Circ re. Winding-Up Proposals

RNS Number:6364A
Framlington Global Fin & Inc Fd Ld
08 July 2004



8 July 2004

               Framlington Global Financial & Income Fund Limited
                                (the "Company")
                                      and
            Framlington Global Financial & Income Securities Limited
                               (the "Subsidiary")




              Proposals to wind-up the Company and the Subsidiary




Introduction

The Board of Framlington Global Financial & Income Fund Limited announced on 21
May 2004 that it was the intention of the Board to try to secure agreement from
the major holders of both classes of shares to enable a proposal for liquidation
to be put to all shareholders.

The Company is today posting a Circular to Shareholders of the Company and the
Subsidiary seeking their approval for the Company and Subsidiary to be placed
into a voluntary liquidation and setting out the proposals for the distribution
of the Group's assets (after payment of its liabilities) on such winding-up.

The following text comprises edited extracts from the Chairman's letter to
Shareholders in the Circular.

Background to and reasons for the Proposals

As at 14 May 2004, the total assets of the Group were only #4.9 million
(including #2.0 million outstanding under the Bank Loan). The covenants
contained in the Bank Loan required that, inter alia, the income of the Company
must be at least 150 per cent. of the total interest payment. Based on income
projections for the six months to 31 May 2004, the Board expected the Company to
be in breach of this covenant as at 31 May 2004. In view of the size of the
Group and the level of ongoing running expenses, which significantly exceed
income, the Board decided to repay the outstanding Bank Loan of #2.0 million in
full on 21 May 2004.

The significantly reduced size of the Group's total assets (being #2.71 million
as at close of business on 6 July 2004) means that it is anticipated that
expenses will exceed anticipated income on an annualised basis by approximately
#0.2 million. This level of expenses would further erode the amount capable of
being returned to Shareholders on a winding up of the Company and the
Subsidiary.

As noted in recent statements, the Directors have kept the strategic options for
the Group under review. In view of the size of the Group and the level of
ongoing running expenses, the Directors believe that it would be in the best
interests of Shareholders for proposals to be put to Shareholders now for a
voluntary winding up of the Company and the Subsidiary.

Reasons for the Proposals

The Subsidiary is not due to be wound up in the ordinary course until 16
December 2008. The arrangements between the Company and the Subsidiary (as set
out in the intra-group loan arrangements contained in the Loan Note and the
Contribution Agreement) provide for the Company to pay such amount to the
Subsidiary as is required to satisfy in full the entitlement of the ZDP Shares
on any winding up, or, to the extent that the Company does not have sufficient
assets to satisfy such entitlement in full, the Company shall pay to the
Subsidiary all of its remaining assets after payment of all other creditors of
the Company. The Ordinary Shareholders do not have any entitlement to the assets
of the Company unless and until the ZDP Shareholders have been repaid in full.

As a consequence, if the Company and the Subsidiary were to be wound up now, in
the absence of the Proposals, all of the Company's assets (including any
undistributed income) after payment of its liabilities would be attributable to
the holders of ZDP Shares.

The support of each class of Shareholder is needed for a winding up of the
Subsidiary and the Company before 16 December 2008. However, as no dividend is
currently being paid or is planned to be paid to Ordinary Shareholders and as it
is extremely unlikely that such shareholders would receive anything on a winding
up of the Subsidiary on the 16 December 2008, the Directors consider that only a
very small part of the Company's assets should be allocated to the Ordinary
Shares as part of the Proposals.

The Proposals

The entitlements under the Proposals have been arrived at after consultation
with major shareholders of each class of Share and after careful consideration
of their views.

The Proposals are that each of the Company and the Subsidiary be placed in
voluntary liquidation and that the Group's assets (after payment of the
liabilities and after deducting the costs of implementing the Proposals) on such
winding up be distributed as follows:


        For each Ordinary Share:     0.125p

        For each ZDP Share:          the balance of the assets of the Group
        proportionately

On the basis of the net asset value as at the close of business on 6 July 2004
of #2.71 million, it is currently estimated that the net assets available for
distribution to ZDP Shareholders on a liquidation would be approximately #2.44
million (equivalent to approximately 64.0p per ZDP Share). This assumes the
successful realisation of all the investments at carrying values, no claims
arising and deducts the payment of 0.125p in respect of each Ordinary Share (at
an aggregate cost of #100,000) and the estimated costs of the Proposals (see
"Expenses" below).

