REG - abrdn Smll Co's IT - Circular Publication & Related Party Transaction

Abrdn Smaller Companies Income TrustAnnouncement

17/10/2023 14:30

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RNS Number : 4194Q  abrdn Smaller Companies Inc Tst plc  17 October 2023

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY (IN WHOLE
OR IN PART) IN, INTO OR FROM THE UNITED STATES OF AMERICA (INCLUDING ITS
TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT
OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH
AFRICA, ANY MEMBER STATE OF THE EEA, OR ANY 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 the United States or in any other jurisdiction in which
the same would be unlawful. Neither this announcement, nor any part of it,
shall form the basis of, or be relied upon in connection with, or act as an
inducement to enter into, any contract or commitment whatsoever.

 

 

17 October 2023

 

abrdn Smaller Companies Income Trust plc

 

Publication of Circular and Related Party Transaction

 

The Board of abrdn Smaller Companies Income Trust plc ("ASCI" or the
"Company") announces that it has today published a circular (the "Circular")
setting out proposals for the voluntary winding-up of the Company and
combination with Shires Income plc ("Shires" or "SHRS").

 

Introduction

 

 As announced by the Company on 26 July 2023, the Board has agreed terms with
 the board of Shires for a combination of the assets of the Company with
 Shires. If approved, the combination will be implemented by way of a scheme of
 reconstruction and members' voluntary winding up of the Company under section
 110 of the Insolvency Act 1986 (the "Scheme") and the associated transfer of
 the Company's cash, assets and undertaking to Shires in exchange for the issue
 of New SHRS Shares to Shareholders who elect, or are deemed to have elected,
 to roll over their investment in the Company into Shires. As noted below,
 Shires' participation in the Scheme will, in the context of these proposals,
 constitute a related party transaction (the "Related Party Transaction") and,
 as a result, will require the approval of Independent Shareholders. The Scheme
 and the Related Party Transaction are together referred to as the "Proposals".
 The Scheme will be implemented by way of a members' voluntary liquidation and
 a scheme of reconstruction of the Company under which Shareholders will be
 entitled to elect to receive in respect of some or all of their Ordinary
 Shares:
 (a)          New SHRS Shares (the "Rollover Option"); and/or
 (b)          cash (the "Cash Option").
 The Proposals are conditional upon, amongst other things, the approval of
 Shareholders at the General Meetings and the approval by SHRS Shareholders of
 the issue of the New SHRS Shares.
 Shareholders can make different Elections in respect of different parts of
 their holdings of Ordinary Shares and there is no limit on the number of
 Ordinary Shares which may be elected for the Cash Option. A discount of 1.5
 per cent. will be applied to the Residual Net Asset Value attributable to
 Ordinary Shares which are elected, or deemed to be elected, to receive cash
 under the Cash Option (the "Cash Option Discount"). The value arising from the
 application of the Cash Option Discount will be allocated to the Rollover Pool
 for the benefit of the enlarged Shires and Shareholders electing, or who are
 deemed to have elected, for the Rollover Option.
 The Rollover Option is the default option under the Scheme. As a result
 Shareholders (other than Overseas Shareholders) who, in respect of all or part
 of their holding of Ordinary Shares, do not make a valid election, or who do
 not make an election at all, under the Scheme will be deemed to have elected
 for New SHRS Shares in respect of such holding. As New SHRS Shares will be
 issued to those Shareholders who elect, or are deemed to elect, for the
 Rollover Option on a formula asset value ("FAV") for FAV basis as described in
 Part 4 of the Circular, i.e. at a 0.80 per cent. premium to the SHRS NAV per
 SHRS Share, Shareholders should note that such issue price may be above the
 market price of the SHRS Shares if the SHRS Shares continue to trade at a
 discount to the SHRS NAV per SHRS Share, which was 7.8 per cent. as at 13
