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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Royal Lon Tst | LSE:RLU | London | Ordinary Share | GB0030794050 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 19.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number : 0717B Royal London UK Eqty&Income Tst PLC 11 August 2008 Royal London UK Equity & Income Trust plc (the "Company") and Royal London UK Equity & Income Securities plc (the "Subsidiary") Recommended Winding-Up of the Company and Reconstruction Proposals The Boards of Royal London UK Equity & Income Trust plc (the "Company") and Royal London UK Equity & Income Securities plc (the "Subsidiary") on Friday, 8 August 2008 announced recommended Proposals for the members' voluntary liquidation and reconstruction of the Company and the Subsidiary. Under the Proposals, Shareholders will have the choice to roll over their investment in a tax efficient manner by electing to receive units ("Rollover Securities") in either one or more of the following UK authorised unit trusts ("Rollover Funds") as follows: * Royal London UK Growth Trust; * Royal London Corporate Bond Trust; and/or * Royal London Cash Trust * and/or elect to receive cash. Shareholders may elect for a mixture of Rollover Securities and/or cash, as suits their personal investment requirements. Further details of the choices for Shareholders can be found in the section "Summary of options". If you elect to receive Rollover Securities in respect of some or all of your Shares then the number of Rollover Securities you will receive will be determined by the creation price of the Rollover Securities and the Terminal (Transfer Date) Value per Share of the Shares you hold. If you elect to receive cash in respect of some or all of your Shares then you will receive payment in the amount of the Terminal Value per Share of the Shares you hold. Under the Proposals and as agreed with the Royal London Group, the Terminal Value of the Annuity Shares will be fixed at 101.93p per Annuity Share (including an amount in respect of arrears of unpaid cumulative dividends). In accordance with the Articles of Association of the Subsidiary, the Terminal Value of the ZDP Shares will be 179.89p per ZDP Share. Ordinary Shareholders have the right to receive the surplus assets of the Company after providing for its liabilities including amounts due to Annuity Shareholders and ZDP Shareholders. On the basis of the Illustrative Terminal Assets set out under the "The Proposals" below, the Terminal Value of each Ordinary Share would result in Ordinary Shareholders receiving 19.65p per Ordinary Share on 12 September 2008. However, Ordinary Shareholders should note that the actual value of cash and/or Rollover Securities they receive under the Proposals may differ from the values based on the Illustrative Terminal Assets as a result of, inter alia, changes in the value of the Company's or the Subsidiary's investments up to the Transfer Date. Accordingly the actual value which will be distributed to Ordinary Shareholders in cash and/or Rollover Securities may vary from that indicated above. The Proposals, so far as they relate to the Company, are conditional upon and require by law, inter alia, the approval of Shareholders, which is sought to be given at the Separate General Meetings and the First Company EGM both convened for 3 September 2008 and the Second Company EGM convened for 11 September 2008 (or, in each case, at any adjournment of such Meetings). So far as they relate to the Subsidiary, the Proposals are conditional on such shareholder approvals being given at the First Subsidiary EGM convened for 3 September 2008 and the Second Subsidiary EGM convened for 11 September 2008. The consequences of Shareholders not approving the winding-up of the Company and the Subsidiary are set out under the heading "Consequences of Ordinary Shareholders not approving the winding-up and reconstruction of the Company". Shareholders are encouraged to complete and return their Forms of Proxy whether or not they intend to attend the Meetings and Shareholders are encouraged to make an Election for the Option(s) they would prefer in respect of their Shares. Shareholders who do not return a validly completed Form of Election or who do not make a valid Election for the purposes of the Proposals will be deemed to have made an Election for cash in respect of their entire holding. Background to and reasons for the Proposals The Company and the Subsidiary were established in August 2001. The Company had an investment objective of providing Ordinary Shareholders with the potential for income and capital growth and providing Annuity Shareholders with a cumulative preferred and fixed level dividend of 8.5 pence per annum and a cumulative dividend yield of 8.5 per cent. per annum at the issue price of £1.00. The investment objective of the Subsidiary was to provide ZDP Shareholders with a final capital entitlement of 179.89p per share. At the time of the launch, it was envisaged that the Group would