RNS Number:1532X
August Equity Trust PLC
24 May 2007
Not for release, publication or distribution, in whole or in part, in or into
the United States, Canada, Australia, South Africa or Japan.
24 May 2007
August Equity Trust PLC (the "Company")
Change of investment manager, change of investment policy, change of name,
Tender Offer to purchase up to 40 per cent. of Shares, a Matching Purchase
Facility, a Placing and issue of New Shares in connection with the
reconstruction of Rutland Trust PLC
Introduction
The boards of August Equity Trust plc and Rutland Trust PLC announced on 22
March 2007 proposals to effect a merger of the two companies and enable their
respective shareholders to realise all or part of their investments at a price
at or near to Net Asset Value.
The Company has published a circular (the "Circular") and prospectus (the
"Prospectus") each dated 23 May 2007 with full details of the proposed
transaction. Terms used in this announcement shall have the same meaning as
those set out in the Circular.
Under the Proposals, August Equity Trust plc will be the continuing company and
will be renamed "New Star Private Equity Investment Trust PLC", and its new
investment manager will be New Star Asset Management Limited.
The Company will also change its investment policy, and following the
transaction its policy will be to invest in a diversified portfolio of private
equity funds, with a focus on mid-market buyout funds in the UK and Europe.
The Company will implement the Tender Offer, pursuant to which Shareholders will
have a basic entitlement to realise up to 40 per cent. of their holdings.
Upon completion of the Proposals, Rutland Shareholders will (subject to overseas
securities laws) roll their holdings over into the Company, save to the extent
that they elect to realise some or all of their Rutland Shares for cash under
the scheme of reconstruction which Rutland will implement.
Prior to the announcement on 22 March 2007, the Board received letters of intent
to vote in favour of the proposals contained in the announcement from
Shareholders holding Shares representing in excess of 60 per cent. of the
Company's issued share capital.
Background to the Proposals
The respective boards of the Company and Rutland have for some time been
reviewing the strategic options available. Both the Company and Rutland are
aware that whilst a number of their respective shareholders wish to continue
with exposure to private equity, others wish to realise their interests at a
price at or near to net asset value.
In November 2006, the Company announced that it was committed to exploring a
number of options available to it. Following careful consideration of a number
of approaches, the Board conducted productive negotiations with New Star and
Rutland which resulted in the formulation of the Proposals which are being put
before both the Company's Shareholders and the Rutland Shareholders.
The Proposals seek to create a diversified fund of private equity funds vehicle
benefiting from the combined management expertise of New Star, August Equity LLP
and Rutland Partners LLP.
It is expected that such a vehicle should be attractive to a wide audience of
potential investors who wish to access private equity returns. The Board
believes that the rating of the Company's Shares in the market should be
enhanced with a more fully invested portfolio and the ongoing support of New
Star.
The Proposals also provide, through the Tender Offer, a mechanism for
Shareholders who wish to do so to realise a significant portion of their
interests in the Company at a price which is close to NAV. Shareholders who
wish, on the other hand, to increase their stake in the Company may elect to do
so under the terms of the Matching Purchase Facility.
The Company and Rutland have entered into the Implementation Agreement, which
provides that each party must take appropriate steps to facilitate the
implementation of the Proposals in accordance with the agreed terms.
The Implementation Agreement also identifies the conditions to which the
Proposals are subject and governs the process by which the Proposals are
(subject to the satisfaction or, as the case may be, waiver of the conditions)
to be carried into effect.
The Proposals require the approval of Shareholders and Rutland Shareholders at
their respective extraordinary general meetings, and the Proposals will be
implemented either in their totality or not at all. Therefore if either the
Shareholders or the Rutland Shareholders fail to pass by the requisite
majorities the relevant resolutions to effect the Proposals, no part of the
Proposals will become effective, irrespective of the outcome of the
extraordinary general meeting of the other company.
Benefits of the Proposals
The Board believes that the Proposals have the following benefits for
Shareholders:
* the ability to hold an investment in a New Star-managed vehicle with
a fully invested, diversified portfolio of private equity funds;
* the combined management experience of New Star, August Equity LLP
and Rutland Partners LLP;
* New Star's marketing support, which should assist in maintaining a
narrower discount to Net Asset Value at which the Shares trade; and
* the opportunity to realise a significant portion of their Shares at
a small discount to Net Asset Value.
