Publication of Prospectus and Circular
BlackRock Frontiers Investment Trust plc
Publication of prospectus and circular
The Company has today published a prospectus and circular in connection with a
placing and offer for subscription of C Shares. The circular will be sent to
Shareholders setting out notices convening (i) a class meeting of the Ordinary
Shareholders to be held on 25 July 2013 at 9.00 a.m.; and (ii) a general
meeting of the Company to be held on 25 July 2013 at 9.10 a.m. (or as soon
thereafter as the Class Meeting shall have concluded or been adjourned).
As announced on 30 April 2013, the Board has been considering methods to meet
demand from new and existing investors for shares in the Company whilst
avoiding any dilution for existing Shareholders. The Prospectus sets out the
background to and reasons for the issue of C Shares to raise up to a maximum of
£70 million, before expenses, by way of a placing and offer for subscription of
C Shares at an issue price of 100p per C Share.
As at 21 June 2013 (the latest practicable date prior to the publication of the
Prospectus), the Company's unaudited Net Asset Value per Ordinary Share (with
income) was £1.0208 and the closing mid-market price of an Ordinary Share was £
1.0750 representing a premium on the rating of the Ordinary Shares of 5.3 per
cent. The Board (as advised by the Manager) believes that there are attractive
opportunities for the Company to deliver value for new and existing
Shareholders through exposure to Frontier Markets and that the premium rating
of its Shares indicates good ongoing demand for the Shares in the secondary
market.
In addition, the Board wishes to give all existing Shareholders and potential
new investors the opportunity to participate in the Issue. Institutional
investors may participate in the Placing and existing investors who cannot
participate in the Placing will be able to apply for C Shares under the Offer
for Subscription. In the event that applications under the Offer for
Subscription are required to be scaled back, existing Shareholders will,
subject to the Company being able to meet the Listing Rules' "shares in public
hands" requirement, be given priority over new investors under the Offer for
Subscription and thereafter no further applications will be accepted and the
Offer for Subscription will be closed.
The Issue, apart from offering existing investors the opportunity to invest,
should broaden the Company's share register by introducing new investors and
improving liquidity for Shareholders. The increased size of the Company should
mean that the fixed costs of operating the Company are spread over a larger
asset base, thereby reducing the Company's ongoing charges ratio.
The issue of further equity in the form of C Shares is designed to overcome the
potential disadvantages for both existing and new investors which would arise
out of a conventional fixed price issue of further Ordinary Shares for cash. In
particular:
* the assets representing the Net Proceeds will be accounted for as a
separate pool of assets until the Conversion Date; by accounting for the
Net Proceeds separately, holders of existing Ordinary Shares will not be
exposed to a portfolio containing substantial amounts of uninvested cash
nor to the costs of investing the Net Proceeds;
* the C Shares will not convert into Ordinary Shares until at least 85 per
cent. of the Net Proceeds of the C Share issue (or such other percentage as
the Directors and Manager shall agree) have been invested in accordance
with the Company's investment policy (or, if earlier, six months after the
date of their issue). When determining whether 85 per cent. of the Net
Proceeds (or such other percentage as the Directors and Manager shall
agree) have been so invested, the Directors will assume that the cash
balances held within the C Share asset pool have been adjusted in respect
of any market exposure obtained through contracts for difference, to
represent the level of cash the C Share asset pool would have held had the
equivalent market exposure been obtained instead via direct equity
investment;
* the Net Asset Value of the existing Ordinary Shares will not be diluted by
the expenses associated with the Issue which will be borne by the
subscribers for C Shares (and in certain circumstances the Manager); and
* the basis upon which the C Shares will convert into Ordinary Shares is such
that the number of Ordinary Shares to which the C Shareholders will become
entitled will reflect the relative Net Asset Value per Share of the assets
attributable to the C Shares and the Ordinary Shares. As a result, the Net
Asset Value per Ordinary Share will not be adversely affected by
Conversion.
