AFHI Aber.GD.C&I

 
TIDMAFHI 
 
28 June 2011 
 
Aberforth Geared Capital & Income Trust plc (the "Company") 
 
Publication of Circular 
 
Highlights 
 
  * The Company has reached agreement in principle with Aberforth Geared Income 
    Trust plc ("AGIT") on the terms of the reconstruction and winding up of the 
    Company, under which AGIT will act as a rollover option for investors in 
    the Company. 
 
  * Under the terms of the proposed reconstruction, Capital Shareholders and 
    Income Shareholders (other than Overseas Holders) will be able to exchange 
    some or all of their investment in the Company for ordinary shares in AGIT 
    and/or to realise some or all of their investment in the Company for cash. 
 
  * Among other benefits, the Proposals offer Shareholders who wish to realise 
    some or all of their investment the potential opportunity to do so at close 
    to NAV and more quickly than would be anticipated under a straightforward 
    liquidation. 
 
  * The Company expects to pay a final interim dividend to Income Shareholders 
    of not less than 12p per Income Share, with any income received by the 
    Company after the Effective Date being paid out to Income Shareholders by 
    the Liquidators as capital by 30 September 2011. 
 
Introduction 
 
Further to the announcement made by the Company on 21 April 2011, the Company 
has reached agreement in principle with Aberforth Geared Income Trust plc (" 
AGIT") on the terms of the reconstruction and winding up of the Company, under 
which AGIT will act as a rollover option for investors in the Company. AGIT is 
a split capital investment trust which was launched in 2010 and is also managed 
by the Company's investment manager, Aberforth Partners LLP. Accordingly, the 
Company has today issued a circular (the "Circular") to its shareholders (the " 
Shareholders") in connection with recommended proposals for the winding up and 
reconstruction of the Company (the "Proposals"). 
 
Under the terms of the proposed reconstruction, Capital Shareholders and Income 
Shareholders (other than Overseas Holders) will be able to exchange some or all 
of their investment in the Company for ordinary shares in AGIT and/or to 
realise some or all of their investment in the Company for cash. Overseas 
Holders will, if the Proposals become effective, receive cash in respect of 
their holdings. Under the terms agreed with AGIT (but subject to the success of 
a placing and offer for subscription by AGIT to finance in part the portfolio 
acquisition), AGIT would acquire part or all of the Company's investments at 
bid prices, the consideration to be satisfied in part by the issue of New AGIT 
Ordinary Shares to Shareholders electing to roll over their investment into 
AGIT, with the balance being payable by AGIT to the Company in cash. 
 
Under the Proposals, Income Shareholders will be entitled to elect to receive 
an amount in cash which is equal to their entitlement under the Articles of 
Association on a straightforward winding up of the Company (being a maximum 
entitlement of 100p per Income Share plus their share of all the Company's 
undistributed revenue reserves and net current revenue). This being the case, 
in accordance with the Articles, Income Shareholders are not entitled to vote 
on the Proposals. 
 
Shareholders (other than, in each case, Overseas Holders) who do not make a 
valid election under the Proposals will be deemed to have elected for New AGIT 
Ordinary Shares. Accordingly, Shareholders who wish to receive New AGIT 
Ordinary Shares under the Proposals in respect of their entire holding of 
Shares need not submit a Form of Election. Overseas Holders will, if the 
Proposals become effective, receive cash in respect of their holdings. 
 
In determining the structure and timing of the Proposals, the Board has to 
balance the interests of the Capital Shareholders and the Income Shareholders. 
The Proposals enable the Company to remain substantially fully invested, and 
therefore generating dividend income, up to the proposed winding up date in 
August 2011. But for the Proposals, the Board would already have commenced the 
realisation of the Company's investments in advance of the final winding up 
date in December 2011 and this would have resulted in a significant reduction 
in the dividend income otherwise received by the Company. A straightforward 
liquidation of the Company (in the absence of a rollover alternative) would 
require the Company's investment portfolio to be realised in the market, 
potentially at a material cost, in advance of 31 December 2011, the date on 
which the Company's bank borrowings are due to be repaid. 
 
Under the Proposals, it is anticipated that substantially all of the 
investments of the Company will be transferred to AGIT at significantly lower 
cost to Capital Shareholders than would be the case under a straightforward 
liquidation. In addition, Income Shareholders are expected to receive their 
fixed capital entitlement, which is expected to be 100p (either in cash or in 
the form of New AGIT Ordinary Shares), and the final dividend payments sooner 
than would be the case under a straightforward liquidation ahead of a planned 
winding up date of 31 December 2011. 
 
