31 May 2011 09:20
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, AUSTRALIA, NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.
THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF, AND SHOULD NOT BE CONSTRUED AS, ANY OFFER FOR SALE OR SUBSCRIPTION OF, OR SOLICITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR, ANY SHARES IN STANDARD LIFE INVESTMENT PROPERTY INCOME TRUST LIMITED OR SECURITIES IN ANY OTHER ENTITY, IN ANY JURISDICTION, INCLUDING THE UNITED STATES, NOR SHALL IT, OR ANY PART OF IT, OR THE FACT OF ITS DISTRIBUTION, FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY CONTRACT OR INVESTMENT DECISION WHATSOEVER, IN ANY JURISDICTION. THIS ANNOUNCEMENT DOES NOT CONSTITUTE A RECOMMENDATION REGARDING ANY SECURITIES.
ANY INVESTMENT DECISION MUST BE MADE EXCLUSIVELY ON THE BASIS OF THE FINAL PROSPECTUS TO BE PUBLISHED BY THE COMPANY AND ANY SUPPLEMENT THERETO IN CONNECTION WITH ADMISSION.
STANDARD LIFE INVESTMENTS PROPERTY INCOME TRUST LIMITED
PROPOSED CONVERSION OF PREFERENCE SHARES AND PLACING AND OPEN OFFER OF NEW ORDINARY SHARES
31 May 2011
The Board of Standard Life Investments Property Income Trust Limited today announces proposals to reduce the Company's structural leverage, to simplify its corporate structure and potentially to raise additional equity capital.
Summary
·; Conversion of existing unquoted Preference Shares into Ordinary Shares at a premium of two per cent.
·; A fund raising of up to £25 million through a Placing and Open Offer. In the light of the costs that will be incurred in investing any cash proceeds of the Placing and Open Offer, the Ordinary Shares will be issued at a premium of four per cent.
·; Qualifying Shareholders will have a priority right to subscribe for Ordinary Shares through the Open Offer. There is no minimum amount to be raised under the Placing and Open Offer and there is no guarantee that either £25 million or significant additional proceeds will be raised.
·; The Conversion will significantly reduce the structural leverage of the Company and assist the Board in managing the funding of the Group in December 2013 when the Bank Facility is due for repayment and the Preference Shares would otherwise have been redeemed.
·; The Conversion and Issue will also increase the market capitalisation of the Company and spread the fixed costs of the Group over a larger asset base.
·; The Board also intends to increase the quarterly dividend by 3 per cent. to 1.133p per quarter with effect from the quarter ending 30 September 2011.
·; A circular and a prospectus are expected to be published in early June setting out the details of these Proposals.
Paul Orchard-Lisle, Chairman of Standard Life Investments Property Income Trust Limited, commented:
"These Proposals are an important step forward for the Company as we look to develop. These Proposals will give the Board and the Investment Manager flexibility to deliver improved returns to Shareholders. The Board believes that the simplified capital structure, reduced leverage and increased market capitalisation will be attractive to existing and new investors."
For further information please contact:
Robin Archibald/Graeme Caton, Winterflood Securities Limited
Tel: 020 3100 0268
Jason Baggaley, Standard Life Investments (Corporate Funds) Limited
Tel: 0131 245 2833
Gordon Humphries, Standard Life Investments (Corporate Funds) Limited
Tel: 0131 245 2735
Introduction
The Board of Standard Life Investments Property Income Trust Limited announces proposals to convert the six million Preference Shares which are held by Standard Life Assurance into new Ordinary Shares at a two per cent. premium to the Company's Adjusted NAV per Share. The Conversion is being proposed by the Board, with the approval of Standard Life Assurance, in order to increase the net assets of the Company, to reduce the Group's leverage and to reduce the funding requirements of the Company in December 2013 when the Bank Facility is due for repayment and the Preference Shares would otherwise have been redeemed.
The Board is also proposing an equity capital raising of up to £25 million by means of a Placing and Open Offer. Any net proceeds will be used to fund the acquisition of further UK commercial properties in accordance with the Company's investment policy. It is intended that up to 38.5 million new Ordinary Shares will be issued under the Placing and Open Offer at a premium of four per cent. to the Adjusted NAV per Share in order to raise gross proceeds of up to £25 million. The Open Offer is being made available to all Qualifying Shareholders on a pre-emptive basis.
The Company will publish a circular and a prospectus in due course in connection with the Issue and the Conversion, which constitutes a "related party transaction" for the purpose of Chapter 11 of the Listing Rules as a result of Standard Life Assurance being a member of the Standard Life Group which is a substantial Shareholder in the Company. Further details of the terms of the Conversion and the Placing and Open Offer are set out below. Defined terms used in this announcement have the meanings given below.
It is intended that the Circular and Prospectus will be published in early June and the General Meeting held in late June/early July.
It is expected that the Conversion, Placing and Open Offer and Admission will occur in mid July.
Background to the Issue
The Board believes that the Proposals offer significant benefits for all Shareholders as noted below.
·; The Conversion would assist the Board in managing the funding requirements of the Group in December 2013 when the Bank Facility is due for repayment and the Preference Shares would otherwise have been redeemed.
