M&g Credit Inc. Regulatory News (MGCI)

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24 May 2023

M&G Credit Income Investment Trust plc

Notice of General Meeting

The Board of M&G Credit Income Investment Trust plc (the "Company") has today published a circular (the "Circular"), including a notice of meeting convening a general meeting ("Meeting") to be held at 12:00 p.m. on 15 June 2023, which will shortly be sent to the Company's shareholders ("Shareholders").

The Circular sets out details of the following proposals:

i. an amendment to the Company's articles of association (the "Articles") such that the Board will be required to submit to Shareholders proposals (which may constitute a tender offer or other method of distribution) to provide Shareholders with an opportunity to realise the value of some or all of their Ordinary Shares at the Net Asset Value per Ordinary Share less costs (a "Liquidity Opportunity") at, or within the twelve months prior to, the annual general meeting of the Company to be held in 2028, and at, or within the twelve months prior to, each annual general meeting of the Company held every fifth year thereafter, in each case unless the Board is directed by Shareholders by way of a special resolution not to offer such Liquidity Opportunity; and

ii. a direction to the Board not to offer to Shareholders a Liquidity Opportunity in 2024 (the "Initial Liquidity Opportunity") (together, the "Proposals").

The Proposals require the approval of Shareholders, which will be sought at the Meeting. Since the Proposals constitute a change to the Articles they are required by law to be proposed as a special resolution ("Resolution"), which requires at least 75% of those votes cast at a general meeting to be cast in favour. In the event that Shareholders do not approve the Resolution to be proposed to implement the Proposals, or were the Proposals to be approved but only by a narrow margin, the Board will reconsider offering the Initial Liquidity Opportunity.

The Board has consulted with a broad group of Shareholders who have all indicated their support for the Proposals.

The Board believes that the Proposals are in the best interests of the Company and the Shareholders as a whole and recommends that Shareholders vote in favour of the Resolution at the Meeting.

Rationale for the Proposals

In the prospectus for the Company's initial public offer in 2018 (the "IPO") the Board set out, as part of its approach to discount management, its intention to present the Initial Liquidity Opportunity to Shareholders before the fifth AGM of the Company, which is to be held in 2024. The Initial Liquidity Opportunity was intended to provide Shareholders with an opportunity to realise the value of some or all of their holdings in the Company, principally in the event that either the Company had not performed well or the Shares had traded at a prolonged discount to their Net Asset Value.

The Board is pleased that the Company has since IPO delivered on its return target of an annualised dividend yield of LIBOR plus 2.5% in respect of the Company's first financial period to 31 December 2019 and an annualised dividend yield of SONIA (which replaced LIBOR) plus 4% (on the opening NAV per Share) in respect of each financial year thereafter. Additionally, given the recent increases in interest rates, the dividend yield on the opening NAV for the Company's financial year 2023 (adjusted for the payment of the fourth quarter dividend for financial year 2022) is approximately 8%.

Despite the Company's NAV underperforming the benchmark in 2022, the Board believes this was due to an increase in credit spreads to levels above those typically seen in public investment grade debt markets and a consequential reduction in the market prices of some of the Company's underlying portfolio holdings. As these spreads normalise, the Company's NAV can be expected to rise again. The Company's investment manager, M&G Alternatives Investment Management Limited (the "Investment Manager") believes that an annual total return of SONIA plus 4% continues to be achievable.

In recognition of the share price discount to NAV at the time, the Board introduced a zero discount policy in April 2021, since when the Company's share price discount to NAV has averaged 1.9% (up to the close of business on 19 May 2023. Where required, in implementing its discount policy, the Board has repurchased Shares, with 2.6 million Shares currently held in treasury as a result and available to be resold into the market. Since the introduction of the zero discount policy the Shares have also traded at times at a premium to NAV per Share and the Company has been able to sell from treasury 2.8 million Shares to satisfy market demand.

Consequently, given that the original objectives of the Initial Liquidity Opportunity have been addressed through the Company having achieved its performance objective and discount management objective through the establishment of an active zero discount policy, the Board does not believe offering the Initial Liquidity Opportunity would be in the best interests of the Company and Shareholders as a whole.

While the Company might have left any decision about the Initial Liquidity Opportunity until closer to the AGM in 2024, the Company's Investment Manager is seeing attractive opportunities for deploying capital in the current environment, particularly in public markets. The Board believes it would be beneficial to the Company to place the Investment Manager in a position to be seeking new investments for the Company with the benefit of certainty as to a longer term horizon and, consequently, has determined that it would be appropriate to bring forward its decision in respect of the Initial Liquidity Opportunity.

Terms used in this announcement shall, unless the context otherwise requires, bear the meanings given to them in the Circular.

A copy of the Circular and Articles of Association will shortly be available to view on the Company's website at www.mandg.co.uk/creditincomeinvestmenttrust and will also be submitted shortly to the National Storage Mechanism ("NSM") and available for inspection at the NSM, which is situated at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

For further information please contact:

M&G Credit Income Investment Trust plc LEI: 549300E9W63X1E5A3N24

The content of this announcement has been prepared by, and is the sole responsibility of, M&G Credit Income Investment Trust plc.

Neither the content of the Company's website nor any website accessible by hyperlinks to the Company's website is incorporated in, or forms part of, this announcement.

Winterflood Securities Limited ("Winterflood"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting only for the Company in connection with the matters described in this announcement and is not acting for or advising any other person, or treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protection afforded to clients of Winterflood or advice to any other person in relation to the matter contained herein.

None of M&G Alternatives Investment Management Limited (the "Investment Manager") or Winterflood, 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 for any loss howsoever arising from any use of the announcement or its contents aside from the responsibilities and liabilities, if any, which may be imposed by FSMA, as amended, or the regulatory regime established thereunder or any other applicable regulatory regime. The Investment Manager and Winterflood 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.

This announcement is not a prospectus and is not an offer to sell or a solicitation of any offer to buy any securities in the United States or in any other jurisdiction. The Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended, and the Company has not been, and will not be, registered under the U.S. Investment Company Act of 1940, as amended.

The distribution of this announcement in certain jurisdictions may be restricted by law and/or regulation. Persons receiving this announcement are required to inform themselves about and to observe any such restrictions.