Invesco Inc Grth Tst Publication of Circular

 
TIDMIVI 
 
Invesco Income Growth Trust Plc - Circular re. General Meetings 
 
           Invesco Income Growth Trust plc (the "Company" or "IVI") 
 
 Recommended Proposals for the Voluntary Winding-Up and Reconstruction of the 
                                    Company 
 
30 March 2021 
 
On 1 December 2020, the Board announced that it had agreed heads of terms with 
Invesco Select Trust plc ("IST") in respect of a proposed merger of the Company 
with IST to be effected by way of a scheme of reconstruction of the Company 
under Section 110 of the Insolvency Act 1986. 
 
The Company is today sending a circular to Shareholders in connection with the 
Proposals (the "Circular"). 
 
Defined terms used in this announcement have the meanings given to them in the 
Circular. 
 
The Proposals, which are unanimously recommended by the Board, comprise a 
members' voluntary liquidation (solvent liquidation) and a scheme of 
reconstruction of the Company pursuant to which Shareholders will be entitled, 
in respect of their shareholdings, to: 
 
 1. elect to receive IST UK Equity Shares (the "Rollover Option"); and/or 
 
 2. elect to receive cash (the "Cash Option"). 
 
Shareholders can make different Elections in respect of different parts of 
their holdings. The maximum number of Ordinary Shares that can be elected for 
the Cash Option is 30 per cent. of the total number of Ordinary Shares in issue 
(excluding Ordinary Shares held in treasury).  Shareholders are entitled to 
elect for the Cash Option in respect of more than 30 per cent. of their 
individual holdings of Ordinary Shares.  However, if aggregate Elections are 
made for the Cash Option which exceed 30 per cent. of the issued Ordinary 
Shares (excluding Ordinary Shares held in treasury), Shareholders who have made 
an Election for the Cash Option in excess of their Basic Entitlement shall have 
their Excess Applications scaled back in a manner which is, as near as 
practicable, pro rata to the number of Shares elected under such Excess 
Applications. 
 
Shareholders who make no Election (or no valid Election) will be deemed to have 
elected for the Rollover Option in respect of their entire holding of Ordinary 
Shares.  To the extent that an Overseas Shareholder would otherwise receive IST 
UK Equity Shares under the Scheme, either because no Election for the Cash 
Option was made or because an Excess Application for the Cash Option is scaled 
back in accordance with the Scheme, then such IST UK Equity Shares may be sold 
by the Liquidators in the market and the net proceeds paid to the relevant 
Overseas Shareholder. 
 
Background to and rationale for the Proposals 
 
At the Company's annual general meeting held on 10 September 2020, Shareholders 
voted in favour of a resolution for the continuation of the Company as a 
closed-ended investment company. Noting that just over 20 per cent. of those 
Shareholders who voted on the continuation resolution voted against the 
resolution, the Board announced that it would assess with its advisers the 
votes cast and engage with Shareholders as appropriate to determine what, if 
any, action to take. 
 
The Board and its advisers have subsequently undertaken a comprehensive review 
of the Company's competitive positioning and, following that review, concluded 
that a merger with IST will offer Shareholders the best way to continue their 
investment in a closed-ended investment vehicle with a similar investment 
objective and the same manager, but in a vehicle whose shares trade at a 
tighter discount to net asset value per share than the persistently wide 
discount to net asset value at which the Ordinary Shares have historically 
traded. 
 
The Proposals also allow those Shareholders who voted against the continuation 
resolution the opportunity for a partial cash exit at near to net asset value 
(less a discount of 2.5 per cent). Conditional upon the Scheme becoming 
effective, the Proposals would result in those assets in the Company which are 
to be transferred to IST pursuant to the Scheme forming part of the IST UK 
Equity Portfolio. 
 
Benefits of the Proposals 
 
The Directors consider that the Proposals should have the following benefits 
for Shareholders as compared to their current position, or under a simple 
liquidation scenario: 
 
  * They enable Shareholders to roll over some or all of their investment into 
    IST, which is proposing to amend the investment objective and policy of the 
    IST UK Equity Portfolio to make it more compatible with the investment 
    objective and policy of the Company. 
 
