Reconstruction of Company

RNS Number:8647W
Allianz Dresdner Smlr Co's I.T PLC
23 March 2004


23 March 2004


Allianz Dresdner Smaller Companies Investment Trust plc (the "Company")


Proposed reconstruction of the Company


Highlights of the Proposals:


-  Proposals to reconstruct the Company under section 110 of the Insolvency Act
   1986.

-  Under the Proposals, Shareholders will have a basic entitlement to have 
   50 per cent. of their Shares realised for cash and the assets underlying the 
   remaining 50 per cent. transferred to Schroder UK Mid and Small Cap in return 
   for the issue of New Schroder UK Mid and Small Cap Shares.

-  Shareholders will also have the opportunity to elect, by making a Mix and 
   Match Election, to receive either:

   -  a higher return of cash and a lower level of investment in Schroder UK Mid 
      and Small Cap; or
   -  a lower return of cash and a higher level of investment in Schroder UK Mid 
      and Small Cap.

-  Mix and Match Elections will only be met to the extent that there are equal 
   and opposite Elections from other Shareholders.

-  It is expected that a Circular containing full details of the Proposals and
   containing notice of two Extraordinary General Meetings of Allianz Dresdner
   Smaller Companies Investment Trust plc will be sent to Shareholders later 
   today; and

   Dealings in the New Schroder UK Mid and Small Cap Shares are expected to
   commence 26 April 2004.


Konrad Meldal-Johnsen, Chairman of Allianz Dresdner Smaller Companies Investment
Trust plc, commented:

"For some time the Board of Allianz Dresdner Smaller Companies Investment Trust
plc has been considering the long term future of the trust against a background
of its size, the liquidity in its shares and its borrowings which carry an
effective rate of interest of 11.28 per cent.

The Directors' considerations have been primarily focused on enhancing
Shareholder value, minimising the costs of a reconstruction and on giving
Shareholders the opportunity to continue to hold an investment in a company with
a similar investment objective as the Company.

On the basis of market values at the close of business on 18 March 2004 and had
the Proposals become effective on that date Shareholders would have received
cash and New Schroder UK Mid and Small Cap Shares valued at 227.4p per Share in
total."


Enquiries to:

Allianz Dresdner Smaller Companies                        Tel: [phone]
Investment Trust plc 
Konrad Meldal-Johnsen


Investec, which is authorised and regulated by the Financial Services Authority,
is acting for Allianz Dresdner Smaller Companies Investment Trust in connection
with the Proposals and is not acting for any person other than Allianz Dresdner
Smaller Companies Investment Trust plc and will not be responsible to any other
person than Allianz Dresdner Smaller Companies Investment Trust plc for
providing the protections afforded to its customers or for providing advice to
any other person in connection with the Proposals.

This announcement is not intended to be an exhaustive summary of the Circular.
The contents of this announcement have been extracted from the Circular, which
contains full details of the Proposals.


Introduction

For some time the Board of Allianz Dresdner Smaller Companies Investment Trust
plc has been considering the long term future of the trust against a background
of its size, the liquidity in its Shares and its borrowings which carry an
effective rate of interest of 11.28 per cent.

The Board's considerations have been primarily focused on enhancing Shareholder
value, minimising the costs of a reconstruction and on giving Shareholders the
opportunity to continue to hold an investment in a company with a similar
investment objective as the Company.

The Directors of Allianz Dresdner Smaller Companies Investment Trust plc
announce a proposed reconstruction of the Company which will give Shareholders
the opportunity to continue to hold an investment in an investment trust with a
similar investment objective as the Company and a return of cash. The
reconstruction will be effected by means of a liquidation of the Company. Prior
to liquidation, after providing for the liabilities of the Company, including
the costs of redeeming the Term Loan and the other expenses of the Proposals,
the Company's investment portfolio will be split into two funds: one fund
representing assets to be transferred to Schroder UK Mid and SmallCap and the
other fund representing the balance of the assets to be liquidated.

Each fund will be subject to a number of adjustments, as explained below.
Accordingly, Shareholders will receive cash and ordinary shares in Schroder UK
Mid and SmallCap in place of their existing shareholdings in the Company.

Under the Proposals, Shareholders will have a basic entitlement to have 50 per
cent. of their Shares realised for cash and the assets underlying the remaining
50 per cent. transferred toSchroder UK Mid and Small Cap in return for the
issue of New Schroder UK Mid and Small Cap Shares. Shareholders will also have
the opportunity to elect, by making a Mix and Match Election, to receive either:

- a higher return of cash and a lower level of investment in Schroder UK Mid and
  Small Cap; or

- a lower return of cash and a higher level of investment in Schroder UK Mid and
  Small Cap.

