Recommended proposals for reconstruction and winding up
02 September 2008 - 1:23AM
UK Regulatory
FRAMLINGTON INCOME & CAPITAL TRUST PLC
FOR IMMEDIATE RELEASE
1 September 2008
NOT FOR RELEASE OR COMMUNICATION IN OR INTO ANY COUNTRY OR TERRITORY OUTSIDE
THE UK, CHANNEL ISLANDS OR ISLE OF MAN
RECOMMENDED PROPOSALS FOR THE RECONSTRUCTION AND VOLUNTARY WINDING UP OF THE
COMPANY
Framlington Income & Capital Trust PLC has today mailed to shareholders a
circular (the "Circular") setting out recommended proposals for the
reconstruction and voluntary winding up of the Company. A summary of the key
information taken from the Circular is set out below.
INTRODUCTION
As stated in the Company's annual report and accounts for the year ended 31
March 2008, the Board has been considering proposals to offer Shareholders the
opportunity to continue their investment in a tax efficient manner following
the winding up of the Company on 30 September 2008. After discussions with a
number of parties, including the larger Shareholders in the Company, the Board
is now proposing a voluntary winding up of the Company on 30 September 2008
with the opportunity for Shareholders to receive, in respect of their
investment in the Company, cash or units in two authorised unit trusts managed
by AXA Framlington Investment Management Limited, the Company's investment
manager (or a combination of cash and units in either or both of those unit
trusts).
The Proposals are conditional on the approval of Shareholders at the relevant
Class Meetings and at the Extraordinary General Meeting. Notices convening the
Meetings are set out at the end of the Circular. The Board unanimously
recommends that Shareholders vote in favour of the relevant Resolutions at the
Meetings.
THE PROPOSALS
The Board has concluded that it is in the best interests of Shareholders as a
whole to propose a scheme of reconstruction comprising a members' voluntary
winding up of the Company under the Company's articles of association, with
options for Income Shareholders and Capital Shareholders to elect:
* to roll over all or some of their investment into units in AXA Framlington
Equity Income Fund (the "EIF Option"); and/or
* to roll over all or some of their investment into units in AXA Framlington
UK Select Opportunities Fund (the "SOF Option"); and/or
* to realise all or some of their investment for cash (the "Cash Option').
Shareholders shall be entitled to elect for a combination of the Options.
Shareholders, other than Overseas Shareholders, who do not make a valid
Election will be deemed to have made the following Elections in respect of
their entire holding of Shares:
* Income Shareholders will be deemed to have made an Election for income
units in the EIF Option; and
* Capital Shareholders will be deemed to have made an Election for
accumulation units in the SOF Option.
All Overseas Shareholders will be deemed to have made an Election for the Cash
Option in respect of all of their Shares. Any other Shareholders who wish to
receive the Cash Option must make a valid Election.
BENEFITS OF THE PROPOSALS
Your Directors believe that the Proposals have significant attractions for
Shareholders and, in particular, that the Proposals:
* offer the opportunity for Shareholders to realise all or part of their
investment for cash;
* provide greater choice and flexibility for Shareholders than if the Company
were simply wound up;
* defer any potential liability to UK capital gains tax on those Shares which
are rolled over;
* enable Shareholders to invest in either or both of the AXA Framlington
Equity Income Fund or the AXA Framlington UK Select Opportunities Fund
without having to pay the initial charge on such funds of 5.25 per cent.;
* offer Rollover Options which are managed by the Company's existing
investment manager, AXA Framlington; and
* should be cost neutral compared with a straightforward liquidation as a
result of the Costs Contribution to be made to the expenses of the Scheme
by AXA Framlington.
Shareholders should note that Shares which are elected for (or are deemed
elected for) the Cash Option will not benefit from any deferral of any
potential liability to UK capital gains tax on those Shares.
INFORMATION ABOUT ROLLOVER OPTIONS
AXA Framlington Equity Income Fund
The investment objective of AXA Framlington Equity Income Fund is to produce a
higher than average yield combined with long term growth of income and capital.
Investment is made principally in UK equities and convertible shares of
companies which, in the Manager's opinion, show above average profitability,
management quality and growth.