The Proposals
Change of name
Upon the implementation of the Proposals, the Company's name will be changed to
"New Star Private Equity Investment Trust PLC".
Change of investment objective and policy
Following completion of the Proposals, the Company's investment objective will
be to produce capital gains through exposure to private equity investments in a
diversified portfolio of private equity funds.
Following completion of the Proposals, the Company will seek to achieve its
objective by investing principally in limited partnership interests and vehicles
exposed to private equity investments or other similar strategies, with a focus
on mid-market buyout funds in the UK and Europe. The Company may also invest in
cash, listed and unlisted equities, fixed income securities, debt instruments
and other alternative asset funds.
The Company announced on 27 October 2003 that its policy was to invest no more
than 15 per cent. of its gross assets in other UK listed investment companies.
Under the broadened investment policy, the Company may invest more than 15 per
cent. of its gross assets in other UK listed investment companies. However, it
will continue to be subject to the existing investment trust limits for
individual investments.
Change of investment manager
Upon completion of the Proposals, the investment manager will be New Star Asset
Management Limited, a subsidiary of New Star Asset Management Group PLC. The New
Star group of companies provides asset management products and services to
retail and institutional investors worldwide and had total assets under
management of approximately #22.9 billion as at 31 March 2007 (Source: New Star,
unaudited).
New Star is authorised and regulated by the Financial Services Authority and as
such is subject to its rules in the conduct of its investment business.
The New Star Funds are a significant Shareholder and the appointment of New Star
Asset Management Limited constitutes a related party transaction under the
Listing Rules. Shareholders are therefore being asked to vote on such
appointment at the EGM. The New Star Funds will not vote on the relevant
resolution and have taken steps to ensure that their associates will not vote on
such resolution.
New Star will appoint Paul Craig and Nick Brind to manage the Company's assets.
Mr Craig joined New Star from Exeter Asset Management in September 2003 and is a
director of New Star Asset Management Limited. He has 19 years of investment
management experience, including 10 years gained at Exeter Asset Management. He
is responsible for the management of four unit trusts with combined assets of
#390 million as at 31 March 2007. Mr Craig is currently rated "AA" by Citywire.
Mr Brind joined New Star from Exeter Asset Management in April 2005. He has 12
years of investment experience, including eight years at Exeter Asset Management
and two years at Capel-Cure Myers. He is responsible for the management of two
closed-end funds with combined assets of #208 million as at 31 March 2007. Mr
Brind holds a BSc in chemistry from the University of Southampton and the
Securities Institute Diploma.
An advisory committee will provide support to New Star through sourcing and
assessing proposed investments in private equity limited partnerships. The
advisory committee will be chaired by Michael Langdon, Chairman of Rutland
Partners LLP.
Initial portfolio post-merger, gearing and over-commitment policy
Immediately following the merger, and prior to any further investments or
commitments to private equity vehicles it is expected that the Company's
unlisted portfolio will comprise the investments listed below:
Estimated value*
#m
August Equity LLP managed funds 28.9
The Rutland Fund 23.9
Other limited partnerships and direct investments 13.6
66.4
*Based on estimated valuations as at close of business on 21 May 2007
In addition, it is expected that the Company will have commitments totalling #73
million, comprising remaining commitments in existing funds of #33 million and
new commitments of #30 million to August Equity Partners II and #10 million to
Rutland Fund II. The Company expects to arrange borrowing facilities to allow
for an over-commitment policy.
Following completion of the Proposals, New Star will invest any remaining cash
in new or secondary limited partnership interests and in listed private equity
vehicles consistent with the Company's investment policy, and will also consider
whether it may be appropriate to re-balance the limited partnership portfolio.
Management arrangements
The Company has, conditional upon Shareholder approval of the Proposals, agreed
a termination fee of #844,950 (exclusive of any VAT) with AEL in respect of the
year from 3 November 2006 (although this sum will be reduced to the extent of an
amount equivalent to the management fees paid to AEL since such date). New Star
has agreed to bear this cost, and will pay to AEL such amount of the termination
fee as remains unpaid at the time of implementation of the Proposals.
