JPMorgan Income & Growth IT PLC Scheme of Reconstruction - Publication of Circular (5398N)

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RNS Number : 5398N

JPMorgan Income & Growth IT PLC

26 October 2016

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA OR THE REPUBLIC OF SOUTH AFRICA

26 October 2016

JPMORGAN INCOME & GROWTH INVESTMENT TRUST PLC

Scheme of Reconstruction - Publication of Circular

On 20 April 2016, JPMorgan Income & Growth Investment Trust plc (the "Company") announced its intentions to put forward a set of proposals to be implemented on 30 November 2016 (the "Proposals") to coincide the end of the Company's fixed life. The Board is pleased to announce that the circular in connection with the Proposals and containing notices of the General Meetings (the "Circular") has been published.

Under the Proposals, the Company's shareholders are being offered a choice of the following:

-- a tax and cost efficient rollover into new shares to be issued by JPMorgan Elect plc ("JPMorgan Elect"); and/or

   --     a cash exit at NAV less costs. 

JPMorgan Elect, which, as at 19 October 2016 had total net assets of approximately GBP291.51 million, has three share classes, each with distinct investment policies, objectives and underlying investment portfolios, and its structure allows for quarterly conversion between share classes at a price close to net asset value. The investment objectives of the three share classes, which the Board considers to be comparable to the Company's overall investment objective, are set out in full in the Circular and in the prospectus related to the issue of JPMorgan Elect Securities pursuant to the scheme by JPMorgan Elect (the "JPMorgan Elect Prospectus").

There is a high degree of overlap between the underlying holdings of the Company and those of JPMorgan Elect's Managed Income share class. In addition, the Company's shareholders who choose to roll over their investment will benefit from the continuity of management as the Company's portfolio managers are also responsible for managing JPMorgan Elect's portfolio.

The Proposals are subject to the approval of both the Company's shareholders and shareholders of JPMorgan Elect.

The Circular will shortly be available on the Company's website at www.jpmincomeandgrowth.co.uk and on the National Storage Mechanism at www.morningstar.co.uk/uk/NSM.

The Proposals

Under the Proposals, the Company will be wound up on 30 November 2016 by means of a members' voluntary liquidation pursuant to a scheme of reconstruction under section 110 of the Insolvency Act and Shareholders and Unitholders can choose to receive any combination of the following in respect of all or part of their holding of Shares in the Company:

   --        Managed Income Shares in JPMorgan Elect; and/or 
   --        Managed Growth Shares in JPMorgan Elect; and/or 
   --        Managed Cash Shares in JPMorgan Elect; and/or 
   --        cash. 

The JPMorgan Elect Securities will be issued at a price equivalent to the NAV per share plus an issue premium as set out under "Costs of the Proposals" below.

Income Shareholders and Unitholders (other than Restricted Shareholders) who do not choose one or more of the Options set out above will be treated as having chosen to rollover their entire investment in the Company into JPMorgan Elect's Managed Income Shares. Capital Shareholders (other than Restricted Shareholders) who do not choose one or more of the Options set out above will be treated as having chosen to rollover their entire investment in the Company into JPMorgan Elect's Managed Growth Shares.

Benefits of the Proposals

Benefits for all Shareholders and Unitholders

The Directors consider that the Proposals should have the following benefits for all Shareholders and Unitholders:

-- they provide Shareholders and Unitholders with a greater choice than if the Company were simply to be wound up, since the Proposals enable Shareholders and Unitholders to (i) continue their investment exposure through a rollover into JPMorgan Elect Securities; (ii) receive cash; or (iii) receive a combination of cash and JPMorgan Elect Securities; and

-- they save on costs that would otherwise be incurred on the realisation of the Company's portfolio on a winding-up as certain assets are expected to be transferred to JPMorgan Elect.

Benefits for Shareholders and Unitholders who choose to rollover into JPMorgan Elect Securities

The Directors consider that the Proposals should have the following additional benefits for Shareholders and Unitholders who choose to rollover their investment in the Company into JPMorgan Elect Securities:

-- they will enable Shareholders and Unitholders to retain market exposure through another investment trust whose portfolio is managed by the same team as manages the Company's portfolio and to continue to receive investment returns without triggering an immediate liability to capital gains tax; and

-- they will enable Shareholders and Unitholders to avoid dealing and other costs associated with a share purchase in the secondary market.

