RNS Number:6640A
UK Balanced Property Trust Ltd(The)
23 July 2007
NOT FOR RELEASE OR PUBLICATION IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA,
CANADA OR JAPAN, OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
THE UK BALANCED PROPERTY TRUST LIMITED
(Registered in Guernsey - Number 39171)
Administrative Office:
C/o BUTTERFIELD FUND SERVICES (GUERNSEY) LIMITED
P.O. BOX 211, REGENCY COURT, GLATEGNY ESPLANADE, ST. PETER PORT,
GUERNSEY, GY1 3NQ, CHANNEL ISLANDS.
___________________________
TELEPHONE: + 44 1481 720321
FACSIMILE: + 44 1481 716117
e-mail: Funds@bfmgl.gg
For immediate release 23 July 2007
THE UK BALANCED PROPERTY TRUST LIMITED (the "Company")
SALE OF THE PROPERTY PORTFOLIO AND RECONSTRUCTION PROPOSALS
________________________________________
Executive Summary
* The Directors of the Company are pleased to confirm
that, following a competitive marketing of the Company's property portfolio,
they have signed a conditional contract for the sale of the Company's entire
property portfolio by means of a sale of the Company's subsidiaries (the
"Sale"). By undertaking a competitive sale of the Company's Property Portfolio,
the Directors have significantly increased value for Shareholders.
* The purchaser of the Company's Property Portfolio is GE
Capital Corporation Inc, through its division, GE Real Estate. GE Real Estate is
one of the world's premier commercial real estate companies with more than $62
billion in assets and a presence in 32 countries. GE Real Estate is backed by
GE Capital Corporation's AAA rating.
* The Sale is conditional on the approval of Shareholders.
The aggregate consideration for the Sale is the payment in cash of #417.5
million, which, net of all costs of the Sale, represents a premium of #14.76
million (3.7 per cent.) over the valuation of the Property Portfolio as at 12
June 2007.
* The Directors estimate that, after all of the costs of
the Sale and a winding up of the Company, the NAV of a Share on the winding up
would equate to approximately 169.5p, a premium of 5.7 per cent. to the NAV per
Share as at 30 June 2007.
* The Directors intend that the Company will continue to
pay the quarterly dividend at the current rate of 1.875p per quarter up to the
date of the winding up.
* Accordingly, the Directors estimate that their proposals
would equate to a total return per Share (including a final quarterly dividend)
on a winding up of approximately 171.4p per Share. This is 6.5p (4 per cent.)
higher than the indicative value of the SWUF proposals.
* The SWUF proposals are subject to amendment based on a
future valuation. The SWUF proposals do not involve any legally binding
obligation on SWUF to put forward the SWUF proposals. There is no guarantee that
the SWUF proposals would be offered to Shareholders. SWUF declined the
opportunity to participate in the competitive marketing of the Company's
property portfolio.
* Subject to the Sale becoming unconditional, the
Directors propose to put forward proposals to Shareholders for the winding up of
the Company with the option for Shareholders to receive cash or to roll-over
their investment into F&C Commercial Property Trust Limited ("FCCPT"), a London
listed and Guernsey registered property investment company with a similar
investment objective to the Company which is managed by F&C Asset Management.
* FCCPT is the largest listed property investment company
in the Company's sector with gross assets of #1.3 billion. FCCPT's portfolio
comprises prime UK commercial properties. Since its launch in March 2005,
FCCPT's property portfolio has significantly outperformed the IPD UK Monthly
Index.
* It is expected that the liquidators under the winding up
will retain #1 million in the liquidation for unknown liabilities. This amount
has not been deducted from the figures referred to above and will be returned to
Shareholders if it is not used. It is expected that the winding up would become
effective in mid-October 2007.
* The Directors believe that their proposals offer a
significant enhancement to Shareholder value. The Directors also believe that
their proposals have a materially higher value than the alternative SWUF
proposals, are more certain and are in the best interests of all Shareholders.
