MITON WORLDWIDE GROWTH INVESTMENT TRUST PLC
NOTICE OF EGM
Miton Worldwide Growth Investment Trust plc (the "Company") announced on 24
July 2015 that it intended to recommend proposals (the "Proposals") which,
conditional on the continuation vote being passed at the AGM, introduced
provisions providing Shareholders with opportunities to elect, in 2018 and then
at three year intervals, to realise all or part of their Shareholding.
The Company today announces that it is convening a General Meeting of the
Company to be held on 9 September 2015, immediately preceding the AGM, to
consider proposals as detailed below.
Introduction
The Company's Articles require currently that a continuation vote is held at
every third Annual General Meeting. The next continuation vote is due to be
proposed at the 2015 Annual General Meeting to be held immediately after the
General Meeting convened by this Circular. For the reasons explained in more
detail below and in the Annual Report of the Company for the year ended 30
April 2015 the Board is recommending that Shareholders vote in favour of
continuation at the 2015 Annual General Meeting and the Board is also putting
forward in this Circular, and recommending that Shareholders vote in favour of,
Proposals on the future structure of the Company. Under these Proposals,
conditional on the continuation vote being passed at the 2015 Annual General
Meeting, the Articles will be amended to remove the requirement for future
continuation votes and instead to include provisions enabling Shareholders to
elect, with effect from the 2018 Annual General Meeting, for the realisation of
their Shares as described below.
It is also proposed at the General Meeting to amend the management fees and the
performances fees payable to the Manager under the Management Agreement.
Continuation vote and future structure of the Company
The Board is recommending that at the 2015 Annual General Meeting the
Shareholders vote in favour of continuation. We are aware that we are a
smaller investment trust whose shares have traded at a discount since the last
continuation vote and, with a view to addressing this, we are therefore at the
same time recommending Proposals on the future structure of the Company,
conditional on the continuation vote being passed.
The Directors believe that the Company has a differentiated mandate adopting an
investment approach that is not replicated by other trusts. As the investment
trust sector continues to evolve, so too the Board believes it has to ensure
our mandate and structure remain relevant. We believe the changes in the
investment companies market mean the investment case for a broadly based
mandate exploiting inefficiencies across all parts of the investment companies
market, delivering capital growth whilst being aware of downside risks, is a
strong as ever.
We also recognise that many potential investors are now reluctant (or even
unable) to invest in smaller less liquid vehicles. Those who may want to invest
may find it hard to build a meaningful position. The discount therefore remains
frustratingly wide and the Company cannot grow.
We are therefore putting forward proposals to change the Articles, as described
under "Realisation Opportunity" below, so that Shareholders will be offered the
opportunity to elect to exit the Company at three year intervals. Our intention
is to use the revised structure of the Company as a platform for a marketing
strategy, but we believe we have to give existing Shareholders and potential
new investors the opportunity of an unconditional realisation opportunity, if
they are to have the confidence to commit more capital to the Company.
The Board believes this opportunity will give potential investors greater
confidence that they will not be trapped in a small illiquid trust trading at a
discount. Importantly, this new structure (unlike tenders or buybacks) is
aligned with the Manager's investment approach where the underlying investments
are less liquid and Shareholder value can be best delivered by managing a
closed-ended pool of investments and thereby not having to sell to meet
short-term cash requirements.
We believe and expect that many Shareholders will wish to remain invested in
three years' time and continue to benefit from the investment strategy. At that
stage there may be a new group of investment companies that have fallen out of
favour and will have the potential to deliver attractive returns for our
specialist approach. Equally, we recognise that if insufficient Shareholders
decide to remain invested in 2018, or at subsequent election dates, it will be
appropriate for the entire portfolio to be realised rather than to perpetuate
the Company's life. We believe smaller investment companies need to be bold or
they will gradually lose appeal with the result that discounts and illiquidity
become entrenched to the detriment of Shareholder value.
The Board believes the Company's investment offering has wider appeal. We
believe the structural changes should give potential investors reassurance on
the liquidity of the Company and the running costs as expressed in the Ongoing
Charges figure. If we continue to perform and market our shares effectively, we
believe the Company can grow and become a more attractive vehicle to our
Shareholders.
In the event that the Company's Shares continue on average to trade at a
material discount to NAV during the 30 calendar days preceding the date of the
2016 Annual General Meeting, the Board will further review the Company's
discount management policy, in consultation with the Company's major
shareholders.
Realisation Opportunity
The Board is proposing that the Company's Articles be amended, conditional on
the continuation vote being passed at the 2015 Annual General Meeting, to
remove the requirement for future continuation votes and to include provisions
enabling Shareholders to elect, with effect from the date of the 2018 Annual
General Meeting, for the realisation of their Shares in accordance with the
procedure described below.
