18th Sep 2006 07:03
City of London Investment Group PLC18 September 2006 Embargoed until 07.00: 18 September 2006 CITY OF LONDON INVESTMENT MANAGEMENT COMPANY LIMITED ("City of London") Resources Investment Trust Plc City of London Investment Management Limited ("City of London") notes theannouncement made on 8 September 2006 by Resources Investment Trust PLC ("REI")regarding the publication of a circular to shareholders setting out theproposals of the directors of the Company, as directed by the resolution passedby shareholders at the Extraordinary General Meeting held on 20 June 2006, andadvising shareholders of an Extraordinary General Meeting (the "EGM") to be heldon 3 October 2006 to consider their proposals. Funds managed by City of London hold in aggregate 29.88 per cent of REI's issuedshares. City of London has been in discussions with REI for some time regardingthe discount to net asset value at which the Company's shares have traded andhas been frustrated at the lack of action on the part of the board of REI toaddress this issue. This has been at a time when there has been significantdemand for exposure to the resources sector and when comparable companies to REIare trading at significantly narrower discounts. City of London has considered the proposals to be put to shareholders at theEGM. The first resolution involves annual votes on the future of REI, beginningin December 2007, and authority to buy back shares by tender. City of London donot consider that this proposal will substantially reduce or eliminate thediscount to NAV at which REI's shares trade, as referred to in the resolutionpassed by shareholders at the Extraordinary General Meeting which took place on20 June 2006. As a consequence the funds managed by City of London will not votein favour of this resolution at the EGM. The second resolution, which will only be put if the first proposal is defeated,will involve putting a proposal to shareholders, no later than 31 July 2007, towinding-up REI. City of London do not consider that the Board's reasons forseeking to delay liquidation - the early termination of the management servicesagreement and the costs of realising the portfolio - to be persuasive. However,as a fall back position the funds managed by City of London will vote in favourof this proposal. For some time City of London has requested the Board of REI to seek independentadvice on the potential costs of liquidating the portfolio. It is not evidentthat this has been done and, in our view, the costs should be significantly lessthan indicated by the Board. In addition, we believe that the costs of realisingthe portfolio could be further reduced by offering an in specie distribution ofassets to shareholders who would be able and prepared to accept this option. City of London also notes with concern that on 11 September 2006, 3 days afterREI's announcement, Panmure Gordon (UK) Limited resigned as broker to REI andhas been replaced by Keith, Bayley, Rogers & Co. Limited, of which one of theDirectors of REI, Howard Drummon, is a director. Depending upon the outcome of the EGM City of London will consider its position.In the event that the second resolution is passed, one of the options that maybe considered is the appointment of an additional independent non-executivedirector, with a view to achieving value for shareholders earlier than 31 July2007. For further information regarding City of London, please visit www.citlon.com orcontact: Clayton Gillece Clemmie CarrCity of London Investment Management Company Tavistock CommunicationsLimitedTel: 020 7711 0771 Tel: 020 7920 3150 City of London Investment Management Company Limited is regulated by the FSA inthe United Kingdom and registered as an Investment Adviser with the UnitedStates SEC. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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