* The Directors intend to send to Shareholders shortly a
circular convening an extraordinary general meeting to approve the Sale. In the
meantime, Shareholders are urged to reject the SWUF resolutions at the EGM
convened for 31 July 2007. There is no guarantee that the Directors' proposals
would be implemented by the SWUF Nominated Directors. The SWUF proposals offer
significantly less value for Shareholders and their implementation would result
in significant abortive costs being incurred by the Company.
SHAREHOLDERS MUST VOTE AGAINST THE SWUF RESOLUTIONS AT THE EGM ON 31 JULY 2007
PLEASE READ THE FULL ANNOUNCEMENT. FULL DETAILS OF THE DIRECTORS' PROPOSALS ARE
SET OUT BELOW.
Background to the Sale and the Proposals
On 18 May 2007, Scottish Widows Unit Funds Limited announced that it had
requisitioned an extraordinary general meeting of the Company to remove the
current Directors, appoint the SWUF Nominated Directors and to instruct those
directors to put forward the SWUF proposals. The SWUF proposals involve winding
up the Company and offering Shareholders a cash exit at the net asset value
prevailing prior to the winding up.
Following the service of the SWUF Requisition, the Board consulted with a number
of the Shareholders, including SWUF as the largest Shareholder. The Directors
reached the conclusion that sufficient of the Shareholders wished a cash exit
and that therefore the Directors should put forward proposals for the winding up
of the Company. However, the Board did not believe that the SWUF proposals
maximised value for all Shareholders. The Board also believed that they should
market the Property Portfolio openly in order to ensure that it was sold for the
best possible price.
On 8 June 2007, the Board announced that it was undertaking an open marketing of
all or part of the Property Portfolio and that it intended to propose a winding
up of the Company that would offer Shareholders the opportunity to receive cash
or to roll-over their investment into a vehicle that had a similar investment
objective to the Company. This announcement sets out the results of the
competitive marketing process undertaken by the Board and the Directors'
proposals for the winding up and reconstruction of the Company.
The Sale
Following the service of the SWUF Requisition, the Board appointed Savills, an
independent property agent, to undertake competitive marketing of all or part of
the Company's Property Portfolio in order to ensure that the Board obtained the
full market price for the Property Portfolio. Savills, in conjunction with
Cordatus Partners, identified and discussed the proposed sale with a wide range
of potential purchasers and assisted the interested parties in undertaking
initial commercial due diligence on the Property Portfolio.
As a result of those discussions, the Board received indicative offers from
certain of those interested parties and the Board resolved to enter into
exclusive negotiations with GE Real Estate as the preferred bidder. During the
period of exclusivity, GE Real Estate undertook detailed due diligence on the
Property Portfolio and the Subsidiary Companies which hold the Property
Portfolio.
Following this sale process, the Company entered into a conditional share
purchase agreement with GE Real Estate dated 20 July 2007. The Sale is
conditional on the approval of Shareholders by ordinary resolution at the Sale
EGM. The Sale is also conditional on there having been no material breaches of
the warranties provided to the Buyer under the Share Purchase Agreement prior to
completion of the Sale and on the Company having complied with certain
obligations imposed on it under the Share Purchase Agreement. The Sale involves
the sale of the Company's entire interests in its subsidiaries, UKPH and UKPH
No.1, which hold the entire Property Portfolio.
GE Real Estate is one of the world's premier commercial real estate companies
with more than $62 billion in assets and a presence in 32 countries. GE Real
Estate is backed by GE Capital Corporation's AAA rating.
The consideration for the Sale is cash of #417.5 million, being the agreed sale
price for the Property Portfolio, and is subject to adjustment based on the
other assets and liabilities of the Subsidiary Companies. The Sale Consideration
effectively applies a value to the Company's Property Portfolio of #417.5
million. Net of the property sale costs, this equates to a premium of #14.76
million (3.7 per cent.) over the external valuation of #397.42 million as at 12
June 2007. Since 12 June 2007, the property at Southend was sold to a separate
third party for an aggregate consideration of #2 million (valuation as at 12
June 2007: #1.985 million).
The Share Purchase Agreement contains a limited number of warranties that are
typical for an agreement of its nature but the period for claims to be made
under the warranties expires on the winding up date of the Company.
