Update on Reconstruction (3426B)
16 Février 2011 - 1:33PM
UK Regulatory
TIDMENG
RNS Number : 3426B
Electric & General Inv Tst PLC
16 February 2011
16 February 2011
Electric & General Investment Trust PLC
Update on Reconstruction Proposals
The Board of Electric & General Investment Trust PLC (the
"Company") announced at the end of last year that it intends to put
forward proposals to offer shareholders the choice of rolling over
their investment without triggering a charge to capital gains tax
into an open ended fund, to be managed by Taube Hodson Stonex
("THS"), or realising all or part of their investment for cash.
The Board is now in a position to further update shareholders on
the likely timing and outline content of these proposals.
The Board has determined, following a review of all options
including possible closed ended alternatives, to put forward, in
due course, innovative proposals which it believes will be
attractive to shareholders.
The Board proposes to create a new independent open ended
investment company or OEIC (the "New Fund") which will be
independently administered by Yealand Administration. The New Fund
will have the following beneficial attributes:
- It will retain "Electric & General" within the title of
the New Fund.
- It will adopt all aspects of a typical corporate structure as
if it were a closed ended investment Company. Thus the New Fund
will have voting shares, will hold AGMs and will have an
independent board whose election is approved by shareholders and
who are tasked with overseeing the running of the New Fund,
including the appointment and/or dismissal of an investment
manager. It is proposed that the initial members of the board
comprise Gerry Aherne, John Pocock and Jonathan Ruffer. The New
Fund's corporate governance arrangements will seek to replicate
those of a closed ended investment company so far as possible.
- It will continue the Company's investment strategy and
approach. It is therefore proposed that the investment manager will
continue to be THS who will manage the assets of the New Fund in
the same way as they currently manage the assets of the Company.
Since their appointment as investment manager in 2004, THS has
outperformed the MSCI World Index, the Company's benchmark, on a
total return basis by more than 20%. It is expected that the yield
on the New Fund will be broadly similar to that of the Company
currently. THS has reassured the Board that there will be no
impairment to the manner in which the investment portfolio is
managed as a consequence of the change of corporate structure, save
that a marginally greater amount of cash is likely to be held
recognising the open ended nature of the structure.
- It will enable shareholders who wish to continue with their
investment to do so in a more cost effective form. The Board
expects the New Fund's total expense ratio will be lower than the
present total expense ratio of the Company. THS has agreed a
reduced investment management fee of 0.3 per cent. of net assets
(the existing performance fee arrangement will continue to apply,
as will the current cap of 1.0 per cent. on the aggregate of
management fee and performance fee). The resulting total expense
ratio will be determined by the amount of money rolled over,
however it is expected that irrespective of the resulting size of
the New Fund it will be at least 7 basis points better than that of
the Company (on a pound for pound fund comparison basis).
- It will remove any discount risk-all shares are issued and
redeemed at net asset value.
The Board believes the benefits of these proposals are:
- Shareholders have freedom of choice as to whether to continue
with their investment or to realise their investment.
- If shareholders elect to roll over without triggering a charge
to capital gains tax into the New Fund they will be electing for
continuity of investment approach and strategy, but in a more cost
effective form and with the removal of any discount risk.
Shareholders will continue to benefit from the aspects of corporate
governance that the existing structure facilitates.
Full details of these proposals will be published in due course.
As a consequence of the regulatory process to establish the New
Fund, including securing FSA approval, detailed proposals are
expected to be circulated by 30 June 2011. The precise timing will
depend on this regulatory process which cannot at this stage be
predicted with any degree of certainty.
Enquiries
William Simmonds 02075882828
J.P. Morgan Cazenove
End
This information is provided by RNS
The company news service from the London Stock Exchange
END
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