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Perpetual Inc&Growth (PLI)

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Monday 12 October, 2020

Perpetual Inc&Growth

Publication of Circular

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND OR THE REPUBLIC OF SOUTH AFRICA.

12 October 2020

Perpetual Income and Growth Investment Trust plc

Publication of Circular

On 29 July 2020, the Board of Perpetual Income and Growth Investment Trust plc (“PLI” or the “Company”) announced that it had concluded its comprehensive search for a new manager with the credentials and capacity to deliver capital growth and real growth in dividends over the medium to longer term mainly from UK equities.  Having considered a large number of proposals, the Board agreed heads of terms for a combination of the assets of the Company with Murray Income Trust plc (“Murray Income” or "MUT") by means of a scheme of reconstruction and winding up of the Company under section 110 of the Insolvency Act 1986 (the “Proposals”).

The Board is pleased to announce that the Company has today published a circular to the Company’s shareholders ("Shareholders") in connection with the Proposals (the “Circular”).

The Proposals

Under the Proposals, Shareholders will be entitled to elect to receive in respect of some or all of their Shares:

(a)  New MUT Shares (the “Rollover Option”); and/or

(b)  cash (the “Cash Option”).

Shareholders can make different elections in respect of different parts of their holdings. The Cash Option is limited to 20 per cent. of the Company’s shares in issue (excluding shares held in treasury) (the “Shares”). Should total elections for the Cash Option exceed 20 per cent. of the Shares, excess elections for the Cash Option will be scaled back into New MUT Shares on a pro rata basis.

In order to effect the Scheme and the proposed amendments to the Company’s articles of association in relation to the Scheme, Shareholder approval is required at the First General Meeting. If the Scheme is approved at the First General Meeting, Shareholder approval is required at the Second General Meeting to wind up the Company voluntarily and to appoint and grant authority to the Liquidators to implement the Scheme.

Benefits of the Proposals

The Board believes that the Proposals will have the following benefits for Shareholders:

  • continued investment exposure to UK equities via one of the largest investment trusts in the UK Equity Income sector which, upon completion, is expected to have in excess of £1 billion of assets and greater secondary market liquidity;

  • integration into a trust with an aligned investment philosophy and a narrower discount than the Company's over recent years;

  • access to the extensive resource and experience within the UK Equities team at ASI, with Charles Luke as lead portfolio manager;

  • investment in an AIC Dividend Hero investment trust with both the credentials and capacity to deliver capital growth as well as real growth in dividends, which has a dividend yield (as at 8 October 2020) of 4.5 per cent and a 47 year track record of dividend increase;

  • a significant reduction in costs, with Murray Income having one of the lowest weighted average management fees (0.38 per cent. per annum) and ongoing charges ratio (0.50 per cent. per annum) in the sector following the completion; and

  • the opportunity to exit the Company at close to NAV.

The Proposals are also expected to result in an uplift in the valuation of Shareholders' investments due to the narrower discount to net asset value at which the MUT Shares have historically traded compared with the Shares. Over the 12 months ended 8 October 2020, the shares of the Company and of Murray Income traded at average discounts to cum-income net asset value of 12.8 per cent. and 4.9 per cent. respectively.

Summary information on Murray Income

Murray Income’s investment objective is to aim for a high and growing income combined with capital growth through investment in a portfolio of principally UK equities, which is very similar to the Company's current objective.

In pursuit of its investment objective, Murray Income invests principally in UK equities to deliver to investors a high and growing income combined with capital growth. The MUT Investment Manager’s philosophy is that markets are not always efficient. It believes that superior investment returns are therefore attainable by identifying good companies with attractive valuations, defined in terms of the fundamentals that, in the MUT Investment Manager’s opinion, drive share prices over the long term. The MUT Investment Manager undertakes substantial due diligence before initiating any investment, including company visits, in order to be assured of the quality of the prospective investment. Murray Income makes use of borrowing facilities to enhance shareholder returns when appropriate.

Murray Income is an AIC dividend hero having grown its dividend for 47 consecutive years. As at 8 October 2020, the dividend yield on MUT's shares was 4.5 per cent.. Over the five years ended 31 August 2020, Murray Income has delivered cumulative NAV growth of 36.3 per cent., against the return of the FTSE All Share of 17.3 per cent., representing outperformance of 19 per cent..