 October 2023 (being the latest practicable date prior to the publication of
 the Circular).
 Shires is the largest beneficial owner of the Company's Ordinary Shares,
 holding approximately 13.6 per cent. of the Company's issued Ordinary Share
 capital as at 13 October 2023. Shires' entitlements as an investor in the
 Company under the Scheme will be satisfied on the Company's entering winding
 up by the transfer of the Rollover Pool to Shires, which will include the
 transfer of Shires' pro rata share of the Rollover Pool by way of a
 distribution in specie. This means that Shires will not receive any New SHRS
 Shares pursuant to the Scheme and will be deemed under the terms of the Scheme
 to receive only Reclassified Shares with "C" rights (as set out in detail in
 Part 4 of the Circular).
 Shires' participation in the Scheme will, in the context of the proposals,
 constitute a related party transaction under the Listing Rules and, as a
 result, will require the approval of Independent Shareholders. If Independent
 Shareholders do not approve the Company's entry into the Related Party
 Transaction, the Scheme will not proceed.
 In order to effect the Scheme, and the proposed amendments to the Articles of
 Association that will need to be made in connection with the Scheme,
 Shareholder approval is required at the First General Meeting. If the Scheme
 and the Related Party Transaction are approved at the First General Meeting,
 Shareholder approval is required at the Second General Meeting to wind up the
 Company voluntarily, and to appoint and grant authority to the Liquidators to
 implement the Scheme. In addition, the issue of New SHRS Shares pursuant to
 the Scheme is subject to the approval of the SHRS Shareholders.
 The Board considers the Proposals to be in the best interests of Shareholders
 as a whole and recommends that Shareholders vote in favour of the Resolutions
 required to implement the Proposals at the General Meetings.
 Background to, and rationale for, the Proposals
 Despite the Company continuing to provide a high and growing dividend from a
 portfolio invested principally in UK smaller companies and UK fixed income
 securities, the Company's Ordinary Shares have continued to trade at a
 material discount to their net asset value for a prolonged period of time.
 This, coupled with the Company being of a relatively small scale, has created
 challenges in generating improved liquidity in the Ordinary Shares and has
 restricted the Company's ability to grow. As a result, on 13 February 2023,
 the Board announced that it was undertaking a strategic review to consider the
 future of the Company (the "Strategic Review Announcement").
 Following the Strategic Review Announcement, the Board conducted a thorough
 and extensive review of options for the future of the Company with a view to
 maximising value for Shareholders. The Board was very pleased with the
 interest shown, with proposals being received from more than a dozen
 candidates. Most of the proposals received envisaged a combination of the
 Company's assets with another investment trust, an outcome the Board expected
 to consider as part of the Strategic Review.
 Consequently, and as announced by the Company on 26 July 2023, after detailed
 negotiations the Board agreed, in principle, the terms for a combination of
 the assets of the Company with Shires by means of the Scheme, which will also
 provide Shareholders with the option of a full cash exit (subject to the
 application of the Cash Option Discount). As noted in the announcement on 26
 July, during these negotiations the terms of the proposals were improved,
 substantially so in relation to the Cash Option, from a proposal that Shires
 presented to the Company in February prior to the commencement of the
 Strategic Review.
 If the Scheme becomes effective, Shires will continue to be managed by abrdn
 Fund Managers Limited ("AFML"), in accordance with its existing investment
 objective: namely to provide a high level of income together with the
 potential for growth of both income and capital from a diversified portfolio,
 substantially invested in UK equities but also in preference shares,
 convertibles and other fixed income securities. Management of Shires'
 portfolio will continue to be led by Iain Pyle and Charles Luke. Shires will
