BLP Blue Planet Investment Trust Plc

 
TIDMBLP 
 
JOINT ANNOUNCEMENT 
 
BLUE PLANET INTERNATIONAL FINANCIALS INVESTMENT TRUST PLC 
 
("INTERNATIONAL") 
 
BLUE PLANET WORLDWIDE FINANCIALS INVESTMENT TRUST PLC 
 
("WORLDWIDE") 
 
BLUE PLANET FINANCIALS GROWTH & INCOME INVESTMENT TRUSTS NOs (1 - 10) PLC 
 
(together "G&I" and each a "G&I Trust") 
 
26 MARCH 2012 
 
RECOMMENDED PROPOSALS TO MERGE INTERNATIONAL, WORLDWIDE AND G&I (TOGETHER THE 
"COMPANIES") - TO BE COMPLETED PURSUANT TO SCHEMES OF RECONSTRUCTION UNDER 
SECTION 110 OF THE INSOLVENCY ACT 1986 ("IA 1986") 
 
SUMMARY 
 
The boards of International, Worldwide and each G&I Trust (together the 
"Boards" and each a "Board") announced on 22 December 2011 that they were 
evaluating the possibility of effectively merging Worldwide and each G&I Trust 
(together the "Targets" and each a "Target") into International. The Boards are 
pleased to advise that discussions have now successfully concluded and they are 
today writing to set out the merger proposals to their respective shareholders 
for consideration. 
 
The merger will be effected by each Target being placed into members' voluntary 
liquidation pursuant to a scheme of reconstruction under Section 110 of the 
Insolvency Act 1986 ("Scheme" and together the "Schemes"). Shareholders should 
note that the merger by way of the Schemes will be outside the provisions of 
the City Code on Takeovers and Mergers. 
 
BENEFITS OF THE MERGER 
 
The Boards consider that the merger will bring a number of benefits to all of 
the groups of shareholders through: 
 
  * the creation of a single investment trust ("Enlarged Company") of a more 
    economically efficient size with a greater capital base over which to 
    spread annual running costs; 
 
  * a significant reduction in annual normal running costs for the Enlarged 
    Company compared to the aggregate annual running costs of the separate 
    Companies; 
 
  * the potential resumption of dividend payments to shareholders in the future 
    through the increased size and reduced running costs of the Enlarged 
    Company, which should also help improve liquidity in the secondary market 
    and reduce the share price discount to NAV; 
 
  * an increase in the NAV per share of the Enlarged Company through the 
    cancellation of the cross shareholdings between the Companies; 
 
  * a simplified structure with a better ability to take advantage of market 
    opportunities in a more responsive and efficient manner; and 
 
  * simplification of administration and corporate governance under one board 
    of directors. 
 
THE SCHEMES 
 
The mechanism by which the merger will be completed is as follows: 
 
  * each Target will be placed into members' voluntary liquidation pursuant to 
    a scheme of reconstruction under Section 110 IA 1986; and 
 
  * all of the assets and liabilities of each Target will be transferred to 
    International in consideration for the issue of new International shares 
    ("New Shares"), which will be issued directly to the shareholders of the 
    relevant Target. 
 
The Schemes will be completed on a relative net asset value basis as at the 
Calculation Date (this being 26 April 2012), adjusted to take into account the 
relevant company's allocation of the estimated merger costs. Each Scheme is 
conditional on the other Schemes becoming unconditional, which includes the 
proposed change to International's investment policy to be approved by 
International shareholders (as detailed below). Following completion of the 
Schemes, each of the Targets will be wound up. 
 
Each Scheme will require the approval by the shareholders of the relevant 
company of the relevant resolutions to be proposed at their general meetings 
(convened for 19 April 2012 for all Companies and 27 April 2012 in respect of 
the Targets alone), as well as certain other conditions applicable to each 
relevant Scheme. 
 
It is hoped that the merger will complete on 27 April 2012. However, if the 
conditions have not been satisfied or have been waived by 31 May 2012, the 
Schemes will not become effective and each company will continue in its current 
form. 
 
ILLUSTRATION OF THE MERGER 
 
Had the merger been completed on 29 February 2012 pursuant to the Schemes, the 
number of New Shares that would have been issued for every existing Target 
share held are as follows: 
 
                                                  Number of New Shares 
 
Worldwide share                                           1.25 
 
G&I share / G&I unit                                  0.138 / 1.38 
 
BACKGROUND TO THE COMPANIES 
 
International was launched in 1999, being renamed Blue Planet European 
Financial Investment Trust plc in 2001 and then Blue Planet International 
Financials Investment Trust plc in July 2011. International's current 
investment policy is to invest in securities issued by quoted financial 
companies located anywhere in the world with the objective of providing 
investors with a high rate of capital growth. As at 29 February 2012 (taken 
from the unaudited management accounts of International to that date), 
International had unaudited net assets of GBP6,108,486 (38.08p per share) and, in 
aggregate, 29 investments in equity securities with a carrying value of GBP8.2 
million, five investments in fixed income securities with a carrying value of GBP 
791,000 and GBP79,000 of cash or near cash assets. 
 
