TIDMMNL TIDMDDIT
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLEOR IN PART INTO ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS
OF SUCH JURISDICTION
FOR RELEASE 28 April 2010 AT 07.00
RECOMMENDED OFFER BY
MANCHESTER AND LONDON INVESTMENT TRUST PLC
FOR
STAKEHOLDERS' MOMENTUM INVESTMENT TRUST PLC
Recommended Offer Summary
* The Boards of MLIT and SMIT are pleased to announce the merger of MLIT and
SMIT to be effected by a recommended offer to be made by MLIT to acquire
the entire issued and to be issued share capital of SMIT.
* The consideration will comprise New MLIT Shares, the number of which will
be determined by reference to a formula based on the net assets per share
of both MLIT and SMIT as at the date the Offer becomes unconditional as to
acceptances. There will be a cash alternative, which is not recommended, of
217.5p per SMIT Share.
* Based on the Offer Illustration (see below for details) the recommended
Basic Offer values each SMIT Share at approximately 286 pence and values
the entire issued share capital of SMIT at approximately GBP16.6 million,
based on the closing price of an MLIT Share on 23 April 2010 and represents
a premium of approximately 4.3 per cent. to the closing price of 274p per
SMIT Share on 25 March 2010, being the last Business Day prior to the
announcement of a possible offer for SMIT.
* Based on the Offer Illustration the recommended Basic Offer values a SMIT
Share at approximately 286 pence, representing a premium of 4.1 per cent.
to the Closing Price of 274.5 pence per SMIT Share on 23rd April 2010
(being the latest practicable date prior to the publication of this
announcement).
* The Offer will be conditional on MLIT receiving such number of valid
acceptances which, together with any other SMIT Shares acquired by MLIT,
represent at least 50% of SMIT's issued share capital. SMIT Shareholders
(some of whom are acting in concert with MLIT) have signed irrevocable
undertakings and letters of intent to accept the Offer in respect of
approximately 51.6% of SMIT's issued share capital.
* The MLIT Board believes that the proposed Offer could lead to the following
benefits:
* a larger net asset base for the Enlarged Group which may provide more
liquidity in MLIT Shares under normal market circumstances;
* while the terms of the Offer provide for the issue of new MLIT Shares in
exchange for SMIT Shares valued at 100 per cent. of FAV under the Basic
Offer, the Cash Alternative Offer is at a discount to FAV. To the extent
that any SMIT Shareholders elect to receive the Cash Alternative Offer,
there would be an enhancement in net asset value per MLIT Share (after
providing for the costs of the Offer);
* costs reductions across the Enlarged Group of approximately GBP385,000 per
annum through economies of scale and having one quoted holding company
rather than two; and
* the potential utilisation of SMIT as an investment subsidiary of MLIT which
may allow for the utilisation of brought forward surplus management
expenses and non trade deficits in SMIT against investment income.
* The merger of SMIT and MLIT by way of the Offer is a Class 1 Transaction
and a Related Party Transaction under the Listing Rules, because of SMIT's
size in relation to MLIT and because MLIT proposes to acquire 2,619,262
SMIT Shares (representing 45.7% of SMIT's issued share capital) from M&M,
which is a substantial shareholder in MLIT and its associates. The merger
is subject to shareholder approval at a General Meeting of MLIT.
* The Offer Document and an accompanying Equivalent Document (being a
document equivalent to a prospectus) will be posted to SMIT Shareholders as
soon as practicable and a circular containing notice of the General Meeting
will be sent with a copy of the Equivalent Document to MLIT shareholders.
Peter Stanley, Chairman of MLIT, said:
"The proposed merger provides SMIT Shareholders with the prospect of an
increase in capital value and is intended to enable cost savings to be made for
the benefit all shareholders in the Enlarged Group. I regard the proposed
merger as being good for shareholders of both MLIT and of SMIT."
Enquiries:
Manchester & London Investment Trust PLC
Peter Stanley Tel: 0161 242 2895
Stakeholders' Momentum Investment Trust PLC
Liam Murray Tel: (020) 7148 7903
Midas Investment Management Limited (fund manager to MLIT and SMIT)
Mark Sheppard Tel: 0161 242 2895
Fairfax I.S. PLC (sponsor and adviser to MLIT)
David Floyd, James King and Rachel Rees Tel: (020) 7469 4358
Libertas Capital Corporate Finance Limited (adviser to SMIT)
Sandy Jamieson and Andrew McLennan Tel: (020) 7569 9650
This summary should be read in conjunction with and is subject to, the full
text of this Announcement (including its appendices) set out below. Appendix
Isets out the conditions and further principal terms of the Offer. Appendix II
of this Announcement contains details of the Formula Asset Value, Appendix III
contains the sources and bases of certain information used in this summary and
in the following Announcement. Appendix IV contains details of the letters of
intent. Appendix V contains definitions of certain terms used in this summary
and the following Announcement.
Neither this summary nor the full text of this Announcement constitutes or
forms part of an offer to purchase or subscribe for any securities. The Offer
will be made solely by the Offer Document and accompanying Equivalent Document
(being a document equivalent to a Prospectus published in accordance with the
Prospectus Rules and (in the case of MLIT Shares held in certificated form) the
Form of Acceptance, which together will contain the full terms and conditions
of the Offer, including details of how the Offer may be accepted.
A copy of this announcement and certain information published or otherwise made
available by MLIT in connection with the recommended Offer is available at:
http://www.manchesterandlondon.co.uk/investorRelations.php
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLEOR IN PART INTO ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS
OF SUCH JURISDICTION
FOR RELEASE 28 April 2010 AT 07.00
RECOMMENDED offer by
Manchester & London investment trust plc
FOR
STAKEHOLDERS' MOMENTUM INVESTMENT TRUST PLC
1. Introduction
The MLIT Directors and the SMIT Directors are pleased to announce a merger to
be effected by a recommended all share offer, to be made by MLIT, to acquire
the entire issued and to be issued share capital of SMIT.
The merger of SMIT and MLIT by way of the Offer is a Class 1 Transaction and a
Related Party Transaction under the Listing Rules, because of SMIT's size in
relation to MLIT and because MLIT proposes to acquire 2,619,262 SMIT Shares
(representing 45.7% of SMIT's issued share capital) from M&M (which is a
substantial shareholder in MLIT) and its associates. The merger is subject to
shareholder approval at a General Meeting to be convened by MLIT.
The offer comprises a share for share offer (the "Basic Offer"), which the SMIT
board recommends SMIT Shareholders to accept and a Cash Alternative Offer which
is not recommended.
Certain SMIT Shareholders who have an aggregate interest in 5,564,047 SMIT
Shares (representing 51.6% of SMIT's issued share capital) have signed
irrevocable undertakings and/or letters of intent to accept the recommended
Basic Offer. Details of these persons (who include M&M, which is acting in
concert with MLIT) and their interests in SMIT Shares are set out in Appendix
III.
MLIT holds no SMIT Shares.
A copy of this announcement and certain information published or otherwise made
available by MLIT in connection with the recommended Offer is available at:
http://www.manchesterandlondon.co.uk/investorRelations.php
Information published or otherwise made available by SMIT in connection with
the recommended Offer is available at:
http://www.stakeholdersmomentumit.co.uk/eaglet/documents/
2. Background to and Reasons for the Offer
Under the Offer, MLIT is offering to acquire all of the issued and to be issued
SMIT Shares. SMIT Shareholders who accept the Offer can either elect to receive
New MLIT Shares as consideration for their SMIT Shares under the Basic Offer or
they can elect to accept the Cash Alternative Offer of 217.5p in cash for each
SMIT Share.
The Board believes that the proposed merger will result in the Enlarged Group
enjoying an increased scale which in turn should lead to the following
benefits:
* a larger net asset base for the Enlarged Group which may provide more
liquidity in MLIT Shares under normal market circumstances;
* while the terms of the Offer provide for the issue of new MLIT Shares in
exchange for SMIT Shares valued at 100 per cent. of FAV under the Basic
Offer, the Cash Alternative Offer is at a discount to FAV. To the extent
that any SMIT Shareholders elect to receive the Cash Alternative Offer,
there would be an enhancement in net asset value per MLIT Share (after
providing for the costs of the Offer);
* costs reductions across the Enlarged Group of approximately GBP385,000 per
annum through economies of scale and having one quoted holding company
rather than two; and
* the potential utilisation of SMIT as an investment subsidiary of MLIT which
may allow for the utilisation of brought forward surplus management
expenses and non trade deficits in SMIT against investment income.
The merger and its attendant savings form part of a programme of cost savings
by SMIT which is already well under way. Since its appointment as investment
manager on 4 December 2009, Midas and the SMIT Board have taken steps to cut
SMIT's annual costs by approximately GBP500,000. The MLIT Directors also
anticipate that the merger of SMIT with MLIT will lead to further annual cost
savings of approximately GBP385,000 for the benefit of all shareholders in the
Enlarged Group.
SMIT's total expense (excluding exceptional costs) ratio to net assets was 3.65
per cent. for the year ended 30 June 2009. By contrast, MLIT, which has a
larger portfolio, had a total expense ratio to year end net assets of 1.42 per
cent. for the year to 31 July 2009. MLIT expects this ratio to fall further as
a result of the Acquisition.
A substantial proportion of the above savings can be achieved following MLIT
becoming SMIT's holding company, but the full benefit will only be achieved as
and when MLIT obtains sufficient SMIT Shares to be able to secure the delisting
of the SMIT Shares which could require the passing of a special resolution at a
general meeting of SMIT. MLIT would vote in favour of such resolution in
respect of its majority shareholding.
3. Terms of the Offer
Under the terms of the Offer, accepting SMIT Shareholders will receive New MLIT
Shares as consideration for their SMIT Shares under the Basic Offer or can
elect for the Cash Alternative Offer and receive 217.5p in cash for each SMIT
Share.
