REG - Henderson Eurotrust - Publication of Circular

Henderson EurotrustAnnouncement

20/05/2024 16:30

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RNS Number : 1602P  Henderson Eurotrust PLC  20 May 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
OR INTO, 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, 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 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.

 

20 May 2024

 

 

Henderson EuroTrust plc

 

Publication of Circular

 

Further to the announcements made by Henderson EuroTrust plc (the "Company" or
"HNE") on 14 March 2024 and 14 May 2024, the board of HNE is pleased to
announce that it has today published a circular (the "Circular") in connection
with the proposed merger of interests with Henderson European Focus Trust
("HEFT") to form Henderson European Trust plc (the "Combined Trust") - an
enlarged, flagship European investment trust to be managed by the European
equities team at Janus Henderson Investors ("Janus Henderson" or the
"Manager") (the "Proposals").

 

The Circular provides the Company's shareholders (the "Shareholders") with
further details of the Proposals. General meetings of the Company will take
place at 11.30 a.m. on 20 June 2024 and 9.30 a.m. on 4 July 2024 (the "General
Meetings") to seek approval from Shareholders for the implementation of the
Proposals.

 

The Circular will shortly be available for inspection at the National Storage
Mechanism which is located at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on the Company's
website at www.hendersoneurotrust.com (http://www.hendersoneurotrust.com) .

 

Terms used and not defined in this announcement shall have the meanings given
to them in the Circular.

 

Background

On 14 March 2024 the Board announced that it had agreed heads of terms with
HEFT in respect of a proposed merger between the two companies. The Board
subsequently announced updated and enhanced agreed terms of the proposed
merger on 14 May 2024, following an unsolicited third party approach to the
Company, negotiations by the Board seeking to optimise the outcome for
Shareholders, and a consultation with certain major Shareholders who were
unanimously supportive.

The Combined Trust will be co-managed by Jamie Ross and Tom O'Hara, currently
lead and co-lead portfolio managers of HNE and HEFT, respectively. The
Combined Trust will bring together their respective expertise and proven track
records of benchmark outperformance under a single mandate: to maximise total
return by investing in companies predominantly listed in Europe (excluding the
UK). Its focus will be on Europe's "global champions" - large, established and
well managed businesses operating internationally but based in Europe. The
Combined Trust expects to hold a concentrated list of stocks, selected with no
particular style bias but with an emphasis on the potential for long-term
growth in the context of enduring global trends.

The merger will be effected by way of a scheme of reconstruction and members'
voluntary winding up of the Company under section 110 of the Insolvency Act
(the "Scheme") and the issue of New HEFT Shares to Shareholders who are deemed
to have elected to roll over their investment into the Combined Trust.

The recommended Proposals have been structured with a view to avoiding any
costs of change falling on continuing shareholders in the Combined Trust, and
to reduce the overall ongoing charges ratio of the Combined Trust. This will
be achieved through a contribution to costs from Janus Henderson to support
the Scheme when the recommended Proposals become effective. In addition, the
AIFM has agreed to reduce the management fees payable by the Combined Trust
and to waive the termination fees that would otherwise be payable by HNE to
the AIFM.

Overview of the Proposals

Under the Proposals, which are conditional upon, amongst other things, the
approval of Shareholders:

(a) all Shareholders will be entitled to elect to receive cash in respect of
some or all of their Shares (subject to an overall limit of 15 per cent. of
the Shares in issue at the Calculation Date, excluding treasury shares) (the
"Cash Option"); and

(b) eligible Shareholders will by default receive New HEFT Shares (the
"Rollover Option") to the extent that they do not make a valid election for
the Cash Option in respect of all of their Shares or to the extent that their
elections for the Cash Option are scaled back in accordance with the Scheme.

The Cash Option will be priced at a 2 per cent. discount (the "Cash Option
Discount") to a formula asset value. This formula asset value will represent
the proportion of the Residual Net Asset Value attributable to those Shares in
respect of which valid elections have been made for the Cash Option (following
any required scaling back in accordance with the Scheme), such amount in
aggregate being the "Cash Pool". The "HNE Cash FAV per Share" shall be equal
to the value of the Cash Pool divided by the number of Shares validly elected
for the Cash Option (following any required scaling back in accordance with
the Scheme). The value arising from the application of the Cash Option
Discount will be allocated to the Rollover Pool. The value of the Rollover
Pool shall be equal to the Residual Net Asset Value less the value of the Cash
Pool, plus HNE's portion of the Janus Henderson Contribution to the extent
required to ensure that the Proposals are cost-neutral for continuing
shareholders in the Combined Trust. The "HNE Rollover FAV per Share" shall be
equal to the value of the Rollover Pool divided by the number of Shares
elected for the Rollover Option.