  * Shareholders who may be subject to UK capital gains tax or corporation tax 
    on chargeable gains should be able to roll over their investments into IST 
    and thereby continue to receive investment returns without triggering an 
    immediate liability to UK capital gains tax or corporation tax on 
    chargeable gains. 
 
  * For Shareholders electing for the Rollover Option, it is anticipated that 
    they should be able to continue to receive similar levels of income in IST 
    as they did as Shareholders of the Company. 
 
  * For those Shareholders electing for the Rollover Option, the Proposals are 
    anticipated to result in an uplift in the market value of their investments 
    due to the narrower discount to net asset value at which the IST UK Equity 
    Shares have historically traded compared with the Ordinary Shares. 
 
  * For those Shareholders electing for the Rollover Option, the structure of 
    IST should enable IST Shareholders to elect in the future to convert some 
    or all of their shareholding into shares of another class within IST 
    (currently on a quarterly basis, with the next conversion opportunity 
    expected to occur in or around July 2021), thereby giving them the ability 
    to diversify their investment into portfolio(s) of different asset class 
    (es) within IST. 
 
  * The Cash Option provides Shareholders with the option to realise part of 
    their shareholding at a price which is close to the prevailing net asset 
    value per share less a discount of 2.5 per cent. 
 
  * Shareholders who roll their investment into IST will hold their investment 
    in an enlarged vehicle. The increase in the size of IST will allow fixed 
    costs to be spread over a larger cost base, thereby improving the ongoing 
    charges ratio for the benefit of IST Shareholders, and may result also in 
    better liquidity for their shares trading on the London Stock Exchange 
    compared to the current level of trading liquidity in the Company's shares. 
 
  * Shareholders electing for the Rollover Option will not suffer the full 
    dealing costs that would be incurred on the realisation of the Company's 
    portfolio in the event of a simple winding-up. 
 
  * Invesco (in its capacity as the investment manager of IST) has agreed to 
    waive, subject to the Scheme becoming effective, its entitlement to any 
    performance fee accrued in respect of the IST UK Equity Portfolio up to the 
    Effective Date (the "IST Accrued Performance Fee Waiver"); the benefit of 
    such accrued performance fee waiver shall be shared by both the IST UK 
    Equity Portfolio and those Shareholders who elect for the Rollover Option 
    on a pro rata basis. 
 
    The management fee currently payable by the Company to Invesco is based on 
    market capitalisation and is 0.60 per cent. per annum on the first £150 
    million and 0.50 per cent. per annum above that level.Upon the 
    implementation of the Scheme (and subject to the Scheme becoming 
    effective): 
 
      + the management fee payable by IST in respect of the IST UK Equity 
        Portfolio will be reduced to 0.55 per cent. per annum on the net assets 
        of the IST UK Equity Portfolio up to £100 million and 0.50 per cent. 
        per annum on the net assets of the IST UK Equity Portfolio over £100 
        million; and 
 
      + Invesco's entitlement to future performance fees in respect of the IST 
        UK Equity Portfolio will be removed in its entirety. 
 
Invesco has agreed to waive, subject to the Scheme becoming effective, the 
termination fee which would otherwise be payable to it in respect of the 
termination of the existing investment management agreement with the Company on 
the Effective Date (the "Termination Fee Waiver Amount"). 
 
Summary of the mechanics of the scheme 
 
On or shortly after the Calculation Date (being 5.00 p.m. on 15 April 2021), 
the Company NAV and IST UK Equity NAV as at the Calculation Date shall be 
determined. 
 
Appropriation of the Company's assets into three pools 
 
On or shortly after the Calculation Date, the Board, in consultation with the 
proposed Liquidators, shall finalise the division of the Company's undertaking, 
cash and other assets into three separate and distinct pools (the Liquidation 
Pool, the Cash Pool and the Rollover Pool), as follows: 
 
  * First, there shall be appropriated to the Liquidation Pool such 
    undertaking, cash and other assets of the Company of a value sufficient to 
    meet the outstanding current and future liabilities, including contingent 
    liabilities, of the Company and a retention to meet unknown and 
    unascertained liabilities of the Company (the "Retention"). 
 
