(Alliance News) - GCP Infrastructure Investments Ltd and GCP Asset Backed Income Fund Ltd ended combination talks, as a "significant minority" of shareholders at the latter opposed the tie-up.
GCP Infrastructure said it remains "committed to delivering a strategy that accelerates the company's capital reallocation".
"The company's priorities for the uses of its available cash reserves remain, in the first instance, a combination of reducing the company's outstanding debt balance from the current GBP104 million to as low as possible; and buying back shares whilst the company's share price trades at a material discount to its net asset value per ordinary share. Given these alternatives, the threshold for new investment activity remains a high hurdle," the FTSE 250 listing said.
GCP Asset, meanwhile, announced it will propose a continuation vote at its May 2024 annual general meeting. Should shareholders vote the company can continue in its present form, similar votes will be held every four years.
The planned GCP Infrastructure and GCP Asset Backed Income combination was to be conducted through a contractual scheme of reconstruction, resulting in a solvent winding-up of the latter. GCP Asset Backed Income assets were to be transferred to GCP Infrastructure in exchange for new shares.
GCP Asset Backed invests in medium to long-term fixed or floating rate loans, secured against physical assets or cash flows. GCP Infrastructure is an investment fund, which specialises in UK infrastructure.
GCP Asset said: "Since announcing the scheme, the company has undertaken a significant shareholder consultation exercise to seek feedback from shareholders as to their views in relation to the scheme. Whilst a number of shareholders expressed their support for the scheme, a significant minority of shareholders have informed the company that they are not supportive of the scheme. As a result of this feedback, the board has notified GCP Infra that it intends to cease discussions relating to the scheme."
Amid the "differing views" on the future of the firm given by shareholders, GCP Asset believes it will benefit from a continuation vote.
"Accordingly, the board announces that it will propose an ordinary resolution at the company's annual general meeting to be held in May 2024 that the company continue in its present form. In the event that such a resolution passes, a similar resolution will be proposed every four years thereafter. Alternatively, if such a resolution does not pass, the board expects to put forward proposals to shareholders to amend the investment objective and policy of the company to pursue a strategy for the orderly realisation of the company's portfolio and the return of capital to shareholders thereafter," GCP Asset added.
GBP Asset Backed shares rose 7.3% to 62.00 pence each in London on Monday morning. GCP Infrastructure edged down 0.3% to 71.80p.
By Eric Cunha, Alliance News news editor
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GCP Infrastructure Investments (GCP)