Worldwide was also launched in 1999, being renamed Blue Planet Worldwide 
Financials Investment Trust plc in 2001. Worldwide's investment policy is to 
invest in securities issued by quoted financial companies located anywhere in 
the world with the objective of providing investors with a high rate of total 
return. As at 29 February 2012 (taken from the unaudited management accounts of 
Worldwide to that date), Worldwide had unaudited net assets of GBP6,714,300 
(47.70p per Worldwide Share) and, in aggregate, 28 investments in equity 
securities with a carrying value of GBP5.4 million, five investments in fixed 
income securities with a carrying value of GBP1.2 million and GBP85,000 of cash or 
near cash. 
 
G&I are ten separate companies launched in 1996 but have, since launch, 
operated as a single entity. G&I were renamed Blue Planet Financials Growth & 
Income Investment Trusts Nos (1 - 10) plc in 2001. G&I's investment policy is 
to invest in securities issued by quoted financial companies located anywhere 
in the world with the objective of providing investors with a total return 
greater than Bloomberg World Financials Index. As at 29 February 2012 (taken 
from the unaudited management accounts of G&I to that date), G&I had aggregate 
unaudited net assets of GBP7,199,975 (5.27p per G&I Share and 52.68p per G&I 
Unit) and, in aggregate, 22 investments in equity securities with a carrying 
value of GBP5.0 million, six investments in fixed income securities with a 
carrying value of GBP2.0 million and GBP5,000 of cash or near cash. 
 
CHANGE TO THE INTERNATIONAL INVESTMENT POLICY 
 
The objective of the Boards is to create an enlarged and more efficient 
investment trust - one with a significantly lower total expense ratio. The 
International Board is seeking to complement this increased efficiency with a 
new, more diversified and flexible investment policy with the aim of further 
improving shareholder returns and reducing risk. 
 
Under the current investment policy, International's investments are restricted 
to the financial sector which has experienced severe difficulties in recent 
years resulting in it being one of the worst performing sectors of stock 
markets globally. Accordingly, it is proposed to change the investment policy 
of International to allow International to invest a proportion of the portfolio 
outside of the financial sector and diversify its portfolio generally. 
International will also adopt, as part of the proposed investment policy, an 
objective of providing investors with a combination of capital growth and 
income. 
 
The proposed investment policy is set out in full in the documents being sent 
out to shareholders. The change to the investment policy requires International 
shareholder approval, which is being sought at the International general 
meeting and is not subject to the merger becoming effective. The merger 
pursuant to the Schemes will not proceed, however, if the change to 
International's investment policy is not approved by International shareholders 
so as to provide certainty as to the investment policy which will apply to the 
Target funds brought across as part of the merger process. 
 
MERGER COSTS 
 
The Boards believe that the Schemes provide an efficient way of merging the 
Companies with a lower level of costs compared with other merger routes. The 
merger costs are expected to be GBP673,000 inclusive of VAT (including the 
secretarial and administration termination costs but assuming there are no 
investment management termination costs, an explanation of which is set out 
below). 
 
The merger costs (other than the Termination Costs (this being the investment 
management termination costs and the secretarial and administration termination 
costs)) will be split between the Companies proportionately by reference to 
their merger values (ignoring the merger costs and the Termination Costs). The 
secretarial and administration termination costs will be payable by the Targets 
but will be allocated equally between International, Worldwide and G&I on 
calculating their merger values, reflecting that all shareholders will benefit 
from the annual overall reduction in secretarial and administration fees from GBP 
300,000 to GBP196,000. The investment management termination costs (as further 
explained below) will be the responsibility of the relevant Target in respect 
of which the cost is incurred. The allocation of the merger costs will be taken 
into account in the calculation of the merger values. Completion of the Schemes 
at the same time is expected to result in the Merger Costs being lower per 
company than had a merger been completed with only one of the Targets (or 
another single company). 
 
The reduction in the normal running costs for the Enlarged Company compared to 
the Companies in aggregate is estimated to be over GBP350,000 per annum. On the 
assumption that immediately after the merger the net assets of the Enlarged 
Company remain the same, the normal running costs of the Enlarged Company is 
expected to represent 3.7% per annum of the expected net assets of the Enlarged 
Company. On the same basis, the Boards believe that the costs of the merger 
would be recovered within 24 months. Shareholders should note, however, that 
the cancellation of the cross shareholdings (as further detailed below), while 
reducing gross assets, is expected to result in an increase in the NAV per 
share in the Enlarged Company whereby the net effect when taking into 
consideration the merger costs is to increase the NAV per share of the Enlarged 
Company by 0.41% per share (compared against the NAV per International share as 
at 29 February 2012). 
 