  * Second, there shall be appropriated to the Cash Pool and to the Rollover 
    Pool the balance of the undertaking, cash and other assets of the Company 
    remaining after the appropriation of the Liquidation Pool referred to 
    above, of a value equal to that attributable to the Elections (which shall 
    include deemed Elections) for the Cash Option and the Rollover Option 
    respectively, on the basis that the value attributable to each Election for 
    the purposes of the appropriation shall be the Residual Net Asset Value per 
    Ordinary Share multiplied by the number of Ordinary Shares to which that 
    Election relates. 
 
    Adjustments to the Cash Pool and Rollover Pool 
 
  * Next, the Cash Pool will be adjusted so that the Cash Pool Discount (being 

    an amount equal to 2.5 per cent. of the value of the Cash Pool as at the 
    Calculation Date) will be deducted from the Cash Pool and instead will be 
    applied towards the Total Benefits. 
 
    (The Total Benefits will be allocated to the Rollover Pool and the IST UK 
    Equity Portfolio in such manner as described in the sub-section headed " 
    IIGT FAV and IST UK FAV" below.) 
 
  * The Rollover Pool as at the Calculation Date will also be adjusted and the 
    adjustments will be made in such manner as described in the sub-section 
    headed "IIGT FAV and IST UK FAV" below. 
 
    Total Costs and Total Benefits 
 
    The Total Costs and Total Benefits, both to be fixed as at the Calculation 
    Date, shall be determined and agreed between the Board (in consultation 
    with the proposed Liquidators) and the IST Board. 
 
    Total Costs means the following costs and expenses relating to the Company 
    and IST which are attributable to the implementation of the Scheme and 
    which are fixed as at the Calculation Date: 
 
Costs and expenses relating to the      Costs and expenses relating to IST 
Company                                  (to be borne by the IST UK Equity 
                                                                Portfolio) 
 
Company's financial adviser                        IST's financial adviser 
 
Company's legal adviser                                IST's legal adviser 
 
Fee of the Liquidators                                           Registrar 
 
Reporting accountant                                  Reporting accountant 
 
Receiving agent                            Printing and postage of the IST 
                                               Prospectus and IST Circular 
 
D&O run off                             Other miscellaneous costs directly 
                                        attributable to the publication of 
                                       the IST Prospectus and IST Circular 
 
Printing and postage of the Company's 
Scheme circular and the Forms 
 
Other miscellaneous costs directly 
attributable to the implementation of 
the Scheme 
 
Total Costs shall not include any of the following: 
 
  * any costs and expenses incurred by either the Company and/or IST in 
    realising or realigning their respective portfolios in connection with the 
    implementation of the Scheme; 
 
  * stamp duty on the transfer of assets from the Company to IST; 
 
  * any dividends which have been declared by either the Company or IST prior 
    to the Calculation Date but not yet paid to the relevant company's 
    shareholders; 
 
  * any fees and expenses in connection with the application for the Admission 
    of the IST UK Equity Shares; and 
 
  * the Retention. 
 
    Total Benefits means (i) the Cash Pool Discount and (ii) the amount 
    representing the IST Accrued Performance Fee Waiver, both of which are 
    fixed as at the Calculation Date.  For the avoidance of doubt, the 
    Termination Fee Waiver Amount shall not be included in the Total Benefits. 
 
    IIGT FAV and IST UK FAV 
 
    The Total Costs and Total Benefits will be allocated to the Rollover Pool 
    and the IST UK Equity Portfolio as at the Calculation Date on a pro rata 
    basis by reference to the Company NAV and the IST UK Equity NAV 
    respectively as at the Calculation Date (the Company's pro rata portion 
    being the "IIGT Proportion" and the IST UK Equity Share class's pro rata 
    portion being the "IST Proportion"). 
 
    As a result of such pro rata allocations to the Rollover Pool and the IST 
    UK Equity Portfolio as at the Calculation Date: 
 
  * the value of the Rollover Pool as at the Calculation Date will therefore be 
    adjusted. Such adjusted value of the Rollover Pool shall be referred to as 
    the "IIGT FAV"; and 
 
  * the IST UK Equity NAV as at the Calculation Date will therefore be 
    adjusted. Such adjusted net asset value of the IST UK Equity Portfolio 
    shall be referred to as the "IST UK FAV". 
 