Shareholders should note that Mix and Match Elections will only be met to the
extent that there are equal and opposite Elections from other Shareholders.

It is expected that a circular to Shareholders including full details of the
Proposals and the Scheme and notices of EGMs together with the Prospectus
relating to Schroder UK Mid and Small Cap will be dispatched the Shareholders
today.

The Proposals are conditional, inter alia, on Shareholder approval of the
Resolutions at both Extraordinary General Meetings, to be convened for 15 April
2004 and 23 April 2004 respectively.

Keyelements of the Proposals

Under the Proposals:

*  the Company will be wound up on 23 April 2004;

*  under the Basic Entitlement, each Shareholder will receive New Schroder UK 
   Mid and Small Cap Shares in respect of the assets underlying 50per cent. of 
   their holding of Shares and cash in respect of 50 per cent. of their holding 
   of Shares;

*  the Mix and Match Election will provide Shareholders with an opportunity to 
   increase or reduce the number of Shares they wish to elect to convert to New 
   Schroder UK Mid and Small Cap Shares or realise for cash to the extent that 
   there is equal and opposite demand from Shareholders;

*  the Proposals are conditional upon:

   *  the passing of the Resolutions at the Extraordinary General Meetings 
      convened for 15 April 2004 and 23 April 2004 respectively; and

   *  the approval of Schroder UK Mid and Small Cap's shareholders at an 
      extraordinary meeting of Schroder UK Mid and Small Cap convened for 
      16 April 2004.

*  in addition to assets to be transferred to Schroder UK Mid and Small Cap 
   pursuant to the Scheme, Schroder UK Mid and Small Cap has agreed to acquire 
   for cash approximately #5 million of the investment assets of theCompany 
   prior to or upon the Effective Date. These assets will be acquired from the 
   Liquidation Fund at their respective mid-market values to enable the Company 
   to realise sufficient cash to repay its Term Loan.  This acquisition is 
  conditional on the Scheme being approved at the First EGM and on there being 
   assets in the Liquidation Fund which are acceptable to Schroder UK Mid and 
   Small Cap. While this acquisition forms part of the Proposals, it will not 
   take effect under the Scheme;

*  Shareholders on the Register on 2 April 2004 will also be paid a second 
   interim dividend equal to 1.5p per Share in respect of the year ended 
   31 January 2004 on 15 April 2004. A further interim dividend may be payable
   in respect of the period between 1 February 2004 and the Effective Date in 
   the event that the Company generates surplus revenue in this period. The 
   Directors do not expect this to exceed 0.6p per Share* in any event.

* This is not intended to be, nor should be taken as, a forecast of profit.


Default provisions

If the Proposals are approved Shareholders will receive their Basic Entitlement
unless they make a valid Mix and Match Election in respect of some or all of
their Shares.

In the event that the Resolutions to be proposed at the First EGM are not
passed, the Resolutions to place the Company into voluntary liquidation and
appoint the Liquidators to be proposed at the Second EGM will not be capable of
being passed. In such circumstances, the Directors intend to send Shareholders a
circular including notice of a further meeting of the Company seeking their
consent to place the Company into voluntary liquidation.


The Scheme

The Proposals involve a scheme of reconstruction of the Company pursuant to a
members' voluntary liquidation. After setting aside sufficient assets into the
Liquidation Fund to meet the Company's liabilities (including the Term Loan,
other borrowings and normal business commitments but excluding the cost
associated with the termination of the Investment Management Agreement which is
to be borne solely by the B Fund) and the expenses of the Scheme the Liquidators
will divide the remaining assets of the Company into two pools(the A Fund and
the B Fund).

The assets comprising the A Fund and the B Fund will not, however, be identical
as the A Fund will contain only assets which SIM considers acceptable under
Schroder UK Mid and Small Cap's investment objectives and appropriate for
transfer to Schroder UK Mid and Small Cap in consideration for the issue to
Shareholders of New Schroder UK Mid and Small Cap Shares. The B Fund will
contain the remaining assets. Accordingly, following the Calculation Date, the
relative values of the A Fund and the B Fund may differ such that the Terminal
Asset Value of a Share in one fund may be different from that of a Share in the
other fund on the Recalculation Date.