The Share Purchase Agreement obliges the Directors to convene an extraordinary
general meeting to consider an ordinary resolution to approve the Sale to be
held no later than 31 August 2007. If Shareholders approve the Sale, the Sale is
expected to complete two business days after such approval.
Reconstruction Proposals
Subject to the Sale becoming unconditional, the Directors intend to issue a
further circular to Shareholders to put forward proposals for a reconstruction
of the Company that will offer Shareholders the opportunity to roll-over all or
part of their investment in the Company in a tax efficient manner into another
listed property investment company. The Reconstruction Proposals will involve
the winding up of the Company. If those Reconstruction Proposals are approved,
the Directors anticipate that the winding up of the Company will commence by
mid-October 2007.
Shareholders will be offered the opportunity to receive in cash their full
entitlement in the winding up or to roll over all or part of their entitlement
into ordinary shares issued by F&C Commercial Property Trust Limited at their
net asset value. Shareholders who make no election will be deemed to have
elected to receive shares in FCCPT. The Directors have been advised that the
roll-over into FCCPT should not be treated as a realisation for UK capital gains
tax purposes. The net asset value of the FCCPT shares at the time of roll-over
may represent a premium over the then current market price of the FCCPT shares.
FCCPT is a London listed and Guernsey registered property investment company
with an investment objective to provide shareholders with an attractive level of
income together with the potential for capital and income growth from investing
in a diversified UK commercial property portfolio. FCCPT was launched in March
2005.
As at 30 June 2007, FCCPT had gross assets of #1.3 billion and net assets of
#1.1 billion. Its property portfolio comprises 29 properties and holdings in two
indirect property funds across the retail, office and industrial sectors.
FCCPT's properties had a running income yield of 4.5 per cent. per annum and a
weighted average lease length of 9.1 years. The sector allocation of FCCPT's
portfolio at 30 June 2007 was 41.2 per cent. offices, 19.9 per cent. retail,
17.6 per cent. retail warehouses, 10.7 per cent. industrial and 10.6 per cent.
shopping centres.
Since the launch of FCCPT in March 2005, the total return on its property
portfolio has been 56.4 per cent. compared to an increase in the IPD UK Monthly
Index of 42.7 per cent. Over this same period the net asset total return of an
FCCPT Share has been 64.7 per cent.
The net asset value of an FCCPT Share as at 30 June 2007 was 147.4p before
provision for the quarterly interim dividend which will be paid on 27 July 2007.
The adjusted net asset value per share, after deducting such quarterly dividend,
was 145.9p per share. FCCPT currently pays gross annual dividends of 6p per
share.
The roll-over into FCCPT will be limited to 44.5 million FCCPT Shares in
aggregate, equivalent to approximately #65.6 million in net asset value
(approximately 20 per cent. of the net asset value of the Company). Based on the
discussions with Shareholders, the Directors are satisfied that this amount will
be more than sufficient to satisfy expected demand for the roll-over option.
In line with common market practice, the Company and FCCPT have procured that F&
C Asset Management plc, the parent company of the investment manager of FCCPT,
make a contribution to the costs of the Reconstruction Proposals. The
contribution agreed is of an amount equal to 0.375 per cent. of the value of the
assets rolled over into FCCPT (excluding any funds managed or advised by F&C
Asset Management plc or its subsidiaries). For the purposes of this
announcement, the Directors have assumed no costs contribution from F&C Asset
Management plc.
Following the Sale of the Property Portfolio, the investment business of the
Company will be managed by Cordatus Partners until the date of liquidation.
The proposed liquidators of the Company have indicated that they expect to
retain approximately #1 million (being approximately 0.3 per cent. of the
Company's net assets) in the winding up to cover potential liabilities for
unknown liabilities. To the extent this amount is not used it will be returned
to Shareholders.
