NOT
FOR
RELEASE,
PUBLICATION
OR
DISTRIBUTION,
IN
WHOLE
OR
IN
PART,
DIRECTLY
OR INDIRECTLY, TO US PERSONS OR IN OR INTO THE UNITED STATES, OR INTO OR FROM
CANADA, AUSTRALIA, JAPAN, NEW
ZEALAND AND THE REPUBLIC OF SOUTH
AFRICA.
This announcement is an advertisement and not a
prospectus. This announcement does not constitute or form part of,
and should not be construed as, any offer for sale or subscription
of, or solicitation of any offer to buy or subscribe for, any
securities in Aberforth Split Level Income Trust plc (the
"Company")
or Aberforth Geared Value & Income Trust plc
(“AGVIT”) or securities in any other entity, in any jurisdiction,
including the United States, nor
shall it, or any
part
of
it,
or
the
fact
of
its
distribution,
form
the
basis
of,
or
be
relied
on
in
connection
with, any contract or investment decision whatsoever,
in any jurisdiction. This announcement does not constitute a
recommendation regarding any securities. Any investment decision
must be made
exclusively
on
the
basis
of
the
final
prospectus
published
by AGVIT
and
any
supplement thereto or the final circular published by
the Company.
Aberforth
Split
Level
Income
Trust plc (the
“Company”)
Update
on planned reconstruction
and
voluntary winding-up
of
the
Company and
further
dividend
Introduction
and
background
The last
“Chairman’s Statement”, released with the Company’s Interim Report
on 29 January 2024, shared the
Board’s views about the planned winding-up of the Company. This
announcement provides an update on these plans.
The Board
has reached agreement in principle with Aberforth Geared Value
& Income Trust plc ("AGVIT")
on the outline terms of the scheme of reconstruction and voluntary
winding-up of the Company, (the "Scheme")
and associated transfer of part of the assets and
undertaking of the
Company to AGVIT in
exchange for the issue
of new
ordinary shares and
new ZDP
shares in
AGVIT (the
"Proposals").
If
the
Company's
shareholders
("Shareholders")
approve
of
the
Proposals,
the
Scheme
is
expected
to
become
effective
on 28 June 2024 and AGVIT will act as
a rollover option for investors in the Company.
AGVIT
will be a new investment trust, expected to launch on 1 July 2024, which will invest in a diversified
portfolio of small UK quoted companies. Aberforth Partners, the
Company's investment managers, will also be the investment managers
of AGVIT. AGVIT’s capital structure will comprise ordinary
shares
with gearing via ZDP shares. Both classes of share will be issued
at 100 pence per share on launch. The
level of gearing for the ordinary shareholders in AGVIT at launch
would be similar to the current gearing level of ASLIT, in a range
of 30 to 40 per cent. of total ordinary shareholders’
funds.
AGVIT’s
investment
objective
will be
to
provide
AGVIT's ordinary
shareholders
with high
total
returns,
incorporating an attractive level of income, and to provide AGVIT's
ZDP shareholders with a pre- determined final capital entitlement
on AGVIT's planned winding-up date of 30
June 2031. The gross redemption yield of the AGVIT ZDP
shares at launch will be announced when the AGVIT prospectus is
published by the end of May 2024.
AGVIT’s portfolio construction will be aimed at delivering an
attractive yield and will also
be
designed
to
take
advantage
of the significant
recovery
potential
of UK equities in general and smaller companies in
particular.
It is
also proposed that AGVIT issue AGVIT ordinary shares and AGVIT ZDP
shares at the issue price of 100
pence per share, pursuant to a placing and offer for
subscription.
Benefits
of the
Proposals
The
Board
considers
that
the
Proposals have the
following
benefits for
Shareholders.
-
They may offer
Shareholders (depending on individual circumstances) the
opportunity to roll over their investments in a tax efficient
manner (without incurring an immediate liability to UK capital
gains tax) into AGVIT's ordinary shares and/or ZDP
shares.
-
They enable Shareholders to
maintain their exposure to a diversified portfolio of small
UK quoted
companies through a closed-ended investment vehicle with a fixed
life without incurring significant realisation costs or portfolio
reorganisation costs.
-
They allow Ordinary
Shareholders to maintain geared exposure to a portfolio of
attractively valued small UK quoted companies.
-
They enable Shareholders
to continue to benefit from the management expertise of
Aberforth Partners.
-
They offer Ordinary
Shareholders who wish to realise some or all of their investment
the opportunity to do so at close to Net Asset
Value.
