REG - Aberdeen Equity Inc - Publication of Circular

Aberdeen Equity Income TrustAnnouncement

11/02/2026 07:02

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RNS Number : 4857S  Aberdeen Equity Income Trust plc  11 February 2026

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN
OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE
REPUBLIC OF SOUTH AFRICA, IN ANY MEMBER STATE OF THE EEA OR IN ANY OTHER
JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

This announcement is not an offer to sell, or a solicitation of an offer to
acquire, securities in any jurisdiction in which the same would be unlawful.
Neither this announcement nor any part of it shall form the basis of or be
relied on in connection with or act as an inducement to enter into any
contract or commitment whatsoever.

11 February 2026

Aberdeen Equity Income Trust plc

LEI: 21380015XPT7BZISSQ74

Publication of Circular

Further to the announcement on 8 January 2026, the Board is pleased to
confirm that Aberdeen Equity Income Trust plc ("AEI" or the "Company") has
today published a circular (the "Circular") regarding the proposed combination
with Shires Income PLC ("Shires").

The Combination, if approved by both sets of shareholders, will be implemented
by means of a scheme of reconstruction and members' voluntary winding up of
Shires under section 110 of the Insolvency Act, under which Shires
Shareholders will be entitled to receive New AEI Shares or to elect some or
all of their Shires Shares for cash. The enlarged AEI will be the ongoing
company following the Combination.

abrdn Fund Managers Limited will continue to manage the enlarged AEI. The
Company will submit an updated investment objective and policy for
Shareholders to approve. The updated investment policy will include Shires'
ability to invest in investment-grade fixed income securities and preference
shares, as well as having selective exposure to overseas equity in developed
markets. Subject to approval by Shareholders, the adoption of this updated
investment objective and policy will be conditional on the Combination being
implemented.

The boards of both Shires and AEI, along with Aberdeen, believe that the
recommended Combination represents an opportunity to create a larger,
differentiated, UK equity income investment company using the same management
team, whilst delivering a progressive dividend growth strategy, lower costs,
and enhanced growth prospects for all Shareholders in the enlarged AEI: an
improved circumstance for both sets of shareholders.

Benefits of the Combination

The Combination is expected to result in the following substantial benefits
for Shareholders:

·              Differentiated proposition: Subject to the
approval of changes to the Company's investment objective and policy, the
enlarged Company will include Shires' distinctive portfolio features,
including some exposure to investment-grade fixed income securities and
preference shares, as well as selective exposure to overseas equities in
developed markets. This investment approach will aim to provide Shareholders
in the enlarged Company with greater diversification, continued progressive
dividend growth and a differentiated option within the AIC's UK Equity Income
Sector.

·              Increased scale: It is expected that the
Combination will deliver a significant increase in the size of AEI to form an
enlarged Company with NAV of between £300 and £331 million, depending on the
take up of the Cash Option and based on the NAV of each company as at the
Latest Practicable Date. With greater scale, the enlarged Company should
appeal to a broader range of investors, including wealth managers, which in
turn should result in higher trading volumes and improved market liquidity in
the enlarged Company's shares.

·              Reduced costs: It is expected that the
Combination will deliver a reduction in the ongoing charges ratio ("OCR") for
Shareholders in the enlarged AEI through its increased scale and absorption of
fixed costs over a larger asset base. The enlarged AEI will retain AEI's
current management fee of 0.55 per cent. per annum of its net asset value,
together with an additional fixed fee of £120,000 per annum (with an annual
increase linked to CPI). The management fee will be scaled back, if required,
so that the OCR of the enlarged AEI does not exceed 0.78 per cent., compared
to AEI's current OCR of 0.84 per cent. and Shires' OCR of 1.00 per cent.

·              Sustained and growing income: Both companies pay
dividends above the average yield of the AIC's UK Equity Income sector. The
Board believes there should be no reduction in dividend income for
shareholders in either Shires or AEI. The enlarged Company will continue AEI's
commitment to a progressive dividend policy, aiming for a dividend increase
each year. For the year ended 30 September 2025, the Company paid dividends
quarterly totalling 23 pence per Share in aggregate and for the current year,
ending 30 September 2026, AEI is expected to pay not less than 23.1 pence per
share in aggregate, paid quarterly. The Board of the enlarged AEI will look to
maintain AEI's AIC Dividend Hero status and extend its track record to 26
consecutive years of dividend growth. AEI has both revenue reserves and
realised capital reserves to support the payment of dividends, if required.