Costs and Expenses

The costs of the Proposals and thecosts of redeeming the Term Loan will be
borne by Shareholders. On the basis of the Assumptions, the Directors estimate
that the amount required to settle the Company's liabilities and to meet the
costs of the Proposals is #7.9 million. The Directors have allocated this amount
between the Liquidation Fund, the A Fund and the B Fund as follows:

* The Liquidation Fund will be deducted from the net assets prior to the 
  creation of the A Fund and the B Fund.  The Liquidation Fund will bear the 
  following:

  -  the #4.6 million book value of the Term Loan which carries an effective
     rate of interest of 11.28 per cent.;

  -  the #2.4 million required to be paid to the Term Loan counterparty to
     compensate it for the difference between the face value of the Term Loan 
     and its market value and other costs associated with the repayment; and

  -  the professional fees and other costs of implementing the Proposals,
     estimated at #0.5 million which includes the Retention of #125,000.


* The A Fund will bear no further costs and expenses but will be increased by 
  an amount representing 5 per cent. of the value of the assets acquired by 
  Schroder UK Mid and Small Cap pursuant to the Acquisition Agreement by way of 
  a transfer from the Liquidation Fund. This represents the saving in dealing 
  costs arising by virtue of the acquisition by Schroder UK Mid and Small Cap 
  of assets from the Liquidation Fund.

  New Schroder UK Mid and Small Cap Shares will be issued on the basis of 99 per
  cent. of the Terminal Asset Value of the A Fund. The net asset value of 
  Schroder UK Mid and Small Cap will be calculated after deducting all the net 
  costs incurred by Schroder UK Mid and Small Cap in relation to the Proposals, 
  which are estimated to be approximately #250,000 (inclusive of VAT and stamp 
  duty).


* The B Fund will be adjusted by deducting there from the costs associated with 
  the termination of the Investment Management Agreement (which, on the 
  assumption that the Company is wound up on the Effective Date, will amount to 
  approximately #123,000).

  The B Fund will contain the Company's unquoted investments (taken at book 
  value of #193,000). In addition, the B Fund will bear the cost of any future 
  liability to meet additional funding obligations up to #75,000 relating to the 
  unquoted investments. The Liquidators will realise the unquoted investments as 
  and when opportunities arise and distribute the net proceeds to holders of 
  Shares with B Rights. The Directors can provide no guidance on the net amount 
  that will be realised or on the timing of the distribution.


Interim Dividends

In respect of the year ended 31 January 2004, the Directors intend to pay a
second interim dividend to Shareholders of 1.5p per Share. This dividend will be
paid on 15 April 2004 to Shareholders on the Register on 2 April 2004.

On the basis of its revenue forecast for the period from 1 February2004 to the
Effective Date, the Directors also anticipate that a further interim dividend in
respect of this period will be required to be paid. The Directors do not expect
this to exceed 0.6p per Share* in any event. Any further interim dividend will
also be paid on 15 April 2004 to Shareholders on the Register on 2 April 2004.

* This is not intended to be, nor should be taken as, a forecast of profits.


Information on Schroder UK Mid and Small Cap

Shareholders who wish to continue to hold an investment in a company with a
similar investment objective and policy to the Company are being given the
opportunity to do so by electing to receive New Schroder UK Mid and Small Cap
Shares.

The New Schroder UK Mid and Small Cap Shares tobe issued to Shareholders under
the Proposals will rank pari passu in all respects with each Existing Schroder
UK Mid and Small Cap Share in issue in Schroder UK Mid and Small Cap and in
particular will rank pari passu for all dividends declared after the Transfer
Date.

Schroder UK Mid and Small Cap, which was previously called LeggMason Investors
Enterprise plc until 30 May 2003, is a UK investment trust which was established
in 1983. The Existing Schroder UK Mid and Small Cap Shares are listed on the
Official List and traded on the London Stock Exchange. Schroder UK Mid and Small
Cap's investment objective is to invest in mid and small cap equities with the
aim of providing a total return in excess of the FTSE All-Share, ex investment
companies, ex FTSE 100 Index.


Advantages of the Proposals

The Directors believe that the Proposals are in the best interests of
Shareholders for the following reasons:

*  they should allow Shareholders to realise a proportion of their investment 
   in cash at a premium to the market price of a Share prior to the announcement 
   of the Proposals;

*  they should allow Shareholders to continue to have an investment in an 
   investment trust with a similar investment objective;

*Schroder UK Mid and Small Cap will, following the issue of New Schroder UK Mid 
   and Small Cap Shares, be a larger company both in terms of net asset value 
   and market capitalisation and Shareholders should therefore benefit from 
   greater liquidity;

*  by agreeing to acquire for approximately #5 million certain assets in the 
   Company's investment portfolio at mid-market price pursuant to the Proposals, 
   Schroder UK Mid and Small Cap has reduced the costs (both in terms of 
   discount to mid-market price and dealing expenses) of realising the Company's 
   investment portfolio. The benefit of this saving will, under the terms of the 
   Scheme, accrue for the benefit of Shareholders electing for New Schroder UK 
   Mid and Small Cap Shares; and

*  the Mix and Match Election should enable Shareholders, to the extent that 
   there is equal and opposite demand, to achieve the balance between cash and 
   New Schroder UK Mid and Small Cap Shares which best suits theirpersonal 
   circumstances.


