Fidelity China Special Situations Plc - Publication of Prospectus and Circular in connection with the proposed combination of the Company with abrdn China Investment Company Limited
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO
OR FROM
This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in
Legal Entity Identifier: 54930076MSJ0ZW67JB75
Publication of Prospectus and Circular in connection with the proposed combination of the Company with abrdn China Investment Company Limited
Introduction
As announced on
The Board announces that the Company has today published a prospectus (the " Prospectus ") in relation to the Issue, together with a circular to provide Shareholders with further details of the Proposals and to convene a general meeting of the Company (the " General Meeting ") to seek approval from Shareholders for the implementation of the Proposals (the " Circular "). Defined terms used in this announcement shall, unless the context requires otherwise, have the meanings ascribed to them in the Circular.
Following implementation of the Proposals, the enlarged FCSS will continue to be managed, in accordance with its existing investment objective and policy, by
In order to effect the Proposals, Shareholders are required to approve the Issue. The Scheme is also subject to, among other things, the approval of ACIC Shareholders at the ACIC General Meetings.
Overview of the Scheme
The Proposals will be effected by way of a Guernsey scheme of reconstruction of ACIC, resulting in a members' voluntary winding up of ACIC and the transfer of part of ACIC's cash, assets and undertaking to the Company in return for the issue of New Shares by the Company on a formula asset value (" FAV ") for FAV basis.
Under the Scheme, Eligible ACIC Shareholders will be deemed to have elected to receive New Shares in respect of their ACIC Shares (the " Rollover Option ") unless they elect (or are deemed to have elected) to receive cash in respect of some or all of their ACIC Shares (the " Cash Option ").
The maximum aggregate number of ACIC Shares that can be elected (or deemed to have been elected) for the Cash Option is 33 per cent. of the total number of ACIC Shares in issue (excluding ACIC Shares held in treasury) as at the Calculation Date. Should total elections and deemed elections for the Cash Option exceed 33 per cent. of the ACIC Shares in issue (excluding ACIC Shares held in treasury) as at the Calculation Date, excess applications for the Cash Option will be scaled back into New Shares in a manner that is, as near as practicable, pari passu and pro rata among all Eligible Shareholders who have made such Excess Applications.
The Cash Option will be offered at the Residual
New Shares will be issued as the default option under the Scheme in the event that ACIC Shareholders do not make (or are not deemed to make) a valid election for the Cash Option under the Scheme or to the extent elections for the Cash Option (including Excess Applications) are scaled back as a result of the Cash Option being oversubscribed. The terms of the Scheme as they relate to Excluded ACIC Shareholders (including Overseas ACIC Shareholders) are described in further detail in the Prospectus and the Circular.
Benefits of the Proposals
The Board believes that, if implemented, the Proposals will offer Shareholders the following benefits:
# Scale and enhanced profile:The Enlarged Company is expected to have a Net Asset Value of approximately £1.094 billion (based on valuations as at 14February 2024 and assuming the Cash Option is fully subscribed). As the flagshipUK closed-ended vehicle for investment inChina and a constituent of theFTSE 250 Index, it is expected that theEnlarged Company would benefit from an enhanced profile and improved marketability. # Enhanced liquidity: The scale of theEnlarged Company , as the largest and most liquid company in the AIC'sChina /Greater China sector, is expected to improve the secondary market liquidity for Shareholders (including in relation to the Company's Share buyback policy). # Shareholder register: The implementation of the Proposals would allow a number of Shareholders to consolidate their holdings across the Company and ACIC whilst also creating a more diversified Shareholder base through a combination of the two share registers. # Lower ongoing charges:The Enlarged Company would be expected to benefit from a lower ongoing expense ratio with the Company's fixed costs being spread over a larger asset base. # Contribution to costs: As described below, the AIFM has agreed to make a cost contribution in respect of the Proposals and the Scheme which is expected to offset the direct transaction costs of the Company relating to the Proposals. # Lower tiered management fee: The AIFM and the Investment Manager have agreed that, with effect from the admission to listing and trading of the New Shares, the base management fee payable by the Company under the Management Agreement will be reduced from 0.70 per cent. to 0.65 per cent. in respect of the Company's Net Assets in excess of £1.5 billion, which is expected to lower the ongoing costs of the Company as it grows over the longer term.
Conditions of the Proposals
Implementation of the Proposals is subject to a number of conditions, including:
# the passing of the ACIC Resolutions to approve the Scheme and the winding up of ACIC at the ACIC General Meetings, or any adjournment thereof, any conditions of such ACIC Resolutions being fulfilled and the Scheme becoming unconditional in all respects (including the Transfer Agreement becoming unconditional in all respects); # the passing of the Resolution to approve the Issue at the General Meeting, or any adjournment thereof, and such Resolution becoming unconditional in all respects; # theFinancial Conduct Authority agreeing to admit the New Shares to the Official List and theLondon Stock Exchange agreeing to admit the New Shares to trading on the Main Market, subject only to allotment; and # the Directors and the ACIC Directors resolving to proceed with the Scheme.
