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Asia Dragon plans conditional tender offers

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Asia Dragon plans conditional tender offers – Asia Dragon Trust says that, provided its shareholders vote to continue the company at the upcoming AGM in December 2021, it intends to introduce five-yearly performance-related conditional tender offers in addition to its regular continuation votes. 

If, on an NAV total return basis, the company beats its benchmark (MSCI All Country Asia (ex Japan) Index), there will be no tender offer. However, should the NAV total return underperform the benchmark over a five-year assessment period,  then shareholders will be offered the opportunity to realise a proportion of their investment for cash at a level close to NAV (25% tender offer at a 2% discount to realisable NAV). The five-yearly period has been chosen as this best corresponds with the manager’s typical investment time horizon. 

In order to align the continuation votes with the conditional tender offers, the board proposes to move from the current cycle of triennial continuation votes to five-yearly continuation votes. There is no formal requirement for shareholders to vote on this.  Nonetheless, the board believes it is appropriate to ask shareholders to approve a resolution at the forthcoming AGM to approve the proposals.

The largest shareholder, City of London Investment Management, representing 27.86% of the issued share capital has provided an irrevocable undertaking to vote in favour of both the continuation vote and the resolution to approve the proposals. 

The assessment period for the first conditional tender offer shall run from 1 September 2021 to 31 August 2026. The board will continue to exercise its right to buy back shares when it believes this to be in shareholders’ interests with the aim of reducing volatility in the discount.

DGN : Asia Dragon plans conditional tender offers

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