New Manager and Merger Talks

RNS Number : 6498M

Picton Property Income Limited

19 August 2011

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD BE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION (EACH A "RESTRICTED JURISDICTION")

This is an announcement falling under Rule 2.4 of the City Code on Takeovers and Mergers (the "Code").  It does not represent a firm intention to make an offer under Rule 2.5 of the Code.  Accordingly, there can be no certainty that any offer will ultimately be made. 

19 August 2011

Statement regarding a possible offer

by

Picton Property Income Limited

for

Invista Foundation Property Trust Limited

The Board of Picton Property Income Ltd ("Picton") notes the announcement by Invista Foundation Property Trust Limited ("Invista" or the "Company") concerning the ongoing merger talks between Picton and Invista (the "Possible Offer") and the appointment of Schroder Property Investment Management Limited as manager of Invista's assets pending the conclusion of discussions with Picton.

Background

Following Invista's announcement on 22 March 2011 that it had given notice to terminate the investment management agreement with Invista Real Estate Investment Management Limited, Picton approached the Invista Board proposing a merger of the two companies.  Following ongoing discussions between Picton and Invista, Picton made a formal non-binding indicative proposal (the "Indicative Proposal") to the Invista Board on 29 July 2011.  Discussions are continuing between the parties and good progress is being made.

Picton's Indicative Proposal

The Indicative Proposal envisages that the Possible Offer would be structured as a recommended share for share merger based on the respective Formula Asset Values ("FAV") (note 1) of Invista and Picton.  Picton reserves the right to vary the form and/or mix of consideration and/or introduce other forms of consideration.

Benefits of the Possible Offer

Picton believes that the Possible Offer would have the following material benefits for Invista and Picton shareholders, particularly given the overlap of shareholders with holdings in both companies:

·      The enlarged group is expected to provide:

o  a significant enhancement in the liquidity of the enlarged group's shares over that of either Invista or Picton currently;

o  greater economies of scale resulting in a lower total expense ratio ("TER") (note 3) given a reduction in central corporate and investment management costs; and

o  increased attraction to a wider investor base as a result of improved index inclusion prospects.

·      The internalised management structure of the enlarged group will:

o  allow shareholders to benefit from a more efficient cost structure than in an externally managed vehicle where management fees increase in line with net assets; and

o  allow for the full alignment of the interests of both the executive management team and shareholders.

·      The cost benefits identified will result in materially enhanced dividend cover for Invista shareholders.

Discussion with Shareholders

Picton and its advisers have discussed the Possible Offer with a small number of the larger shareholders of Invista.  It is these discussions that have encouraged Picton to continue its dialogue with Invista which led to Picton making the Indicative Proposal.  Picton now expects to engage with other Invista shareholders.

About Picton

Picton, a closed-ended investment company listed on the London and Channel Islands Stock Exchanges, was established in 2005 to invest both directly and indirectly in commercial property across the United Kingdom. It has approximately 850 investors.

With a property portfolio of £426 million and Net Asset Value of £209 million as at 30 June 2011, Picton's objective is to provide shareholders with an attractive level of income, together with the potential for capital growth by investing in the principal commercial property sectors.

On the 1 January 2012 Picton will become a self managed property investment company with Picton Capital Limited, a wholly owned FSA approved subsidiary of Picton Property Income Limited, taking over investment management from ING Real Estate Investment Management (UK) Limited.

Last year Picton successfully acquired and integrated Rugby Estates Investment Trust plc, which comprised some 33 assets, the first such takeover of a UK REIT by an offshore company since the introduction of REIT legislation.

Picton Property Income Limited changed its name from ING UK Real Estate Income Trust Limited on 1 June 2011.

Conditions and Reservations

Any offer which might be made will be subject to a number of conditions including, but not limited to, the consent of Picton shareholders in general meeting and the receipt, in terms satisfactory to Picton, of all consents or confirmations considered by Picton to be necessary or desirable in connection with the Possible Offer and/or its implementation under or in relation to the notes issued pursuant to Invista's securitised loan facility (the "Notes") including without limitation (i) the confirmation that the rating agencies which provide ratings for the Notes will not downgrade their ratings of the Notes, and (ii) the receipt by Picton of the consent of the issuer of the Notes to the change of Invista's investment manager and investment management committees. Picton reserves the right to waive, in whole or in part, any of the conditions to which an offer may be made at any time in its sole discretion.

Pursuant to Rule 2.4(c) of the Code, Picton reserves the right to amend or vary its Possible Offer in the event that (i) the Board of Invista agrees; (ii) a third party announces a possible or firm intention to make an offer for Invista; (iii) Invista announces, declares or pays a dividend or any other distribution or other distribution or other payments to its shareholders, in which case there would be an equivalent reduction in the value of Picton's offer; or (iv) Invista undertakes any material property disposals or acquisitions without the prior consent of Picton.  Further, Picton reserves the right to vary the form and/or mix of consideration and/or introduce other forms of consideration.

Picton reserves the right to effect the Possible Offer by way of an offer or scheme of arrangement.