    For illustrative purposes only, if the Company NAV as at the Calculation 
    Date is £80 million and the IST UK Equity NAV as at the Calculation Date is 
    £20 million, the Total Costs and Total Benefits will be split between the 
    Rollover Pool and the IST UK Equity Portfolio on a 4:1 basis. If the Total 
    Costs as at the Calculation Date are £100,000 and the Total Benefits as at 
    the Calculation Date are £50,000, then the IIGT Proportion of the Total 
    Costs will be equal to £80,000 and the IST Proportion of the Total Costs 
    will be equal to £20,000, and the IIGT Proportion of the Total Benefits 
    will be equal to £40,000 and the IST Proportion of the Total Benefits will 
    be equal to £10,000. The value of the Rollover Pool as at the Calculation 
    Date will therefore be adjusted to take into account the deduction of £ 
    80,000 from it and the allocation of £40,000 to it, and the IST UK Equity 
    NAV as at the Calculation Date will therefore be adjusted to take into 
    account the deduction of £20,000 from it and the allocation of £10,000 to 
    it. 
 
    Conversion ratio 
 
    The issue of IST UK Equity Shares under the Rollover Option will be 
    effected on a "formula asset value per share for formula asset value per 
    share" basis as at the Calculation Date, at a conversion ratio based on the 
    IIGT FAV per Share and IST UK FAV per Share as at the Calculation Date. 
 
    Effective Date 
 
    On the Effective Date, the cash, undertaking and other assets of the 
    Company comprising the Rollover Pool shall be transferred to IST, for the 
    benefit of the IST UK Equity Portfolio. In consideration for the transfer 
    of the Rollover Pool to the IST UK Equity Portfolio under the Transfer 
    Agreement, the relevant numbers of IST UK Equity Shares will be allotted to 
    the Liquidators who will renounce the IST UK Equity Shares in favour of the 
    Shareholders who elect or are deemed to have elected for the Rollover 
    Option (save for any Overseas Shareholders). 
 
Shortly following the Effective Date, the Liquidators will distribute the net 
realisation proceeds (following the realisation of the Cash Pool) to the 
Shareholders who have elected for the Cash Option in accordance with their 
respective entitlements under the Scheme. 
 
Special Dividend 
 
The Directors have declared a special dividend of 8.35 pence per Share (the " 
Dividend") and Shareholders who are on the Register as at 6.00 p.m. on 6 April 
2021 will be entitled to receive such dividend, subject to the passing of the 
Resolutions at the First General Meeting. The Dividend incorporates an amount 
equal to the Company's expected net income for the period from 1 April 2021 to 
22 April 2021 and the balance represents an amount in lieu of the fourth 
interim dividend for the year ended 31 March 2021 and brought forward revenue 
reserves. The Dividend will be paid on 21 April 2021. The ex-dividend date will 
be 1 April 2021. 
 
It is not anticipated that there will be further dividends paid in relation to 
the current financial period or for the period up to the liquidation of the 
Company. 
 
Conditions of the Proposals 
 
Implementation of the Proposals is subject to a number of conditions, 
including: 
 
 1. the passing of the Resolutions to be proposed at the First General Meeting 
    and the Resolution to be proposed at the Second General Meeting, or any 
    adjournment of those meetings, and any conditions of such Resolutions being 
    fulfilled; 
 
 2. the Financial Conduct Authority agreeing to amend the listing of the 
    Ordinary Shares to reflect their reclassification as Reclassified Shares 
    for the purpose of implementing the Scheme; 
 
 3. the IST Resolutions being passed and becoming unconditional in all 
    respects; 
 
 4. the approval of the Financial Conduct Authority and the London Stock 
    Exchange to the Admission of the IST UK Equity Shares to the Official List 
    and to trading on the main market of the London Stock Exchange, 
    respectively; and 
 
 5. the Directors resolving to proceed with the Scheme. 
 