MANAGEMENT AND ADMINISTRATION ARRANGEMENTS 
 
The investment management and secretarial and administration fees in respect of 
each of the Companies are as follows: 
 
  * a monthly investment management fee to Blue Planet Investment Managers Ltd 
    ("BPIM") of an amount equivalent to 0.125% of the gross assets of the 
    relevant company; and 
 
  * an annual secretarial and administration fee to Blue Planet Investment 
    Advisers Ltd ("BPIA") of GBP100,000 (ie GBP300,000 in aggregate across the 
    Companies per annum). 
 
The investment management arrangements as set out above will continue with BPIM 
following the merger. The annual secretarial and administration arrangements 
will be moved across to BPIM from BPIA to achieve efficiency and reduce costs 
for the benefit of all shareholders. This will be effected through the 
termination of the existing arrangement with BPIA and the entering into of 
equivalent arrangements with BPIM, save that the annual fee will be GBP196,000 
for the Enlarged Company. While this results in an aggregate saving of GBP104,000 
per annum across the Companies, the increase to the fee for the Enlarged 
Company in absolute terms reflects the need to spread across a single company 
the underlying costs incurred in providing the secretarial and administration 
services. Accordingly, following the merger, the Enlarged Company will pay to 
BPIM a monthly investment management fee of 0.125% of the gross assets of the 
Enlarged Company and an annual secretarial and administration fee of GBP196,000. 
 
With regard to each of the Targets, BPIM and BPIA have agreed that their 
appointments will be terminated from the merger effective date, subject to the 
relevant Schemes becoming effective and the following compensation payments in 
lieu of notice (Termination Costs): 
 
  * in respect of BPIM, an amount equivalent to 3% of any cash leakage (this 
    being equivalent to two years' investment management fees on any equivalent 
    amount not rolled into the Enlarged Company in respect of each Target (each 
    G&I Trust being treated separately) - BPIM may, in its sole discretion, 
    decide to waive the fee in respect of a Target if the amount of the cash 
    leakage in respect of that Target is immaterial; and 
 
  * in respect of BPIA, GBP208,000 (this being equivalent to two years savings in 
    respect of the reduced secretarial and administration fees for the Enlarged 
    Company) split equally between Worldwide and G&I (the allocation to G&I 
    split equally between each G&I Trust). 
 
In respect of a Target, cash leakage for these purposes means the aggregate 
estimated break value paid to dissenting Target shareholders by the liquidator 
agreed by the relevant Target Boards, BPIM and the liquidator. It is not 
intended to proceed with the merger if there are dissenting Target shareholders 
(unless they only represent an immaterial amount of the share capital of the 
Targets), this payment is not expected to be material. 
 
THE INTERNATIONAL BOARD 
 
The Boards have considered what the size and future constitution of the board 
of the Enlarged Company should be following the merger. It has been agreed 
that, subject to and immediately following the merger becoming effective the 
Board should comprise one director from each of the Companies. As a result, 
David Thomas and Kay Bendall will resign as directors of International and 
Kenneth Murray (being a director of Worldwide) and Victoria Killay (being a 
director of G&I) will be appointed as directors of International. This will 
reduce the aggregate number of directors across the Companies from 9 to 3 and 
will result in a cost saving of GBP88,000 per annum in aggregate across the 
Companies. 
 
CROSS SHAREHOLDINGS 
 
The Companies have, over the last few years, acquired shares in each other as 
part of each of their investment strategies. These shareholdings have been 
transferred to Investment Company Investments LLP as capital contributions to 
allow the proposed merger to proceed free of certain CA 2006 complications. 
 
Following completion of the merger, International will be the sole member of 
Investment Company Investments LLP whose only valuable assets will comprise 
shares in itself (it will also continue to hold the Target shares though these 
will be valueless and subject to the Targets being liquidated). International 
will arrange for all of the Shares held by Investment Company Investments LLP 
to be cancelled for no consideration as soon as reasonably practicable 
following the merger. 
 
The cancellation of the cross shareholdings between the Companies as part of 
the merger process is expected to result in an increase in the NAV per share of 
the Enlarged Company being the difference between their market value as will be 
reflected in their merger values and their net asset value. On the basis of the 
current NAVs, the increase is expected to be approximately 0.41% per share 
representing GBP76,021 in aggregate (based on the Companies' NAVs taken from 
their respective unaudited management accounts to 29 February 2012 and taking 
into consideration the estimated merger costs). 
 