Financial effects of the Proposals
The Directors estimate that, assuming the Sale becomes unconditional, after the
costs of the Sale and the Winding up as referred to below and the repayment of
the floating rate notes issued by the Company but before the Liquidators'
Retention, the NAV of a Share on the Winding up would equate to approximately
169.5p. This is a premium of 5.7 per cent. over the NAV per Share as at 30 June
2007. This figure has been adjusted to deduct the dividends expected to be paid
on the Shares up to the date of the Winding up and an estimate of the income and
costs of the Company up to the date of the Winding up. This figure is otherwise
calculated on the basis of the NAV per Share as at 30 June 2007 but with the
value of the interest rate swap at the lower valuation as at 18 July 2007.
The proceeds of the Sale will be held on deposit and in cash equivalent
securities. Part of the proceeds will be held pending re-investment in respect
of the anticipated assets to be rolled over to FCCPT under the Reconstruction
Proposals. It is expected that, based on current interest rates, the Company's
income following the Sale will be similar to the net income generated from the
Property Portfolio.
Shareholders should note that if interest rates should fall between 30 June 2007
and the date of the repayment of the floating rate notes, the marked to market
value of the interest rate swap relating to the floating rate notes would
decrease and the NAV per Share would decrease. If interests rates rise over this
period, the marked to market value of the interest rate swap would increase. As
at 18 July 2007, the marked to market value of the interest rate swap was #10.6
million.
Shareholders should also note that these figures are estimates only and that the
potential for a cash realisation of a Shareholder's investment is contingent on
a number of Shareholder approvals. There is no guarantee that such Shareholder
approvals will be obtained and that the Proposals will become effective.
Benefits of the Proposals
The Directors believe that the Proposals are in the best interests of all
Shareholders. The Directors are of the view that the Proposals offer the
following benefits for Shareholders.
* By undertaking a competitive sale of the Company's
Property Portfolio, the Directors have significantly increased value for
Shareholders.
* The Sale Consideration for the Property Portfolio is at
a significant premium to the external valuation reflecting the attraction to a
potential purchaser of a sale of the portfolio as a whole and the transaction
cost reduction resulting from the Group's holding structure.
* By undertaking a sale of the Property Portfolio for
cash, the Directors have crystallised a certain value for the Property Portfolio
and reduced the transactional risk that may exist in any alternative proposal.
* By offering a roll-over option into FCCPT, the Directors
are able to offer Shareholders the opportunity to continue an investment
exposure to UK commercial property in a tax efficient manner.
Costs of the Proposals
In putting forward the Proposals the Board has been conscious of the need to
keep costs to a minimum, in particular until they were able to sign a contract
for the sale of the Property Portfolio. The Board has therefore sought to
appoint key advisers on a fee basis that incentivises them to obtain the highest
value for the Property Portfolio. Notwithstanding such requirements, the Board
is pleased that it has managed to keep the costs of the Proposals within market
standard levels.
It is estimated that if the Sale becomes unconditional, the total property sale
costs on the Sale (inclusive of the incentive fees payable to Cordatus Partners
and Savills discussed below) will amount to approximately #5.3 million. This is
equal to approximately 1.27 per cent. of the aggregate Sale Consideration which
is in line with typical sale costs for a portfolio of this nature of
approximately 1.25 per cent. of gross consideration.
It is further estimated that, if the Reconstruction Proposals become
unconditional, the total costs of the Reconstruction Proposals will amount to
approximately #2.1 million. This is equal to approximately 0.5 per cent. of the
gross assets of the Company (based on the Sale Consideration) which compares
favourably with typical costs for the reconstruction of a UK investment trust of
0.5 per cent. of gross assets.
It is therefore estimated that the total costs of the Proposals will amount to
approximately 1.77 per cent. of the gross assets of the Company (based on the
Sale Consideration).
Shareholders should note that if the Sale is not approved by Shareholders, the
Company will incur abortive costs of #5.28 million, equal to approximately 1.24
per cent. of the gross assets of the Company. These costs include the payment
of a fee to GE Real Estate of #2 million that would be incurred by the Company
if the Sale is not approved by Shareholders.
Cordatus Partners
In the event that the Company is wound up, the appointment of Cordatus Partners
Limited as the Company's investment manager will be terminated with no
termination compensation payable.