 also have access to abrdn's Smaller Companies team, including drawing on the
 expertise of the Company's current portfolio managers Abby Glennie and Amanda
 Yeaman. Shires will continue to have exposure to UK smaller companies (the
 expectation is that UK small cap exposure will represent up to 20 per cent. of
 Shires' portfolio on an ongoing basis); although, following the implementation
 of the Scheme it will hold such assets directly rather than indirectly via its
 shareholding in the Company.
 Further information on Shires is provided in the SHRS Prospectus which is
 available on the Shires website at www.shiresincome.co.uk
 (http://www.shiresincome.co.uk) .
 Dividends
 Pre-liquidation dividend
 In connection with the Proposals, the Board intends, subject to the passing of
 all Resolutions to be proposed at the First General Meeting, to pay a
 pre-liquidation interim dividend of not less than 14.0 pence per Ordinary
 Share to reflect a distribution of substantially all of the Company's
 accumulated revenue reserves. This interim dividend will be paid to
 Shareholders prior to the Effective Date.
 All Shareholders will be entitled to receive the pre-liquidation dividend,
 regardless of whether they elect (or are deemed to elect) for the Rollover
 Option or the Cash Option under the Scheme.
 Future Shires' dividends
 New SHRS Shares issued in connection with the Scheme will rank fully pari
 passu with existing SHRS Shares for all dividends declared by Shires with a
 record date falling after the date of the issue of those New SHRS Shares.
 For the avoidance of doubt, Shareholders receiving New SHRS Shares in
 connection with the Scheme will not be entitled to receive Shires' first
 interim dividend in relation to the financial year ending 31 March 2024, which
 was announced by the Shires Board on 13 September 2023 and is due to be paid
 on 27 October 2023 to SHRS Shareholders whose names appear on Shires' register
 of members on 6 October 2023 (the "SHRS First Interim Dividend"). On the basis
 of the expected timetable, only existing SHRS Shareholders will be entitled to
 receive the SHRS First Interim Dividend.
 Benefits of the Proposals
 Under the Scheme all Shareholders can elect to receive cash, subject to the
 application of the Cash Option Discount of 1.5 per cent. of the Residual Net
 Asset Value attributable to Ordinary Shares which are elected (or deemed to be
 elected) to receive cash under the Cash Option, in respect of their entire
 holding of Ordinary Shares.
 Those Shareholders who elect, or are deemed to elect, for the Rollover Option
 are expected to benefit 1  (#_ftn1) from, amongst other things:
 ·      Increased dividend: An expected increase of 31.7 per cent. per
 annum in dividend income based on the last four quarterly dividends for each
 company (i.e. a full year's dividend).
 ·      Reduced costs 2  (#_ftn2) : An expected decrease of 31.4 per
 cent. in the ongoing charges ratio ("OCR") based on the pro forma OCR of
 Shires, as enlarged, as compared with the most recent OCR of the Company as at
 30 June 2023.
 ·      Improved average rating: Over the twelve months to 24 July
 2023 (being the latest practicable date prior to the release of the Strategic
 Review results announcement) SHRS Shares traded at an average 1.5 per cent.
 discount to the NAV per SHRS Share, compared to the Ordinary Shares which
 traded at an average 13.2 per cent. discount to the NAV per Ordinary Share. As
 at 13 October 2023, the discounts to NAV per share at which the Company's
 Ordinary Shares and the SHRS Shares traded were, respectively, 2.7 per cent.
 and 7.8 per cent.
 ·      Shires' historic investment performance: Shires' NAV total
 return over 1, 3 and 5 years to 13 October 2023 was 9.2 per cent., 22.8 per
 cent. and 25.3 per cent. respectively, and its share price total return over
 the same periods was 2.8 per cent., 25.8 per cent. and 22.9 per cent.,
 respectively. Further details in relation to Shires' relative returns are set
 out in Part 2 of the Circular.
 ·      Continued UK smaller companies exposure: A material proportion of
 the Rollover Pool transferred to Shires will comprise existing investments of
 the Company, ensuring continued UK small cap exposure for all SHRS
 Shareholders, with the expectation being that UK small cap exposure will
