REG - Caledonia Investmnts - Circular and Notice of General Meeting

Caledonia InvestmentsAnnouncement

26/11/2024 07:00

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RNS Number : 5895N  Caledonia Investments PLC  26 November 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

26 November 2024

 

Publication of Circular and Notice of General Meeting

 

Caledonia Investments plc ("Caledonia" or "the Company") announces a proposal
to refresh the Company's existing authority to make market purchases of
Ordinary Shares and at the same time seek approval from Independent
Shareholders of a waiver of the mandatory offer requirements set out in the
Takeover Code that may otherwise apply to the Concert Party (as defined
below), which does not include a cap on the percentage of the Ordinary Shares
that the Concert Party can hold following the exercise by the Company of the
new Authority to Make Market Purchases.

 

The following documents will today be posted or otherwise made available to
shareholders:

 

·    a circular containing a notice of a general meeting (the "General
Meeting") to be held at Cayzer House, 30 Buckingham Gate, London SW1E 6NN at
2.00pm on 18 December 2024 and outlining further information on the proposals
(the "Circular"); and

·    a form of proxy (the "Proxy").

 

Background to the Proposals

 

The Company's aim is to generate long-term compounding real returns that
outperform inflation by 3 per cent. to 6 per cent. over the medium to long
term, and the FTSE All-Share index over 10 years. Whilst the Company's
approach has delivered long-term real returns with an average NAVTR of 9.6 per
cent. per annum over the 10 years to 30 September 2024, the investment trust
sector continues to face a number of headwinds which have weighed on the share
price performance of trusts across the market, including the Company's. As at
31 October 2024, the Ordinary Shares traded in the market at a 39.4 per cent.
discount to the Net Asset Value per Ordinary Share. The Board believes the
Company's share price undervalues the Company's high quality and diverse
portfolio, its long-term track record and its future prospects.

 

Addressing the discount is a priority for the Board and the Company's
management team. Alongside continuing to deliver long-term real returns, to
help ensure the Company's investment proposition is recognised by the market,
over the past year the Company has improved disclosure, expanded press
engagement, revitalised its approach to investor relations and focused on
increasing engagement with retail investors.  These efforts will continue to
be enhanced and, among other things, will include a series of events
spotlighting each of the Company's investment pools, commencing with Private
Capital in early 2025.

 

The Board believes that making market purchases of Ordinary Shares at a
significant discount to Net Asset Value per Ordinary Share is a good
investment and capital allocation decision, as it is accretive to Net Asset
Value per Ordinary Share and therefore in the best interests of Ordinary
Shareholders as a whole. As a result of recent market purchases of Ordinary
Shares by the Company, the Concert Party's percentage of shares carrying
voting rights of the Company as at the Latest Practicable Date was
approximately 49.49 per cent. Accordingly, the Company's ability to buy back
any further shares is severely constrained by the existing cap of 49.9 per
cent. on the Concert Party's current maximum potential percentage interest (as
detailed below).

 

Following regular discussion with Independent Shareholders, the Board has been
carefully considering the possibility of taking steps to ensure that the
Company can continue to make market purchases of Ordinary Shares. This
proposal seeks to remove the cap constraining the Company's ability to buy
back any further shares.

 

Overview of the Proposals

 

Under Rule 9 of the Takeover Code, when any person, together with persons
acting in concert with that person, is interested in shares carrying in
aggregate at least 30 per cent., but does not hold shares carrying more than
50 per cent., of the voting rights of a company which is subject to the
Takeover Code, and such person or any person acting in concert with that
person increases the percentage of voting rights in which that person is
interested, such person is normally required to make an offer to all the
remaining shareholders to acquire their shares. Rule 37 of the Takeover Code
extends the principle in Rule 9 of the Takeover Code so that, when a company
purchases its own shares, any resulting increase in the percentage of shares
carrying voting rights which a person or group of persons acting in concert is
interested will be treated as an acquisition for the purposes of Rule 9.

Historically, the Company has requested from the Panel on Takeovers and
Mergers (the "Panel") and Independent Shareholders at its annual general
meeting the approval of a waiver from this obligation (a "Rule 9 Waiver") in
connection with its ordinary course annual authority to make market purchases
of Ordinary Shares. It has requested this Rule 9 Waiver on the basis that the
maximum percentage of Ordinary Shares in which the Concert Party could become
interested as a result of the Company's market purchases of Ordinary Shares
will not exceed 49.9 per cent.