Cordatus Partners have been heavily involved in achieving the terms of the Sale
and assisting the Buyer in the due diligence on the Property Portfolio and the
Subsidiary Companies. After the Company entered into exclusivity with GE Real
Estate and in consideration for the additional work undertaken by Cordatus
Partners in connection with the Sale, the Company agreed to pay an additional
fee to Cordatus Partners. This fee is an incentive fee based on the
consideration for the sale of the Property Portfolio. If the Sale becomes
unconditional, Cordatus Partners will be entitled to an incentive fee of #2.3
million. If the Sale is not approved by Shareholders, Cordatus Partners will be
entitled to an abort fee of #500,000. If, after entering into the exclusivity
with GE Real Estate, the Company had not entered into a legally binding
contract, Cordatus Partners would have been entitled to an abort fee of
#250,000.
The Company has also appointed Savills to provide independent advice to the
board on the terms of the sale of the Property Portfolio. The success fees
payable to Savills and Cordatus Partners, as referred to above, on the Sale
becoming unconditional are in aggregate equal to approximately 1.0 per cent. of
the Sale consideration. The Directors believe that these fees are appropriate
and in line with the maximum capped incentive fees that would typically be paid
for the sale of a property portfolio similar to the Property Portfolio, in
particular given the overall terms of the Sale, the time constraints imposed on
the sale process and the level of the abort fees payable.
It is expected that Cordatus Partners will provide services to the liquidators
after the Company is wound up. On any sale of a property portfolio there is a
significant amount of post sale reconciliation work to be undertaken given the
size and complexity of the Property Portfolio and the fact that there are over
392 tenants. It is expected that Cordatus Partners will be paid a reduced
management fee for this work of #150,000 per month for a minimum period of two
months.
The Buyer has indicated that it may discuss with Cordatus Partners the
possibility of Cordatus Partners providing certain property management services
to the Buyer in respect of the Property Portfolio following Completion, at least
on a transitional basis. The Company has not been a party to these discussions
although it understands that no contractual documentation has been put in place
in respect of such services.
As a result of the requisition served by SWUF and the terms of the SWUF
proposals, the Directors wrote off the entire value of the equity stake held by
the Company in Cordatus Partners Holdings Limited. That stake had a book value
of #100,000. Under the terms of the investment in Cordatus Partners Holdings
Limited, the Company is required to sell that stake to the management team of
Cordatus Partners on the winding up of the Company. The Company has agreed,
immediately on the Sale completing, to transfer that equity stake to the
management team of Cordatus Partners for #50,000. The Company has also agreed,
if the Sale does not become unconditional, to transfer that equity stake to the
management team of Cordatus Partners for its current written down value of nil.
The Company has not reimbursed to Cordatus Partners the compensation of #1.35
million paid by Cordatus Partners to SWIP in connection with the termination of
the investment management agreement between the Company and SWIP. Cordatus
Partners replaced SWIP as the investment manager of the Company on 1 May 2007.
In order to enable the liquidators to distribute cash to Shareholders and to
undertake the roll-over of Shareholders' investments, the liquidators will
require certain representations from Cordatus Partners. In addition, the
liquidators will require a formal release and waiver of all and any claims that
Cordatus Partners may have against the Company. In consideration for the
incentive fee arrangements, Cordatus Partners has also agreed to give these
representations and the release and waiver upon payment of the full incentive
fee.
In accordance with the UK Listing Authority's Listing Rules, these arrangements
with Cordatus Partners are a related party transaction. The Board has appointed
Noble Grossart to advise the Board on the terms of these arrangements. Noble
Grossart is entirely independent of the Board, the Company, Cordatus Partners
and the other advisers to the Company. Noble Grossart has had no other
involvement with the Company in relation to the change of investment manager,
the SWUF proposals or the Board's Proposals. Noble Grossart has advised the
Board that the terms agreed with Cordatus Partners are fair and reasonable so
far as the Shareholders are concerned. In accordance with the Listing Rules the
arrangements with Cordatus Partners are not subject to Shareholder approval.
However, as noted above, the arrangements with Cordatus Partners, other than the
abort fee, are conditional on Shareholders' approval of the terms of the Sale or
Shareholders' approval of the winding up of the Company.
