Information  X 
Enter a valid email address

Framlington GlbFin (FGF)

  Print   

Wednesday 11 September, 2002

Framlington GlbFin

Recommended Proposals

Framlington Global Fin & Inc Fd Ld
11 September 2002

               FRAMLINGTON GLOBAL FINANCIAL & INCOME FUND LIMITED

                   AND FRAMLINGTON GLOBAL FINANCIAL & INCOME

                               SECURITIES LIMITED


Recommended Proposals to enable the Subsidiary to purchase up to 30 per cent of
its issued ZDP Shares and the Company to purchase up to 14.99 per cent of its
issued Ordinary Shares


The Board of Framlington Global Financial & Income Fund Limited (the 'Company')
and Framlington Global Financial & Income Securities Limited (the 'Subsidiary')
announces today proposals to seek further authorities of ZDP Shareholders and
Ordinary Shareholders (together 'Shareholders') for the purchase by the
Subsidiary of up to 30 per cent of its issued ZDP shares and the Company of up
to 14.99 per cent of its issued Ordinary Shares.


Shareholders may recall that resolutions were passed on 23 May 2002 authorising
the Subsidiary to purchase up to 14.99 per cent of the ZDP Shares and the
Company to purchase up to 7.5 per cent of the Ordinary Shares. In addition, both
the Company and the Subsidiary agreed with Bank of Scotland to limit purchases
pursuant to those authorities to £1million in aggregate. As at 1 August 2002
1,499,000 ZDP Shares (being 14.99 per cent) had been purchased by the Subsidiary
using this authority for an aggregate amount of £941,150 and to date no Ordinary
Shares have been purchased.


The Company and the Subsidiary have agreed a further arrangement with Bank of
Scotland to limit purchases under any new authorities sought to £500,000 in
aggregate. Accordingly, it is proposed to seek new authorities to purchase ZDP
Shares and Ordinary Shares which, in the case of Ordinary Shares, will replace
the existing unused authority.


It is proposed that the Board be authorised to purchase in the market and cancel
up to 2,550,300 of the issued ZDP Shares in the Subsidiary and up to 11,992,000
of the issued Ordinary Shares in the Company (equivalent to 30 per cent and
14.99 per cent respectively of the Shares). Purchases of ZDP Shares and Ordinary
Shares will be made at the discretion of the Board in the light of prevailing
market conditions and within guidelines set from time to time by the Board.
Purchases will only be made through the market at prices below the prevailing
net asset value per ZDP Share and per Ordinary Share respectively. The Board
believes that the ability to repurchase shares will continue to be a useful tool
in helping to achieve value for Shareholders. As at the close of business on 2
September 2002 the Net Asset Value per ZDP Share calculated on a mid-price basis
was 109p, and the mid-market price was 16p, a discount of 85 per cent; while the
Net Asset Value per Ordinary Share calculated on a mid-price basis was 1p the
same as the bid price at that date.


Although at the present time the Board intends to prioritise repurchases of the
ZDP Shares, the Board continues to believe that the power to repurchase both ZDP
Shares and Ordinary Shares gives the Board flexibility. Any purchases will be
made with the aim of maximising the benefits for both ZDP Shareholders and
Ordinary Shareholders. If Shares were to be repurchased, the Board believes that
the following benefits should arise for Shareholders:


        •      a repurchase of a ZDP Share at below its prevailing net asset
        value would increase the cover of the remaining ZDP Shares and the net
        asset value if below its current entitlement;


        •      the net asset value of the Ordinary Shares (provided this is
        positive) will rise as a result of a purchase of ZDP Shares at below
        their prevailing net asset value;


        •      the implementation of the Proposals will improve the liquidity of
        both ZDP Shares and Ordinary Shares for Shareholders wishing to sell
        Shares; and


        •      as the Company will only repurchase Ordinary Shares below their
        prevailing net asset value, the effect of any repurchase will be to
        increase the net asset value of the remaining Ordinary Shares.