It is an authorised UK unit trust scheme with the same investment manager as
the Company, AXA Framlington Investment Management Limited. It was launched in
1980 and has an unlimited life. It aims to pay income twice annually on 15
March and 15 September. EIF issues income units and accumulation units. If you
invest in income units, any distributions will be paid directly to your bank or
building society account on the fund's income payment date. If you select
accumulation units, the income will be automatically reinvested within the fund
and reflected in the price of units which will gradually draw away from the
price of the income units as the income is "rolled up".
AXA Framlington UK Select Opportunities Fund
The investment objective of AXA Framlington UK Select Opportunities Fund is to
achieve capital growth by investing in companies, primarily of UK origin, where
the Manager believes above average returns can be realised.
It is an authorised UK unit trust scheme with the same investment manager as
the Company, AXA Framlington Investment Management Limited. It was launched in
1969 and has an unlimited life. It aims to pay income twice annually on 15 May
and 15 November. SOF issues income units and accumulation units. If you invest
in income units, any distributions will be paid directly to your bank or
building society account on the fund's income payment date. If you select
accumulation units, the income will be automatically reinvested within the fund
and reflected in the price of units which will gradually draw away from the
price of the income units as the income is "rolled up".
Further details on AXA Framlington Equity Income Fund and AXA Framlington UK
Select Opportunities Fund are set out in the Circular and the Simplified
Prospectus.
COSTS OF THE PROPOSALS AND THE COSTS CONTRIBUTION
The Board has sought to limit the expenses of the Scheme to minimise the impact
on Shareholder value. In considering whether it is in the best interests of
Shareholders to offer the Rollover Options rather than a straightforward
winding up, the Board took into account the Costs Contribution being provided
by the Manager. The Manager has agreed to make a contribution towards the costs
of the Proposals of �40,000 plus 0.75 per cent. of the aggregate amount that
rolls over under the Rollover Options in excess of �6 million.
The Board estimates that the expenses of the Proposals (including irrecoverable
VAT), before taking account of the costs associated with the realisation of the
Company's assets and the Liquidators' Retention but taking into account the
minimum contribution under the Costs Contribution of �40,000, will be
approximately �215,000. The Board has determined, having taken advice, that
these costs should be charged to the capital account and therefore will be
borne by the Capital Shareholders. This amount equates to approximately 0.5 per
cent. of the NAV of a Capital Share as at 21 August 2008.
The Board has agreed a Liquidators' Retention of �100,000 which will be
retained by the Liquidators to meet any unforeseen costs and liabilities and
will be set against assets attributable to the Capital Shareholders.
The Board believes that the costs of the Proposals, after taking into account
the Costs Contribution, are equivalent to the typical costs for a
straightforward liquidation.
FINANCIAL EFFECTS OF THE PROPOSALS
The number of AXA Framlington Equity Income Fund Units or AXA Framlington UK
Select Opportunities Fund Units to which a Shareholder electing, or deemed to
be electing, for any of the Options will become entitled under the Proposals
can only be determined on the Effective Date. The Company will announce the
capital entitlements and the Income Share FAVs and the Capital Share FAVs on
the Effective Date or as soon as practicable thereafter. Whether or not Income
Shareholders receive their full capital entitlement of 30 pence per share will
depend on there being sufficient net assets of the Company available for
distribution. Whether or not Capital Shareholders receive any capital
entitlement will depend on there being sufficient net assets of the Company
available for distribution to fulfil the Income Shareholders' capital
entitlement of 30 pence per Income Share and there then being a surplus to make
payment to the Capital Shareholders.
Income Shareholders are also expected to receive a final interim dividend prior
to liquidation (see below under the heading "Final Interim Dividend").
For illustrative purposes, the following table shows the attributable value to
Shareholders electing for the various Options in respect of each Share if the
Calculation Date and the Effective Date had been at close of business on 21
August 2008 (being the latest practicable date prior to the publication of the
Circular). It should be noted that these figures are given for illustrative
purposes only and should not be regarded as forecasts.
