TIDMJMI
RNS Number : 6506A
JPMorgan UK Smaller Cos IT PLC
23 January 2024
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO, THE UNITED STATES OF AMERICA
(INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED
STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, NEW
ZEALAND, THE REPUBLIC OF SOUTH AFRICA, IN ANY MEMBER STATE OF THE
EEA OR IN ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE
UNLAWFUL.
This announcement is not an offer to sell, or a solicitation of
an offer to acquire, securities in the United States or in any
other jurisdiction in which the same would be unlawful. Neither
this announcement nor any part of it shall form the basis of or be
relied on in connection with or act as an inducement to enter into
any contract or commitment whatsoever.
23 January 2024
JPMorgan UK Smaller Companies Investment Trust plc
Legal Entity Identifier: 549300PXALXKUMU9JM18
Proposed combination with JPMorgan Mid Cap Investment Trust
plc
Publication of Prospectus and Circular
The Board announced on 14 November 2023 that it had agreed heads
of terms for a combination of the Company with JPMorgan Mid Cap
Investment Trust plc ("JMF") (the "Transaction"), to be implemented
through a scheme of reconstruction of JMF pursuant to section 110
of the Insolvency Act 1986 (the "Scheme"). This will see the
enlarged Company continue to be managed by JPMorgan Funds Limited
(the "Manager") (which delegates the management of the Company's
Portfolio to JPMorgan Asset Management (UK) Limited (the
"Investment Manager")) and continue to operate under its existing
Investment Objective and Policy.
Subject to the successful completion of the Transaction, the
Board intends to change the name of the Company from JPMorgan UK
Smaller Companies Investment Trust plc to JPMorgan UK Small Cap
Growth & Income plc and adopt an enhanced dividend policy. The
proposals set out in this paragraph and above are collectively
referred to as the "Proposals".
As a result of the Proposals and the expected implementation of
the enhanced dividend policy following the successful completion of
the Transaction (as described further below), the Board will
announce a pre-completion interim dividend of 3.60 pence per Share
on or around 23 January 2024 (the "Pre-Completion Dividend"). The
Pre-Completion Dividend will be paid in cash only and is expected
to be paid on 27 February 2024 to Shareholders on the Register on 2
February 2024 (the "Pre-Completion Dividend Record Date"),
conditional on the passing of the JMF Resolution at the First JMF
General Meeting and the passing of the Allotment Resolution at the
General Meeting.
The Board announces that the Company has today published a
prospectus (the "Prospectus") in relation to the issue of new
ordinary shares in the capital of the Company (the "Issue")
pursuant to the Scheme together with a circular to provide the
Company's shareholders (the "JMI Shareholders") with further
details of the Transaction and to convene a general meeting of the
Company (the "General Meeting") to seek approval from JMI
Shareholders for the implementation of the Transaction (the
"Circular").
The Prospectus has been approved by the Financial Conduct
Authority and the Prospectus and Circular will shortly be available
for inspection at the National Storage Mechanism which is located
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on
the Company's website at www.jpmsmallercompanies.co.uk .
Benefits of the Transaction
The Board believes that the Transaction has the following
benefits for Shareholders of the enlarged Company (the
"Shareholders"):
-- the enlarged Company is expected to have an unaudited Net
Asset Value of approximately GBP430 million (based on valuations as
at 18 January 2024 (the "Latest Practicable Date") ([1]) , creating
a leading investment vehicle for UK-listed or quoted smaller
companies while also improving secondary market liquidity for the
Shareholders;
-- Shareholders will benefit from the introduction of an
enhanced dividend policy, targeting a 4 per cent. yield on the NAV
per annum, calculated on the basis of 4 per cent. of audited NAV as
at the end of the preceding financial year of the Company;
-- the Company will benefit from the New Management Fee and an
enlarged asset base, reducing the blended fee rate for Shareholders
of 2 basis points, assuming that 85 per cent. of the Company's net
assets are rolled over into the Company (on the assumption that
there is full participation under the Cash Option and no Dissenting
JMF Shareholders) ;
-- Shareholders will benefit from an ongoing expense ratio
reduction of approximately 20 basis points compared to the
Company's previous accounting period ended on 31 July 2023, as a
result of the Company's fixed costs being spread over a larger
asset base and the cumulative changes to the management fee,
including the New Management Fee;
-- the Manager has agreed to make the Manager's Contribution in
respect of the Scheme, reducing the effective implementation costs
for the Company;
-- the Board believes that Eligible JMF Shareholders who elect
for the Rollover Option will benefit from the Company's broader
Investment Objective and Policy which, as at 31 December 2023, has
enabled the Company to have over 40 per cent. of its Portfolio
invested in UK-listed and quoted companies with market
capitalisations ranging from GBP1 billion to GBP3 billion; and
-- the Company's Shareholder register will become further
diversified, having introduced a number of new long-term JMF
investors to the register while also allowing a number of JMF
Shareholders and Existing Shareholders to consolidate their
holdings across the two companies.
