INH Investec H.I.Pf

 
TIDMICH TIDMINH 
 
25 February 2009 
 
Investec High Income Trust PLC 
 
Investec High Income Securities PLC 
 
PROPOSED VOLUNTARY WINDING-UP OF Investec High Income Trust plc ("THE COMPANY") 
 
AND Investec High Income Securities plc ("THE SUBSIDIARY") 
 
The Company announced on 14 January 2009 that given the substantial reduction 
in assets following the maturing of the bank debt and the planned winding up of 
the Subsidiary and the repayment of its zero dividend preference shares in 
March 2009, the most sensible strategy to adopt was to wind up the Company and 
that, accordingly, a resolution would be put to shareholders on 20 March 2009 
proposing to wind up the Company. A circular has now been sent to shareholders 
in the Company and the Subsidiary outlining the proposals relating to the 
liquidation of the Companies. 
 
Background to and reasons for the Proposals 
 
The Company was incorporated on 28 February 2001. It was launched in March 2001 
as an investment company with the objective of generating a high and growing 
level of income with the potential for capital growth from a portfolio 
principally invested directly or indirectly in equities. 
 
The Subsidiary was incorporated on 28 February 2001 as an investment company. 
It is a special purpose subsidiary formed solely to issue the ZDP Shares and 
lend the proceeds of such issue to the Company. 
 
The Subsidiary's ZDP Shares carry an entitlement to be redeemed at a fixed 
price of 195.54p per ZDP Share, such amount representing an accrued capital 
entitlement for the period to 20 March 2009. 
 
Pursuant to a Subscription Agreement dated 22 March 2001, in consideration of a 
loan made to the Company by the Subsidiary, the Company agreed to ensure that 
the Subsidiary would have sufficient assets on 20 March 2009 to satisfy the 
final capital entitlements of ZDP Shareholders. 
 
Once the ZDP Shareholders' entitlements are repaid there will be a relatively 
small pool of assets remaining. It is not efficient to manage such a small pool 
of assets and accordingly, as previously indicated in the interim report and 
accounts of the Company for the six month period to 30 September 2008, in the 
circumstances the Board considers that the best course of action is to place 
the Company into liquidation. 
 
The Proposals 
 
It is proposed that the Subsidiary and the Company be placed into members' 
voluntary liquidation on 20 March 2009 and that Laura Waters and Richard 
Setchim of PricewaterhouseCoopers LLP be appointed liquidators of the Company 
and the Subsidiary. The payment of fees to the Directors will cease from that 
point and no payments for loss of office will be made. 
 
Under the Proposals, the Subsidiary and the Company will be wound up by means 
of a members' voluntary liquidation in accordance with their respective 
Articles and pursuant to the provisions of section 84(l)(b) of the Insolvency 
Act 1986. The winding up of each of the Company and the Subsidiary will become 
effective immediately upon the passing of the Resolutions to be proposed at the 
General Meeting of each company. 
 
As at the close of business on 19 February 2009, the unaudited net assets of 
the Company, after accounting for the final capital entitlement of the ZDP 
Shareholders, were GBP10,040,000. At this date, the Company had GBP10,602,000 in 
liquid assets, and GBP16,914,000 in cash. The Company currently has sufficient 
assets to enable it to transfer, on or before 20 March 2009, enough cash to the 
Subsidiary to enable the Subsidiary to satisfy payment of the ZDP Shareholders' 
entitlements. If Shareholders vote in favour of the Proposals, on the 
liquidation of the Company and the Subsidiary, the Liquidators will set aside 
sufficient liquid assets in a Liquidation Fund to meet the Company's and the 
Subsidiary's liabilities including the costs of the Proposals. The Liquidation 
Fund will include a Retention which will be set at an amount that the 
Liquidators consider sufficient to meet any unascertained and unknown 
liabilities of the Company and the Subsidiary. This Retention is currently 
expected not to exceed GBP50,000. 
 
The expenses, including VAT, incurred in relation to the Proposals (including 
all printing costs, postage costs, professional advice and the Liquidators' 
fees) are currently estimated to amount to approximately GBP90,000 (equivalent to 
approximately 0.003p per Share). 
 
The Liquidators intend to satisfy the ZDP Shareholders' entitlement in 
accordance with the Subsidiary's Articles as soon as practicable after the 
Subsidiary is placed into liquidation. It is intended that ZDP Shareholders 
will receive their entitlement of 195.54p per ZDP Share in the week commencing 
23 March 2009. Once this entitlement is paid, it is not anticipated that there 
will be any other assets in the Subsidiary available for distribution to the 
Company as the only Ordinary Shareholder in the Subsidiary. 
 
