JPMorgan Elect PLC Publication of Circular and Prospectus (6344U)

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RNS Number : 6344U

JPMorgan Elect PLC

19 January 2017

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, South Africa, In any Member State of the EEA (other than the United Kingdom) OR IN ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction in which the same would be unlawful. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

19 January 2017

JPMorgan Elect plc

Publication of Circular and Prospectus

Further to the proposals announced in outline on 10 November 2016 for the issue of New JPM Elect Shares in connection with the reconstruction of M&G High Income Investment Trust P.L.C. ("HIIT"), the Board of JPMorgan Elect plc (the "Company") is pleased to announce that the Company has today published a Circular and Prospectus in connection with the Issue.

The Board considers that the Scheme is in the best interests of the Company and of Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Proposals to be put to the General Meeting and Class Meetings, as applicable. Each of the Notice of General Meeting, Notice of Class Meeting of Managed Cash Shareholders, Notice of Class Meeting of Managed Growth Shareholders and Notice of Class Meeting of Managed Income Shareholders is set out in the shareholder circular published by the Company today (the "Circular").

In connection with the issue of New JPM Elect Shares pursuant to the Scheme, the Company is required by the Prospectus Rules to publish a prospectus. As such, the Company has today published a prospectus (the "Prospectus"), a copy of which will be available shortly on the Company's website at www.jpmelect.co.uk.

Background to and benefits of the Scheme

HIIT was launched as an investment trust on 23 December 1996 with a fixed winding-up date of 17 March 2017. The HIIT Directors believe that many Eligible HIIT Shareholders wish to continue their investment in a tax efficient manner rather than simply to receive cash in a liquidation.

Your Board and the Investment Manager regularly review the options available for increasing the size of the Company and in this regard have agreed with the HIIT Directors that the Company be included as a Rollover Fund available to Eligible HIIT Shareholders seeking a tax-efficient rollover.

As described in the Circular, the costs of the Scheme will not be borne by existing Shareholders. As a result, and to the extent that New JPM Elect Shares are issued under the Scheme, the Board considers that Shareholders should benefit from the spreading of fixed costs over a wider asset base, and a correspondingly lower Ongoing Charges Ratio, and greater liquidity in Managed Cash Shares, Managed Growth Shares and Managed Income Shares.

Details of the Scheme

Under the terms of the Scheme, HIIT will be wound up on 17 March 2017 by means of a members' voluntary liquidation pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986 (as amended) and Eligible HIIT Shareholders will have the opportunity (subject to the passing of the HIIT Scheme Resolutions) to realise all or part of their investment in Eligible HIIT Shares as cash and/or to rollover all or part of their investment in Eligible HIIT Shares into any combination of shares in the M&G Rollover Funds and/or (subject to the passing of the Issue Resolution and the Issue Consents) any combination of New JPM Elect Shares.

To the extent that an Eligible HIIT Shareholder does not make a valid Election in respect of all or part of their holding of Eligible HIIT Shares, they will be deemed to have elected for the M&G UK Income Distribution Fund Option for such proportion of their holding of Eligible HIIT Shares.

In the event that the conditions to the Company's participation in the Scheme are not satisfied, Elections for New JPM Elect Shares pursuant to the Scheme will instead be deemed to be Elections for the M&G UK Income Distribution Fund Option.

Under the terms of the Scheme, Eligible HIIT Shareholders who make a valid Election for New JPM Elect Shares will receive:

   --           Managed Growth Shares issued at a price equivalent to NAV plus the Issue Premium; 

-- Managed Income Shares issued at a price equivalent to NAV plus the Issue Premium; and/or

   --           Managed Cash Shares issued at a price equivalent to NAV plus the Issue Premium. 

In the event that the value of assets represented by Eligible HIIT Shareholders electing to roll their interests in Eligible HIIT Shares into the Company is less than GBP40 million then the Issue Premium will be set at 1.0 per cent. In the event the value of such assets exceeds or equals GBP40 million then the Issue Premium will reduce on a straight line basis such that if the value of such assets equals GBP70 million or more then the Issue Premium will be set at 0.65 per cent.

The costs of the Company's participation in the Scheme will be met, in the first instance, by the Issue Premium at which the New JPM Elect Shares will be issued. To the extent that the Issue Premium does not cover these costs, the Investment Manager has agreed to meet any such shortfall. In the event that the Company ceases to be available as a rollover option for Eligible HIIT Shareholders then the Investment Manager has agreed to cover these costs.

To the extent that the Issue Premium relating to a class of JPM Elect Share amounts to more than the costs of the Scheme borne by that class, such surplus will accrue to the benefit of the holders of shares in that class. For these purposes, the costs of the Scheme borne by the Company will be allocated to each class of JPM Elect Shares in the proportion to the value of the assets to be transferred to each Pool pursuant to the Scheme. As a result of these arrangements, the Scheme is not expected to result in any material increase or decrease in the NAV per share of any of the Company's share classes.

Any transaction taxes, stamp duty/stamp duty reserve tax payable on the transfer of assets pursuant to the Scheme to the Company shall be borne by the Company.

The New JPM Elect Shares will rank pari passu with the JPM Elect Shares including for dividends. In addition, it should be noted that by issuing the New JPM Elect Shares pursuant to the Scheme the retained revenue reserves associated with the JPM Elect Shares will, on a per share basis, be diluted. The extent of any dilution cannot be determined at this stage and will depend on various factors, including the number of Eligible HIIT Shareholders rolling their interests in Eligible HIIT Shares into the Company as well as the share classes into which these investors elect to roll.

