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Miton Global Opportunities Plc (MIGO)

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Wednesday 11 August, 2021

Miton Global Opportunities Plc

Publication of Circular and Notice of GM

Miton Global Opportunities plc

Publication of Circular and notice of General Meeting in relation to a realisation opportunity for Shareholders (the “2021 Realisation Opportunity”)

11 August 2021

Miton Global Opportunities plc (the “Company”) announces that it has convened a General Meeting to be held on 10 September 2021 in relation to the 2021 Realisation Opportunity.

The Circular will be available online at www.migoplc.co.uk and will shortly be posted to Shareholders.

Introduction and background

The Board is pleased to note that the Company’s recent share price total return and NAV total return have been strong in comparison to global stock market indices and the Ordinary Shares are trading at a marginal discount to NAV. The one-year increase in share price total return and NAV total return to the Latest Practicable Date were 56.9 per cent. and 48.7 per cent. respectively, whilst the MSCI AC World Index was up 24.7 per cent. over the same period. The five-year increases in share price total return and NAV total return to the Latest Practicable Date were 99.7 per cent. and 84.1 per cent. respectively, which is in line with global stock market indices. The market capitalisation as of the Latest Practicable Date was £97.4 million.

Furthermore, the Investment Manager believes that the Company’s investment case remains highly compelling. The closed-ended sector continues to evolve and increasingly offers access to a wide range of alternative asset classes. Sectors such as shipping, digital infrastructure and residential property are difficult to access via an open-ended fund. There are now more pricing inefficiencies available to exploit compared to when investment trusts were mainly equity offerings.

2021 Realisation Opportunity

Against this positive backdrop, the Board is again giving Shareholders the right to realise all or part of their holdings of Ordinary Shares for cash, at a price per Ordinary Share representing 2 per cent. discount to the Net Asset Value per Ordinary Share as at the close of business on 22 September 2021.

The three yearly Realisation Opportunity was introduced in 2015 to protect Shareholders against the risk of an entrenched share price discount to NAV, and it has proven effective as evidenced by the Ordinary Shares trading at a marginal discount to NAV.

The Directors and the Investment Manager do not intend to realise their Ordinary Shares and highlight that, based on the current share price and NAV, Shareholders wishing to realise their shareholding would be able to sell on the stock market at a higher price than is expected to be offered under the 2021 Realisation Opportunity.

Further details of the 2021 Realisation Opportunity are set out below and in the Circular.

General Meeting

The Board is convening a General Meeting, which will take place on 10 September 2021, at which two Resolutions will be proposed. The Circular also provides details of these Resolutions, explains how these Resolutions are intended to help enhance the delivery of the 2021 Realisation Opportunity and explains the actions requested to be taken in relation to these Resolutions.

Expected Timetable

2021
Latest time and date for receipt of proxy appointment from Shareholders for the General Meeting (whether via the return by post/hand of the Form of Proxy, via online submission or via CREST) 10.00 a.m. on 8 September
General Meeting 10.00 a.m. on 10 September
Announcement of results of General Meeting 10 September
Commencement of Election Period 15 September
Realisation NAV Calculation Date the close of business on 22 September
Expiry of Election Period and latest time and date for receipt of Election (whether via the return by post/hand of the Form of Election or via TTE Instruction in CREST from Shareholders) 1.00 p.m. on 23 September
Record Date (for entitlement to participate in the 2021 Realisation Opportunity)  the close of business on 23 September
Announcement of results of Elections and announcement of the Realisation Price 24 September
Cheque payments expected to be despatched and CREST payments expected to be made in respect of Elected Shares which have been placed or purchased and bought back on or around 29 September
Annual General Meeting 6 October
If Realisation Shares are required to be created:
Reorganisation Date 13 October
Announcement of 2021 Realisation Opportunity overall outcome 13 October
Balance share certificates despatched by post in the week commencing 18 October

Enquiries

Premier Miton Group plc:
Claire Long
+44 (0) 14 8340 0463
Numis Securities Limited:
Nathan Brown/ Matt Goss
+44 (0) 20 7260 1000
Frostrow Capital LLP:
Kerstin Rucht
+44 (0) 20 3709 8732
 

Notes

A copy of the Notice of General Meeting will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism

Capitalised terms used but not defined in this announcement will have the same meaning as set out in the circular to shareholders dated 11 August 2021 (the “Circular”).

APPENDIX

Background to the 2021 Realisation Opportunity

The Articles give Shareholders the right to elect to realise all or part of their holdings of Ordinary Shares at three yearly intervals to protect Shareholders against the risk of an entrenched share price discount to NAV. The last realisation opportunity occurred in 2018 and the next realisation opportunity is due to occur this year.

