TIDMMIOT
Miton Income Opportunities Trust PLC (the "Company" or "MIOT")
30 August 2013
Publication of circular in relation to recommended proposals for the
reconstruction and voluntary winding up of the Company.
Background to the Proposals
Shareholders will be aware that the Board of Directors of Miton Income
Opportunities Trust PLC (the "Company" or "MIOT") announced on 15 February 2013
that it had agreed heads of terms with the board of directors of The Diverse
Income Trust plc ("DIVI") (the "DIVI Board") in respect of a proposed merger
between the Company and DIVI by way of a scheme of reconstruction of the
Company under section 110 of the Insolvency Act 1986 (the "Scheme"), whereby
the Company would be put into members' voluntary liquidation and Eligible
Shareholders would be able to roll over their investment into DIVI.
As announced at the time, the details of the Scheme would be put forward to
Shareholders shortly after 90 per cent. of the Company's portfolio of
investments had been re-aligned so as to be consistent with the amended
investment objective and policy of the Company approved by Shareholders at the
general meeting of the Company held on 5 April 2013.
On 2 July 2013, the Company announced that the Company's portfolio had been
re-aligned so as to be consistent with the amended investment objective and
policy of the Company and that the Board and the DIVI Board had therefore
agreed to proceed with the recommended Scheme on the terms set out in the
announcement of 15 February 2013.
The Board of Directors of the Company has today published a circular (the
"Circular") containing details of the Scheme and notices of General Meetings.
The Proposals
Under the Proposals, the Company will be wound up on 30 September 2013 by means
of a members' voluntary liquidation and its net assets transferred to DIVI,
which will act as the successor vehicle to the Company. In this way, Eligible
Shareholders will be given a tax-efficient rollover of their entitlements.
Eligible Shareholders will receive DIVI Ordinary Shares and DIVI will acquire
the net assets of the Company.
DIVI is an investment trust which is managed by Miton Capital Partners Limited
("MCP"). Shareholders will be aware that MCP was appointed investment manager
of the Company's portfolio with effect from 1 March 2013.
In order to consider and approve the Proposals, general meetings have been
convened for 23 September 2013 (the "First GM") and 30 September 2013 (the
"Second GM").
The Resolutions to be proposed at the General Meetings, on which all
Shareholders may vote, are required in order to obtain certain Shareholder
authorities in accordance with the Companies Act 2006, the Insolvency Act 1986
and the Listing Rules, as follows:
i. at the First GM, amongst other things, to approve the terms of the Scheme
to amend the Articles of Association to give effect to the Scheme and to
authorise the Liquidators to enter into and give effect to the Transfer
Agreement with DIVI, to distribute DIVI Ordinary Shares to Eligible
Shareholders in accordance with the Scheme and to purchase the interests of
any dissentients to the Scheme and to cancel the listing of the Shares,
with effect from or as soon as possible after the Effective Date; and
ii. at the Second GM, amongst other things, to appoint the Liquidators and to
wind up the Company.
The Proposals are conditional, amongst other things, on Shareholder approvals
being given at the First GM convened for 23 September 2013 and the Second GM
convened for 30 September 2013 (or, in each case, at any adjournment of such
Meeting). Notices of the First GM, to be held on 23 September 2013 at 9.30 a.m.
and the Second GM, to be held on 30 September 2013 at 9.30 a.m., both at
1 Finsbury Circus, London EC2M 7SH, are set out at the end of the Circular posted
to Shareholders today.
As announced on 15 February 2013, M&G Investment Management Limited, acting as
the appointed investment manager and agent on behalf of The Prudential
Assurance Company Limited, which currently holds 6,570,597 Shares (representing
40.9 per cent. of the issued Share capital of the Company), has given the
Company an irrevocable undertaking to vote (or procure to vote) in favour of
the Proposals in respect of the Shares held by it.