The number of New MLIT Shares to be issued in respect of each SMIT Share under
the Basic Offer will be determined by reference to a formula based on net
assets per share of MLIT and SMIT as at the close of business on the date on
which the Offer is declared unconditional as to acceptances. This formula is
referred to as the `FAV' or `Formula Asset Value'. The calculation of the
Formula Asset Values is described in Appendix II of this document and the
conditions of the Offer are set out in Appendix I.
The New MLIT Shares will be issued in exchange for SMIT Shares and shall be
valued at 100 per cent. of FAV.
The number of New MLIT Shares to which accepting SMIT Shareholders will become
entitled under the Basic Offer cannot be determined until the Offer becomes or
is declared unconditional as to acceptances at which point the Formula Asset
Values will be calculated.
Any fractions of New MLIT Shares arising after calculation of each accepting
SMIT Shareholder's entitlement will be rounded down and will not be allotted to
accepting SMIT Shareholders but will instead be aggregated and sold in the
market for the benefit of MLIT.
The Offer extends to any new SMIT Shares issued as a result of all or any of
the 90,951 Management Warrants currently in issue being exercised while the
Offer is open for acceptance. An offer letter will be sent to holders of
Management Warrants containing an offer with a cash alternative, which is
comparable to the Basic Offer and the Cash Alternative Offer.
For illustrative purposes only, had the Calculation Date been 23 April 2010
(being the latest practicable date prior to the release of this announcement
when MLIT and SMIT released their respective net asset values per share):
* the FAV per MLIT Share would have been 374.6469 pence and the FAV per SMIT
Share would have been 323.3398 pence (such Formula Asset Values having been
calculated by reference to the respective net asset values per MLIT Share
and per SMIT Share as at 23 April 2010);
* an accepting SMIT Shareholder under the Basic Offer would have been
entitled to 863 New MLIT Shares for every 1,000 SMIT Shares held; and
* the Basic Offer would have valued the entire issued share capital of SMIT
at approximately GBP16.6 million and values each SMIT Share at approximately
286 pence, representing a premium of 4.3 per cent. to the Closing Price of
274p per SMIT Share on 25 March 2010, being the last business day prior to
the announcement of the possible offer.
(the "Offer Illustration").
The assumptions on which the Offer Illustration is based are:
* full acceptance of the Basic Offer and that all the Management Warrants are
exercised;
* that the other conditions of the Offer are fully satisfied;
* that the FAV is calculated as described in Appendix II of this document,
but for illustrative purposes, treating references to the Calculation Date
as references to 23 April 2010 in respect of MLIT and SMIT; and
* the FAV per SMIT Share has been estimated for the purposes of the
illustration by dividing the FAV by 5,818,645 SMIT Shares (being the number
of such shares in issue and 90,951 SMIT Shares in respect of the number of
warrants outstanding).
On the basis of the Offer Illustration, full acceptance of the Basic Offer
would have resulted in the issue of 5,021,794 New MLIT Shares, representing
approximately 22 per cent. of the Enlarged Share Capital.
The Cash Alternative Offer of 217.5p per SMIT Share values the whole of SMIT's
issued share capital at GBP12.66 million, and represents a discount of 56.5p to
the Closing Price of 274p per SMIT Share on 25 March 2010 (being the last
business day prior to the announcement of the possible offer).
The SMIT Shares will be acquired by MLIT, pursuant to the Offer, fully paid and
free from all liens, equities, charges, encumbrances, rights of pre-emption and
any other interest of any nature whatsoever and together with all rights now or
hereafter attaching thereto, including voting rights and the right to receive
and retain in full all dividends and other distributions (if any) declared,
made or paid on or after 26 March 2010 (being the date on which the potential
Offer was announced).
The New MLIT Shares will be issued credited as fully paid and will rank pari
passu in all respects with the Existing MLIT Shares, including the right to
receive all dividends and other distributions declared, made or paid on or
after 26 March 2010 in respect of the MLIT Shares but excluding the MLIT
dividend in respect of the year to the 31 July 2010 which had a record date of
6 April 2010 (which is before the date on which the Offer is capable of
becoming unconditional). The New MLIT Shares may be issued in certificated or
in uncertificated form.
Application has been made to the UK Listing Authority for the New MLIT Shares
to be admitted to the Official List and application will be made to the London
Stock Exchange for the admission of the New MLIT Shares to trading on its
market for listed securities. No application will be made for the New MLIT
Shares to be admitted to listing or trading on any other stock exchange.
The Offer is conditional upon acceptances being received in respect of not less
than 50 per cent. in nominal value of the SMIT Shares to which the Offer
relates. The Offer is also conditional, amongst other things, upon the
Resolution being passed at the General Meeting and on Admission.
The availability of the Offer to persons not resident in the United Kingdom may
be affected by the laws of the relevant jurisdictions. Persons who are not
resident in the United Kingdom should inform themselves about and observe any
applicable legal or regulatory requirements.
4. Information on MLIT
MLIT is an investment company with a portfolio of investments, principally
quoted on the main market of the London Stock Exchange, valued at approximately
GBP66.5 million as at 31 March 2010. MLIT has a simple equity capital structure
comprising ordinary shares listed on the Official List and traded on the main
market of the London Stock Exchange.
MLIT maintains a relatively small and focused portfolio seeking capital growth
by investing the majority of its assets in a portfolio of approximately 20 to
40 securities. Midas, the investment manager of MLIT, endeavours to construct a
balanced portfolio of holdings with an emphasis on achieving capital
appreciation and providing a reasonable return of income. The current portfolio
includes UK and overseas equities and money market deposits. The MLIT Board
adopts a policy permitting investment in any particular sector of the stock
market in both the UK and overseas.
MLIT may borrow to gear the portfolio returns when the Investment Manager
believes it is in MLIT Shareholders' interests to do so. Currently, MLIT has no
borrowings.
The success of MLIT's investment policy is illustrated by the growth in net
assets per MLIT Share from the equivalent of 2.30p at 31 December 1981 to
379.66p as at 31 March 2010, a compound growth rate of 19.9 per cent. per
annum, which compares to a compound growth rate of 7.2 per cent. in the FTSE
All Share Index over the same period.
The Closing Price of 331 pence per MLIT Share as at 23 April 2010 represented a
discount of 12.26 per cent. to the net asset value of 377.25 pence per MLIT
Share as at that date (being the latest practicable date prior to the printing
of this document). The MLIT Shares traded at an average discount of 10 per
cent. over the 12 months ended 31 March 2010, which compares with the UK Growth
sector size-weighted average discount of 11 per cent. over the same period.
MLIT seeks to renew, at each annual general meeting, its authority to buy-back
its own shares. Acquisitions under this authority will only be made at market
prices below the prevailing net asset value per MLIT Share at the time of the
buy-back. The MLIT Board continues to believe that share buy-backs can be a
useful tool in enhancing MLIT Shareholder value, including, if the MLIT Board
considers it to be appropriate, during the course of the Offer Period.
Additional information concerning MLIT and copies of announcements released in
connection with the Offer are available at http://www.manchesterandlondon.co.uk
/investorRelations.php.
5. Information on SMIT
SMIT is an investment company incorporated in the United Kingdom under the Act
with registered number 02812946. SMIT has a capital structure comprising a
single class of SMIT Shares, which are listed on the Official List. SMIT is not
authorised or regulated by the FSA.
SMIT's investment policy since 11 March 2009 has been to achieve returns for
its shareholders, primarily through capital appreciation, by investing in
companies listed on regulated investment exchanges in the United Kingdom. The
policy will be achieved through investment in companies identified as having
patterns of directors' dealings on the premise that following such signals may
lead to superior investment performance.
SMIT has been managing its holdings as two distinct portfolios, the Legacy
Portfolio (being those investments made pursuant to the previous investment
policy and which are in the process of being realised) and the General
Portfolio (being those investments made pursuant to the new investment policy).
SMIT`s fully diluted net asset value per share as at 23 April 2010 amounted to
368.68 pence and that its investment portfolio comprised:
Capital allocated to "Legacy Portfolio" GBP 1.33 m
Capital allocated to "General Portfolio", Cash and Working Capital GBP20.12 m
SMIT's audited financial statements for the year ended 30 June 2009 showed
losses on investments at fair value of GBP8.38 million (2007 - losses of GBP36.23
million), income of GBP1.44 million (2007 - GBP1.59 million) and a net loss for the
year of GBP7.43 million (2007 - losses of GBP37.69 million). Its audited gross
assets as at 30 June 2009 were GBP29.1 million and its net assets were GBP28.9
million, which amounted to 328.67p per SMIT Share.
Additional information concerning SMIT is available at http://
www.stakeholdersmomentumit.co.uk/eaglet/documents/
6. Proposals for SMIT, compulsory acquisition and cancellation of listing and
trading
Following the Acquisition, it is intended that the Enlarged Group will pursue
MLIT's current investment objective and strategy.
Once the Offer has become or is declared unconditional as to acceptances, and
SMIT has become a subsidiary of MLIT, MLIT will seek to terminate certain
contracts for investment management and advisory agreements, and other
contracts for administrative and other services to which SMIT is a party. MLIT
will seek to implement alternative, lower cost arrangements to achieve some of
the anticipated cost savings. The estimated termination costs of SMIT contracts
are provided for in the FAV formula which means that, as a result, the economic
burden of such termination costs will be borne by SMIT Shareholders rather than
existing MLIT Shareholders.
In addition, once the Offer has become or is declared unconditional as to
acceptances, MLIT will seek to cancel the public quotation of SMIT Shares on
the main market of the London Stock Exchange so that the Enlarged Group bears
the cost of having one quoted holding company rather than two.