·              Cost contributions: To ensure maximum retention
of value for Shareholders in the enlarged Company, Aberdeen has agreed to
cover all costs of the Scheme (excluding any costs of Shires realising or
aligning its portfolio or stamp duty payable by AEI on the acquisition of
assets from Shires in connection with the Scheme), in excess of any
contribution to Scheme costs arising from the Cash Option being at a discount
of two per cent. to the SHRS Residual FAV. The Aberdeen Costs Contribution
will be made through a combination of an offset against future management
fees, to be paid by the enlarged Company and a waiver in relation to
management fees payable by Shires to Aberdeen in the period up to the
Effective Date, minimising the impact on NAV for Shareholders in the enlarged
AEI.

Overview of the Scheme

The Combination, if approved by Shareholders and Shires Shareholders, will be
effected by way of a scheme of reconstruction and members' voluntary
winding-up of Shires under section 110 of the Insolvency Act and the
associated transfer of cash and other assets of Shires to the Company in
exchange for the issue of New AEI Shares. The New AEI Shares will be issued on
the basis of the ratio between the AEI FAV per Share and the SHRS Rollover FAV
per Share. Implementation of the Scheme is conditional upon, amongst other
things, approval by Shareholders of the Issue Resolution at the General
Meeting and the approval of Shires Shareholders at the Shires Meetings.

Alternatively, Shires Shareholders will be offered a cash exit opportunity at
a 2 per cent. discount to the SHRS Residual FAV, subject to an aggregate limit
of 25 per cent. of Shires' issued ordinary share capital (excluding any Shires
Shares held in treasury) at the Calculation Date being tendered.

 In addition, the Board is proposing, as part of the Proposals, to:

·            make certain amendments to the Company's current
investment objective and investment policy;

·            bring forward the Company's continuation resolution
which the Board would otherwise be proposing at the Company's annual general
meeting which is expected to take place in February 2027;

·            amend the Company's Articles to reset the timetable
for future continuation resolutions; and

·            cancel the amount which would be standing to the
credit of the Company's share premium account following the issuance of the
New AEI Shares to be issued pursuant to the implementation of the Scheme.

Further detail on the Scheme can be found in Part 2 of the Circular.

Amendments to Investment Objective and Investment Policy

Upon the Scheme becoming unconditional, it is proposed that the Company will
make certain amendments to its investment objective and investment policy as
set out below.

The full text of the proposed amended investment objective and investment
policy is set out in Part 4 of the Circular.

Resolution 2 will be proposed at the General Meeting (the "Investment
Objective and Investment Policy Change Resolution") to seek shareholder
approval to the adoption of the amended investment objective and investment
policy.

Aside from these proposed changes, the investment strategy of the enlarged AEI
will remain largely unchanged and would, on the assumption that the Scheme is
implemented, incorporate the preference share portfolio and non-UK listed
holdings of Shires. The enlarged AEI will remain benchmark agnostic and its
performance will continue to consider the FTSE All-Share Index as its
Reference Index, recognising the Company's primary exposure being to UK listed
equities.

Continuation Vote and Amendments to Articles

Under the Company's current Articles, the Company is required to propose a
continuation resolution (that the Company continue as an investment trust) at
the Company's annual general meeting in February 2027. As part of the
Proposals, the Company is proposing to bring forward this continuation
resolution (the "Continuation Vote") to be considered as part of the business
of the General Meeting at Resolution 3.

Due to the proposal to bring forward the Continuation Vote, as summarised
above, it is necessary for the Company to amend the current Articles which, as
currently drafted, would commit the Company to proposing a further
continuation vote at its annual general meeting in February 2027. The proposed
amendments will have the effect of resetting the timetable for future
continuation votes with the next continuation vote being required to be
proposed at the Company's annual general meeting in February 2031 and at every
fifth annual general meeting thereafter.

In order to implement this change, Resolution 4 to be proposed at the General
Meeting seeks approval to amend the Articles to delete the current Article
151.2 and replace it with the amended Article 151.2 as set out in Part 3 of
the Circular. The Scheme is not conditional on the passing of this resolution.