Dividend
In the absence of unforeseen circumstances, the Directors intend to maintain the
payment of a dividend on the Shares at the forecast rate of 7.5p per Share per
annum (this is not a profit forecast). Accordingly, the Directors intend to pay
a final interim dividend immediately prior to the proposed Winding up of the
Company, which shall be accrued from 1 July 2007 to the proposed date of the
Winding up. The Directors will make an announcement of the expected level of
that final interim dividend when they convene the extraordinary general meeting
for the Winding up of the Company.
Prepayment of the floating rate notes
In accordance with the terms of the Notes, the Company is entitled to prepay the
Notes without penalty on a quarterly interest payment date subject to the
Company giving not less than 45 days' prior written notice. Prepayment of the
Notes is effected by the Company giving notice to UK Balanced Property Finance
Limited of repayment of the loan due from the Company and UK Balanced Property
Finance Limited then gives notice to the holders of the Notes of the prepayment
of the Notes. These notices are irrevocable. The next interest payment date is 8
October 2007 and accordingly the first notice must be given no later than 23
August 2007.
It is the Directors' intention that, subject to Shareholders approving the Sale,
the Directors will give notice of the prepayment of the Notes immediately on the
Sale becoming unconditional and will repay the Notes on 8 October 2007. It is
expected that the Company will be wound up shortly following the prepayment of
the Notes.
Expected Timetable
The expected timetable for the Proposals is as follows. These indicative dates
are subject to change at the sole discretion of the Directors.
EGM to approve the Sale 17 August 2007
Sale completes by 23 August 2007
Circular convening the EGM to wind up early September 2007
the Company published
Final interim dividend early October 2007
Notes prepaid 8 October 2007
EGM to approve the winding up of the Company Mid-October 2007
Cash distributions made and roll-over mid-October 2007
shares issued to Shareholders
Status of the SWUF Proposals
The SWUF Proposals are set out in the circular published by the Company dated 8
June 2007. SWUF sent a document to Shareholders dated 10 July 2007 in which it
confirmed that it was seeking to replace the independent Board with the SWUF
Nominated Directors and to put forward plans to liquidate the Company and to
roll-over the Company's assets into a new vehicle, majority owned by SWUF and to
be managed by Scottish Widows Investment Partnership Limited, including
providing a cash exit for Shareholders who did not wish to roll-over. The SWUF
document indicated that Shares would be valued at closing NAV at the time of
liquidation/reconstruction. The SWUF document stated "we estimate that our
Proposals would have valued your Shares at 163.0p per Share had the closing NAV
been calculated as at 30 June 2007".
As explained above, your independent Board has procured an offer for its assets
which would value the Property Portfolio at #417.5 million, which represents,
after all property sale costs, a premium of #14.76 million (3.7 per cent.) over
the external valuation of the Property Portfolio of #397.42 million as at 12
June 2007. As set out above, the independent Board's proposals would, after the
costs of the Sale and the Winding up and repayment of the floating rate notes,
equate to a NAV per Share on a Winding up of approximately 169.5p and allow the
Company to pay a dividend at the rate of 1.875p per quarter (this is not a
profit forecast). The Board has carefully considered the best interests of
Shareholders. If the Board had considered the SWUF proposals to be in the best
interests of Shareholders it would have recommended them to Shareholders. The
Board has concluded that it is in the best interests of Shareholders to proceed
with the Sale which the Board estimates will deliver value of approximately
169.5p per Share rather than the SWUF proposals which SWUF has stated would
deliver 163.0p per Share based on SWUF's assumptions (in both cases prior to any
final dividend). Further details on the SWUF proposals, and your Directors
concerns in relation to the SWUF proposals, are set out below.