Separately, AXA Investment Managers UK Limited, as agent acting on behalf of
its underlying clients, who currently hold 2,302,805 Shares in aggregate
(representing 14.3 per cent. of the issued Share capital of the Company), has
given the Company a non-binding letter of intent to vote in favour of the
Proposals in respect of the above-mentioned Shares.
Benefits of the Proposals
The Directors consider that the Proposals should have the following benefits
for Shareholders as compared to their current position, or under a liquidation:
i. they enable Eligible Shareholders to maintain their investment exposure
through an investment trust with a similar investment objective and policy
to that of the Company;
ii. they enable Eligible Shareholders to roll over their investment into an
investment trust with a strong performance track record in the UK small and
mid-cap market sector;
iii. investment in DIVI will provide Eligible Shareholders with a holding in a
larger investment trust than the Company, with greater secondary market
liquidity;
iv. holders of DIVI Ordinary Shares may be able to redeem DIVI Ordinary Shares
through the Annual Redemption Facility (further described below);
v. Shareholders will not suffer the dealing costs that would be incurred on
the full realisation of the Company's portfolio in the event of a simple
winding-up;
vi. Shareholders who may be subject to UK capital gains tax or corporation tax
should be able to roll over their investment into DIVI and thereby continue
to receive investment returns without triggering an immediate liability to
UK capital gains tax or corporation tax; and
vii. the use of a rollover vehicle will enable Shareholders to avoid dealing
and other costs associated with a purchase of DIVI Ordinary Shares in the
secondary market.
Conditions to the Scheme
The Scheme is conditional, among other things, upon:
(i) the passing of all Resolutions to be proposed at the First GM and the
Second GM (or at any adjournments thereof) and upon any conditions of such
Resolutions being fulfilled;
(ii) the passing of the DIVI Resolution;
(iii) the admission of the DIVI Ordinary Shares to be issued to Eligible
Shareholders pursuant to the Scheme to listing on the premium segment of the
Official List and to trading on the main market of the London Stock Exchange;
(iv) Gervais Williams of MCP continuing to be the lead portfolio manager
responsible for the investment management of the portfolio of investments of
DIVI;
(v) the provisions relating to the Annual Redemption Facility not having been
removed from the DIVI Articles; and
(vi) the Directors resolving to proceed with the Scheme.
In the event that condition (ii), (iii), (iv), (v) or (vi) fails to be
satisfied, the Second GM will be adjourned indefinitely and the Scheme will
lapse.
The Diverse Income Trust PLC
DIVI is a closed-ended investment company incorporated in England and Wales on
30 March 2011 with an investment objective of providing its shareholders with
an attractive level of dividends coupled with capital growth over the
long-term. DIVI carries on business as an investment trust within the meaning
of Chapter 4 of Part 24 of the Corporation Tax Act 2010.
As at the Latest Practicable Date (23 August 2013), DIVI had unaudited net
assets of approximately GBP145 million (69.5 pence per DIVI Ordinary Share) and a
market capitalisation of approximately GBP150 million.
In the period from admission of the DIVI Ordinary Shares to the premium segment
of the Official List on 28 April 2011 ("DIVI Admission") to the Latest
Practicable Date, the price per DIVI Ordinary Share has increased by 44.0 per
cent. with a net asset value total return of approximately 42.9 per cent,
outperforming the FTSE All-Share Index and ranking the Company as the top
performing company in the UK Income and Growth sector over that period on a net
asset value total return basis. Over the same period, the DIVI Ordinary Shares
have traded at an average premium to net asset value of 2.3 per cent.
As at the Latest Practicable Date, the DIVI Ordinary Shares traded at a premium
to the prevailing cum income net asset value of 3.4 per cent. as compared to an
average premium for the UK Income and Growth sector of 1.6 per cent.
For further details on DIVI please refer to the Circular and the DIVI
Prospectus.
