Artemis Alpha Trust Plc - Publication of Circular plus Dividend
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,
This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in
Legal Entity Identifier: 549300MQXY2QXEIL3756
Publication of Circular in connection with the recommended proposals for the voluntary winding-up of the Company and combination with Aurora Investment Trust PLC (to be renamed
1 Introduction
The Board of
On
2 September
2024,
the
Board
announced
that
it
had
agreed
heads
of
terms
with
Aurora
in
respect
of
a
proposed combination
with
Aurora
to
form an enlarged investment trust (the "
The merger will be effected by way of a scheme of reconstruction and members' voluntary winding up of the Company under section 110 of the Insolvency Act (the "
Scheme
") and the issue of New
As explained in further detail in the section "
A cash exit option will be made available for up to 25 per cent. of the Company's issued share capital, allowing Shareholders the ability to exit at least part of their investment. The cash exit will be offered at a 2 per cent. discount to the Company's Residual Net Asset Value, less a liquidity adjustment of 20 per cent. of the relevant proportion of the Company's unquoted holdings that transfer to Aurora pursuant to the Scheme. The liquidity adjustment reflects, for those Shareholders who elect to receive cash, the benefit of being able to exit their holdings without immediately triggering a requirement upon the Company to sell assets that may not be readily realisable within the timeframe of the Proposals.
The Board believes that the strong commonality in high-conviction investment philosophies between the Company and Aurora will provide Shareholders with continued exposure to a similar investment strategy to the Company.
Following the implementation of the Proposals, Shareholders who roll over are expected to benefit from holding a larger investment trust with a reduced ongoing charges ratio and enhanced secondary market liquidity.
Shareholders who roll over will benefit from Aurora's unique fee structure, whereby its investment manager,
The purpose of the Circular is to explain the Proposals and their rationale and expected benefits, the actions required to be taken in order for them to be implemented, and to convene the General Meetings to seek the required Shareholder approvals.
Prior to the announcement on
2 Background to the Proposals
In concluding the Company's strategic review in 2018, the Board stated its intention to propose to Shareholders a tender offer for up to 25 per cent. of the issued Shares at or around the time of the Company's annual general meeting in
In 2021, owing to changing circumstances, the Board sought and obtained Shareholder approval not to put forward proposals for a tender offer that year, and instead committed itself to a sustainable share buyback policy with the target of maintaining a narrow discount to NAV. At that time, the Board was clear that it still intended to propose a tender offer every three years, with the next tender offer scheduled to occur in 2024. As a result of adverse market conditions, it became evident that the buyback policy was not effective in maintaining a narrow discount to NAV.
The Company's annual report for the year ended
The options reviewed included combinations with other listed closed-ended funds and a solvent liquidation with no rollover option. In conducting its review, the Board took account of the Company's distinctive investment approach and the fact that many of the Company's investors are long term supporters of the listed investment fund structure and concluded that a rollover into an investment trust or similar vehicle was the most appropriate outcome. Furthermore, given the intention to propose a tender offer in 2024, the Board wished to see an appropriate cash exit opportunity being made available to Shareholders as well as an option for ongoing liquidity in the shares of a suitable listed closed-ended fund.
Given the similarity in focused investment strategies and the performance track record of Aurora, the Board identified Aurora as the most suitable vehicle with which to explore a combination and commenced discussions in
For the avoidance of doubt, the tender offer referred to in the 2024 Annual Report will not be proposed to Shareholders in addition to, or alongside, the Proposals, given that the Proposals include a partial cash exit of up to 25 per cent.
