27 Jul 2018 07:00
Gabelli Value Plus+ Trust PLC (the "Company")
27 July 2018
Notice of General Meeting
The Company has today published a shareholder circular (the "Circular") setting out the notice of a general meeting (the "General Meeting" or "GM") to be held at Dukes Hotel, 35 St James's Place, London, SW1A 1NY, on Tuesday, 14 August 2018 immediately following the conclusion of the Company's Annual General Meeting, which will be held at the same venue on Tuesday, 14 August 2018, commencing at 11 a.m. The purpose of the General Meeting is to seek shareholder approval for a Rule 9 Panel waiver, as set out in more detail below.
The Circular will shortly be available on the Company's website (https://www.gabelli.co.uk/the-gabelli-value-plus-trust/), subject to certain access restrictions, and will be available for inspection at the Company's registered office at 64 St. James's Street, London, SW1A 1NF. A copy of the Circular will be submitted to the National Storage Mechanism and will also shortly be available for inspection at www.morningstar.co.uk/uk/NSM.
Capitalised terms in this announcement shall have the same meaning as given to them in the Circular unless the context otherwise requires.
1. INTRODUCTION
At the Company's Annual General Meeting convened at Dukes Hotel, 35 St James's Place, London, SW1A 1NY at 11.00 a.m. on 14 August 2018, resolution 12 to be proposed at the Annual General Meeting will, if approved, give the Company authority to make one or more market purchases of Shares up to a maximum of 14,980,650 Shares (representing 14.99 per cent. of the total issued share capital of the Company as at the latest practicable date prior to the publication of the notice of the meeting) (the "Buy Back Authority").
The purpose of the Circular is to set out the business to be considered at the GM. The proposal being put forward to Shareholders by the Board is to approve the waiver granted by the Panel of the obligation that would otherwise arise on any member of the Concert Party to make a general offer to Shareholders pursuant to Rule 9 of the Code as a result of the potential exercise by the Company, prior to the 2019 annual general meeting of the Company, of the Buy Back Authority (if approved) (the "Waiver Proposal").
The Circular provides Independent Shareholders with the details of the Waiver Proposal and the Directors recommendation in relation to the Waiver Proposal.
2. THE BUY BACK AUTHORITY
The Directors believe that the ability of the Company to purchase its own Shares is a potentially important mechanism for managing capital efficiency. In particular the Directors may want to take advantage of circumstances where a purchase by the Company of its own Shares would represent good use of the Company's available cash resources and would increase Net Asset Value per Share and Shareholder value. For these reasons, resolution 12 is being proposed at the Annual General Meeting. However, Shareholders should note that there is no guarantee that the Board will exercise its discretion to buy back Shares pursuant to the Buy Back Authority.
If the Company purchases any of its Shares, the maximum price (exclusive of expenses) which may be paid for a Share shall be an amount equal to the higher of: (i) an amount equal to five per cent. above the average of the middle market quotations for a Share as derived from the Daily Official List of the London Stock Exchange plc for the five business days immediately preceding the day on which that Share is contracted to be purchased; and (ii) an amount equal to the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out at the relevant time. In addition, Shares will be purchased through the market only at prices below the last published Net Asset Value per Share, which should have the effect of increasing the Net Asset Value per Share for the remaining Shareholders. Any such purchase will be carried out in accordance with the Companies Act. The minimum price payable is £0.01 per Share. The Directors will only consider repurchasing Shares in the market if they believe it to be in Shareholders' interests and as a means of correcting any imbalance between supply and demand for shares, to increase the Net Asset Value per Share and to assist in minimising any discount to the Net Asset Value per Share in relation to the price at which Shares may be trading.
The Directors are seeking authority at the Annual General Meeting to purchase up to 14,980,650 Shares, being 14.99 per cent. of the current Shares in issue. The Directors have not agreed any terms for the purchase of the Shares and do not seek authority to purchase Shares from specific parties and have not at the date of this announcement entered into negotiations for the repurchase of Shares from any particular shareholder. For the avoidance of doubt, the authority being sought is without prior understanding, arrangement or agreement between the Company and any related party in relation to the repurchase of shares. This authority will expire on the earlier of the conclusion of the annual general meeting of the Company in 2019 or if earlier 18 months from the passing of resolution 12 at the Annual General Meeting. All Shares purchased pursuant to the above authority shall be either:
• cancelled immediately on completion of the purchase; or
• held as treasury shares as permitted by the Companies Act.
Please refer to Section 3 below for information in relation to Code implications of buy backs of the Shares.
3. THE WAIVER PROPOSAL
Background
As an English company which has its shares admitted to listing on the Premium Listing Segment of the Official List and admitted to trading on the Main Market of the London Stock Exchange, the Company is subject to the Code. Under Rule 9 of the Code, any person who acquires an interest (as defined in the Code) in shares which, taken together with shares in which he/she is already interested and shares in which persons acting in concert with him/her are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares.