It is anticipated that SMIT may, as a result of the delisting of its shares,
lose investment trust status under section 842 ICTA. As a consequence, SMIT may
not be able to take advantage of the exemption from capital gains in the
financial year to 30 June 2010. The MLIT Board does not expect that this will
have any adverse tax consequences as SMIT has significant unused losses and
these would be available for offset against any chargeable gains which are
realised in SMIT during periods when it does not have investment trust status.
As at the 30 June 2009, SMIT had carried forward non trade deficits of GBP8.65
million and surplus management expenses of GBP16.16 million.
If MLIT receives acceptances under the Offer in respect of, and/or otherwise
acquires, 90 per cent. or more of the SMIT Shares to which the Offer relates,
MLIT intends to exercise its rights pursuant to the provisions of section 979
of the Companies Act 2006 which will entitle MLIT to compulsorily acquire the
remaining SMIT Shares in issue.
Following the Acquisition, MLIT intends to secure the transfer of SMIT's
investment portfolio to MLIT and to seek Shareholder approval to alter the
articles of association of SMIT to allow it to become an investment subsidiary
of MLIT and to cancel its current investment policy. This may also be tax
efficient in the Enlarged Group context because of surplus management expenses
and non trade deficits within SMIT. Should MLIT procure insufficient votes to
pass resolutions to permit the transfer of SMIT's portfolio to MLIT, it will
pass an ordinary resolution to change the investment policy of SMIT to the same
investment policy of MLIT.
SMIT Shareholders should note that MLIT intends to procure the cancellation of
SMIT Shares' listing and trading on the London Stock Exchange and will also
propose changes to SMIT's activities if it should be in a position to do so.
Accordingly, if the Offer becomes or is declared unconditional as to
acceptances, any SMIT Shareholder who does not accept it could subsequently
find it difficult to realise his SMIT Shares.
7. Effects of the Acquisition on MLIT
The terms of the Offer have been structured to achieve a merger on terms
advantageous to MLIT Shareholders compared to SMIT Shareholders due to the
higher proportion of illiquid holdings in the portfolio of SMIT. Even after
transaction costs there is an expected immediate increase in the net asset
value of the Existing MLIT Shares on completion of the Offer. The extent of any
such increase would be reduced if the Offer is increased. If the Calculation
Date had been 23 April 2010, on the basis of the Offer Illustration the effect
of the Acquisition on net assets per share is an increase from 377.25 pence to
377.59 pence.
The merger of MLIT with SMIT is expected to lead to one-off costs in relation
to the Offer and the termination of contracts for investment management,
administrative and other services, some of which will be charged to the
Enlarged Group's profit and loss account and may have a negative impact on
earnings for the current year. However, these contract terminations are
expected to lead to savings of GBP385,000 per annum (as described in paragraph 8
below) some of which accrue over time and may not have a material effect on the
period remaining in this financial year, but are expected to enhance earnings
per share in future financial periods.
The benefit of any expected cost reductions should be considered in the context
of the fact that many expenses do not change as a result of variations in the
size of the portfolio and the number of MLIT Shares in issue, so that the
increase in the size of the Enlarged Group's portfolio leads to lower expenses
per share.
SMIT's total expense ratio to net assets (excluding exceptional costs) was 3.65
per cent. for the year ended 30 June 2009. By contrast, MLIT, which has a
larger portfolio, had a total expense ratio to year end net assets of 1.42 per
cent. for the year to 31 July 2009. MLIT expects this ratio to fall further as
a result of the Acquisition.
MLIT's net assets as at the 31 January 2009 were GBP61.27 million and on a pro
forma basis (by reference to SMIT's net assets as at 31 December 2009) would
have been increased by the Acquisition to GBP78.66 million, with no gearing.
The Acquisition is not expected to have any impact on MLIT's status as an
investment trust for tax purposes as described in more detail in paragraph 9
below however this will be dependent to some extent upon the actions of SMIT
prior to MLIT acquiring control of SMIT. MLIT Shareholders should be aware that
MLIT will suffer certain costs associated with the proposed merger, some of
which are only payable in the event the merger is successful. Costs estimated
at GBP147,000 will be payable regardless of whether or not the Offer becomes
unconditional. There is a further risk in relation to the Acquisition that it
may not be possible for MLIT to acquire compulsorily all minority shareholdings
and may not be able to procure the passing of resolutions which require the
approval of 75 per cent. of votes cast. This could restrict MLIT's ability to
cancel the listing of SMIT Shares, and take certain other actions designed to
save costs for the Enlarged Group.
8. Cost savings and other merger benefits
The MLIT Board believes that the proposed Offer could lead to the following
benefits:
i. a larger net asset base for the Enlarged Group which may provide more
liquidity in MLIT Shares under normal market circumstances;
ii. while the terms of the Offer provide for the issue of new MLIT Shares in
exchange for SMIT Shares valued at 100 per cent. of FAV under the Basic
Offer, the Cash Alternative Offer is at a discount to FAV. To the extent
that any SMIT Shareholders elect to receive the Cash Alternative Offer,
there would be an enhancement in net asset value per MLIT Share (after
providing for the costs of the Offer);
iii. costs reductions across the Enlarged Group of approximately GBP385,000 per
annum through economies of scale and having one quoted holding company
rather than two; and
iv. the potential utilisation of SMIT as an investment subsidiary of MLIT which
may allow for the utilisation of brought forward surplus management
expenses and non trade deficits in SMIT against investment income.
SMIT's administrative and other expenses (excluding an adjustment in respect of
VAT and one-off professional fees) amounted to GBP1,056,000 for the year ended 30
June 2009.
The merger and its attendant savings form part of a programme of cost savings
which is already well under way. Since its appointment as investment manager on
4 December 2009, Midas and the SMIT Board have taken steps to cut SMIT's annual
costs by approximately GBP500,000. The MLIT Directors also anticipate that the
merger of SMIT with MLIT will lead to further annual cost savings of
approximately GBP385,000.
The anticipated savings include a GBP275,000 reduction in investment management,
company secretarial, registrar, administration and other fees. Furthermore, the
costs of maintaining SMIT's independent board and listed status which amount to
approximately GBP110,000 are intended to be saved as a result of the Enlarged
Group having a single quoted holding company.
MLIT estimates that termination costs of up to GBP132,000 will be incurred to
cancel various contracts for investment management, administrative and other
services in order to achieve these savings. The Investment Manager has agreed
that, in the event the Offer becomes unconditional, no termination fee will
fall due in respect of the termination of the Investment Management Agreement.
In aggregate the annual savings expected to arise as a result of the merger
amount to GBP385,000. After taking account of the non recurring termination costs
of up to GBP132,000 which will be incurred, the net income available for
distribution by way of dividends could be increased.
The benefit of the expected cost reductions should be considered in the context
of the fact that many expenses do not change as a result of variations in the
size of the portfolio and the number of MLIT Shares in issue, so that the
increase in the size of the Enlarged Group's portfolio leads to lower expenses
per share.
A substantial proportion of the above savings can be achieved following MLIT
becoming SMIT's holding company, but the full benefit will only be achieved as
and when MLIT obtains sufficient SMIT Shares to be able to secure the
termination of SMIT's listing on the London Stock Exchange which may require
the passing of a special resolution at a general meeting of SMIT at which MLIT
will vote in respect of its majority shareholding.
The MLIT Board believes that if the proposed merger was not completed, it could
lead to the following disadvantages for SMIT and its shareholders:
i. the ongoing annual costs of SMIT are likely to remain at least GBP385,000
higher than under the alternative scenario of becoming an unquoted fully
owned subsidiary of MLIT;
ii. future dividends paid out of net revenue for the period may be reduced by
the additional costs referred to in (i) above;
iii. it is not certain that Midas will continue to offer its services for 0.25
per cent. of net asset per annum on an ongoing basis, which is materially
below the normal market rate;
iv. it may also be necessary for SMIT to bear a higher cost burden to manage
the respective claims from KDAM and their associates, as the investment
manager is not currently being remunerated to administer the defence of
these actions; and
v. there is the possibility that the outcome with regard to the claims from
KDAM and their associates are more materially adverse for SMIT than
anticipated by the provisions made in the Formula Asset Value calculation.
The SMIT Board has received legal advice that the outstanding claims are
without merit and they are being and, if required, will be strongly
resisted. The SMIT Board, in the course of agreeing the terms of the Offer,
have however agreed with MLIT to include a provision in the FAV formula.
The MLIT Board wish to make it clear that such provision has been included
as part of the process of agreeing the terms of the offer package as a
whole and should not be deemed by anyone for any purpose to be an admission
of liability on the part of the Company.
The merger benefit statements in this paragraph, which are also referred to in
other parts of this announcement, do not constitute a profit forecast and
should not be interpreted to mean that earnings per share will necessarily be
greater than those for previous financial reporting periods.
9. Employees and MLIT board changes
SMIT has no employees and there will be no change to the MLIT Board as a result
of the Acquisition.
10. Information relating to Midas and Manchester & Metropolitan Limited
The MLIT Directors are responsible for MLIT's investment policy but MLIT
delegates its day-to-day investment management to Midas under the terms of the
Management Agreement.
Midas is a fund management company formed in 2002 by Mark Sheppard and Brian
Sheppard, the investment team who have been responsible for the investment
management of the assets of MLIT since 2001. As at 31 March 2010, Midas had
approximately GBP300 million of assets under management.
Midas is authorised and regulated in the conduct of investment business by the
Financial Services Authority and provides investment and administration
services to MLIT.
Manchester & Metropolitan Investment Limited ("M&M"), which owns 52.76 per
cent. of MLIT's issued share capital, also holds 40.99 per cent. of SMIT's
issued share capital. M&M is a private investment company which had net assets
of GBP67.5 million as at 31 July 2009 (being the date of its most recent audited
accounts). The registered office of M&M, which is deemed for the purposes of
the City Code to be acting in concert with its subsidiary, MLIT, is at 2nd
Floor, Arthur House, Chorlton Street, Manchester M1 3FH.