Directors

Conditionally upon the Scheme becoming effective and with effect from
Admission, Simon White will be appointed to the Board.

Simon White was appointed as a director of Shires in 2024. Simon has a
background in UK equity fund management and significant experience in the
investment trust sector. He was, until June 2022, Co-Head of Investment Trusts
at BlackRock where he was responsible for overseeing the company secretarial,
sales and marketing and third-party administration services. He was also
involved in successful fundraisings and significant secondary issuance within
the investment trust business. He is currently a Senior Adviser to Cadarn
Capital, an independent distribution and investor relations company servicing
London-listed investment companies.

The Board of the enlarged AEI will therefore consist of the Company's four
continuing Directors, as Caroline Hitch is retiring from the Board at the
completion of the Annual General Meeting of the Company which is scheduled to
take place on 17 February 2026, and Simon White.

General Meeting

The implementation of the Proposals requires a general meeting of the Company
to be held. The notice convening the General Meeting, to be held at 11.30 a.m.
on 9 March 2026 at Aberdeen Group plc, 18 Bishops Square, London, E1 6EG, is
set out at the end of the Circular.

Admission and dealings

Applications will be made by the Company to the FCA and to the London Stock
Exchange for the New AEI Shares to be admitted to listing in the closed-ended
investment funds category of the Official List and to trading on the Main
Market, respectively. If the Scheme becomes effective, it is expected that the
New AEI Shares will be admitted to the Official List, and dealings on the Main
Market will commence, on 18 March 2026. The results of the Issue will be
announced on or around 17 March 2026 via a RIS announcement.

Recommendation:

The Board, which has been advised by J.P. Morgan Cazenove, considers the
Proposals and the Resolutions to be proposed at the General Meeting to be in
the best interests of Shareholders as a whole. In providing its advice, J.P.
Morgan Cazenove has taken into account the Board's commercial assessment of
the Proposals.

Accordingly, the Board unanimously recommends Shareholders to vote in favour
of the Resolutions, as the Directors intend to do in respect of their own
beneficial holdings, which total 56,523 Shares (representing 0.11 per cent. of
the Company's total voting rights) as at the Latest Practicable Date.

 

 Expected Timetable:

 General Meeting
 Latest time and date for receipt of Forms of Proxy and CREST voting           11.30 a.m. on 5 March 2026
 instructions for the General Meeting
 General Meeting                                                               11.30 a.m. on 9 March 2026
 Announcement of results of the General Meeting                                9 March 2026
 Scheme
 First Shires General Meeting                                                  10.30 a.m. on 9 March 2026
 Shires Ordinary Shares Class Meeting                                          10.45 a.m. on 9 March 2026
 Record Date                                                                   6.00 p.m. on 9 March 2026
 Shires Shares disabled in CREST (for settlement)                              close of business on 9 March 2026
 Trading in Shires Shares on the London Stock Exchange suspended               7.30 a.m. on 10 March 2026
 Calculation Date                                                              close of business on 12 March 2026
 Reclassification of Shires Shares                                             8.00 a.m. on 16 March 2026
 Suspension of listing of Shires Shares                                        7.30 a.m. on 17 March 2026
 Second Shires General Meeting                                                   9.00 a.m. on 17 March 2026
 Effective Date                                                                17 March 2026
 Announcement of results of elections under the Scheme, the SHRS Rollover FAV  17 March 2026
 per Share, the SHRS Cash FAV per Share and the AEI FAV per Share
 CREST accounts credited with, and dealings commence in, New AEI Shares        As soon practicable on 18 March 2026
 Certificates despatched by post in respect of New AEI Shares in certificated  by 31 March 2026
 form
 Cancellation of listing of Reclassified Shires Shares                         as soon as practicable

                                                                               after the Effective Date

Note: All references to time in this announcement are to UK time. Each of the
times and dates in the above expected timetable (other than in relation to the
general meetings) may be extended or brought forward. If any of the above
times and/or dates change, the revised time(s) and/or date(s) will be notified
to Shareholders by an announcement through a Regulatory Information Service.

All defined terms have the meaning given to them in the Circular.