The Proposals, if implemented, will result in Murray Income being one of the largest investment trusts in the UK Equity Income sector, with gross assets expected to be in excess of £1 billion.

Murray Income’s alternative investment fund manager for the purposes of the AIFM Directive is Aberdeen Standard Fund Managers Limited (the "ASFML"), which has delegated the day-to-day management of the portfolio to Aberdeen Asset Managers Limited ("AAML" or "MUT Investment Manager"). In particular, Charles Luke as lead portfolio manager, supported by the ASI UK Equities team, is responsible for the management of MUT’s portfolio. Charles Luke has managed the MUT portfolio since 2006.

Further details on Murray Income, including details of its performance track record, are set out in Part 2 of the Circular and in the accompanying MUT prospectus dated 12 October 2020 (the “MUT Prospectus”).

Dividends

It is expected that Shareholders will see a reduction in their dividend yield given that MUT has a lower, but still attractive, current dividend yield than PLI. Over the five years ending 31 August 2020, MUT’s dividend has grown at a compound annual growth rate of 1.85 per cent. per annum. MUT also has an unbroken record of 47 years of dividend growth.

Partly in recognition of the reduction in absolute dividends that a PLI Shareholder would be expected to receive following the implementation of the Scheme, the Board has declared a pre-liquidation final interim dividend of 13 pence per Share to reflect a distribution of its accumulated revenue reserve (including current year net income to date), which will be paid to PLI Shareholders prior to the Effective Date.  PLI Shareholders receiving New MUT shares under the Scheme will rank fully for all dividends declared by MUT with a record date falling after the date of the issue of those New MUT Shares to them.

Costs of implementing the Scheme

The Company and Murray Income have agreed to each bear their own costs in relation to the Scheme.

In the event that MUT Shareholders resolve not to proceed to implement the Scheme (including if MUT Shareholders do not approve any resolution required to implement the Scheme) then Murray Income will bear the abort costs of both parties.

In the event that the PLI Shareholders resolve not to proceed to implement the Scheme (including if Shareholders do not approve any resolution required to implement the Scheme) then the Company will bear the abort costs of both parties.

In the event that both of the parties resolve not to proceed to implement the Scheme (including if both PLI Shareholders and the MUT Shareholders do not approve any resolutions required to implement the Scheme) then each party will bear its own abort costs.

ASFML has agreed to waive the management fee payable by MUT in respect of the net assets transferred to MUT under the Scheme for the first 182 days following the completion of the Scheme, which will be for the benefit of the shareholders of the enlarged MUT, including those PLI shareholders who elect for the Rollover Option.

PLI Notes

On the Effective Date, the PLI Notes will be novated to MUT and MUT will accept the obligations of the Company in respect of the PLI Notes. The Company will bear all interest under the PLI Notes up to the Calculation Date. The PLI Notes will rank equally with the existing secured notes issued by MUT.  Further details on the PLI Notes and the MUT Notes are set out in the MUT Prospectus.

General Meetings

The Proposals are conditional, inter alia, upon Shareholders’ approval of the resolutions to be proposed at the First General Meeting and the Second General Meeting (the “Resolutions”). Both General Meetings will be held at the offices of Dickson Minto W.S., 17 Charlotte Square, Edinburgh EH2 4DF.

First General Meeting

The First General Meeting will be held on 9 November 2020 at 11.00 a.m.

The Resolutions to be considered at the First General Meeting (which will be proposed as special resolutions) will, if passed, approve the terms of the Scheme, amend the Articles to give effect to the Scheme and authorise the Liquidators to implement the Scheme should the Resolution to be proposed at the Second General Meeting be passed. Each resolution put forward at the First General Meeting will require at least 75 per cent. of the votes cast in respect of it, whether in person or by proxy, to be voted in favour to be passed at the First General Meeting. The Scheme will not become effective unless and until, inter alia, the resolution to be proposed at the Second General Meeting has also been passed.

Second General Meeting

The Second General Meeting will be held on 17 November 2020 at 11.00 a.m.