New Star will be entitled to a basic management fee (exclusive of any VAT) of
1.25 per cent. per annum of the assets invested in limited partnerships and
direct private equity interests and 0.75 per cent. per annum on all other
assets. New Star will also be entitled to a performance fee (exclusive of any
VAT) of 10 per cent. of any return in excess of 8 per cent. per annum.
The performance fee will be subject to a high watermark provision such that only
growth in the total return on Net Asset Value per Share as measured against the
highest Net Asset Value per Share at the end of a previous performance period
will attract a performance fee. The management agreement will be for an initial
period of 2 years, with a rolling 12-month notice period thereafter.
Board
The existing Board will remain in place following completion of the Proposals
and John Duffield, Chairman of New Star, will be invited to join the Board on
completion as a non-independent director.
Dividends
It is intended that, following the implementation of the Proposals, the Company
will pay dividends only insofar as may be necessary for the purposes of
maintaining its status as an investment trust under section 842 of the Taxes
Act. This will represent a change to the present position, under which the
Company has from time to time paid dividends to a greater extent than that
strictly required for the purposes of section 842.
Tender Offer
The Directors have arranged for a Tender Offer to be made for up to 40 per cent.
of the Company's issued share capital to enable those Shareholders who wish to
realise Shares in the Company to do so at a price which is close to their net
asset value, whilst ensuring that ongoing Shareholders who do not wish to tender
their Shares are not disadvantaged.
Under the Tender Offer, Shareholders (other than certain Overseas Shareholders)
will be able to realise up to 40 per cent. of their holdings (their "Basic
Entitlement"). Further, Shareholders will be able to tender additional Shares in
excess of their Basic Entitlement, but such tenders will only be satisfied, on a
pro rata basis, to the extent that other Shareholders tender less than their
Basic Entitlement or Shares tendered are placed under the Matching Purchase
Facility or via the Placing.
The Tender Offer is being made at a Tender Price that represents a discount of 3
per cent. to the adjusted Net Asset Value per Share (that is to say, the Net
Asset Value after providing for a proportion of the costs of the Proposals which
are to be borne by the Company and any stamp duty or stamp duty reserve tax
arising on the Company's purchase of Shares) on the Calculation Date.
The Tender Offer is being made by JPMorgan Cazenove. JPMorgan Cazenove will, as
principal, purchase the Shares tendered by means of on-market purchases and,
following the completion of all those purchases, sell them to the Company or to
purchasers under the Matching Purchase Facility or via the Placing.
All Shares acquired by the Company will be cancelled. The repurchase of Shares
by the Company (and related costs, including stamp duties) will be funded from
the Company's existing cash resources or cash resources generated by the
realisation of investments in the Company's portfolio.
It is expected that a Shareholder who tenders all of his Shares will be able to
realise approximately 57 per cent. of his holding. This has been calculated
taking into account commitments from the New Star Funds to make an investment
(to the extent available under the Matching Purchase Facility or Placing) in the
Company in aggregate of (i) the lesser of such amount as would result in the New
Star Funds (and their associates) (a) an investment of #25 million and (b) 29
per cent. of the issued share capital of the Company upon the implementation of
the Proposals and (ii) (to the extent that the Company would otherwise have
assets of less than #90 million following such implementation) the lesser of (a)
#10 million and (b) such sum as would result in the Company having net assets of
#90 million. Such investment will be financed by cash resources within the New
Star Funds. It is hoped that the Company will have assets of at least #90
million following the implementation of the Proposals.
Matching Purchase Facility and Placing
The Directors are aware that certain Shareholders may wish to increase their
investment in the Company and that new investors might wish to gain exposure to
the Company under its new investment policy. Accordingly, they have reviewed
with their advisers the options to facilitate such investment.
Concurrently with the Tender Offer, the Directors have arranged for JPMorgan
Cazenove to operate a Matching Purchase Facility for purchases of Shares
pursuant to which Shareholders may purchase additional Shares to the extent that
tenders in excess of Shareholders' Basis Entitlement are received. JPMorgan
Cazenove will also offer a secondary market Placing whereby its dealing clients
(other than from certain overseas jurisdictions) may purchase Shares to the
extent they are available through tenders in excess of Shareholders' Basic
Entitlement. Under the Placing, new investors may be able to acquire Shares in
the Company at the Tender Price (plus stamp duty).