 represent up to 20 per cent. of Shires' portfolio on an ongoing basis. By way
 of illustration, had 25 per cent. of Shareholders elected, or been deemed to
 have elected, for the Cash Option as at 13 October 2023 (being the latest
 practicable date prior to the publication of the Circular) approximately 54
 per cent. of the Rollover Pool FAV would have comprised existing UK small cap
 assets.
 Management of the Company's portfolio prior to implementation of the Scheme
 Following the Strategic Review results announcement, the Board instructed the
 Company's AIFM and investment manager to consider the potential realignment of
 the Company's investment portfolio so that by the Calculation Date it contains
 assets that are suitable for transfer to Shires and also to ensure that the
 Company has sufficient cash to meet the amounts expected to be due in respect
 of Elections for the Cash Option, as well as meeting any remaining
 indebtedness and/or liabilities. This process is underway and since the
 Strategic Review results announcement the Company has repaid and closed its
 revolving credit facility and sold a number of the more illiquid holdings in
 the Company's portfolio.
 Costs of implementing the Proposals
 The Company and Shires have each agreed to bear their own costs in relation to
 the Proposals.
 The fixed costs of the Proposals payable by the Company are expected to be
 approximately £724,000 inclusive of VAT (which is assumed to be irrecoverable
 where applicable). This estimate of costs excludes the Liquidators' retention
 (estimated at £100,000) to cover unknown or unascertained liabilities of the
 Company (the "Liquidators' Retention"), and does not take account of any
 dealing costs (including UK SDRT) which will be incurred by the Company in
 disposing of assets in order to meet Elections made or deemed to have been
 made and in realigning the Company's portfolio after the approval of the
 Scheme and prior to the Effective Date so as to result in the Rollover Pool
 containing assets that are suitable for transfer to Shires.
 The fixed direct costs of the Proposals payable by Shires are expected to be
 approximately £808,000 inclusive of VAT (which is assumed to be irrecoverable
 where applicable). As part of Shires' fee arrangements, there is scope for an
 additional discretionary payment to be made to Shires' sponsor, which will be
 subject to the outcome of, and the extent of work required in order to
 implement, the Proposals. In any event, this will not exceed in aggregate
 £350,000. In addition, Shires, as enlarged, will also incur listing fees in
 respect of the listing of the New SHRS Shares and UK SDRT based on the value
 and constitution of the Rollover Pool.
 In the event that either Shareholders or SHRS Shareholders resolve not to
 proceed to implement the Scheme (including if the Company's Independent
 Shareholders do not approve the Related Party Transaction) or the SHRS
 Directors or the Company's Directors decide not to implement the Scheme on the
 terms described in the Circular, then each party will bear its own abort
 costs.
 For the avoidance of doubt, in any event where the Scheme is not implemented,
 the listing fees and UK SDRT that would have been payable by Shires, as
 enlarged, will not be payable, but dealing costs (including UK SDRT) may still
 have been incurred by the Company in disposing of assets in order to meet
 Elections made or deemed to have been made and in realigning the Company's
 portfolio in respect of the Rollover Pool to be established pursuant to the
 Scheme.
 The Liquidators' Retention is estimated at £100,000 and will be retained by
 the Liquidators to meet any unknown or unascertained liabilities of the
 Company. This retention is in addition to any provisions made in the
 calculation of the ASCI FAV per Share in respect of known and ascertained
 liabilities of the Company. To the extent that some or all of the Liquidators'
 Retention remains at the conclusion of the liquidation, this will be returned
 to Shareholders on the Register as at the Record Date (excluding Dissenting
 Shareholders). If, however, any such amount payable to any Shareholder is less
 than £5.00, it shall not be paid to the Shareholders but instead shall be
 paid by the Liquidators to the Nominated Charity.