At the Second General Meeting, a special resolution will be proposed which, if passed, will place the Company into liquidation, appoint the Liquidators and agree the basis of their remuneration, instruct the Company Secretary to hold the books to the Liquidators’ order, and provide the Liquidators with appropriate powers to carry into effect the amendments to the Articles made at the First General Meeting. The Resolution will require at least 75 per cent. of the votes cast in respect of it, whether in person or by proxy, to be voted in favour to be passed at the Second General Meeting.

Overseas Shareholders

Overseas Shareholders will not receive a copy of the MUT Prospectus unless they have satisfied the MUT Directors that they are entitled to receive and hold New MUT Shares without breaching any relevant securities laws and without the need for compliance on the part of the Company or Murray Income with any overseas laws, regulations, filing requirements or the equivalent.

No action has been taken or will be taken in any jurisdiction other than the UK where action is required to be taken to permit the distribution of the Circular and/or the MUT Prospectus. Accordingly, such documents may not be used for the purpose of, and do not constitute, an offer or solicitation by anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation.

To the extent that an Overseas Shareholder would otherwise receive New MUT Shares under the Scheme, either because no Election for the Cash Option was made or because an Excess Application for the Cash Option is scaled back in accordance with the Scheme, then such New MUT Shares will be sold by the Liquidators in the market and the net proceeds paid to the relevant Overseas Shareholder.

Overseas Shareholders wishing to elect for the Cash Option must complete and return the Form of Election accompanying the Circular or send a TTE Instruction (as applicable).

Expected Timetable

2020
Ex-dividend date for the final interim dividend to Shareholders 15 October
Record date for the final interim dividend to Shareholders 16 October
Latest time and date for receipt of Forms of Proxy for the First General Meeting 11:00 a.m. on 5 November
Latest time and date for receipt of the Forms of Election and/or TTE Instructions 11:00 a.m. on 5 November
Record Date for entitlements under the Scheme 6.00 p.m. on 6 November
First General Meeting 11:00 a.m. on 9 November
Shares disabled in CREST 6:00 p.m. on 9 November
Calculation Date 5.00 p.m. on 12 November
Payment date for the final interim dividend 13 November
Latest time and date for receipt of Forms of Proxy for Second General Meeting 11.00 a.m. on 13 November
Reclassification of the Shares (and commence dealings in Reclassified Shares) 8.00 a.m. on 16 November
Suspension of listing of Reclassified Shares and Company’s Register closes 7.30 a.m. on 17 November
Second General Meeting 11.00 a.m. on 17 November
Effective Date for implementation of the Scheme 17 November
Announcement of the results of Elections, the PLI FAV per Share, the Cash NAV per Share and the MUT FAV per Share 17 November
CREST accounts credited with, and dealings commence in, New MUT Shares 8.00 a.m. on 18 November
Cheques despatched to Shareholders who elect for the Cash Option in accordance with their entitlements and CREST accounts credited with cash week commencing 23 November
Share certificates in respect of New MUT Shares despatched (or as soon as practicable thereafter) week commencing 23 November
Cancellation of listing of Reclassified Shares as soon as practicable after the Effective Date
Note: All references to time in this document are to UK time.Each of the times and dates in the above expected timetable (other than in relation to the General Meetings) may be extended or brought forward. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service.

General

This announcement does not contain all the information which is contained in the Circular and Shareholders should read the Circular, the MUT Prospectus and the MUT KID to make an informed Election under the Proposals.

Defined terms used in this announcement have the meanings given in the Circular unless the context otherwise requires.

A copy of the Circular has been submitted to the Financial Conduct Authority and will be available for inspection at the National Storage Mechanism which is located at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's website at https://www.invesco.com/uk/en/investment-trusts/individual/perpetual-income-and-growth-investment-trust-plc.html.co.uk.

Contacts

Richard Laing, Chairman
Contact through Winterflood

Winterflood Investment Trusts (Corporate Broker)
Joe Winkley / Neil Morgan
Telephone 020 3100 0301 / 0292

Invesco Fund Managers Limited
Angus Pottinger
Telephone 020 3753 0714

Aberdeen Standard Investments
James Thorneley
Telephone 0776 855 6334

Note: The content of the Company's web-pages and the content of any website or pages which may be accessed through hyperlinks on the Company's web-pages, other than the content of the document referred to above, is neither incorporated into nor forms part of the above announcement.


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