As and when the Offer is declared unconditional, M&M will receive New MLIT
Shares as consideration for its SMIT Shares. As described in paragraph 2 above,
the number of such New MLIT Shares will be determined by reference to the FAVs
of MLIT and of SMIT. If the FAV of each company is as set out in the Offer
Illustration in paragraph 2 above, M&M would hold 11,261,484 MLIT Shares
representing between 50.0 per cent. and 57.0 per cent. of the enlarged share
capital depending on the level of acceptances by other SMIT Shareholders and
the extent of elections for the Cash Alternative Offer.
The beneficial owners of M&M are also the owners of Midas, which is the investment
manager of both SMIT and MLIT. Mr Brian Stephen Sheppard, who is a
director of M&M, owns 1,434 A ordinary shares of M&M and 9,000 MLIT Shares. Mr
Brian Sheppard is also the trustee of two trusts, the B S Sheppard 1991
Settlement Trust and the 2002 Sheppard Settlement Trust, which hold, in
aggregate, 1,091 A ordinary shares and 136 B ordinary shares of M&M
(representing 62.7 per cent. of its issued voting share capital) and 8,562 MLIT
Shares. Mr Brian Sheppard, aged 75 is a founder Director of MLIT and was
Chairman until November 1997. He is a Director of Midas Investment Management
Limited. Mr Sheppard was last re-elected to the MLIT Board at the annual
general meeting held on 18 November 2008. He is also the settlor and a trustee
of the BS Sheppard 1991 Settlement which holds 4,430 MLIT Shares and 271,730
SMIT Shares. The 2002 Sheppard Settlement Trust, of which Brian Sheppard is
also a trustee owns 4,132 MLIT Shares. Mr Mark Sheppard, who is a director of
Midas, holds 36,984 MLIT Shares.
11. MLIT General Meeting
A circular will be posted to MLIT Shareholders as soon as practicable
containing information about the proposed merger and notice of the General
Meeting at which a Resolution will be proposed to approve the Acquisition and
grant powers of allotment.
12. Conflicts of interest and recommendation
The SMIT Directors, who have been so advised by Libertas Capital Corporate
Finance Limited, consider the terms of the Offer to be fair and reasonable and
unanimously recommend SMIT Shareholders to accept the Basic Offer.
The SMIT Directors, who have been so advised by Libertas Capital Corporate
Finance Limited, do not recommend SMIT Shareholders to accept the Cash
Alternative Offer.
In providing advice to the SMIT Board, Libertas Capital Corporate Finance
Limited has taken the SMIT Directors' commercial assessments into account.
The MLIT Board, which has been so advised by Fairfax, considers the terms of
the Acquisition (including the purchase of SMIT Shares from the Related Parties
pursuant to the Offer) and the granting of powers of allotment to be fair and
reasonable as far as MLIT Shareholders are concerned. In giving their advice,
Fairfax has taken into account the commercial assessments of the Directors. The
Board considers the resolution to be voted on at the General Meeting to be in
the best interests of MLIT Shareholders as a whole.
Mr Brian Sheppard, who is a Director and who is an associate of the Related
Parties, took no part in the Board's consideration of the Resolution.
Accordingly, the Board recommends MLIT Shareholders to vote in favour of the
Resolution to be proposed at the General Meeting, as they intend to do in
respect of their own beneficial shareholdings (excluding those in which Mr
Brian Sheppard is interested) amounting, in aggregate, to 6,250 Shares,
representing 0.04 per cent. of the Existing MLIT Shares.
M&M and the Settlement, both of whom are Related Parties for the purposes of
the Listing Rules, and Brian Sheppard and the 2002 Sheppard Settlement Trust,
who are associates of the Related Parties, have undertaken not to vote on the
Resolution at the General Meeting and to take all reasonable steps to ensure
that their associates will not vote on the Resolution.
13. Number of MLIT Shares and MLIT Shares in issue
MLIT has 17,504,955 ordinary shares of 25p each in issue with ISIN
GB0002258472. SMIT has 5,727,694 ordinary shares of 25p each in issue with ISIN
GB0002974375. This information is given in accordance with Rule 2.10 of the
Takeover Code.
14. Shareholdings of persons acting in concert with MLIT
The persons acting in concert with MLIT, their holdings in MLIT and percentage
of MLIT's issued share capital are:
MLIT Shares %
Mr Brian Sheppard 9,000 0.05%
The Sheppard 1991 Trust 4,430 0.03%
The Sheppard 2002 Trust 4,132 0.02%
Mr Mark Sheppard 36,984 0.21%
M&M 9,235,442 52.76%
Mr Peter Stanley (Chairman of 6,250 0.04%
MLIT)
Fairfax (adviser to MLIT) 5,859 0.48%
Total 9,379,771 53.58%
The persons acting in concert with MLIT, their holdings in SMIT and percentage
of SMIT's issued share capital are:
SMIT Shares %
The Sheppard 1991 Trust 271,730 4.74
M&M 2,347,532 40.99
Fairfax (adviser to MLIT) 5,859 0.10
Total 2,625,121 45.83
15. General
The Offer Document, containing the full terms of the Offer, will be posted with
the Equivalent Document to SMIT Shareholders as soon as possible, but in any
event, within 28 days of today's date. The conditions to the Offer are set out
in Appendix I to this Announcement and, together with certain further terms of
the Offer, will also be set out in full in the Offer Document and, in the case
of certificated SMIT Shares, in the Form of Acceptance. In deciding whether to
accept the Offer, SMIT Shareholders should rely on the information contained
in, and follow the procedures described in, the Offer Document and, if
applicable, the Form of Acceptance.
The availability of the Offer to SMIT Shareholders not resident in or citizens
of the United Kingdom may be affected by the laws of the relevant jurisdictions
in which they are citizens or in which they are resident. Such persons should
inform themselves about and observe any applicable legal or regulatory
requirements of any such relevant jurisdiction.
In particular, the Offer is not being made, directly or indirectly, in, into or
from or by the use of the mails of or any means or instrumentality (including,
without limitation, by means of facsimile transmission, telex, telephone,
internet or other forms of electronic communication) of interstate or foreign
commerce of, or by any facility of a national, state or other securities
exchange of, any Restricted Jurisdiction, or in any other jurisdiction if to do
so would constitute a violation of the relevant laws of such jurisdiction and
the Offer, when made, will not be capable of acceptance by any such use, means,
instrumentality or facility from or within any Restricted Jurisdiction where to
do so would constitute a breach of any relevant securities laws of that
Restricted Jurisdiction. Accordingly, copies of this Announcement are not
being, and must not be, mailed or otherwise distributed or sent in or into or
from any Restricted Jurisdiction or any such other jurisdiction. Doing so may
render invalid any purported acceptance of the Offer. MLIT will retain the
right to permit the Offer to be accepted and any sale of any securities
pursuant to the Offer to be completed if, in its sole discretion, it is
satisfied that the transaction in question can be undertaken in compliance with
applicable law and regulation.
Any persons who are subject to the laws of any jurisdiction other than the
United Kingdom should inform themselves about, and observe any applicable legal
or regulatory requirements. Further information in relation to overseas SMIT
Shareholders will be set out in the Offer Document and in the Equivalent
Document.
This Announcement does not constitute, or form part of, an offer or an
invitation to purchase or subscribe for any securities. The Offer will be made
solely by way of the Offer Document, Equivalent Document and, where
appropriate, the related Form of Acceptance which together will contain the
full terms and conditions of the Offer, including details of how the Offer may
be accepted.
SMIT Shareholders who accept the Offer may only rely on the Offer Document, the
Equivalent Document and, where appropriate, the related Form of Acceptance for
all the terms and the condition of the Offer. In deciding whether or not to
accept the Offer in relation to their SMIT Shares, SMIT Shareholders should
rely only on the information contained, and procedures described, in the Offer
Document, the accompanying Prospectus Equivalent Document and, where
appropriate, the related Form of Acceptance. SMIT Shareholders are strongly
advised to read the Offer Document being posted to them shortly, or in any
event within 28 days of this Announcement, which contains important information
with respect to the Offer.
Fairfax is satisfied that MLIT, which intends to finance any acceptances of the
Cash Alternative Offer from its own liquid resources, has available the
necessary resources to satisfy full acceptance of the Cash Alternative Offer,
having regard to M&M's irrevocable undertaking to accept the Basic Offer.
Fairfax, which is authorised and regulated in the United Kingdom by the
Financial Services Authority, has authorised this Announcement for the purposes
of section 21 of FSMA. The principal place of business of Fairfax I.S. PLC is
46 Berkeley Square, London W1J 5AT. Fairfax is acting exclusively for MLIT and
no one else in connection with the Offer and will not be responsible to anyone
other than MLIT for providing the protections afforded to customers of Fairfax
or for providing advice in relation to the Offer or any other matter referred
to herein.
Fairfax, which is acting in concert with MLIT holds 5,859 SMIT Shares.
Fairfax and Libertas Capital Corporate Finance Limited have given their
respective written consents to the release of this Announcement containing
references to their names in the form and context in which they appear.
Libertas Capital Corporate Finance Limited, which is authorised and regulated
in the United Kingdom by the Financial Services Authority, is acting
exclusively for SMIT and no one else in connection with the Offer and will not
be responsible to anyone other than SMIT for providing the protections afforded
to customers of Libertas Capital Corporate Finance Limited or for providing
advice in relation to the Offer or any other matter referred to herein. The
principal place of business of Libertas Capital Corporate Finance Limited is 16
Berkeley Street London W1J 8DZ.
