Aurora Investment - Proposed combination with Artemis Alpha Trust plc
02/09/2024 07:00
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RNS Number : 4105C Aurora Investment Trust PLC 02 September 2024
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE 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 EUROPEAN ECONOMIC AREA OR 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 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 on in connection with or act as an inducement
to enter into, any contract or commitment whatsoever.
This announcement contains inside information for the purposes of Article 7 of
Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018 as amended ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR. The person responsible for arranging for the release of this announcement
on behalf of Aurora Investment Trust plc is Frostrow Capital LLP, the Company
Secretary.
AURORA INVESTMENT TRUST PLC
Proposed combination with Artemis Alpha Trust plc
LEI: 2138007OUWIZFMAGO575
2 September 2024
Introduction
The Board of Aurora Investment Trust plc ("Aurora" or the "Company") is
pleased to announce that it has agreed heads of terms with the Board of
Artemis Alpha Trust plc ("Artemis Alpha") in respect of a proposed combination
of the assets of Artemis Alpha with the assets of Aurora (the "Proposals").
The combination, if approved by each company's respective shareholders, will
be effected by way of a scheme of reconstruction and winding up of Artemis
Alpha under section 110 of the Insolvency Act 1986 (the "Scheme") and the
associated transfer of part of the cash, assets and undertaking of Artemis
Alpha to Aurora in exchange for the issue of new ordinary shares in Aurora
(the "New Aurora Shares") to shareholders in Artemis Alpha ("Artemis Alpha
Shareholders") (altogether the "Proposals").
Following the implementation of the Proposals, the enlarged Aurora will
continue to be managed, on the same basis as it is currently, by Phoenix Asset
Management Partners Limited ("Phoenix"). Aurora's investment objective and
policy will not, therefore, be amended in connection with the Proposals. The
Aurora Board will also remain unchanged.
The Proposals will be subject to approval by existing shareholders of Aurora
("Aurora Shareholders") and Artemis Alpha Shareholders, in addition to
regulatory and tax approvals.
Highlights of the Proposals
§ Scale and enhanced profile: If no Artemis Alpha Shareholders elect, or are
deemed to elect, for the Cash Option, the enlarged Aurora would, on the basis
of the Aurora NAV and Artemis Alpha NAV as at 29 August 2024, have net assets
of approximately £353 million, equating to an increase of approximately 64
per cent.
§ Enhanced liquidity: The scale of the enlarged Aurora is expected to improve
secondary market liquidity for Aurora Shareholders and Artemis Alpha
Shareholders.
§ Lower ongoing charges: The enlarged Aurora is expected to benefit from a
lower ongoing charges ratio as a result of Aurora's fixed costs being spread
over a larger asset base.
§ Manager contribution to costs: Phoenix is willing to make a material cost
contribution in respect of the Proposals, set out in further detail below,
which is expected to substantially offset the fixed direct transaction costs
for Aurora Shareholders.
§ Aurora and Artemis Alpha Shareholder support: Major Aurora Shareholders,
representing approximately 31.6 per cent. of Aurora's issued share capital as
at 29 August 2024, have expressed support for the Proposals. Likewise, Artemis
Alpha Shareholders, representing approximately 31.5 per cent. of Artemis
Alpha's issued share capital (excluding Artemis Alpha shares held in treasury)
as at 29 August 2024, have expressed support for the Proposals.
§ Overlapping portfolios: Aurora and Artemis Alpha have a number of stocks in
common which, as at 29 August 2024, represented approximately 62.5 per cent.
and 36.1 per cent. of the respective investment portfolios.
§ Change of name: Conditional on the Scheme becoming effective, Aurora
intends to change its name to Aurora UK Alpha plc.
Summary of the Scheme
The Proposals will be effected by way of a scheme of reconstruction of Artemis
Alpha under section 110 of the Insolvency Act 1986, resulting in the voluntary
winding up of Artemis Alpha and the transfer of part of Artemis Alpha's cash,
assets and undertaking to Aurora on a formula asset value ("FAV") to FAV
basis.
Under the Scheme, Artemis Alpha Shareholders will be deemed to have elected to
receive New Aurora Shares in respect of their holding in Artemis Alpha unless
they elect to receive cash in respect of some or all of the Artemis Alpha
shares they own (the "Cash Option").
The Cash Option is limited to 25 per cent. of the Artemis Alpha shares in
issue (excluding treasury shares). Should total elections for the Cash Option
exceed this 25 per cent. threshold, excess elections for the Cash Option will
be scaled back into New Aurora Shares on a pro rata basis.
For every Artemis Alpha share validly elected for the Cash Option, Artemis
Alpha Shareholders will receive cash equal to Artemis Alpha's Residual NAV
multiplied by the percentage of Artemis Alpha Shares accepted for the Cash
Option (the "Cash Exit Percentage") less: (i) a discount of 2 per cent. of
such amount; and (ii) an illiquidity discount of 20 per cent. of the value of
the unquoted part of Artemis Alpha's portfolio that transfers to Aurora
pursuant to the Scheme as at the Scheme calculation date (the "Calculation
Date") multiplied by the Cash Exit Percentage, then divided by the aggregate
number of Artemis Alpha shares validly elected for the Cash Option.