3 Overview of the Proposals
Under the Proposals, which are conditional upon, amongst other things, the approval of Shareholders:
(a) all Shareholders will be entitled to elect to receive cash in respect of some or all of their Shares (subject to an overall limit of 25 per cent. of the Shares in issue at the Calculation Date, excluding treasury shares) (the " Cash Option "); and
(b)
eligible Shareholders will by default receive
New
Cash entitlements under the Cash Option will be calculated on the basis of the ATS Cash Pool FAV. The ATS Cash Pool FAV will be calculated as the Residual Net Asset Value multiplied by the percentage of Shares in respect of which valid elections have been made, or are deemed to have been made, for the Cash Option (following any required scaling back in accordance with the Scheme) (the " Cash Exit Percentage "), less:
-- a discount of 2 per cent. of such amount (the "Cash Option Discount");
and
-- a further discount equal to 20 per cent. of the value of the Company's
unquoted holdings that form part of the Rollover Pool multiplied by the
Cash Exit Percentage (the "Cash Pool Liquidity Adjustment"),
(together, the " Cash Option Adjustments ").
The Cash Pool Liquidity Adjustment reflects, for those Shareholders who elect for the Cash Option, the benefit of being able to exit their holdings without immediately triggering a requirement upon the Company to sell assets that may not be readily realisable within the timeframe of the Proposals. The Cash Pool Liquidity Adjustment will be calculated as at the Calculation Date on the value of the unquoted holdings transferring to Aurora pursuant to the Scheme.
The value arising from the application of the Cash Option Adjustments will be allocated to the
The number of New
Further detail on the calculation methodology is set out in Part 3 of the Circular.
The choice between the options available under the Proposals will be a matter for each Shareholder to decide
and
will
be
influenced
by
their
investment
objectives
and
by
their personal,
financial
and tax
circumstances.
Accordingly,
Shareholders
should,
before
making
any
Election,
read
carefully
all
the information
in the Circular and in the Aurora Prospectus. Summary information on Aurora (and the
Separate to the Proposals,
4 Benefits of the Proposals
The Directors believe that the Proposals will have the following benefits for Shareholders:
# Investment strategy: Aurora's patient and focused investment approach differentiates it from many of its peers with a portfolio of high conviction investments. This strategy aligns well with the Company's own investment approach. # Enhanced liquidity: Shareholders rolling over into Aurora are expected to benefit from exposure to a larger investment trust with enhanced secondary market liquidity following the implementation of the Proposals. # Improved share rating: Shareholders that roll over are expected to benefit from an uplift in the market valuation of their investment as a result of Aurora's share price discount to NAV being narrower than the Company's prior to the announcement of the Proposals. The Company's 3-year average share price discount to NAV (as at30 August 2024 , the last business day prior to the announcement of the Proposals) was 10.85 per cent., whereas Aurora's share price discount to NAV was 8.03 per cent. over the same time period. # Performance track record: Since the appointment ofPhoenix as its AIFM on 28January 2016 , Aurora has returned a share price total return of 86.7 per cent. and a NAV total return of 101.2 per cent. (as at21 October 2024 , being the latest practicable date prior to publication of this announcement (the "Latest Practicable Date"). This compares to the total return of the FTSE All Share of 90.9 per cent. over the same time period. # Favourable fee structure and lower ongoing charge ratio ("OCR"): Aurora has a unique and favourable fee structure, whereby no base management fee is charged byPhoenix , which is remunerated by way of a performance fee payable in shares and only if the benchmark (being the FTSE All-Share Index (total return)) is outperformed. Furthermore, theCombined Trust will be able to spread its fixed costs over a larger pool of assets, which is expected to result in a lower OCR. #Phoenix cost contribution:Phoenix , in demonstrating its support for the Proposals, has agreed to make a contribution of £750,000 to the costs of the Proposals, of which at least £250,000 will be allocated to meeting the direct fixed costs incurred by the Company.