In addition, these figures:
1. do not include an estimate of any costs that may be incurred by the Company
in reorganising its portfolio or realising and transferring assets;
2. include the impact on the Capital Share FAV of the Liquidators' Retention
of �100,000;
3. do not include any undistributed net revenue of which 1.74p per Income
Share was reflected in the Company's published NAV per Income Share as at
21 August 2008;
4. do not include any amounts in respect of the expected recovery of VAT paid
on management fees; and
5. are calculated after deducting the estimated costs and expenses of the
Scheme and assuming that only the minimum Costs Contribution of �40,000 is
made.
FAV EIF Option SOF Option Cash
Shares (p) (p)* (p)* (p)
Income Share 30.0 29.3 29.6 30.0
Capital Share 174.0 170.0 171.5 174.0
* At the bid price per unit in respect of the EIF Option and the bid price per
unit in respect of the SOF Option.
FINAL INTERIM DIVIDEND
Based on current estimates of costs and revenues for this financial year, the
Board anticipates that the Company will pay a final interim dividend on 30
September 2008 to Income Shareholders on the register at 5.00 p.m. on 12
September 2008. The final interim dividend is expected to be declared on, or
around, 4 September 2008.
As at 21 August 2008 (the latest practicable date prior to the publication of
the Circular), the Company had undistributed net revenue (after deduction of
the first interim dividend of 2.5p per Income Share which has already been
declared) of approximately �681,000, being 1.74p per Income Share. The final
interim dividend is not conditional upon the approval or implementation of the
Proposals. The Liquidators may make a capital distribution to Income
Shareholders following implementation of the Proposals in respect of any
undistributed net revenue arising during the period prior to the Effective
Date.
SHAREHOLDER MEETINGS
The Class Meetings of each of the Income Shareholders and the Capital
Shareholders will be held at 11.00 a.m. and 11.05 a.m. respectively on 22
September 2008. Resolutions will be proposed which, if passed by a simple
majority, will sanction the passing and implementation of the resolutions at
the Extraordinary General Meeting, other than the ordinary resolution to wind
up the Company which is not subject to class consent. At the Extraordinary
General Meeting at 9.00 a.m. on 30 September 2008 a special resolution will be
proposed to reclassify the Income Shares and the Capital Shares, amend the
Articles and authorise the Liquidators to implement the Scheme. At the
Extraordinary General Meeting an ordinary resolution will also be proposed to
wind up the Company (on which only Capital Shareholders are permitted to vote
under the Articles of the Company) and a special resolution will be proposed to
provide the Liquidators with appropriate powers.
The Proposals are conditional on the passing by Shareholders of the Resolutions
at the Meetings or any adjournments thereof and all conditions to such
Resolutions and the Scheme being fulfilled. The Scheme is described in more
detail in the Circular and the full terms of the Scheme are set out in Part 3
of the Circular. If the Scheme becomes unconditional, the Company's Articles
will be amended to facilitate the Scheme and in accordance with the terms of
the Scheme.
Notices convening the requisite Meetings are set out at the end of the
Circular. The Meetings will all be held at 155 Bishopsgate, London EC2M 3XJ.
The quorum for the Class Meetings is two persons of the relevant class holding
or representing by proxy at least one third of the issued shares of that class.
In the event that a quorum is not present at either of the Class Meetings, the
relevant Class Meetings will be adjourned to the same time and place on Monday,
29 September 2008. The quorum at any adjourned Class Meeting is one Shareholder
holding the relevant class of Share or his proxy.
If the Proposals are not approved at the Class Meetings or if the special
resolutions are not approved at the Extraordinary General Meeting, the ordinary
resolution for the winding up of the Company at the Extraordinary General
Meeting will be proposed in any case. Only Capital Shareholders are entitled to
vote on the ordinary resolution for the winding up of the Company. If the
Company is wound up in this manner (that is, without the Scheme) Shareholders
would receive their cash entitlements in accordance with the Articles under a
liquidation after all liabilities have been satisfied in full. Such a winding
up would not, however, constitute a reconstruction for tax purposes, and would
therefore constitute a disposal by Shareholders for the purposes of UK taxation
of capital gains. The Costs Contribution from the Investment Manager is payable
only if the Scheme is approved.