Unless the conditions referred to above have been satisfied or, to the extent permitted, waived by both the Company and ACIC on or before
Costs and expenses of the Scheme and the Proposals
Subject as noted below, if the Scheme is implemented, the Company and ACIC have each agreed to bear their own costs associated with the Scheme and the Proposals. The fixed direct costs of the Proposals payable by the Company (that is, excluding listing fees) are expected to be approximately £617,000 inclusive of VAT (which is assumed to be irrecoverable) where applicable.
Any costs of realignment and/or realisation of the ACIC Portfolio incurred prior to the Effective Date and any sales or acquisition costs (including any commissions, taxes (including stamp duty), transaction charges and/or market charges) associated with the transfer of the
In the event that implementation of the Scheme does not proceed, each party will bear its own costs.
The AIFM has agreed to make a material contribution towards the costs of the Proposals. The Fidelity Contribution will constitute a contribution of £500,000 plus an amount equal to eight months of management fees that would otherwise be payable by the
The AIFM and Investment Manager have also agreed that, subject to implementation of the Scheme and with effect from Admission, the annual base management fee payable by the Company in respect of the Company's net assets in excess of £1.5 billion will be reduced from 0.70 per cent. to 0.65 per cent. Although it is not anticipated that this threshold will be reached immediately as a result of the Proposals, the Board expects that this reduction in the management fee will lower the ongoing costs of the Company as it grows over the longer term.
Continuation Vote
Subject to the implementation of the Scheme, the Board has committed to holding a continuation vote in 2029 and every five years thereafter.
Admission and Dealings
Applications will be made by the Company to the
General Meeting
The Proposals are conditional, among other things, upon Shareholders' approval of the Resolution to be proposed at the General Meeting. The General Meeting will be held at
The Resolution will, if passed, authorise the Directors to allot up to 130 million New Shares to ACIC Shareholders who are deemed to have elected for the Rollover Option pursuant to the Scheme, such number being considered sufficient to satisfy the maximum number of New Shares that could be required to be issued in connection with the Scheme. Notice of the General Meeting is set out at the end of the Circular and contains the full text of the Resolution.
The Board considers the Proposals to be in the best interests of Shareholders as a whole and recommends that Shareholders vote in favour of the Resolution to be proposed at the General Meeting , as the Directors intend to do in respect of their own beneficial holdings in the Company's shares.
Expected Timetable
2024 Publication of the Prospectus and the 16 February Circular Calculation Date for the Scheme5.00 p.m. on 6 March Latest time and date for receipt of Forms of Proxy and CREST voting3.00 p.m. on 7 March instructions for the General Meeting Announcement of elections under the 8 March Scheme General Meeting3.00 p.m. on 11 March Announcement of results of General 11 March Meeting Effective Date for implementation of the 13 March Scheme Announcement of the results of the 13 March Scheme and the respective FAVs Admission and dealing in New Shares8.00 a.m. on 14 March commence CREST Accounts credited in respect of as soon as is reasonably practicable on New Shares in uncertificated form 14 March Share certificates in respect of New Shares held in certificated form no later than 27 March despatched
All references to time are to
Dickson Minto Advisers is acting as sponsor and financial adviser to the Company in connection with the Proposals.
The Prospectus and Circular have been submitted to the
For further information please contact:FIL Investment Services (UK) Limited +44 (0) 20 3986 5367Claire Dwyer Daniel Summerland Dickson Minto Advisers (Sponsor and Financial Adviser +44 (0) 20 7649 6823Douglas Armstrong Jefferies International Limited (Corporate Broker) +44 (0) 20 7029 8000 Gaudi LeRoux Harry Randall
IMPORTANT NOTICES
General
This announcement is an advertisement for the purposes of the Prospectus Regulation Rules of the
This announcement is not for publication or distribution, directly or indirectly, in or into
This announcement does not contain all the information set out in the Circular. Shareholders should read the Circular in full before deciding what action to take in respect of the Proposals.
Approval of the Prospectus by the
Sponsor
Dickson Minto Advisers, which is authorised and regulated by the
Apart from the responsibilities and liabilities, if any, that may be imposed upon Dickson Minto Advisers by the Financial Services and Markets Act 2000 or the regulatory regime established thereunder, neither Dickson Minto Advisers nor any persons associated or affiliated with it accepts any responsibility whatsoever or makes any representation or warranty, express or implied, concerning the contents of this announcement, including its accuracy, completeness or verification, or concerning any other statement made or purported to be made by it or them, or on its or their behalf, the Company or the Directors in connection with the Company or the Proposals, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Dickson Minto Advisers and its respective associates and affiliates accordingly disclaim, to the fullest extent permitted by law, all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to herein) that it or they might otherwise have in respect of this announcement or any such statement.
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