The directors of MLIT accept responsibility for the information contained in
this document, save for the information for which the SMIT Directors accept
responsibility in accordance with the following paragraph. Save as aforesaid,
to the best of the knowledge and belief of the directors of MLIT (who have
taken all reasonable care to ensure that such is the case) the information
contained in this document for which they are responsible is in accordance with
the facts and does not omit anything likely to affect the import of such
information.
The directors of SMIT, accept responsibility for the information contained in
this document relating to SMIT, themselves and their immediate families,
related trusts and connected persons. To the best of the knowledge and belief
of the directors of SMIT (who have taken all reasonable care to ensure that
such is the case) the information contained in this document for which they are
responsible is in accordance with the facts and does not omit anything likely
to affect the import of such information.
This Announcement contains certain forward-looking statements with respect to
(amongst other things) the financial condition, results of operations and
business of the SMIT and certain plans and objectives of the MLIT Board. These
forward-looking statements, without limitation, can be identified by the fact
that they do not relate only to historical or current facts. Forward-looking
statements often use words such as "anticipate", "SMIT", "expect", "estimate",
"intend", "plan", "goal", "believe", "will", "may", "should", "would", "could"
or other words of similar meaning. These statements are based on assumptions
and assessments made by the MLIT Directors in light of their experience and
their perception of historical trends, current conditions, expected future
developments and other factors they believe appropriate. By their nature,
forward-looking statements involve risk and uncertainty, and the factors
described in the context of such forward-looking statements in this
Announcement could cause actual results and developments to differ materially
from those expressed in or implied by such forward-looking statements, which
are not guarantees of future performance.
Should one or more of these risks or uncertainties materialise, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this Announcement. SMIT and MLIT assume no obligation to
update or correct the information contained in this Announcement, whether as a
result of new information, future events or otherwise, except to the extent
legally required.
The statements contained in this Announcement are made as at the date of this
Announcement, unless some other time is specified in relation to them, and
service of this Announcement shall not give rise to any implication that there
has been no change in the facts set out in this Announcement since such date.
Nothing contained in this Announcement shall be deemed to be a forecast,
projection or estimate of the future financial performance of SMIT except where
expressly stated.
The attention of SMIT Shareholders is drawn to the fact that under the Code
there are certain UK dealing disclosure requirements in respect of relevant
securities during an offer period. An Offer Period was deemed to have commenced
at 14.32 on 26 March 2010 when a possible offer by MLIT for SMIT was announced.
Disclosure requirements of the Takeover Code (the "Code")
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of
any class of relevant securities of an offeree company or of any paper offeror
(being any offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer period and,
if later, following the announcement in which any paper offeror is first
identified.
An Opening Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant securities of
each of (i) the offeree company and (ii) any paper offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no
later than 3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later than 3.30 pm
(London time) on the 10th business day following the announcement in which any
paper offeror is first identified. Relevant persons who deal in the relevant
securities of the offeree company or of a paper offeror prior to the deadline
for making an Opening Position Disclosure must instead make a Dealing
Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1%
or more of any class of relevant securities of the offeree company or of any
paper offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any paper offeror. A Dealing
Disclosure must contain details of the dealing concerned and of the person's
interests and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any paper offeror, save
to the extent that these details have previously been disclosed under Rule 8. A
Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no
later than 3.30 pm (London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a paper offeror, they will be deemed to be
a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see Rules
8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Takeover Panel's website at
www.thetakeoverpanel.org.uk, including details of the number of relevant
securities in issue, when the offer period commenced and when any offeror was
first identified. If you are in any doubt as to whether you are required to
make an Opening Position Disclosure or a Dealing Disclosure, you should contact
the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
MLIT is a paper offeror for the purposes of the above disclosure requirements.
This Announcement does not constitute, or form part of, an offer or invitation
to purchase any securities.
APPENDIX I
Conditions of the Offer
The Offer is subject to the following conditions:
(i) valid acceptances being received (and not, where permitted, withdrawn) by
not later than 1.00 p.m. on the first closing date of the Offer (or such later
time(s) and/or date(s) as MLIT may, subject to the rules of the Code, decide)
in respect of not less than 50 per cent. (or such lesser percentage as MLIT may
decide) in nominal value of the SMIT Shares to which the Offer relates,
provided that, unless agreed by the Panel, this condition will not be satisfied
unless MLIT has acquired or agreed to acquire (pursuant to the Offer or
otherwise), directly or indirectly, SMIT Shares carrying, in aggregate, over 50
per cent. of the voting rights then normally exercisable at general meetings of
SMIT on such basis as may be required by the Panel (including for this purpose,
to the extent (if any) required by the Panel, any voting rights attaching to
any shares which are unconditionally allotted or issued before the Offer
becomes or is declared unconditional as to acceptances, whether pursuant to the
exercise of conversion or subscription rights or otherwise); and for this
purpose (a) the expression "SMIT Shares to which the Offer relates" shall be
construed as those shares subject to the Offer but excluding any shares
allotted on or after the date of the Offer or any shares that cease to be held
in treasury on or after the date of the Offer; (b) shares which have been
unconditionally allotted shall be deemed to carry the voting rights which they
will carry on issue; and (c) valid acceptances shall be deemed to have been
received in respect of SMIT Shares which are treated as having been acquired or
contracted to be acquired by MLIT by virtue of acceptances of the Offer;
(ii) the passing at the General Meeting of MLIT (or at any adjournment thereof)
of a resolution to approve: the Acquisition, the adoption of a modified
investment policy and the Directors' powers of allotment;
(iii) (a) the UK Listing Authority agreeing to admit the New MLIT Shares to the
Official List of the UK Listing Authority and (unless the Panel otherwise
agrees) such admission becoming effective in accordance with the Listing Rules
of the UK Listing Authority; and (b) the London Stock Exchange agreeing to
admit the New MLIT Shares to trading on its market for listed securities and
(unless the Panel otherwise agrees) such admission becoming effective in
accordance with its admission and disclosure standards;
(iv) no government or governmental, quasi-governmental, supranational,
statutory or regulatory body, or any court, institution, investigative body,
association, trade agency or professional or environmental body or (without
prejudice to the generality of the foregoing) any other person or body in any
jurisdiction (each, a "Relevant Authority") having decided to take, instituted,
implemented or threatened any action, proceedings, suit, investigation or
enquiry or enacted, made or proposed any statute, regulation or order or
otherwise taken any other step or done anything, and there not being
outstanding any statute, legislation or order, that would or might reasonably
be expected to (in any case to an extent which is material in the context of
SMIT or MLIT, as the case may be):
(a) directly or indirectly restrict, restrain, prohibit, delay, impose
additional conditions or obligations with respect to or otherwise interfere
with the implementation of the Offer or the acquisition of any SMIT Shares by
MLIT or any matters arising therefrom or require amendment to the terms of the
Offer;
(b) result in a limit or delay in the ability of MLIT, or render MLIT unable,
to acquire some or all of the SMIT Shares;
(c) require, prevent, delay or affect the divestiture by MLIT or SMIT of all or
any portion of their respective businesses, assets or property or of any SMIT
Shares or other securities in SMIT or impose any limitation on the ability of
either of them to conduct their respective businesses or own their respective
assets or properties or any part thereof;
(d) impose any limitation on the ability of MLIT to acquire or hold or exercise
effectively, directly or indirectly, all rights of all or any of the SMIT
Shares (whether acquired pursuant to the Offer or otherwise) or to exercise
voting or management control over MLIT;
(e) make the Offer or its implementation or the proposed acquisition of SMIT or
of any SMIT Shares or any other shares or securities in, or control of, SMIT,
illegal, void or unenforceable in or under the laws of any jurisdiction;
(f) otherwise adversely affect any or all of the businesses, assets, prospects
or profits of MLIT or SMIT or the exercise of rights of shares in SMIT;
and all applicable waiting periods during which such Relevant Authority could
institute, implement or threaten any such action, proceedings, suit,
investigation, enquiry or reference or otherwise intervene having expired,
lapsed or been terminated;
(v) all authorisations, orders, grants, consents, clearances, licences,
permissions and approvals ("Authorisations"), in any jurisdiction, reasonably
considered necessary or appropriate by MLIT for or in respect of the Offer, the
proposed acquisition of any shares or securities in, or control of, SMIT by
MLIT or the carrying on of the business of SMIT or MLIT, the issue of the New
MLIT Shares or any matters arising therefrom being obtained in terms reasonably
satisfactory to MLIT from all appropriate Relevant Authorities or (without
prejudice to the generality of the foregoing) from any persons or bodies with
whom SMIT or MLIT has entered into contractual arrangements (in each case where
the absence of such Authorisation would have a material adverse effect on MLIT)
and such authorisations, orders, grants, consents, clearances, licences,
permissions and approvals remaining in full force and effect and there being no
intimation of any intention to revoke or not to renew the same and all
necessary filings having been made, all appropriate waiting and other time
periods (including extensions thereto) under any applicable legislation and
regulations in any jurisdiction having expired, lapsed or been terminated and
all necessary statutory or regulatory obligations in any jurisdiction in
respect of the Offer or the proposed acquisition of SMIT by MLIT or of any SMIT
