought forward. If any of the
above times and/or dates change, the revised time(s) and/or date(s) will be
notified to Shareholders by an announcement through a Regulatory Information
Service.
A copy of the Circularhas been submitted to the National Storage Mechanism and
will shortly be available for inspection
athttps://data.fca.org.uk/#/nsm/nationalstoragemechanism. The Circular will also
shortly be available on the Company's website at www.atlantisjapangrowthfund.com
where further information on the Company can also be found.
Capitalised terms used but not defined in this announcement will have the same
meaning as set out in the Circular dated 12 September 2023.
For further information please contact:
Enquiries:
Company Secretary
Hannah Hayward
Northern Trust International Fund Administration Services (Guernsey) Limited
Email:HH61@ntrs.com
Tel: +44 (0) 1481 745 417
Corporate Broker
Singer Capital Markets
Robert Peel, Alaina Wong(Investment Banking)
James Waterlow(Sales)
Tel: +44 (0) 20 7496 3000
Important Information
This announcement contains statements about the Company that are or may be
deemed to be forward looking statements. Without limitation, any statements
preceded or followed by or that includes the words "targets", "plans",
"believes", "expects", "aims", "intends", "will", "may", "anticipates",
"estimates", "projects" or words or terms of similar substance of the negative
thereof, may be forward looking statements.
These forward looking statements are not guarantees of future performance. Such
forward looking statements involve known and unknown risks and uncertainties
that could significantly affect expected results and are based on certain key
assumptions. Many factors could cause actual results to differ materially from
those projected or implied in any forward looking statement. Due to such
uncertainties and risks, readers should not rely on such forward looking
statements, which speak only as of the date of this announcement, except as
required by applicable law.
The distribution of this announcement in jurisdictions outside the United
Kingdom may be restricted by law and therefore persons into whose possession
this announcement comes should inform themselves about, and observe, such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities laws of such jurisdictions.
This information was brought to you by Cision http://news.cision.com
END
(END) Dow Jones Newswires
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