Enquiries:

LCF Edmond de Rothschild Securities Limited	020 7845 5900 / 5950
William Marle John Armstrong-Denby
Oriel Securities Limited	020 7710 7600
Mark Young
Neil Winward
Neil Langford
Tavistock Communications	020 7920 3150
Simon Hudson
James Verstringhe

Sources and Bases of Information

NOTES

1.   FAV based on the adjusted Net Asset Values of both Invista and Picton. FAV per share of each company is expected to be calculated with reference to the balance sheets of both companies.  It is expected that the aggregate transaction costs for the Possible Offer will be shared pro rata to each company's share of the ownership of the enlarged group. 

2.   The market capitalisation of Picton is £168.4 million (based on the Picton share price of 48.75p and 345,336,118 shares in issue as of 18 August 2011) and the Invista market capitalisation is £128.1 million (based on the Invista share price of 36.00p and 355,921,281 shares in issue as at the same date).

3.   TER calculated as the aggregate of property investment management fees and other operating expenses (excluding property operating costs) as a percentage of the value of total investment properties.

4.   This statement should not be interpreted to mean that overall dividend cover for the enlarged Picton Group would be higher, lower or the same as for the preceding financial period.

Disclaimer

LCF Edmond de Rothschild Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Picton as joint financial adviser in relation to the Possible Offer and is not acting for or advising any other person and accordingly will not be responsible to any person other than Picton for providing the protections afforded to the customers of LCF Edmond de Rothschild Securities Limited or for providing advice in relation to the contents of this announcement and the Possible Offer. Neither LCF Edmond de Rothschild Securities Limited nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a customer of LCF Edmond de Rothschild Securities Limited in connection with this announcement, any statement contained herein or otherwise.

Oriel Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Picton as joint financial adviser and broker in relation to the Possible Offer and is not acting for or advising any other person and accordingly will not be responsible to any person other than Picton for providing the protections afforded to the customers of Oriel Securities Limited or for providing advice in relation to the contents of this announcement and the Possible Offer. Neither Oriel Securities Limited nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a customer of Oriel Securities Limited in connection with this announcement, any statement contained herein or otherwise.

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities. This announcement does not constitute a prospectus or a prospectus equivalent document. Any offer or court approved scheme of arrangement will be made solely through certain offer documentation or scheme documentation, which will contain the full terms and conditions of the offer or scheme, including details of how to accept in the case of an offer or vote in the case of a court approved scheme of arrangement.

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom should inform themselves about, and observe, any applicable requirements. This announcement has been prepared in accordance with English law, the City Code, the Listing Rules and the Disclosure and Transparency Rules and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England.

The distribution of this announcement in jurisdictions other than the United Kingdom and the availability of any offer to Invista shareholders who are not resident in the United Kingdom may be affected by the laws of relevant jurisdictions. Therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom or Invista shareholders who are not resident in the United Kingdom will need to inform themselves about, and observe, any applicable requirements.

Picton shares have not been and are not currently intended to be registered under the securities laws or regulations of the United States, Australia, Canada or Japan, and may not be offered or sold in the United States, Australia, Canada or Japan or any other jurisdiction where it would be unlawful to do so absent registration or an applicable exemption from the securities laws or regulations of such jurisdictions.

Unless otherwise determined by Picton or required by the Code and permitted by applicable law and regulation, copies of this announcement are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in, into or from the United States, Australia, Canada or Japan or any other jurisdiction where it would be unlawful to do so and persons receiving this announcement must not mail or otherwise forward, distribute or send it in, into or from such jurisdictions.  Any person who would, or otherwise intends to, or who may have a contractual or legal obligation to, forward this announcement and/or any other related document to any jurisdiction outside the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction.

No Profit Forecast

No statement in this announcement is intended as a profit forecast or profit estimate and no statement in this announcement should be interpreted to mean that the future earnings per share of the enlarged group, Picton and/or Invista for current or future financial years will necessarily match or exceed the historical or published earnings per share of Picton or Invista.

Forward-Looking Statements

This announcement may contain "forward looking statements" concerning Picton and Invista. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward looking statements. The forward looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested by them. Many of these risks and uncertainties relate to factors that are beyond the ability of Picton to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement.

Picton undertakes no obligation to update or revise publicly any of the forward-looking statements set out herein, whether as a result of new information, future events or otherwise, except to the extent legally required.

Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of any member of Picton, Invista or the enlarged group following completion of a formal offer unless otherwise stated.

Publication on websites

A copy of this announcement is and will be available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Picton's website at www.pictonproperty.co.uk.

The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Disclosure requirements of the Takeover Code (the "Code")

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on [phone].

Rule 2.10 Disclosures

In accordance with Rule 2.10 of the Code, Picton confirms that on 18 August 2011, being the latest practicable Business Day prior to the commencement of the Offer Period, it had 345,336,118 ordinary shares in issue all with equal voting rights. The total number of voting rights in Picton is therefore 345,336,118. The International Securities Identification Number for the Picton ordinary shares is GB00B0LCW208.

 

END

 

 

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