seek to achieve its objective through (a) the Growth Portfolio, which would be invested predominantly in UK listed equity securities drawn from the FTSE All-Share Index; (b) the Income Portfolio, which would be invested in highly geared ordinary shares, income shares and, when appropriate, capital shares of split capital investment trusts, other closed-end funds and convertible issues; and (c) the Bond Portfolio, which would be invested in UK corporate bonds but would have the option to invest in overseas bond markets. At the time of the launch, the Company also entered into a loan facility with Royal Bank of Scotland ("Bank Loan") under which it was entitled to draw down up to 40 per cent. of the initial gross assets of the Group (up to a maximum of £100 million). The Bank Loan was for a term of seven years. The ZDP Shares have a fixed life and are due to be repaid on the last preceding business day before 14 September 2008 (this being Friday 12 September 2008). The Annuity Shares also have a fixed life and the Articles of Association of the Company provide for the Annuity Shares to be redeemed for 75p per Annuity Share (plus an amount equal to any arrears on the fixed cumulative preferential dividend payable on the Annuity Shares) on 14 September 2021, and provide further that the Company may not be wound up prior to that date without the sanction of an extraordinary resolution of the holders of Annuity Shares passed at a separate general meeting of such holders. On 15 May 2008 the Company announced that it had reached agreement with the Royal London Group that the Royal London Group, which is the holder of all of the Annuity Shares, would agree to vote in favour of proposals to wind the Company up on the basis that the Royal London Group receives in respect of the Annuity Shares a payment of 95.3 pence per Annuity Share on the winding up of the Company, equating to a redemption yield of 8.2 per cent. per annum over the period from the launch of the Company to the proposed liquidation date, plus payment of any arrears of cumulative dividends owed on the Annuity Shares down to the date of liquidation. Following the announcement made on 15 May 2008, the Company has undertaken an orderly realisation of its investment portfolio so that the portfolio is in the most part held in cash and near-cash equivalent securities. The Company also repaid the outstanding balance on the Bank Loan early, on 17 July, 2008. Given the continued persistence of the discount of the market price of the Ordinary Shares to the Net Asset Value attributable to those Shares in the period up until 15 May 2008 (the date of the announcement of the intention of the Company to seek to enter into voluntary liquidation) and given further the agreement of the Royal London Group to support the winding up of the Company, the Board believes that the Proposals for reconstruction and winding up of the Company will best allow Shareholders to realise the value of their investment in the Company. Under the Subsidiary's Articles of Association, the Directors are obliged to convene an extraordinary general meeting of the Subsidiary prior to 14 September 2008 at which either a Liquidation Resolution or a Reconstruction Resolution must be proposed (and which, pursuant to the terms of the Articles of Association, will be passed by virtue of the Company, as the sole holder of Ordinary (Subsidiary) Shares, voting in favour) unless the Directors have been released from their obligation to do so by a special resolution of the Subsidiary. If the Company and the Subsidiary were simply wound up this would result in all Shareholders receiving cash for their investment and, depending on their individual circumstances, incurring a liability to capital gains tax. The Directors believe that some Shareholders may wish to continue their investment through one or more successor vehicles rather than simply to receive cash in a liquidation. The Proposals have been designed to provide Shareholders with options to permit them to roll over their investment in a potentially tax-efficient manner, rather than simply putting the Company and the Subsidiary into voluntary liquidation. The Proposals General At the First Subsidiary EGM a Reconstruction Resolution will be proposed which, if passed, will reclassify the ZDP Shares, authorise the implementation of the Scheme by the Liquidators and amend the Articles of Association of the Subsidiary for the purposes of its implementation. Separate General Meetings of the Ordinary Shareholders and of the Annuity Shareholders will then be held at which extraordinary resolutions will be proposed which, if passed, will approve the resolutions to be proposed at the First and the Second Company EGM, the implementation of the Proposals and the Company Scheme and the amendments to the rights attached to the Ordinary Shares and the Annuity Shares respectively. Following the Separate General Meetings the First Company EGM will be held, at which special resolutions will be proposed, which, if passed, will approve