Publication of Prospectus and Circular

RNS Number : 1158H

JPMorgan Global Growth & Income PLC

21 November 2022

 

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, THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF South Africa, In any Member State of the EEA OR IN ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL

This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction in which the same would be unlawful. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

Legal Entity Identifier: 5493007C3I0O5PJKR078

21 November 2022

JPMorgan Global Growth & Income plc

Proposed combination with JPMorgan Elect plc

Publication of Prospectus and Circular

On 27 October 2022, the Board of JPMorgan Global Growth & Income plc (the "Company" or "JGGI") announced that it had agreed heads of terms for a combination of the Company with JPMorgan Elect plc ("JPE") (the "Transaction"), to be implemented through a scheme of reconstruction (the "Scheme") of JPE pursuant to section 110 of the Insolvency Act 1986 (the "Proposals").

The Board announces that the Company has today published a prospectus (the "Prospectus") in relation to the issue of new ordinary shares and C Shares in the capital of Company (the "Issue") pursuant to the Scheme together with a circular to provide the Company's shareholders (the "JGGIShareholders") with further details of the Proposals and to convene a general meeting of the Company (the "General Meeting") to seek approval from JGGI Shareholders for the implementation of the Proposals (the "Circular").

The Prospectus has been approved by the Financial Conduct Authority and the Prospectus and Circular will shortly be available for inspection at the National Storage Mechanism which is located at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website at http://www.jpmglobalgrowthandincome.co.uk .

Details of the Proposals

The Transaction, if approved by the shareholders of each of the Company and JPE, will be implemented through a scheme of reconstruction under section 110 of the Insolvency Act, resulting in the voluntary liquidation of JPE and the rollover of its assets into the Company in exchange for the issue of Scheme Ordinary Shares and Scheme C Shares ("Scheme Shares") to Eligible JPE Shareholders and to the Liquidators of JPE for sale in the market for the benefit of Overseas Excluded JPE Shareholders.

Subject to the passing of the Allotment Resolution, the Articles Amendment Resolution and the JPE Resolutions, and satisfaction of the other conditions of the Scheme (which are outlined below), the Scheme will take effect on 19 December 2022 (the "Effective Date").

Under the Scheme, JPE will be put into liquidation and its assets split into the following pools:

(i)  the pool of cash, undertaking and other assets attributable to the JPE Cash Shares to be established under the Scheme and to be transferred to the Company pursuant to the Transfer Agreement in consideration for the issue of Scheme Ordinary Shares to Eligible JPE Cash Shareholders and to the Liquidators for sale in the market for the benefit of Overseas Excluded JPE Shareholders (the "JPE Cash Rollover Pool");

(ii)  the pool of cash, undertaking and other assets (which will be the same, or predominantly the same, as those in the JPE Growth Portfolio) attributable to the JPE Growth Shares to be established under the Scheme and to be transferred to the Company pursuant to the Transfer Agreement in consideration for the issue of Scheme C Shares to Eligible JPE Growth Shareholders and to the Liquidators for sale in the market for the benefit of Overseas Excluded JPE Shareholders (the "JPE Growth Rollover Pool");

(iii)  the pool of cash, undertaking and other assets attributable to the JPE Income Shares to be established under the Scheme and to be transferred to the Company pursuant to the Transfer Agreement in consideration for the issue of Scheme Ordinary Shares to Eligible JPE Income Shareholders and to the Liquidators for sale in the market for the benefit of Overseas Excluded JPE Shareholders (the "JPE Income Rollover Pool"); and

(iv)  the pool of cash and other assets to be retained by the Liquidators to meet all known and unknown liabilities of JPE and other contingencies (the "Liquidation Pool").