 AFML, in its capacity as the AIFM of Shires, has agreed to make a contribution
 to the costs of the Scheme by means of a reduction in the management fee
 payable by Shires to AFML. The fee reduction will constitute a waiver of the
 management fee that would otherwise be payable by Shires to AFML in respect of
 the assets transferred by the Company to Shires pursuant to the Scheme for the
 first six months following the completion of the Scheme (the "AFML
 Contribution"). The financial value of this amount (which is estimated at
 £87,051 based on Shires' NAV as at 13 October 2023, assuming there are no
 Dissenting Shareholders and that 25 per cent. of Shareholders elect for the
 Cash Option) will be satisfied by AFML by means of a waiver of its fees for
 the benefit of the shareholders of the enlarged Shires. For the avoidance of
 doubt, this amount will not be taken into account in the calculation of either
 the ASCI FAV per Share or the SHRS FAV per Share. The AFML Contribution is
 subject to Shires not terminating its management agreement (other than for
 cause as provided for under such agreement) for three years from the Effective
 Date of the Scheme, failing which the enlarged Shires will be obliged to repay
 all or part (depending on the point of termination) of the AFML Contribution.
 In addition, a new administration fee of £120,000 plus VAT per annum,
 effective from the completion of the Scheme, will be payable by Shires to
 abrdn.
 In addition, in anticipation of the Scheme becoming effective, AFML, in its
 capacity as the AIFM of the Company, has undertaken to waive, in full, the
 period of notice to which it is contractually entitled under the ASCI AIFM
 Agreement and has agreed that no compensation will be payable by the Company
 to AFML in respect of such waiver, provided that the Scheme is implemented.
 Further details of the Scheme
 Entitlements under the Scheme
 Under the Scheme, each Shareholder on the Register on the Record Date may
 elect or may be deemed to have elected to receive:
 ·      such number of New SHRS Shares as have a value (at the SHRS FAV
 per Share) equal to the proportion of the Rollover Pool attributable to the
 number of Ordinary Shares so elected, being the Rollover Option; and/or
 ·      an amount of cash equal to the Cash NAV per Share attributable to
 the number of Ordinary Shares so elected, being the Cash Option.
 Shareholders can make different Elections in respect of different parts of
 their holdings of Ordinary Shares. There is no limit on the amount of Ordinary
 Shares which may be elected for the Cash Option.
 The default option under the Scheme is for Shareholders to receive New SHRS
 Shares. As a result, Shareholders who, in respect of all or part of their
 holding of Ordinary Shares, do not make a valid election, or who do not make
 an election at all, under the Scheme will be deemed to have elected for New
 SHRS Shares in respect of such holding. However, Overseas Shareholders should
 ensure they have read the section titled "Overseas Shareholders" in Part 3 and
 paragraph 16 of Part 4 of the Circular.
 Shires' entitlements as a Shareholder under the Scheme will be satisfied on
 the Company's entering winding up by the transfer of the Rollover Pool to
 Shires, which will include the transfer of Shires' pro rata share of the
 Rollover Pool by way of a distribution in specie. This means that Shires will
 receive no New SHRS Shares pursuant to the Scheme and will be deemed under the
 terms of the Scheme to receive only Reclassified Shares with "C" rights (as
 set out in detail in Part 4 of the Circular).
 Cash Entitlements payable to Shareholders who elect (or are deemed to elect)
 for the Cash Option (being the holders of Reclassified Shares with "B" rights
 under the Scheme) shall be distributed by the Liquidators, through the
 Receiving Agent and pursuant to the Scheme, in cash to each such Shareholder
 in proportion to their respective holdings of Reclassified Shares with "B"
 rights which shall be equal to such Shareholder's entitlement to the net
 realisation proceeds of the Cash Pool pursuant to the Scheme (the "Cash
 Entitlement") and rounded down to the nearest penny.
 If a Shareholder wishes to receive cash in respect of all or part of their
 holding of Ordinary Shares they must complete and return a Form of Election,