Following the service of the requisition by SWUF, Directors of the Company and
the Company's advisers met with Jim McConville, the Chairman of SWUF, and SWUF's
advisers. The Directors encouraged SWUF to provide some certainty on the value
of its offer as SWUF was not guaranteeing a certain value for the Property
Portfolio. As the Directors believed that the SWUF proposals undervalued the
Property Portfolio, the Directors also encouraged SWUF to increase the value of
its proposals to Shareholders. The Directors also offered SWUF the opportunity
to bid for the Property Portfolio through the open marketing process. SWUF
refused to participate in the open marketing process and has not increased the
value of its proposals to Shareholders. SWUF's refusal to increase the value of
its proposals to Shareholders was confirmed in its correspondence to
Shareholders on 10 July 2007.
The SWUF proposals do not involve any legally binding obligation on SWUF to put
forward the SWUF proposals. There is no guarantee that the SWUF proposals would
be offered to Shareholders. The SWUF proposals would involve a winding up of the
Company by means of a special resolution which requires a 75 per cent. vote in
favour. As a result of the structure of the SWUF proposals, the resolution to
approve the SWUF proposals will be a related party transaction under the Listing
Rules and SWUF and its associates will not be entitled to vote on the
resolution. There is no guarantee that independent Shareholders would vote in
sufficient numbers to implement the SWUF proposals. SWUF and its associates
currently hold over 29 per cent. of the issued share capital of the Company.
As mentioned above, in connection with entering into the Share Purchase
Agreement, the Company has agreed to pay certain fees and expenses which will be
incurred if the Sale does not proceed and would also be incurred under the SWUF
proposals. Accordingly, the Directors estimate that if the SWUF Proposals could
be implemented on the same timetable as the Board's Proposals, they would result
in a terminal asset value per Share of approximately 161.3p after such abortive
fees were incurred, which is 5 per cent. below the Directors' estimate of the
value of the Board's Proposals.
Accordingly, the Directors do not believe that the SWUF proposals are in the
best interests of Shareholders. The Directors believe that they offer less value
to Shareholders, less certainty of delivery and a less attractive roll-over
investment opportunity. The Directors believe that the Board's Proposals offer
the best value for Shareholders and are the only viable proposals.
The SWUF requisitioned EGM
The extraordinary general meeting convened by SWUF to remove the Directors, to
appoint the SWUF Nominated Directors and to instruct them to implement the SWUF
proposals has been convened by the Board to be held on 31 July 2007. In order
that the Board can proceed with the Sale and the Proposals as described in this
announcement, it is important that the SWUF Resolutions are not passed. The
Directors urge Shareholders to vote against the SWUF Resolutions.
Sale EGM
The Sale is conditional upon the approval of Shareholders. The Sale EGM will be
held at 10.00 a.m. on 17 August 2007 at Regency Court, Glategny Esplanade, St
Peter Port, Guernsey GY1 3NQ at which the Sale Resolution will be proposed to
approve the Sale. A circular will be despatched shortly to Shareholders
convening the Sale EGM.
Enquiries:
Douglas Armstrong, Dickson Minto W.S.
0131 225 4455
Nigel Russell/Graeme Caton/Graham Reaves, G&N Collective Funds Services Limited
0131 226 4411
Stephanie Highett/Dido Laurimore, Financial Dynamics
020 7831 3113
Additional copies of the circular from the independent Directors dated 8 June
2007 and the form of proxy can be obtained by telephoning 020 7621 1358. If you
hold your shares through a nominee, please contact that nominee as soon as
possible to ensure that you have the opportunity to vote on the resolutions at
the extraordinary general meeting on 31 July 2007.
Definitions:
"Board" means the board of directors of the Company
"Company" means The UK Balanced Property Trust Limited
"Completion" means the completion of the Sale in accordance with the Share
Purchase Agreement
"Cordatus Partners" or "Investment Manager" means Cordatus Partners Limited
"Directors" means the directors of the Company
"FCCPT" means F&C Commercial Property Trust Limited
"FCCPT Shares" means ordinary shares of 90p each in the capital of FCCPT
"GE Real Estate" or "Buyer" means GE Real Estate, a division of GE Capital
Corporation, Inc.