Before the Effective Date, JPE will, to the extent practicable, seek to realign the JPE Portfolios so that, immediately prior to the Scheme taking effect, JPE will hold, in addition to assets destined to become the Liquidation Pool, investments which are suitable to be held by the Company in accordance with the Ordinary Share Investment Policy. Given the less liquid nature of some of the investments in the JPE Growth Portfolio, however, it is expected that a significant proportion of such investments will not be disposed of prior to the Effective Date but will instead simply transfer to the Company under the Transfer Agreement to be managed within the C Share Portfolio in accordance with the C Share Investment Policy.

Under the Scheme:

· each Eligible JPE Cash Shareholder will receive such number of Scheme Ordinary Shares as have a value (at the formula asset value ("FAV") per JGGI Ordinary Share) equal to the proportion of the JPE Cash Rollover Pool attributable to the number of JPE Cash Shares they hold;

· each Eligible JPE Growth Shareholder will receive one Scheme C Share for each JPE Growth Share they hold; and

· each Eligible JPE Income Shareholder will receive such number of Scheme Ordinary Shares as have a value (at the FAV per JGGI Ordinary Share) equal to the proportion of the JPE Income Rollover Pool attributable to the number of JPE Income Shares they hold.

Benefits of the Proposals

The Board believes that the Proposals may have the following benefits for JGGI Shareholders:

• the enlarged Company will have net assets in excess of £1.7 billion (based on valuations as at 10 November 2022), which should improve secondary market liquidity for the Shareholders;

• following implementation of the Scheme, the Company will benefit from its tiered Management Fee structure, as the enlarged asset base will have the effect of reducing the initial weighted average Management Fee;

• Existing JGGI Shareholders and new JGGI Shareholders will benefit from a lower ongoing expense ratio with the Company's fixed costs spread over a larger asset base, in addition to the lower Management Fee;

• the Company's shareholder base will become further diversified, having introduced a number of new long-term JPE investors to the register; and

• the Manager has agreed to make the Manager's Contribution in respect of the Scheme, reducing the effective implementation costs for the Company.

Conditions of the Scheme

The Scheme is conditional on, among other things:

• approval of the Allotment Resolution and the Articles Amendment Resolution by JGGI Shareholders at the General Meeting of the Company and such Resolutions becoming unconditional in all respects;

• the passing of the JPE Resolution to be proposed at the First JPE General Meeting, the JPE Resolution to be proposed at the Second JPE General Meeting and the JPE Resolutions to be proposed at the JPE Class Meetings or any adjournment of those meetings and any conditions of such JPE Resolutions being fulfilled;

• the approval of the FCA and the London Stock Exchange in relation to the Admission of the Scheme Ordinary Shares and Scheme C Shares to listing on the premium listing category of the Official List and to trading on the Main Market of the London Stock Exchange, respectively, occurring before 31 December 2022, or such other date as may be agreed between the Company and the Sponsor;

• tax clearances in respect of the Scheme being received by JPE; and

• the Board and the JPE Board resolving to proceed with the Scheme.

Board structure

It is intended that, following completion of the Scheme, one current director of JPE, being Steve Bates, the chair of JPE, will be appointed as a non-executive Director of the Company. The Board will then consist of seven Directors, comprising six Directors from the current Board and one director from the board of JPE. Steve Bates is independent of the Manager and the Investment Manager.

Costs and Expenses of the Proposals

Costs of the Company

The costs incurred by the Company, prior to the Effective Date in connection with the implementation of the Transaction (which include legal fees, financial advisory fees, other professional advisory fees, printing costs and other applicable expenses, but exclude for the avoidance of doubt, any JGGI Acquisition Costs) will be borne by Existing JGGI Shareholders (the "JGGI Implementation Costs"). The JGGI Implementation Costs are estimated (after taking into account the Manager's Contribution as detailed below) to be equivalent to 0.06 per cent. of the Company's Net Asset Value as at 10 November 2022 .