Similarly, when any person, together with persons acting in concert with him/her, is interested in shares which in the aggregate carry not less than 30 per cent. of the voting rights of such a company, but does not hold shares carrying more than 50 per cent. of such voting rights, a general offer will normally be required if any further interests in shares are acquired by any such person. An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him/her, for any interest in shares of the company during the 12 months prior to the announcement of the offer.
When members of a concert party hold more than 50 per cent. of the voting rights in a company, no obligations under Rule 9 normally arise from acquisitions by any member of the concert party. They may accordingly increase their aggregate interests in shares without incurring any obligation under Rule 9 to make a general offer, although individual members of a concert party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Panel consent.
Outline of the Concert Party
Associated Capital Group Inc. is currently interested in 26,691,000 Shares, representing 26.725 per cent. of the voting rights of the Company. ACG is a US publicly traded company whose Class A common stock is admitted to trading on the New York Stock Exchange. ACG was admitted to trading on 30 November 2015 following the spin-out of the business from GAMCO Investors, Inc. GAMCO Investors, Inc. is the ultimate parent company of the Gabelli Funds, LLC, the Company's discretionary investment manager. Mr. Mario J. Gabelli, is currently interested in 15,000 Shares, representing 0.015 per cent. of the voting rights of the Company. Mr. Mario J. Gabelli is the executive chairman of ACG and indirectly controls approximately 96.4 per cent. of the voting rights in ACG, and for the purposes of the Code is deemed to be acting in concert with ACG, who together form the "Concert Party".
Further information on the Concert Party is set out in the Circular.
Effect of the exercise of the Buy Back Authority on the interests of the Concert Party
The exercise of the Buy Back Authority may result in a material increase in the interests of the Concert Party as a whole. Please see the table set out in paragraph 4.9 of Part II of the Circular which sets out the maximum potential percentage holdings of the Concert Party members, being 31.459 per cent., based on the exercise of the Buy Back Authority in full over Shares not held by the Concert Party.
Shareholders should also note that the Company does not expect to make use of its existing share buy back authority between the Latest Practicable Date and the GM and that the percentage holdings disclosures in the table in paragraph 4.9 of Part II of the Circular have been calculated on this basis.
Impact of Rule 37 of the Code
Under Rule 37 of the Code, any increase in the percentage holding of a shareholder that results from a company buying back or redeeming its own shares is also treated as an acquisition for the purposes of Rule 9 of the Code. Rule 37 does not normally apply, however, unless the person who would otherwise be required to make a mandatory offer under Rule 9 of the Code is a director of the company or is acting in concert with the directors of the company.
An investment manager of an investment company will, for these purposes, be treated under the Code as a director. The Company's discretionary investment manager is Gabelli Funds, LLC and Mr. Mario J. Gabelli is one of the senior portfolio managers responsible for the discretionary management of the Company and, as noted above, is also the executive chairman of ACG. Therefore, the exercise of the Buy Back Authority would have consequences for the Concert Party under Rule 37 of the Code.
Accordingly, if the Concert Party's aggregate shareholding increased as a result of the exercise of the Buy Back Authority, the Concert Party would be required to make a mandatory offer for the remainder of the Issued Share Capital of the Company.
Panel Waiver - exercise of the Buy Back Authority
The Panel has agreed that, subject to the approval of the Independent Shareholders on a poll, it will waive the obligation on any member of the Concert Party to make a general offer that would otherwise arise as a result of the exercise of the Buy Back Authority, if the Waiver Resolution is approved at the GM on 14 August 2018.
Accordingly, the Waiver Resolution (for the approval of the Waiver Proposal) is being proposed at the GM and will be taken on a poll to be called by the Chairman of the GM. The members of the Concert Party will not be entitled to vote on the Waiver Resolution. No other shareholder is considered to be acting in concert with the Concert Party.
Shareholders should note that, if the Waiver Resolution is approved at the GM, any further increase in the Concert Party's aggregate interest in Shares (other than pursuant to the exercise of the Buy Back Authority) or an acquisition of further Shares by any member of the Concert Party or any person acting in concert with it will be subject to the provisions of Rule 9. The Panel Waiver will only remain in effect until the 2019 annual general meeting of the Company.
Intentions of the Concert Party
The Concert Party has confirmed that, if the Waiver Resolution is passed by the Independent Shareholders on a poll, there is no agreement, arrangement or understanding for the transfer of their Shares to any third party. The Concert Party is not intending to seek any changes in respect of: (i) the future business of the Company, including any research and development functions; (ii) the management of the Company including any material change to the balance of the skills and functions of the management; (iii) the strategic plans for the Company and their repercussions on the Company's places of business, including on the location of the Company's headquarters functions; (iv) the fixed assets of the Company and (v) the continuation of the Shares being admitted to the Premium Listing Segment of the Official List and admitted to trading on the Main Market of the London Stock Exchange. As an investment company, the Company has no employees or fixed assets.