Under section 107 of the Insolvency Act 1986, the Liquidators have a statutory 
duty to pay the Company's liabilities before distributing surplus assets to the 
Company's Shareholders. As part of that duty, the Liquidators must advertise to 
ascertain whether the Company has any creditors, as provided under Rules 4.182A 
and 11.2 of the Insolvency Rules 1986. In practice this advertisement for 
creditors' claims requires one month's notice. Accordingly, it is intended that 
on the expiry of the creditors' claims period, the Liquidators will make an 
initial distribution to Ordinary Shareholders in the Company. 
 
Accordingly, the Liquidators intend to make an initial and main liquidation 
distribution to the Company's Shareholders in the week commencing 27 April 
2009. 
 
Assuming no change in the net asset value of the Company, the Board estimates 
that, after allowing for the provisions detailed above and the VAT recoveries 
referred to below, the first cash distribution will be approximately 35.9p per 
Ordinary Share in the Company. 
 
Reclaim of VAT on management fees 
 
A test case (the "AIC case") was brought by the Association of Investment 
Companies (the "AIC") and JPMorgan Fleming Claverhouse Investment Trust plc 
with regard to the VAT treatment of fees relating to the management of 
investment trusts. Unlike the position regarding UK authorised unit trusts and 
UK open-ended investment companies, fees relating to the management of the 
assets of investment trusts were subject to value added tax at the standard 
rate. The AIC and JPMorgan Fleming Claverhouse Investment Trust plc won their 
case against HM Revenue & Customs ("HMRC") to establish that investment trusts 
are and should previously have been exempt from VAT on management fees. 
 
In view of this, managers can make a claim to HMRC for repayment of overpaid 
VAT which they have charged to investment trusts. HMRC will only refund to 
managers the net VAT which the manager paid to HMRC, i.e. the VAT charged to 
investment trusts less related VAT incurred by the manager, which the manager 
would previously have deducted on the basis that its fees were subject to 
VAT. 
 
As a result, Investec Investment Management Limited has agreed to pay the 
Company GBP294,000 by way of repayment of VAT paid under a mistake of law and 
this amount (less any appropriate provision for corporation tax) will be 
included in the initial distribution to Shareholders in the Company. To the 
extent that the total amount Investec Investment Management Limited is able to 
recover from HM Revenue and Customs in respect of VAT paid under a mistake of 
law by the Company (inclusive of interest) exceeds GBP294,000, such excess will 
be paid into the Liquidation Fund. The Subsidiary did not incur such investment 
management fees and is not subject to such recoveries. 
 
Third and Final Dividend 
 
In order to ensure the Company's continuing compliance with section 842 of the 
Income and Corporation Taxes Act 1988 and thus the retention of its investment 
trust status for the period up to the date on which the Liquidators are 
appointed, the Board has declared a final interim dividend on the Ordinary 
Shares of the Company of 1.24p per Ordinary Share of the Company. This dividend 
will be paid on 19 March 2009 to Shareholders on the Register as at 27 February 
2009. 
 
Arrangements with the Company's and Subsidiary's service providers 
 
Assuming the Proposals proceed, all arrangements with the Company's and 
Subsidiary's service providers will be terminated upon the Company and 
Subsidiary being placed into liquidation or when any services being performed 
in connection with the Proposals have been completed. No compensation is 
payable in connection with the termination of these contracts. 
 
Dealings, settlement and cancellation of listing 
 
The Registers will be closed and the Shares will be disabled in CREST at the 
close of business on 18 March 2009 and, to be valid, all transfers must be 
lodged before that time. The last day for trading in the Shares on the London 
Stock Exchange for normal settlement (in order to enable settlement prior to 
the Record Date) will be 13 March 2009. As from 16 March 2009, dealings should 
be for cash settlement only and will be registered in the normal way if the 
transfer, accompanied by documents of title, is received by the Registrar by 
5.00 p.m. on 18 March 2009. The Record Date, being the date for determining 
which Shareholders are entitled to receive liquidation distributions, is the 
close of business on 18 March 2009. Transfers received by the Registrar after 
5.00 p.m. on 18 March 2009 will be returned to the person lodging them. 
 
Dealings in Shares on the London Stock Exchange will be suspended at 7.00 a.m. 
on 20 March 2009 and, at the same time, the listing on the Official List will 
be suspended. Shareholders should be aware that, should the Proposals be 
implemented, the listing of the Shares on the Official List will be cancelled 
with effect from March 2010. 
 
It is intended that the ZDP Shareholders will be paid their cash entitlement 
(of 195.54p per ZDP Share) in the week commencing 23 March 2009. 
 
The Liquidators intend to make the initial distribution to Ordinary 
Shareholders in the week commencing 27 April 2009 or as soon as practicable 
thereafter. 
 