The purpose of the Circular is to provide Shareholders with details of the 2021 Realisation Opportunity and to remind Shareholders of their right to make an Election, should they wish, to participate in the 2021 Realisation Opportunity.

All of the Directors (who collectively hold 296,348 Ordinary Shares in aggregate, representing approximately 1.1 per cent. of the Company's issued share capital and an aggregate net asset value of £1.1 million based on the Net Asset Value per Ordinary Share as at the Latest Practicable Date) and the employees of the Investment Manager (who collectively hold 171,752 Ordinary Shares in aggregate, representing approximately 0.64 per cent. of the Company's issued share capital and an aggregate net asset value of £0.6 million based on the Net Asset Value per Ordinary Share as at the Latest Practicable Date) intend to continue their investment in the Company and do not intend to participate in the 2021 Realisation Opportunity in respect of all or any part of their respective shareholdings.  

Shareholders should read the Circular in full prior to making any decision as to (i) whether or not to participate in the 2021 Realisation Opportunity and (ii) how to vote in respect of the Resolutions.

Mechanics of the 2021 Realisation Opportunity

Shareholders who wish to retain their current investment in the Company should not make an Election.

Shareholders whose names appear on the Register on the Record Date that wish to realise all or part of their holdings of Ordinary Shares should make an Election during the Election Period in respect of those Ordinary Shares which they wish to realise in accordance with the instructions set out in detail in Part 2 of the Circular. 

The Election Period commences on 15 September 2021 and ends at 1.00 p.m. on 23 September 2021.

In respect of Elections validly submitted, the Company shall satisfy them in the following order (steps i., ii. and iii. below): 

Step i. Initially, through one or more placings of Elected Shares in the market at the Realisation Price. The Company has engaged Numis to use its reasonable endeavours to place as many of the Elected Shares as it is able to.
Step ii. To the extent that any Elected Shares cannot be placed in the market, Numis will, acting as principal, purchase unplaced Elected Shares, to be bought back by the Company, at the Realisation Price, subject to the Company having sufficient authority to do so.
In the event that there are unplaced Elected Shares that are purchased by Numis which the Company buys back, the Company will finance the consideration for such shares from available cash or cash equivalent resources of the Company, or through utilising the Company’s existing bank facility. Cash may also be generated through realisation by the Company of its portfolio of investments. Any unplaced Elected Shares bought back as described above will be cancelled.

Realisation Price : The Realisation Price for each Elected Share satisfied through steps i. and ii. will represent a 2 per cent. discount to the Net Asset Value per Ordinary Share as at the Realisation NAV Calculation Date. This discount has been established at a level intended to at least offset the variable costs of the 2021 Realisation Opportunity (including broker commissions) and for these to be borne by the Realisation Shares. The calculation of the Realisation Price by the Directors will be conclusive and binding on all Shareholders. The Realisation Price will be announced through a Regulatory Information Service on 24 September 2021.

Where Elections are met by the mechanisms described in steps i. and/or ii. above, electing Shareholders are expected to receive cheque/CREST payment on or around 29 September 2021 in respect of the Elected Shares at the Realisation Price.  Please refer to paragraph 3 headed "Settlement" in Part 2 of the Circular for further details.

In accordance with the Articles, in the event that some but not all Elected Shares are placed or purchased by a market maker and bought back by the Company, the Company will ensure that, so far as is practicable, those Elected Shares are placed or purchased and bought back pro rata to the number of Ordinary Shares in respect of which Shareholders have made an Election.

