Monks Inv Regulatory News (MNKS)

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9 August 2022

The Monks Investment Trust PLC

LEI: 213800MRI1JTUKG5AF64

Combination with The Independent Investment Trust plc

Introduction

The Board of The Monks Investment Trust PLC (the "Company" or "Monks") is pleased to announce that heads of terms have been agreed for a proposed combination of the Company with the assets of The Independent Investment Trust plc ("IIT") (the "Proposals"). The combination, if approved by each company's shareholders, will be implemented through a scheme of reconstruction pursuant to section 110 of the Insolvency Act 1986 (the "Scheme"), resulting in the voluntary liquidation of IIT and the rollover of its assets into the Company in exchange for the issue of new Monks shares to IIT shareholders, with IIT shareholders offered the option of a full or partial cash exit (the "Transaction").

Following completion of the Scheme, it is intended that the Monks portfolio will continue to be managed on the same basis as it is currently. In particular, the Monks investment policy and investment objective will not be amended in connection with the Proposals and the portfolio will continue to be managed by Baillie Gifford's Global Alpha team.

Benefits of the Transaction

Shareholders in Monks will benefit from:

· an increase in scale, allowing the enlarged Monks to spread fixed costs over a larger cost base, while also improving liquidity and aiding marketing;

· an inflow of cash to Monks's portfolio which can be redeployed at a potentially advantageous stage of the performance, discount and market cycles;

· the addition to Monks's portfolio of a ready-assembled collection of UK growth stocks which the Managers have assessed for potential upside and portfolio fit.

Further details of the Scheme

The Scheme will be effected by way of a scheme of reconstruction under Section 110 of the Insolvency Act 1986, under which IIT shareholders will be able to elect to:

1. Receive Ordinary Shares in the Company (the "Rollover Option"); and/or

2. Realise a proportion or all of their holding for cash (the "Cash Option")

New Monks shares that are issued to IIT shareholders will be issued on a Formula Asset Value ("FAV")-to-FAV basis. FAVs will be calculated using the respective net asset values of each company (cum income and, in the case of Monks, debt at fair value), adjusted for the costs of the Transaction, any dividends and distributions declared by each party which have a record date prior to the effective date of the Transaction, an allowance for the costs of liquidation (for IIT) and the Cash Option (for IIT, as described further below).

IIT Shareholders who elect for the Cash Option will receive their cash at the equivalent to a 2.0 per cent. discount to IIT's FAV per Share, with IIT Shareholders electing for the Rollover Option receiving the benefit of the uplift in FAV delivered thereby. There will be no limit as to the number of IIT Shares which may be elected for the Cash Option. New Monks Shares will be issued as the default option in the event that an IIT shareholder does not make a formal election under the Scheme.

Subject as noted below, each party will bear its own costs in respect of the Proposals. Any costs of realignment or realisation of the IIT portfolio prior to the Scheme becoming effective will be borne by IIT and any stamp duty, stamp duty reserve tax or other transaction tax, or investment costs incurred by Monks for the acquisition of the IIT portfolio or the deployment of the cash therein upon receipt shall be borne by the enlarged Monks. In the event that IIT resolves not to proceed to implement the Scheme (including if IIT shareholders do not approve any resolution required to implement the Scheme) then IIT shall bear the reasonable costs incurred by both parties in connection with the Proposals, save to the extent that Monks's reasonable costs exceed £125,000 (+VAT). In the event that Monks resolves not to proceed to implement the Scheme (including if Monks shareholders do not approve any resolution required to implement the Scheme) then Monks shall bear the reasonable costs incurred by both parties in connection with the Proposals, save to the extent that IIT's reasonable costs exceed £125,000 (+VAT). In the event that both of the parties resolve not to proceed to implement the Scheme or do not obtain the required approvals then each party will bear its own costs.

It is currently envisaged that IIT will pay a pre-liquidation interim dividend to its shareholders of the minimum size sufficient to ensure it maintains its investment trust status.

The directors of IIT, who own circa 24.3% of IIT's issued share capital in aggregate, all intend to elect for the Rollover Option to the full extent of their holdings; and they will also recommend the resolutions which will be put to IIT's shareholders proposing the implementation of the Scheme.

Manager contribution

Baillie Gifford & Co Limited ("Baillie Gifford") has agreed to make a contribution to the costs of the Transaction by means of a reduction in the management fee payable by the Company to Baillie Gifford for the first six months following the completion of the Scheme. The value of this reduction will be based on the value of the net assets transferred by IIT to the Company as part of the Transaction and the reduction will be for the benefit of all shareholders of the enlarged Monks.

Monks Board of Directors

None of the IIT directors will be joining the Monks Board as part of the Transaction, and accordingly the Board of Monks will continue to consist of the five incumbent directors upon completion of the Scheme.

In accordance with customary practice for such transactions involving investment trusts, the City Code on Takeovers and Mergers is not expected to apply to the Transaction. However, the Transaction is subject to the approval, inter alia, of the respective shareholders of the Company and IIT, as well as regulatory and tax approvals. A circular to shareholders of the Company, providing further details of the Transaction and convening a general meeting to approve the Transaction, and a prospectus in respect of the issue and admission of new shares in connection with the Transaction are expected to be published by the Company in late September. It is anticipated that the Transaction will conclude in November 2022.

Enquiries

The Monks Investment Trust plc

Karl Sternberg (Chairman) Contact via Investec

Investec Bank plc (Corporate Broker)

David Yovichic T: 020 7597 4000