Perpetual Income & Growth Investment Trust Plc - Results of Manager Search
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Results of Manager Search
The Board of
Having considered a large number of proposals, the Board has agreed the heads of terms for a combination of the assets of the Company with Murray Income Trust PLC (“MUT”) by means of a section 110 scheme of reconstruction under the Insolvency Act 1986 (the “Transaction”). MUT is managed by the
MUT, which has a similar investment objective to PLI, aims to provide a high and growing income combined with capital growth through investment in a portfolio principally of
The Transaction will provide the Company’s shareholders with an investment in a significantly larger investment trust with one of the lowest management fees in the sector (0.38% per annum), with greater liquidity, and with a stronger investment track record and in recent years a better share price rating than PLI (4.5% 12-month average discount for MUT, compared with 13.1% discount for PLI).
The Company’s shareholders will benefit from the extensive resource and experience within the
The Company has consulted with a number of its major shareholders who have indicated their support for the Transaction.
The Transaction will be effected by way of a scheme of reconstruction of the Company under section 110 of the Insolvency Act 1986 resulting in the voluntary liquidation of the Company. In accordance with customary practice for such transactions involving investment trusts, the City Code on Takeovers and Mergers is not expected to apply to the Transaction. However, the Transaction will be subject to other regulatory and tax approvals. The Transaction will be subject to, inter alia, approval by the shareholders and noteholders of each of the Company and MUT. As part of the Transaction, in order to manage the realisation/realignment of the Company’s portfolio ahead of liquidation, it is proposed that
New MUT shares that are issued to PLI shareholders will be issued on a formula asset value (“FAV”)-to-FAV basis. FAVs will be calculated using the respective net asset values of each company, adjusted for the costs of the Transaction, any dividends and distributions declared by each party which have a record date prior to the effective date of the Transaction, an allowance for the costs of liquidation (for PLI) and the cash exit option (for PLI, as defined below). ASFML has agreed to make a contribution to the costs of the Transaction by means of a reduction in the management fee payable by MUT to ASFML for the first six months following the completion of the Scheme. The value of such reduction will be based on the value of the assets transferred by PLI to MUT as part of the Transaction and the reduction will be for the benefit of the shareholders of the enlarged MUT.
It is expected that PLI shareholders will see a reduction in their overall share price yield given MUT has a lower, but still attractive, current yield than PLI, but it is believed that MUT has a more resilient portfolio income profile than the market. MUT also has strong revenue reserves and an extensive record of dividend growth, which it intends to maintain. Partly in recognition of the reduction in absolute dividends that a PLI shareholder would be expected to receive, the
As part of the Transaction, the Company expects to offer its shareholders the ability to elect to receive cash in respect of some or all of their holdings in the Company at a price equal to 98% of FAV (the “Cash Option”). The Cash Option will be limited to 20% of the Company’s shares in issue and aggregate elections for the Cash Option in excess of this number will be scaled back on a pro rata basis in favour of the rollover into MUT, which will also be the default option for the Transaction.
A circular convening a general meeting to approve the Transaction will be sent to the Company’s shareholders in due course, together with a prospectus published by MUT containing details of the MUT shares to be issued in connection with the Transaction. It is expected that the Transaction will conclude in early Q4 2020.
“There are few mergers of investment trusts, but we believe that this Transaction will have great appeal to shareholders of PLI. They will transition their interests at net asset value (after deduction of costs and adjusting for dividends), and with Murray Income shares typically trading at a narrower discount to PLI, should bring an immediate uplift. Our shareholders will become part of a trust that has an excellent track record and share price rating, one of the lowest ongoing charges ratio in the sector at an estimated 0.50% per annum (a significant reduction from PLI’s present 0.73% per annum), and an attractive yield of 4.5% with the accolade of being an AIC Dividend Hero. It will also be one of the largest investment trusts in the
1 As at
2 As at
3 ASI is paid a variable management fee by MUT of 0.55% p.a. of the first £350m of net assets, 0.45% p.a. on the assets between £350 – 450m, and 0.25% p.a. on assets in excess of £450m. The weighted average annual management fee would be 0.38% p.a. and the estimated pro forma ongoing charges ratio would be 0.50% p.a., based on the net assets of MUT and PLI, assuming the cash option is fully taken-up, as at
4 Based on revenue reserves at the latest date prior to the publication of this announcement. Source: Invesco.
5 Source: PLI annual report and accounts for the year ended
This announcement contains information that is inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014. The person responsible for arranging for the release of this announcement on behalf of the Company is
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