Publication of Shareholder Circular

RNS Number : 7769C

British Assets Trust PLC

21 January 2015

 



21 January 2015

Publication of Shareholder Circular

On 30 October 2014 your Board announced important proposals regarding the future of your Company.  Today, the Company has published a shareholder circular containing further details on the Proposals and notice of General Meeting to be held on 26 February 2015.

Our proposals seek to enable the Company to capitalise on the new opportunities that we expect to be created by the rapidly changing environment for the UK savings and pension market, and to recognise what we believe the Shareholders of British Assets Trust value most. The Board has therefore decided to do the following:

• first, to seek Shareholder approval to change the Company's existing investment objective and policy to a new multi-asset investment objective and policy;

• secondly, to appoint BlackRock Fund Managers Limited as the Company's new investment manager; and

• thirdly, to seek Shareholder approval to implement a tender offer.

Your Board believes that these Proposals are attractive for all Shareholders, including investors through the Savings Plans, for the following reasons;

• The new investment policy will continue to offer an attractive level of income. We expect to continue paying dividends at least at the current level of 6.44 pence per annum (which equates to a dividend yield of 5.1 per cent. per annum based on a share price of 127.5 pence on 19 January 2015) and to grow the dividend in line with inflation.

• The focus of the Company will be on delivering greater capital stability over the medium term (5 to 7 years) than an equity only strategy, with an objective of achieving a total portfolio return of UK Consumer Price Index plus 4 per cent. per annum (before ongoing charges) over a 5 to 7 year cycle.

• The Board has selected the highly-rated BlackRock multi-asset team which currently manages over £15 billion of assets and is very well positioned to manage the Company's portfolio and deliver the returns we intend for Shareholders. BlackRock is the world's largest fund manager and has a strong performance track record, brand and reputation.

• As part of our strategy to improve liquidity in the Shares, the Board intends to offer any

Shareholder who wishes to sell their Shares at a price close to Net Asset Value an opportunity to do so by implementing a tender offer prior to 31 August 2015 for up to 20 per cent. of Shares in issue at that time (excluding any Shares held in treasury) at a two per cent. discount to cum income Net Asset Value per Share (debt at market value) less costs and expenses. This tender offer is subject to Shareholder approval.

• The Board believes that the new investment policy, combined with BlackRock's investment management and marketing expertise, should result in higher demand for the Shares which will, in turn, lead to a re-rating of the Shares by narrowing the current discount to Net Asset Value towards zero. Your Board believes that it is in the best interests of all of our Shareholders that the Shares trade at a price as close as possible to their underlying cum income Net Asset Value per Share (including debt at market value) ("NAV"). In normal market conditions and following the Tender Offer, the Board intends to purchase and issue/re-issue Shares in the market to ensure that the Shares trade as close as possible to their underlying NAV on a consistent basis. To support this strategy, the Company is seeking to renew the Shareholder authority to purchase and issue/re-issue Shares at the forthcoming Annual General Meeting.

• There will be no change in the management fee paid and therefore BlackRock will be paid an annual management fee of 0.4 per cent. on the value of the Company's total assets less current liabilities (excluding loans).

The new investment policy will be to follow a flexible multi-asset approach and it is the current intention that approximately 40 per cent. of the portfolio will be invested in UK equity income stocks with the balance of the portfolio being invested on a tactical asset allocation basis, including global equities, debt securities, derivatives, exchange traded funds and unlisted alternative assets.

Assuming the Proposals receive the necessary Shareholder support, the Company will be re-named BlackRock Income Strategies Trust plc to reflect our commitment to income generation for Shareholders as part of targeting a total portfolio return of UK Consumer Price Index plus 4 per cent. per annum (before ongoing charges) over a 5 to 7 year cycle.

If the Proposals do not receive the necessary Shareholder support, it remains the Board's intention to move the management of the Company's assets to BlackRock where the Company will continue to be invested in accordance with its current investment policy but managed by BlackRock while the Board consult with Shareholders regarding the future of the Company.

The Board is encouraged by the initial feedback and support it has received from Shareholders on our proposed changes. AXA Investment Managers UK Limited, as agent on behalf of its underlying clients, has discretionary management control over approximately 15.3 per cent. of the Ordinary Shares and has given the Company a non-legally binding letter of intent to vote in favour of any shareholder resolutions in connection with the Proposals, should it remain a shareholder at the time of the General Meeting.

The Board considers that the Proposals and the Resolutions are in the best interests of the Shareholders as a whole. Accordingly, the Board unanimously recommends Shareholders to vote in favour of the Resolutions being proposed at the General Meeting. The Directors, who in aggregate have an interest in 188,170 Ordinary Shares (being 0.07 per cent. of the Company's issued share capital), intend to vote their entire beneficial holdings in favour of the Resolutions.

Copies of the Circular have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/nsm or on the Company's websites www.britishassetstrust.co.uk or www.british-assets.co.uk.

Expected Timetable

If you are a F&C Plan Participant you need to return your

Voting Direction Form(s) by                                                       no later than 11 a.m. on 18 February

If you are a Shareholder you need to return your

Form(s) of Proxy by                                                                        no later than 11.00 a.m. on 24 February

Annual General Meeting                                                              10.30 a.m. on 26 February

General Meeting                                                                             11.00 a.m. on 26 February*

Appointment of BlackRock Fund Managers Limited         on or around 27 February

Deadline by which to take action in relation

to the F&C Savings Plans                                                              30 April

*or such later time as the Annual General Meeting has concluded)

All references in this announcement are to London times.

Unless otherwise stated in the announcement, capitalised terms are as defined in the Circular.

This announcement does not contain all the information which is contained in the Circular and Shareholders should read the Circular in their entirety.

For further information, please contact:

The Company

Lynn Ruddick                     [e-mail]

Cenkos Securities

Sapna Shah - 020 7397 1922

Will Rogers - 020 7 397 1920

Cenkos Securities plc, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and for no-one else in connection with the contents of this announcement, and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Cenkos Securities plc nor for providing advice in connection with the contents of this announcement or any other matter referred to herein. Cenkos Securities plc is not responsible for the contents of this announcement. This does not exclude or limit any responsibilities which Cenkos Securities plc may have under the Financial Services and Markets Act 2000 or the regulatory regime established thereunder.

 

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