Mechanics of the Scheme
If the Scheme is to be implemented, MCP, together with the Administrator, will
upon the Calculation Date, calculate the total assets of the Company as being
the aggregate value thereof as valued in accordance with the provisions
detailed in the Circular (the "Total Assets"). The calculation will be reviewed
by Ernst & Young LLP, the independent accountants appointed by the Company. On
the Calculation Date, MCP, in consultation with the Liquidators, will procure
that the Company finalises the division of the Total Assets and appropriate
them to two separate and distinct funds:
(i) The Liquidation Fund - There will be appropriated to the Liquidation Fund
such cash of the Company of a value which is estimated by the Liquidators to be
sufficient to meet the current and future, actual and contingent liabilities of
the Company (further details are provided in the Circular); and
(ii) The Rollover Fund - There will then be appropriated to the Rollover Fund
such assets, cash and other rights of the Company from the remaining assets of
the Company after the appropriation referred to in (i) above to the Liquidation
Fund. The amount appropriated to the Rollover Fund will amount to the aggregate
"Total FAV" of all the Shares.
On or before the Effective Date, the Liquidators will deliver to DIVI and MCP
(in its capacity as the manager of DIVI) particulars of the assets proposed to
be comprised in the Rollover Fund together with a schedule certified by the
Registrar of the names and addresses of each of, and the number of Shares held
by, the Eligible Shareholders as shown on the Register who will participate in
the Scheme.
On the Winding-up Date, or as soon as practicable thereafter, the Liquidators
will enter into, and will procure that the Company enters into, the Transfer
Agreement (subject to such modifications as may be agreed by the parties
thereto) with DIVI whereby the Liquidators will procure the transfer of the
assets in the Rollover Fund to DIVI (or its nominee) in exchange for the
allotment of DIVI Ordinary Shares to the Liquidators as nominees for the
Eligible Shareholders.
The Liquidation Fund will be applied by the Liquidators in discharging all
current and future actual and contingent liabilities of the Company and if
there will be any balance remaining after discharging such liabilities, the
Liquidators will in due course pay the same to Shareholders on the Register on
the Winding-up Date pro-rata to their respective holdings of Shares, provided
that if any such amount payable to any Shareholder is less than GBP5.00, it will
not be paid to such Shareholders but will be aggregated and paid by the
Liquidators to DIVI. The Liquidators will also be entitled to make interim
payments to Shareholders in proportion to their holdings of Shares. For these
purposes, any Shares held by Dissenting Shareholders will be ignored.
Issue of DIVI Ordinary Shares
The number of DIVI Ordinary Shares to be issued to the Liquidators pursuant to
the Scheme (as nominees for the Eligible Shareholders) will be calculated by
reference to the DIVI FAV per Share and the MIOT FAV per Share.
Each Eligible Shareholder will be entitled to such number of DIVI Ordinary
Shares as have (at the DIVI FAV per Share) an aggregate value equal to the
Total FAV of such Eligible Shareholder's holding of Shares (i.e. the MIOT FAV
per Share multiplied by the number of Shares held by such Eligible Shareholder)
as at the Calculation Date, provided that the number of DIVI Ordinary Shares to
be issued to Shareholders will be rounded down to the nearest whole number and
fractional entitlements will not be issued.
The DIVI FAV per Share will be calculated at a 2.5 per cent. premium to the net
asset value of a DIVI Ordinary Share at the Calculation Date (calculated on a
cum-income, debt at fair value, pre-costs of the Scheme basis and adjusted to
take into account any dividends declared, but not paid, prior to the Effective
Date by DIVI to holders of DIVI Ordinary Shares). The MIOT FAV per Share will
be calculated at the net asset value of a Share (with any debt at fair value)
as at the Calculation Date and adjusted by deducting the value of the cash and
other assets of the Company comprising the Liquidation Fund.
The DIVI FAV per Share and the MIOT FAV per Share will be calculated as at
5.00 p.m. on the Calculation Date using each company's respective accounting
policies, which are substantially the same. Investments which are listed,
quoted or traded on a recognised stock exchange will be valued by reference to
the bid price on the principal stock exchange on which the relevant investment
is listed, quoted or dealt.