Conditions to the Issue

The Issue is conditional, among other things, upon:

(i) the passing of all the HIIT Scheme Resolutions to be proposed at the HIIT Scheme Meetings (or, in each case, any adjournment thereof) and all conditions to such HIIT Scheme Resolutions being fulfilled;

   (ii)      the UK Listing Authority consenting to the amendment of the Official List to reflect the reclassification of the HIIT Shares as Reclassified Shares; 
   (iii)     the HIIT Directors not resolving to abandon the Scheme; 
   (iv)      the passing of the Issue Resolution and the Issue Consents; and 

(v) the UK Listing Authority having agreed to admit the New JPM Elect Shares to be issued pursuant to the Scheme to the premium segment of the Official List and the London Stock Exchange having agreed to admit such New JPM Elect Shares to trading on the main market for listed securities of the London Stock Exchange.

Issue Resolution

In accordance with the requirements of the Companies Act 2006 and the Prospectus Rules, the Company is seeking Shareholder authority to issue the New JPM Elect Shares and to disapply pre-emption rights in respect of the issue of such New JPM Elect Shares.

The Issue Resolution to be proposed at the General Meeting will be proposed as a special resolution and, in order to be passed, will require the approval of 75 per cent or more of the votes cast at the General Meeting, whether in person or by proxy.

The Issue Resolution is conditional on the passing of each of the Issue Consents.

Issue Consents

Given that the Issue may increase the number of JPM Elect Shares currently in issue by more than one third, the Company is required under the Articles to seek the consent of each class of JPM Elect Shares for the Issue.

Each Issue Consent to be proposed at the relevant Class Meeting will be proposed as a special resolution and, in order to be passed, will require the approval of 75 per cent or more of the votes cast at the relevant Class Meeting, whether in person or by proxy.

The consent of each class of JPM Elect Shares is required in order for the Issue to proceed.

Prospectus

In connection with the issue of New JPM Elect Shares pursuant to the Scheme, the Company has today published a prospectus relating to the issue of up to 440,227,031 Managed Cash Shares, 61,804,088 Managed Growth Shares and 404,374,680 Managed Income Shares. These figures are based on the assumption that all Eligible HIIT Shareholders participate in the Scheme and elect to roll into the same class of JPM Elect Shares and do not make Elections to receive cash or any combination of shares in the M&G Rollover Funds. The actual number of New JPM Elect Shares of each class to be issued pursuant to the Scheme will not be known until all Elections have been made by Eligible HIIT Shareholders and Shareholders should not take the foregoing maximum numbers of New JPM Elect Shares as being indicative of the actual number of New JPM Elect Shares that will be issued pursuant to the Scheme.

Recommendation

The Board considers the Proposals to be in the best interests of the Company and Shareholders as a whole. Accordingly, the Board recommends Shareholders vote in favour of the Proposals to be put to the Meetings, as they intend to do in respect of their own beneficial holdings which amount in aggregate, to 27,572 Managed Growth Shares and 63,650 Managed Income Shares, representing 0.085 per cent of the total issued ordinary share capital of the Company and 0.089 per cent of the total voting rights in the Company.

Expected timetable

 
 Publication of the Circular           19 January 2017 
  and Prospectus 
 Latest time and date for receipt      9.00 a.m. on 20 
  of Voting instruction Forms            February 2017 
  for the Managed Cash Class Meeting 
 Latest time and date for receipt      9.01 a.m. on 20 
  of Voting Instruction Forms            February 2017 
  for the Managed Growth Class 
  Meeting 
 Latest time and date for receipt      9.02 a.m. on 20 
  of Voting Instruction Forms            February 2017 
  for the Managed Income Class 
  Meeting 
 Latest time and date for receipt      9.03 a.m. on 20 
  of Voting Instruction Forms            February 2017 
  for the General Meeting 
 Latest time and date for receipt      9.00 a.m. on 23 
  of the Form of Proxy for the           February 2017 
  Managed Cash Class Meeting 
 Latest time and date for receipt      9.01 a.m. on 23 
  of the Form of Proxy for the           February 2017 
  Managed Growth Class Meeting 
 Latest time and date for receipt      9.02 a.m. on 23 
  of the Form of Proxy for the           February 2017 
  Managed Income Class Meeting 
 Latest time and date for receipt      9.03 a.m. on 23 
  of the Form of Proxy for the           February 2017 
  General Meeting 
 Managed Cash Class Meeting            9.00 a.m. on 27 
                                         February 2017 
 Managed Growth Class Meeting          9.01 a.m. on 27 
                                         February 2017 
 Managed Income Class Meeting          9.02 a.m. on 27 
                                         February 2017 
 General Meeting                       9.03 a.m. on 27 
                                         February 2017 
 Completion of the Scheme and            21 March 2017 
  issue of the New JPM Elect Shares 
 

Each of the times and dates in the expected timetable may (where permitted by law) be extended or brought forward without further notice and in particular the dates relating to the Scheme and the issue of the New JPM Elect Shares are provisional only. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service. All references to times in this document are to London time.

A copy of the Circular and Prospectus has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM. The Circular and Prospectus will also shortly be available on the Company's website at www.jpmelect.co.uk where further information on the Company can also be found.

Capitalised terms used but not defined in this announcement will have the same meaning as set out in the Circular dated 19 January 2017.

For further information:

 
 JPMorgan Funds Limited 
  Richard Plaskett, Client 
   Director                    020 7742 3422 
  Rhys Williams, Company 
   Secretary                    020 7742 5073 
 Winterflood Investment 
  Trusts 
  Neil Langford 
  Chris Mills                 020 3100 0000 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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January 19, 2017 09:00 ET (14:00 GMT)