REG - STS Global I&G Trust Troy Inc & Gwth Plc - Publication of a Prospectus and Circular

Troy Income & Growth TrustAnnouncement

23/02/2024 15:45

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240223:nRSW3302Ea&default-theme=true

RNS Number : 3302E  STS Global Income & Growth Trust  23 February 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 (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA, IN ANY MEMBER STATE OF THE EEA OR ANY OTHER JURISDICTION IN WHICH THE SAME COULD 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.

 

23 February 2024

 

STS Global Income & Growth Trust plc

(the "Company" or "STS")

LEI: 549300UZ1Y7PPQYJGE19

 

Publication of Prospectus and Circular in connection with the proposed
combination of the Company with Troy Income & Growth Trust plc

 

Introduction

 

As announced by the Company on 28 November 2023, the Board has agreed terms
with the board of Troy Income & Growth Trust plc ("TIGT") in respect of a
proposed combination of the assets of the Company with TIGT. If approved, the
combination will be implemented by way of a scheme of reconstruction and
members' voluntary liquidation of TIGT under section 110 of the Insolvency Act
(the "Scheme") and the associated transfer of part of TIGT's cash, assets and
undertaking to the Company in exchange for the issue of new ordinary shares of
one penny each in the capital of the Company (the "New Shares") to TIGT
Shareholders who are deemed to have elected to roll over their investment in
TIGT into the Company (the "Issue"). The proposals for the Company's
participation in the Scheme, including the Issue, constitute the "Scheme
Proposals".

 

The Board announces that the Company has today published a prospectus (the
"Prospectus") in relation to the Issue, together with a circular to provide
Shareholders with further details of the Scheme Proposals and to convene a
general meeting of the Company (the "General Meeting") to seek approval from
Shareholders for the implementation of the Scheme Proposals (the "Circular").

 

Following implementation of the Scheme Proposals, the Company will continue to
be managed by Troy Asset Management Limited ("Troy") and it is intended that
the Company's Portfolio will continue to be managed on the same basis as it is
currently. In particular, the Company's investment policy and investment
objective, to achieve rising income and long-term capital growth which it
seeks to deliver for shareholders through investment in a balanced portfolio
constructed from global equities, will not be amended in connection with the
Scheme Proposals.

 

As noted below, whilst not a requirement or condition of the Scheme, the Board
is also proposing to renew the Company's authority to buy back Shares and to
make certain amendments to the Company's existing articles of association
("Existing Articles") at the General Meeting convened in connection with the
Scheme Proposals. Further details are set out in the section titled "General
Meeting" below and in the Circular.

 

Benefits of the Scheme Proposals

 

The Board believes that the Scheme Proposals will offer a number of benefits
to shareholders of the enlarged Company, including:

 

·     Reduction in the Company's management fees: As part of the Scheme
Proposals, Troy has agreed to reduce the annual management fees payable by the
enlarged Company to align with those currently payable by TIGT. These annual
management fees will be 0.55 per cent. of net assets up to and including £250
million and 0.50 per cent. of net assets in excess of £250 million (the "New
Fee Arrangements"). As a result of the combination of assets under the Scheme,
shareholders in STS, including TIGT Shareholders that roll over, are expected
to benefit from the lower marginal management fee rate charged on the value of
net assets above £250 million. 1  Neither the Company nor TIGT currently meet
that threshold.

 

·    Lower ongoing charges ratio: As the enlarged Company will be able to
spread its fixed costs over a larger asset base and because of the New Fee
Arrangements, the Scheme Proposals are expected to result in a decrease of
approximately 22 per cent. 2  in the ongoing charge ratio ("OCR") for Existing
Shareholders, based on the pro forma OCR of the enlarged Company and the most
recent OCR of the Company (as at 31 March 2023).

 

·     Enhanced marketability: The scale of the enlarged Company is expected
to improve the marketability of the Shares.

 

·    Significant cost contribution from Troy: Troy will make a significant
cost contribution equivalent to an eighteen-month fee waiver on the assets
transferred to the Company under the Scheme (the "Troy Cost Contribution").
This is expected to fully offset the costs that would otherwise be borne by
Existing Shareholders in connection with the Scheme Proposals. The Troy Cost
Contribution, together with the other terms of the Scheme, means that there
should be no dilution to the Company's NAV per Share as a result of the Scheme
Proposals. Further details of the Troy Cost Contribution are set out below.

 

·   Shareholder register: The Scheme Proposals will allow a number of
Shareholders to consolidate their holdings across the Company and TIGT while
also possibly creating a more diversified shareholder base through a
combination of the balance of the two share registers.