Artemis Alpha's Residual NAV will be calculated as the gross assets of Artemis
Alpha as at the Calculation Date, plus the portion of the Phoenix Contribution
(as defined below) attributable to Artemis Alpha, minus: (a) the value of the
Liquidation Pool (which shall comprise: (i) a provision sufficient to meet any
outstanding known liabilities of Artemis Alpha; (ii) a provision sufficient to
meet any contingent or unknown liabilities of Artemis Alpha following its
entry into liquidation, not expected to exceed £100,000; and (iii) the value
of any of Artemis Alpha's unquoted investments that the parties agree will not
transfer to Aurora pursuant to the Scheme); and (b) the value of any dividends
or other distributions which are declared prior to the Calculation Date but
not paid to Artemis Alpha Shareholders nor accounted for in its NAV as at the
Calculation Date.
The Proposals will be conditional upon, amongst other things, the approval by
Aurora Shareholders of the issue of the New Aurora Shares at a general meeting
of Aurora, and the approval of Artemis Alpha Shareholders of the Scheme at the
requisite Artemis Alpha general meetings.
Artemis Alpha Shareholders will not qualify for any Aurora dividend with a
record date before the date on which the Scheme becomes effective.
Cost contribution
Phoenix has demonstrated its conviction in the combined fund by agreeing to
contribute £750,000 towards the costs of the Proposals (the "Phoenix
Contribution"). The Phoenix Contribution will be allocated first to pay
Aurora's fixed direct costs in connection with the Proposals up to a cap of
£500,000, with the balance of the Phoenix Contribution allocated to pay
Artemis Alpha's fixed direct costs in connection with the Proposals. The
Phoenix Contribution will be reflected in the relevant FAV of each company and
it is expected that the Phoenix Contribution will constitute a waiver of
Phoenix's future entitlement to a performance fee.
Investment manager
Separate to the Proposals, Kartik Kumar, the lead manager on Artemis Alpha,
has accepted an offer from Phoenix to join its investment management team
later in the year.
Lucy Walker, Chair of Aurora, commented:
"The Aurora Board is delighted to welcome Artemis Alpha Shareholders who will
enter into an investment trust with a similar philosophy and portfolio, and
the enlarged trust will benefit all shareholders through lower fees and better
liquidity."
For further information please contact:
Enquiries:
Aurora Investment Trust plc via Quill PR
Lucy Walker, Chair
Dickson Minto Advisers LLP (joint financial adviser)
Douglas Armstrong +44 (0)20 7649 6823
Andrew Manson +44 (0)131 200 1605
Panmure Liberum Limited (joint financial adviser and corporate broker) +44 (0)20 3100 2000
Chris Clarke
Frostrow Capital LLP (company secretary) +44 (0)20 3709 8733
Paul Griggs
Quill PR (media enquiries)
Sarah Gibbons-Cook Tel: +44(0) 7702 412680
Email: Sarah@quillpr.com
City Code
In accordance with customary practice for schemes of reconstruction, The Panel
on Takeover and Mergers has confirmed that the City Code on Takeovers and
Mergers is not expected to apply to the combination of Aurora and Artemis
Alpha.
Important Information
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 distribution of this announcement in jurisdictions outside the United
Kingdom may be restricted by law and therefore persons into whose possession
this announcement comes should inform themselves about, and observe, such
restrictions. Any failure to comply with the restrictions may constitute a
violation of the securities laws of such jurisdictions.
The New Aurora Shares have not been, and will not be, registered under the US
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, US persons absent registration or an exemption
from registration under the Securities Act. Moreover, the New Aurora 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, Aurora is not, and will not be,
registered under the US Investment Company Act of 1940, as amended.
The value of shares and the income from them is not guaranteed and can fall as
well as rise due to, inter alia, stock market and currency movements. When you
sell your investment you may get back less than you originally invested.
Figures refer to past performance and past performance should not be
considered a reliable indicator of future results. Returns may increase or
decrease as a result of currency fluctuations.
This announcement contains statements about the Company that are or may be
deemed to be forward looking statements. Without limitation, any statements
preceded or followed by or that includes the words "targets", "plans",
"believes", "expects", "aims", "intends", "will", "may", "anticipates",
"estimates", "projects" or words or terms of similar substance of the negative
thereof, may be forward looking statements. All statements other than
statements of historical facts included in this announcement, including,
without limitation, those regarding financial position, strategy, plans,
proposed acquisitions and objectives of Aurora or the enlarged Aurora, are
forward looking statements.
These forward looking statements are not guarantees of future performance.
Such forward looking statements involve known and unknown risks and
uncertainties that could significantly affect expected results and are based
on certain key assumptions. Many factors could cause actual results to differ
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Due to such uncertainties and risks, readers should not rely on such forward
looking statements, which speak only as of the date of this announcement,
except as required by applicable law. Subject to their respective legal and
regulatory obligations, both Aurora and Phoenix expressly disclaim any
obligations or undertaking to update or revise any forward-looking statements
contained herein to reflect any change in expectations with regard thereto or
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is based unless required to do so by law or any appropriate regulatory
authority, including FSMA, the Listing Rules, the Prospectus Regulation Rules,
the Disclosure Guidance and Transparency Rules, the Prospectus Regulation and
MAR.
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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
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howsoever arising from any use of the announcement or its contents or
otherwise arising in connection therewith. Each of Aurora, Phoenix 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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