The choice between the options available under the Proposals will be a matter
for each Shareholder to decide and will be influenced by their investment
objectives and by their personal, financial and tax circumstances.
Accordingly, Shareholders should, before making any Election, read carefully
all the information in the Circular and in the HEFT Prospectus. A short
document which includes some "Frequently asked questions" is available on the
Company's website at: www.hendersoneurotrust.com
(http://www.hendersoneurotrust.com) .

Benefits of the Proposals

The Directors believe that the Proposals will have the following benefits for
Shareholders:

§    A compelling investment case: The Rollover Option will provide
Shareholders with exposure to the Combined Trust, a flagship Europe excluding
UK equities proposition, seeking to maximise total return from a portfolio of
the Investment Manager's assessment of Europe's biggest and best companies,
selected according to long-standing global trends and with an emphasis on
substantial, well-managed businesses, with sustainable business models.

§    Demonstrable track record of strong performance: HNE's NAV total
return over three, five and ten years to 30 April 2024 has been 13.1 per
cent., 59.8 per cent. and 155.5 per cent. respectively. HEFT's NAV total
return over three, five and ten years to 30 April 2024 has been 30.6 per
cent., 74.8 per cent., and 164.8 per cent. respectively.

§    A "best ideas" approach: The Combined Trust will be managed by Jamie
Ross, who has managed HNE's portfolio since 2019, and Tom O'Hara, who has
co-managed HEFT's portfolio since 2020. The portfolio managers have their own
distinct and proven expertise but share a fundamental investment philosophy.
Working collaboratively from an enhanced knowledge base, and with the benefit
of increased discussion throughout the stock picking process, it is expected
that the Combined Trust will represent the very best ideas of both portfolio
managers.

§    Continuity of manager and excellent European equities team: The
Combined Trust will be supported by Janus Henderson's award-winning European
equities team which encompasses 11 team members and conducts around 1,300
company meetings a year.

§    Continuity of exposure: HEFT and HNE have over 50 per cent. of common
holdings by value and the majority of the Combined Trust's portfolio is
expected to comprise assets currently held by at least one of the companies.
This complementarity of holdings and style will reduce the extent of any
portfolio realignment required in connection with the Scheme.

§    Increased scale: As a result of the Proposals, the Combined Trust is
anticipated to have net assets of approximately £680 million (based on
valuations as at 30 April 2024) and, assuming full take up of the Cash Option
and the HEFT Tender Offer, would become the second largest investment company
in the AIC European sector. It is also expected to be eligible for inclusion
in the FTSE 250 Index(1). The enhanced scale of the Combined Trust should
improve secondary market liquidity, as well as raise the profile and help
marketability.

§    Reduced management fees for the Combined Trust: The Combined Trust
will benefit from improved management fee terms, with management fees to be
charged on the following basis: 0.600% per annum of the Net Asset Value up to,
but excluding, £500 million; 0.475% per annum of the Net Asset Value equal to
and in excess of £500 million and up to, but excluding, £1 billion; and
0.450% per annum of the Net Asset Value equal to and in excess of £1 billion.
This compares with the current structure of both HNE and HEFT of 0.65% per
annum of the Net Asset Value up to £300 million and 0.55% per annum of the
Net Asset Value in excess of £300 million.

§    Reduced OCR: The Scheme is expected to reduce fixed costs
proportionately and, along with the reduced management fees, produce a
competitive OCR for the Combined Trust estimated to be approximately 0.70 per
cent.(2) compared to HNE's current OCR of 0.79 per cent. and HEFT's of 0.80
per cent.

§    Contribution from Janus Henderson to the costs of the Proposals: The
AIFM has committed to make a contribution of £1,550,000 to the costs of the
Proposals, to ensure the Proposals will be cost-neutral for continuing
shareholders in the Combined Trust, and with any surplus being available for
the benefit of continuing shareholders in the Combined Trust.

§    Discount/premium management policy: The Combined Trust will introduce
a five-yearly conditional performance related tender offer and will also use
share buybacks and share issuance where appropriate and subject to prevailing
market conditions. In addition, the board of the Combined Trust will consider,
at its discretion, subject to normal market conditions and no earlier than
after an initial three-year period, whether it would be in the long-term
interests of shareholders as a whole to be offered additional opportunities to
realise some of their investment in the Combined Trust.

§    Gearing: The Combined Trust expects to deploy strategically both the
longer-term structural and short-term gearing currently in place in HEFT, with
the benefit of inexpensive long-term gearing of €35 million over 25 to 30
years (weighted average cost of 1.57 per cent.) and short-term gearing in the
form of an overdraft.