 Form of Instruction or submit a TTE Instruction (depending on how their
 Ordinary Shares are held) in respect of the number of Ordinary Shares for
 which they wish to make an Election for the Cash Option. They will be deemed
 to have elected to receive New SHRS Shares in respect of the remainder of
 their holding.
 Overseas Shareholders are entitled to participate in the Scheme. However, to
 the extent that Shires, and/or the Liquidators, acting reasonably, consider
 that any issue of New SHRS Shares to an Overseas Shareholder would or may
 involve a breach of the securities laws or regulations of any jurisdiction, or
 may violate any applicable legal or regulatory requirements or may require
 Shires to become subject to additional regulatory requirements (to which it
 would not be subject but for such issue) and Shires and/or the Liquidators, as
 the case may be, have not been provided with evidence reasonably satisfactory
 to them that the relevant Overseas Shareholder is permitted to hold New SHRS
 Shares under any relevant securities laws or regulations of such overseas
 jurisdictions (or that Shires will not be subject to any additional regulatory
 requirements to which it would not be subject but for such issue), such
 Overseas Shareholder will be deemed to have elected for the Cash Option in
 respect of their entire holding of Ordinary Shares. Overseas Shareholders who
 wish to receive New SHRS Shares under the Scheme should contact the Company
 directly as soon as possible and, in any event, by no later than 5.00 p.m. on
 17 November 2023 if they are able to demonstrate, to the satisfaction of the
 Directors, the SHRS Directors and the Liquidators, that they can be issued New
 SHRS Shares without breaching any relevant securities laws.
 If an Overseas Shareholder does not contact the Company and provide the
 required evidence as noted above, such Overseas Shareholder will be deemed to
 have elected for the Cash Option in respect of their entire holding of
 Ordinary Shares in accordance with paragraph 16 of Part 4 of the Circular.
 After allocating cash and other assets to the Liquidation Pool to meet all
 known and unknown liabilities of the Company and other contingencies,
 including the Liquidators' Retention and the entitlements of any Dissenting
 Shareholders, there shall be appropriated to the Cash Pool and the Rollover
 Pool the remaining assets of the Company in the manner described in paragraph
 3.2 of Part 4 of the Circular. Such appropriation includes the application of
 the Cash Option Discount. The value arising from the application of the Cash
 Option Discount will be allocated to the Rollover Pool for the benefit of the
 enlarged Shires and Shareholders electing, or who are deemed to have elected,
 for the Rollover Option.
 The issue of New SHRS Shares under the Scheme will be effected on a FAV for
 FAV basis as at the Calculation Date as described in detail in Part 4 of the
 Circular. In determining the SHRS FAV, the SHRS NAV will (i) have applied to
 it a 0.80 per cent. premium and (ii) not be adjusted for the costs of the
 proposals incurred by Shires, so as to reduce the asset and income dilutive
 effect of the costs of the proposals on Shires.
 The Calculation Date for determining the value of the Rollover Pool and Cash
 Entitlements under the Scheme is expected to be 5.00 p.m. on 27 November 2023.
 The Record Date for the basis of determining Shareholders' entitlements under
 the Scheme is 6.00 p.m. on 24 November 2023. It is expected that the
 Liquidators will distribute Cash Entitlements (rounded down to the nearest
 penny) not later than 10 Business Days following the Effective Date.
 Illustrative entitlements
 For illustrative purposes only, had the Calculation Date been 5.00 p.m. on 13
 October 2023 and assuming that there are no Dissenting Shareholders, after
 deduction of the pre-liquidation interim dividend of 14.0 pence per Ordinary
 Share and assuming 25 per cent. of the Company's current issued Ordinary Share
 capital is elected or deemed to be elected for the Cash Option, the Cash NAV
 per Share would have been 230.514533 pence and the ASCI FAV per Share would
 have been 235.195032 pence. The Cash NAV per Share and the ASCI FAV per Share
 may be compared with the Company's share price and cum-income NAV per Share as