-
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 AGVIT
under the Proposals, thereby saving potential realisation costs
which would otherwise be borne by Ordinary Shareholders on the
winding up of the Company.
-
Shareholders who choose to
roll over their investment in the Company into AGVIT will benefit
from a £450,000 contribution from Aberforth Partners to the launch
costs of AGVIT.
Further
details
of
the
Proposals
Under the terms of the
proposed
Scheme:
-
Ordinary
Shareholders
(other than overseas holders) will be able to exchange some
or all of their investment in the
Company for ordinary shares in AGVIT and/or to realise some or all
of their investment in the Company for cash. To the extent that
their election for AGVIT ordinary shares is scaled back, Ordinary
Shareholders will be able to elect for AGVIT ordinary shares and
AGVIT ZDP shares in a ratio determined by AGVIT’s level of
gearing.
-
ZDP Shareholders (other
than overseas holders) will be able to exchange some or all of
their investment in the Company for ZDP shares in AGVIT and/or
ordinary shares in AGVIT and/or to realise some or all of their
investment in the Company for cash. To the extent that their
election for AGVIT ZDP shares is scaled back, ZDP Shareholders will
be able to elect for AGVIT ordinary shares and AGVIT ZDP shares in
a ratio determined by AGVIT’s level of gearing.
If Shareholders approve of
these Proposals, it is currently anticipated that AGVIT would
acquire part or all of the Company’s assets, the consideration to
be satisfied in part by the issue of AGVIT shares to Shareholders
electing to roll over their investment into AGVIT, with the balance
being payable by AGVIT to the Company in cash which it intends
raising by means of a placing and offer for
subscription.
It is intended that the
AGVIT board shall have discretion (after consultation with ASLIT,
Aberforth Partners and J.P. Morgan Cazenove) to scale back
elections and/or applications to ensure that
AGVIT:
-
will not be larger than
the Company; and
-
the gearing of AGVIT
ordinary shares by AGVIT ZDP shares will be in the range of 30 to
40 per cent.
In exercising its
discretion, it is the intention of the AGVIT board to seek to
ensure a fair allocation and give preference, so far as is
practicable, in allocating AGVIT ordinary shares, to those Ordinary
Shareholders who have elected (or are deemed to elect) to rollover
into AGVIT ordinary shares and, in allocating AGVIT ZDP shares, the
AGVIT board intends to give preference, so far as is practicable,
to those investors who have also subscribed for (or rolled into)
AGVIT ordinary shares and/or ZDP shares.
The AGVIT board
anticipates that, in the absence of unforeseen circumstances, and
on the basis of a gearing ratio at the higher end of the indicated
30-40%. range, the target aggregate dividends, in respect of the
period from AGVIT's launch to 30 June
2025, will be approximately 5
pence per AGVIT ordinary share. This is not a profit
forecast. There can be no guarantee that AGVIT will pay such or any
dividends.
Second
interim
dividend
The Board
had previously indicated that it planned to declare a second
interim dividend to be paid to all Ordinary Shareholders (including
those who elect to receive cash and not roll over their investment
in the Company into AGVIT) by the end of June 2024 prior to the winding up of the Company
and, in the absence of unforeseen circumstances, it was expected to
be no less than 2.75p per Ordinary Share. The Board is pleased to
announce that given the strength of the recent dividend experience,
the Company’s revenue position is such that the Board can revise
upwards its estimation for the second interim dividend and, in the
absence of unforeseen circumstances, expects this to be 3.25p per
Ordinary Share. In expressing this intention, which is not a profit
forecast, the Board has been guided by the Investment Managers’
dividend estimates and revenue reserves as at 30 June 2023 of 1.32p per Ordinary Share. No
further dividends are expected to be paid after this second interim
dividend by the Company and Ordinary Shareholders will receive
value for any remaining undistributed revenue reserves as part of
the Scheme and the planned wind-up of the Company.
Next
Steps
The
Board, in conjunction with the AGVIT board, and advisers to both
companies, is working towards publishing final proposals by the end
of May 2024. It is currently
envisaged that a shareholder circular setting out the details of
the Scheme and containing notices of the general meetings at which
Shareholder approval for, inter
alia, the
Scheme will be sought, will be sent to Shareholders by the end of
May 2024. The relevant general
meetings are expected to be held during June
2024. Shareholders will note that the Board’s plans are now
at a relatively advanced stage though do remain subject to change,
in whole or in part.