"Group" means the Company and all the subsidiaries of the Company as a group
"Intercompany Indebtedness" means indebtedness owing by the Subsidiary Companies
to the Company at Completion
"Liquidators' Retention" means that amount proposed to be retained by the
liquidators from the assets in liquidation to provide for unforeseen or
contingent liabilities
"Listing Rules" means the listing rules made by the Financial Services Authority
in exercise of its functions as competent authority pursuant to Part VI of FSMA
"NAV" means net asset value
"Notes" means the #170,000,000 floating rate secured notes due 2017 issued by UK
Balanced Property Finance Limited
"Proposals" means the Sale and the Reconstruction Proposals
"Properties" or "Property Portfolio" means the real properties situated in the
United Kingdom and wholly owned or leased by any of the Subsidiary Companies
"Reconstruction Proposals" means proposals intended by the Directors to be put
forward for a voluntary winding up and reconstruction of the Company, as more
fully described in this announcement
"Sale" means the proposed sale by the Company of the Subsidiary Companies to the
Buyer under the terms and subject to the conditions of the Share Purchase
Agreement
"Sale Consideration" means #417.5 million, comprising #417.5 million less the
amount of the Intercompany Indebtedness plus repayment of all Intercompany
Indebtedness
"Sale EGM" means the extraordinary general meeting of the Company to be held on
17 August 2007 at which a resolution will be proposed to approve the Share
Purchase Agreement
"Sale Resolution" means the ordinary resolution to approve the Sale to be
proposed at the Sale EGM
"Share Purchase Agreement" means the share purchase agreement dated 20 July 2007
between the Company and the Buyer
"Shareholders" means the holders of Shares
"Shares" means ordinary shares of 25p each in the capital of the Company
"Subsidiary Companies" means UKPH, UKPH No. 1, UKPH Nominee 1 Limited, UKPH
Nominee 2 Limited, UKPH Nominee 3 Limited, UKPH Nominee 4 Limited, UKPH Nominee
5 Limited, UKPH Nominee 6 Limited, UKPH Nominee 7 Limited, UKPH Nominee 8
Limited, UKPH Nominee 9 Limited, UKPH Nominee 10 Limited, UKPH Nominee 11
Limited, UKPH Nominee 12 Limited, UKPH Nominee 13 Limited, UKPH Nominee 14
Limited, UKPH Nominee 15 Limited, UKPH Nominee 16 Limited, UKPH Nominee 17
Limited, UKPH Nominee 18 Limited, UKPH Nominee 19 Limited, UKPH Nominee 20
Limited, UKPH Nominee 21 Limited and UKPH Nominee 22 Limited
"SWIP" means Scottish Widows Investment Partnership Limited
"SWUF" means Scottish Widows Unit Funds Limited
"SWUF Nominated Directors" means Malcolm King, Richard Prosser and Charles
Wilkinson
"SWUF Requisition" means the requisition served by State Street Nominees on
behalf of SWUF on 21 May 2007 that requisitions, pursuant to section 70 of the
Companies (Guernsey) Law, 1994 (as amended) and in accordance with Article 46 of
the Articles, that an extraordinary general meeting of the Company be convened
to consider the resolutions included in the notice of the Extraordinary General
Meeting set out at page 12 of the circular issued by the Company to Shareholders
on 8 June 2007
"SWUF Resolutions" means the resolutions proposed by SWUF set out at page 12 of
the circular issued by the Company to Shareholders on 8 June 2007
"UKPH" means UK Property Holdings Limited
"UKPH No.1" means UKPH No.1 Limited
"Winding up" means the proposed voluntary winding up of the Company under the
Proposals
Important Note:
Dickson Minto W.S., which is authorised and regulated in the United Kingdom by
the Financial Services Authority, is acting solely for The UK Balanced Property
Trust Limited and for no one else in connection with the matters set out in this
announcement and will not regard any other person as its client or be
responsible to anyone other than The UK Balanced Property Trust Limited for
providing the protections afforded to clients of Dickson Minto W.S. or for
providing advice in relation to these matters or the contents of this
announcement. This announcement, which has been issued by The UK Balanced
Property Trust Limited, has been approved by Dickson Minto W.S. solely for the
purposes of section 21 of the Financial Services and Markets Act 2000.
This announcement does not constitute, or form part of, any offer, or
solicitation of any offer, for securities.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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