the variation of the rights of the Ordinary Shares and Annuity Shares (including the reclassification of the Ordinary Shares and the Annuity Shares), authorise the implementation of the Scheme by the Liquidators and amend the Articles of Association of the Company for the purposes of the implementation. Eight days subsequent to the above meetings, the Second Company EGM and the Second Subsidiary EGM will be held at which special resolutions will be proposed which, if passed, will place the Company and the Subsidiary respectively, in liquidation, instruct the Company Secretary to hold the books to the Liquidators' order and appoint the proposed Liquidators. Following the passing of the winding-up resolutions at the Second Company EGM and the Second Subsidiary EGM, the Company and Subsidiary will enter into members' voluntary liquidation and the listings of the Ordinary Shares and ZDP Shares on the Official List and listings of the Ordinary Shares, Annuity Shares and ZDP Shares on CISX will in due course be cancelled. Details of the Proposals Subject to the restrictions relating to Overseas Shareholders and subject also to the Scheme becoming unconditional in all respects, Shareholders will have a choice between continuing their investment by electing for one or more of the Rollover Securities listed above and/or realising some or all of their investment for cash under the Cash Option. Ordinary Shares On a winding-up the holders of Ordinary Shares in the Company are entitled to the surplus assets of the Company and the Subsidiary remaining after payment of all debts and satisfaction of all liabilities of the Company and the Subsidiary including meeting the entitlements of the ZDP Shareholders and Annuity Shareholders. For illustrative purposes, the capital only net assets of the Company attributable to Ordinary Shareholders as at 1 August 2008 as announced on 6 August 2008 (being the latest practicable date prior to the printing of this document) were approximately £19.251 million. Adjusting this for the inclusion of current period revenue, for the agreed enhanced return of 20.3p per Annuity Share, and for the arrears of cumulative dividends accrued on the Annuity Shares up to and including 11 September 2008 of 6.63p per Annuity Share, for the additional accrual of 1.81p per ZDP Share to provide for their Terminal Value, and providing for the anticipated costs of the Proposals (estimated at approximately £500,000), for the termination payments to the Manager and Company Secretary of £62,000 and £30,000, respectively, and for the Retention anticipated to be required by the Liquidators (to meet contingent and unknown liabilities) of £75,000, and for a revaluation of the assets at mid-market values (as will apply under the Schemes) instead of at bid value, results in Illustrative Terminal Assets of £13.754 million. Based on the Illustrative Terminal Assets above and assuming (i) that there is no change in those net assets between now and the Effective Date; and (ii) that units in Royal London UK Growth Trust, Royal London Corporate Bond Trust and Royal London Cash Trust are issued at 170.8p, 82.96p and 101.8p respectively (being their issue price at mid-day on 1 August 2008); this would give rise to the following payments per Ordinary Share in cash or Rollover Securities under the Proposals: 19.65p in cash; or 0.11505 units in Royal London UK Growth Trust; or 0.23686 units in Royal London Corporate Bond Trust; or 0.19303 units in Royal London Cash Trust. THESE FIGURES ARE PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY. ZDP Shares In accordance with the terms of the Subscription Agreement, the Company will contribute to the Subsidiary such funds as will ensure that the Subsidiary will have sufficient funds to satisfy the final capital entitlement of the holders of ZDP Shares. Based on the Illustrative Terminal Assets of the Company, as described above, and assuming (i) that there is no change in those net assets between now and the Effective Date which would prevent the Company from contributing such funds to the Subsidiary as will ensure that the Subsidiary will be able to satisfy the final capital entitlement of the ZDP Shares, and (ii) that units in Royal London UK Growth Trust, Royal London Corporate Bond Trust and Royal London Cash Trust are issued at 170.8p, 82.96p and 101.8p respectively (being their issue price at mid-day on 1 August 2008); this would give rise to the following payments per ZDP Share in cash or Rollover Securities under the Proposals: 179.89p in cash; or 1.05322 units in Royal London UK Growth Trust; or 2.16839 units in Royal London Corporate Bond Trust; or 1.76709 units in Royal London Cash Trust. THESE FIGURES ARE PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY. General Under the Proposals, both the Company and the Subsidiary will be wound up by means of members' voluntary liquidations. The Liquidators will set aside sufficient assets in the Liquidation Funds of the Company and the Subsidiary to meet their respective liabilities. The