 

·     Cost savings from the rollover of TIGT's existing holdings: As at 20
February 2024, the Company and TIGT had 15 stocks in common, representing
approximately 50 per cent. of their respective gross portfolios (excluding
cash). Given there are a number of common holdings between the two companies,
a material proportion of the Rollover Pool is expected to consist of TIGT's
existing holdings. The Company's acquisition of such assets pursuant to the
Scheme is expected to be more cost effective for the enlarged Company than
investing cash upon receipt under the Scheme in the same investee companies
(assuming there is no significant change in such companies' share prices
between the Calculation Date and the Effective Date).

 

Overview of the Scheme

 

The Scheme Proposals will be effected by way of a scheme of reconstruction of
TIGT under section 110 of the Insolvency Act, resulting in the voluntary
liquidation of TIGT and the transfer of part of TIGT's cash, assets and
undertaking (the "Rollover Pool") to the Company in exchange for the issue of
New Shares by the Company on a formula asset value ("FAV") for FAV basis.

 

Under the Scheme, TIGT Shareholders will be entitled to elect to receive in
respect of some or all of their TIGT Shares:

 

·      New Shares (the "Rollover Option"); and/or

 

·      cash (the "Cash Option").

 

The Cash Option will be unlimited, and all valid Elections for that option
will be accepted. TIGT Shareholders that elect, or are deemed to have elected,
for the Cash Option will receive cash equal to the Cash NAV per TIGT Share
multiplied by the number of TIGT Shares they own and in respect of which they
have validly elected, or are deemed to have elected, for the Cash Option. The
Cash NAV per TIGT Share will be equal to the TIGT NAV (which excludes any
provision for the costs of the Scheme Proposals or any costs of the Scheme
Proposals already accrued in TIGT's net asset value as at the Calculation
Date) divided by the number of TIGT Shares in issue as at the Calculation Date
(excluding TIGT Shares held in treasury) less a discount of 2 per cent. (the
"Cash Option Discount"). The value arising from the application of the Cash
Option Discount will be credited to the TIGT FAV for the benefit of the TIGT
Shareholders that roll over their investment under the Scheme.

 

New Shares will be issued as the default option under the Scheme in the event
that TIGT Shareholders do not make a valid Election under the Scheme for the
Cash Option, or to the extent that they do not make an Election for the Cash
Option in respect of their entire holding of TIGT Shares.

 

Further details of the Scheme and illustrative FAV calculations of each of the
Company and TIGT are set out in Part 2 of the Circular.

 

The New Shares will be issued on a non pre-emptive basis and will rank equally
in all respects with the existing issued Shares other than in respect of
dividends declared with a record date prior to the Effective Date. For the
avoidance of doubt, TIGT Shareholders receiving New Shares in connection with
the Scheme will not, in respect of those New Shares, be entitled to receive
the STS Third Quarterly Interim Dividend (being the Company's third quarterly
interim dividend in respect of the financial year ending on 31 March 2024,
which is due to be paid on 19 April 2024). However, such TIGT Shareholders
will be entitled to participate in any dividends declared by the Company with
a record date after the date of the issue of New Shares to them.

 

Conditions of the Scheme Proposals

 

The Scheme Proposals are conditional on:

 

·    the passing of the TIGT Resolutions to approve the Scheme and the
winding up of TIGT at the TIGT General Meetings and the Scheme becoming
unconditional in all respects (including the Transfer Agreement becoming
unconditional in all respects);

 

·   the passing of Resolution 1 (to approve the issue of the New Shares
pursuant to the Scheme) and Resolution 1 becoming unconditional in all
respects;

 

·      the FCA agreeing to admit the New Shares to the Official List and
the London Stock Exchange agreeing to admit the New Shares to trading on the
Main Market, subject only to allotment; and

 

·      the Directors and the TIGT Directors resolving to proceed with
the Scheme.

 

Unless the conditions referred to above have been satisfied or, to the extent
permitted, waived by both the Company and TIGT on or before 31 March 2024, the
Scheme Proposals will not become effective and the New Shares will not be
issued.

 

Costs and Expenses of the Scheme Proposals

 

Save as described below, the Company and TIGT have each agreed to bear their
own costs in relation to the Scheme Proposals. The fixed direct costs of the
Scheme Proposals payable by the Company are expected to be approximately
£790,000 inclusive of VAT (which is assumed to be irrecoverable where
applicable). Such costs are expected to be fully offset by the Troy Cost
Contribution (as defined below).