5
Summary information on Aurora,
Aurora Investment Trust plc
Aurora Investment Trust plc is a closed-ended investment company, incorporated on
Since the appointment of
Aurora has a triennial continuation vote, with the next vote expected to take place at Aurora's AGM in
Founded in 1998,
Further information on Aurora and
Following the implementation of the Proposals, it is intended that the
Neither the Board nor the Company takes any responsibility for the contents of the Aurora Prospectus. Similarly, the Aurora Board takes no responsibility for the content of the Circular. Investors should not subscribe for any New
6 Conditions of the P roposals
Implementation of the Proposals is subject to a number of conditions, including:
(a) the recommendation of the boards of the Company and Aurora to proceed with the Proposals which may be withdrawn at any time;
(b) the passing of the Resolutions and any conditions of such Resolutions being fulfilled;
(c)
the
(d)
the approval of the
If any condition is not satisfied, the Proposals will not become effective, the Company will not proceed with the winding-up and instead will continue in existence. In these circumstances, the Directors will reassess the options available to the Company at that time.
7 Scheme mechanics and entitlements under the Scheme
Under the Scheme:
(a) all Shareholders will be entitled to elect to receive cash in respect of some or all of their Shares (the " Cash Option "). The maximum number of Shares (in aggregate) that can be elected for the Cash Option is 25 per cent. of the total number of Shares in issue (excluding Shares held in treasury) as at the Calculation Date. Shareholders are entitled to elect for the Cash Option in respect of more than 25 per cent. of their individual holdings of Shares (the " Basic Entitlement ", such amount in excess of 25 per cent. being an " Excess Application "). However, if aggregate Elections are made for the Cash Option which exceed 25 per cent. of the issued Shares (excluding Shares held in treasury) as at the Calculation Date, Shareholders who have made an Election for the Cash Option in excess of their Basic Entitlement will have their Excess Applications scaled back in a manner which is, as near as practicable, pari passu and pro rata among all eligible Shareholders who have made such Excess Applications such that the aggregate number of Shares elected (or deemed to have been elected) for the Cash Option will equal 25 per cent. of the issued Shares (excluding Shares held in treasury) as at the Calculation Date; and
(b) eligible Shareholders will by default receive New Aurora Shares (the " Rollover Option ") to the extent that they do not make a valid election for the Cash Option in respect of some or all of their Shares or to the extent that their elections for the Cash Option are scaled back in accordance with the Scheme.
Ahead of the Effective Date, the Company's portfolio may be realigned in the most cost-effective manner to ensure that the Company has sufficient cash to fund the
On or shortly after the Calculation Date, the Board, in consultation with the proposed liquidators, shall finalise the division of the Company's assets into three separate and distinct pools (the
For
illustrative
purposes
only
,
had
the
Calculation
Date
been
close of business
on
the
Latest
Practicable
Date, and assuming
that: (i)
there are no Dissenting Shareholders; (ii) the maximum amount is elected for the Cash Option; (iii) the ATS Scheme Costs are £1,206,724; (iv) Aurora's direct fixed costs in connection with the Scheme are £536,976; and (v) all of the Company's unquoted investments with value form part of the
-- the ATS Rollover FAV per Share would have been 426.358531 pence and the
Aurora FAV per Share would have been 277.531534 pence which, for the
Rollover Option, would have produced a conversion ratio of 1.536253 and,
in aggregate, 37,691,748 New Aurora Shares would have been issued to
Shareholders under the Scheme, representing approximately 33 per cent.
of the issued ordinary share capital of the Combined Trust immediately
following the completion of the Scheme; and
-- the ATS Cash Pool FAV per Share would have been 410.709778 pence .
The above figures are for illustrative purposes only and do not represent forecasts. The ATS Rollover FAV per Share, Aurora FAV per Share and ATS Cash Pool FAV per Share and Shareholders' entitlements under the Proposals may materially change up to the Effective Date as a result of, inter alia , changes in the value of investments. For further details of the Scheme, please refer to Part 3 of the Circular .
8 Costs of implementing the Scheme and the Phoenix Contribution
Save as noted below, each of the Company and Aurora will bear its own costs in respect of the Proposals whether or not the Proposals proceed.
The fixed costs of the Scheme
payable
by
the
Company
(including the costs of terminating the Company's service providers)
are
expected
to
be
approximately
£1,207,000 inclusive of
VAT
which,
for
the
purposes
of
this
calculation,
is
assumed
to
be
irrecoverable
where
applicable.