A reminder of Shareholders' rights to elect to realise their Ordinary Shares at
the 2018 Annual General Meeting and at each Annual General Meeting in every
third year thereafter, will be sent to Shareholders with the notice of the
Annual General Meeting to be held on each Reorganisation Date.
It is intended that the Company will seek admission of the Realisation Shares
to the Official List and, if required at the time the prospectus rules of the
UK Listing Authority or by other law or regulation, a prospectus in relation to
the Realisation Shares will be produced and sent to Shareholders at that time.
It is anticipated that the cost of producing any such new prospectus will be
apportioned to the Pools pro rata to the number of Ordinary Shares and
Realisation Shares. Shareholders may elect to realise all or part of their
holdings of Ordinary Shares in the Company by electing for Realisation with
effect from the Reorganisation Date. Subject to the aggregate NAV of the
continuing Ordinary Shares at the close of business on the last Business Day
before the Reorganisation Date being not less than £30 million, each Ordinary
Share in respect of which an election for Realisation has been made will be
redesignated as a Realisation Share. The rights of holders of Ordinary Shares
(being Shares in respect of which no election for Realisation has been made)
and of Realisation Shares will be as follows: the Portfolio will be split into
two separate and distinct Pools namely the Continuation Pool comprising the
assets attributable to the continuing Ordinary Shares and the Realisation Pool
comprising the assets attributable to the Realisation Shares (which assets will
be managed in accordance with an orderly realisation programme with the aim of
making progressive returns of cash to holders of Realisation Shares as soon as
practicable) with effect from the Reorganisation Date. Elections for
Realisation must be made not less than seven nor more than 28 days before the
relevant AGM. Ordinary Shares held by Shareholders who do not submit a valid
and complete election in respect of those Shares in accordance with the
Articles during the Election Period will remain Ordinary Shares.
It is anticipated that the Portfolio will be divided pursuant to the
Realisation, as at the close of business on the Reorganisation Date between the
Continuation Pool and the Realisation Pool with assets comprised in the
Portfolio being apportioned to the Realisation Pool pro rata to the number of
Ordinary Shares in respect of which elections for Realisation have been validly
received and the remainder of the assets being apportioned to the Continuation
Pool. The liabilities of the Company will be similarly apportioned as between
the Pools with liabilities being apportioned to the Realisation Pool pro rata
to the number of Ordinary Shares in respect of which elections for Realisation
have been validly received and the remainder of the liabilities being
apportioned to the Continuation Pool save that the costs and expenses of the
realisation of the assets comprising the Realisation Pool will be attributed to
the Realisation Pool and the costs and expenses of the Realisation will be
apportioned between the Pools as the Board in its discretion deems fair and
reasonable. Assets that are not divisible pro rata, due to their nature, will
be apportioned between the Pools as the Board in its discretion deems fair and
reasonable. Upon a future disposal of such assets, the disposal value will be
similarly apportioned between each Pool.
The precise mechanism for any return of cash to holders of Realisation Shares
will depend upon the relevant factors prevailing at the time and will be at the
discretion of the Board, but may include a combination of capital
distributions, share repurchases and tender offers. The resolution to be
proposed at the General Meeting to amend the Articles as described above will
authorise such share repurchases and tender offers. Shares repurchased from
time to time will be cancelled. A resolution to renew the authority will be
proposed at the Annual General Meeting of the Company to be held in 2017 and
every third year after that.
If one or more Realisation Elections are duly made and the net asset value
attributable to the continuing Ordinary Shares (being those Ordinary Shares in
respect of which Realisation Elections have been made) at the close of business
on the last Business Day before the Reorganisation Date is less than £30
million, the Realisation will not take place, no Ordinary Shares will be
redesignated as Realisation Shares and the Portfolio will not be split into the
Continuation Pool and the Realisation Pool. In this circumstance, with effect
from the Reorganisation Date, unless the Directors have previously been
released from this obligation by an extraordinary resolution, the investment
objective and investment policy of the Company will become to realise the
Company's assets on a timely basis with the aim of making progressive returns
of cash to Shareholders as soon as practicable. The Directors will seek to
realise the Company's assets as efficiently and at as much value as is
possible.