The number of DIVI Ordinary Shares to be issued pursuant to the Scheme, the
DIVI FAV per Share and the MIOT FAV per Share will be announced through the
Regulatory Information Service as soon as practicable following the Calculation
Date.
The DIVI Ordinary Shares to be issued to Eligible Shareholders pursuant to the
Proposals will rank pari passu with the existing DIVI Ordinary Shares already
in issue, except that Eligible Shareholders are not entitled to any dividend in
respect of DIVI Ordinary Shares declared by DIVI prior to the Effective Date
(even if such dividend is to be paid on a date that is after the Effective
Date, when Eligible Shareholders will have received DIVI Ordinary Shares
pursuant to the Scheme), as referred to below.
For illustrative purposes only, had the Calculation Date been 23 August 2013
(being the latest practicable date prior to the publication of this
announcement), the MIOT FAV per Share and DIVI FAV per Share would have been
505.92 pence and 71.37 pence, respectively. The Proposals would have resulted
in the issue of 113,944,990 DIVI Ordinary Shares to Eligible Shareholders,
representing approximately 35.3 per cent. of the issued ordinary share capital
of the enlarged DIVI.
Shareholders should note that the illustrative entitlements above do not take
into account the payment by the Company of the special dividend of 10.06 pence
per Share which will be paid to Shareholders prior to implementation of the
Scheme nor DIVI's first interim dividend for the period ending 31 August 2013
which is expected to be declared on or around 17 September 2013.
Special Dividend
The Directors have declared a special dividend of 10.06 pence per Share (the
"Dividend") and Shareholders who are on the Register as at 6.00 p.m. on
13 September 2013 will be entitled to receive such dividend, subject to the
passing of the Resolutions at the First GM. The Dividend represents the
entirety of the Company's revenue reserves as at 31 July 2013. The Dividend
will be paid prior to the implementation of the Scheme and by no later than
25 September 2013. The ex-dividend date will be 11 September 2013.
It is not anticipated that there will be further dividends paid in relation to
the current financial period or for the period up to the liquidation of the
Company.
DIVI Annual Redemption Facility
Whilst Shareholders will not be offered an immediate cash exit under the
Scheme, the DIVI Articles confer upon the holders of DIVI Ordinary Shares the
right to request the redemption of all or any of their DIVI Ordinary Shares on
any Redemption Point (the "Annual Redemption Facility"). The next Redemption
Point is expected to occur on 30 May 2014. Therefore, Eligible Shareholders
receiving DIVI Ordinary Shares pursuant to the Scheme will have the right to
request the redemption of all or any of their DIVI Ordinary Shares at the next
Redemption Point in May 2014.
The DIVI Board will have absolute discretion to operate the Annual Redemption
Facility on any given Redemption Point and to accept or decline in whole or
part any request for redemption. Whilst it is not expected that the DIVI Board
would generally exercise this discretion, holders of DIVI Ordinary Shares
should place no reliance on the DIVI Board exercising its discretion to permit
a request for redemption in any particular case. The DIVI Board's determination
as to whether to permit or decline a request for redemption (in whole or in
part), together with their reasoning for their decision, will be documented. In
the event that the DIVI Board declines a request for redemption for a
particular Redemption Point, the DIVI Board will be permitted to propose an
additional Redemption Point at its absolute discretion.
The DIVI Ordinary Shares may only be redeemed or purchased by DIVI out of
distributable reserves or the proceeds of a fresh issue of shares made for that
purpose. In order to maintain its status as an investment trust, in accordance
with regulation 19 of the Investment Trust (Approved Company) (Tax) Regulations
2011, DIVI must retain not more than 15 per cent. of the income it receives in
an accounting period and accordingly to the extent such income is required to
be distributed by way of dividend it will not be available to fund redemptions
or repurchases of the DIVI Ordinary Shares.