Conditions to the Scheme

The Scheme is conditional upon, amongst other things:

(i) the passing of all the Resolutions to be proposed at: (a) the First General Meeting; and (b) the Second General Meeting and all conditions to such Resolutions (excluding any condition relating to the passing of any other Resolution) being fulfilled;

   (ii)       the passing of the JPMorgan Elect Resolutions; 

(iii) the UK Listing Authority agreeing to amend the listing of the Shares to reflect their reclassification as Reclassified Shares for the purpose of implementing the Scheme;

(iv) the UK Listing Authority having agreed to admit the JPMorgan Elect Securities which are to be issued under the Scheme to the premium segment of the Official List and the London Stock Exchange having agreed to admit such JPMorgan Elect Securities to trading on the main market for listed securities of the London Stock Exchange; and

   (v)       the Directors not resolving to abandon the Scheme. 

In the event that any of conditions (i), (ii), (iii) and (iv) fails to be satisfied, the Winding-up Resolution will, in any event be put to Shareholders at the Second General Meeting, which will place the Company into members' voluntary liquidation and appoint the Liquidators.

The Rollover Vehicle - JPMorgan Elect plc

JPMorgan Elect is an investment trust company whose shares are admitted to the premium segment of the Official List and to trading on the main market for listed securities of the London Stock Exchange. JPMorgan Elect has three share classes, Managed Income Shares, Managed Growth Shares and Managed Cash Shares, each with distinct investment policies, objectives and underlying investment portfolios. Each share class is listed separately and traded on the London Stock Exchange.

Shareholders in JPMorgan Elect may convert between each class of JPMorgan Elect Securities in February, May, August and November in each year without incurring a liability for capital gains tax. In addition, Managed Cash shareholders may also elect to have their shares repurchased by JPMorgan Elect on each quarterly conversion date at a price close to Net Asset Value.

JPMorgan Elect employs JPMorgan Funds Limited ("JPMF") as its Alternative Investment Fund Manager, which, in turn, delegates portfolio management to JPMorgan Asset Management (UK) Limited ("JPMAM") to manage its assets actively. Both JPMF and JPMAM perform the same functions for the Company.

In connection with the Scheme, it is proposed that Karl Sternberg, chairman of the Company, will be appointed to the JPMorgan Elect Board shortly following Admission and that he will stand for election as a director of JPMorgan Elect at its annual general meeting in 2017.

Further details of each class of JPMorgan Elect Securities which are being offered under the Scheme are set out in the Circular and in the JPM Elect Prospectus.

Costs of the Proposals

The costs of the Proposals (including all advisers' fees, printing and other ancillary costs of the Proposals but excluding stamp duty incurred on the in specie transfer of assets from the Company to JPMorgan Elect pursuant to the Transfer Agreement) are expected to be approximately GBP450,000 (inclusive of VAT). The stamp duty will be paid by the enlarged JPMorgan Elect and spread across the existing shareholders of JPMorgan Elect as well as the Company's Shareholders electing to roll over.

JPMF has agreed to contribute by way of a waiver of management fees an amount such that the net costs of the Proposals to Shareholders (excluding any dealing costs to realign or realise the Company's portfolio), will be limited to GBP248,000 which is approximately the amount which would have been incurred had the Scheme not been put forward and the Company simply placed into liquidation at the end of its fixed life.

Those Shareholders and Unitholders who choose to receive JPMorgan Elect Securities for some or all of their investment will also incur costs equal to the issue premium (the "Issue Premium") applicable to the relevant JPMorgan Elect Securities. This Issue Premium is intended to defray the costs which will be incurred by JPMorgan Elect in respect of its participation in the Scheme.

The level of the Issue Premium will depend on the value of the assets to be transferred to JPMorgan Elect under the Scheme. If the value of these assets is less than GBP40 million then the Issue Premium will be set at 1.0 per cent. However, if their value exceeds GBP40 million, the Issue Premium will reduce on a straight line basis such that if their value equals GBP70 million (or more) then the Issue Premium will be set at 0.65 per cent.

Liquidation Fund

Before any assets are transferred to JPMorgan Elect under the Scheme or set aside to pay Shareholders or Unitholders who have elected for cash, the Liquidators will retain cash and other assets in a liquidation fund (the "Liquidation Fund") in an amount which they consider sufficient to provide for all liabilities of the Company (including tax and contingent liabilities and an amount for unknown and unascertained liabilities of the Company). The retention in respect of unknown and unascertained liabilities is currently expected to be GBP50,000. Further details of the Liquidation Fund are set out in Parts II and III of the Circular.