ZDP Shareholders should note that the amount finally distributed to them may be
different due to a variety of factors including movement in the value of the
underlying assets, the level at which assets can be realised, settlement of any
currently unknown or contingent liabilities and ongoing costs associated with
running the Group and the realisation process.

If the Proposals are implemented no dividends will be declared or recommended,
and holders of Ordinary Shares will not receive anything on the winding-up,
except as set out above. In order that the Ordinary Shareholders should receive
the amount of 0.125p per Ordinary Share allocated to them under the Proposals,
it is necessary to amend both the Loan Note and the Contribution Agreement by
means of the Company and the Subsidiary entering into the Deed of Amendment. The
amendments require the approval of the ZDP Shareholders at the ZDP Class Meeting
and the Subsidiary at the Subsidiary Extraordinary General Meeting.

Liquidation and Dealings

Assuming that the liquidations of the Company and the Subsidiary are approved on
29 July 2004 and in the absence of unforeseen circumstances, the Liquidators
envisage that they should be in a position to make distributions by Friday 10
September 2004 to (i) Ordinary Shareholders of 0.125p per Ordinary Share and
(ii) ZDP Shareholders in an amount equal to the surplus assets of the Group
after reserving for creditor claims, if any, not previously agreed and paid, the
payment to Ordinary Shareholders and the costs of the Proposals.

Dealings in the Shares on the London Stock Exchange and the Channel Islands
Stock Exchange will be suspended at the opening of business on Thursday 29 July
2004 and on the same date the listing on the Official List of the UK Listing
Authority will be suspended.

The Shareholders' registers will be closed at the close of business on Thursday
29 July 2004 and, to be valid, all transfers must be lodged and transactions of
CREST settled with the Registrars before that time. Transfers received by the
Registrars after close of business on Thursday 29 July 2004 will be returned to
the person lodging them. Shareholders should note that dealings in the Shares
after close of business on Monday 26 July 2004 should therefore be for cash
settlement only.

Support for the Proposals

The Board has received irrevocable undertakings to vote in favour of the
Resolutions from Shareholders holding 21.8 per cent. of the issued Ordinary
Shares and 52.0 per cent. of the issued ZDP Shares and statements of intention
to vote in favour of the Resolutions from Shareholders holding 3.5 per cent. of
the issued Ordinary Shares and 9.6 per cent. of the issued ZDP Shares.

Expenses

The expenses incurred in relation to the Proposals, including financial advice,
other professional advice and the Liquidators' fees and expenses, are estimated
to amount to #175,000.

Extraordinary General Meetings and ZDP Class Meeting

The implementation of the Proposals will require Shareholders to vote in favour
of all the resolutions to be proposed at the ZDP Class Meeting and the
Extraordinary General Meetings of the Company and the Subsidiary which have been
convened on Thursday 29 July 2004 starting at 10.00am.

Recommendation

The Directors, who have been advised by Hoare Govett Limited, consider that the
Proposals are in the best interests of the Shareholders as a whole. In providing
its advice, Hoare Govett Limited has placed reliance on the Directors'
commercial assessment of the Proposals.

Expected Timetable
                                                                                                               2004
Latest time and date for receipt of forms of proxy                                       10.00am on Tuesday 27 July

Suspension of Shares from trading on the London Stock Exchange and                       7.30am on Thursday 29 July
the Channel Islands Stock Exchange and suspension of listing on the
Official List

ZDP Class Meeting                                                                       10.00am on Thursday 29 July

Extraordinary General Meeting of the Subsidiary                                         10.05am on Thursday 29 July

Extraordinary General Meeting of the Company                                            10.10am on Thursday 29 July

Share registers close                                                         Close of business on Thursday 29 July

Cancellation of the listing of the Shares on the Official List                                  Wednesday 25 August

Liquidation distributions                                                                    By Friday 10 September


                                   -- Ends --


Enquiries:

Hugh Field                     Hoare Govett           020 7678 8000


The definitions used in this announcement are as set out in the Circular dated 8
July 2004

Hoare Govett Limited is acting for Framlington Global Financial & Income Fund
Limited and Framlington Global Financial & Income Securities Limited and no one
else in connection with the Proposals and will not be responsible to any person
other than Framlington Global Financial & Income Fund Limited and Framlington
Global Financial & Income Securities Limited for providing the protections
afforded to clients of Hoare Govett Limited or for providing advice in relation
to the Proposals.

A copy of the Circular is available for inspection at the UKLA's Document
Viewing facility at 25 The North Colonnade, Canary Wharf, London E14 5HS.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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