 

Any costs of realignment and/or realisation of the TIGT Portfolio will be
borne by TIGT. The Acquisition Costs, being the anticipated costs of stamp
duty, stamp duty reserve tax or other transaction tax for the acquisition of
the Rollover Pool by the Company (but not, for the avoidance of doubt, any
stamp duty, stamp duty reserve tax or investment costs incurred by the Company
on the deployment of the cash therein upon receipt under the Scheme) will be
borne by TIGT, together with the London Stock Exchange's Admission Fees. Such
costs are not reflected in the estimate of costs above.

 

Troy has agreed to make a contribution to the costs of the Scheme Proposals by
means of a reduction in the management fee payable by the enlarged Company to
Troy. This fee reduction will constitute a waiver of the management fee that
would otherwise be payable by the enlarged Company to Troy in respect of the
assets transferred by TIGT to the Company pursuant to the Scheme for the first
18 months following the completion of the Scheme at the blended rate of the
enlarged Company's New Fee Arrangements (the "Troy Cost Contribution"). The
financial value of the Troy Cost Contribution will first be credited to the
STS FAV against the STS Direct Costs (which for these purposes are capped at
£900,000 (inclusive of VAT)) and, in the event that the Troy Cost
Contribution exceeds the STS Direct Costs, an amount equal to the difference
between the Troy Cost Contribution and the STS Direct Costs will be credited
to the TIGT FAV. Based on the net assets of TIGT and the Company as at 20
February 2024, and assuming there are no Dissenting TIGT Shareholders, it is
currently estimated that the total value of the Troy Cost Contribution will be
between £970,000 (if there is a 30 per cent. take up of the Cash Option) and
£1.1 million (if there is a 20 per cent. take up of the Cash Option), which
would fully offset the Company's fixed direct costs in relation to the Scheme
Proposals.

 

In the event that implementation of the Scheme does not proceed, each party
will bear its own costs.

No expenses will be charged directly to investors by the Company in connection
with the Issue or Admission.

 

Proposed changes to the Board

 

It has been agreed as part of the Scheme Proposals that Bridget Guerin and
Brigid Sutcliffe (the "Prospective Directors"), both of whom are currently
TIGT Directors, will be appointed as non-executive Directors of the Company
from the date of Admission. As such, the Board will then, initially, consist
of eight Directors, comprising the six current Directors of the Company and
two current TIGT Directors. It is expected that two current Directors, Angus
Cockburn and Mark Little, will retire from the Board at the Company's upcoming
annual general meeting, which is expected to be held in June 2024, and that
they will not stand for re-election. Therefore, subject to the Directors'
re-elections and the Prospective Directors' elections being approved by
Shareholders, following the 2024 AGM the Board will consist of four of the
incumbent Directors and two of the current TIGT Directors.

 

Following the implementation of the Scheme Proposals, the current Chairman of
the Company will continue in that role.

 

Admission and Dealings

 

Applications will be made by the Company to the FCA and to the London Stock
Exchange for the New

Shares to be admitted to listing on the premium segment of the Official List
and to trading on the Main Market, respectively. If the Scheme Proposals
become effective, it is expected that the New Shares will be admitted to the
Official List, and dealings on the Main Market will commence, on 28 March
2024.

 

General Meeting

 

Implementation of the Scheme Proposals is conditional on, amongst other
things, the passing of the Resolution to be proposed at the General Meeting to
approve the Issue and the approval of the Scheme by TIGT Shareholders at the
TIGT General Meetings.

 

In addition, whilst not a requirement of the Scheme, the Board is proposing to
seek Shareholder approval for the renewal of the Company's authority to buy
back Shares based on the issued Share capital of the Company at the time of
the General Meeting and, due to the dilutive effect of the Issue, based on the
on enlarged Share capital of the Company following the implementation of the
Scheme Proposals.

 

The Board is also proposing, whilst not a requirement of the Scheme, to make
certain amendments to the Company's existing articles of association
("Existing Articles"). The proposed changes to the Existing Articles primarily
relate to changes in law and regulation and developments in market practice
since the Existing Articles were adopted and also include some additional
minor or technical amendments. The proposed amendments to the Existing
Articles are summarised in Part 3 of the Circular.

 

The General Meeting of STS will be held at the offices of Troy Asset
Management Limited, 33 Davies Street, London W1K 4BP at 3.00 p.m. on 13 March
2024.

 

Notice of the General Meeting is set out at the end of the Circular and
contains the full text of the Resolutions.