Combination with JMF
The combination, if approved by the shareholders of each of the
Company and JMF, will be implemented through a scheme of
reconstruction under section 110 of the Insolvency Act, resulting
in the voluntary liquidation of JMF and the transfer of its assets
to the Company in exchange for the issue of new Shares ("Scheme
Shares") to Eligible JMF Shareholders and to the Liquidators of JMF
for sale in the market for the benefit of Excluded JMF Shareholders
(being Sanctions Restriction JMF Shareholders and Overseas Excluded
JMF Shareholders).
Subject to the passing of the JMF Resolutions, and the
satisfaction of the other conditions of the Issue (which are
outlined below), the Scheme will take effect on the Effective
Date.
Under the Scheme, JMF will be put into member's voluntary
liquidation and its assets split into the following three
pools:
(i) the pool of cash, undertaking and other assets to be
retained by the Liquidators to meet all known and unknown
liabilities of JMF and other contingencies (the "Liquidation
Pool");
(ii) the pool of cash, undertaking and other assets established
for distribution to participating JMF Shareholders and attributable
to JMF Reclassified B Shares (excluding any JMF Shares held by
Dissenting JMF Shareholders) (the "Cash Pool"); and
(iii) the pool of cash, undertaking and other assets
attributable to the JMF Reclassified A Shares to be established
under the Scheme and to be transferred to the Company pursuant to
the Transfer Agreement in consideration for the issuance of the
Scheme Shares to Eligible JMF Shareholders and to the Liquidators
for sale in the market for the benefit of Excluded JMF Shareholders
(the "Rollover Pool").
Details of the Issue
The number of Scheme Shares to be issued to Eligible JMF
Shareholders, and to the Liquidators appointed in respect of
Excluded JMF Shareholders, will be based on the FAV of each of the
Company and JMF and will be reviewed by an independent accountant.
The FAV per JMI Share and the FAV per JMF Share will be calculated
to six decimal places (with 0.0000005 rounded down) as at the
Calculation Date in accordance with each company's respective
normal accounting policies.
Eligible JMF Shareholders will be issued Scheme Shares
calculated by dividing the FAV per JMF Share by the FAV per JMI
Share and multiplying this ratio (which will be calculated to six
decimal places, with 0.0000005 rounded down) by the number of JMF
Shares owned as at the Record Date that will be reclassified as JMF
Reclassified A Shares.
The number of Scheme Shares which will be issued to Eligible JMF
Shareholders and the Liquidators appointed in respect of Excluded
JMF Shareholders is not known at the date of this Circular as it
will be calculated in accordance with the formula stated above at
the Calculation Date. The number of Scheme Shares to be issued will
be announced through an RIS announcement as soon as practicable
following the Calculation Date. The Issue is not being
underwritten.
JMF Revolving Credit Facilities
JMF currently has in place a revolving credit facility with
Scotiabank Europe plc ("Scotia Revolving Credit Facility") and a
second revolving credit facility with ING Bank N.V. ("ING Revolving
Credit Facility"), together the "JMF Revolving Credit Facilities").
As at the Latest Practicable Date, JMF has drawn debt amounting to
GBP23 million in aggregate under the JMF Revolving Credit
Facilities (the "JMF Outstanding Debt Amount"). As a condition to
the implementation of the Scheme, the JMF Board will arrange for
the JMF Outstanding Debt Amount to be repaid in full prior to the
Calculation Date, such repayments to be made out of available cash
and by realising assets in the JMF Portfolio.
Amendment of the Investment Management Agreement
The existing annual management fee payable by the Company to the
Manager (the "Existing Management Fee") is calculated on a tiered
basis by reference to the Net Asset Value of the Company, on the
following basis:
0.65 per cent. on the first GBP300 million of the Company's Net
Asset Value; and
0.55 per cent. on the Company's Net Asset Value in excess of
GBP300 million.
