JPMorgan Russian Securities has announced that, following consultation with the Company’s large shareholders and its advisers, it plans to introduce, subject to shareholders approving a resolution in favour of the Company’s continuation as an investment trust at the Company’s AGM on 7 March 2017, a measure that places an obligation on the Board to make a conditional tender offer to shareholders. The measure will require the board to make a tender offer for up to 20% of the outstanding share capital at NAV less costs and less a discount of 2 per cent if, over the next five years (from the start of the current financial year being 1st November 2016), the Company’s net asset value total return in sterling, on a cum income basis, is below the total return of the benchmark in sterling terms over the 5-year period. Any tender offer will also be conditional on shareholders approving the continuation vote in 2022. The Board says that it believes this measure is in shareholders’ interests as it further incentivises the manager to focus on long-term investment performance.
The Board says that it also considered whether to include a discount related condition when proposing a tender offer but felt that the higher levels of volatility in Russia, both political & market related, meant that this measure was inappropriate. The board also says that, given the current reliance that the Russian economy has on the oil price, it believes that it would be hard to influence the discount if there was a global commodities slump, or significant geopolitical pressures affecting Russia. However, the Board says that it monitors discount movements closely and, subject to market conditions, the share repurchase authority will be used to assist in managing the imbalance between supply and demand when the discount widens for company-specific reasons.
JPMorgan Russian announces proposals to introduce a conditional tender : JRS