Proposed Bonus Issue of Subsc

RNS Number : 3313Z

Schroder AsiaPacific Fund PLC

18 September 2009

 

Schroder AsiaPacific Fund plc

Proposed Bonus Issue of Subscription Shares

18 September 2009

Introduction

Further to the Company's announcement on 16 June 2009 that it was considering proposals for a bonus issue of  Subscription Shares to Qualifying Shareholders, the Board has today published its Proposals in relation to the Bonus Issue. 

Shareholders will be asked to approve the Special Resolution which is required to implement the Proposals at a General Meeting to be held on 14 October 2009. 

The proposed Special Resolution will be for the creation of up to 33,437,960 Subscription Shares, the approval of the authorities required for the Bonus Issue and the exercise of those shares (including the repurchase of the issued Subscription Shares) and the adoption of the New Articles.

Background

The Company is an investment trust company, incorporated in 1995. The principal investment objective of the Company is to achieve capital growth from investment primarily in equities of companies located in the continent of Asia (excluding the Middle East and Japan), together with the Far Eastern countries bordering the Pacific Ocean (excluding Australasia), with the aim of achieving growth in excess of the MSCI All Countries Far East (Free) excluding Japan Index in Sterling, over the longer term. As at 11 September 2009 the Company had gross assets of £293.44 million and net assets of £287.45 million.

The Proposals

Bonus Issue of Subscription Shares

The Company is proposing to issue Subscription Shares, subject to the passing of the Special Resolution. If the Special Resolution is passed, Qualifying Shareholders will each receive, at no cost, one Subscription Share for every five Ordinary Shares held by them on the Record Date, being 13 October 2009, on the terms and subject to the conditions set out in the Prospectus. Fractions of Subscription Shares will not be allotted or issued and entitlements will be rounded down to the nearest whole number of Subscription Shares. 

Each Subscription Share will confer the right, but not the obligation, to subscribe for one Ordinary Share on each of 31 December, 31 March, 30 June and 30 September between 31 December 2009 and 31 December 2012 (or if such date is not a Business Day, on the next following Business Day), each a Subscription Date. Such Subscription Share Rights will be exercisable on payment of the relevant Subscription Price, which will be the Net Asset Value per Ordinary Share on the Calculation Date, plus a percentage premium to such amount, rounded up to the nearest whole penny as follows:

(a) if exercised on any Subscription Date between and including 31 December 2009 and 30 September 2010, a premium of 1 per cent.;

(b) if exercised on any Subscription Date between and including 31 December 2010 to 30 September 2011, a premium of 10 per cent.; and

(c) if exercised on any Subscription Date between and including 31 December 2011 to 31 December 2012, a premium of 30 per cent.

The NAV for the purpose of calculating the Subscription Prices will be the unaudited value of the Company's assets calculated as at 5.00 p.m. on the Calculation Date in accordance with the Company's accounting policies (including revenue items for the current financial year) less all prior charges and other creditors at their fair value (including the costs of the Bonus Issue). Prior charges include all loans and overdrafts that are to be used for investment purposes.

It is expected that an announcement setting out Subscription Prices will be made on 14 October 2009. 

The percentage premia applying upon exercise and the resulting Subscription Prices reflect the Board's confidence in the Company's medium-term prospects and its hope that holders of Subscription Shares will be able to exercise their Subscription Share Rights and acquire Ordinary Shares on favourable terms in the future.

Notice of exercise of the Subscription Rights may be given in the 28 days preceding each of the Subscription Dates and the Ordinary Shares arising on subscription will be allotted within 14 days of the relevant Subscription Date or such later date as may be necessary to ensure the correct treatment of entitlement to dividend.

Subscription Shares will rank equally with each other and will not carry the right to receive any dividends from the Company. Subscription Shares do not carry the right to attend and vote at any general meeting of the Company. The Ordinary Shares resulting from the exercise of the Subscription Rights will rank pari passu with the Ordinary Shares then in issue (save for any dividends or other distributions declared, made or paid on the Ordinary shares by reference to a record date prior to the allotment of the relevant Ordinary Shares). For the avoidance of doubt, Subscription Shares subscribed for following the Subscription Date on 30 September in each year will not be entitled to receive the dividend declared by the Company for the financial year in which that Subscription Date falls.