Liquidators will also provide in the Liquidation Funds for a Retention which they consider sufficient to meet any contingent and unknown liabilities of the Company and the Subsidiary. The Retention is currently expected to amount to £65,000 for the Company and £10,000 for the Subsidiary. Under the Schemes, Shareholders will have their Shares reclassified respectively as Shares with A Rights (in respect of Elections made, or deemed to be made, for Royal London UK Growth Trust Units), Shares with B Rights (in respect of Elections made, or deemed to be made, for Royal London Corporate Bond Trust Units), Shares with C Rights (in respect of Elections made, or deemed to have been made, for Royal London Cash Trust Units) and Shares with Cash Rights (in respect of Elections made, or deemed to have been made, for the Cash Option). The Liquidators will transfer the remaining assets of the Company and the Subsidiary to the Rollover Funds, other than those assets set aside by the Liquidators in the Liquidation Funds. Assets in proportion to Elections validly made for Rollover Securities or cash will be allocated to the A Fund, B Fund, C Fund and Liquidation Funds respectively and to which the Shares with A Rights, B Rights, C Rights and Cash Rights will be entitled. The transfer of assets in the A Fund, the B Fund and the C Fund will be in consideration for the issue of Rollover Securities by the Rollover Funds to the relevant Shareholders. An amendment to the Official List has been sought from the UK Listing Authority and the London Stock Exchange for the Reclassified Ordinary Shares and the Reclassified ZDP Shares to trade on the main market of the London Stock Exchange in place of the Ordinary Shares and ZDP Shares respectively. If the Company Scheme is not approved by Shareholders of the Company at the Separate General Meeting of the Ordinary and Annuity Shareholders and the First Company EGM then the Directors do not intend to put the winding-up resolutions to the Company at the Second Company EGM. However, the Directors would, as required by the Articles of Association of the Subsidiary, continue to put forward the Proposals insofar as they relate to the Subsidiary Scheme. With regards to the Subsidiary Scheme the Directors note that, in accordance with the Articles of Association of the Subsidiary, the Company, in its capacity as holder of all but one of the Ordinary (Subsidiary) Shares will have four times the number of votes on the resolution to approve the Subsidiary Scheme as the holders of the ZDP Shares. As the Directors intend that the Company shall vote the Ordinary (Subsidiary) Shares in favour of the Subsidiary Scheme, the Subsidiary Scheme will be approved at the First Subsidiary EGM. If, for any reason, the Ordinary (Subsidiary) Shares were not voted in favour of the Proposals as they relate to the Subsidiary Scheme then the Directors would withdraw all of the Proposals (in relation to both the Company and the Subsidiary) and neither of the Schemes would proceed. The Schemes pursuant to which Shareholders will receive their entitlements under the Proposals are set out in the Circular. The consequences of Shareholders of the Company not approving the winding-up of the Company are set out below. Benefits of the Schemes The Directors consider that the Schemes should have the following benefits for Shareholders: * in respect of Elections made for Royal London UK Growth Trust Units, they enable Shareholders to retain equity market exposure and to continue to receive investment returns without triggering a disposal for capital gains purposes until disposing of such securities at a time of their choosing; * in respect of Elections made for Royal London Corporate Bond Trust Units, they enable Shareholders to gain an exposure to the bond market and to continue to receive investment returns without triggering a disposal for capital gains purposes until disposing of such securities at a time of their choosing; * in respect of Elections made for Royal London Cash Trust Units, they provide Shareholders with a near cash investment without triggering a disposal for capital gains purposes until disposing of such securities at a time of their choosing; and * in respect of all three Rollover Funds, they enable Shareholders to purchase securities of the Rollover Funds on terms which are more favourable than the terms on which they could otherwise purchase such securities since they will not be charged an initial fee and they will incur a reduced annual management charge. Consequences of Ordinary Shareholders not approving the winding-up and reconstruction of the Company As stated in "Background to and reasons for the proposals" above, the sole holder of Annuity Shares has agreed to vote in favour of the Proposals on the basis that it receives 95.3p per Annuity Share on the winding-up of the Company plus the amount of accumulated but unpaid dividends payable on the Annuity Shares down to the date of the liquidation of the Company, being an additional 6.63p per Annuity Share. However, if