NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY (IN
WHOLE OR IN PART) IN, INTO OR FROM ANY JURISDICITON WHERE TO DO SO
WOULD COSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF
THE JURISDICITON.
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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE UK VERSION OF EU MARKET ABUSE REGULATION (EU)
NO 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED ("UK MAR") AND IS
BEING DISCLOSED IN ACCORDANCE WITH THE COMPANY'S OBLIGATIONS UNDER
ARTICLE 17 OF UK MAR. UPON PUBLICATION OF THIS ANNOUNCEMENT, THIS
INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
THIS ANNOUNCEMENT HAS BEEN AUTHORISED FOR RELEASE BY THE COMPANY'S
BOARD OF DIRECTORS.
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LEI
Number: 2138003QINEGCHYGW702
8
February 2024
abrdn Diversified Income and
Growth plc (the "Company")
Publication of
Circular
Recommended Proposals for a Managed Wind-Down of the Company
and associated adoption of a New Investment Objective and Policy
and Notice of General Meeting
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The Company has today published a
circular (the "Circular")
in relation to the recommended proposals for a Managed Wind-Down of
the Company, the associated adoption of a New Investment
Objective and Policy, the reduction in nominal value of the
Company's Shares from 25 pence to one penny per Share and to cancel
the entire nominal value standing to the credit of the Company's
capital redemption reserve (the "Proposals"). The Proposals are subject
to Shareholder approval and, accordingly, the Circular contains a
notice convening a general meeting of the Company to be held at
Wallacespace, 15 Artillery Lane, London E1 7HA on 27 February 2024
at 10.00 a.m. (or such later time as is immediately following the
conclusion of the Company's annual general meeting convened for the
same date at 9.30 a.m. and any adjournment thereof) (the
"General
Meeting").
A copy of the Circular will be
submitted to the National Storage Mechanism and will shortly be
available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
The Circular will also be available on the
Company's website (https://www.abrdndiversified.co.uk/).
Save as otherwise defined in this announcement, terms defined in
the Circular shall bear the same meaning in this
announcement.
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Introduction
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As announced by the Company on 14
December 2023, the Board has concluded that it is in the best
interests of Shareholders as a whole to put forward proposals for a
managed wind-down of the Company (the "Managed Wind-Down").
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Pursuant to the Managed Wind-Down,
the Company proposes to conduct an orderly realisation of its
assets in a manner that seeks to optimise the value of the
Company's investments whilst progressively returning cash to
Shareholders.
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Implementation of the Managed
Wind-Down requires Shareholder approval to adopt the New Investment
Objective and Policy reflecting the realisation strategy and the
fact that the Company is ceasing to make new investments. The
approval of Shareholders is also being sought to carry out a
reduction in the nominal value of the Shares from 25 pence per
Share to one penny per Share and to cancel the entire amount
standing to the credit of the Company's capital redemption reserve
(the "Reduction"). The
reserve arising as a result of the Reduction will, subject to any
arrangements required for the protection of creditors and any
direction given by the Court in confirming the Reduction, amount to
distributable reserves for the purposes of the Companies Act and
will be available to the Company to distribute to Shareholders
pursuant to the Managed Wind-Down.
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Background to the Proposals
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On 20 June 2023, the Company
commenced a strategic review process that sought to address the
material discount to Net Asset Value per Share at which its Shares
were trading and consider how best to deliver value to
Shareholders. The strategic review culminated in the Company's
announcement of an enhanced distribution programme on 26 October
2023.
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Following this announcement, further
detailed discussions with Shareholders were undertaken. In the
light of the feedback received during these conversations and the
entrenched discount to Net Asset Value per Share at which the
Company's Shares continued to trade, the Board announced on 14
December 2023 that it had resolved to put forward proposals for a
Managed Wind-Down.
