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Aberforth Geared lays out reconstruction proposals

Aberforth Geared Income has reached agreement in principle with Aberforth Split Level Income Trust plc (ASLIT) on the outline terms of the reconstruction and winding-up of the company, expected to become effective on 30 June 2017, under which ASLIT will act as a rollover option for investors in the company.

ASLIT will be a new split capital investment trust, expected to launch on 3 July 2017, which will invest in a diversified portfolio of small UK quoted companies. Aberforth Partners, the Company’s investment managers, will also be the investment managers of ASLIT. ASLIT’s capital structure will comprise ordinary shares and ZDP shares in a 4:1 ratio. Both classes of share will be issued at 100 pence per share on launch.

ASLIT’s investment objective will be to provide ASLIT ordinary shareholders with a high level of income, with the potential for income and capital growth, and to provide ASLIT ZDP shareholders with a final capital entitlement on ASLIT’s planned winding-up date of 1 July 2024. The gross redemption yield of the ASLIT ZDP shares at launch will be announced when the ASLIT prospectus is published by the end of May 2017.

Under the terms of the proposed reconstruction:

  • Ordinary Shareholders (other than overseas holders) will be able to exchange some or all of their investment in the Company for ordinary shares in ASLIT and/or to realise some or all of their investment in the company for cash.
  • ZDP Shareholders (other than overseas holders) will be able to exchange some or all of their investment in the Company for ZDP shares in ASLIT and/ or ordinary shares in ASLIT and/or to realise some or all of their investment in the Company for cash. ZDP Shareholders will also be able to elect for ASLIT ordinary shares and ASLIT ZDP shares, in a 4:1 ratio, to the extent that their election for ASLIT ZDP shares is scaled back.

Pursuant to these proposals, it is currently anticipated that ASLIT would acquire part or all of the Company’s assets, the consideration to be satisfied in part by the issue of ASLIT shares to Shareholders electing to roll over their investment into ASLIT, with the balance being payable by ASLIT to the Company in cash which it intends raising by means of a placing and offer for subscription.

It is intended that the ASLIT board shall have discretion (after consultation with Aberforth Partners and J.P. Morgan Cazenove) to scale back elections and/ or applications to ensure that ASLIT:

  • will not be larger than the Company; and
  • will have a ratio of ASLIT ordinary shares to ASLIT ZDP shares of 4:1.

In exercising its discretion, it is the intention of the ASLIT board to seek to ensure a fair allocation and give preference, so far as is practicable, in allocating ASLIT ordinary shares, to those Ordinary Shareholders who have elected (or are deemed to elect) to rollover into ASLIT ordinary shares and, in allocating ASLIT ZDP shares, the ASLIT board intends to give preference, so far as is practicable, to those investors who have also subscribed for (or rolled into) ASLIT ordinary shares.

The ASLIT board intends to target aggregate dividends, in respect of the period to 30 June 2018, of not less than 4 pence per ASLIT ordinary share. This is not a profit forecast. There can be no guarantee that ASLIT will pay such or any dividends.

AGIT : Aberforth Geared lays out reconstruction proposals

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