Ordinary Shareholders do not vote in favour of the Proposals at the Company EGMs, then the Company Scheme will not take effect and the Company will remain in existence with its current share structure. However, as required under the Articles of Association of the Subsidiary, the Directors would continue to put forward the Proposals insofar as they relate to the Subsidiary Scheme, and would still cause the Company, in its capacity as the Ordinary (Subsidiary) Shareholder, to vote so as to approve the Subsidiary Scheme and the winding-up of the Subsidiary. Were this to occur, then the level of gearing of the Ordinary Shares would be zero due to the winding-up of the Subsidiary and the earlier repayment of the Bank Loan. The Directors would at such point propose to consult with the majority holders of Ordinary Shares as to appropriate next steps for the Company. Shareholder entitlements under the Proposals Shareholders may elect to receive one or more of the Rollover Securities and/or cash. The number of Rollover Securities to which each Shareholder will be entitled will be calculated by dividing the aggregate Terminal (Transfer Date) Value per Share on the Transfer Date attributable to the Shareholder's Shares in respect of which they have made or are deemed to have made Elections for the Rollover Funds by the relevant Rollover Price on the Transfer Date. The number of Rollover Securities to be issued to each Shareholder pursuant to the Schemes will be rounded up to the nearest one-hundredth of a rollover fund unit at the Unit Trust Manager's expense. Restricted Persons Restricted Persons will not receive a Form of Election and will be deemed to have elected for the Cash Option and will receive cash directly from the Company or the Subsidiary as applicable in respect of their entire holding of Shares. All Overseas Shareholders will be taken to be Restricted Persons unless they have satisfied the Directors or the Liquidators (as appropriate) and the Unit Trust Manager that it is lawful for the Rollover Funds to issue Rollover Securities to them under any relevant overseas laws and regulations. Cash payments out of the Company's Liquidation Fund Any balance in the Liquidation Fund of the Company, after the settlement of all creditors and the satisfaction of all the entitlements of Shareholders in the Company under the terms of the Company Scheme, including the payment of cash under the Cash Option and to Restricted Persons and after receipt of any amount paid to it out of the Liquidation Fund of the Subsidiary, will be distributed by the Liquidators in cash under the terms of the Company Scheme to Ordinary Shareholders on the Register on the Effective Date pro rata to their respective holdings, provided that no amount of less than £5.00 shall be paid to any Ordinary Shareholder and all such amounts shall instead be paid by the Liquidators to The Royal Marsden Hospital Charity (Registered Charity Number 1050537). Cash payments out of the Subsidiary's Liquidation Fund Any balance in the Liquidation Fund of the Subsidiary, after the settlement of all creditors and the satisfaction of all the entitlements of Shareholders in the Company under the terms of the Company Scheme, including the payment of cash under the Cash Option and to Restricted Persons, will be distributed by the Liquidators in cash under the terms of the Subsidiary Scheme to the Company, as the holder of all but one of the Ordinary (Subsidiary) Shares, where it will be received into the Liquidation Fund of the Company. Summary of options Under the Proposals, Shareholders have the choice of rolling their investment over into Rollover Securities and/or realising their investment for cash under the Cash Option. Information on each of these options is set out below. The Rollover Securities take the form of units in one of three Rollover Funds: * Royal London UK Growth Trust; * Royal London Corporate Bond Trust; and/or * Royal London Cash Trust, which respectively have the investment objectives and policies set out below. Royal London UK Growth Trust Fund Objective: The investment objective and policy of the Royal London UK Growth Trust is to actively seek capital growth through investing predominantly in UK equities. Annual Management Charge (AMC) 0.75% Total expense ratio (TER) 0.90% Size of Fund (at 31 July 2008) £81,863,565.70 Accounting dates 31 May (final), 30 November (interim) Income accumulation dates 31 July, 31 January Type of unit Accumulation Domiciled UK Royal London Corporate Bond Trust Fund Objective: The Royal London Corporate Bond Trust seeks to maximise investment return (predominantly income with some capital growth) over the medium to long term from a portfolio of fixed interest securities. Annual Management Charge (AMC) 0.50% Total expense ratio (TER) 0.54% Size of Fund (at 31 July 2008) £320,432,117.75 Accounting dates 31 August, 28 February (29 in leap year) Distribution dates 31 October, 31 January, 30 April, 31 July Type of unit Income Domiciled UK Royal London Cash Trust Fund Objective: The Royal