It is estimated that the costs of realising the Company's investment portfolio 
by way of a straightforward liquidation (in addition to the relevant fixed 
costs) would be in excess of three per cent. of the Company's net assets. On 
this basis, it is estimated that a straightforward liquidation could result in 
a reduction in the NAV per Capital Share of 7.1 per cent. On the basis of the 
respective values of the assets of the Company and of AGIT as at 23 June 2011 
and on the assumption that AGIT raises sufficient cash under the AGIT Placing 
and Offer to acquire the Company's entire investment portfolio, the costs of 
the Proposals which are to be incurred by the Company would be expected to 
represent a reduction in the NAV per Capital Share of less than one per cent. 
 
Information on Aberforth Geared Income Trust plc 
 
AGIT is a split capital investment trust which invests in a diversified 
portfolio of small UK quoted companies. Aberforth is also the investment 
manager of AGIT. At the date of this announcement, AGIT had 45,000,000 AGIT 
Ordinary Shares and 30,000,000 AGIT ZDP Shares in issue. The NAV per AGIT 
Ordinary Share at 23 June 2011 was 113.0p and the NAV per AGIT ZDP Share was 
107.8p. Its aggregate market capitalisation at that date was GBP85.1 million and 
it had unaudited net assets attributable to all Shareholders (with current year 
income) of GBP83.2 million. AGIT has a planned life lasting until 30 June 2017. 
 
Benefits of the Proposals 
 
The Directors consider that the Proposals have the following benefits for 
Shareholders participating in the Scheme: 
 
  * they offer Shareholders the opportunity to roll over their investments in a 
    tax efficient manner (without incurring an immediate liability to UK 
    capital gains tax) into AGIT Ordinary Shares; 
 
  * they enable Shareholders to maintain their exposure to a diversified 
    portfolio of small UK quoted companies through a closed-ended investment 
    vehicle without incurring significant reinvestment costs or portfolio 
    reorganisation costs; 
 
  * they enable Shareholders who elect for the Rollover Option to continue to 
    benefit from the management expertise of Aberforth; 
 
  * they offer Shareholders who wish to realise some or all of their investment 
    the potential opportunity to do so at close to NAV and more quickly than 
    would be anticipated under a straightforward liquidation; 
 
  * they avoid the need to realise all of the Company's small cap investment 
    portfolio in the market, to the extent that all or part of it is 
    transferred to AGIT under the Proposals, thereby saving potential 
    realisation costs which would otherwise be borne by Capital Shareholders; 
    and 
 
  * the Proposals would enable the Company to remain substantially fully 
    invested and geared up to the Effective Date and to generate income on its 
    portfolio for the benefit of Income Shareholders. 
 
Costs and expenses 
 
Under the Proposals, the Company will bear all of its own and AGIT's costs in 
relation to the Proposals net of any premium on the issue of new AGIT ZDP 
Shares under the AGIT Placing and Offer. 
 
On the basis of the respective values of the assets of the Company and of AGIT 
as at 23 June 2011 and on the assumption that AGIT raises sufficient cash under 
the AGIT Placing and Offer to acquire the Company's entire investment 
portfolio, it is estimated that the costs of the Company (which would be borne 
entirely by the Capital Shares) would be GBP223,000 in aggregate (amounting to 
2.1p per Capital Share). It should be emphasised that these figures are given 
for illustrative purposes only and should not be regarded as a forecast of the 
actual costs which will be borne by Capital Shareholders under the Proposals. 
 
If AGIT does not raise sufficient cash under the AGIT Placing and Offer to 
acquire the Company's entire investment portfolio, then Capital Shareholders 
who elect for the Cash Option will bear the costs of realising the remaining 
part of the investment portfolio which is not acquired by AGIT. 
 
If the Proposals do not become effective, the Company will bear abort costs 
estimated at approximately GBP210,000 (including irrecoverable VAT) (amounting to 
2.0p per Capital Share). 
 
Proposed interim dividend 
 
The Directors propose that, subject to the approval of the Scheme at the First 
Meeting, the Company should pay a final interim dividend to Income Shareholders 
on the Register at the close of business on 29 July 2011. This dividend, which 
is expected to be not less than 12p per Income Share, will represent as near as 
practicable (to the extent expected to be received in cash prior to the 
Effective Date) the entire revenue reserves and net current revenue of the 
Company and will be paid prior to the implementation of the Proposals. The 
Shares will go ex dividend on 27 July 2011. It is expected that the dividend 
will be announced on 25 July 2011. It is expected that any income received by 
the Company after the Effective Date will be paid out to Income Shareholders by 
the Liquidators as capital by 30 September 2011. 
 
