Acorn Income Fund Update on Future of the Company

 
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ACORN INCOME FUND LIMITED 
 (a closed-ended investment company incorporated in Guernsey with registration 
                                 number 34778) 
                           LEI 213800UAZN7G46AHQM67 
 
01 September 2021 
 
             Acorn Income Fund Limited ("Acorn" or the "Company") 
 
                        Update on Future of the Company 
 
Further to the Company's announcements on 17 May and 12 August 2021 on the 
future of the Company, the Board announces that it is proposing a scheme of 
reconstruction. Having reviewed proposals regarding the future of the Company 
and following consultation with some of the Company's shareholders, the Board 
has concluded that offering a rollover of its assets into Unicorn UK Income 
Fund, an open ended vehicle managed by Unicorn Asset Management ("Unicorn"), 
and an option for a cash exit (together, the "Proposals") is in the best 
interests of shareholders as a whole. 
 
Reasons for the Proposals 
 
Given a combination of factors, including the existing dual portfolio 
structure, likely future cut in dividends, historic discount to NAV and size of 
the Company, the Board does not believe that the Company can viably continue in 
its existing form. However, some shareholders have confirmed their endorsement 
of the Company's Smaller Companies portfolio investment strategy under 
Unicorn's management and others have indicated a preference for a cash exit at 
close to NAV. After careful consideration, the Board therefore recommends a 
scheme of reconstruction of the Company, which would result in the voluntary 
liquidation of the Company. Shareholders would be entitled, in respect of their 
shareholdings in the Company, to elect to: 
 
  * roll over all or part of their holding into Unicorn UK Income Fund, an open 
    ended vehicle managed by Unicorn (a sub-fund of Unicorn Investment Funds), 
    with rollover entitlements being calculated on an NAV for NAV basis; and/or 
  * receive cash as all of or part of their entitlement upon the liquidation of 
    the Company at a price which will be close to the prevailing net asset 
    value per share ("Cash Option"). 
 
Unicorn UK Income Fund 
 
The Unicorn UK Income Fund (the "Fund") was launched in 2004 and is the best 
performing Fund in the UK Equity Income sector since launch1.  The Fund follows 
the same long-term approach as the Acorn Income Fund Smaller Companies 
portfolio with a focus on generating a differentiated and high quality income 
stream from a high conviction portfolio of predominantly small and medium sized 
UK equities.  The Fund is currently £527 million in size and has an historic 
dividend yield of 3.4%, which is paid quarterly.  Fraser Mackersie and Simon 
Moon have been managers of the portfolio since 2013.  The Fund is also 
currently top quartile in the UK Equity Income sector over 3, 5 and 10 years2. 
 
As at 31 August 2021, Unicorn estimates that the Company's existing Smaller 
Companies portfolio that it manages has a circa 67% commonality with the 
Unicorn UK Income Fund and that the balance of the portfolio can be realigned 
in an efficient manner ahead of the rollover. 
 
The Company has signed Heads of Terms with Unicorn and Unicorn Investment Funds 
in relation to the Proposals. Costs of the Proposals will be borne by the 
Company. However, Unicorn has agreed: 
 
  * to make a cost contribution to the Company in the amount of £100,000, 
    reduced by the proportion of Ordinary Shares in respect of which elections 
    are made for the Cash Option, subject to a minimum contribution of £50,000; 
  * to waive its management fees for Unicorn UK Income Fund for a period of 12 
    months for those Acorn shareholders choosing to roll over some or all of 
    their holding; and 
  * to waive the entry charge to shareholders choosing to rollover. 
 
Zero dividend preference shares 
 
As part of the Proposals, the holders of zero dividend preference shares in 
Acorn will be paid an amount in cash equal to their final capital entitlement 
as at 28 February 2022, on completion of the rollover and liquidation, expected 
to be in October/November 2021. 
 
General Meetings 
 
The Proposals are conditional on, inter alia, shareholder and regulatory 
approvals. Shareholder documentation setting out full details of the proposals 
will be put forward in a circular to be sent to shareholders as soon as 
practicable, including a notice for the necessary general meeting to seek 
shareholder approval of the Proposals. If the Proposals are subsequently 
approved by shareholders, the conditions to the Proposals are fulfilled and the 
scheme of reconstruction is effected, it is expected that the Company will go 
into voluntary winding up. 
 
Shareholders will also receive a notice for the Company's upcoming Annual 
General Meeting, which will include a discontinuation resolution. In light of 
the Proposals recommended by the Board, the Board recommends voting in favour 
of the discontinuation resolution. 
 
 1. Source: FE Analytics from 24 May 2004 to 31 August 2021 
 2. Source: FE Analytics as at 31 August 2021 
 
For information please contact: 
 
Nigel Ward (Chairman) 
 
via Singer Capital Markets or Company Secretary 
 
Northern Trust International Fund Administration Services (Guernsey) Limited 
Company Secretary  [phone] 
 
Singer Capital Markets (Corporate Broker) 
Paul Glover / Alan Ray / Alaina Wong  + 44 (0) 207 496 3000 
 
This announcement contains inside information for the purposes of Article 7 of 
the Market Abuse Regulation (EU) No 596/2014. This announcement has been 
authorised for release by the Company's Board of Directors. 
 
 
 
END 
 
 

(END) Dow Jones Newswires

September 01, 2021 06:04 ET (10:04 GMT)