Share Issue and Share Split Proposals

RNS Number : 5945Z

JPMorgan US Smaller Co. IT

07 February 2014

 



LONDON STOCK EXCHANGE ANNOUNCEMENT

JPMORGAN US SMALLER COMPANIES INVESTMENT TRUST PLC

('the Company')

SHARE ISSUE AND SHARE SPLIT PROPOSALS

7 February 2014

Introduction

The Board today announces details of proposals to put in place a placing programme to enable the Company to continue to issue further Shares after its existing Share allotment authorities have been exhausted.  The Share Issue Proposals would permit the Company to issue additional Shares up to 20 per cent of the Company's issued share capital to investors without first having to offer them, pro rata, to Shareholders.

In addition, the Board announces details of its proposed sub-division of the Company's share capital.  The average mid-market price of an Existing Share at the close of business on the five dealing days ending 3 February 2014 was 1,549.80 pence per Share.  The Board believes that the Share Split Proposals would reduce the Company's share price to a level where smaller sized dealings in the Shares would be more efficient, hence increasing the attractiveness of the Shares to potential buyers.

A circular is being posted to Shareholders to provide the details, explain the benefits of the Proposals and set out the reasons why the Directors are recommending that Shareholders vote in favour of the Resolutions at the General Meeting.

The Share Split Proposals

By means of the Share Split Proposals each Existing Share will be sub-divided into 10 New Shares.  As at 3 February 2014, being the last practicable date prior to publication of the circular, there are 5,555,780 Existing Shares in issue.  Following the completion of the Share Split Proposals (if they are approved by Shareholders), the Company's issued share capital will comprise 55,557,800  New Shares, assuming no further Shares are issued before that date.

Assuming that a Shareholder does not buy or sell any Existing Shares prior to the Record Date, each Shareholder will hold the same proportionate interest in the Company following the completion of the Share Split as he or she does before the Share Split.

The Share Split Proposals are conditional on the passing of Resolution 1, an ordinary resolution, at the General Meeting.

Share rights

The rights attaching to the New Shares will be the same as those attaching to the Existing Shares including, without limitation, the same voting, dividend and other rights.

Settlement

Following the completion of the Share Split Proposals, the Existing Shares will be converted into ten times the number of New Shares.  For holdings in uncertificated form, it is expected that Share accounts in CREST will be credited with New Shares on 6 March 2014. For holdings in certificated form, it is expected that share certificates in respect of New Shares will be posted, at the risk of Shareholders, on 14 March 2014 or as soon as practicable thereafter. These will replace existing certificates which should be destroyed.  Pending the receipt of new certificates, transfers of New Shares held in certificated form will be certified against the register of members of the Company.

The New Shares have been allocated new stock identification codes as follows: SEDOL code (BJL5F34) and ISIN code (GB00BJL5F346).

Following completion of the Share Split Proposals the New Shares will be admitted to the premium segment of the Official List of the UK Listing Authority and to trading on the main market for listed securities of the London Stock Exchange.  It is anticipated that this will occur on 6 March 2014.

The Share Issue Proposals

The performance of the US smaller companies market and the Company's portfolio in particular has been strong in recent months.  As set out in the Company's interim report in August 2013, this has resulted in increased demand from investors for Shares. This has allowed the Company to issue new Shares at a premium to the Net Asset Value per Share.  Since 9 July 2013, the Company has issued 392,157 Shares for an aggregate consideration of £6,100,000, at an average premium of 2.42 per cent.

The Shares have continued to trade at a premium to their Net Asset Value.  On 3 February 2014 (being the latest practicable date prior to the publication of the circular) the premium was 3.07 per cent.

The existing Share allotment authorities granted to the Directors at the Company's Annual General Meeting held on 30 April 2013 enabled the Company to issue up to a maximum of 516,364 Shares, representing approximately 10 per cent of the Company's issued share capital as at that date, for cash on a non-pre-emptive basis.  Since that meeting 392,157 Shares have been issued pursuant to these authorities and, as at the date of this document, the Company is only able to issue up to a further 124,205 Shares before exhausting the existing Share allotment authorities.

In the face of the continuing demand for the Company's Shares and having regard to the benefits of enlarging the Company, the Directors have resolved to convene the General Meeting in order to seek Shareholder authority to issue further Shares on a non-pre-emptive basis. In so doing the Directors have taken into account the desirability of limiting the premium to Net Asset Value at which the Company's Shares trade in order to ensure that potential new investors are not deterred and that long-term Shareholders who acquire additional Shares, for example through savings plans, are not disadvantaged by being required to acquire additional Shares at a high premium.