 at 13 October 2023 which, when adjusted on a pro forma basis for the deduction
 of the pre-liquidation interim dividend of 14.0 pence per Share, were 231.00
 pence and 237.75 pence, respectively.
 For illustrative purposes only, on the basis of the assumptions above, the
 SHRS FAV per Share would have been 243.865440 pence which, for the Rollover
 Option, would have produced a conversion ratio of 0.964446 and, in aggregate,
 13,086,179 New SHRS Shares would have been issued to Shareholders under the
 Scheme, representing approximately 30.0 per cent. of the issued ordinary share
 capital of Shires, as enlarged, immediately following completion of the
 Scheme. Had the Calculation Date been 5.00 p.m. on 13 October 2023, and after
 taking account of Shires' costs in connection with the Scheme, the effect of
 Shires receiving its pro rata share of the Rollover Pool by way of a
 distribution in specie, the application of the AFML Contribution and the
 listing fees in respect of the listing of the New SHRS Shares and UK SDRT to
 be paid by Shires, as enlarged, Shires' pro forma cum-income NAV per SHRS
 Share would have been 240.74 pence. This may be compared with Shires' share
 price and cum-income NAV per SHRS Share as at 13 October 2023 which were
 223.00 pence and 241.93 pence, respectively.
 Related Party Transaction
 Having sought guidance from the FCA, Shires is deemed to be a related party of
 the Company under the Listing Rules in the context of the proposals.
 Therefore, under the Listing Rules, Shires' participation in the Scheme will
 constitute a related party transaction for the purposes of LR11.1.5(1) and, as
 a result, must be approved by the Company's Independent Shareholders by way of
 an ordinary resolution of such Shareholders. The Company is proposing to
 obtain such approval of Independent Shareholders by proposing Resolution 1 at
 the First General Meeting.
 In accordance with the Listing Rules, Shires will not vote on Resolution 1 to
 be proposed at the First General Meeting and has undertaken to take all
 reasonable steps to ensure that its associates will not vote on Resolution 1.
 If Independent Shareholders do not approve the entry into of the Related Party
 Transaction by passing Resolution 1 at the First General Meeting, the Scheme
 will not proceed.
 The maximum potential value of the Related Party Transaction to Shires would
 arise in the event that all Shareholders elect, or are deemed to elect, for
 the Rollover Option and there are no Dissenting Shareholders. In this
 scenario, all of the Company's assets other than those appropriated to the
 Liquidation Pool, having a value equal to the Residual Net Asset Value as at
 the Calculation Date, would transfer to Shires. For illustrative purposes
 only, had the Calculation Date been 5.00 p.m. on 13 October 2023, the Residual
 Net Asset Value would have been £51.7 million and therefore £51.7 million of
 the Company's assets would have transferred to Shires pursuant to the Scheme.
 Conditions of the Proposals
 Implementation of the Proposals is subject to a number of conditions,
 including:
 ·      the passing of the Resolutions to be proposed at the First
 General Meeting and the Resolution to be proposed at the Second General
 Meeting (or any adjournment of those General Meetings), and any conditions of
 such Resolutions being fulfilled;
 ·      the SHRS Resolution being passed and becoming unconditional in
 all respects;
 ·      the FCA agreeing to admit the New SHRS Shares to the Official
 List and the London Stock Exchange agreeing to admit the New SHRS Shares to
 trading on the Main Market, subject only to allotment; and
 ·      the Directors and SHRS Directors resolving to proceed with the
 Scheme.
 If any condition is not satisfied, the Proposals will not become effective,
 the Company will not proceed with the members' voluntary winding up and
 instead will continue in existence and will continue to be managed under its
 current investment policy. In such circumstances the Board will reassess the
 options available to the Company at that time.
 General Meetings
 As noted above, the Proposals are conditional, amongst other things, upon
 Shareholders' approval of the Resolutions to be proposed at the First General
 Meeting and the Second General Meeting.