General Meetings 
 
As noted above, in accordance with the Articles, Income Shareholders are not 
entitled to vote on the Proposals. The implementation of the Proposals will, 
therefore, require Capital Shareholders to vote in favour of resolutions to be 
proposed at general meetings of the Company (the "General Meetings") which have 
been convened for 10.00 a.m. on 25 July 2011 and 4.30 p.m. on 9 August 2011. 
The notices convening the General Meetings, which set out in full the terms of 
the resolutions which are to be proposed, are set out in the Circular. The 
General Meetings will be held at the offices of Aberforth Partners LLP, 14 
Melville Street, Edinburgh EH3 7NS. 
 
                              EXPECTED TIMETABLE 
 
All references are to UK time.                                           2011 
 
Latest time and date for receipt of forms of  10.00 a.m. on Thursday, 21 July 
proxy for the First Meeting 
 
Time and date from which it is advised that      8.00 a.m. on Monday, 25 July 
dealings in Shares should only be for cash 
settlement and immediate delivery of 
documents of title 
 
First Meeting                                   10.00 a.m. on Monday, 25 July 
 
Proposed final interim dividend announced                     Monday, 25 July 
 
Ex-dividend date for the Shares                            Wednesday, 27 July 
 
Latest time and date for receipt of Forms of  1.00 p.m. on Wednesday, 27 July 
Election or TTE instructions from 
Shareholders 
 
Record Date for the Scheme                           the close of business on 
                                                           Wednesday, 27 July 
 
Shares disabled in CREST                       7.30 a.m. on Thursday, 28 July 
 
Record date for the proposed final interim           the close of business on 
dividend                                                      Friday, 29 July 
 
Calculation Date                                     the close of business on 
                                                          Wednesday, 3 August 
 
Latest time and date for receipt of forms of    4.30 p.m. on Friday, 5 August 
proxy for the Second Meeting 
 
Payment of the proposed final interim                     by Monday, 8 August 
dividend 
 
Amendment to the Official List and dealings     8.00 a.m. on Monday, 8 August 
in Reclassified Shares commence on the London 
Stock Exchange 
 
Dealings in Reclassified Shares suspended      7.30 a.m. on Tuesday, 9 August 
 
Second Meeting                                 4.30 p.m. on Tuesday, 9 August 
 
Effective Date for implementation of the                    Tuesday, 9 August 
Proposals and commencement of the liquidation 
of the Company 
 
Admission to listing of the New AGIT Ordinary      8.00 a.m. on Wednesday, 10 
Shares and of the new AGIT Shares to be                                August 
issued pursuant to the AGIT Placing and Offer 
 
New AGIT Ordinary Shares issued in                 8.00 a.m. on Wednesday, 10 
uncertificated form credited to CREST                                  August 
accounts of Shareholders under the Scheme 
 
AGIT Ordinary Shares issued in uncertificated     11.00 a.m. on Wednesday, 10 
form credited to CREST accounts of new AGIT                            August 
Shareholders under the Placing and Offer 
 
CREST payments made in respect of cash                    Thursday, 11 August 
entitlements of Shareholders under the Scheme 
 
Cheques despatched to Shareholders in respect             Thursday, 11 August 
of cash entitlements under the Scheme 
 
Definitive certificates in respect of New          week commencing Monday, 15 
AGIT Ordinary Shares issued in certificated                            August 
form pursuant to the Scheme despatched to 
Shareholders entitled thereto 
 
Cancellation of listing of the Reclassified                     9 August 2012 
Shares 
 
Each of the times and dates in the above expected timetable (other than in 
relation to the Meetings) may be extended or brought forward without further 
notice. If any of the above times and/or dates changes, the revised time(s) and 
/or date(s) will be notified to Shareholders by an announcement through a 
Regulatory Information Service provider. 
 
Words and expressions defined in the Circular have the same respective meanings 
in this announcement. 
 
Enquiries: 
 
Aberforth Partners LLP            David Ross             0131 220 0733 
 
                                  John Evans 
 
                                  Alan Waite 
 
 
 
Dickson Minto W.S.                Douglas Armstrong      020 7628 4455 
 
A copy of the Circular has been submitted to the National Storage Mechanism and 
will shortly be available for inspection at http://www.hemscott.com/nsm.do 
 
For the avoidance of doubt, the Register will remain open until the Effective 
Date. 
 
Reclassified Shares are a technical requirement of the Scheme and will be 
created if the resolution to be proposed at the First Meeting is passed and 
becomes effective. 
 
END 
 

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