Under the Matching Purchase Facility, Shareholders (other than certain Overseas
Shareholders) will be able to purchase Shares at the Tender Price (plus stamp
duty) to the extent that there are Shares available to be so purchased through
valid tenders. Shares purchased by JPMorgan Cazenove under the Tender Offer will
first be allocated to the Matching Purchase Facility and the Placing, and any
balance will be repurchased by the Company.
Investors who are not currently Shareholders, as well as existing Shareholders,
will, at the discretion of JPMorgan Cazenove, be able to participate in the
Placing. Such proposed investors will also be able to participate in the
Matching Purchase Facility if they have acquired Shares (with the right to
participation in the Matching Purchase Facility) and either they or their
nominee is on the register of members as at the close of business on 25 June
2007, being the record date.
To the extent that more Shares are required to satisfy demand under the Matching
Purchase Facility and Placing than are tendered under the Tender Offer, such
tendered Shares shall be allocated pro rata to the aggregate demand for Shares
under the Matching Purchase Facility or requested under the Placing.
The purchaser will also be responsible for the payment of stamp duty or stamp
duty reserve tax on any Shares purchased through the Matching Purchase Facility
or Placing, in the ordinary way. Purchasers should not send any separate payment
in respect of stamp duty or stamp duty reserve tax. Stamp duty or stamp duty
reserve tax payable in respect of the repurchase by the Company under the Tender
Offer will be met by the Company.
The Matching Purchase Facility and Placing are conditional upon the Tender Offer
proceeding, and, as Shares may be purchased at a discount to Net Asset Value,
form part of the Tender Offer, which is subject to Shareholder approval.
Shareholders should read the Purchase Form for further information on the
Matching Purchase Facility and the completion of the Purchase Form.
Save in respect of the New Star Funds as described below, the Company and
JPMorgan Cazenove will scale back any purchase instruction under the Matching
Purchase Facility or Placing where fulfilment of the instruction would otherwise
result in any Shareholder or any person acting in concert with him owning 30 per
cent. or more of the issued share capital of the Company.
It is possible that, on the basis of the New Star Funds' agreement to make
commitments as outlined above, the New Star Funds (or New Star and other persons
acting in concert with it) might be interested, following completion of the
Tender Offer, in Shares carrying more than 30 per cent. of the voting rights in
the Company, depending on the extent of investment by third parties.
Under Rule 9 of the City Code the Panel would normally require the New Star
Funds to make a general offer to Shareholders in these circumstances. In this
case, however, the Panel has agreed to waive the obligation for the New Star
Funds (or New Star and other parties acting in concert with it) to make any such
general offer, subject to the approval of Shareholders of a resolution of
independent Shareholders in general meeting, such resolution to be taken on a
poll. New Star and other persons acting in concert with the New Star Funds and
any other persons whom the Panel treats as non-independent and who already own
Shares will refrain from voting on any such poll.
The commitments of the New Star Funds (or persons acting in concert) will be
effected under the Placing arrangement by JPMorgan Cazenove.
New Articles
The Company will adopt New Articles upon completion of the Transaction to take
account of its new name and authorised share capital and to reflect those
provisions of the Companies Act 2006 (the "2006 Act") which came into effect in
January or April 2007.
The principal changes to reflect the provisions of the 2006 Act relate to
electronic communications with shareholders. The provisions of the Companies Act
1985 which allowed companies to communicate with their shareholders
electronically have been repealed and replaced by provisions in the 2006 Act
which operate in a different way and use different definitions, which will be
reflected in the New Articles.
The New Articles will also permit the Company to use electronic communications
for all notices, documents and information to be sent to Shareholders, in
accordance with individual Shareholder preference.
In addition, the New Articles will reflect the key change introduced by the 2006
Act, which is the ability for companies to use website communication with
Shareholders as the default position. The Company can ask each individual
Shareholder for their consent to receive communications from the Company via the
Company's website.
If the Shareholder does not respond to the request for consent within 28 days,
the Company may take that as consent to receive communications in this way. When
the Company places a document on its website, it must notify each Shareholder
who is receiving documents via the website that the document is there by post or
(if the Shareholder has already agreed to receive documents electronically) by
email.