Shares or any matters arising therefrom having been complied with;
(vi) since 31 December 2009 (being the date to which the last interim results
of SMIT were made up) and save as announced publicly and in each case delivered
to a Regulatory Information Service or otherwise fairly disclosed in writing to
MLIT by or on behalf of SMIT prior to 28 April 2010 (being the date upon which
the Offer was announced), SMIT not having:
(a) issued or agreed to issue or authorised or proposed the issue of additional
shares of any class or issued or authorised or proposed the issue of or granted
securities convertible into or rights, warrants or options to subscribe for or
acquire such shares or convertible securities or redeemed, purchased or reduced
or announced any intention to do so or made any other change to any part of its
share capital;
(b) recommended, declared, paid or made or proposed to recommend, declare, pay
or make any dividend, bonus or other distribution;
(c) authorised or proposed or announced any change in its share or loan
capital;
(d) issued or authorised or proposed the issue of any debentures or (other than
by operation of any rate of interest applying to such indebtedness or
liability) incurred or increased any indebtedness or liability (actual or
contingent) which in any case is material in the context of SMIT;
(e) disposed of or transferred, mortgaged or encumbered any asset or any right,
title or interest in any asset or entered into or varied any contract,
commitment or arrangement (whether in respect of capital expenditure or
otherwise) which is of a long term or unusual nature or which involves or could
involve an obligation of a nature or magnitude which is material or is
otherwise than in the ordinary course of business or could reasonably be
regarded as restricting the business of SMIT or MLIT or authorised, proposed or
announced any intention to do so;
(f) entered into, or varied the terms of, any contract or agreement with any of
the directors of SMIT;
(g) taken or proposed any corporate action or had any legal proceedings started
or threatened against it for its winding-up, dissolution or reorganisation or
for the appointment of a receiver, administrator, administrative receiver,
trustee or similar officer of all or any of its assets and revenues or any
analogous proceedings in any jurisdiction or appointed any analogous person in
any jurisdiction which in any case is material in the context of SMIT;
(h) waived or compromised any claim other than in the ordinary course of
business which is material in the context of SMIT;
(i) made any amendment to its memorandum or articles of association or other
incorporation documents;
(j) been unable or admitted that it is unable to pay its debts or having
stopped or suspended (or threatened to stop or suspend) payment of its debts
generally or ceased or threatened to cease carrying on all or a substantial
part of its business;
(k) entered into any contract, commitment or agreement or passed any
resolutions with respect to any of the transactions, matters or events referred
to in this condition (vi);
(vii) since 31 December 2009 (being the date to which the last interim results
of SMIT were made up) and save as announced publicly and in each case delivered
to a Regulatory Information Service or otherwise fairly disclosed in writing to
MLIT by or on behalf of SMIT prior to 28 April 2010 (being the date upon which
the Offer was announced):
(a) no litigation, arbitration, prosecution or other legal proceedings having
been instituted, announced or threatened or become pending or remained
outstanding by or against SMIT or to which SMIT is or may become a party
(whether as plaintiff, defendant or otherwise) which in any case is material
in the context of SMIT;
(b) no contingent or other liability of SMIT having arisen or become apparent
or increased which in any case is material in the context of SMIT;
(c) no adverse change or deterioration having occurred in the business, assets,
financial or trading position, profits or prospects of SMIT which in any case
is material in the context of SMIT; and
(d) no investigation by any Relevant Authority having been threatened,
announced, implemented or instituted or remaining outstanding which in any case
is material in the context of SMIT; and
(viii) MLIT not having discovered that:
(a) any business, financial or other information concerning SMIT publicly
disclosed at any time by SMIT, either contains a misrepresentation of fact or
omits to state a fact necessary to make the information contained therein not
misleading and which was not subsequently corrected before 28 April 2010 by
disclosure either publicly or otherwise to MLIT to an extent which in any case
is material in the context of SMIT; or
(b) SMIT is subject to any liability, actual or contingent, which is not
disclosed in the interim report and accounts of SMIT for the six months ended
31 January 2010 which is material in the context of SMIT.
MLIT reserves the right to waive all or any of conditions (iv) to (viii)
(inclusive) above, in whole or in part. Conditions (ii) to (viii) above must be
fulfilled or waived (where possible) within 21 days after the later of the
first closing date of the Offer and the date on which condition (i) is
fulfilled (or in each case such later date as the Panel may agree), failing
which the Offer will lapse. MLIT shall be under no obligation to waive or treat
as satisfied any of conditions (iv) to (viii) (inclusive) by a date earlier
than the latest date specified above for the satisfaction thereof
notwithstanding that the other conditions of the Offer may at such earlier date
have been waived or fulfilled and that there are at such earlier date no
circumstances indicating that any of such conditions may not be capable of
fulfilment.
If MLIT is required by the Panel to make an offer for SMIT Shares under the
provisions of Rule 9 of the Code, MLIT may make such alterations to the
conditions as are necessary to comply with the provisions of that Rule.
If the Offer lapses it will cease to be capable of further acceptance. SMIT
Shareholders who have accepted the Offer and MLIT shall then cease to be bound
by acceptances delivered on or before the date on which the Offer lapses.
APPENDIX II
CALCULATION OF THE FORMULA ASSET VALUES
For the purpose of this Appendix II, each of SMIT and MLIT is, unless the
context otherwise requires, referred to as the "Relevant Company". Each of the
FAV per SMIT Share and the FAV per MLIT Share shall be calculated as at the
close of business on the Calculation Date (being the date on which the Offer
becomes or is declared unconditional as to acceptances) and shall be the amount
in pence which is the result of the following formula, rounded to four decimal
places (with 0.00005p being rounded upwards):
FAV per share of the Relevant Company = A - B
_____
C
where
"A" is the aggregate of:
i. the value of those investments of the Relevant Company which are listed,
traded, quoted or dealt in on a recognised stock exchange or on AIM,
calculated by reference to the bid quotations or, if not available, prices
or the last trade prices for those investments as at the close of business
on the Calculation Date as derived from the relevant exchange's recognised
method of publication of prices for such investments (any CFD accounts
containing cash and positions to be valued using the statement from the
independent CFD administrator as at the close of business on the
Calculation Date);
ii. the value of those investments of the Relevant Company which are dealt in
or traded on any publicly-available exchange or market (including any "over
the counter" market but excluding any exchange or market referred to in
sub-paragraph A(i) above), calculated by reference to the average of the
daily average of the prices marked for such investments on each of the five
business days up to and including the Calculation Date on which there were
dealings or trading in such investments as derived from the relevant
market's recognised method of publication of prices for such investments;
iii. the value of those investments of the Relevant Company which are units in
unit trusts or shares in open-ended investment companies, calculated by
reference to the prices or, in the case of units or shares in respect of
which cancellation and bid prices are quoted, the lower of the cancellation
and bid prices quoted as at the close of business on the Calculation Date
by the manager of the relevant unit trust or open-ended investment company
for holdings of the size held by the Relevant Company (and, for the
avoidance of doubt, any such investments which are listed, traded, quoted
or dealt in on a recognised stock exchange shall be valued under this
sub-paragraph (iii) and not under sub-paragraph A(i) above);
iv. the value of those traded uncovered options and futures contracts to which
the Relevant Company is a party as at the close of business on the
Calculation Date which are traded on a stock, commodities, financial
futures or other securities exchange, calculated by reference to the
official middle-market closing prices on the Calculation Date as derived
from the relevant exchange's recognised method of publication of prices for
such traded options and futures contracts;
v. the value of call options contracts to which the Relevant Company is a
party as at the close of business on the Calculation Date which are traded
on a stock held in the portfolio of the Relevant Company shall be valued at
zero unless the premium is still due in which case the position will be
valued at the premium value due;
vi. the value of those investments of the Relevant Company which have unexpired
call options sold against a stock held in the portfolio of the Relevant
Company shall be valued at the strike price of the call if the bid price of
the investment is above the strike price as at the close of business on the
Calculation Date;
vii. the value of all other investments of the Relevant Company, calculated as
being their fair realisable values as at the close of business on the
Calculation Date as determined by agreement between the Company Secretary
of MLIT, on behalf of MLIT, and CLB Coopers ("CLB") or the SMIT Board, on
behalf of SMIT (or, failing such agreement within seven days after the
Calculation Date, as determined by an independent expert);
viii. the amount as at the close of business on the Calculation Date of any
sums due from debtors (including, for this purpose, any dividends or
distributions receivable on investments quoted ex-dividend or
ex-distribution on the Calculation Date and any interest accrued on any
debt securities as at the Calculation Date and any recoverable tax credit
in relation thereto, but excluding any dividend, distribution or interest
not yet received which has been taken into account in the value of any of
the investments referred to in sub-paragraphs A (i) to (vii) (inclusive)
above or is unlikely to be received), cash and deposits with or balances at
banks, bills receivable and any money market instruments of the Relevant
Company (together with, in each case, any accrued interest at that date
less an accrual for any associated tax) and the fair realisable value of
any other tangible assets of the Relevant Company not otherwise accounted
for in subparagraphs A (i) to (vii) (inclusive) above, less any provision
for diminution of value which may be appropriate in respect of any of
sub-paragraphs A (i) to (vii) (inclusive) above (including provisions for
bad or doubtful debts), in each case as determined by agreement between the
Company Secretary of MLIT, on behalf of MLIT, and CLB or the SMIT Board
(or, failing such agreement within seven days after the Calculation Date,
as determined by an independent expert);
ix. in the case of the FAV per MLIT Share only, the value of its Wimbledon
debentures will be valued at GBP40,483 which was the last valuation as
provided by the All England Lawn Tennis Ground plc.
