TIDMMNL TIDMOSP
RNS Number : 5830P
Manchester & London Inv Tst PLC
27 March 2009
Manchester & London Investment Trust PLC
Possible merger with
Osprey Smaller Companies Income Fund Limited
For immediate release
27 March 2009
The boards of Manchester and London Investment Trust PLC ("MLIT") and
Osprey Smaller Companies Income Fund Limited ("Osprey) announce that they are
considering proposals which may lead to a merger of MLIT and Osprey to be
effected by way of a recommended offer by MLIT for Osprey. Under the Offer it
is expected that accepting Osprey Shareholders will receive new MLIT Shares, the
number of which will be determined by reference to a formula based on net assets
per share.
The formula to be used to determine the value of the Offer is summarised in the
appendix to this announcement.
Both MLIT and Osprey are managed by Midas Investment Management Limited
("Midas").
Midas and the Board of MLIT believe the proposed Offer allows the two investment
companies to increase their respective scale which in turn could lead to the
following benefits:
* cost reductions as a proportion of net assets through economies of scale;
* the increased size of the merged Group which may provide more liquidity for
shareholders; and
* the increased Net Asset Value may increase the probability that the Group can
gain access to loan finance if required, particularly in the current climate
where smaller companies may struggle to find lending solutions.
Certain major shareholders in Osprey have been approached and have signed
letters indicating that if an Offer based on the relative formula asset value of
MLIT and Osprey were to be made, they would accept it in respect of 5,564,047
Osprey Shares owned by them or under their discretionary management representing
52.7% of its issued share capital as follows:
Name Osprey Shares %
Manchester & Metropolitan Investment Ltd 4,047,000 38.3%
Brewin Dolphin Ltd 541,030 5.1%
Philip J Milton & Company Plc 476,025 4.5%
Cenkos Channel Islands Nominee Company Ltd 193,000
1.8%
Rathbone Investment Management Limited 159,100 1.5%
Adam & Company Investment Management Ltd147,8721.4%
Total 5,564,047 52.7%
It is emphasised that the letters of intent are not legally binding and that it
is possible that no offer or other proposals will be made to the shareholders of
either MLIT or Osprey. MLIT and Osprey reserve the right to implement the
proposed merger by way of a scheme (instead of by an Offer) and the letters of
intent state the signatories' intention to vote in favour of such a scheme. In
addition to the Osprey Shares held in funds under discretionary management shown
above, Rathbone Investment Management Limited and Brewin Dolphin Ltd hold 50,000
and 115,081 Osprey Shares respectively on behalf of advisory clients and have
stated their intention to advise such clients to accept the Offer in respect of
such 165,081 Osprey Shares representing 1.6% of Osprey's issued share capital.
A further announcement will be made in due course.
Rule 2.10 of the City Code on Takeovers and Mergers requires the announcement of
the number of shares in issue of MLIT and Osprey. MLIT has 13,946,338
Ordinary Shares of 25p each in issue and admitted to trading on the London Stock
Exchange under ISIN code GB0002258472 and Osprey has 10,554,612 Ordinary Shares
of 10p each in issue and admitted to trading on the London Stock Exchange and
the Channel Island Stock Exchange under ISIN code GB0031797698.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if any
person is, or becomes, "interested" (directly or indirectly) in 1% or more of
any class of "relevant securities" of MLIT or of Osprey, all "dealings" in any
"relevant securities" of that company (including by means of an option in
respect of, or a derivative referenced to, any such "relevant securities") must
be publicly disclosed by no later than 3.30 pm (London time) on the London
business day following the date of the relevant transaction. This requirement
will continue until the date on which the offer becomes, or is declared,
unconditional as to acceptances, lapses or is otherwise withdrawn or on which
the "offer period" otherwise ends. If two or more persons act together pursuant
to an agreement or understanding, whether formal or informal, to acquire an
"interest" in "relevant securities" of MLIT or Osprey, they will be deemed to be
a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant
securities" of MLIT or Osprey by
MLIT or Osprey, or by any of their respective "associates", must be disclosed by
no later than 12.00 noon (London time) on the London business day following the
date of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Takeover Panel's website at
www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel's website. If you are in any doubt as to whether or not you are required
to disclose a "dealing" under Rule 8, you should consult the Panel.
The Directors of MLIT and of Osprey accept responsibility for the information
contained in this announcement. To the best of the knowledge and belief of the
Directors of MLIT and Osprey (who have taken all reasonable care to ensure that
such is the case), the information contained in this announcement is in
accordance with the facts and does not omit anything likely to affect the import
of such information.
This Announcement does not constitute, or form part of, an offer or invitation
to purchase any securities.
Appendix
CALCULATION OF THE FORMULA ASSET VALUES
Each of Osprey and MLIT is, unless the context otherwise requires, referred to
as the "Relevant Company". Each of the FAV per Osprey 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, a market of
the London Stock Exchange, 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 trust 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 traded 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 an underlying 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 Elysium on behalf of Osprey (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 sub-paragraphs 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 Elysium, on behalf of Osprey (or,
failing such agreement within seven days after the Calculation Date, as
determined by an independent expert); and
(ix) in the case of the FAV per MLIT Share only, (a) the value of its
Wimbledon debentures will be valued at GBP110,000 which was the last valuation
as provided by the All England Lawn tennis Ground plc; and (b) the value of its
outstanding claim for VAT and interest repayable from HM Customs which shall be
valued at GBP45,017.23.
"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 Osprey Share only, the cost of termination
as at the close of business on the Calculation Date of any investment advisory
(Midas have agreed that no termination fee will be due in the event the Offer
becomes unconditional), advisory, custody 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 Osprey, such amount to include
irrecoverable value added tax (where applicable) but to exclude any tax relief;
(iv) in the case of the FAV per Osprey 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 Osprey 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 Osprey 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 POTM fees or UKLA fees to be borne
equally by each Relevant Company in respect of the Offer (including any VAT
chargeable);
(viii) the amount of all stamp duty or stamp duty reserve tax as may be
payable by MLIT in respect of the transfer of the Osprey Shares pursuant to the
Offer (assuming full acceptance of the Offer), as estimated by agreement between
the Company Secretary of MLIT, on behalf of MLIT, and Elysium, on behalf of
Osprey (or, failing such agreement within seven days after the Calculation Date,
as determined by an independent expert) to be borne equally by each Relevant
Company;
(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) but excluding for the purpose of this
sub-paragraph B (ix) all stamp duty and stamp duty reserve tax 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; and
(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, and
Elysium, on behalf of Osprey (or, failing such agreement within seven days after
the Calculation Date, as determined by an independent expert); and
"C" is the aggregate of:
(i) the number of shares in the Relevant Company in issue 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 Elysium, on behalf of Osprey (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 Elysium 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 Osprey or any Osprey Shares
or of the transfer of such investment or other asset to any party or of the
winding up of Osprey;
(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 Elysium or, if appointed, any independent expert.
5. With regard to sub-paragraphs A (vii) and (viii) above, the Company
Secretary of MLIT and Elysium 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 Elysium (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 Elysium shall act as experts and not as arbitrator
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
London Investment Banking Association (not connected with any of the parties
providing advice to Osprey or MLIT in connection with the Offer) selected by the
Company Secretary of MLIT and Elysium or, in default of such selection within 14
days after the Calculation Date, by the chairman for the time being of the
London Investment Banking Association on the application of either the Company
Secretary of MLIT or Elysium. 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 Osprey) 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 Elysium, incorrect or unfair they may, if they so
agree, adopt an alternative method of valuation or deduction, as the case may
be.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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