26
April
2024
For
further information, please
contact:
Investment
Managers
Aberforth
Partners
LLP +44
(0) 131 220
0733
Euan
Macdonald
Peter Shaw
Financial
Advisers
to
the
Company and
AGVIT
J.P.
Morgan Cazenove (JPMC) +44
(0) 207 742 4000
William Simmonds
Rupert Budge
Solicitors
to the Company and AGVIT
Dickson
Minto LLP +44
(0) 207 649 6823
Douglas Armstrong
Important
notices
The
content of this announcement, which has been prepared by, and is
the sole responsibility of, the Company, has been approved by
Aberforth Partners LLP solely for the purposes of section
21(2)(b) of the
Financial Services and Markets Act 2000 (as amended). Aberforth
Partners LLP is authorised and regulated by the Financial Conduct
Authority.
The
information contained in this announcement is given at the date of
its publication (unless otherwise marked) and is subject to
updating, revision and amendment from time to time.
J.P.
Morgan
Cazenove,
which
is
authorised
and
regulated
by
the
Financial
Conduct
Authority,
is
acting
only for the
Company and AGVIT
in connection with the matters described in this announcement and
is not acting for or advising any other person, or treating any
other person as its client, in relation thereto and will not be
responsible to anyone other than the Company and AGVIT for
providing the protections afforded to clients of J.P. Morgan
Cazenove or advice to any other person in relation to the matters
contained herein.
This
announcement may include statements that are, or may be deemed to
be, "forward-looking statements". These forward-looking statements
can be identified by the use of forward-looking terminology,
including the terms "believes", "estimates", "anticipates",
"expects", "intends", "may", "will" or "should" or, in each case,
their negative or other variations or comparable terminology. All
statements other
than
statements
on
historical
facts
included
in
this
announcement,
including,
without
limitation, those regarding the Company's financial position,
strategy, plans, proposed acquisitions and objectives, are
forward-looking statements.
Forward-looking
statements are subject to risks and uncertainties and, accordingly,
AGVIT's actual future financial results and operational performance
may differ materially from the results and performance expressed
in, or implied by, the statements. These forward-looking statements
speak only as
at
the
date of
this announcement
and
cannot
be relied
upon
as
a
guide
to
future
performance.
Aberforth Partners LLP, J.P. Morgan Cazenove and Dickson Minto LLP
expressly disclaim any obligation or undertaking to update or
revise any forward-looking statements contained herein to reflect
actual or any change in the assumptions, conditions or
circumstances on which any such statements are based unless
required to do so by the Financial Services and Markets Act 2000,
the Prospectus Rules of the Financial Conduct Authority or other
applicable laws, regulations or rules.
None
of
the
Company,
AGVIT, Aberforth
Partners
LLP,
J.P.
Morgan
Cazenove
or Dickson
Minto LLP, or
any of their respective affiliates, accepts any responsibility or
liability whatsoever for or makes any representation
or
warranty, express
or
implied,
as
to
this
announcement,
including
the truth,
accuracy
or completeness of this information in this announcement (or
whether any information has been omitted from the announcement) or
any other information relating to the Company or associated
companies, whether written, oral or in visual or electronic form,
and howsoever transmitted or made available or for any loss
howsoever arising from any use of the announcement or its contents
or otherwise arising
in
connection
therewith.
The
Company,
AGVIT,
Aberforth
Partners
LLP,
J.P.
Morgan
Cazenove and Dickson Minto LLP, and their respective affiliates,
accordingly disclaim all and any liability whether
arising
in
tort,
contract
or
otherwise
which
they
might
otherwise
have
in
respect
of
this
announcement or its contents or otherwise arising in connection
therewith.
This
announcement does not constitute a prospectus relating to AGVIT, or
form part of, any offer or invitation to sell or issue, or any
solicitation of any offer to purchase or subscribe for, any shares
in the
Company or AGVIT in any jurisdiction nor shall it, or any part of
it, or the fact of its distribution, form the
basis
of,
or
be
relied
on
in
connection
with
or
act
as
any
inducement
to
enter
into,
any
contract
therefor. Investors should not purchase or subscribe for any
transferable securities referred to in this announcement except on
the basis of information contained in the prospectus being
considered for publication by
AGVIT
in due
course.
The
contents
of such
prospectus
will, if
published,
supersede
the
information in this announcement.
Nothing
in this document constitutes investment advice and any
recommendations that may be contained herein have not been based
upon a consideration of the investment objectives, financial
situation or particular needs of any specific recipient. Copies of
the prospectus, if published, will be available from Aberforth
Partners LLP's website www.aberforth.co.uk.