The Board believes that the Proposals may also have a beneficial effect on the
market value of the ZDP Shares through a reduction in the discount to net asset
value at which the ZDP Shares trade. Shareholders should not assume, however,
that any such, purchases or purchases of Ordinary Shares, will necessarily take
place.


In exercising their powers to repurchase Shares, the Directors will seek to
balance fairly the interests of holders of both ZDP Shares and Ordinary Shares.


The maximum price to be paid on any purchase of the ZDP Shares and Ordinary
Shares will not be greater than 5 per cent above the average of the middle
market quotations for the ZDP Shares and Ordinary Shares for the five business
days immediately preceding the date of purchase. The minimum price to be paid
for the purchase of a ZDP Share and an Ordinary Share will be 0.25p
respectively.


Both the Company and the Subsidiary have sufficient special reserves out of
which to purchase Sshares as a result of the reduction of the share premium
account of each company approved by Shareholders and the Royal Court of Guernsey
in May 2002.


Shares which are purchased by the Subsidiary or the Company will be cancelled.


In its announcement of 22 August 2002 the Company stated that it would be
seeking further authorities from Shareholders to purchase ZDP Shares and
Ordinary Shares. References were made to seeking authority to purchase up to
14.99 per cent of the ZDP Shares. In the event, the Board considers that
authority to purchase up to 30 per cent will provide maximum flexibility.


The Proposals are conditional upon the passing of the extraordinary resolution
of ZDP Shareholders to be proposed at a separate class meeting of ZDP
Shareholders, the passing of an ordinary resolution and a special resolution by
Ordinary Shareholders of the Company to be proposed at an Extraordinary General
Meeting of the Company and the passing of a special resolution of the Subsidiary
to be proposed at an Extraordinary General Meeting of the Subsidiary (which
resolution will be passed by the Company, as holder of the issued ordinary
shares of the Subsidiary).


A circular is being posted to Shareholders today setting out details of the
Proposals and containing the notices of the separate class meeting of ZDP
Shareholders and the Extraordinary General Meetings of the Subsidiary and the
Company each to be held on Friday, 27 September 2002 at 10.00 a.m., 10.05 a.m.
and 10.10 a.m. respectively.




Banking Arrangements


The Company and the Subsidiary have agreed with Bank of Scotland to limit
purchases of ZDP Shares and Ordinary Shares pursuant to the powers to repurchase
Shares sought pursuant to the Proposal to £500,000 in aggregate.


The Company and Subsidiary have further agreed with Bank of Scotland that the
ratio of the aggregate value of those investments in the global financial
portfolio with a market capitalisation greater than US$500 million, fixed
interest securities each having a Standard & Poors rating of not less than BBB
(or the Moody's equivalent), UK government securities and cash or cash deposits
(including any cash which may be deposited with Bank of Scotland for the
purposes of the cash deposit set-off arrangement) to the amount outstanding
under the Bank Loan shall not at any time be less than 1.125:1. Prior to the
date of this announcement the ratio could not at any time be less than 1.10:1.


There has been no increase in the amount of the margin payable on the Bank Loan.


As at 2 September 2002, the total assets of the Company, calculated at mid
market and bid prices, were invested and allocated as follows:

Existing allocation of total assets
                                             Mid-basis                           Bid-basis

                                                   %         £ million               %         £ million

Global Financial Portfolio                      63.0             15.66            67.5             15.63
Income Portfolio                                27.5              6.83            22.3              5.17
Cash                                             9.5              2.37            10.2              2.37

Total assets                                   100.0             24.85           100.0             23.17

                                                                             Mid-basis         Bid-basis
                                                                             £ million         £ million

Borrowings                                                                       15.00             15.00

Zero dividend preference shares (at current accrued entitlement as at             9.24              9.24
2 September 2002) issued out of the Company's subsidiary, Framlington
Global Financial & Income Securities Limited

Assets attributable to Ordinary Shares                                            0.61             -1.07
Total assets                                                                     24.85             23.17


Enquiries:

Paul Branigan                                                                Tel: 020 7374 4100
Framlington Investment Management Limited



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

a d v e r t i s e m e n t