Step iii. Subject only to the "£30m NAV Threshold Condition" set out below, Elected Shares which are not placed or purchased and bought back as described in step i. and/or step ii. above will be re-designated as Realisation Shares with effect on the Reorganisation Date.
Application will be made to admit the Realisation Shares to trading on the London Stock Exchange.
Also with effect on the Reorganisation Date, the Company's portfolio will be split into two pools, which will be accounted for as two separate sub-portfolios, being (i) the Continuation Pool and (ii) the Realisation Pool, pro rata as nearly as practicable to the number of Continuing Ordinary Shares and Realisation Shares respectively in existence as at the Reorganisation Date.
Assets and liabilities will be allocated between the Continuation Pool and the Realisation Pool in such manner as in the Board's opinion best achieves the objective of splitting the Company's assets fairly between the Continuation Pool and Realisation Pool. In particular, the Board may increase the proportion of cash to be allocated to a particular pool if it considers it would be equitable to both holders of Realisation Shares and Continuing Ordinary Shares to do so, or if it determines that it is necessary or desirable to retain cash for the Company’s working capital purposes, it may decrease the proportion of cash to be so allotted and the Board may choose an alternative allocation, or subsequently rebalance the pools, in respect of non-cash assets if it considers a pro rata allocation to be impracticable or that to do so would be equitable to both holders of Realisation Shares and Continuing Ordinary Shares.
The costs and expenses of re-designating any Elected Shares as Realisation Shares and the costs and expenses of admitting Realisation Shares to trading on the London Stock Exchange and of preparing and publishing any required prospectus in connection with the above will be borne by the Realisation Pool. The costs and expenses relating to the realisation of assets comprising the Realisation Pool will be attributed to the Realisation Pool also. 
The Continuation Pool will be managed in accordance with the Company's current investment objective and policy, whilst the Realisation Pool will be managed in accordance with an orderly realisation programme with the aim of making progressive returns of cash to holders of Realisation Shares. The precise mechanism for any return of cash to holders of Realisation Shares will depend upon the relevant factors prevailing at the time and will be determined at the discretion of the Board, but may include a combination of capital distributions, share buybacks and tender offers. The price of shares purchased by the Company may be paid out of the share capital, share premium, retained earnings or any other source to the fullest extent permitted under the Act.

The 2021 Realisation Opportunity will be conducted on the terms and subject to the conditions set out in the Circular and in accordance with the Articles. The Directors have absolute discretion to determine any technical, procedural and/or administrative matter in respect of the 2021 Realisation Opportunity, including as to whether or not any Form of Election or TTE Instruction has been validly submitted. Any changes of a technical, procedural and/or administrative nature, which may be made at the Directors' absolute discretion, will be published on the Company's website and any changes to the timetable will be announced as promptly as practicable. Shareholders participating in the 2021 Realisation Opportunity will be deemed to have accepted such changes, if any.

£30m NAV Threshold Condition

Step iii. of the mechanism described above is conditional upon the aggregate Net Asset Value attributable to the Continuing Ordinary Shares being not less than £30 million. The calculation of this £30 million threshold will be based on the Net Asset Value as at the close of business on 12 October 2021. This condition is referred to in the Circular as the “£30m NAV Threshold Condition”.

If the £30m NAV Threshold Condition cannot be met, the Articles require that no re-designation of Elected Shares as Realisation Shares will take place, but instead, the investment objective and investment policy of the Company will, with effect from the Reorganisation Date, be to realise the Company's assets on a timely basis with the aim of making progressive returns of cash to Shareholders as soon as practicable.

Resolutions to be proposed, reasons and benefits for proposing these Resolutions

Resolution 1:

As mentioned above, the Company proposes to satisfy Elections through a combination of mechanisms, starting initially with one or more placings in the market. To the extent that any Elected Shares cannot be placed in the market, Numis will, acting as principal, purchase unplaced Elected Shares, to be bought back by the Company, at the Realisation Price, subject to the Company having sufficient authority to do so.

The Company is therefore proposing Resolution 1 at the General Meeting to seek specific authority to effect market buyback of unplaced Elected Shares from Numis at the Realisation Price.

The maximum number of unplaced Elected Shares authorised to be bought back will not be more than 4,029,309  Ordinary Shares, this number representing 14.99 per cent. of the issued Ordinary Share capital of the Company as at the Latest Practicable Date, excluding any Ordinary Shares held in treasury.

This authority will expire on 13 October 2021 unless such authority is renewed prior to such time, although the Company may make a contract to purchase Elected Shares under this authority before the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority, and may make a purchase of Elected Shares in pursuance of any such contract. 

Any unplaced Elected Shares repurchased pursuant to this authority will be cancelled.

Resolution 1 is proposed in order to give the Board the power to buy back Elected Shares which cannot be placed in the market. As mentioned above, Elected Shares which are unplaced and not bought back by the Company will re-designate as Realisation Shares (subject only to the £30m NAV Threshold Condition described above being met). The Board considers that there are certain downsides to the share re-designation mechanism however, namely the following: 

  • The Company's portfolio will need to be split into a Continuation Pool and a Realisation Pool pro rata as between the Continuing Ordinary Shares and the Realisation Shares respectively. The two distinct pools will need to be managed and accounted for separately. This will result in an additional ongoing administrative burden on the Company.

  • Application will need to be made to admit the Realisation Shares to trading on the London Stock Exchange. This will involve, inter alia, the preparation of a prospectus for approval by the FCA and the publication of such prospectus, which will result in additional costs being incurred.