Subject to the successful completion of the Transaction and with
effect from Admission, the Investment Management Agreement shall be
amended such that the Existing Management Fee shall be revised to a
tiered fee structure by reference to the Net Asset Value of the
Company on the following basis (the "New Management Fee"):
0.65 per cent. on the first GBP200 million of the Company's Net
Asset Value; and
0.55 per cent. on the Company's Net Asset Value in excess of
GBP200 million.
Costs and Expenses of the Transaction
Costs of the Company
The costs incurred by the Company prior to the Effective Date in
connection with the implementation of the Transaction (which
include legal fees, financial advisory fees, other professional
advisory fees, printing costs and other applicable expenses but
exclude, for the avoidance of doubt, any JMI Acquisition Costs (as
defined below)) will be borne by JMI Shareholders (the "JMI
Implementation Costs"). The JMI Implementation Costs are estimated
to be approximately GBP1.1 million (including irrecoverable
VAT).
In addition, the enlarged Company, and therefore all
Shareholders following implementation of the Scheme, will bear the
JMF Portfolio Realignment Costs and any stamp duty, SDRT or other
transaction tax, or investment costs it incurs in connection with
the acquisition of the assets comprised in the Rollover Pool or the
deployment of the cash therein upon receipt (the "JMI Acquisition
Costs").
The enlarged Company will also bear the London Stock Exchange
admission fees in respect of the admission of Scheme Shares.
Costs of JMF
The costs to be borne by JMF Shareholders, excluding the JMF
Portfolio Realignment Costs, are estimated to be approximately
GBP1.1 million (including irrecoverable VAT).
The costs of acquiring and disposing of investments in the
Rollover Pool transferred to the Company pursuant to the Transfer
Agreement in order to realign the Rollover Pool so that it is
consistent with the Company's Portfolio will be borne by the
enlarged Company following the implementation of the Scheme (the
"JMF Portfolio Realignment Costs"). Accordingly, the JMF Portfolio
Realignment Costs will be excluded from the costs borne by JMF for
the purposes of the FAV calculation.
Manager's Contribution
The Manager has agreed to make a contribution (the "Manager's
Contribution") to the costs of the Transaction by way of a waiver
of part of the New Management Fee payable by the Company. The
Manager's Contribution will be an amount equal to six months of the
Company's New Management Fee calculated on the value of the net
assets transferred to the Company by JMF pursuant to the Scheme
(the "Contribution Amount"). The financial value of the
Contribution Amount is estimated at approximately GBP514,554
million based on the estimated unaudited Net Asset Value of the
assets to be transferred to the Company as at the Latest
Practicable Date (assuming full participation by JMF Shareholders
under the Cash Option and no Dissenting JMF Shareholders).
Board structure
It is intended that, following the successful completion of the
Transaction, three current directors of JMF, being Richard Gubbins,
Lisa Gordon and Hannah Philp, will be appointed as non-executive
Directors of the Company (the "Prospective Directors") , such that
the Board will initially consist of seven directors, comprising
four directors from the current Board and three directors from the
board of JMF (reducing to a maximum of six directors at, or shortly
prior to, the next AGM of the Company expected to be held in
November 2024 with Andrew Impey and Richard Gubbins retiring from
the Board at, or shortly prior to, the next AGM and not standing
for re-election).
Each of the Prospective Directors is independent of the Manager
and the Investment Manager.
Change of Company Name
The Directors have resolved to change the name of the Company to
JPMorgan UK Small Cap Growth & Income plc and change the ticker
symbol of the Shares to JUGI, subject to the successful completion
of the Transaction.
The change of the name of the Company and ticker symbol will be
announced to the market by way of RIS announcement on or shortly
after the Effective Date.
New enhanced dividend policy
Subject to the successful completion of the Transaction, the
Company intends to introduce an enhanced dividend policy, targeting
a 4 per cent. yield on the NAV per annum, calculated on the basis
of 4 per cent. of audited NAV as at 31 July each year, being the
end of the preceding financial year of the Company.
Under the enhanced dividend policy, the Company will move from a
final annual dividend to equal quarterly interim dividends, to be
announced in August, November, February and May and expected to be
paid in October, January, April and July each year.
Following the successful completion of the Transaction and in
lieu of any other interim dividend for the financial year of the
Company ended 31 July 2024, the Company will announce in May 2024
an interim dividend of 2 per cent. of the unaudited NAV of the
enlarged Company as at the date of Admission which is expected to
be paid to Shareholders in July 2024.