London Cash Unit Trust seeks to maximise income by investing in high quality, short dated cash instruments. Annual Management Charge (AMC) 0.185% Total expense ratio (TER) 0.185% Size of Fund (at 31 July 2008) £14,091,299.39 Accounting dates 31 March, 30 September Distribution dates 31 May, 30 November Type of unit Income Domiciled UK Cash Shareholders who wish to receive cash following the liquidation of the Company and the Subsidiary in respect of some or all of their holding should elect, accordingly, for the Cash Option on their Form of Election. All cheques will be sent at Shareholders' own risk. Cash entitlements will be sent to the registered address held by the Group's Registrar. Cheques are expected to be despatched in respect of the cash amounts due to Shareholders on the week commencing 15 September 2008. The choice between the options available under the Proposals will be a matter for each Shareholder to decide and will be influenced by their personal, financial and tax circumstances and their investment objectives. The Directors are not making any recommendation as to which of the options Shareholders should elect to receive. Shareholders are recommended to seek their own personal financial advice from an appropriately qualified independent adviser authorised pursuant to the Financial Services and Markets Act 2000. Shareholders should, before making any Election, read the Circular in its entirety. In the event that Shareholders do not return a Form of Election (in relation to Shares held in certificated form) or send a TTE Instruction (in relation to Shares held in CREST) by 1.00 p.m. on 2 September 2008 or the Form of Election is not validly completed, such holders will be deemed to have elected for cash in respect of their entire holdings. Risk Factors relating to the Rollover Funds Shareholders are strongly urged to read the section below entitled "Risk Factors" which contains the principal and material risk factors relating to the Rollover Funds, before making an Election under the Proposals. If Shareholders are in any doubt as to the contents of this document or as to what action to take, they should immediately seek their own personal financial advice from an appropriately qualified independent adviser authorised pursuant to the Financial Services and Markets Act 2000. Risk Factors What are the general risks associated with all of these Rollover Funds? Any stock market investment involves risk. Some of these risks are general, which means that they apply to all investments. Others are specific, which means that they apply to individual Rollover Funds. Before you decide to invest, it is important to understand these risks. If you are unsure, please seek professional advice from a Financial Adviser. Market risk The value of units and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. Past performance is not a guide to future performance and when you sell your investment you may get back less than you originally invested regardless of how well the Rollover Fund performs. The entire market of a particular asset class or geographical sector may fall, having a more pronounced affect on a Rollover Fund heavily or solely invested in that asset class or region. If you transfer or switch into one or more Rollover Funds you should appreciate that during a part of the period of transfer your investment will be in cash. This means that until your cash is reinvested into the Rollover Fund(s) of your choice you will not be exposed to any gains or falls in stock markets. Performance risk There will be a variation in performance between Rollover Funds with similar objectives due to the different assets selected. Rollover Funds aiming for relatively high performance can incur greater risk than those adopting a more conservative investment approach. There is no guarantee for the performance of your investment and investors may get back less than they put in. If you start a savings plan in order to build up a particular sum by a certain date (for example, to repay a mortgage) you may not achieve the target amount if you do not maintain your contributions or the investment value does not grow sufficiently. Inflation risk Inflation will, over time, reduce the value of your investments in real terms. Capital risk Where an initial charge is imposed, an investor who sells their units after a short period may not (even in the absence of a fall in the value of the relevant investments) realise the amount originally invested. Having purchased units you will be entitled, should you wish, to cancel the contract within fourteen days of receipt of the contract note. If the value of a lump sum investment falls before notice of cancellation is given, a full refund of the original investment may not be provided but rather the original amount less any fall in value. If the value rises before cancellation is given, only the original amount shall be returned. For the monthly savings scheme, you will receive back what you have paid when you cancel, even if the price of units has fallen. Tax