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Summary of the Managed Wind-Down proposals
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Pursuant to the Managed Wind-Down,
the Company proposes to conduct an orderly realisation of its
assets in a manner that seeks to optimise the value of the
Company's investments whilst progressively returning cash to
Shareholders. In particular:
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§ The Board
expects that approximately £115 million would be returned to
Shareholders in the first half of 2024 at, or close to, NAV per
Share (subject to Shareholder approval, the approval of the Court
for the Company to reduce its share capital and cancel the amounts
standing to the credit of its capital redemption reserve and,
subject to tax advice, potentially also its share premium account
(further details of which are set out in the section headed "Means
of Returning Capital") and the appropriate use of the Company's
distributable reserves) principally by means of a bonus issue of
redeemable B shares where the cash returned to Shareholders would
be treated as a return of capital rather than income from a UK tax
perspective, with further returns of cash to follow as value is
realised from the Company's private markets portfolio in a timely
and efficient manner as set out below.
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§ Approximately £108.5 million of the Company's private markets
portfolio (valued as at 5 February 2024) is expected to mature
between 2024 and 2027 (the "First
Tranche"). It is intended that the proceeds from the First
Tranche will be returned to Shareholders in a timely manner as the
investments mature.
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§ The
remaining £84.8 million of the private markets portfolio (valued as
at 5 February 2024) is expected to mature between 2029 and 2033
(the "Second Tranche"). As
market conditions improve, opportunistic secondary sales of Second
Tranche assets would be considered by the Company in order to
realise value from these assets in a timely manner.
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§ The
Company will cease making new investments (save as to fund existing
commitments and support the Managed Wind-Down as set out
below).
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§ It is
intended that the Company's debt arrangements, comprising secured
Bonds with a par value of c.£16.1 million, will be repaid during
2024.
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§ The Board
will seek to reduce the Company's ongoing costs.
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Benefits of the Proposals
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The Directors believe that the
Proposals are in the best interests of Shareholders as a whole and
should yield the following principal benefits:
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§ implementing a managed and orderly disposal of investments
should optimise the value to be realised on the sale of the
Company's assets and, therefore, returns to Shareholders, including
the significant Initial Return of Capital expected to comprise of
approximately £115 million (representing approximately 38 pence per
Share) during 2024;
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§ the
Proposals will allow cash to be returned to Shareholders in a
cost-effective and timely manner; and
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§ the
Company will continue to benefit from the expertise of the
Investment Manager who the Board believes is best placed to execute
the Managed Wind-Down strategy to maximise value for Shareholders
(particularly in respect of the First Tranche and Second Tranche
assets).
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Initial Return of Capital
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The Company's liquid assets
currently comprise approximately £94 million of fixed income and
credit investments, £47 million of listed equities and £8 million
of cash and cash equivalents. Pursuant to the Managed Wind-Down,
the Board intends to return the cash generated from the sale of the
Company's liquid assets together with available cash to
Shareholders in 2024, save that the Company will retain sufficient
funds to meet outstanding commitments in respect of its private
markets portfolio (such commitments amounting to c.£38.4 million in
total), repay the Company's secured Bonds (c.£18 million including
an estimate of the repayment premium) and provide for its ongoing
working capital requirements (c.£8.5 million).
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The Board therefore currently
expects that approximately £115 million will be available to be
returned to Shareholders in the first half of 2024 (the
"Initial Return of
Capital"). This is however, subject to the further
conditions set out in the section of the
Circular headed "Means of Returning
Capital".
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Please see the section titled "Means
of Returning Capital" generally for further information on the
proposed process for the Initial Return of Capital.
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Future Realisations
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The Company held approximately £193
million of private markets investments as at 5 February 2024. The
First Tranche of approximately £108.5 million is expected to be
realised, as the underlying funds mature, between 2024 and 2027.