The Liquidation Fund 
 
The Liquidators will distribute the balance of the Liquidation Fund by one or 
more further distributions, after paying the costs of liquidation and settling 
all tax and other liabilities of the Company and the Subsidiary, to Ordinary 
Shareholders of the Company once any realisations in respect of the VAT reclaim 
have been received. On the basis of current information, the timing and quantum 
of any further distributions will depend upon the VAT recovery mentioned above 
and the receipt by the Liquidators of confirmation from the tax authorities 
that the Company has no outstanding liabilities. 
 
General Meetings 
 
The implementation of the Proposals will require Shareholders to vote in favour 
of the Resolutions at the General Meetings, which have been convened for 10.00 
a.m. and 10.05 a.m. on 20 March 2009. The General Meetings will be held at the 
offices of Investec Investment Management Limited, Woolgate Exchange, 25 
Basinghall Street, London EC2V 5HA. The Resolutions will require the approval 
of 75 per cent. or more of the votes cast at each General Meeting, whether in 
person or by proxy. The Proposals are conditional upon the passing of 
Resolution 1 at the General Meeting of the Company and the Subsidiary 
respectively. 
 
In accordance with the Articles of the Company, all Shareholders in the Company 
present in person or by proxy and entitled to vote shall, upon a show of hands, 
have one vote and, upon a poll, shall have one vote in respect of every Share 
held. 
 
The Articles of the Subsidiary are drafted in such a manner that in practice 
the Resolution being put to Shareholders for its winding-up will be passed. In 
accordance with the Articles of the Subsidiary, Shareholders in the Subsidiary 
present in person or by proxy and entitled to vote and who vote in favour of 
the Resolutions shall collectively have such total number of votes on a poll as 
is more than the number of votes which are required to be cast on such poll for 
the Resolutions to be carried. 
 
The quorum requirement for each General Meeting is at least two Shareholders 
present in person or by proxy (or, in the case of a corporation, by a duly 
appointed representative) and entitled to vote. 
 
If Resolution 1 is not passed at the General Meeting of the Company, the 
Company will continue as an investment company in its current form but will 
continue to be obliged to ensure that the Subsidiary, which will go into 
liquidation in any event as described above, has sufficient assets on 20 March 
2009 to satisfy the final capital entitlements of ZDP Shareholders. 
 
Recommendation 
 
The Board unanimously recommends Shareholders to vote in favour of the 
Resolutions to be proposed at the General Meetings. The Directors intend to 
vote in favour of the Resolutions in respect of their own beneficial holdings 
of Shares (amounting to 396,000 Ordinary Shares in the Company representing 
approximately 1.41 per cent. of the issued share capital of the Company and 
40,000 ZDP Shares in the Subsidiary representing approximately 0.56 per cent. 
of the issued share capital of the Subsidiary, in each case as at the date of 
this announcement). 
 
Expected Timetable 
 
Payment of third and final Interim                              19 March 2009 
Dividend 
 
Latest time and date for receipt of               10.00 a.m. on 18 March 2009 
Forms of Proxy for use at the General 
Meeting of the Company 
 
Latest time and date for receipt of               10.05 a.m. on 18 March 2009 
Forms of Proxy for use at the General 
Meeting of the Subsidiary 
 
Registers close and Record Date for                5.00 p.m. on 18 March 2009 
Shareholder entitlements in respect of 
the liquidations 
 
Suspension of Shares from trading on               7.00 a.m. on 20 March 2009 
the London Stock Exchange and 
suspension of the listing for the 
Shares on the Official List 
 
General Meetings of the Company and     10.00 a.m. and 10.05 a.m. on 20 March 
the Subsidiary respectively                                              2009 
 
Appointment of Liquidator in respect                            20 March 2009 
of the Company and the Subsidiary 
 
Expected distribution to ZDP                    Week Commencing 23 March 2009 
Shareholders* 
 
Expected first distribution to                  Week commencing 27 April 2009 
Ordinary Shareholders* 
 
Cancellation of listing                                            March 2010 
 
This announcement does not contain all the information which is contained in 
the Circular and Shareholders should read the Circular to make an informed 
decision on the proposals. 
 
Enquiries 
 
Martin Slade 
 
Authorised Representative of the Company Secretary, Investec Investment 
Management Limited 
 
020 7597 2000 
 
Notes 
 
A copy of the Circular will be submitted shortly to the UK Listing Authority 
and will be available for inspection at the UK Listing Authority's Document 
Viewing Facility, which is situated at: 
 
The Financial Services Authority 
 
25 The North Colonnade 
 
Canary Wharf 
 
London E14 5HS 
 
 
 
END 
 

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