A Shareholder who has received a document electronically can ask for a hard copy
of any document at any time and Shareholders can also revoke their consent to
receive electronic communications at any time.
This new regime, while continuing to ensure that Shareholders are able to
receive communications and documents in hard copy if that is their preference,
will enable the Company to take advantage of the efficiencies and cost savings
inherent in electronic communications to a greater extent than is currently
possible.
The upper age limit for directors has been removed from the New Articles in line
with current legislation.
The New Articles also provide for the Company to have C shares, and whilst the
Board has no present intention of allotting any such shares, it considers that
it would be desirable for the Company to be able to have the flexibility to do
so in the future, subject to Shareholder approval from time to time of the
necessary powers of allotment.
The Directors will be able to allot tranches of C shares, and the assets
attributable to the C shares will be invested in accordance with the investment
policy of the Company. When a designated percentage of the assets have been so
invested, the C shares shall be converted into Shares in accordance with the
conversion ratio relevant to such tranche (and until such time, the C shares
shall carry no rights to vote or to receive any dividends). The conversion will
be effected in circumstances in which the respective net asset values per share
of the C sharers and the Shares are substantially equivalent (following such
adjustments as may be necessary), such that the conversion will not create a
dilutive effect. The conversion will result in the issue of such number of
Shares as equals the aggregate number of C shares of the relevant tranche in
issue at the relevant time of conversion multiplied by the conversion ratio. Any
C shares not so converted will automatically become deferred shares, and the
Company may repurchase such deferred shares for the sum of #1 in aggregate.
Rutland Trust PLC
Rutland will enter into the Scheme, whereby Rutland Shareholders will have the
option to roll their holdings into the Company upon the implementation of the
Proposals or to elect for cash in respect of all or part of their holdings.
Rutland Shareholders who make no election at all will be deemed to have elected
to roll their holdings into the Company (subject to relevant securities laws).
Rutland will appoint a liquidator to administer the reconstruction. The
liquidator will distribute cash to those Rutland Shareholders electing to
receive cash under the Rutland Scheme and will transfer certain assets to the
Company in exchange for New Shares, which will be issued directly to the
relevant Rutland Shareholders according to an exchange ratio based on the
relative formula asset value per share of each of Rutland and the Company.
It is intended that the issue of New Shares to Rutland Shareholders will take
effect after the implementation of the various transfers in the course of the
Tender Offer, Placing and Matching Purchase Facility (including any repurchases
by the Company).
The formula asset value of Rutland will be the net asset value of its ordinary
shares as adjusted for costs incurred by Rutland under the Proposals and
adjusted for any retention made by the liquidator.
The formula asset value for the Company will be the net asset value of the
Shares as adjusted for the effects of the Tender Offer and adjusted for an
accrual for certain costs incurred by the Company in respect of the Proposals.
The remainder of the Company's costs will be accrued for following the
implementation of the Proposals.
The assets transferred by Rutland to the Company in consideration of the issue
of Shares to Rutland Shareholders will comprise Rutland's limited partnership
interests in The Rutland Fund and, to the extent required cash or near cash
instruments. In the event that the rollover is insufficient to result in all of
Rutland's limited partnership interests in The Rutland Fund being transferred,
the Company will purchase for cash that part of the limited partnership
interests which otherwise would not be transferred.
In February 2007, Rutland announced that it had exchanged contracts for the sale
of its investment property, Rutland House. It is intended that the Proposals
will be implemented following completion of the sale of Rutland House (which is
not expected to occur until the end of June 2007) and that the proceeds of the
sale will therefore be reflected within the formula asset value of Rutland.
If, however, the sale of Rutland House has not been completed prior to
completion of the Proposals, Rutland House shall remain with Rutland's
liquidator and shall therefore not pass to the Company pursuant to the Scheme.
Any proceeds subsequently realised on the sale of Rutland House will be
distributed in cash to the Rutland Shareholders pro rata to their entitlements,
regardless of whether they elect for cash or rollover their holdings into the
Company. Any retention made by the liquidator which is subsequently deemed
unnecessary will also be distributed in this way.