If both Resolutions 2 and 3 are passed, the Directors will be authorised to issue up to a maximum of 1,111,156 Existing Shares (or 11,111,560 New Shares if the Share Split Proposals are implemented) (representing approximately 20 per cent. of the Company's issued share capital as at the date of this document), for cash on a non-pre-emptive basis. The Directors intend to use this authority when they consider that it is in the best interests of Shareholders to do so and to satisfy continuing demand for the Company's Shares. Any Shares will be issued only pursuant to these authorities at prices greater than the prevailing Net Asset Value per Share and therefore will be accretive to the Net Asset Value per Share.  

The Company has issued a significant number of Shares since July 2013 and expects to continue to do so whilst sentiment towards US smaller companies remains strong.  As a result, the Directors believe that taking authority to issue 20 per cent. of the Company's issued share capital on a non-pre-emptive basis is appropriate.  It will allow the Board to continue to allot a significant number of Shares without having to convene regular shareholder meetings to renew the authorities, each of which would incur cost to the Company.  Whilst such authorities are higher than would typically be seen in the investment company sector, the Directors believe that the benefits to the Company justify the size of the authority.  As set out above, any use of this authority will be accretive to the Net Asset Value per Share, although it will mean that Shareholders' voting rights are diluted.

Under the Prospectus Rules, a company listed on the Official List (such as the Company) is only able to issue new shares up to a maximum of 9.99% of its existing share capital in any rolling 12 month period unless it publishes a prospectus.  The Company is approaching this limit.  The Directors therefore intend to publish a new prospectus in order to obtain admission to the Official List of any Shares issued pursuant to the authorities conferred by Resolutions 2 and 3 that exceed this limit. The Directors will continue actively to consider opportunities to grow the Company through a placing of Shares and the new prospectus is expected to provide the flexibility to undertake such a placing.  It is expected that the new prospectus will be published shortly after the General Meeting.

The authorities conferred by Resolutions 2 and 3, if passed, will lapse at the conclusion of the Annual General Meeting to be held in 2015. If the authorities conferred by Resolutions 2 and 3 are exhausted before the prospectus referred to above expires, the Directors may seek  Shareholder authority to issue further Shares on a non-pre-emptive basis at one or more subsequent General Meetings.

Discount management

In addition to seeking to manage the premium at which the Shares trade, the Directors recognise that Shareholders and potential new investors will wish the Company to also manage any discount at which the Shares may trade in the future.  The Board is keen that the return to Shareholders through the Share price should, where possible, match the investment returns that are achieved in the Company's portfolio and so will continue to monitor any discount to the NAV per Share closely and take action where appropriate.

General Meeting

The Share Split Proposals require the approval of Shareholders under the Companies Act 2006 to effect the sub-division of the Existing Shares into New Shares.  The Share Split Proposals are therefore conditional on the passing of Resolution 1 at the General Meeting.

The Share Issue Proposals also require the approval of Shareholders under the Companies Act 2006 to increase the Directors' existing Share allotment authority and also to disapply pre-emption rights, and are therefore conditional on the passing of Resolutions 2 and 3, which will be proposed at the General Meeting of the Company.  The Share Issue Proposals are not conditional on the Share Split Proposals and the passing of Resolution 1.

The General Meeting will be held on 4 March 2014 at 11.00 a.m.

Enquiries

James Glover, J.P. Morgan Asset Management: 020 7742 4000 

Nathan Brown, Numis Securities: 020 7260 1426

Expected Timetable

Latest time and date for receipt of Voting Instruction Forms from Plan Participants	11.00 a.m. on 25 February 2014
Latest time and date for receipt of Forms of Proxy	11.00 a.m. on 28 February 2014
General Meeting	11.00 a.m. on 4 March 2014
Record Date for the Share Split Proposals	Close of business on 5 March 2014
Dealings in the New Shares expected to commence	8.00 a.m. on 6 March 2014
Expected date for crediting CREST accounts with New Shares (where applicable)	8.00 a.m. on 6 March 2014
Expected date by which certificates in respect of New Shares are to be despatched to certificated Shareholders	On or prior to 14 March 2014
Note: All references to time in this announcement are to London time. Each of the times and dates in this announcement are subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a regulatory information service.

Notes

Terms used and not defined in this announcement bear the meaning given to them in the Circular dated 7 February 2014.

A copy of the Circular will shortly be submitted to the National Storage Mechanism and will be available for inspection at www.morningstar.co.uk/uk/NSM.

The Circular is also available on the Company's website at www.jpmussmallercompanies.co.uk where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

 

END

 

 

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