SUSPENSION AND CANCELLATION OF LISTING AND TRADING
It is proposed that the register of members of the Company be closed at 5.00
p.m. on 19 September 2008, the last date for receipt of Forms of Election under
the Scheme so that no further transfers of Income Shares and Capital Shares
will be registered once the Shares have been elected. It is recommended that
any transfers of Shares from 17 September 2008 be for immediate delivery of
documents of title and cash settlement only. In connection with the proposed
liquidation and reconstruction of the Company, the Company has requested the
suspension and then the cancellation of the listings of the Income and Capital
Shares on the Official List of the UK Listing Authority and the trading in the
Income and Capital Shares on the London Stock Exchange. It is expected that the
suspension will be effective at 7.30a.m. on 22 September 2008. Subject to the
passing of the resolution to be proposed at the EGM to put the Company into
voluntary liquidation, it is expected that the cancellation will be effective
at 8.00a.m. on 1 October 2008. If the resolution to put the Company into
liquidation is not passed then the Company will request that the suspension of
listing and trading of its Shares be lifted.
If the Scheme is approved by Shareholders, immediately upon the Company being
put into liquidation, the Income Shares and the Capital Shares shall be
reclassified as Shares with A Rights, Shares with B Rights, Shares with C
Rights, Shares with D Rights, Shares with E Rights or Shares with F Rights in
accordance with their elections or deemed elections and to reflect the
entitlements of those shares following the relevant elections. The reclassified
shares will not be admitted to trading or listing as the Company will go into
liquidation simultaneously with the reclassification. If the Scheme is not
approved then the Shares will not be reclassified but the Company will still go
into liquidation provided the liquidation resolution is passed.
THE CIRCULAR
A copy of the Circular has been submitted to the FSA, and will shortly be
available for inspection at the FSA's Document Viewing Facility which is
situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Tel: 020 7066 1000
Copies of the Circular have been mailed to Shareholders on the register as at
close of business on 22 August 2008 and are also available from the registered
office of the Company and at the offices of Dickson Minto W.S., Royal London
House, 22/25 Finsbury Square, London EC2A 1DX up to the conclusion of the
Extraordinary General Meeting.
All enquiries
AXA Framlington Investment Management Limited
Neil Winward, Tel. 020 7330 6619
Dickson Minto W.S.
Douglas Armstrong, Tel. 0207 628 4455
Dickson Minto W.S., which is regulated by the Financial Services Authority, is
acting for the Company and for no-one else in connection with the contents of
this announcement and will not be responsible to anyone other than Framlington
Income & Capital Trust PLC for providing the protections afforded to clients of
Dickson Minto W.S., or for affording advice in relation to the contents of this
announcement or any matters referred to herein.
EXPECTED TIMETABLE
2008
Announcement of final interim dividend by 4 September
Income Shares marked ex dividend in respect of the final 10 September
interim dividend
Record date for the dividend payable to Income 12 September
Shareholders
Date from which it is recommended transfers of Shares 17 September
are done against immediate delivery of documents of
title and cash settlement only
Record date for Shareholders to make Elections under the 19 September
Scheme
Latest time for receipt of Forms of Election from 3.00 p.m. on 19
Shareholders September
Register of members closed in respect of the existing 5.00 p.m. on 19
Income and Capital Shares September
Latest time for receipt of Forms of Proxy for the Income 11.00 a.m. on 20
Class Meeting September
Latest time for receipt of Forms of Proxy for the 11.05 a.m. on 20
Capital Class Meeting September
Suspension of listing and trading of Income Shares and 7.30 a.m. on 22
Capital Shares September
Income Class Meeting 11.00 a.m. on 22
September
Capital Class Meeting 11.05 a.m. on 22
September
Calculation Date 5.00 p.m. on 25
September
Latest time for receipt of Forms of Proxy for the 9.00 a.m. on 28
Extraordinary General Meeting September
Date of payment of final interim dividend 30 September
Extraordinary General Meeting 9.00 a.m. on 30
September
Effective Date 30 September
Conditional on the appropriate shareholder resolutions 30 September
