25th Oct 2007 16:05
Schroder Split Investment Fund PLC25 October 2007 Schroder Split Investment Fund plc and Schroder Split ZDP plc (together the "Group") Recommended Proposals for the Reconstruction and Winding Up of the Group 25 October 2007 The Board has today announced detailed proposals for the reconstruction of SSIFand its subsidiary, SZDP, which are proposed to become effective on 30 November2007, being the planned winding up date of SSIF and SZDP. SSIF's Articlesrequire the Directors to put a resolution to Shareholders by no later than 30November 2007 to consider the winding up or reconstruction of SSIF and itssubsidiary, SZDP. The Directors, with their advisers, have reviewed the courses of actionavailable, which include a straight liquidation of both Companies. In reachingits decision, the Board took account of the costs of a straight liquidation andof the undertaking by the Manager that it will not make any charge in respect ofthe additional administrative work involved in implementing the Proposals(rather than a straight liquidation). The Board is satisfied that the differencebetween the costs of straight liquidation and the costs of the Proposals ismarginal and, in the Board's opinion, this is outweighed by the benefits ofproviding roll-over options to all Shareholders (except Overseas Shareholders). The Directors have therefore concluded that it is in the interests ofShareholders as a whole to propose a scheme of reconstruction, comprising amembers' voluntary liquidation of each of SSIF and SZDP pursuant to section 110of the Insolvency Act 1986, together with options for Shareholders (other thanOverseas Shareholders) to elect for: (a) units in IMAX, an authorised unit trust managed by SUTL; and/or(b) realising all or part of their investment in SSIF and/or SZDP (as the case may be) for cash, as suits each Shareholder's personal investment requirements. Benefits of the Proposals The Directors believe that the Proposals will provide the following benefits:- more flexibility for Shareholders than if SSIF and SZDP were each simply to be wound up;- Shareholders will be able to retain an exposure to equity and equity related securities of UK companies without incurring an immediate liability to tax on capital gains by rolling their investment in the Group into IMAX;- no initial charge will be levied on IMAX Units to be issued pursuant to the Proposals; and- for those Shareholders who wish to realise some or all of their investment, the opportunity to receive cash equivalent to the Terminal Asset Value of the relevant Shares they hold which, in the case of ZDP Shareholders, will be a maximum of 154.59p per ZDP Share and for Ordinary Shareholders will be an amount, per Ordinary Share, equivalent to the Net Asset Value of SSIF less the Liquidation Fund, which will include the costs of the Proposals, divided by the number of Ordinary Shares in issue. The choice between the options available under the Proposals will be a matterfor each Shareholder to decide and will be influenced by his or her personal,financial and taxation circumstances and his or her investment objectives. SIM considers the benefits of a holding in IMAX to include:- IMAX targets a yield of up to 7 per cent. using an innovative approach. This target yield quoted is net of basic rate tax. Higher rate tax payers will be liable for further tax deductions. The target yield quoted is an estimate and is not guaranteed. IMAX invests in an actively managed portfolio of higher yielding UK large and middle capitalisation stocks and adds a "covered call option" overlay strategy to enhance the yield on the fund. Investors also have the potential to benefit from capital growth in addition to the enhanced income;- Every quarter, IMAX enters into contracts under which it agrees to exchange the profit on any stock exceeding a specified level (chosen by the Manager), for an agreed fee (premium). This is used to boost the income of IMAX. IMAX retains any gain up to this level each quarter, but surrenders returns above that level. The trade off for this increased income will be a capped upside on the stocks held, i.e. in certain market conditions investors may effectively be trading a higher income in exchange for reduced capital growth potential; and- The exchange of a potential but uncertain gain for a known premium improves IMAX's risk profile (volatility), by regulating its likely performance in both up and down markets, delivering an extra income stream in all situations. THE IMAX OPTION IMAX is an authorised unit trust managed by SUTL with an investment objective ofproviding income with potential for capital growth primarily through investmentin equity and equity related securities of UK companies. IMAX also usesderivative instruments to generate additional income. IMAX Units are "qualifyinginvestments" for ISAs and PEPs. In its first full year to November 2006 IMAXdelivered an annualised yield of 7.4 per cent., ahead of the target yield of 7per cent. As at