INTERNATIONAL SHARE ISSUE AND BUY BACK AUTHORITIES 
 
International also proposes to renew and increase its authorities to issue 
shares (having disapplied pre-emption rights) for general purposes and make 
market purchases of shares reflecting the increased share capital of 
International following the merger. These are general annual authorities taken 
each year for general corporate purposes. 
 
EXPECTED TIMETABLE 
 
International General Meeting 12.00 noon on 19 April 2012 
 
Worldwide First General Meeting 12.03 p.m. on 19 April 2012 
 
G&I First General Meetings 1.00 p.m. to 1.45 p.m. on 19 April 2012 
 
Targets' register of members close 5.00 p.m. on 26 April 2012 
 
Calculation date for the Schemes after 5.00 pm on 26 April 2012 
 
Suspension of listing of Targets' shares 7.30 am 27 April 2012 
 
Worldwide Second General Meeting 12.00 noon on 27 April 2012 
 
G&I Second General Meetings 12.30 p.m. to 1.15 p.m. on 27 April 2012 
 
Effective Date for the transfer of assets 27 April 2012 
 
and liabilities of the Targets to International 
 
and the issue of New Shares 
 
Announcement of results of the Schemes 27 April 2012 
 
Admission of and dealings in the New Shares 30 April 2012 
 
issued pursuant to the Schemes to commence 
 
Certificates for New Shares issued pursuant 8 May 2012 
 
to the Schemes dispatched 
 
Cancellation of the Targets' share listing 8.00 a.m. on 29 May 2012 
 
DOCUMENTS AND APPROVALS 
 
International shareholders will receive a copy of a circular convening the 
International general meeting to be held on 19 April 2012 (together with the 
International prospectus) at which International shareholders will be invited 
to approve resolutions in connection with the change to the investment policy, 
the Schemes, the authority to issue International Shares and the renewal and 
increase of the general authorities to issue and repurchase shares. 
 
Targets' shareholders will receive a circular convening the relevant Targets' 
first general meeting on 19 April 2012 and the relevant Targets' second general 
meeting on 27 April 2012 (together with the International prospectus) at which 
relevant Targets' shareholders will be invited to approve resolutions in 
connection with the relevant Schemes. 
 
Copies of the International prospectus and the circulars for International, 
Worldwide and G&I have been submitted to the UK Listing Authority and will be 
shortly available for download both from Blue Planet's website 
(www.blueplanet.eu) and the national storage mechanism (www.hemscott/nsm.do). 
 
Company secretary and administrator for the Companies 
 
Blue Planet Investment Advisers Ltd 
 
Zahid Mehmood 
 
Telephone: 0131 466 6666 
 
Solicitors to the Companies 
 
SGH Martineau LLP 
 
Kavita Patel 
 
Telephone: 0800 763 2000 
 
Sponsor to International 
 
Matrix Corporate Capital LLP 
 
Jonathan Becher 
 
Telephone: 020 3206 7000 
 
The directors and proposed directors of International accept responsibility for 
the information relating to International and its directors and proposed 
directors contained in this announcement. To the best of the knowledge and 
belief of such directors and proposed directors (who have taken all reasonable 
care to ensure that such is the case), the information relating to 
International and its directors and proposed directors contained in this 
announcement, for which they are solely responsible, is in accordance with the 
facts and does not omit anything likely to affect the import of such 
information. 
 
The directors of Worldwide accept responsibility for the information relating 
to Worldwide and its directors contained in this announcement. To the best of 
the knowledge and belief of such directors (who have taken all reasonable care 
to ensure that such is the case), the information relating to Worldwide and its 
directors contained in this announcement, for which they are solely 
responsible, is in accordance with the facts and does not omit anything likely 
to affect the import of such information. 
 
The directors of each G&I Trust accept responsibility for the information 
relating to the G&I Trust of which they are a director and the information 
relating to such directors contained in this announcement. To the best of the 
knowledge and belief of such directors (who have taken all reasonable care to 
ensure that such is the case), the information relating to the G&I Trust of 
which they are a director and the information relating to such directors 
contained in this announcement, for which they are solely responsible, is in 
accordance with the facts and does not omit anything likely to affect the 
import of such information. 
 
SGH Martineau LLP are acting as legal adviser to the Companies and for no one 
else in connection with the matters described herein and will not be 
responsible to anyone other than the Companies for providing the protections 
afforded to clients of SGH Martineau LLP or for providing advice in relation to 
the matters described herein. 
 
Matrix Corporate Capital LLP, which is authorised and regulated in the United 
Kingdom by the Financial Services Authority, is acting as sponsor for 
International and no one else and will not be responsible to any other person 
for providing the protections afforded to customers of Matrix Corporate Capital 
LLP or for providing advice in relation to any matters referred to herein. 
 
corporate - 206869 - 3 
 
 
 
 
 
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