 

Expected timetable

                                                                              2024
 Publication of  the Circular and the Prospectus                              23 February

 Latest time and date for receipt of Forms of Proxy and CREST voting          3.00 p.m. on 11 March
 instructions in respect of the General Meeting

 General Meeting                                                              3.00 p.m. on 13 March

 Announcement of results of the General Meeting                               13 March

 Announcement of the results of the Elections under the Scheme                15 March

 Calculation Date in relation to the Scheme                                   Market Close on 21 March

 Effective Date for implementation of the Scheme                              27 March

 Announcement of the TIGT FAV per Share, the Cash NAV per TIGT Share and the  27 March
 STS FAV per Share

 CREST Accounts credited with, and dealings commence in, New Shares           at, or soon after, 8.00 a.m. on 28 March

 Share certificates in respect of New Shares held in certificated form        no later than 10 Business Days from the Effective Date
 despatched

 All references to time are to London (UK) time, unless otherwise stated. Each
 of the times and dates in the above expected timetable (other than in relation
 to the General Meeting) 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.

Defined terms used in this announcement shall, unless the context requires
otherwise, have the meanings ascribed to them in the Circular.

The Prospectus and Circular have been submitted to the Financial Conduct
Authority and will shortly be available for inspection at the National Storage
Mechanism which is located at
https://data.fca.org.uk/a/nsm/nationalstoragemechanism
(https://data.fca.org.uk/a/nsm/nationalstoragemechanism) and on the Company's
website at www.stsplc.co.uk (http://www.stsplc.co.uk) .

Enquiries

STS Global Income & Growth Trust plc

 

John Evans
(Chairman)
              Contact via J.P Morgan Cazenove

 

 

J.P. Morgan Cazenove

 

William Simmonds

Rupert Budge
 
     0203 493 8000

 

 

IMPORTANT NOTICES

General

This announcement is an advertisement for the purposes of the Prospectus
Regulation Rules of the UK Financial Conduct Authority ("FCA") and is not a
prospectus. This announcement does not constitute or form part of, and should
not be construed as, an offer for sale or subscription of, or solicitation of
any offer to subscribe for or to acquire, any ordinary shares in the Company
in any jurisdiction, including in or into Australia, Canada, Japan, the
Republic of South Africa, the United States of America (including its
territories and possessions, any state of the United States and the District
of Columbia) or any member state of the EEA.

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. The securities
referred to herein have not been and will not be registered under the US
Securities Act of 1933, as amended, and may not be offered or sold in the
United States, except pursuant to an applicable exemption from registration.
No public offering of securities is being made in the United States.

This announcement does not contain all the information set out in the Circular
or the Prospectus. Shareholders should read the Circular and the Prospectus in
full before deciding what action to take in respect of the proposals.

Approval of the Prospectus by the FCA should not be understood as an
endorsement of the securities that are the subject of the Prospectus. TIGT
Shareholders are recommended to read the Prospectus before making a decision
in order to fully understand the potential risks associated with a decision to
invest in the Company's securities.

Sponsor

J.P. Morgan Securities plc (which carries on its UK investment banking
activities as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove") which is
authorised in the United Kingdom by the Prudential Regulation Authority and
regulated by the FCA and the PRA, is acting exclusively for the Company and
for no one else in connection with the matters set out in this announcement
and is not, and will not be, responsible to anyone other than the Company for
providing the protections afforded to its clients nor for providing advice in
connection with the matters set out in this announcement.

Apart from the responsibilities and liabilities, if any, which may be imposed
upon J.P. Morgan Cazenove by the Financial Services and Markets Act 2000 or
the regulatory regime established thereunder, neither J.P. Morgan Cazenove nor
any persons associated or affiliated with it accepts any responsibility
whatsoever or makes any representation or warranty, express or implied,
concerning the contents of this announcement, including its accuracy,
completeness or verification, or concerning any other statement made or
purported to be made by it or them, or on its or their behalf, the Company or
the Directors in connection with the Company or the proposals, and nothing in
this announcement is, or shall be relied upon as, a promise or representation
in this respect, whether as to the past or future. J.P. Morgan Cazenove and
its respective associates and affiliates accordingly disclaim, to the fullest
extent permitted by law, all and any responsibility and liability whether
arising in tort, contract or otherwise (save as referred to herein) that it or
they might otherwise have in respect of this announcement or any such
statement.

 

 1  Based on a combination of the net assets of the Company and TIGT as at 20
February 2024 (£202.9 million and £171.2 million respectively), current
cost estimates and assuming no TIGT Shareholders dissent from the Scheme
pursuant to section 111(2) of the Insolvency Act and 25 per cent. of TIGT
Shares are elected for the Cash Option.

 2  Figures assume 25 per cent. of TIGT Shares are elected for the Cash Option
and exclude any impact from the TIGT Portfolio realisation costs in connection
with the Scheme. All figures are illustrative only, using currently available
information and estimates. All figures are subject to change. 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  PDITJMATMTJTBAI