"B" is the aggregate of:
i. in respect of each Relevant Company, the principal amounts as at the close
of business on the Calculation Date of any outstanding borrowings plus any
accrued but unpaid interest, commitment fees and other charges up to and
including that date and the higher of any premiums or penalties payable on
either early or final repayment if required;
ii. the cost of closing as at the close of business on the Calculation Date any
open foreign exchange or other forward purchase or sale contract to which
the Relevant Company is a party on that date (save to the extent otherwise
taken into account in calculating the FAV per share of the Relevant
Company);
iii. in the case of the FAV per SMIT Share only, the cost of termination as at
the close of business on the Calculation Date of any investment advisory
(Midas has agreed that no termination fee will be due in the event the
Offer becomes unconditional), advisory, custody, supplier and
administrative arrangements in force on that date, including, but not
limited to, any compensation or other payments to be made to any investment
manager, investment adviser, administrator, secretary, director or employee
of SMIT, such amount to include irrecoverable value added tax (where
applicable) but to exclude any tax relief;
iv. in the case of the FAV per SMIT Share only, the cost of terminating as at
the close of business on the Calculation Date any other contracts or
arrangements whatsoever in force on that date to which SMIT is a party, but
excluding, for the purpose of this sub-paragraph B (iv), any investment
management, advisory and administrative arrangements in force at the close
of business on the Calculation Date;
v. the total cost of any dividend or other distribution of the Relevant
Company declared on or before the Calculation Date, so far as not
previously paid;
vi. in the case of the FAV per SMIT Share only, the costs, expenses and fees of
any independent expert appointed in connection with determining the Formula
Asset Values (of either/or both Relevant Companies), as well as any
additional accrued but unpaid costs and expenses to the Relevant Companies
arising directly as a result of and specifically in connection with the
appointment of an independent expert and the performance of its function,
such amount to include irrecoverable value added tax (where applicable) but
to exclude any tax relief;
vii. the aggregate of the amount of any Panel fees, UKLA fees and printing
costs to be borne equally by each Relevant Company in respect of the Offer
(including any VAT chargeable);
viii. in the case of the FAV per SMIT Share only, the amount of all stamp duty
or stamp duty reserve tax and any other costs expected to be payable in
respect of the transfer of the SMIT Shares to MLIT pursuant to the Offer or
by way of compulsory acquisition following the Offer being declared
unconditional, and the estimated costs of transferring the SMIT investment
portfolio to MLIT in order to achieve the intended merger benefits as
estimated by agreement between the Company Secretary of MLIT, on behalf of
MLIT, and CLB, or the SMIT Board (or, failing such agreement within seven
days after the Calculation Date, as determined by an independent expert);
ix. the aggregate of the amount of all accrued but unpaid professional,
advisory, legal and other fees and other advertising costs and expenses
incurred by the Relevant Company in connection with the Offer, such amount
to include irrecoverable value added tax (where applicable) but to exclude
any tax relief including all such fees, costs and expenses relating to or
in connection with the determination of the Formula Asset Values (excluding
any amounts arising under sub-paragraph B (vi) above) and including for the
purpose of this sub-paragraph B (ix) all stamp duty, stamp duty reserve tax
and transfer out costs already provided for in accordance with
sub-paragraph B (viii) above, such amount to include irrecoverable value
added tax (where applicable) but to exclude any tax relief;
x. the aggregate of the amount of any accrued but unpaid professional,
advisory, legal and other fees and advertising and other costs and expenses
whatsoever incurred by the Relevant Company otherwise than in connection
with the Offer, such amount to include irrecoverable value added tax (where
applicable) but to exclude any tax relief;
xi. an amount which fully reflects all other liabilities and obligations of the
Relevant Company whatsoever, including a fair provision for any contingent
liabilities (including any additional liabilities to taxation, whether or
not deferred, and any liabilities arising on liquidation) or losses
(including disputed claims), as at the close of business on the Calculation
Date determined by agreement between the Company Secretary of MLIT, on
behalf of MLIT, CLB or the SMIT Board, on behalf of SMIT. (or, failing such
agreement within seven days after the Calculation Date, as determined by an
independent expert);
xii. in the case of the FAV per SMIT Share only, a liquidity adjustment equal
to 50 per cent. of the value (calculated in accordance with the principles
in A (i) and A (ii) above) of the Legacy Portfolio being the holdings in
Property Recycling Plc, Rapid Realisations Ltd and Angel Realisations Plc;
and
xiii. in the case of the FAV per SMIT Share only, a provision in respect of
management warrants issued to Knox D'Arcy Asset Management Ltd and certain
other contingent liabilities relating to KDAM, a transaction with an
insurance company associated with KDAM and VAT on fees paid to another
former investment manager, further information about which is set out in
note 9 & 10 of Unaudited Interim Results for the six months ended 31
December 2009. As the value of the warrants change in line with movements
in the NAV per SMIT Share, had the Calculation Date been 23 April 2010
(being the latest practicable date prior to the publication of this
document when MLIT and SMIT released their respective Net Asset Values per
share) then the illustrative value of this provision would have been
GBP1,528,906. See note 10 below for further details.
"C" is the aggregate of:
i. the number of shares in the Relevant Company in issue; and
ii. the number of shares capable of being issued on the exercise of warrants or
subscription rights;
as at the close of business on the Calculation Date.
Notes:
1 For the purpose of the above calculations, the value of any investments,
other assets or liabilities denominated or valued in currencies other than
Sterling shall be converted into Sterling at the closing mid point spot rate of
exchange between Sterling and such other currencies in London as at the close
of business on the Calculation Date as published in the Financial Times or,
failing which, as certified by Midas (acting as an expert and not as an
arbiter).
2 In the case of sub-paragraphs A(i), (ii), (iii), (iv), (v) and (vi) above, if
there has been any general suspension of trading on the relevant stock,
commodities, financial futures or other securities exchange or market, or if it
was closed for business on the Calculation Date, the value of the relevant
investments, traded options or futures contracts shall be taken as at the close
of business on the immediately preceding date on which there was trading on
such exchange or market, provided that such date is not more than seven days
prior to the Calculation Date and save that, if there has been a material
adverse change in the financial position of any such underlying investment,
traded option or futures contract since the date by reference to which its
value is calculated but prior to the close of business on the Calculation Date,
a fair provision (as determined by agreement between the Company Secretary of
MLIT, on behalf of MLIT, and CLB or the SMIT Board, on behalf of SMIT (or
failing such agreement within seven days after the Calculation Date, as
determined by an independent expert)) shall be made to take account of such
adverse change in the value of the relevant investment, traded option or
futures contract.
3 Subject to note 2 above, in the case of sub-paragraphs A (i) to (vi)
(inclusive) above:
(i) where any such investment, traded option or futures contract is subject to
restrictions on transfer or a suspension of dealings or if no such published or
quoted prices are available in respect of any such investment, traded option or
futures contract, in each case as at the close of business on the Calculation
Date, the value of such investment, traded option or futures contract will be
calculated as at the close of business on the Calculation Date in accordance
with sub-paragraph A (vii) above; and
(ii) where any such investment, traded option or futures contract is, at the
close of business on the Calculation Date, subject to any right of any person
to acquire the same or any obligation on the Relevant Company to dispose of the
same, whether as a result of the Offer being made or becoming or being declared
unconditional or otherwise, at a price more or less than would otherwise be
determined in accordance with sub-paragraphs A (i) to (vi) (inclusive) above,
such investment, traded option or futures contract shall be valued at such
greater or lesser price unless such right or obligation is unconditionally and
irrevocably waived or lapses prior to the calculation of the FAV per share of
the Relevant Company otherwise being agreed or determined.
4 Subject to note 5 below, with regard to sub-paragraphs A (vii) and (viii)
above, the Company Secretary of MLIT and CLB or the SMIT Board, and if
appointed, any independent expert, shall have regard, inter alia, to the
following when determining the value of any investment or other asset (which
shall be calculated on the basis of a notional sale by a willing seller to a
willing buyer, without regard to any additional value that might be attributed
to such investment or other asset by any special category of potential
purchaser):
(i) the existence or exercise of any pre-emption rights or obligations in
respect of such investment or other asset or any other restrictions on the
transfer or disposal of the same which may exist or which may arise as a
consequence of the proposed acquisition by MLIT of SMIT or any SMIT Shares or
of the transfer of such investment or other asset to any party or of the
winding up of SMIT;
(ii) the terms and volumes of any recent dealings in, and marketability of,
such investment or other asset; and
(iii) the amount of any bona fide offer to acquire such investment or other
asset which may be made by any person and brought to the attention of the
Company Secretary of MLIT and CLB or the SMIT Board or, if appointed, any
independent expert.
5. With regard to sub-paragraphs A (vii) and (viii) above, the Company
Secretary of MLIT, CLB, the SMIT Board and, if appointed, any independent
expert shall, except in the case of debtors and tangible assets, be bound
by the actual amount of cash items and, in the case of debtors and tangible
assets, shall adopt the accounting policies used by the Relevant Company in
its latest audited financial statements.
6. If any liability referred to in sub-paragraphs B(i) to (xi)(inclusive)
above has not been determined by the date on which the calculations and
adjustments otherwise necessary to determine the FAV per share of the
Relevant Company have been made, there shall be included in "B" such amount
in respect of any such liability as shall be considered to be an appropriate
estimate by agreement between the Company Secretary of MLIT and
CLB, or the SMIT Board (or failing such agreement within seven days after
the Calculation Date, as determined by an independent expert).
7. In agreeing any fair realisable value (in the case of sub-paragraphs A
(vii) and (viii) above) or estimating or determining the amount of any
liabilities, obligations or losses (in the case of sub-paragraphs B(viii)
or B(xi) above), or in making any determination under notes 2 and 6 above,
the Company Secretary of MLIT and CLB or the SMIT Board shall act as
experts and not as arbitrators and any such determination shall be final
and binding on all persons and neither of them shall be under any liability
to any person by reason thereof or by reason of anything done or omitted to
be done by them for the purposes thereof or in connection therewith.
8. The independent expert referred to herein shall be a member of the
Association for Financial Markets in Europe (not connected with any of the
parties providing advice to SMIT or MLIT in connection with the Offer)
selected by the Company Secretary of MLIT, the SMIT Board or, in default of
such selection within 14 days after the Calculation Date, by the chairman
for the time being of the Association for Financial Markets in Europe on
the application of either the Company Secretary of MLIT or the SMIT Board.