The estimate of the Company's costs excludes the Liquidators' Retention to cover unknown liabilities (estimated at £100,000) and does not take account of any dealing costs which will be incurred by the Company in disposing of assets in order to fund the Cash Option and the
The Phoenix Contribution will be effected through a waiver of the performance fees that would otherwise be payable by Aurora to
The Phoenix Contribution is subject to a clawback provision such that, in the event of the termination of
For the avoidance of doubt, in the event the Proposals do not proceed for any reason, each of the Company and Aurora will bear its own costs and the Phoenix Contribution will not be payable.
Any costs of realignment/realisation of the Company's portfolio prior to the Scheme becoming effective will be borne by the Company. Any (i) sales or acquisition costs (including any commissions, taxes (including stamp duty), transaction charges and/or market charges) associated with the transfer of the
No expenses will be charged directly to investors by the Company in connection with the Scheme.
9 Dividends
The Company has declared a final dividend of
As
an
investment
trust,
the
Company
is
not
permitted
to
retain
more
than
15
per
cent.
of
its
income
in
any accounting
period. If the Scheme is successful, this condition must be met in the shortened accounting period commencing on
As the Company will be entering members' voluntary liquidation shortly after the payment of the Pre-Liquidation Interim Dividend, the dividend reinvestment plan operated by the Company will be suspended and will not be available for the purposes of the Pre-Liquidation Interim Dividend (but will be available for the purposes of the Final Dividend).
The Aurora Board proposes to pay an interim dividend of
However, such Artemis Alpha Shareholders will be entitled to participate in any dividends declared by Aurora with a record date after the date of the issue of New Aurora Shares to them.
10 Risk factors
Shareholders are strongly urged to read carefully the risk factors contained in Part 4 of the Circular which sets out the material risks known to the Directors at the date of the Circular in relation to the Proposals. Shareholders are also strongly urged to read the section containing risk factors in the Aurora Prospectus.
11 Taxation
Shareholders
are
advised
to
read
carefully
the
section
headed
"
Please note that nothing in the Circular or this announcement constitutes tax advice. Shareholders are strongly advised to consult their own professional advisers as to their tax position.
12 General Meetings
The implementation of the Proposals will require two general meetings of the Company. The notices convening the First General Meeting (to be held at
The Resolutions to be proposed at the General Meetings, on which all Shareholders may vote, are as follows:
12.1 First General Meeting
The Resolutions to be considered at the First General Meeting (which will each be proposed as special resolutions) will, if passed, approve the terms of the Scheme and associated amendments to the Articles set out in Part 3 of the Circular, authorise the Liquidators to enter into and give effect to the Transfer Agreement with Aurora, purchase the interests of any Dissenting Shareholders and authorise the Liquidators to apply to cancel the listing of the Shares with effect from such date as the Liquidators may determine.
Each Resolution will require at least 75 per cent. of the votes cast in respect of it, whether in person or by proxy, to be voted in favour in order for it to be passed. The Scheme will not become effective unless and until, inter alia , the Resolution to be proposed at the Second General Meeting has also been passed.
12.2 Second General Meeting
At the Second General Meeting, a special resolution will be proposed which, if passed, will place the Company into liquidation, appoint the Liquidators and agree the basis of their remuneration, instruct the Company Secretary to hold the books to the Liquidators' order and provide the Liquidators with appropriate powers to carry into effect the amendments to the Articles made at the First General Meeting. The Resolution to be proposed at the Second General Meeting is conditional upon the passing of the Resolutions at the First General Meeting, the
The Resolution will require at least 75 per cent. of the votes cast in respect of it, whether in person or by proxy, to be voted in favour in order for it to be passed.
13 Recommendation
The
Board, which has been advised by
Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Resolutions, as the Directors intend to do in respect of their own beneficial holdings, which total 64,241 Ordinary Shares (representing 0.2 per cent. of the Company's total voting rights) as at the Latest Practicable Date.