Subscription Shares are traded on the main market of the London Stock Exchange and can be bought and sold in a similar way to the Ordinary Shares. Prices for the Subscription Shares will be available on the Company's website www.schroderasiapacificfund.com and in the Financial Times newspaper.

Adoption of new Articles of Association

The Company proposes to adopt the New Articles which will set out the rights pertaining to the Subscription Shares but otherwise will be identical to the Articles of the Company that were adopted at the Annual General Meeting of the Company on 28 January 2009. 

The New Articles will be on display at the registered office of the Company and at the offices of Eversheds LLP, One Wood Street, London EC2V 7WS, until the end of the General Meeting and at the General Meeting itself for the duration of the meeting and for at least 15 minutes prior to the start of the meeting.

Creation of Subscription Shares

The Company will seek Shareholder approval at the General Meeting to subdivide and redesignate 3,343,796 Ordinary Shares of 10p in the authorised but unissued share capital of the Company into 33,437,960 Subscription Shares to satisfy the Bonus Issue (and further Subscription Shares as may require to be issued in accordance with the terms attaching to the Subscription Shares).

Authority to allot and disapplication of pre-emption rights

The Company proposes by means of a special resolution to be proposed at the General Meeting to seek authority under section 551 of the 2006 Act to allot up to a maximum aggregate nominal amount of £334,380 Subscription Shares pursuant to the Bonus Issue and up to a maximum aggregate nominal amount of £3,343,796 of Ordinary Shares for the purposes of satisfying the Bonus Issue. This authority will expire at the conclusion of the Company's Annual General Meeting in 2013. In accordance with sections 570 and 571 of the 2006 Act the Special Resolution will also empower the Directors to allot Ordinary Shares in connection with and for the purpose of the exercise of Subscription Rights pursuant to such authority otherwise than on a pre-emptive basis (this disapplication of statutory pre-emption rights under sections 570 and 571 of the 2006 Act will expire 15 months following the passing of the Special Resolution, but shall extend to the making before such expiry, of an offer or agreement which would or might require any Ordinary Shares to be allotted after such an expiry and the Directors may allot Ordinary Shares in pursuance of such offer or agreement as if authority conferred hereby had not expired).

Authority to repurchase Subscription Shares

Shareholders are being requested to grant the Board authority to allow the Company to repurchase up to 14.99 per cent. of the issued Subscription Share capital in issue following completion of the Bonus Issue (such authority will expire 18 months following the passing of the Special Resolution unless the authority is renewed at the Company's Annual General Meeting in 2010 or any other general meeting prior to that time). The repurchase of Subscription Shares may be required from time to time in order to ensure the orderly maintenance of the Company's share capital. Repurchases of Subscription Shares will be made at the discretion of the Board and will only be made when market conditions are considered by the Board to be appropriate and in accordance with the Listing Rules. Any Subscription Shares repurchased by the Company will be cancelled and will not be held in treasury for resale.

Capitalisation of reserves

If the Proposals are successful, the Company will capitalise up to £334,380 standing to the credit of the Company's share premium account or capital redemption reserve or any reserve (other than the profit and loss account) otherwise available for the purpose in order to pay up the nominal price (1p) of each Subscription Share issued under the Bonus Issue.

Benefits of the Proposals

The Directors believe that the Bonus Issue creating Subscription Shares will have the following benefits:

(a) Qualifying Shareholders (other than certain Overseas Shareholders) will receive securities that they may convert into Ordinary Shares at a predetermined price in order to benefit from any future growth in the Company;

(b) Qualifying Shareholders (other than certain Overseas Shareholders) will receive securities with a monetary value that may be traded in a similar fashion to their existing Ordinary Shares or converted into Ordinary Shares;

(c) on any exercise of the Subscription Share Rights, the capital base of the Company will increase allowing operating costs to be spread across a larger number of Ordinary Shares and hence the total expense ratio to fall;

(d) following the exercise of any Subscription Rights, the Company will have an increased number of Ordinary Shares in issue, which may in due course improve the liquidity in the market for its Ordinary Shares; and

(e) Qualifying Shareholders (other than certain Overseas Shareholders) will receive securities that are qualifying investments for the purposes of the stocks and shares components of a ISA and permitted investments for the purposes of a SIPP.