The DIVI Board has the absolute discretion to elect to calculate the Redemption
Price applying on any Redemption Point on either of the following bases:
(i) Redemption Price calculated by reference to dealing value per DIVI Ordinary
Share:
The Redemption Price will be equal to the dealing value per DIVI Ordinary Share
calculated as at the close of business on the Business Day immediately
preceding the relevant Redemption Point; the "dealing value" is to be
calculated in accordance with the valuation methods set out in detail in the
DIVI Prospectus; or
(ii) Redemption Price calculated by reference to a separate Redemption Pool:
The DIVI Board may elect to calculate the Redemption Price by reference to the
amount generated upon the realisation of a Redemption Pool created for the
purpose of funding the redemption.
DIVI may, prior to a Redemption Point, in its sole discretion, invite investors
to purchase DIVI Ordinary Shares which are the subject of requests for
redemption. The price at which such transfers will be made will not be less
than the Redemption Price which the holder of DIVI Ordinary Shares requesting a
redemption would have received if the Redemption Price had been determined by
reference to the dealing value per DIVI Ordinary Share applicable on the
relevant Redemption Point. In circumstances where there are investors willing
to acquire the DIVI Ordinary Shares as referred to in this paragraph, such DIVI
Ordinary Shares will not be redeemed by DIVI but instead will be transferred to
the incoming investors with effect from the relevant Redemption Point.
At the most recent Redemption Point of 31 May 2013, 0.02 per cent. of the DIVI
Ordinary Shares then in issue were submitted for redemption. Investors were
found for such DIVI Ordinary Shares and, accordingly, such shares were not
redeemed by DIVI.
Appointment of the Chairman to the DIVI Board
It is proposed that, subject to the Scheme being approved, Tom Bartlam will be
appointed as a non-executive director of DIVI with effect from the Effective
Date.
As a director of DIVI, Tom Bartlam will be subject to the DIVI Articles and the
terms of his letter of appointment. He will be entitled to an annual director's
fee of GBP25,000, which is the usual annual fee payable to non-executive
directors of DIVI (other than the chairman), and will be entitled to costs and
expenses reasonably incurred by him in connection with the performance of his
duties as a director of DIVI. Tom Bartlam will not be eligible for any bonuses,
share options or long-term incentive schemes or other performance-related or
pension benefits. He be subject to re-election at the annual general meeting of
DIVI to held in October 2014, and will be subject to annual re-election
thereafter. Compensation will not be made upon any early termination of my
appointment.
Conditionality of the Proposals
Implementation of the Proposals is conditional, among other things, upon the
Resolutions being passed at the General Meetings and on the DIVI Resolution
being passed by the shareholders of DIVI. In the event that any of the
Resolutions to be proposed at the General Meetings are not passed, or the DIVI
Resolution is not passed, or any other condition of the Proposals is not met,
the Proposals will not be implemented and the Company will be required to meet
its own costs. The Board may then have to consider alternative proposals for
the future of the Company, the implementation of which will result in
additional costs being incurred.
General Meetings
The implementation of the Proposals will require two General Meetings of the
Company which have been convened for 23 September 2013 (the "First GM") and 30
September 2013 (the "Second GM"). The notices convening the General Meetings
are set out at the end of the Circular. The General Meetings will be held at
1 Finsbury Circus, London EC2M 7SH.
All Shareholders are entitled to attend and vote at the First GM and the Second
GM.
The Resolutions to be proposed at the General Meetings will, if passed, approve
the Scheme and put the Company into liquidation, as further described below.
At the First GM Resolutions will be proposed which, if passed, will:
i. amend the Articles of Association in order to implement the Scheme, make
provision for the issue of the relevant numbers of DIVI Ordinary Shares to
Eligible Shareholders on a winding-up of the Company, require the Second GM
to be convened and introduce weighted voting rights for the winding-up
Resolution at the Second GM. The introduction of weighted voting rights for
the winding-up Resolution at the Second GM will ensure that the Scheme, as
approved by Shareholders at the First GM, will take effect;
ii. authorise the implementation of the Scheme by the Liquidators, including
the entry into the Transfer Agreement by the Liquidators, the allotment of
the relevant number of DIVI Ordinary Shares by DIVI to the Liquidators who
will renounce such relevant number of DIVI Ordinary Shares in favour of
Eligible Shareholders and authorise the Liquidators to purchase the
interests of Dissenting Shareholders; and
iii. to cancel the listing of the Company's Shares, with effect from or as soon
as possible after the Effective Date, or such other date as the Liquidators
will determine.