noon on 23 October 2007, the unaudited net assets of IMAX were£210 million and the portfolio comprised 41 holdings. Shareholders (other than Overseas Shareholders) who elect (or who are deemed tohave elected) for the IMAX Option will receive units in IMAX. OrdinaryShareholders will receive Income Units and ZDP Shareholders will receiveAccumulation Units. In the case of Accumulation Units, the income generated bythe unitholder's investment is not paid directly to the unitholder, but isretained within IMAX and increases the value of the unitholder's units. Holdersof Income Units, on the other hand, receive income generated by their investmentin the form of payments into their bank accounts. ZDP Shareholders should be aware that the Accumulation Units do not representany form of "roll-up investment" for UK income taxation purposes. IMAX Units will be issued at their creation price as at noon in 30 November 2007discounted by 5.25 per cent. (to reflect the fact that no initial levy is beingcharged) as further described in the paragraph entitled "Calculation of Valuefor the Purposes of the Proposals" below. The new IMAX Units will be subject toan equalisation charge (in respect of accrued income) to ensure equality oftreatment with existing unitholders in IMAX. IMAX Units are not listed on any stock exchange and thus may not be traded assuch but can be purchased or redeemed through SUTL. THE CASH OPTION Those Shareholders who have elected (or who are deemed to have elected) for theCash Option will receive cash in respect of their Shares for which an electionfor the Cash Option has been or is deemed to have been made equal to theTerminal Asset Value per Share. DETAILS OF THE SCHEME Apportionment of net assets on Liquidation Immediately prior to the liquidation of SZDP, SSIF will repay its outstandingdebt to SZDP (the "Loan") and subscribe (pursuant to the Subscription Agreement)for sufficient ordinary shares in SZDP (after taking into account the moniesreceived on repayment of the Loan) for SZDP to have net assets (afterdischarging all liabilities of SZDP) sufficient to distribute 154.59p for eachZDP Share on a winding up. The subscription will be in cash or cash equivalentsecurities. On liquidation, the net assets of each of SSIF and SZDP, after providing for allof the relevant Company's liabilities (including contingent liabilities and thecosts incurred or to be incurred in connection with the Proposals) and, in thecase of SSIF, the Liquidators' retention, will be divided into an A Fund and a BFund with:(a) each A Fund comprising assets that are to be transferred to IMAX; and;(b) each B Fund comprising assets that are to be held and managed for the purpose of making a distribution to those Shareholders who have elected, or who are deemed to have elected, for the Cash Option. The assets to be transferred to IMAX or to be allocated to the B Funds will becalculated on the basis of the elections made or deemed to have been made by therelevant Shareholders for the IMAX Option and the Cash Option respectively. Calculation of value for the purposes of the Proposals Upon the winding up of SSIF, but before any assets are transferred to IMAX underthe Scheme or are realised and distributed pursuant to the Cash Option, theLiquidators will retain from the assets of the Group a fund of an amount whichthey consider sufficient to provide for all outstanding liabilities of SSIF,including contingent liabilities and the costs incurred by, or in respect of,SSIF, SZDP and the Liquidators in relation to the Proposals. To the extent thatthis contingency sum is not required, any cash balance remaining in theLiquidation Fund will be paid, in due course, to Ordinary Shareholders on theRegister immediately prior to the Effective Date as one or more distributions ona pro rata basis according to their respective holdings of Ordinary Shares (orto ZDP Shareholders to the extent that their entitlements under the Scheme donot amount to 154.59p as provided under the Articles). Shareholders'entitlements under the Proposals will reflect their entitlements on a winding upof SSIF or SZDP under their respective Articles of Association. IMAX Units will be issued at their creation price as at noon on 30 November2007, calculated in accordance with the FSA Regulations by reference to thevaluation of IMAX at that time to the nearest two decimal places and discountedby 5.25 per cent. (because no initial charge is being levied on Shareholderselecting for the IMAX Option). The number of IMAX Units to be issued to eachrelevant Ordinary Shareholder and/or ZDP Shareholder (as the case may be) willbe such number as has a value, at the relevant IMAX Unit Issue Price, equivalentto the Terminal Asset Value, calculated in accordance with the Scheme, of theShares in respect of which such Shareholder has elected to receive IMAX Units. Final Interim Dividend Ordinary Shareholders registered on SSIF's Register on 2 November 2007 will beentitled to the interim dividend of 4.0p