Shareholder meetings

The Proposals are conditional on the approval of Shareholders which is being sought at the First General Meeting and the Second General Meeting.

At the First General Meeting special resolutions will be proposed which, if passed, will reclassify the Income Shares and the Capital Shares (whether held separately or in the form of Units), authorise the implementation of the Scheme by the Liquidators and amend the Articles of Association of the Company for the purposes of implementing the Scheme.

At the Second General Meeting, a special resolution will be proposed which, if passed, will appoint the Liquidators and the Company will be placed into liquidation (the "Winding-up Resolution").

In accordance with the Articles, weighted voting rights will apply on all the special resolutions to be proposed at the General Meetings so as to ensure that all of the resolutions are passed.

Expected timetable

 
                                                                        2016 
 Latest time for receipt                            6.00 p.m. on 11 November 
  of Plan Forms of Instruction 
  from Plan Participants 
 Latest time for receipt                            6.00 p.m. on 11 November 
  of Voting Forms of Direction 
  from Plan Participants who 
  hold Shares or Units for 
  use at the First General 
  Meeting 
 Time from which it is advised                      6.00 p.m. on 16 November 
  that dealings in Shares 
  and Units will be for cash 
  settlement only and immediate 
  delivery of documents of 
  title 
 Latest time for receipt                           12.30 p.m. on 17 November 
  of Forms of Proxy from Shareholders 
  and Unitholders for use 
  at the First General Meeting 
 Closing of the Company's                           6.00 p.m. on 18 November 
  register of members and 
  Record Date for participation 
  in the Proposals 
 Latest time for receipt                            6.00 p.m. on 18 November 
  of Forms of Election from 
  Shareholders and Unitholders 
 Shares disabled in CREST                           6.00 p.m. on 18 November 
 First General Meeting                             12.30 p.m. on 21 November 
 Latest time for receipt                            6.00 p.m. on 23 November 
  of Voting Forms of Direction 
  from Plan Participants who 
  hold Shares or Units for 
  use at the Second General 
  Meeting 
 Latest time for receipt                           10.30 a.m. on 28 November 
  of Forms of Proxy from Shareholders 
  and Unitholders for use 
  at the Second General Meeting 
 Calculation Date                                   5.00 p.m. on 28 November 
 Opening of the Company's                           8.00 a.m. on 29 November 
  register of members and 
  commencement of dealings 
  in respect of the Reclassified 
  Shares 
 Dealings in Reclassified                           7.30 a.m. on 30 November 
  Shares suspended 
 Second General Meeting                            10.30 a.m. on 30 November 
 Scheme Effective Date and                                        1 December 
  Transfer Date 
 CREST accounts credited                                          2 December 
  with JPMorgan Elect Securities 
 Admission of JPMorgan Elect                         8.00 a.m. on 2 December 
  Securities and dealings 
  in JPMorgan Elect Securities 
  commence 
 Cheques expected to be despatched              on or as soon as practicable 
  in respect of the Cash Option                             after 5 December 
  and CREST payments made 
  to Shareholders and Unitholders 
 Cheques expected to be despatched              on or as soon as practicable 
  in respect of Plan Participants                           after 5 December 
  electing for the Cash Option 
 Share certificates for JPMorgan                           week commencing 5 
  Elect Securities issued                                           December 
  under the Scheme expected 
  to be despatched 
 Cancellation of the Reclassified                     as soon as practicable 
  Shares                                          after the Scheme Effective 
                                                        Date when all of the 
                                                           capital assets of 
                                                       the Company have been 
                                                                    realised 
 

The times and dates set out in the expected timetable of events above may be adjusted by the Company, in which event details of the new times and dates will be notified, as requested, to the UK Listing Authority, the London Stock Exchange and, where appropriate, Shareholders and Unitholders.

This announcement does not contain all the information which is contained in the Circular. Shareholders and Unitholders should read the Circular and the JPMorgan Elect Prospectus to make informed elections under the Proposals.

Terms used and not defined in this announcement have the meanings given in the Circular unless the context otherwise requires.

For further information, please contact:

 
 JPMorgan Funds Limited            [phone] 
  Divya Amin, Company Secretary     4000 
 Winterflood Investment Trusts 
  Joe Winkley                      [phone] 
  Neil Morgan                       0000 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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October 26, 2016 09:22 ET (13:22 GMT)