If the Scheme is not approved by Shareholders at the First GM the Proposals
will be abandoned. In this event, the Board will consider alternative proposals
for the future of the Company, the implementation of which will result in
additional costs being incurred.
At the Second GM, a special Resolution will be proposed which, if passed, will
place the Company into liquidation, appoint the proposed Liquidators and agree
the basis of their remuneration, instruct the Company Secretary to hold the
books to the Liquidators' order, and provide the Liquidators with appropriate
powers to carry into effect the amendments to the Articles of Association made
at the First GM. The Resolutions to be proposed at the Second GM are conditional
upon the Directors resolving to proceed with the Scheme.
The special Resolutions will require the approval of 75 per cent. or more of
the votes cast at the Meeting, whether in person or by proxy.
The Directors intend to vote in favour, where possible, of all of the Resolutions
to be proposed at the General Meetings in respect of their beneficial holdings
amounting, in aggregate, to 38,000 Shares representing less than 0.24 per cent.
of the Shares in issue in the Company.
Copies of the Circular have been submitted to the National Storage Mechanism
and will shortly be available for inspection at www.morningstar.co.uk/uk/nsm
Expected Timetable
Ex dividend date for the Dividend 11 September
Record date for the Dividend 6.00 p.m. on 13 September
Latest time and date for receipt of Forms of 9.30 a.m. on 19 September
Proxy from Shareholders for First GM
First GM 9.30 a.m. on 23 September 2013
Dividend paid to Shareholders on or around 25 September
Calculation Date 5.00 p.m. on 25 September
Latest time for receipt of Forms of Proxy from 9.30 a.m. on 26 September
Shareholders for Second GM
Record Date, Register closed and Shares 6.00 p.m. on 27 September
disabled in CREST
Suspension of listing of Shares 7.30 a.m. on 30 September
Second GM 9.30 a.m. on 30 September 2013
Winding-up Date and Transfer Agreement executed 30 September
Effective Date and Transfer Agreement 30 September
implemented
CREST accounts credited with new DIVI Ordinary 1 October
Shares
Certificates dispatched in respect of new DIVI on or as soon as practicable
Ordinary Shares after 1 October
Cancellation of listing of Shares 1 October
The times and dates set out in the expected timetable of events above and
mentioned throughout this announcementmay be adjusted by the Company, in which
event details of the new times and dates will be notified, as requested, to the
UK Listing Authority, the London Stock Exchange and, where appropriate,
Shareholders.
All references in this announcement are to London times.
Unless otherwise stated in the announcement, capitalised terms are as defined
in the Circular.
This announcement does not contain all the information which is contained in
the Circular and Shareholders should read the Circular and the prospectus
published by DIVI today in their entirety.
Enquiries:
Miton Income Opportunities Trust PLC
Tom Bartlam
07788 911 184
Cenkos Securities plc
Sapna Shah
020 7397 1922
Cenkos Securities plc, which is authorised and regulated in the United Kingdom
by the Financial Conduct Authority, is acting for the Company andfor no-one
else in connection with the contents of this announcement, and will not be
responsible to anyone other than the Company for providing the protections
afforded to clients of Cenkos Securities plcnor for providing advice in
connection with the contents of this announcement or any other matter referred
to herein. Cenkos Securities plcis not responsible for the contents of this
announcement. This does not exclude or limit any responsibilities which Cenkos
Securities plcmay have under the Financial Services and Markets Act 2000 or the
regulatory regime established thereunder.
END
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