Admission and dealings

The Subscription Shares will be in registered form and may be issued either in certificated or uncertificated form. No temporary documents of title will be issued. Pending despatch of definitive certificates, transfers of Subscription Shares in certificated form will be certified against the Register. All documents or remittances will be sent through the post at the risk of the Subscription Shareholder. 

Application will be made to the UK Listing Authority for the Subscription Shares to be admitted to the Official List and to the London Stock Exchange for such shares to be admitted to trading on its main market. It is expected that Admission will occur and that dealings will commence on 15 October 2009.

General Meeting

To enable the Bonus Issue to proceed, it is necessary to create the Subscription Shares and to grant the Directors the appropriate power and authority to issue the Subscription Shares and allot Ordinary Shares following exercise of the Subscription Rights. Under the 2006 Act, this requires the approval of Shareholders. Accordingly, a general meeting of the Company is being convened for 14 October 2009 at which a resolution will be proposed as a Special Resolution to deal with the following matters:

(a) to adopt the New Articles which set out all of the rights attaching to the Subscription Shares;

(b) sub-divide and redesignate 3,343,796 Ordinary Shares in the authorised share capital of the Company into 33,437,960 Subscription Shares;

(c) to authorise the Directors pursuant to section 551 of the 2006 Act to allot the Subscription Shares pursuant to the Bonus Issue up to a maximum nominal amount of £334,380 and up to a maximum aggregate nominal amount of £3,343,796 of Ordinary Shares for the purpose of satisfying the Subscription Share Rights (which represents, respectively, 0.8 per cent. and 20 per cent. of the Company's total issued Ordinary Share capital as at the date of this document, is in addition to the Director's existing authority and power to allot Ordinary Shares and will expire at the conclusion of the Company's Annual General Meeting in 2013 consistent with such existing authority and power) and pursuant to sections 570 and 571 of the 2006 Act to disapply statutory pre-emption rights in connection therewith (this disapplication of statutory pre-emption rights will expire 15 months following the passing of the Special Resolution, but shall extend to the making, before such expiry, of an offer or agreement which would or might require any Ordinary Shares to be allotted after such expiry and the Directors may allot Ordinary Shares in pursuance of such offer or agreement as if the authority conferred hereby had not expired);

(d) to capitalise any part of the amount then standing to the credit of any of the share premium account or the capital redemption reserve or any reserve (other than the profit and loss account) of the Company and to apply the same in paying up at par the Subscription Shares for the purpose of the Bonus Issue;

(e) to authorise the capitalisation of any reserve amount of the Company available for distribution in (i) paying up Ordinary Shares to be allotted pursuant to the exercise of Subscription Rights or (ii) in issuing further Subscription Shares to which the holder may be entitled in accordance with the rights attaching to the Subscription Shares;

(f) to approve any consolidation, sub-division or redemption of share capital required to give effect to the rights of the Subscription Shareholders; and 

(g) to grant authority to the Company to purchase through the market up to 14.99 per cent. of the Subscription Shares issued pursuant to the Bonus Issue. 

The Board is recommending that Shareholders vote in favour of the Special Resolution to be proposed at the General Meeting in order for the Bonus Issue to be implemented. 

In order to be passed, the Special Resolution requires at least 75 per cent. of the votes cast to be in favour of it. 

The General Meeting will be held at 31 Gresham Street, London EC2V 7QA. 

Continuation Vote

Under the Articles, the Company is required to propose a continuation vote as an ordinary resolution at every fifth AGM. If a continuation vote is not passed the Directors are required to convene a general meeting within three months of the relevant AGM at which proposals for the winding up or other reconstruction of the Company will be considered.

The last continuation vote took place in January 2006 and the next is due at the AGM to be held in 2011, when all or some of the Subscription Shares may still be outstanding. Subscription Shares do not carry the right to attend and vote at any general meeting of the Company, including any meeting at which a continuation vote resolution is considered. In the event that the continuation vote is not passed and the Company is wound up or restructured, the entitlement of Subscription Shareholders will be calculated in accordance with the rights attaching to the Subscription Shares. Broadly, this means that if the diluted Net Asset Value per Ordinary Share is higher than the applicable Subscription Prices (net of any costs including any associated costs with a winding up, liquidation or a restructuring) Subscription Shareholders will receive the value of the difference in the winding up or reconstruction. 

