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Artemis Alpha Tst (ATS)

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Monday 27 September, 2010

Artemis Alpha Tst

Proposed merger with Gartmore

RNS Number : 3191T
Artemis Alpha Trust PLC
27 September 2010

Artemis Alpha Trust plc (the "Company" or "ATS")

Proposed merger with Gartmore Growth Opportunities plc


The Board is pleased to announce that it has reached agreement in principle with Gartmore Growth Opportunities plc ("GGO") in respect of a merger of the assets of the two companies to be effected through a scheme of reconstruction and winding up of GGO (the "Proposals").


Overview of the Proposals


Under the Proposals, which are to be recommended by the Boards of both companies, shareholders of GGO ("GGO Shareholders") will be offered a choice between:-


·      continuing their investment in GGO in a tax-efficient manner by rolling their investment into ATS, receiving such number of ordinary shares in ATS with a formula asset value on the approval of the Proposals ("FAV") equal to 98.5% of the FAV of their GGO shares; and


·      an immediate cash exit at 95% of FAV, for up to 30% of GGO's issued share capital as at the effective date of the Proposals (the "Cash Option"). Elections by GGO Shareholders to receive in excess of 30% of their holding for cash will be accepted to the extent that other shareholders have made elections for cash for less than 30% of their holdings.  The record date for GGO Shareholders to be entitled to elect for the Cash Option is the close of business on 24 September 2010.


The Cash Option will be funded through the voluntary early exercise of all of the Company's manager warrants to subscribe for ordinary shares in the Company held by Artemis's fund managers (the "ATS Manager Warrants") raising approximately £8 million, and also from existing cash resources, augmented as required by a short term debt facility.  Following the exercise of all the ATS Manager Warrants, Artemis fund managers will have an aggregate holding in the Company of £22.0 million based on the closing price of the Company's ordinary shares on 24 September 2010.


Under the Proposals, new ordinary shares in ATS issued to GGO Shareholders electing to rollover their investment into ATS will rank pari passu with the existing ATS ordinary shares save for the interim dividend in respect of the six months to 31 October 2010.


The Company will continue to be managed by John Dodd and Adrian Paterson pursuing the Company's existing investment objective and applying the Company's existing investment policy and approach.  In view of the early exercise of the ATS Manager Warrants to facilitate the cash exit for GGO Shareholders, it is envisaged that ATS will introduce a performance-related fee element to its management arrangements which continues to align the interests of Artemis with those of the Company's shareholders.


Bonus issue of subscription shares by ATS


All shareholders, including those GGO Shareholders electing to rollover into ATS, will receive one subscription share in ATS for every seven ATS ordinary shares held or issued pursuant to the Proposals. It is currently envisaged that each ATS subscription share will confer the right (but not the obligation) to subscribe for one ATS ordinary share upon exercise of such ATS subscription share and on payment of a conversion price which is expected to be equal to a 10% premium to the NAV of an ATS ordinary share immediately following implementation of the Proposals. It is currently intended that the ATS subscription shares will have a seven year life and will be traded on the London Stock Exchange.


Key benefits of the Proposals


The Proposals have a number of benefits for ATS shareholders, the key ones of which are

·      the acquisition of a high quality investment portfolio which is complimentary to ATS's existing portfolio;

·      introducing new investors into the Company and improving liquidity in the Company's shares;

·      reducing the Company's fixed operating costs as a percentage of shareholder funds; and

·      significant added value through a bonus issue of subscription shares.


Costs of the proposals


The Company will pay for its own costs of implementing the Proposals.  In addition, Artemis Investment Management has agreed to make a contribution towards the Company's costs.  GGO will meet its own costs associated with the Proposals (including fees payable on the early termination of the management agreement with Gartmore Investment Management Limited). The Proposals have been structured in a way to ensure that there will be no dilution to the Company's net asset value as a result of the Proposals.


Expected Timetable

Both the Company and GGO expect to post documents providing full details of the Proposals to their respective shareholders during November 2010 so as to enable shareholders' approval to be obtained in December 2010, with a view to the Proposals being completed shortly thereafter, subject to the receipt of all necessary regulatory approvals and tax clearances. 


Contact details


Simon Miller                                         Tel: 07768 794 182
Artemis Alpha Trust plc

Mark Tyndall                                         Tel: 0131 718 0401
Artemis Investment Management

Gordon Neilly                                        Tel: 020 7050 6778
Canaccord Genuity Limited

Ian Dighe                                              Tel:  07785 703 261
Gartmore Growth Opportunities plc

Will Rogers                                           Tel: 020 7397 1920
Cenkos Securities


This information is provided by RNS
The company news service from the London Stock Exchange

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