Recommendation

The Directors, who have been advised by Investec, consider the Proposals to be
in the best interests of Shareholders as a whole. In providing its advice,
Investec has placed reliance on the Directors' commercial assessment of the
Proposals.

Accordingly, the Directors intend to unanimously recommend that Shareholders
vote in favour of the Resolutions to be proposed at the Extraordinary General
Meetings, irrespective of any intention to make aMix and Match Election under
the Proposals.

The Directors intend to vote in favour of the Resolutions and will make Mix and
Match Elections to receive New Schroder UK Mid and Small Cap Shares in respect
of all the Shares they hold. In aggregate, as at the date of this document, the
Directors and their immediate families hold 27,000 Shares representing 0.26 per
cent. of the issued share capital of the Company.

Expected Timetable
                                                             2004
Circular posted to Shareholders                                      23 March

Record Date for entitlement of Shareholders to the second interim    2 April
dividend for the year ended 31 January 2004 and, if applicable, for
the interim dividend for the period from 1 February 2004 to the
Effective Date

Closing of Register and Record Date for entitlements of Shareholders 5.00 p.m.
under the Proposals                                                  on 8
                     April

Latest time for receipt of Forms of Proxy for use at the First       10.00 a.m.
Extraordinary General Meeting                                        on 13
                                       April

Latest time for receipt of Forms of Election                         11.00 a.m.
                                                                     on 13
                                                         April

Date of payment of second interim dividend for the year ending 31    15 April
January 2004 and, if applicable, for the interim dividend for the
period from 1 February 2004 to the Effective Date

First Extraordinary General Meeting                                  10.00 a.m.
                                                                     on 15
                                                                     April

Calculation Date                                   15 April

Latest time for receipt of Forms of Proxy for the Second             10.00 a.m.
Extraordinary General Meeting                                        on 21
                                                                  April

Register of Reclassified Shares opens and dealings in Reclassified   8.00 a.m.
Shares commence                                                      on 22
                                                                     April

Suspension of dealings in Reclassified Shares and closing of         8.00 a.m.
register of Reclassified Shares                                      on 23
                                                                     April

Second Extraordinary General Meeting                                 10.00 a.m.
                                                                     on 23
                                                                     April

Recalculation Date                          23 April

Effective Date                                                       23 April

Dealings commence in New Schroder UK Mid and Small Cap Shares,       8.00 a.m.
uncertificated New Schroder UK Mid and Small Cap Sharescredited to  on 26
CREST accounts                                                       April

Certificates despatched in respect of New Schroder UK Mid and Small  week
Cap Shares issued in certificated form                               commencing
                                                                     26 April

Cheques despatched in respect of Elections for cash and CREST        7 May
accounts credited with cash in respect of Elections for cash

Definitions


The followingdefinitions apply throughout this announcement unless the context
requires otherwise:

"Act"            the Companies Act 1985, as amended
"Articles of     the articles of association of the Company
Association"
"Assumptions"    the principal bases and assumptions as set out in Part V of the
                 Circular to Shareholdes dated 23 March 2004
"Basic           the entitlement for Shareholders under the Scheme to receive
Entitlement"     New Schroder UK Mid and Small Cap Shares in respect of the
                 assets underlying 50 per cent. of their holding of Shares and
                 cash in respect of 50 per cent. of their holding of Shares
"Calculation     the date for calculation of the Net Asset Value per Share of
Date"the Shares, to be determined by the Directors but expected to
                 be the close of business on 15 April 2004
"Company"        Allianz Dresdner Smaller Companies Investment Trust PLC
"Directors" or   the board of directors of the Company
"Board"
"Effective       the date on which the Company is placed in liquidation and the
Date"            Scheme becomes effective, which is expected to be 23 April
                 2004
"Election"       An election for New Schroder UK Mid and Small Cap shares and/or
                 cash under the Proposals
"Existing        The existing and fully paid ordinary shares of 1p each of
Schroder UK Mid  Schroder UK Mid and Small Cap
and Small Cap
Share"
"Extraordinary   the First EGM and/or the Second EGM, as the context may
General          require
Meetings" or
"EGMs"
"First EGM "     the extraordinary general meeting of the Company convened for
                 10.00 a.m. on 15 April 2004 (or any adjournment thereof)
"Investec"       Investec Investment Banking, a division of Investec Bank (UK)
                 Limited
"Investment      The agreement between the Company and the Manager dated 16
Management       March 1998
Agreement"
"Liquidation     any amount distributed in cash by the Liquidators to
Distribution"    Shareholders out of the Liquidation Fund and/or the Retention
                 in one or more payments
"Liquidation     the fund to be retained by the Liquidators to meet all known
Fund"            liabilities of the Company and other contingencies, as further
                 described in paragraph 7 of Part III of this document
"Liquidators"    the liquidator or liquidators for the time being of the
                 Company, jointly and severally
"London Stock    London Stock Exchange plc
Exchange"
"Manager"        RCM (UK) Limited, the investment manager of the Company
"Meetings"       the First EGM and/or the Second EGM, as the context may
                 require
"Mix and Match   the facility enabling Shareholders (subject to matching
Election"        elections from other Shareholders) to elect to receive a
                 greater or lesser proportion of cash and to hold a greater or
                 lesser proportion of New Schroder UK Mid and Small Cap Shares
                 upon the Scheme becoming effective than would otherwise arise
                 under their Basic Entitlements under the Proposals
"net asset       in respect of a share in a company, the amount which would be
value"           payable to the holder on any specified date if that company
                 were wound up and its assets (after making provision for all
                 its liabilities) distributed on that date (valuing assets and
  providing for liabilities in accordance with the normal
                 accounting policies of that company, but ignoring net
                 distributable income of the current financial year and
                 winding-up expenses)
"Net Asset Value The net asset value attributable to each Share as reduced to
per Share"       take account of the Retention (but not reduced to take account
                 of any costs associated with the early termination of the
              Investment Management Agreement) calculated on the Calculation
                 Date
"New Schroder UK ordinary shares of 1p each in Schroder UK Mid and Small Cap
Mid and Small    Fund plc issued pursuant to the Scheme
Cap Shares"
"Official      the list maintained by the UK Listing Authority pursuant to
List"            Part VI of the Financial Services and Markets Act 2000
"Proposals"      the proposals described in the Circular to Shareholders dated
                 23 March 2004 for the winding-up and reconstruction of the
                 Company
"Prospectus"     the prospectus, dated 23 March 2004, relating to Schroder UK
                 Mid and Small Cap
"Recalculation   close of business on the day following the Effective Date
Date"
"Reclassified    the Shares in the Company with A Rights and B Rights arising
Shares"          under the Scheme
"Record Date"    the record date for the purposes of the Scheme, being 5.00 p.m.
                 on 8 April 2004
"Register"  means the register of members of the Company
"Registrar" or   Capita IRG Plc
"Receiving
Agents" or
"Capita IRG''
"Resolutions"    the resolutions to be proposed at the First Extraordinary
                 General Meeting and/or the Second Extraordinary General
                 Meeting, as the context may require
"Restricted      any Shareholder whose registered address is in the United
Person"          States, Canada, Australia or Japan
"Retention"      the retention to be made by the Liquidators
"Scheme"         the proposed scheme of reconstruction of the Company under
                 section 110 of the Insolvency Act 1986 as set out in the
                 Circular to Shareholders dated 23 March 2004
"Schroder UK Mid Schroder UK Mid and Small Cap Fund plc
and Small Cap"
"Second EGM"     the extraordinary general meeting of the Company convened for
                 10.00 a.m. on 23 April 2004 (or any adjournment thereof)
"Shareholders"   holders of Shares in the Company
"Shares"         the existing issued and fully paid ordinary shares of 25p each
                 in the Company
"SIM"            Schroder Investment Management Limited
"Term Loan"      the stepped-rate upstream bonds and stepped-rate loan notes
    issued by the Company to First Debenture Finance plc pursuant
                 to instruments dated 17 December 1987
"Terminal Asset  the net asset value attributable to a Share as calculated on
Value"           the Recalculation Date
"Transfer        the agreements for the transfer of assets from the Company to
Agreement"       Schroder UK Mid and Small Cap pursuant to the Scheme
"Transfer        the date on which the relevant proportions of the Company's
Date"            assets are transferred to Schroder UK Mid and Small Cap
                 pursuant to the Transfer Agreement
"UK"             the United Kingdom of Great Britain and Northern Ireland
"UK Listing      the Financial Services Authority as the competent authorityfor
Authority"       listing in the UK








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