Costs
The Company's costs under the Proposals are estimated at #0.86 million
(inclusive of VAT), of which #0.48 million will be applied pro rata against the
net assets attributable to all those Shareholders on the register of members
prior to the merger with Rutland, and the remaining #0.38 million will be
applied pro rata against the net assets attributable to all those Shareholders
on the register of members following the implementation of the Proposals
(including Rutland Shareholders who roll over into the Company).
Rutland's costs under the Proposals will be borne by Rutland.
Financial effects of the Proposals
By way of illustration only, based on the Company's published NAV at 31 December
2006 of 330.4 pence per Share and based on the relevant assumptions set out
below, the effect of the Proposals on the Net Asset Value of the Company's
Shareholders, comparing for these purposes the case of a Shareholder who tenders
none of his Shares with the case of a Shareholder who successfully tenders all
of his Shares would have been as follows:
Shareholder's participation or otherwise in Tender Offer Effect on net asset
value (%)
Shareholder who tenders no Shares +0.2
Successful tender of all Shares -3.8
1. The fixed costs and expenses incurred by the Company in respect of the
Tender Offer are #0.48 million (inclusive of VAT), the further costs and
expenses incurred by the Company and charged to it following implementation of
the proposals are #0.38 million (inclusive of VAT).
2. Stamp duty of 0.5 per cent. is charged to the Company on the consideration
of the Shares bought back.
3. Holders of 40 per cent. of the Company's Shares elect to tender at the
Tender Price.
4. The New Star Funds purchase Shares under the Matching Purchase Facility or
Placing such that 28 per cent. of the Company's Shares are bought back by the
Company under the Tender Offer.
5. The Company's NAV is 330.4 pence per Share as per its published NAV at 31
December 2006.
6. Rutland's NAV is 69.0 pence per Rutland Share, which is based on the NAV of
approximately 69 pence as reported in the preliminary announcement of results
for the year ended 31 December 2006.
7. Rutland Shareholders roll their holding into the Company to the value of
#30 million.
8. The fixed costs and expenses incurred by Rutland in respect of the Rutland
Scheme are #0.99 million (inclusive of VAT).
Commitment to August Equity Partners II
Following the passing of all the resolutions in relation to the Proposals to be
considered at the Extraordinary General Meeting, the Company will commit to
August Equity Partners II the sum of #30 million (or, if lower, such other sum
as is equivalent to 40 per cent. of the size of such fund at the first closing).
This commitment does not require the approval of Shareholders.
Shareholders should note that whilst the Board has determined that this
commitment is conditional upon Shareholder approval of the relevant resolutions
at the Extraordinary General Meeting, it does not form part of the Proposals and
it is not conditional upon the full implementation of the Proposals. Therefore
if the Proposals are, for any reason, not carried into effect (including, for
example, by reason of any failure by Rutland Shareholders to pass the
resolutions falling for consideration at either the First Rutland EGM or the
Second Rutland EGM), the commitment will nevertheless be made.
Overseas Shareholders
The Tender Offer (and thus the Matching Purchase Facility) is not available to
certain Overseas Shareholders as further described in the Circular.
Taxation
Shareholders who sell Shares in the Tender Offer may, depending on their
individual circumstances, incur a liability to taxation as further described in
the Circular. Shareholders who are in any doubt as to their tax position or who
are subject to tax in a jurisdiction other than the United Kingdom should
consult an appropriate professional advisor.
Extraordinary General Meeting
The implementation of the Tender Offer, as well as other aspects of the
Proposals as a whole, requires the approval of Shareholders. An Extraordinary
General Meeting of the Company is proposed to be held at 11.00 a.m. on 15 June
2007.
All of the resolutions in relation to the Proposals (that is to say, Resolution
1 and Resolution 3) must be passed in order to enable the implementation of the
Proposals. Therefore unless both such resolutions are passed, neither of them
will have any effect. The Company and Rutland have agreed by way of the
Implementation Agreement that the Proposals will not in any event be implemented
unless the requisite approvals of both the Shareholders and the Rutland
Shareholders have been duly obtained.
A further special resolution, Resolution 2, will also be considered at the EGM.
Resolution 2 provides for the creation of C shares and gives the Directors
authority to allot them free of the statutory pre-emption restrictions.
