TIDMDNE
RNS Number : 7057B
Dunedin Enterprise Inv Trust PLC
06 April 2017
6 April 2017
DUNEDIN ENTERPRISE INVESTMENT TRUST PLC
PROPOSED INTRODUCTION OF B SHARE SCHEME
AND NOTICE OF GENERAL MEETING
Introduction
The Company is pleased to announce further details of the
proposals to introduce a mechanism to enable surplus cash to be
returned to Shareholders in due course through a compulsory
procedure involving a bonus issue, on a pro rata basis, of B Shares
followed by the redemption of such B Shares at the option of the
Company.
The introduction of the B Share Scheme requires Shareholder
approval, which will be sought at a general meeting of the Company
to be held at 11.10 a.m. (or such later time as the AGM concludes)
on 11 May 2017. Subject to such approval being obtained at the
General Meeting, the Company will be able to make future capital
returns through the issue and redemption of B Shares without the
need for further Shareholder approval. This will be a less costly
way of returning capital than tender offers and can be achieved
more quickly. It also ensures that all Shareholders are treated
equally as capital is returned to all Shareholders on a pro rata
basis. The Board has been advised that, for tax purposes, returns
of capital through a B share Scheme should be treated as a capital,
rather than an income, receipt in the hands of the recipients.
Background to, and Details of, the B Share Scheme
In May 2016, Shareholders approved a change in investment
strategy whereby the Company ceased making new investments and
began a managed wind-down. The Company's objective is to conduct an
orderly realisation of its assets over a period of time, to be
effected in a manner that seeks to achieve a balance between
maximising the value of the Company's investments and progressively
returning cash to Shareholders.
After consideration, the Board believes that one of the fairest
and most efficient ways of returning cash to Shareholders is by
adopting a B Share Scheme whereby the Company will be able to issue
redeemable B Shares to Shareholders and to redeem them on each
Redemption Date without further action being required by
Shareholders.
The quantum and timing of Returns of Capital to Shareholders
following receipt by the Company of the net proceeds of
realisations of investments will be dependent on the Company's
liabilities (including any outstanding bank borrowings), its
uncalled fund commitments and general working capital requirements.
In particular, the net cash proceeds from realisations of
investments, after settlement of and provision for liabilities of
the Company, will normally be applied to the repayment of any
outstanding bank borrowings prior to returning capital to
Shareholders. Accordingly, the quantum and timing of Returns of
Capital are at the discretion of the Board, which will announce
details of each Return of Capital, including the relevant Record
Date, Redemption Price and Redemption Date, through an RIS
Announcement, a copy of which will be posted to Shareholders.
The adoption of a B Share Scheme will not limit the ability of
the Company to return cash to Shareholders by using other
mechanisms and, if the B Share Scheme is adopted, the Board will
continue to review its tax effectiveness and cost efficiency over
time. The Board's proposal to adopt a B Share Scheme at this point
in time should not be taken as any indication as to the likely
timing or quantum of any future returns of cash to Shareholders and
Shareholders should not conclude that returns of capital over the
next few months are likely.
Advantages of Returning Surplus Cash via B Shares
The advantages of returning capital via the B Share Scheme
rather than via a tender offer (a mechanism that has previously
been used by the Company) are that:
-- it reduces costs for the Company, as there should be no need
to prepare further circulars to give effect to future Returns of
Capital as is the case with tender offers. Details of each Return
of Capital would be notified to Shareholders through an RIS
Announcement (a copy of which would be posted to Shareholders) and,
subject to any change in existing United Kingdom tax law (and in
contrast to a tender offer where stamp duty at the rate of 0.5 per
cent. of the tender price is payable), no stamp duty would be
payable;
-- all Shareholders would be able to participate in the
redemption process and they would be treated equally;
-- subject to the Resolutions being passed at the General
Meeting, Shareholders should not be required to take any further
action to give effect to the B Share Scheme; and
-- there would be greater certainty for the Company regarding
the rate of returns of capital to Shareholders (unlike tender
offers, capital returns under the B Share Scheme would be mandatory
and would apply to all Shareholders on a pro rata basis).
However, for some Shareholders, there may be some disadvantages
in returning capital via the B Share Scheme, relating to the timing
and mandatory nature of the scheme. Unlike a tender offer,
Shareholders would not be given a choice as to whether or not to
participate in a Return of Capital and, for those Shareholders who
hold Shares through a number of different vehicles, they would not
be given the choice as to which of their vehicles should
participate in a Return of Capital. This could potentially lead to
adverse tax consequences for Shareholders as they may not be able
to structure their returns in the most tax efficient manner.
Circular to Shareholders
A circular containing further detail of the proposed B Share
Scheme and the notice convening the General Meeting will be posted
to Shareholders today. Copies of that circular have been submitted
to the National Storage Mechanism and will shortly be available for
inspection at www.morningstar.co.uk/uk/nsm and on the Company's
website (www.dunedinenterprise.com).
Enquiries
Graeme Murray Dunedin LLP T: 0131 225 6699
Sue Inglis Cantor Fitzgerald Europe T: 020 7894 8016
Definitions
In this announcement, unless the context otherwise requires, the
following expressions bear the following meanings:
AGM the annual general meeting of the
Company to be held at The Waldorf
Astoria Edinburgh - The Caledonian,
Princes Street, Edinburgh EH1 2AB
at 11.00 a.m. on 11 May 2017
B Share Scheme the proposed mechanism to enable
returns of capital through the issue
and redemption of B Shares
B Shares unlisted redeemable fixed rate preference
shares of 50p each in the capital
of the Company
Board the board of directors of the Company
(or any duly authorised committee
thereof) from time to time
Company Dunedin Enterprise Investment Trust
PLC
Directors the directors of the Company
FCA the Financial Conduct Authority
or its successor from time to time
General Meeting the general meeting of the Company
to be held at The Waldorf Astoria
Edinburgh - The Caledonian, Princes
Street, Edinburgh EH1 2AB at 11.10
a.m. (or such other time as the
AGM concludes) on 11 May 2017 (or
any adjournment of that meeting)
Ordinary Shares ordinary shares of 25p each in the
capital of the Company
Redemption in respect of any Return of Capital,
Date the date determined by the Board,
at its absolute discretion, on which
the B Shares allotted under that
Return of Capital will be redeemed
Redemption in respect of any Return of Capital,
Price the price at which B Shares allotted
under that Return of Capital are
to be redeemed, being 50p for each
B Share
Resolutions the resolution to be put to the
General Meeting to (i) adopt new
articles of association of the Company,
which will set out the rights of
the B Shares, and (ii) authorise
the Directors to capitalise from
time to time sums standing to the
credit of certain of the Company's
reserves and to apply such sums
in paying up in full up to 400,000,000
B Shares and to issue B Shares from
time to time up to an aggregate
nominal amount of GBP200 million
on a pro rata basis to the holders
of Ordinary Shares by way of bonus
issues
Return of each return of capital pursuant
Capital to the issue and redemption of B
Shares at such time or times as
determined by the Board, at its
absolute discretion
RIS Announcement an announcement to a regulatory
information service that is approved
by the FCA as meeting the primary
information provider criteria and
that is on the list of regulatory
information service providers maintained
by the FCA
Shareholders holders of Ordinary Shares
This information is provided by RNS
The company news service from the London Stock Exchange
END
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