If the Waiver Proposal is approved by the passing of the Waiver Resolution at the GM, the Concert Party will not be restricted from making an offer for the Company.
Intentions of the Directors
The Independent Directors anticipate that they will continue to seek Shareholder approval on an annual basis of the waiver of any Rule 9 obligation which may arise as a result of the exercise of a renewed buy back authority.
4. BENEFITS OF THE WAIVER PROPOSAL
The Directors recognise that it is important to Shareholders that the Shares do not trade at a significant discount to their prevailing Net Asset Value per Share and consider that the Buy Back Authority represents a useful mechanism to seek to correct any discount between the trading price and the Net Asset Value per Share which might arise.
In order to prevent the need for the Concert Party to make a mandatory offer arising as a result of exercising the Buy Back Authority and to enable the Company to continue its business as an investment company without material disruption, the Company has sought the Panel Waiver in respect of the Code as set out in Section 3 of this Part I.
In light of the matters outlined above, the Board believes that it is in the best interests of the Company and the Shareholders as a whole that the Waiver Proposal be implemented.
5. RISKS ASSOCIATED WITH THE WAIVER PROPOSAL
In considering their voting decisions in relation to the Waiver Proposal, shareholders are referred to the risks set out below. Only those risks relating to the Waiver Proposal which are material and currently known to the Company are set out below. Additional risks and uncertainties not currently known to the Company, or that the Company currently deems to be immaterial, may also have an adverse effect on the Company.
• The Independent Shareholders should note that, if the Waiver Resolution is approved and, as a result of the exercise of the Buy Back Authority, the Concert Party's aggregate shareholding in the Company is increased, the Concert Party would be able to exercise greater control over the conduct of the Company than is currently already the case.
• The Independent Shareholders should note that, if the Waiver Resolution is approved, this does not provide any guarantee that in any future situation where Rule 9 of the Code became relevant to the Company (whether in relation to the Concert Party or otherwise) the Panel would be similarly willing to grant a waiver.
Whilst not a risk associated with the Waiver Proposal, Shareholders should note that the Shares may trade at a discount to the applicable Net Asset Value per Share for a variety of reasons, including adverse market conditions and a deterioration in investors' perceptions of the merits of the Company's investment objective and investment policy. While the Directors may seek to mitigate any discount to Net Asset Value per Share through such discount management mechanisms as they consider appropriate, there can be no guarantee that they will do so or that such mechanisms will be successful.
6. IMPLEMENTING THE WAIVER RESOLUTION
The Waiver Resolution is subject to Independent Shareholder approval at the GM. In order to comply with the Code, the Waiver Resolution will be taken on a poll, to be passed by more than 50 per cent. of votes cast by Independent Shareholders at the GM present in person or by proxy and voting at the GM. The Concert Party members will not vote on the Waiver Resolution.
7. ACTION TO BE TAKEN
Shareholders will find enclosed with the Circular the Form of Proxy for use at the GM.
Whether or not they intend to be present at the GM, shareholders are asked to complete the Form of Proxy in accordance with the instructions printed thereon and to return the Form of Proxy to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY, to arrive by the time and date specified on the Form of Proxy. As an alternative to completing the hard-copy proxy form, you can appoint a proxy electronically by going to www.investorcentre.co.uk/eproxy. You will be asked to enter a Control Number, Shareholder Reference Number and Pin, which are set out on your personalised Form of Proxy enclosed with the Circular. For an electronic proxy appointment to be valid, your appointment must be received by no later than 11.05 a.m. on 10 August 2018.
The completion and return of the Form of Proxy will not preclude shareholders from attending the GM and voting in person if they wish to do so.
8. RECOMMENDATION
The Directors, who have been so advised by Peel Hunt, consider the Waiver Proposal to be fair and reasonable and in the best interests of Independent Shareholders and the Company as a whole. In providing advice to the Directors, Peel Hunt has taken account of the commercial assessments of the Directors. Accordingly, the Directors unanimously recommend that the Independent Shareholders vote in favour of the Waiver Resolution, approving the Waiver Proposal at the GM, as the Directors intend to do in respect of their entire beneficial shareholdings of 286,000 Shares, representing 0.286 per cent. of the total number of issued shares in the Company.
Enquiries:
Maitland Administration Services Limited
Email: cosec@maitlandgroup.co.uk
Phone: +44 (0) 1245 398984
Peel Hunt LLP
Luke Simpson, Corporate Broking
Telephone: +44 20 7418 8900
Legal Entity Identifier: 213800FZFN1SD1GNNZ11