The C share mechanics do not form part of the Proposals and accordingly the
implementation of the Transaction will, assuming that Shareholders duly approve
Resolution 1 and Resolution 3 for the dispensation provisions under Rule 9 of
the City Code and the other conditions are fulfilled, take place irrespective of
whether the C shares resolutions in Resolution 2 are approved.
The resolutions to be proposed are:
Special Resolution 1.1 to approve the Proposals
The Directors seek Shareholders' consent for the Proposals set out in the
Circular.
Special Resolution 1.2 to increase the authorised share capital of the Company
so as to enable the Company to issue the New Shares to Rutland Shareholders
The Directors propose that the authorised share capital of the Company be
increased to #4,050,000, representing an increase of 102.5 per cent., so as to
enable the allotment of New Shares to Rutland Shareholders pursuant to the
Rutland Scheme. The increase has been framed to address the possibility that all
Rutland Shareholders would roll over their interests into the Company.
Special Resolution 1.3 to authorise the directors to allot the New Shares
This resolution will give the Directors authority to allot New Shares in
connection with the Scheme and otherwise up to one-third of the issued share
capital of the Company following the implementation of the Transaction up to an
aggregate nominal value of #2,050,000 (which represents approximately 151 per
cent. of the Company's share capital in issue at 21 May 2007, being the latest
practicable date prior to the publication of the Circular).
This authority will expire on the date which is the earlier of 15 months from
the passing of the resolution or the conclusion of the annual general meeting of
the Company to be held in 2008.
The Directors will use the authority to allot the New Shares in connection with
the Proposals and will only use the general authority to allot Shares at a price
representing a premium to the latest NAV per Share prior to such issue.
Special Resolution 1.4 to enable the Directors to use the allotment authority
described above free of the statutory pre-emption restrictions under section 89
(1) of the Act
This resolution will give the Directors authority to allot New Shares, which
will be issued to Rutland Shareholders pursuant to the Rutland Scheme, up to an
aggregate nominal amount of #2,050,000 and otherwise up to 10 per cent. of the
issued share capital of the Company following implementation of the Transaction
(and approximately 29 per cent. of the issued share capital of the Company as at
21 May 2007, the latest practicable date prior to the publication of the
Circular), such power to expire on the date which is the earlier of 15 months
from the passing of the resolution or the conclusion of the annual general
meeting of the Company to be held in 2008.
Special Resolution 1.5 to grant authority to the Company to purchase Shares in
connection with the Tender Offer
This resolution permits the Company to effect the Tender Offer so as to permit
those Shareholders who wish to realise their investment (whether in whole or in
part) to do so, subject to the terms of the Tender Offer and the extent to which
Shareholders as a whole tender their Shares.
Special Resolution 1.6 provides the Company with general authority to purchase
Shares
This resolution will be proposed to enable the Company generally to make market
purchases of its Shares.
The Directors intend to use this authority as a means of addressing any
imbalance between the supply and demand for Shares and to enhance the NAV of the
Shares.
Under the authority sought, a maximum of 14.99 per cent. of the issued Shares
may be repurchased for immediate cancellation or to be held in treasury.
The maximum price that may be paid for a Share shall be higher of (a) an amount
equal to the 105 per cent. of the London Stock Exchange daily Official List for
the five business days immediately preceding the date on which the Share is
purchased and (b) the highest current independent bid on the London Stock
Exchange when the purchase is carried out. Market purchases by the Company will
only be made in accordance with the Listing Rules and other applicable laws and
regulations.
Special Resolution 1.7 to adopt the New Articles
The Company will adopt New Articles upon completion of the Transaction.
The New Articles will be in substantially the same form as the current Articles,
save for the following amendments:
(i) the New Articles will refer to the new name of the Company (New Star
Private Equity Investment Trust PLC) and the revised level of its authorised
share capital; and
(ii) the New Articles will take advantage of enhanced flexibility offered
by the Companies Act 2006 to communicate with Shareholders by electronic means
and make other minor technical amendments in the context of the new Act.
The full terms of the New Articles will be available for inspection from the
date of the Circular until the close of the EGM and at the EGM for at least 15
minutes before and during the EGM.
Special Resolution 1.8 to change the name of the Company
The Company will pursuant to this resolution change its name to "New Star
Private Equity Investment Trust PLC" with effect from the completion of the
Transaction.