Following Conversion, the investments which were attributable to the C Shares
will be merged with the Company's existing portfolio of investments. The new
Ordinary Shares arising on Conversion of the C Shares will rank pari passu with
the Ordinary Shares then in issue.
Participation by BlackRock Investors in the Issue
As at 21 June 2013 (being the latest practical date prior to the publication of
the Prospectus) funds managed or advised by the Manager hold approximately 15.2
per cent. of the existing issued Ordinary Share capital of the Company. Certain
of these funds and further funds managed or advised by BlackRock (the
"BlackRock Investors") intend to participate in the Placing in respect of, in
aggregate, up to 20 million C Shares (depending on the size of the Issue and
the aggregate holdings of the BlackRock Investors on Admission and following
Conversion). The Manager has indicated that the BlackRock Investors may agree,
in certain circumstances, to participate in respect of, in aggregate, up to a
further 10 million C Shares.
The Manager is a related party of the Company for the purposes of the Listing
Rules because, inter alia, it is a 'substantial shareholder' as funds managed
or advised by the Manager hold in excess of 10 per cent. of the issued Ordinary
Share capital of the Company. Accordingly, the participation by the BlackRock
Investors in the Issue constitutes a related party transaction under the
Listing Rules. As a consequence, separate shareholder approval is required for
this related party transaction. The Manager will, given the related party
nature of the proposed participation in the Issue by the BlackRock Investors,
abstain, and has undertaken to take all reasonable steps to ensure that its
associates (as defined in the Listing Rules) will abstain, from voting at the
General Meeting in relation to the resolution for the approval of the proposed
participation in the Issue by the BlackRock Investors.
Furthermore, although not required by the Listing Rules the Manager will also
abstain, as a matter of good practice, and has undertaken to take all
reasonable steps to ensure that its associates (as defined in the Listing
Rules) will abstain, from voting on the resolutions to be proposed at the
General Meeting which are required for implementation of the Issue (being
resolutions 1, 2 and 4).
Expected timetable
Placing and Offer for Subscription opens 25 June 2013
Latest time and date for receipt of Forms of 9.00 a.m. on 12 July 2013
Direction for the Class Meeting
Latest time and date for receipt of Forms of 9.10 a.m. on 12 July 2013
Direction for the General Meeting
Latest time and date for receipt of Application 1.00 p.m. on 19 July 2013
Forms under the Offer for Subscription
Latest time and date for commitments under the 5.00 p.m. on 19 July 2013
Placing
Latest time and date for receipt of Forms of Proxy 9.00 a.m. on 23 July 2013
for the Class Meeting
Latest time and date for receipt of Forms of Proxy 9.10 a.m. on 23 July 2013
for the General Meeting
Class Meeting 9.00 a.m. on 25 July 2013
General Meeting 9.10 a.m. on 25 July 2013*
Announcement of the results of the Issue 25 July 2013
Admission of the C Shares to the Official List of 31 July 2013
the UKLA and dealings in the C Shares commence on
the main market for listed securities of the London
Stock Exchange
Crediting of CREST stock accounts in respect of the 31 July 2013
C Shares
Share certificates despatched in respect of the C week commencing 5 August
Shares 2013 (or as soon as
possible thereafter)
* or as soon thereafter as the Class Meeting shall have concluded or been
adjourned.
Capitalised terms in this announcement have the meanings attributed to them in
the Prospectus.
Copies of the Prospectus and the Circular have been submitted to the National
Storage Mechanism and will shortly be available for inspection at
www.hemscott.com/nsm.do and on the Company's website at www.blackrock.co.uk/
brfi.
25 June 2013
Enquiries:
Simon White
BlackRock Investment Management (UK) Limited
020 7743 5284
Jane Lewis/Alex Blake
Sponsor and Joint Placing Agent
Winterflood Investment Trusts
020 3100 0295
Andrew Davies/Haris Papanikolaou
Joint Placing Agent
LCF Edmond de Rothschild Securities Limited,
020 7845 5960