§    Experienced board: The Combined Trust's board will include directors
of both HNE and HEFT ensuring continuity and collective competence and
experience.

§    Opportunity for cash exit: The Proposals include a cash exit
opportunity of up to 15 per cent. of the Company's shares in issue, providing
all Shareholders with the ability to realise part of their investment at the
HNE Cash FAV per Share.

 

Expected timetable

 Ex dividend date for the pre-liquidation interim dividend to Shareholders        30 May

 Record date for the pre-liquidation interim dividend to Shareholders             31 May

 Latest time and date for receipt of proxy appointments in respect of the First   11.30 a.m. on 18 June
 General Meeting

 Pre-liquidation interim dividend paid to Shareholders                            19 June

 First General Meeting                                                            11.30 a.m. on 20 June

 Latest time and date for receipt of Forms of Election and TTE Instructions       1.00 p.m. on 27 June

 Record date for entitlements under the Scheme                                    6.00 p.m. on 27 June

 Calculation Date                                                                 close of business on 27 June

 Ordinary Shares disabled in CREST (for settlement)                               close of business on 27 June

 Latest time and date for receipt of proxy appointments in respect of the         9.30 a.m. on 2 July
 Second General Meeting

 Reclassification of the Ordinary Shares                                          8.00 a.m. on 3 July

 Suspension of listing of Reclassified Shares                                     7.30 a.m. on 4 July

 Second General Meeting                                                           9.30 a.m. on 4 July

 Effective Date for implementation of the Scheme                                  4 July

 Announcement of the results of Elections, the HNE Rollover FAV per Share, the    4 July
 HNE Cash FAV per Share and the HEFT FAV per Share

 CREST accounts credited with, and dealings commence in, New HEFT Shares          8.00 a.m. on 5 July

 Cheques and electronic payments despatched to Shareholders who elect for the     week commencing 8 July
 Cash Option and CREST accounts credited with cash

 Certificates despatched in respect of New HEFT Shares                            by 18 July

 Cancellation of listing of Reclassified Shares                                   as soon as practicable after the Effective Date

 

Note: All references to time 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.

(1)  Index eligibility subject to subsequent market movement and FTSE
eligibility review.

 

(2) This figure is an estimate, which is subject to change. The actual OCR
will depend on subsequent movements in costs and net assets.

 

For further information please contact:

 

 Henderson EuroTrust plc

 Nicola Ralston                      Contact via Company Secretary

 Chairman                            020 7818 4082

 Janus Henderson Investors, Manager

 Dan Howe                            020 7818 4458

 Head of Investment Trusts

 Oliver Packard                      0207 818 2690

 Head of Investment Trust Sales

 Harriet Hall                        020 7818 2919

 PR Director, Investment Trusts

 Deutsche Numis, Corporate Broker

 Nathan Brown                        020 7260 1426

 Matt Goss                           020 7260 1642

 

Notes

 

Legal Entity Identifier:

HNE: 213800DAFFNXRBWOEF12

 

Disclaimers

 

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.

 

This announcement is not for publication or distribution, directly or
indirectly, in or into the United States of America. This announcement is not
an offer of securities for sale into the United States. Any securities that
may be issued in connection with the matters referred to herein have not been
and will not be registered under the U.S. Securities Act of 1933, as amended
(the "Securities Act") and may not be offered or sold in the United States,
except pursuant to an applicable exemption from registration under the
Securities Act and in compliance with the securities laws of any state, county
or any other jurisdiction of the United States. No public offering of
securities is being made in the United States.

 

Furthermore, any securities that may be issued in connection with the matters
referred to herein may not be offered or sold indirectly or indirectly in,
into or within the United States or to or for the account or benefit of U.S.
Persons except under circumstances that would not result in the Company being
in violation of the U.S. Investment Company Act of 1940, as amended.

 

Outside the United States, the securities may be sold to persons who are not
U.S. Persons pursuant to Regulation S.

 

Moreover, any securities that may be issued in connection with the matters
referred to herein 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).

 

The value of shares and the income from them is not guaranteed and can fall as
well as rise due to 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 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
the Company's financial position, strategy, plans, proposed acquisitions and
objectives, are forward-looking statements.

 

Forward-looking statements are subject to risks and uncertainties and,
accordingly, the Company'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. Subject to their respective legal and regulatory
obligations, each of HNE and Janus Henderson expressly disclaims any
obligations or undertaking to update or revise any forward-looking statements
contained herein to reflect any change in expectations with regard thereto or
any change in events, conditions or circumstances on which any such statement
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.

 

None of HNE or Janus Henderson, 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 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 HNE and Janus Henderson,
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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