  • It is expected that it will take up to 60 days (from the Reorganisation Date) for the Realisation Shares to be admitted to trading on the London Stock Exchange. Therefore the Realisation Shares will not actually be tradeable on the London Stock Exchange during this period, as they will not have been admitted to trading yet. Even once the Realisation Shares are capable of being traded on the London Stock Exchange, it is expected that they will be less liquid than the Continuing Ordinary Shares.

  • Holders of Realisation Shares will have to wait until assets held in the Realisation Pool are realised before cash can be progressively returned to them. Therefore, compared to the market placing or purchase and buyback mechanisms described above, there will be a longer wait before cash can be returned to them.

Therefore, the ability for the Company to buy back unplaced Elected Shares will minimise the likelihood of the Company having to rely on the "fall-back" position of share re-designation.

Shareholders should consider fully the risk factors set out in Part 4 of the Circular.

Resolution 2:

As mentioned above, any Elected Shares not placed in the market or purchased and bought back as described above will be re-designated as Realisation Shares (subject only to the £30m NAV Threshold Condition described above being met). If share re-designation is to occur, the Continuation Pool will be managed in accordance with the Company's current investment objective and policy, whilst the Realisation Pool will be managed in accordance with an orderly realisation programme to enable the Company to make progressive returns of cash to holders of Realisation Shares. The precise mechanism for any return of cash to holders of Realisation Shares will depend upon the relevant factors prevailing at the time and will be determined at the discretion of the Board, but may include a combination of capital distributions, share buybacks and tender offers.

To provide for the possibility that Realisation Shares may indeed need to be created and that the Board may choose to return cash to holders of Realisation Shares by way of a buyback mechanism in due course, the Company is proposing Resolution 2 at the General Meeting to seek a general authority to effect market buybacks of Realisation Shares in the future. If this authority is utilised in the future, it is intended that realised proceeds will be returned to holders of Realisation Shares and this would decrease the size of the Realisation Share class.

The maximum number of Realisation Shares authorised to be bought back will not be more than 50,000,000 Realisation Shares, or if less, the aggregate number of Realisation Shares which may be in issue while this resolution remains in force.

The minimum price (exclusive of expenses) which may be paid for a Realisation Share is £0.01.

The maximum price (exclusive of expenses) which may be paid for a Realisation Share pursuant to a tender offer made to all holders of Realisation Shares shall be an amount equal to 100 per cent. of the net asset value per Realisation Share determined by the Company as at such date as the Company shall specify for the purposes of such tender offer, and in any other case, shall be the greater of: (i) 105 per cent. of the average of the middle market quotations for a Realisation Share as derived from the daily official list of the London Stock Exchange for the 5 Business Days immediately preceding the day on which that Realisation Share is purchased; and (ii) the higher of the price of the last independent trade of a Realisation Share and the highest then current independent bid for a Realisation Share on the trading venue where the purchase is carried out.

This authority will expire 5 years after the date on which Resolution 2 is passed unless such authority is renewed prior to such time, although the Company may make a contract to purchase Realisation Shares under this authority before the expiry of such authority which will or may be executed wholly or partly after the expiration of such authority, and may make a purchase of Realisation Shares in pursuance of any such contract.

Realisation Shares bought back from time to time will be cancelled.

The Board intends to seek a renewal of this general authority at future annual general meetings at regular three year intervals.

As mentioned above, the 2021 Realisation Opportunity is already provided for under the Articles and is not conditional upon the Resolutions being passed, although the delivery of the 2021 Realisation Opportunity may be constrained if Resolution 1 is not passed.

Costs relating to the 2021 Realisation Opportunity

Shareholders as a whole will bear the fixed costs of preparing and implementing the 2021 Realisation Opportunity, estimated to be £139,600 including VAT, which is equivalent to 0.14 per cent. of the Net Asset Value per Ordinary Share as at the Latest Practicable Date of the Circular. Such costs have been accrued into the Net Asset Value.

Shareholders who make an Election in respect of their Ordinary Shares are expected to receive the Realisation Price for each Elected Share (assuming that such Elections are met by the mechanisms described in steps i. and/or ii. above). The Realisation Price for each Elected Share will represent a 2 per cent. discount to the Net Asset Value per Ordinary Share as at the Realisation NAV Calculation Date. This discount has been established at a level intended to at least offset the variable costs of the 2021 Realisation Opportunity (including broker commissions) and for these to be borne by the Realisation Shares.

In the event that step iii. of the mechanism described above is to take place, this will result in additional costs (potentially material in the context of the value of the Realisation Share class) being incurred: the costs and expenses of re-designating any Elected Shares as Realisation Shares and the costs and expenses of admitting Realisation Shares to trading on the London Stock Exchange and of preparing and publishing any required prospectus in connection with the above will be borne by the Realisation Pool. The costs and expenses relating to the realisation of assets comprising the Realisation Pool will be attributed to the Realisation Pool also. 