    If any condition is not satisfied, the Proposals will not become effective, 
    the Company will not proceed with the winding-up and instead will continue 
    in existence. In these circumstances, the Directors will reassess the 
    options available to the Company at that time. 
 
Shareholder Meetings 
 
The implementation of the Proposals will require two general meetings of the 
Company.  The notices convening the First General Meeting (to be held at 10.30 
a.m. on 15 April 2021) and the Second General Meeting (to be held at 11.00 a.m. 
on 23 April 2021) are set out at the end of the Circular. 
 
As a result of the Covid-19 pandemic and associated UK Government guidance, 
attendance at the General Meetings is not expected to be possible. Arrangements 
will be made by the Company to ensure that a minimum number of Shareholders 
required to form a quorum will attend each of the General Meetings in order 
that the meetings may proceed. 
 
Recommendation and voting intentions 
 
The Board, which has received financial advice from J.P. Morgan Cazenove, 
considers the Proposals and the Resolutions to be in the best interests of 
Shareholders as a whole.  Accordingly, the Board unanimously recommends 
Shareholders to vote in favour of the Resolutions, as the Directors intend to 
do in respect of their own beneficial holdings, which total 113,527 Ordinary 
Shares (representing approximately 0.19 per cent. of the Company's total voting 
rights) as at the Latest Practicable Date.  In providing advice to the Board, 
J.P. Morgan Cazenove has relied on the Board's commercial assessment of the 
Proposals. 
 
Expected Timetable 
 
                                                                          2021 
 
Ex dividend date for the Dividend                                      1 April 
 
Record date for the Dividend                                           6 April 
 

Latest time and date for receipt of Forms of Proxy in   10.30 a.m. on 13 April 
respect of the First General Meeting 
 
Latest time and date for receipt of Forms of Election    1.00 p.m. on 14 April 
and/or TTE Instructions from Shareholders 
 
Record Date for entitlements under the Scheme          close of business on 14 
                                                                         April 
 
First General Meeting                                   10.30 a.m. on 15 April 
 
Calculation Date                                         5.00 p.m. on 15 April 
 
Dividend paid to Shareholders                                         21 April 
 
Latest time and date for receipt of Forms of Proxy in   11.00 a.m. on 21 April 
respect of the Second General Meeting 
 
Ordinary Shares disabled in CREST                      close of business on 21 
                                                                         April 
 
Reclassification of the Ordinary Shares [2]              8.00 a.m. on 22 April 
 
Suspension of listing of Reclassified Shares             7.30 a.m. on 23 April 
 
Second General Meeting                                  11.00 a.m. on 23 April 
 
Effective Date for implementation of the Scheme                       23 April 
 
Announcement of the results of Elections, IIGT FAV per                23 April 
Share, IST UK FAV per Share and conversion ratio 
 
CREST accounts credited with, and dealings commence      8.00 a.m. on 26 April 
in, IST UK Equity Shares 
 
Certificates despatched in respect of IST UK Equity      week commencing 3 May 
Shares during or as soon as practicable after 
 
Cheques despatched to Shareholders who elect for the     week commencing 3 May 
Cash Option in accordance with their entitlements and 
CREST accounts credited with cash 
 
Cancellation of listing of Reclassified Shares          as soon as practicable 
                                                           after the Effective 
                                                                          Date 
 
Enquiries: 
 
J.P. Morgan Cazenove                                 [phone] 
William Simmonds 
 
Invesco Asset Management Limited          [phone] 
Angus Pottinger 
Will Ellis 
 
LEI: 549300DI4285Q8ZFO135 
 
[1] Please note that this is not a profit forecast and there can be no 
assurance that any distributions or dividend levels can be achieved. Please 
also note that the IST Board has not set dividend targets for the year to 31 
May 2021. 
 
[2] Reclassified Shares are a technical requirement of the Scheme and will be 
created if Resolution 1 to be proposed at the First General Meeting is passed 
and becomes effective. Ordinary Shares will be reclassified according to the 
Elections made (or deemed to be made) by Shareholders. 
 
 
 
END 
 
 

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March 30, 2021 10:00 ET (14:00 GMT)