The proceeds received by the Company from the First Tranche
realisations will be progressively returned to Shareholders
throughout this period and the Board will seek to do so in a timely
and efficient manner. As set out in the chart below as at 5
February 2024, the Second Tranche, comprising the Company's
remaining private markets investments valued at c.£84.8 million, is
expected to mature between 2029 and 2033:
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Asset
|
Expected
Maturity
|
NAV
£'000
|
Unfunded
Commitments
£'000
|
abrdn Andean Social Infrastructure
Fund I
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2029
|
£14,430
|
£4,666
|
Healthcare Royalty Partners
IV
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2031
|
£16,323
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£320
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SL Capital Infrastructure Fund
II
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2032
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£24,767
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£2,790
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Bonaccord Capital Partners
I-A
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2032
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£16,180
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£3,482
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Aberdeen Standard Secondary
Opportunities Fund IV
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2033
|
£13,490
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£11,217
|
TOTAL
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£84,794
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£22,475
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The Board believes that these
longer-term investments are, in the large part, attractive,
saleable assets but remains cognisant of the fact that early
disposals from the Company's private markets portfolio in current
market conditions would necessitate a substantial discount to their
long-term realisable values, and thereby limit the value that could
be achieved for Shareholders. As market conditions improve,
opportunistic secondary sales may be sought by the Company to
realise value from these assets in a timely manner. Throughout the
Managed Wind-Down the Board may also seek to use opportunistic
secondary sales from either tranche of private markets investments
to manage the Company's undrawn commitments and optimise the level
of cash that can be realised and returned to Shareholders. In
considering how best to deliver value to Shareholders, the Board
will also remain open-minded to corporate opportunities during the
Managed Wind-Down.
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Given the current position of the
Company's private markets portfolio, it is expected that the
Managed Wind-Down would be in place for three to four years or
longer (depending, among other things, on prevailing market
conditions enabling the Company to realise optimal value from the
Second Tranche assets). There can be no certainty as to the precise
quantum or timing of any realisations or returns of capital from
the private markets portfolio and, in particular, from sales of the
Second Tranche assets (which will depend on prevailing market
conditions alongside consideration of the Company's liabilities,
undrawn fund commitments and general working capital
requirements).
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Subject to any corporate
opportunities that may arise during the Managed Wind-Down, it is
envisaged that, once all (or substantially all) of the Company's
investments have been realised, the Company would seek Shareholder
approval for the Company to be placed into members' voluntary
liquidation at the appropriate time.
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Means of Returning Capital
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Prior to the Managed Wind-Down being
able to be implemented, Shareholders will need to approve the
Continuation Resolution at the AGM and the Investment Policy
Resolution at the General Meeting. Pursuant to the Managed
Wind-Down, the Company will seek to return cash to Shareholders in
an efficient and fair manner that accounts for, among other things,
the UK tax consequences for Shareholders and the composition of the
Company's shareholder register. Returns of capital pursuant to the
Managed Wind-Down, including the Initial Return of Capital, are
also conditional on, inter alia, the relevant Shareholder approvals
and Court approvals being granted.
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As set out in the notice of AGM
published on 9 January 2024, the Company has asked Shareholders to
approve the cancellation of the amount standing to the credit of
the Company's share premium account at the Annual General Meeting.
As set out in the Notice of General Meeting, the Company is also
asking Shareholders to approve the reduction of its ordinary share
capital by cancelling and extinguishing capital of 24 pence on each
Share and reducing the nominal value per Share from 25 pence to one
penny each in accordance with the Companies Act. In addition the
Company is proposing to cancel the entire amount standing to the
credit of its capital redemption reserve at the date of the General
Meeting (which was approximately £37 million as at 5 February 2024,
being the latest practicable date prior to the publication of
the Circular).
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If the required Shareholder
approvals are obtained at the AGM and the General Meeting, the
Company will be able to apply to the Court for confirmation of the
Cancellation and/or the Reduction. In seeking the Court's
confirmation of the Cancellation and/or Reduction, the Court needs
to be satisfied that the interests of the Company's creditors
(including contingent creditors), whose debts remain outstanding on
the date the Court Order is registered and the holders of the
Company's Bonds in the event the Bonds are not repaid prior to the
Company's application to the Court being submitted will not be
prejudiced by the Cancellation or the Reduction.
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Subject to such Shareholder
approvals and sanctions by the Court the resultant reserves arising
from the Cancellation and the Reduction, expected to be
approximately £230 million in aggregate, will subject to any
arrangements required for the protection of creditors and any
direction given by the Court in confirming the Reduction and
Cancellation, amount to distributable reserves in accordance with
the Companies Act which may be applied in any manner permitted by
the Companies Act (including for any bonus share issues and/or
redemptions, tender offers, share buy backs and/or other returns of
capital) excluding for dividends.