risk The value of current tax relief depends on individual circumstances. The rates of and relief from taxation may change over time. Additional tax information is set out below. If you have any doubts about your tax position, you should seek professional advice. What are the specific risks associated with these Rollover Funds? The Rollover Funds each have different areas of investment and their investment objectives are listed above. The specific risks labelled below may also apply to your investment depending on the fund which you select. (A) Credit and fixed interest security risk. (These risks apply to the Royal London Corporate Bond Trust) * Fixed interest securities are particularly affected by trends in interest rates and inflation. If interest rates go up, the value of capital may fall, and vice versa. Inflation will also decrease the real value of capital. * Unlike the income from a single fixed interest security, the level of income (yield) from any fund is not fixed and may go up and down. * If the income yield is higher than the redemption yield, there is the possibility that the capital will be eroded. * The value of a fixed interest security will fall in the event of the default or reduced credit rating of the issuer. Generally, the higher the rate of interest, the higher the perceived credit risk of the issuer. (B) Additional capital risk - Rollover Funds where charges are deducted from capital. (This risk applies to the Royal London Corporate Bond Trust and the Royal London Cash Trust) Income from these Rollover Funds is increased by taking charges from capital. Because of this, the growth potential of the capital value of the investment will be reduced. No Dividend Payments The Directors do not intend to pay any Dividends in respect of any Ordinary Shares or Annuity Shares before the winding-up of the Company on 12 September 2008. Costs and expenses Investment Management Agreement and other agreements The responsibility for the investment management of the Company lies with Royal London Asset Management under the terms of the investment management agreement, pursuant to which 12 months notice must be given for its termination. Notice was given for termination of this agreement on 30 April 2008. An amount totalling £62,000 will therefore have to be paid to the Manager for the period from 12 September 2008 to 30 April 2009 despite the winding-up of the Company and the Subsidiary. This amount will be paid from the Liquidation Fund of the Company. Similarly, fees in lieu of notice will be paid to BNP Paribas Fund Services UK Limited in the amount of £30,000 in respect of company secretarial and administration services. General If the Proposals become effective, the Company's and Subsidiary's total costs in connection with the Proposals inclusive of irrecoverable VAT and the estimated Liquidators' costs but excluding the Retention and the termination fees payable to the Manager and the Company Secretary will be approximately £500,000 and will be met by the Company out of the Liquidation Fund of the Company. Conditions to the Proposals The Company Scheme is conditional, inter alia, upon: * the passing of all Resolutions to be proposed at the Separate General Meetings of the Ordinary Shareholders and the Annuity Shareholders and at the First and Second Company EGMs (or at any adjournment thereof); and * the Directors not resolving to abandon the Company Scheme prior to the Second Company EGM. The Subsidiary Scheme is conditional, inter alia, upon: * the passing of all Resolutions to be proposed at the First and Second Subsidiary EGMs (or at any adjournment thereof); and * the Directors not resolving to abandon the Subsidiary Scheme prior to the Second Subsidiary EGM. The Directors would exercise their discretion to resolve to abandon the Schemes only were there a significant and material change in relevant circumstances (for example, the insolvency of the Trustee or Unit Trust Manager) and the Directors were of the view that as a result the interests of Shareholders were best served by abandoning the Schemes. The winding-up of the Company and the Subsidiary are taken to commence at the time of the passing of the winding-up resolutions at the Second Company EGM and the Second Subsidiary EGM respectively. Shareholder approval of the Proposals As the Proposals are conditional on the passing of the Resolutions, Shareholders are requested to vote in favour of the Proposals and to complete and return their Forms of Proxy, irrespective of the Election, if any, Shareholders intend to make in respect of their Shares. If the Schemes are approved and become effective, it will be binding on all Shareholders whether or not they have voted for the Resolutions. Dissenting Shareholders Shareholders may make an application, pursuant to Section 111 of the Insolvency Act 1986, to dissent from either of the Schemes applicable to them. The Liquidators may purchase the interest of such Shareholders at a price which would not exceed the amount such holder would receive on a straightforward