being passed, the Company will go into liquidation and
simultaneously the Shares will be reclassified
Cancellation of listing of Income Shares and Capital 1 October
Shares
Contract notes dispatched in respect of AXA Framlington On or as soon as
Equity Income Fund Units and AXA Framlington UK Select practicable after 1
Opportunities Fund Units October
Distribution of cash entitlements to Shareholders who Week commencing
elect for the Cash Option under the Scheme and CREST
accounts credited with cash 6 October
DEFINITIONS
The following definitions apply throughout this announcement unless the context
requires otherwise:
"AIC" The Association of Investment Companies
"Appointment of Proxy" the appointment of proxy by a Shareholder by
utilising either a Form of Proxy or the CREST
electronic proxy appointment service
"Articles" the articles of association of the Company
"Calculation Date" the time (to be determined by the Directors but
expected to be 5.00 p.m. on 25 September 2008)
as at which the value of the assets of the
Company will be determined for the purposes of
the creation of the Pools
"Capita Registrars" a trading name of Capita Registrars Limited
"Capital Class Meeting" the class meeting of the Capital Shareholders
convened for 22 September 2008 at 11.05 a.m. and
any adjournment thereof
"Capital Shareholder" a holder of Capital Shares
"Capital Shares" the existing issued and fully paid capital
shares of 25p each in the capital of the Company
"Capital Share FAV" the formula asset value attributable to the
Capital Shares (which may be different in
respect of the Equity Income Pool, the Select
Opportunities Pool and the Cash Pool) on a
liquidation basis on the relevant date
calculated in accordance with the Articles and
as set out in Part 3 of the Circular
"Cash Option" the right of Shareholders to receive cash
"Cash Pool" the fund which represents the interests of
holders of Shares with C Rights and Shares with
F Rights to be established pursuant to the
Scheme
"certificated"or shares which are not in uncertificated form
"in certificated form"
"Class Meetings" class meetings of the Income and Capital
Shareholders convened for 22 September 2008 at
11.00 a.m. and 22 September 2008 at 11.05 a.m.
respectively and any adjournment thereof as the
context may require
"Company" Framlington Income & Capital Trust PLC
"Costs Contribution" the costs contribution as provided by the
Manager and as described in the section headed
"Costs of the Proposals and the Costs
Contribution"
"CREST" the computerised settlement system to facilitate
the transfer of title to shares in
uncertificated form operated by Euroclear
"Directors"or "Board" the directors of the Company
"Effective Date" the date on which the Scheme becomes
unconditional, which is expected to be on 30
September 2008
"EIF" AXA Framlington Equity Income Fund
"EIF Issue Price" the issue price of an EIF Unit as at the
Effective Date, determined by the Unit Trust
Managers in accordance with the Unit Trust
Regulations and on the basis that the usual
initial charge of 5.25% is waived
"EIF Unit" a unit in EIF
"Election" an election pursuant to a Form of Election and/
or a deemed election pursuant to the Scheme as
the context may require and any reference to
"elect" shall, except where the context requires
otherwise, mean "elect or is deemed to elect"
"Equity Income Option"or the right of Shareholders to receive EIF Units
"EIF Option"
"Equity Income Pool"or "EIF the fund which represents the interests of
Pool" holders of Shares with A Rights and Shares with
D Rights to be established pursuant to the
Scheme
"Euroclear" Euroclear UK & Ireland Limited, being the
operator of CREST
"Extraordinary General the general meeting of the Company convened for
Meeting"or"EGM" 30 September2008 at 9.00 a.m. and any
adjournment thereof
"Financial Services the Financial Services Authority of the UK
Authority"or"FSA"
"Form of Direction" the form of direction for use by the Plan
Participants
"Form(s) of Election" the form(s) of election for use by Shareholders
(other than Overseas Shareholders) in connection
with the Scheme
"Form(s) of Proxy" the blue form of proxy for use at the separate
class meeting of Income Shareholders, the yellow
form of proxy for use at the EGM by the Income
Shareholders, the pink form of proxy for use at
the separate class meeting of Capital
Shareholders, and the white form of proxy for
use at the EGM by the Capital Shareholders, as
the context requires
"FSMA" the Financial Services and Markets Act 2000
"HMRC" HM Revenue & Customs