 

Expected Timetable

 

 2023
 Latest time and date for receipt of PINK Letters of Direction in respect of     2.00 p.m. on 13 November
 the First General Meeting
 Latest time and date for receipt of PINK Forms of Proxy and CREST voting        2.00 p.m. on 16 November
 instructions in respect of the First General Meeting
 Latest time and date for receipt of Forms of Instruction for Shareholders who   1.00 p.m. on 17 November
 hold Ordinary Shares in a Share Plan
 First General Meeting                                                           2.00 p.m. on 20 November
 Latest time and date for receipt of GREEN Letters of Direction in respect of    9.30 a.m. on 24 November
 the Second General Meeting
 Latest time and date for receipt of Forms of Election and TTE Instructions      1.00 p.m. on 24 November
 Record Date for entitlements under the Scheme                                   6.00 p.m. on 24 November
 Settlement of Ordinary Shares disabled in CREST                                 6.00 p.m. on 24 November
 Trading in the Ordinary Shares on the London Stock Exchange is suspended        7.30 a.m. on 27 November
 Calculation Date                                                                5.00 p.m. on 27 November
 Latest time and date for receipt of GREEN Forms of Proxy in respect of the      9.30 a.m. on 29 November
 Second General Meeting
 Reclassification of the Ordinary Shares (and commencement of dealings in        8.00 a.m. on 30 November
 Reclassified Shares)
 Suspension of listing of Reclassified Shares and Company's Register closes      7.30 a.m. on 1 December
 Second General Meeting                                                          9.30 a.m. on 1 December
 Appointment of Liquidators                                                      1 December
 Effective Date for implementation of the Scheme                                 1 December
 Announcement of the results of Elections, the ASCI FAV per Share, the Cash NAV  1 December
 per Share and the SHRS FAV per Share
 CREST accounts credited with, and dealings commence in, New SHRS Shares         at, or soon after, 8.00 a.m. on 4 December
 Cheques despatched to Shareholders who elect or are deemed to elect for the      not later than 10 Business Days from the Effective Date
 Cash Option in accordance with their Cash Entitlements and CREST accounts
 credited with cash
 Share certificates in respect of New SHRS Shares despatched                      not later than 10 Business Days from the Effective Date
 Cancellation of listing of Reclassified Shares                                  as soon as practicable after the Effective Date
 Notes:
 1)     All references to time in this announcement and the Circular are to
 London (UK) time, unless otherwise stated.
 2)     The timetable set out above and referred to throughout the Circular
 and any accompanying documents may be subject to change. If any of the above
 times and/or dates should change, the revised times and/or dates will be
 notified to Shareholders by an announcement through a Regulatory Information
 Service.

 

This announcement does not contain all the information which is contained in
the Circular and Shareholders should read the Circular in conjunction with the
SHRS Prospectus and the SHRS KID before deciding what action to take in
respect of the Proposals.

 

Unless otherwise defined, all capitalised terms used but not defined in this
announcement shall have the meaning as given to them in the Circular.

 

A copy of the Circular has been submitted to the National Storage Mechanism
and will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) and on the Company's
website at www.abrdnsmallercompaniesincome.co.uk
(http://www.abrdnsmallercompaniesincome.co.uk) . Further information on Shires
is provided in the SHRS Prospectus which is available on the Shires website at
www.shiresincome.co.uk (http://www.shiresincome.co.uk) .

 

 

Enquiries:

 abrdn Smaller Companies Income Trust plc
 Dagmar Kent Kershaw, Chair                0131 372 2200

 Winterflood Securities
  Neil Morgan                              0203 100 0000

 

Legal Entity Identifier: 213800J6D2TVHRGKBG24

 1  (#_ftnref1) All figures are illustrative only, using currently available
information and estimates. All figures are subject to change. Past performance
is not a guide to future performance. The value of investments, and the income
or capital entitlement which may derive from them, if any, may go down as well
as up and is not guaranteed.

 2  (#_ftnref2) Figures exclude any impact from the Company's portfolio
realisation costs in connection with the Scheme.

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.   END  CIRBXBDGSBBDGXR