winding-up of the Subsidiary (i.e. an amount equal in value to what would be received by such holder electing for the Cash Option). Taxation The receipt of Rollover Securities under the Proposals should not, on the basis of current UK legislation and published HMRC practice, trigger a disposal of Shares for the purposes of capital gains tax where these are held beneficially by Shareholders as an investment. A subsequent sale, redemption or other disposal of the Rollover Securities acquired will, however, constitute a disposal for capital gains tax purposes and may, depending on a Shareholder's particular circumstances, give rise to a liability to capital gains tax. Shareholders who are UK resident individuals benefit from an annual exemption, which currently exempts the first £9,600 of any gains from charge to capital gains tax. UK resident corporate Shareholders should be entitled to indexation allowance which will increase their base cost in the Shares. Shareholders who are UK residents and who elect, or are deemed to have elected, for the Cash Option in respect of some or all of their holdings under the Scheme will be treated as disposing of a proportion or all of their Shares for capital gains tax purposes and may, depending on their personal circumstances, be liable to capital gains tax on any gain realised on such disposal. You are advised to consult an independent professional adviser immediately if you are in any doubt as to your circumstances. Action to be taken It is important that Shareholders read Part II of the Circular entitled "Action to be taken" carefully and return their Forms of Proxy as soon as possible and in any event so as to be received not later than 48 hours before the appointed time of the relevant meeting. In addition, Shareholders wishing to make an Election should return their Forms of Election or CREST Instruction so as to be received no later than 1.00 p.m. on 2 September 2008. EXPECTED TIMETABLE 2008 Latest time for receipt of Forms of 10.00 a.m.on 1 Proxy for use at First Subsidiary EGM September Latest time for receipt of Forms of 10.05 a.m.on 1 Proxy for use at Separate General September Meeting of Annuity Shareholders Latest time for receipt of Forms of 10.10 a.m.on 1 Proxy for use at Separate General September Meetings of Ordinary Shareholders Latest time for receipt of Forms of 10.20 a.m.on 1 Proxy for use at First Company EGM September Latest time for receipt of Forms of 1.00 p.m.on 2 Election or CREST Instructions from September Ordinary Shareholders, Annuity Shareholders and ZDP Shareholders Record Date for participation in the 6.00 p.m.on 2 Proposals September Listing of Shares on CISX suspended 7.30 a.m.on 3 September. First Subsidiary EGM 10.00 a.m.on 3 September Separate General Meeting of the Annuity 10.05 a.m.on 3 Shareholders September Separate General Meeting of the Ordinary 10.10 a.m.on 3 Shareholders September First Company EGM 10.20 a.m.on 3 September Results of Elections announced by 5.00 p.m. on 3 September Ordinary Shares and ZDP Shares 8.00 a.m.on 4 reclassified as Reclassified Ordinary September Shares and Reclassified ZDP Shares respectively on the Official List* Latest time for receipt of Forms of 10.00 a.m.on 9 Proxy for use at Second Subsidiary EGM September Latest time for receipt of Forms of 10.10 a.m.on 9 Proxy for use at Second Company EGM September Calculation Date Close of business on 10 September Listing of Reclassified Ordinary Shares 7.30 a.m.on 11 and Reclassified ZDP Shares on the September Official List suspended Second Subsidiary EGM and appointment of 10.00 a.m.on 11 Liquidator September Second Company EGM and appointment of 10.10 a.m.on 11 Liquidator September Effective Date 11 September Transfer Date 11 September Listing of the Reclassified Ordinary 12 September Shares and the Reclassified ZDP Shares on the Official List cancelled Listing of Ordinary Shares, ZDP Shares 12 September and Annuity Shares on CISX cancelled Cheques expected to be despatched in Week commencing respect of Cash Option Monday 15 September Deal confirmations for Rollover Week commencing Securities expected to be despatched Monday 22 September *Reclassified ZDP Shares are a technical requirement of the Subsidiary Scheme and will be created if the first resolution to be proposed at the First Subsidiary EGM is passed and becomes effective. Reclassified Ordinary Shares are a technical requirement of the Company Scheme and will be created if the first resolution to be proposed at First Company EGM is passed and becomes effective. Definitions Words and expressions which are defined in the Circular of the Company dated 8 August 2008 bear the same meanings when used in this announcement. Enquiries Royal London Asset Management Limited Victoria Muir + 44 (0)20 7506 6758 Landsbanki Securities (UK) Limited Jonathan Becher/Paul Fincham + 44 (0)20 7426 9000 11 August 2008 This information is provided by RNS The company news service from the London Stock Exchange END MSCGUUUPRUPRGGG
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