Overseas Shareholders

The issue of the Subscription Shares to persons who have a registered or mailing address in countries outside of the EEA States may be affected by the law or regulatory requirements of the relevant jurisdiction. Accordingly, unless stated otherwise, any Subscription Shares to be issued under the Bonus Issue are not being issued to Overseas Shareholders, and Subscription Shares due to the Overseas Shareholders under the Bonus Issue will be allotted to a market maker who will sell such Subscription Shares promptly at the best price obtainable. The proceeds of sale will be paid to the Overseas Shareholders entitled to them save that entitlements of less than £5 per Overseas Shareholder will be retained by the Company for its own account. Subscription Shares will be issued to Qualifying Shareholders with registered or mailing addresses in New Zealand and the Isle of Man on the basis described in the Prospectus as if they are not Overseas Shareholders.

Dilution

The allotment of the Subscription Shares will mean that the equivalent of 20 per cent. of the Company's issued ordinary share capital is under option immediately following the Bonus Issue. On each occasion that Subscription Shares Rights are exercised this will dilute the shareholding of any Ordinary Shareholders who do not exercise a corresponding proportion of the Subscription Share Rights attaching to their Subscription Shares or who have sold their Subscription Shares. However, if a Shareholder continues to hold the Subscription Shares issued to him pursuant to the Bonus Issue and exercises his Subscription Share Rights before their expiry, that Shareholder's percentage interest in the ordinary share capital of the Company will not ultimately be reduced below his percentage interest in the ordinary share capital of the Company immediately prior to the Bonus Issue. If the NAV per Ordinary Share at the time of exercise of the Subscription Share Rights exceeds the applicable Subscription Prices, the issue of the Ordinary Shares upon such exercise will also have a dilutive effect on the NAV per Ordinary Share. The extent of such dilution will depend on the number of Subscription Shares which are converted on each occasion and the difference between the applicable Subscription Prices and the NAV per Ordinary Share prevailing at the time the new Ordinary Shares are issued pursuant to the exercise of the Subscription Share Rights.

ISAs/SIPPs

The Subscription Shares will be a qualifying investment for the stocks and shares component of an ISA. 

The Subscription Shares acquired pursuant to the Bonus Issue are expected to be eligible for inclusion in SIPPs and SSASs, although this should be confirmed independently by Subscription Shareholders with their professional tax or financial advisers after taking into account the relevant scheme rules.

Expected timetable of principal events

Latest time and date for receipt of forms of proxy	11.30 a.m. on 12 October 2009
Subscription Prices of Subscription Shares calculated	5.00 p.m. on 13 October 2009
Record Date for entitlements under the Bonus Issue	5.00 p.m. on 13 October 2009
General Meeting	11.30 a.m. on 14 October 2009
Announcement of Subscription Prices	14 October 2009
Date of Admission and commencement of dealing in the Subscription Shares	8.00 a.m. on 15 October 2009
Crediting to CREST stock accounts in respect of the Subscription Shares	15 October 2009
Share certificates despatched in respect of the Subscription Shares	Week commencing 19 October 2009

References to times in this document are to London time unless otherwise stated. The dates set out may be adjusted by Schroder AsiaPacific Fund Plc in which event details of the new dates will be notified to the FSA, to the London Stock Exchange and, where appropriate, to Shareholders.

For further information please contact: 

John Spedding

Schroder Investment Management Limited

020 7658 3206

David Benda / Nathan Brown

Numis Securities

020 7260 1275/1426 

The information in this announcement should be read in conjunction with the full text of the circular and prospectus sent to Shareholders on 18 September 2009. Capitalised terms used in this announcement shall, unless the context otherwise requires, bear the meaning given to them in those documents. 

Copies of the circular and prospectus have been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility which is situated at: 

Financial Services Authority 

25 The North Colonnade 

Canary Wharf 

London E14 5HS 

Tel. [phone] 

 

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