Such member shall act as an expert and not as an arbitrator and his
determination shall (subject to any agreement to the contrary between MLIT
and SMIT) be final and binding on all persons and such member shall not be
under any liability to any person by reason of his appointment or by
anything done or omitted to be done by him for the purposes of such
appointment or in connection therewith.
9. Notwithstanding any of the above provisions, in the event that the
valuation of any investment or other asset of the Relevant Company in
accordance with any of such provisions, or the amount of any deduction made
in accordance with sub-paragraphs B (i) to (xi) (inclusive) above, is, in
the opinion of the Company Secretary of MLIT and the SMIT Board, incorrect
or unfair they may, if they so agree, adopt an alternative method of
valuation or deduction, as the case may be.
10. The amount of the provision set out in sub-paragraph B (xiii) above was
shown in the announcement of the possible Offer dated 26 March 2010 as
being GBP1,520,578, using the fully diluted Net Asset Value per SMIT Share
disclosed as at 12 March 2010. The difference between these two amounts
arises from a change in the value of management warrants as a result of
movements in the Net Asset Value per SMIT Share.
The number of MLIT Shares to be issued and allotted per SMIT Share pursuant to
the Offer will be announced through a Regulatory Information Service as soon as
reasonably practicable following the Calculation Date.
Appendix III
Bases and Sources
In this Announcement, unless otherwise stated or the context otherwise
requires, the following bases and sources have been used:
Midas, as the investment manager of both MLIT and SMIT, is shown as the source
of certain financial information. Midas has details of the MLIT and SMIT
investment portfolios and utilises market information from Trustnet, Proquote
and the London Stock Exchange to derive valuation information for their
investments. Information from Midas is also used to calculate net asset values
which are announced each month.
The assumptions on which the Offer Illustration is based are:
* full acceptance of the Offer and that the Management Warrants are all
exercised;
* that the other conditions of the Offer are satisfied; and
* that the FAV is calculated as described in this document, but for
illustrative purposes, treating references to the Calculation Date as
references to 23 April 2010.
The information about net asset values as at 23 April 2010 has been is
unaudited and has not been reported on by an accountant.
The sources of the information used to calculate the FAV are unaudited company
records of MLIT and SMIT and portfolio valuations.
The statements concerning cost savings in paragraph 8 above have been derived
from internal financial accounting records and estimates in relation to future
costs, supported by third party quotes. The information has been compiled from
several sources including fee agreements and third party quotes, published
charges (eg Panel and UK Listing Authority), is the source of estimates of the
costs of the Offer.
The prices of SMIT Shares on a particular date are derived from the Closing
Price for that date.
APPENDIX IV
Irrevocable undertakings and letters of intent
Manchester & Metropolitan has signed an irrevocable undertaking in respect of
2,347,532 SMIT Shares representing 40.99 per cent. of the issued share capital
of SMIT to accept the Basic Offer in respect of their entire SMIT Shareholding.
The B S Sheppard 1991 Settlement has signed an irrevocable undertaking in
respect of 271,730 SMIT Shares representing 4.74 per cent. of the issued share
capital of SMIT to accept the Basic Offer in respect of their entire SMIT
Shareholding.
Certain SMIT Shareholders have signed letters of intent (which are not legally
binding) to accept the Basic Offer in respect of 2,958,042 SMIT Shares owned by
them or under their discretionary management representing 51.64 per cent. of
SMIT's issued share capital as follows:
Name SMIT Shares %
Manchester & Metropolitan Investment Ltd* 2,619,262 45.73
Charles Stanley & Co Limited 135,500 2.37
Smith & Williamson Investment Management Ltd 101,008 1.76
Rathbone Investment Management Ltd 93,452 1.63
Brewin Dolphin Ltd 8,820 0.15
Total 2,958,042 51.64
*Including the 271,730 SMIT Shares owned by the BS Sheppard 1991 Settlement
which is deemed to be acting in concert with M&M. Both M&M and The BS Sheppard
1991 Settlement have signed irrevocable undertakings to accept the Basic Offer
as well as the letters of intent they signed previously.
In addition to the SMIT Shares held in funds under discretionary management
shown above, advisory clients of Charles Stanley & Co. Limited, Rathbone
Investment Management Ltd and Brewin Dolphin Ltd hold 1,000, 2,750 and 21,697
SMIT Shares respectively. Charles Stanley & Co. Limited, Rathbone Investment
Management Ltd and Brewin Dolphin Ltd have stated their intention to advise
such clients to accept the Offer in respect of such 25,447 SMIT Shares
representing 0.44 per cent. of SMIT's issued share capital.
APPENDIX V
Definitions
The following definitions apply throughout this document, unless the context
requires otherwise:
"Acquisition" the proposed acquisition of SMIT by MLIT pursuant
to the Offer
"Act" the Companies Act 2006, as amended from time to
time;
"Admission" admission of the New MLIT Shares to the Official
List and to trading on the London Stock Exchange's
main market for listed securities becoming
effective in accordance with the Listing Rules and
the Admission Standards respectively
"Admission Standards" the admission and disclosure standards for
companies published from time to time by the
London Stock Exchange
"Basic Offer" the Offer in its basic form, comprising an offer
of New MLIT Shares for each SMIT share based upon
the formula of 100 per cent. of the FAV of MLIT/
100 per cent. of the FAV of SMIT
"Board" or "Directors" the directors of the Company as at the date of
this document
"Calculation Date" the close of business on the date on which the
Offer becomes or is declared unconditional as to
acceptances
"Cash Alternative Offer" the right of SMIT Shareholders to elect to receive
a consideration pursuant to the Offer equal to
217.5 pence per SMIT Share
"City Code" or "Takeover the City Code on Takeovers and Mergers (as amended
Code" or interpreted from time to time by the Panel)
"Closing Price" the closing middle market quotation of a share on
the relevant date as derived from the Daily
Official List
"Daily Official List" the daily official list of the London Stock
Exchange
"Enlarged Group" MLIT and its subsidiaries following completion of
the Acquisition
"Enlarged Share Capital" the entire issued share capital of the Company
following the issue of the New MLIT Shares
"Equivalent Document" the document equivalent to a prospectus prepared
pursuant to Prospectus Rule 1.2.2R(2) and
Prospectus Rule 1.2.3R(3) and to be issued by MLIT
in connection with the Acquisition
"Existing MLIT Shares" the 17,504,955 MLIT Shares in issue at the date of
this document
"Fairfax" Fairfax I.S. PLC, financial adviser and sponsor to
MLIT
"FAV" or "Formula Asset the formula asset value of each of MLIT and SMIT
Value" calculated in accordance with the formula set out
in Part 3 of this document
"Form of Acceptance" the form of acceptance, authority and election for
use by holders of SMIT Shares in certificated form
in connection with the Offer
"FSA" the Financial Services Authority;
"FSMA" the Financial Services and Markets Act 2000;
"General Meeting" the general meeting of the Company to be convened
(or any adjournment thereof) to vote on the
Resolution
"ICTA" Income and Capital Taxes Act 1988
"IFRS" International Financial Reporting Standards, the
guidance and rules set by the International
Accounting Standards Board from time to time
"Independent Shareholders" the holders of Existing MLIT Shares other than
Brian Sheppard, M&M, the Settlement and their
respective associates
"KDAM" Knox D'Arcy Asset Management Ltd, former
investment manager of SMIT
"Listing Rules" the Listing Rules of the UKLA made pursuant to
section 74 of the FSMA
"London Stock Exchange" London Stock Exchange PLC
"M&M" or "Manchester & Manchester & Metropolitan Investment Limited
Metropolitan"
"Midas" Midas Investment Management Limited
"MLIT" or "the Company" Manchester & London Investment Trust PLC
"MLIT Directors" the Directors of MLIT
"MLIT Shareholders" or the holders of MLIT Shares
"Shareholders"
"MLIT Shares" the ordinary shares of 25p each in the capital of
the Company
"New MLIT Shares" the MLIT Shares to be allotted and issued pursuant
to the Offer
"Offer" the offer to be made by MLIT to acquire the entire
issued and to be issued share capital of SMIT on
the terms and subject to the conditions to be set
out in the Offer Document and the Form of
Acceptance (including, where the context so
requires, any subsequent waiver, revision,
variation, extension or renewal thereof) and any
election available in connection with it;
"Offer Document" the document to be sent to SMIT Shareholders
containing the Offer
"Offer Illustration" the illustrative calculations as set out in this
announcement
"Official List" the Official List of the UKLA
"Panel" the Panel on Takeovers and Mergers
"Related Parties" M&M and the Settlement
"Resolution" the ordinary resolution to be proposed at the
General Meeting relating to the Acquisition
"Restricted Jurisdiction" the United States, Canada, Australia, the Republic
of South Africa or Japan
"Settlement" the B S Sheppard 1991 Settlement and / or the
Sheppard 2002 Settlement as the context requires
"SMIT" Stakeholders' Momentum Investment Trust plc
"SMIT Directors" or "SMIT the board of directors of SMIT
Board"
"SMIT Shareholders" the holders of SMIT Shares
"SMIT Shares" the existing unconditionally allotted or issued
and fully paid (or credited as fully paid)
ordinary shares of 25p each in the capital of SMIT
and any further shares which are unconditionally
allotted or issued fully paid or credited as fully
paid before the date on which the Offer ceases to
be open for acceptance (or such earlier date as
MLIT may, subject to the City Code, decide) but
excluding any such shares held or which become
held in treasury
"UKLA" or "UK Listing the FSA acting in its capacity as the competent
Authority" authority for the purposes of Part VI of the
Financial Services and Markets Act 2000
"United States" the United States of America, its territories and
possessions, any states of the United States and
the District of Columbia and all other areas
subject to its jurisdiction of the United States
of America
END
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