"Income Class Meeting" separate class meeting of the Income
Shareholders convened for 22 September 2008 at
11.00 a.m. and any adjournment thereof
"Income Shareholder" a holder of Income Shares
"Income Shares" the existing issued and fully paid Income Shares
of 25p each in the capital of the Company
"Income Share FAV" the formula asset value attributable to the
Income Shares (which may be different in respect
of the Equity Income Pool, the Select
Opportunities Pool and the Cash Pool) on a
liquidation basis on the relevant date
calculated in accordance with the Articles and
as set out in Part 3 of the Circular
"Liquidation Pool" the fund to be established by the Liquidators to
meet the outstanding liabilities of the Company
"Liquidators" the liquidator or liquidators for the time being
of the Company, jointly and severally, proposed
to be Christopher Richard Frederick Day and
Nicholas James Dargan
"Liquidators' Retention" the retention to be made by the Liquidators in
respect of the Company as described in the
section headed "Costs of the Proposals and the
Costs Contribution"
"London Stock Exchange" London Stock Exchange plc
"Manager"or "AXA Framlington AXA Framlington Investment Management Limited
"
"Management Agreement" the investment management agreement between the
Company and the Manager dated 7 January 2002 (as
amended and novated)
"Meetings" the EGM and the Separate Class Meetings
"NAV" net asset value, expressed on a fully diluted
basis unless stated otherwise
"Official List" the Official List of the UK Listing Authority
"Options" the EIF Option, the SOF Option and/or the Cash
Option
"Overseas Shareholders" Shareholders with a registered address outside
the United Kingdom, the Channel Islands or the
Isle of Man
"Plan Participants" holders of the Shares via the Plan
"Plan" Select Investment Trust Plan
"Pool"or "Pools" the Liquidation Pool, the EIF Pool, the SOF Pool
and/or the Cash Pool or any of them
"Proposals" the proposals for the reconstruction and winding
up of the Company and the other matters
described in the Circular including the
Resolutions
"Registrars"or "Capita" Capita Registrars
"Resolutions" the resolutions to be proposed at the EGM and
the Class Meetings as set out in the notice to
the EGM and the Class Meetings contained in the
Circular
"Rollover Options" the EIF Option, the SOF Option and the Cash
Option
"Rollover Vehicle" EIF and/or SOF as the context may require
"Scheme" the proposed scheme implementing the Proposals
set out in Part 3 of the Circular
"Select Opportunities Option the right of Shareholders to receive SOF Units
"or "SOF Option"
"Shareholders" holders of Shares in the Company including where
the context may require holders of reclassified
Income or Capital Shares
"Shares" Capital Shares and/or Income Shares as the
context may require and/or reclassified Capital
Shares or Income Shares where the context may
require
"Simplified Prospectus" simplified prospectus of AXA Framlington Equity
Income Fund and AXA Framlington UK Select
Opportunities Fund dated August 2008
"SOF" AXA Framlington UK Select Opportunities Fund
"SOF Issue Price" the issue price of an SOF unit as at the
Effective Date determined by the Unit Trust
Managers in accordance with the Unit Trust
Regulations and on the basis that the usual
initial charge of 5.25% is waived
"Select Opportunities Pool" the fund which represents the interests of
or "SOF Pool" holders of Shares with B Rights and Shares with
E Rights to be established pursuant to the
Scheme
"SOF Units" a unit in SOF
"TCGA" Taxation of Chargeable Gains Act 1992
"Transfer Agreement" the agreement, described in more detail in the
Circular, for the transfer of assets of the
Company in accordance with the Scheme to EIF and
/or SOF
"Trustee" The Royal Bank of Scotland plc
"TTE Instruction" a transfer to escrow instruction (as described
in the CREST Manual issued by Euroclear)
containing the details set out in the Circular
"UK Listing Authority" the UK Listing Authority, a division of the
Financial Services Authority
"uncertificated"or a share recorded on the register as being held
"in uncertificated form" in uncertificated form in CREST and title to
which, by virtue of the Uncertificated
Securities Regulations 2001 (as amended), may be
transferred by means of CREST
"Unit Trust Managers" AXA Framlington Unit Management Limited
"Unit Trust Regulations" the Collective Investments Schemes Sourcebook
(COLL) contained in the FSA Handbook
"Units" EIF Units or SOF Units
"VAT" UK value added tax
END
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