Special Resolution 1.9 to change the investment policy of the Company
This resolution approves the adoption of a new investment policy following the
implementation of the Proposals.
Special Resolution 1.10 to change the investment manager
This resolution approves the appointment of New Star upon the completion of the
Transaction.
Special Resolution 2.1 to increase the Company's authorised share capital so as
to enable it to issue C shares
The Directors propose that the authorised share capital of the Company be
increased to #9,050,000 by the creation of 100,000,000 C shares.
Special Resolution 2.2 to amend the articles in relation to C shares
The articles of association will be amended by the insertion of provisions
setting out the rights of the C shares and the circumstances in which they may
convert to Shares.
Special Resolution 2.3 to authorise the Directors to allot the C shares
The Directors propose to take authority to allot the C shares for a five-year
period.
Special Resolution 2.4 to enable the Directors to use the allotment authority
described above free of the statutory pre-emption restrictions under section 89
(1) of the Act
The Directors will be able to allot C shares free of the pre-emption provisions,
having regard to the non-dilutive effect of such allotment.
Ordinary Resolution for the dispensation provisions under Rule 9 of the City
Code
As described above, New Star or the New Star Funds may in certain circumstances
acquire an interest in aggregate in 30 per cent. or more of the issued Shares.
This resolution approves these arrangements for the purposes of the dispensation
provisions of Rule 9 of the City Code such that neither New Star nor the New
Star Funds will in these circumstances be required to make a mandatory offer to
all Shareholders to acquire all Shares not owned by New Star or the New Star
Funds. The vote on this resolution, will be taken by way of poll. The New Star
Funds (and any person acting in concert with New Star) will refrain from voting
on such poll.
Expected Timetable
2007
Latest time and date for receipt of Forms of Proxy for the Extraordinary General Meeting of 11.00 a.m. on 13
the Company June
First Extraordinary General Meeting of Rutland Trust PLC 9.00 a.m. on 15
June
Extraordinary General Meeting of the Company 11.00 a.m. on 15
June
Latest time and date for receipt of Tender Forms and Purchase Forms 5.00 p.m. on 25
June
Record Date for Tender Offer close of business
on 25 June
Calculation Date for Tender Price, terminal asset value of Rutland close of business
on 29 June
Trust PLC and issue price of New Shares
Deadline for receipt of applications under the Placing 9.00 a.m. on 2
July
Second Extraordinary General Meeting of Rutland Trust PLC 9.00 a.m. on 2
July
Tender Price, result of Tender Offer and issue price announced 2 July
Effective Date for Rutland Scheme 2 July
Change of name effective 2 July
Change of investment policy and change of manager effective 2 July
New Shares issued, Admission and dealings in New Shares commence 8.00 a.m. on 3
July
Cheques despatched in respect of proceeds of Tender Offer 5 July
and balance certificates despatched in respect of unsold
certificated Shares, certificates in respect of New Shares
despatched, and CREST accounts credited with proceeds of Tender
Offer and unsold uncertificated Shares
Enquiries
John Mackie 020 7632 8200
Chairman, August Equity Trust plc
Richard Green 020 7632 8200
Managing Director, August Equity LLP
Ravi Anand 020 7225 9200
New Star Asset Management Limited
Angus Gordon Lennox 020 7588 2828
JPMorgan Cazenove Limited
JPMorgan Cazenove Limited, which is regulated in the United Kingdom by the
Financial Services Authority, is acting for August and no-one else in connection
with the proposals and will not be responsible to anyone other than August for
providing the protections afforded to clients of JPMorgan Cazenove Limited or
for providing advice in relation to the proposals.
Ernst & Young LLP, which is regulated in the United Kingdom by the Financial
Services Authority, is acting for Rutland and no-one else in connection with the
proposals and will not be responsible to anyone other than Rutland for providing
the protections afforded to clients of Ernst & Young LLP or for providing advice
in relation to the proposals.
This announcement does not constitute, or form any part of, any offer for, or
solicitation of any offer for, securities. Any acceptance or other response to
the proposals should be made on the basis of the information contained in the
Circular and Prospectus.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCOKQKQABKKOPB
August Equity Trust (LSE:AGE)
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August Equity Trust (LSE:AGE)
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