Conditions of the Issue
The Scheme is conditional upon:
-- the passing of the JMF Resolution to be proposed at the First
JMF General Meeting and the JMF Resolution to be proposed at the
Second JMF General Meeting or any adjournment of those meetings and
such JMF Resolutions becoming unconditional in all respects;
-- approval of the Allotment Resolution by JMI Shareholders at
the General Meeting of the Company and such Resolution becoming
unconditional in all respects;
-- the approval of the FCA and the London Stock Exchange to the
Admission of the Scheme Shares to listing on the premium listing
category of the Official List and to trading on the Main Market of
the London Stock Exchange, respectively occurring before 31 March
2024, or such other date as may be mutually agreed between the
Company, JMF and the Sponsor;
-- the Sponsor Agreement not having been terminated in
accordance with its terms prior to Admission;
-- confirmation of the JMF Board that the drawn debt under the
JMF Revolving Credit Facilities has been repaid in full; and
-- the JMF Board resolving to proceed with the Scheme.
Admission and dealings
Applications will be made by the Company to the FCA for the
Scheme Shares to be admitted to the premium listing category of the
Official List and to the London Stock Exchange for the Scheme
Shares to be admitted to trading on the premium segment of the Main
Market. If the Scheme becomes effective, it is expected that the
Scheme Shares will be admitted to the Official List and the first
day of dealings in such shares on the Main Market will be 28
February 2024.
Expected Timetable
GENERAL MEETING
Posting of Circular and Forms of 23 January 2024
Proxy for the General Meeting
Latest time and date for receipt 12.00 p.m. on 8 February
of Forms of Proxy for the General 2024
Meeting
General Meeting 12.00 p.m. on 12 February
2024
Announcement of results of the General 12 February 2024
Meeting
SCHEME
Publication of Prospectus 23 January 2024
Ex-dividend date for the Pre-Completion 1 February 2024
Dividend*
Pre-Completion Dividend Record Date 2 February 2024
First JMF General Meeting 11.00 a.m. on 12 February
2024
Record Date for entitlements under 6.00 p.m. on 20 February
the Scheme 2024
JMF Shares disabled in CREST 6.00 p.m. on 20 February
2024
Calculation Date for the Scheme 5.00 p.m. on 21 February
2024
Suspension of listing of JMF Shares 7.30 a.m. on 27 February
and JMF's register closes 2024
Second JMF General Meeting 12.00 p.m. on 27 February
2024
Effective Date for implementation 27 February 2024
of the Scheme
Announcement of results of the Scheme 27 February 2024
and respective FAVs per share
Payment date for the Pre-Completion 27 February 2024
Dividend
Admission and dealings in Scheme 8.00 a.m. on 28 February
Shares commence 2024
CREST accounts credited to JMF Shareholders 8.00 a.m. on 28 February
in respect of Scheme Shares in uncertificated 2024
form
Certificates despatched by post 12 March 2024 (or as soon
in respect of Scheme Shares as practicable thereafter)
Cancellation of listing of JMF Shares as soon as practicable
after the Effective Date
References to times are to London times unless otherwise
stated. Any changes to the expected timetable set out above
will be notified to the market by the Company via an RIS
announcement.
*The Pre-Completion Dividend being the interim dividend
of 3.60 pence per Share to be announced on or around 23 January
2024 and is expected to be paid on 27 February 2024, subject
to the passing of the JMF Resolution at the First JMF General
Meeting and the passing of the Allotment Resolution at the
General Meeting.
Capitalised terms used but not defined in this announcement will
have the same meaning as set out in the Circular.
For further information please contact:
JPMorgan UK Smaller Companies Investment Contact via Company Secretary
Trust plc
Andrew Impey
JPMorgan Funds Limited
Simon Crinage
Fin Bodman +44 (0) 20 7742 4000
JPMorgan Funds Limited (Company Secretary) +44 (0) 20 7742 4000
Panmure Gordon (UK) Limited
Alex Collins +44 (0) 20 7886 2767
Ailsa Macmaster +44 (0) 20 7886 2979
Ashwin Kohli +44 (0) 20 7886 2786
[1] Based on the estimated unaudited Net Asset Value of the
Company and JMF as at the Latest Practicable Date, assuming: (i)
that there are no Dissenting JMF Shareholders; and (ii) full
participation by JMF Shareholders under the Cash Option.
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