In addition, the enlarged Company, and therefore all Shareholders following implementation of the Scheme, will bear any stamp duty, SDRT or other transaction tax, or investment costs it incurs in connection with the acquisition of the assets comprised in the Rollover Pools or the deployment of the cash therein upon receipt (the "JGGI Acquisition Costs"). The enlarged JGGI Ordinary Share class will bear the JGGI Acquisition Costs associated with the transfer of the JPE Cash Rollover Pool and the JPE Income Rollover Pool. The Scheme C Share class will bear the JGGI Acquisition Costs associated with the transfer of the JPE Growth Rollover Pool.

After the Scheme becomes effective, the Scheme C Share class will also incur a number of costs in disposing of the investments in the JPE Growth Rollover Pool transferred to the Company pursuant to the Transfer Agreement and thereafter comprising the C Share Portfolio and realigning such investments in a portfolio of investments consistent with the Ordinary Share Investment Policy (the "JGGI C Share Portfolio Realignment Costs"). The JGGI C Share Portfolio Realignment Costs will be attributed to the Scheme C Shares and will therefore be borne indirectly by JPE Growth Shareholders who acquire Scheme C Shares pursuant to the Scheme.

The enlarged Company will also bear the London Stock Exchange fees in respect of the admission of Scheme Shares which are estimated to be £0.14 million in respect of the Scheme Ordinary Shares (to be borne by the enlarged JGGI Ordinary Share class) and £0.27 million in respect of the Scheme C Shares (to be borne by the Scheme C Share class).

Costs of JPE

The costs to be borne by JPE Shareholders, after taking account of the Manager's Contribution and excluding the Liquidators' Retention, are estimated to be equivalent to 0.2 per cent. of JPE's Net Asset Value as at 10 November 2022. Such costs will be allocated amongst the JPE share classes pro rata based on the respective net asset value of each share class, other than JPE Portfolio Realignment Costs which shall be allocated to the share class in respect of which they were incurred.

Manager Contribution

The Manager has agreed to make the Manager's Contribution to the costs of the Transaction by way of a waiver of part of the ongoing management fee payable by the Company. The Manager's Contribution will be an amount equal to 8 months of the Company's prevailing management fee calculated on the value of the net assets transferred to the Company by JPE pursuant to the Scheme. The financial value of the Manager's Contribution is estimated at approximately £0.8 million based on the estimated net asset value of the assets to be transferred to JGGI as at 10 November 2022 (and assuming that no JPE Shares are repurchased pursuant to the JPE Repurchase Facility on 30 November 2022).

35 per cent. of the Manager's Contribution will be allocated to benefit Existing JGGI Shareholders and 65 per cent. will be allocated to benefit JPE Shareholders, with the latter being further allocated to benefit holders of JPE Cash Shares, JPE Growth Shares and JPE Income Shares pro rata to the respective net asset value of each class as at the Calculation Date.

Future dividends

JPE Shareholders receiving New JGGI Ordinary Shares under the Scheme or upon conversion of the Scheme C Shares will not be entitled to receive the second interim dividend in respect of the JGGI Ordinary Shares, declared on 3 November 2022 and to be paid in January 2023. JPE Growth Shareholders who are issued Scheme C Shares may be paid a dividend based on the net income of that share class prior to Conversion should the Directors resolve to pay any such dividend.

Details of the Issue

The number of Scheme Ordinary Shares to be issued to Eligible JPE Cash Shareholders and Eligible JPE Income Shareholders, and to the Liquidators appointed in respect of Overseas Excluded JPE Shareholders, will be based on the JGGI FAV and the relevant FAV per JPE Share. The FAVs will be calculated as at the Calculation Date based on the NAV (cum income, debt at fair value, if applicable) of each of the Company and JPE. The FAV per JGGI Ordinary Share and the FAVs per JPE Share will be calculated to six decimal places (with 0.0000005 rounded down) in accordance with each company's respective normal accounting policies and will be reviewed by an independent accountant.