Related party transaction
If the proposal to amend the Articles is approved, then the management and
performance fees payable by the Company to the Manager will be amended to
reflect new fee arrangements in respect of the share reorganisation (the "
Related Party Transaction") as follows:
Charge based on: Management fee Performance fee - based on cash
realised
Ordinary Shares The management fee The existing performance fee will
relating to the Ordinary cease to be payable. Performance
Shares shall be fees will only be payable in future
calculated at an annual by the Company in respect of the
rate of 0.65% (increased realisation of assets in the
from 0.5%) Realisation Pool or the realisation
of the adjusted market of assets where the Company as a
capitalisation of the whole moves onto a realisation
Ordinary Shares valued basis.
at the close of business
on the last Business Day
of each month. The
management fee accrues
daily and is payable in
arrears in respect of
each calendar month.
Realisation The management fee The performance fee will be 15% of
Shares relating to Realisation all cash realised and returned to
Shares shall be holders of Realisation Shares from
calculated at an annual the realisation of assets in the
rate of 0.5% of the Realisation Pool in excess of the
adjusted market Hurdle* and will become payable once
capitalisation of the the aggregate net asset value of
Realisation Shares undistributed assets (including
valued at the close of cash) remaining in the Realisation
business on the last Pool is less than 5% of the
Business Day of each aggregate net asset value of the
month. The management assets in the Realisation Pool on
fee accrues daily and is relevant Reorganisation Date.
payable in arrears in
respect of each calendar There will be no annual cap on this
month. fee.
Where Company as The management fee will The performance fee will be 15% of
a whole moves be calculated at an all cash realised from the
onto realisation annual rate of 0.5% of realisation process in excess of the
basis the adjusted market Hurdle* and will become payable once
capitalisation of the the
Company valued at the aggregate net asset value of
close of business on the undistributed assets (including
last Business Day of cash) is less than 5% of the
each month. The aggregate net asset value of the
management fee accrues Company on the relevant
daily and is payable in Reorganisation Date.
arrears in respect of
each calendar month. There will be no annual cap on this
fee.
*Hurdle: the Hurdle shall be an amount per share equivalent to interest at a
rate equal to 3 month sterling LIBOR on Reorganisation Date plus 5% per annum,
measured from the date on which Resolution 1 to be proposed at the General
Meeting becomes effective and calculated by reference to the net asset value
per Ordinary Share as at that date, until to the date when the aggregate net
asset value of undistributed assets (including cash) remaining in the relevant
pool is
(a) where the Company operates a continuation pool and a realisation pool,
less than 5% of the aggregate net asset value of the assets in the Realisation
Pool on the relevant Reorganisation Date; or
(b) where the Company as a whole has moved onto realisation basis, less than 5%
of the aggregate net asset value of the Company on the relevant Reorganisation
Date.
These changes to the Management Agreement are classified as a related third
party transaction under the UK Listing Rules and therefore the Board is
required to seek Shareholders' approval for the amendments by way of an
ordinary resolution at the General Meeting.
Benefits of the Proposals
The Proposals which Shareholders are being asked to consider and approve at the
General Meeting are intended to have the following benefits for Shareholders:
* the liquidity of the Shares is expected to be enhanced as Shareholders will
have the opportunity to elect for realisation at three year intervals;
* the demand for the Shares in the market is expected to grow, as potential
investors will have greater confidence as to liquidity, which other things
being equal, should influence the discount to NAV at which the Shares
trade; and
* the new structure will be aligned with the Manager's investment approach
where the underlying investments are less liquid and Shareholder value can
be best delivered by managing a closed-ended pool of investments.
General Meeting
The Resolutions are conditional on the approval by Shareholders of resolution
numbered 10 set out in the notice of the Annual General Meeting of the Company
to be held on 9 September 2015.
Resolution number 1 will be proposed as a special resolution to amend the
Articles as described above and to authorise the Company to repurchase
Realisation Shares. Resolution number 2 will be proposed as an ordinary
resolution to approve the proposed amendments to the Management Agreement.
All Shareholders are entitled to attend and vote at the General Meeting. In
accordance with the Articles, all Shareholders present in person or by proxy
shall upon a show of hands have one vote and upon a poll shall have one vote in
respect of each Share held. In order to ensure that a quorum is present at the
General Meeting, it is necessary for two Shareholders entitled to attend and
vote to be present, whether in person or by proxy (or, if a corporation, by a
representative).
All holders of Ordinary Shares are entitled to vote on the Resolutions.
However, the Manager has undertaken to abstain from voting on Resolution number
2 and to take all reasonable steps to ensure that its associates and funds
managed by it and its associates abstain from voting on that Resolution.
Enquiries
Miton Group plc
David Barron
DDI: +44 (0) 203 714 1474
Email: david.barron@mitongroup.com
Numis Securities Limited
Nathan Brown, Corporate Broking and Advisory
DDI: +44 (0) 20 7260 1426
Email: n.brown@numis.com