General Meeting

The formal notice convening the General Meeting to be held at 10.00 a.m. on 10 September 2021 is set out on page 35 to the end of the Circular. The Resolutions to be proposed at the General Meeting are as follows:

Resolution 1 will be proposed as a special resolution to give the Company specific authority to buy back unplaced Elected Shares.

Resolution 2 will be proposed as a special resolution to give the Company general authority to buy back Realisation Shares.

Each of Resolution 1 and Resolution 2 will require at least 75 per cent. of the votes cast in respect of it to be voted in favour (whether in person or by proxy) in order for it to be passed.

All Shareholders are entitled to attend and vote at the General Meeting. In order to ensure that a quorum is present at the General Meeting, it is necessary for two Shareholders entitled to attend and vote to be present, whether in person or by proxy (or, if a corporation, by a representative).

Voting on each of the Resolutions will be conducted on a poll. On a poll, every Shareholder present in person or by proxy (or, if a corporation, by a representative) shall have one vote in respect of each Ordinary Share held by him/her/it.

To vote on the Resolutions

Shareholders that hold Ordinary Shares in certificated form (that is, not in CREST):

Are requested to either:

  • complete and return the hard copy Form of Proxy accompanying the Circular; to be valid, the Form of Proxy must be completed and returned in the reply paid envelope provided so as to be received by the Company's registrars, Computershare, at The Pavilions, Bridgwater Road, Bristol, BS99 6ZY as soon as possible and in any event so as to arrive by not later than 10.00 a.m. on 8 September 2021; or

  • submit a proxy appointment online via www.investorcentre.co.uk/eproxy so as to be received as soon as possible, but in any event by no later than 10.00 a.m. on 8 September 2021.

Shareholders that hold Ordinary Shares in uncertificated form (i.e. in CREST):

Shareholders may vote using the CREST electronic voting service in accordance with the procedure set out in the CREST Manual.  Please also refer to the accompanying notes for the notice of General Meeting set out at the end of the Circular. A proxy appointment made electronically will not be valid if sent to any address other than that provided or if received after the deadline for receipt of Form of Proxy.

Shareholders are requested to submit their proxy appointment (whether via the completion and return of the hard copy Form of Proxy, via online submission or via CREST), whether or not they wish to attend the General Meeting.

All Shareholders are entitled to attend and vote at the General Meeting. The submission of a proxy appointment will not prevent them from attending the General Meeting and voting in person should they so wish.

2021 Realisation Opportunity: action to be taken

Shareholders that wish to retain their investment in the Company:

Shareholders who wish to retain their current investment in the Company should not make an Election.

Shareholders that wish to elect to participate in the 2021 Realisation Opportunity:

Shareholders whose names appear on the Register on the Record Date that wish to realise all or part of their holdings of Ordinary Shares should make an Election in respect of such Ordinary Shares.

Shareholders that wish to make an Election and hold their Ordinary Shares in certificated form (that is, not in CREST):

Complete the personalised Form of Election and return it, along with the relevant Ordinary Share certificate(s) and/or any other documents of title, in accordance with the instructions printed thereon by post during the Election Period and in any event so as to be received by Computershare at Corporate Actions Projects, Bristol, BS99 6AH by no later than 1.00 p.m. on 23 September 2021. If a Form of Election, with the accompanying Ordinary Share certificate(s) and/or any other documents of title, is/are not lodged so as to be received by the time mentioned in the instructions printed thereon, it will be invalid. 

Shareholders that wish to make an Election and hold their Ordinary Shares in uncertificated form (i.e. in CREST):

Ensure that a properly authenticated TTE Instruction in respect of the Ordinary Shares wished to participate in the 2021 Realisation Opportunity is sent to Euroclear during the Election Period and in any event by no later than 1.00 p.m. on 23 September 2021. If a TTE Instruction is not submitted so as to be received by the designated time, it will be invalid.

The Election Period commences on 15 September 2021 and ends at 1.00 p.m. on 23 September 2021.

Shareholders who do not submit a valid and complete Election (whether through the return of a Form of Election or through a TTE Instruction) in respect of their Ordinary Shares will be deemed not to have made an Election in respect of their Ordinary Shares and will retain their current investment in the Company.

Further details on how to make an Election are set out in Part 2 of the Circular.

Risk factors

Shareholders are advised to read carefully Part 4 of the Circular which sets out the material factors which the Directors consider, at the date of the Circular, should be taken into account by Shareholders when accessing the proposals contained in the Circular, including whether or not to make an Election.


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