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The Company currently intends to
implement the Initial Return of Capital pursuant to the Managed
Wind-Down principally by means of a bonus issue of redeemable B
shares to Shareholders. Such B shares would then be immediately
redeemed by the Company with the return of cash to Shareholders
being treated as capital rather than income from a UK tax
perspective. The Directors note that both the Cancellation and the
Reduction are likely to be required in order to implement the
Managed Wind-Down particularly where a B share issue is to be used
for the Initial Return of Capital. Further returns to Shareholders
will be subject to tax advice but could be made by means of tender
offers.
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Shareholders should note that
following the Reduction, there will be no change in the number of
Ordinary Shares in issue.
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In the event that the Managed
Wind-Down is approved, full details of the Initial Capital Return
(including a summary of the UK taxation consequences for
Shareholders) will be set out in a circular to Shareholders which
will also seek the further Shareholder approvals that will require
to be granted to implement the Initial Return of Capital. Subject
to these further Shareholder approvals being granted and the
required Court approvals being received, it is expected that the
Initial Return of Capital will be implemented by the end of June
2024.
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Dividends
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The Board intends that it will
continue to pay a sufficient level of dividend to ensure that the
Company will not retain more than 15 per cent. of its income in an
accounting period so as to maintain the Company's investment trust
status during the Managed Wind-Down process. In addition, and in
accordance with the Company's proposed dividend policy that is set
out in the Accounts and will be put to Shareholders at the AGM, any
dividend going forward will also reflect the Company's plan to
return cash to Shareholders in a tax efficient manner. Therefore if
Shareholders vote to approve the Investment Policy Resolution and
put the Company into Managed Wind-Down, the Directors will still
declare certain dividends based on the Company's net income but the
quantum and timing of any dividends going forward will be at the
sole discretion of the Board.
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In the absence of unforeseen
circumstances, it is the current intention of the Board that the
Company will pay an interim dividend around the end of March 2024,
the Initial Return of Capital (subject to all the required
Shareholder and Court approvals being received as noted above)
around the end of June 2024 and a further interim dividend around
the middle of October 2024. Thereafter, it is likely that dividends
will be paid in smaller, less regular amounts principally for the
purpose of maintaining the Company's investment trust status and
capital will be returned progressively to Shareholders in larger,
less regular amounts by the most efficient mechanism available. The
Board will therefore be taking into account the UK tax consequences
for Shareholders in determining the most efficient means of
returning realised cash during the Managed Wind-Down
process.
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The amount of the net proceeds from
the Managed Wind-Down that can be paid as dividends and the timing
of any capital distributions will also be determined by the
distributable reserves of the Company. There can be no guarantee as
to the payment, quantum or timing of dividends during the Managed
Wind-Down process.
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No
further investments
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The Company has not made any new
private market investments since 14 December 2023 and, subject to
the approval of the New Investment Objective and Policy, will not
make any new investments during the Managed Wind-Down save as in
respect of existing fund commitments or to support the Managed
Wind-Down. In particular, realised cash may be invested in liquid
cash-equivalent securities, including short-dated corporate bonds,
government bonds, cash funds or bank cash deposits (and/or funds
holding such investments) pending its return to
Shareholders.
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Ongoing costs
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The Board acknowledges the
importance of monitoring the Company's ongoing costs as the Managed
Wind-Down progresses and will continue to keep the options
available to the Company under review. In order to reduce the costs
of the Company, the Board intends to reduce the number of Directors
and, as announced on 14 December 2023, Anna Troup has indicated
that she does not intend to stand for re-election at the Annual
General Meeting. The remaining Directors would like to take this
further opportunity to thank Anna for her substantial contributions
to the Board.
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The Board is mindful of the
operating costs of a listed investment company and will keep these
under review seeking to minimise expenses where possible with an
overarching view to delivering shareholder value and it is intended
that the Company's existing secured bonds will be repaid in
2024.
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Implementation of the New Investment Objective and
Policy
|
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The Proposals require the Company to
adopt the New Investment Objective and Policy to reflect the
realisation strategy and the fact that the Company is ceasing to
make any new investments.
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The Listing Rules require any
proposed material changes to the Company's published investment
objective and policy to be submitted to the FCA for prior approval.