Eligible JPE Cash Shareholders and Eligible JPE Income Shareholders will be issued Scheme Ordinary Shares based on the ratio between the FAV per JGGI Ordinary Share and the FAV per share of the JPE Cash Shares or JPE Income Shares (as applicable), multiplied by the number of JPE Cash Shares or JPE Income Shares owned by such Eligible JPE Cash Shareholder or Eligible JPE Income Shareholder as at the Record Date.

Eligible JPE Growth Shareholders will be issued one Scheme C Share for each JPE Growth Share held.

The number of Scheme Shares which will be issued is not known at the date of this announcement as it will be calculated in accordance with the methodology stated above at the Calculation Date. The number of Scheme Shares to be issued will be announced through an RIS announcement as soon as practicable following the Calculation Date.

The procedure for Conversion of the Scheme C Shares into New JGGI Ordinary Shares when the C Share Portfolio has been transitioned in line with the Ordinary Share Investment Policy is described in more detail in Part II of the Circular.

Admission and Dealings

Applications will be made by the Company to the FCA for the Scheme Shares to be admitted to the premium listing category of the Official List and to the London Stock Exchange for the Scheme Shares to be admitted to trading on the premium segment of the Main Market. If the Proposals become effective, it is expected that the Scheme Shares will be admitted to the Official List and the first day of dealings in such shares on the Main Market will be 20 December 2022.

The Company has published a prospectus dated 21 November 2022 (the "Prospectus") in relation to the issue of Scheme Shares to JPE Shareholders pursuant to the Scheme, which will shortly be available on the Company's website at http://www.jpmglobalgrowthandincome.co.uk under "Documents", or in hard copy on request to [e-mail] .

General Meeting

The Proposals are subject to JGGI Shareholder approval. The GM Notice convening the General Meeting, to be held at 1:00 p.m. on 16 December 2022 at 60 Victoria Embankment, London, EC4Y 0JP, is set out on pages 35 and 36 of the Circular. The GM Notice includes the full text of the Resolutions.

Expected Timetable

GENERAL MEETING

Posting of Circular and Forms of Proxy for the General Meeting	22 November 2022
Latest time and date for receipt of Forms of Proxy for the General Meeting	1:00 p.m. on 14 December 2022
General Meeting	1:00 p.m. on 16 December 2022
Announcement of results of the General Meeting	16 December 2022

SCHEME

Publication of the Prospectus	21 November 2022
First JPE General Meeting	12:30 p.m. on 9 December 2022
JPE Growth Class Meeting	12:35 p.m. on 9 December 2022
JPE Income Class Meeting	12:40 p.m. on 9 December 2022
JPE Cash Class Meeting	12:45 p.m. on 9 December 2022
Calculation Date for the Scheme	5:00 p.m. on 13 December 2022
Record Date for entitlements under the Scheme	6:00 p.m. on 13 December 2022
Second JPE General Meeting	12:30 p.m. on 19 December 2022
Effective Date for implementation of the Scheme	19 December 2022
Announcement of results of the Scheme and respective FAVs per share	19 December 2022
CREST accounts credited with, and dealings commence in, Scheme Shares	8:00 a.m. on 20 December 2022
Certificates despatched by post in respect of Scheme Shares	By 9 January 2023 (or as soon as practicable thereafter)
Conversion of Scheme C Shares	as soon as practicable after the C Share Portfolio has been realigned with the Ordinary Share Investment Policy
Note: All references to time in this announcement are to UK time. Each of the times and dates in the above expected timetable (other than in relation to the General Meetings or the JPE Class Meetings) may be extended or brought forward. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service.

Capitalised terms used but not defined in this announcement will have the same meaning as set out in the Circular.

For further information:

JPMorgan Global Growth & Income plc Tristan Hillgarth	Contact via Company Secretary
JPMorgan Funds Limited Simon Crinage Simon Elliott Fin Bodman	020 7742 4000
JPMorgan Funds Limited (Company Secretary) Divya Amin	020 7742 4000
Winterflood Investment Trusts Neil Langford Chris Mills	020 3100 0000

 

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