Along with the notice of its AGM, El Oro has published details of a new proposed rollover into JPMorgan Elect that the board is exploring as an alternative to a liquidation of the Company. The board says that their proposal offers a real choice to shareholders of either cashing out or rolling over into a larger investment company with access to greater investment resource. The board thinks that this may offer greater flexibility to shareholders in terms of tax planning.
Board conscious of concerns raised during 2016
The Board has remained conscious of the concerns expressed by Members during 2016, which included the investment performance of the Company, the lack of liquidity in the Ordinary Shares and their widening discount to net asset value. The Board says that it has studied a wide range of options for the future direction of the Company, having regard to the fact that the concerns referred to remain.
Head of terms agreed for rollover
The Board says that it has agreed a heads of terms with the board of JPMorgan Elect for it to provide a “rollover” option for shreholders of El Oro. JPMorgan Elect provides investors access to a number of different investment strategies, including one focussed on UK equity income, through a multi-share class structure. El Oro’s Board believe that this will appeal to its shareholders.
About JPMorgan Elect
JPMorgan Elect, which has total net assets of £369.6m (as at 31 August 2018), has three share classes, and quarterly conversion between share classes is permitted. The investment objectives of the three classes, which the Board considers to be comparable to the El Oro’s overall investment objective, are as follows:
- Managed Income – A growing income return with potential for long term capital growth by investing in equities, investment companies and fixed income securities.
- Managed Growth – Long term capital growth from investing in a range of investment trusts and open-ended funds managed principally by JPMorgan Asset Management.
- Managed Cash – Preservation of capital with a yield based on short term interest rates.
El Oro’s board expect all three share classes will be available for a rollover
El Oro’s board says that it expects that all three of JPMorgan Elect’s share classes will be made available as rollover options for El Oro shareholders, with the managed income share class being the default. Each share class is listed separately and traded on the main market of the London Stock Exchange and JPMorgan Elect shareholders are able to switch between them on a quarterly basis without incurring a liability to UK capital gains tax.
El Oro says that its shareholders, who want to rollover their El Oro Shares in a cost and tax efficient way, can choose to rollover into new JPMorgan Elect shares. Furthermore, it says that El Oro shareholders who want to exit for cash, with broadly the same amounts as they would have received on simple liquidation, can choose the cash option.
Circulars to be issued Q1 2019
El Oro’s board says that, subject to final agreements being signed with JPMorgan Elect, it currently anticipates that circulars will be issued to El Oro shareholders during the first calendar quarter of 2019, with the restructuring likely to be completed before June 2019. It also says that, under the proposed restructuring of the company, shareholders will be asked to vote on the proposals.
Further information
El Oro’s board says that further information on JPMorgan Elect and full details of the terms of the rollover proposal will be included in the documentation to be sent to Shareholders in 2019. However, in the meantime, El Oro’s board is also encouraging its shareholders to visit the JPMorgan Elect’s website:
https://am.jpmorgan.com/gb/en/asset-management/gim/per/products/investment-trusts/jpm-elect-plc