As at the Latest Practicable Date, the Concert Party's interest in Ordinary
Shares represented approximately 49.49 per cent. of the shares carrying voting
rights of the Company. Accordingly, the Company's ability to buy back any
further shares is severely constrained by the existing cap on the Concert
Party's maximum potential percentage interest.

Having consulted with the Panel, the Company is seeking from Independent
Shareholders the approval of a new Waiver Resolution that does not include a
49.9 per cent. cap on the Concert Party's maximum interest in Ordinary Shares.
This would allow optionality for the Company to make additional market
purchases of Ordinary Shares when the Board believes it is in the best
interests of the Company to do so.

The Concert Party has confirmed that it remains fully supportive of the
Company's management and has no intention to make any changes to the future
business or the strategic direction of the Company. If this proposal is
approved by a majority of Independent Shareholders, it is not expected to
affect the running of the Company, its inclusion in the FTSE 250 index or
remove any rights of an Ordinary Shareholder. The Board and the management
team would remain focused on the same objective of delivering long-term,
compounding returns for all Ordinary Shareholders.

Alongside the Waiver Resolution, the Board is seeking authorisation from
Ordinary Shareholders for the Company to purchase up to a maximum of 2,681,322
ordinary shares of 5p each, or such other number of ordinary shares as may
represent a total nominal value of £134,066, which represents approximately 5
per cent. of the issued Ordinary Shares as at the Latest Practicable Date. The
Authority to Make Market Purchases will only be utilised if the Board believes
that purchases of Ordinary Shares will be in the best interests of Caledonia
and Ordinary Shareholders as a whole and will result in an increase in Net
Asset Value per Ordinary Share. In considering whether to exercise the
Authority to Make Market Purchases, the Board will take into account both the
longer-term investment opportunities available to Caledonia and any discount
at which the Ordinary Shares are trading in the market relative to the Net
Asset Value per Ordinary Share.

The Authority to Make Market Purchases and the Waiver Resolution are each
conditional upon the other being approved.

The Circular explains the resolutions to be proposed at the General Meeting
and why the Non-Concert Party Directors are unanimously recommending that
Independent Shareholders vote in favour of the Waiver Resolution.

Shareholder consultation

The Company has carried out a consultation exercise with a significant
proportion of Independent Shareholders who have historically voted at previous
general meetings. During this process, the possibility of seeking approval of
a new Waiver Resolution that does not include a 49.9 per cent. cap on the
Concert Party's maximum interest in Ordinary Shares was discussed.

Summary

The Board believes that it is in the best interests of the Company and
Ordinary Shareholders as a whole to ensure that the Company is able to
continue to make market purchases of Ordinary Shares. Therefore, the Board is
proposing resolutions to: (a) authorise the Company to purchase up 5 per cent.
of the issued Ordinary Shares as at the Latest Practicable Date; and (b)
approve a new Waiver Resolution that does not include a 49.9 per cent. cap on
the Concert Party's maximum interest in Ordinary Shares.

Definitions

 

The following definitions apply throughout this announcement, unless the
context requires otherwise.

 