The Circular has been submitted to the National Storage Mechanism and will
shortly be available for inspection at
https://data.fca.org.uk/a/nsm/nationalstoragemechanism and is also available
on the Company's website at https://www.aberdeeninvestments.com/en-gb/aei.

Enquiries:

 

 J.P. Morgan Cazenove                           +44 (0) 203 493 8000

 William Simmonds

 Rupert Budge

 abrdn Fund Managers Limited                    +44 (0) 207 156 2382

 Ben Heatley (Head of Closed End Funds Sales)

The information in this announcement is for background purposes only and does
not purport to be full or complete. No reliance may be placed for any purpose
on the information contained in this announcement or its accuracy or
completeness. The material contained in this announcement is given as at the
date of its publication (unless otherwise marked) and is subject to updating,
revision and amendment. In particular, any proposals referred to herein are
subject to revision and amendment.

The New AEI Shares have not been, and will not be, registered under the U.S.
Securities Act of 1933 (as amended) (the "Securities Act") or with any
securities regulatory authority of any state or other jurisdiction of the
United States, and may not be offered or sold in the United States or to, or
for the account or benefit of, U.S. persons absent registration or an
exemption from registration under the Securities Act. Moreover, the New AEI
Shares have not been, nor will they be, registered under the applicable
securities laws of Australia, Canada, Japan, New Zealand, the Republic of
South Africa, or any member state of the EEA (other than any member state of
the EEA where the shares are lawfully marketed). Further, AEI is not, and will
not be, registered under the US Investment Company Act of 1940, as amended.

Figures in this announcement that refer to past performance and past
performance should not be considered a reliable indicator of future results.

This announcement may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "might",
"will" or "should" or, in each case, their negative or other variations or
similar expressions. All statements other than statements of historical facts
included in this announcement, including, without limitation, those regarding
Shires' or AEI's respective financial positions, strategies, plans, proposed
acquisitions and objectives, are forward-looking statements.

Forward-looking statements are subject to risks and uncertainties and,
accordingly, Shires' or AEI's actual future financial results and operational
performance may differ materially from the results and performance expressed
in, or implied by, the statements. These forward-looking statements speak only
as at the date of this announcement and cannot be relied upon as a guide to
future performance.

J.P. Morgan Securities plc (which conducts its UK investment banking
activities as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") which is
authorised in the United Kingdom by the Prudential Regulatory Authority and
regulated by the Financial Conduct Authority and the Prudential Regulatory
Authority is acting exclusively for AEI and for no-one else in connection with
the Combination, will not regard any other person as its client in relation to
the Combination and will not be responsible to anyone other than AEI for
providing the protections afforded to its clients or for providing advice in
relation to the Combination, or any of the other matters referred to in this
announcement.  This does not exclude any responsibilities or liabilities of
J.P. Morgan Cazenove under the Financial Services and Markets Act 2000, as
amended, or the regulatory regime established thereunder.

Winterflood Securities Limited ("Winterflood") which is authorised in the
United Kingdom by the Financial Conduct Authority is acting exclusively for
Shires and for no-one else in connection with the Combination, will not regard
any other person as its client in relation to the Combination and will not be
responsible to anyone other than Shires for providing the protections afforded
to its clients or for providing advice in relation to the Combination, or any
of the other matters referred to in this announcement.  This does not exclude
any responsibilities or liabilities of Winterflood under the Financial
Services and Markets Act 2000, as amended, or the regulatory regime
established thereunder.

None of AEI, Shires, Aberdeen, Winterflood or J.P. Morgan Cazenove, or any of
their respective affiliates, accepts any responsibility or liability
whatsoever for, or makes any representation or warranty, express or implied,
as to this announcement, including the truth, accuracy or completeness of the
information in this announcement (or whether any information has been omitted
from the announcement) or any other information relating to any of them,
whether written, oral or in a visual or electronic form, and howsoever
transmitted or made available or for any loss howsoever arising from any use
of the announcement or its contents or otherwise arising in connection
therewith. Each of AEI, Shires, Aberdeen, Winterflood and J.P. Morgan
Cazenove, and their respective affiliates, accordingly, disclaim all and any
liability whether arising in tort, contract or otherwise which they might
otherwise have in respect of this announcement or its contents or otherwise
arising in connection therewith.

 

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