per Ordinary Share as declared by theSSIF Board on 24 October 2007. Conditions The Scheme is conditional upon the passing of the requisite resolutions at theMeetings and certain other conditions. If the IMAX Units are for any reason notissued, elections for the IMAX Option will be deemed to be elections for theCash Option. Costs and Commissions The total costs of the Proposals (excluding the Liquidators' retention) areexpected to be approximately £400,000 (including amounts in respect of VAT),which is equivalent to 0.4 per cent. of the Group's Net Asset Value and 0.8 percent. of the net assets of SSIF attributable to the Ordinary Shares as at theclose of business on 23 October 2007. These costs will be charged against thecurrent year's revenue account of SSIF. If ZDP Shareholders' entitlements (being 154.59p per ZDP Share) are met in full,the costs of the Proposals will be borne by the Ordinary Shareholders. No initial charges will be payable in connection with the issue of IMAX Unitsunder the Scheme. Whether or not the Scheme becomes effective, the Manager will not be entitled toany fee under the Investment Management Agreement except for investmentmanagement in the period ending on the liquidation of SSIF. DEEMED ELECTIONS Shareholders (other than Overseas Shareholders) who do not return a Form ofElection or (as appropriate) send a TTE instruction to CREST will be deemed tohave elected for the IMAX Option in respect of their entire holding of Shares. Overseas Shareholders will not receive a Form of Election and will be deemed tohave elected for the Cash Option in respect of their entire holdings of Shares. EXPECTED TIMETABLE 2007Date from which it is advised that dealings in Shares 13 November 2007should only be for cash settlement and immediatedelivery of documents of titleLatest time for receipt of Forms of Election 11.00 a.m. on 16 November 2007Latest time for receipt of TTE instructions from 11.00 a.m. on 16 November 2007Shareholders holding Shares in uncertificated formRecord date for the purposes of Elections and 5.00 p.m. on 16 November 2007Companies' Registers closeLatest time for receipt of Forms of Proxy for the 11.30 a.m. on 19 November 2007Class Meeting of ZDP ShareholdersLatest time for receipt of Forms of Proxy for the 11.45 a.m. on 19 November 2007First General Meeting of SSIFLatest time for receipt of Forms of Proxy for the Noon on 19 November 2007First General Meeting of SZDPClass Meeting of the ZDP Shareholders 11.30 a.m. on 21 November 2007First General Meeting of SSIF 11.45 a.m. on 21 November 2007*First General Meeting of SZDP Noon on 21 November 2007*Adjourned Class Meeting of the ZDP Shareholders (if 9.00 a.m. on 26 November 2007adjournment occurs)Latest time for receipt of Forms of Proxy for the 9.15 a.m. on 28 November 2007Second General Meeting of SSIFCalculation Date Close of business on 28 November 2007Opening of Companies' Registers and commencement of 8.00 a.m. on 29 November 2007dealings in Reclassified SharesDealings in Reclassified Shares suspended 7.30 a.m. on 30 November 2007Second General Meeting of SZDP 9.00 a.m. on 30 November 2007(only SSIF is eligible to vote at this Meeting)Second General Meeting of SSIF 9.15 a.m. on 30 November 2007*Effective Date of the Proposals 30 November 2007Date on which the assets of SSIF and SZDP are 30 November 2007transferred (depending on the Elections made byShareholders) to IMAXEntitlement of Shareholders to IMAX Units determined Noon on 30 November 2007IMAX Units issued 30 November 2007Notification of IMAX Units despatched On or as soon as practicable after 3 December 2007Cheques despatched to Shareholders who have elected Week commencing 3 December 2007for the Cash Option and CREST payments madeCancellation of listing of Reclassified Shares** No later than 8.00 a.m. on 1 December 2008 * Or as soon thereafter as the preceding meeting shall have been concluded oradjourned. *\* The Reclassified Shares will exist when the resolutions proposed at the FirstGeneral Meetings and the Class Meeting take effect, being 8.00 a.m. on 29November 2007. The existence of the Reclassified Shares are a technicalrequirement of the Scheme. Shares will be reclassified according to theElections made (or deemed to have been made) by Shareholders. Terms used in this announcement shall, unless the context otherwise requires,bear the meaning given to them in the Circular issued by the Group dated 25October 2007. Copies of the Circular have been submitted to the UK ListingAuthority and will shortly be available for inspection at the UK ListingAuthority's Document Viewing Facility which is situated at: Financial Services Authority25 The North ColonnadeCanary WharfLondonE14 5HSTel. no. 020 7066 1000 Enquiries: Louise Richard/John Spedding 020 7658 6501/3206 Schroder Investment Management Limited David Benda/Katie Standley 020 3100 0293 Winterflood Investment Trusts This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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