The Board cannot, and does not, give any advice or recommendation to Shareholders as to whether, or as to what extent, they should elect for any of the options under the Proposals. The choice between the options available under the Proposals will be a matter for each Shareholder to decide and will be influenced by their individual investment objectives and by their personal, financial and tax circumstances. Accordingly, Shareholders should, before deciding what action to take, read carefully all the information in the Circular and in the Aurora Prospectus.
14 Expected Timetable
2024
Ex dividend date for Pre-Liquidation 31 October
Interim Dividend
Record date for Pre-Liquidation Interim 1 November
Dividend
Latest time and date for receipt of proxy
appointments in respect of the First 2.00 p.m. on 15 November
General Meeting
Latest time and date for receipt of Forms 1.00 p.m. on 19 November
of Election and TTE Instructions
FirstGeneralMeeting 2.00 p.m. on 19 November
Record date for entitlements under the 6.00 p.m. on 19 November
Scheme
Ordinary Shares disabled in CREST (for close of business on 19 November
settlement)
Trading in the Ordinary Shares on the 7.30 a.m. on 20 November
London Stock Exchange suspended
Pre-Liquidation Interim Dividend paid to 22 November
Shareholders
Calculation Date close of business on 22 November
Latest time and date for receipt of proxy
appointments in respect of the Second 9.00 a.m. on 27 November
General Meeting
Reclassification of the Ordinary Shares 8.00 a.m. on 28 November
Suspension of listing of Reclassified 7.30 a.m. on 29 November
Shares
Second General Meeting 9.00 a.m. on 29 November
Effective Date for implementation of the 29 November
Scheme
Announcement of the results of Elections,
the ATS Rollover FAV per Share, the ATS 29 November
Cash Pool FAV per Share and the Aurora
FAV per Share
CREST accounts credited with, and as soon as reasonably practicable on 2
dealings commence in, New Aurora Shares December
Cheques despatched to Shareholders who
elect for the Cash Option and CREST by no later than 13 December
accounts credited with cash
Certificates despatched in respect of New 13 December
Aurora Shares
Cancellation of listing of Reclassified as soon as practicable after the
Shares Effective Date
Note
: All references to time in this announcement are to
A copy of the Circular has been submitted to the National Storage Mechanism and on the Company's website at www.artemisfunds.com/en/gbr/adviser/funds/explorer/artemis-alpha-trustplc/ordinary-shares.
Defined terms used in this announcement shall, unless the context requires otherwise, have the meanings ascribed to them in the Circular. For further information please contact:Artemis Alpha Trust plcVia Singer Capital Markets Duncan Budge (Chair)Singer Capital Markets +44 (0) 20 7496 3079Alaina Wong James Todd
Important Information
The information in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The material contained in this announcement is given as at the date of its publication (unless otherwise marked) and is subject to updating, revision and amendment. In particular, any proposals referred to herein are subject to revision and amendment.
This announcement is not for publication or distribution, directly or indirectly, in or into
Furthermore, any securities that may be issued in connection with the matters referred to herein may not be offered or sold indirectly or indirectly in, into or within
Outside
Moreover, any securities that may be issued in connection with the matters referred to herein have not been, nor will they be, registered under the applicable securities laws of
The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance should not be considered a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "might", "will" or "should" or, in each case, their negative or other variations or similar expressions. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.
Forward-looking statements are subject to risks and uncertainties and, accordingly, the Company's actual future financial results and operational performance may differ materially from the results and performance expressed in, or implied by, the statements. These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. Subject to their respective legal and regulatory obligations, each of the Company and the Investment Manager expressly disclaims any obligations or undertaking to update or revise any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based unless required to do so by law or any appropriate regulatory authority, including FSMA, the
None of the Company or the Investment Manager, or any of their respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to them, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. Each of the Company and the Investment Manager, and their respective affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.