The Company notes that FCA approval of the New Investment Objective
and Policy was obtained on 25 January 2024. The Listing Rules also
require Shareholder approval prior to any material changes being
made to the Company's published investment policy and, accordingly,
Shareholder approval of the New Investment Objective and Policy is
being sought at the General Meeting.
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As set out in further detail below,
the New Investment Objective and Policy (and, as a consequence, the
Managed Wind-Down) will take effect subject to, and conditional on,
Shareholder approval of (i) the Continuation Resolution at the
Annual General Meeting; and (ii) the Investment Policy Resolution
at the General Meeting.
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The New Investment Objective and
Policy is set out in full in Part 2 of the Circular.
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The
Investment Policy Resolution
|
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The Investment Policy Resolution,
which will be proposed as an ordinary resolution, seeks authority
to adopt the New Investment Objective and Policy as set out in Part
2 of the Circular.
As an ordinary resolution, more than 50 per cent. of the votes cast
must be in favour for the Investment Policy Resolution to
pass.
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Continuation Resolution
|
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In accordance with the requirements
of the Articles, and as set out in the notice of AGM published on 9
January 2024, the Board has proposed an ordinary resolution that
seeks Shareholder approval at the AGM for the continuation of the
Company as an investment trust.
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Shareholder approval of the
Continuation Resolution is required in order that the Company can
proceed to bring into effect the General Meeting in order that the
Company can then proceed, subject to Shareholders approving the
Investment Policy Resolution, to implement the Managed Wind-Down.
Accordingly, the Investment Policy Resolution will only be able to
take effect if it is passed at the General Meeting and if the
Continuation Resolution has been previously approved by
Shareholders at the AGM.
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In the context of the Managed
Wind-Down, the Directors therefore note their recommendation that
Shareholders vote in favour of the Continuation Resolution at the
AGM as set out in the Company's Accounts.
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The
Reduction Resolution
|
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The Reduction Resolution which will
be proposed as a special resolution seeks authority to carry out a
reduction in the nominal value of the Shares from 25 pence per
Share to one penny per Share and to cancel the entire amount
standing to the credit of the Company's capital redemption reserve
to create a distributable reserve which may be applied in any
manner permitted by the Companies Act and/or the Articles
(including for any bonus share issues and/or redemptions, tender
offers, share buy backs and/or other returns of capital) excluding
the payment of dividends. As a special resolution, more than 75 per
cent. of the votes cast must be in favour for the Reduction
Resolution to pass.
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General Meeting
|
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The General Meeting at which the
Investment Policy Resolution and the Reduction Resolution will be
proposed, in order that the Company can proceed with the Managed
Wind-Down and the Initial Return of Capital, will be held at 10.00
a.m. on 27 February 2024 at Wallacespace, 15 Artillery Lane, London
E1 7HA (or such later time as is immediately following the
conclusion of the Company's AGM to be held at 9.30 a.m. on 27
February 2024 at the same venue).
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The Investment Policy Resolution and
the Reduction Resolution will be voted on by way of a poll. In
accordance with the Articles, all Shareholders entitled to vote and
who are present in person or by proxy at the General Meeting shall
have one vote in respect of every Share held when voting on a
poll.
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Recommendation
|
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The Board considers that the
Proposals, including the adoption of the New Investment Objective
and Policy and the Reduction, are in the best interests of
Shareholders as a whole. Accordingly, the Board unanimously
recommends that Shareholders vote in favour of the Investment
Policy Resolution and the Reduction Resolution to be proposed at
the General Meeting.
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The Directors, who in aggregate have
an interest in 303,671 Shares, representing approximately 0.09 per
cent. of the issued share capital of the Company as at 5 February
2024 (being the latest practicable date prior to the publication
of the Circular),
intend to vote their entire beneficial holdings of Shares in favour
of the Investment Policy Resolution and the Reduction Resolution to
be proposed at the General Meeting.
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Enquiries:
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abrdn Diversified Income and Growth plc
|
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Davina Walter (Chairman)
|
via Buchanan
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Dickson Minto Advisers
|
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Douglas
Armstrong
|
+44 (0)20 7649 6823
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Buchanan
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Helen Tarbet / Henry
Wilson
|
+44 (0)20 7466 5000
|
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George Beale / Verity
Parker
|
ADIG@buchanancomms.co.uk
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