 2026 AGM                            the annual general meeting of the Company to be held in 2026
 Authority to Make Market Purchases  the authority to make market purchases of Ordinary Shares to be proposed to
                                     Ordinary Shareholders in the terms of resolution 1 set out in the notice of
                                     General Meeting at the end of the Circular
 Board                               Caledonia's board of directors
 Caledonia or the Company            Caledonia Investments plc of Cayzer House, 30 Buckingham Gate, London SW1E 6NN
 Circular                            the circular to shareholders dated 26 November 2024 accompanying this
                                     announcement
 Concert Party                       that group of Ordinary Shareholders which the Panel has confirmed is deemed to
                                     act in concert, details of the members of the Concert Party being set out in
                                     paragraph 4.6 of Part III of the Circular
 Employee Share Trust                The Caledonia Investments plc Employee Share Trust
 FCA                                 the Financial Conduct Authority acting in its capacity as the competent
                                     authority for the purposes of Part VI of the Financial Services and Markets
                                     Act 2000
 General Meeting                     the general meeting of the Company to be held at Cayzer House, 30 Buckingham
                                     Gate, London SW1E 6NN at 2.00 pm on 18 December 2024 and any adjournment(s)
                                     thereof
 Independent Shareholders            those Ordinary Shareholders who are not members of the Concert Party
 Latest Practicable Date             the close of business on 22 November 2024, being the latest practicable date
                                     prior to the publication of the Circular
 Listing Rules                       the Listing Rules as published by the FCA in its handbook of rules and
                                     guidance
 NAVTR                               the increase in Caledonia's Net Asset Value per Ordinary Share between the
                                     beginning and end of a relevant period, plus accretion from the assumed
                                     dividend reinvestment in the period
 Net Asset Value per Ordinary Share  Caledonia's net assets divided by the number of issued Ordinary Shares,
                                     adjusted for (i) shares held by the Employee Share Trust and (ii) dilution by
                                     the exercise of vested share awards
 Non-Concert Party Directors         Ms F A Buckley, Mr G B Davison, Ms M A Farlow, Mrs C L Fitzalan Howard, Ms L R
                                     Fordham, Mr M S D Masters, Mr R W Memmott and Mr D C Stewart
 Ordinary Shares                     ordinary shares of 5p each in Caledonia
 Ordinary Shareholders               the holders of Ordinary Shares
 Panel                               the Panel on Takeovers and Mergers
 Resolutions                         the Authority to Make Market Purchases and the Waiver Resolution
 Rule 9 Waiver                       an approval by the Independent Shareholders, by way of a poll, of a waiver of
                                     the obligation on the Concert Parties to make an offer for the entire issued
                                     share capital as a result of market purchases by the Company of its Ordinary
                                     Shares
 Takeover Code                       the City Code on Takeovers and Mergers
 Waiver Resolution                   the ordinary resolution 2 in the form set out in the notice of General Meeting
                                     at the end of the Circular approving a waiver of the mandatory offer
                                     provisions set out in Rules 9 and 37 of the Takeover Code

 

Notes

 

In accordance with the provisions of the Takeover Code, the Concert Party is
considered to be interested in the outcome of the Waiver Resolution and,
accordingly, none of its members will vote on this resolution.

 

Copies of the Circular and the Proxy will be uploaded 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) in compliance with
Listing Rule 6.4.1R. Copies can also be viewed on the Company's website at
http://www.caledonia.com (http://www.caledonia.com) .

 

Enquiries

 

 Company contacts                                                                                   Media contacts

 Richard Webster                                                                                    Teneo

 Company Secretary

                                                                                                    Tom Murray

 +44 20 7802                                                                                        Robert Yates
 8080

 investorrelations@caledonia.com (mailto:investorrelations@caledonia.com)

                                                                                                    +44 20 7353 4200

                                                                                                    caledonia@teneo.com (mailto:caledonia@teneo.com)

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Richard Webster, Company Secretary.

 

Expected Timetable of Principal Events

 

The dates and times set out below are based on the Company's current
expectations and may be subject to change. Any change will be notified via a
Regulatory Information Service. Reference to times are London times, unless
otherwise stated.

 

 

 Publication of the Circular                                                      26 November 2024

 Latest time and date for receipt of Forms of Proxy                               2.00pm on 16 December 2024

 General Meeting                                                                  2.00pm on 18 December 2024

 Completion of market purchase(s) under the Authority to Make Market Purchases    by 26 May 2026 or, if earlier, at the conclusion of the 2026 AGM

 

 

Further information

 

Your attention is drawn to the further information set out in the Circular.

 

 

 

Forward looking statements

 

This announcement contains certain statements that are, or may be deemed to
be, forward-looking. Phrases such as "aim", "plan", "intend", "should",
"anticipate", "well-placed", "believe", "estimate", "expect", "target",
"consider" and similar expressions are generally intended to identify
forward-looking statements. Forward-looking statements are prospective in
nature and are not based on historical facts, but rather on current
expectations of the Company about future events, and involve risks and
uncertainties because they relate to events and depend on circumstances that
will occur in the future. Any forward-looking statement is based on
information available to the Company as of the date of the statement, it can
give no assurance that these expectations will prove to be correct. There are
a number of factors that could cause actual results and developments to differ
materially from those expressed or implied by the forward-looking statements.
Forward-looking statements should therefore be construed in the light of such
factors. You are cautioned not to place undue reliance on any forward-looking
statements, which speak only as of the date made. All written or oral
forward-looking statements attributable to the Company are qualified by this
caution. Other than in accordance with legal and regulatory obligations, the
Company undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise.

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