·; The Conversion and any proceeds raised under the Issue will increase the net and gross assets of the Company respectively and reduce the leverage of the Group.
·; The Issue offers the Company the potential opportunity to acquire further commercial properties that should enhance the performance of the Property Portfolio. The Board believes that such acquisitions should also diversify further the Property Portfolio.
·; The Proposals significantly increase the market capitalisation of the Company which should therefore increase liquidity in the Ordinary Shares.
·; As a result of the Proposals, the fixed costs of the Group would be spread over a larger asset base and therefore the total expense ratio of the Group would be reduced.
Related Party Transaction
Standard Life Investments, a member of the Standard Life Group, holds on behalf of clients of the Standard Life Group 16,644,609 Ordinary Shares representing approximately 14.4 per cent. of the issued share capital of the Company. The Investment Manager is also a member of the Standard Life Group. The members of the Standard Life Group, including Standard Life Assurance, are therefore related parties, or associates of related parties, of the Company for the purposes of Chapter 11 of the Listing Rules.
Standard Life Assurance owns the six million issued Preference Shares which have an aggregate Preference Share Liability as at 27 May 2011, calculated in accordance with the accounting policies of the Company, of £9.3 million. It is proposed that, conditional on the Related Party Transaction being approved by way of an ordinary resolution by Independent Shareholders and the Conversion being approved by way of a special resolution by all Shareholders at the General Meeting and the Admission Condition being satisfied in respect of the Conversion, the existing issued Preference Shares held by Standard Life Assurance will be converted into new Ordinary Shares. The Preference Shares will be converted into such number of new Ordinary Shares as have an aggregate value (being the Adjusted NAV per Share plus a premium of two per cent.) equal to the prevailing Preference Share Liability on the Conversion Date. The new Ordinary Shares will rank pari passu with the existing Ordinary Shares, save that they will not be entitled to the second interim dividend in respect of the quarter to 30 June 2011 payable in August 2011.
It is estimated that the accrued Preference Share Liability on the Conversion Date (assuming Admission is expected to take place on 15 July 2011) will be £9.3 million and therefore approximately 14 million new Ordinary Shares will arise on the Conversion. The premium of two per cent. referred to above would equate to a contribution towards the costs of the Conversion and the Issue of approximately £190,000. The Conversion does not involve the payment of any cash and therefore the Company will not incur the costs that arise on the investment of cash into commercial properties that would otherwise arise on the issue of new Ordinary Shares for cash.
In accordance with the Company's Articles, the Conversion is also conditional upon the previous sanction of a special resolution passed at a separate general meeting of the holder of the Preference Shares. The Company has received an irrevocable undertaking from Standard Life Assurance to vote in favour of the special resolution to be proposed at this separate general meeting.
Details of the terms of the Issue
Under the Placing and Open Offer, the Company is proposing to issue up to 38.5 million new Ordinary Shares potentially to raise gross proceeds of approximately £25 million. In the light of the costs that will be incurred in investing the cash proceeds of the Placing and Open Offer, the new Ordinary Shares will be issued at a premium of four per cent. to the Adjusted NAV per Share. The net proceeds of the Placing and Open Offer will be used to acquire further UK commercial properties in accordance with the Company's investment policy. There is no minimum amount to be raised under the Placing and Open Offer and there is no guarantee that either £25 million or significant additional proceeds will be raised.
The Board will offer the full 38.5 million new Ordinary Shares on a pro rata basis to Qualifying Shareholders under the Open Offer (on the basis of one new Ordinary Share for every three Ordinary Shares held on the Record Date). The new Ordinary Shares will also be conditionally placed with placees, subject to placing commitments being clawed back to satisfy valid applications by Qualifying Shareholders under the Open Offer.
Qualifying Shareholders have the opportunity to make excess applications, if they wish to do so, up to a maximum amount equal to five times their Open Offer Entitlement under the Excess Application Facility, subject to new Ordinary Shares being available once the applications for pro rata entitlements under the Open Offer and commitments under the Placing have been taken into account.
Costs and expenses of the Issue and the Conversion
The costs and expenses of the Issue and the Conversion are expected to be approximately £500,000 (on the assumption that the Issue is fully subscribed) after deducting the amount of the premium of the issue of the new Ordinary Shares arising under the Conversion.
In the event that the Placing and Open Offer is not implemented, but the Conversion is approved and becomes unconditional, the costs and expenses would be approximately £185,000, after deducting the amount of the premium on the issue of the new Ordinary Shares arising under the Conversion, which would equate to approximately 0.16 pence per Ordinary Share.
In the event that neither the Conversion nor the Issue are implemented the abort costs that would be incurred by the Company have been limited to approximately £200,000, being equal to approximately 0.17p per Ordinary Share.
Dividends
It is the Board's policy that in paying dividends it should target a high level of dividend cover. In the absence of unforeseen circumstances, the Board expects to pay a second interim dividend of 1.1p in respect of the quarter to 30 June 2011. In the light of the Investment Manager's success in investing the Company's cash resources in acquisition opportunities, the Board intends, in the absence of unforeseen circumstances to increase the quarterly dividend for the remaining six months of the current financial year to 1.133p per quarter, an increase of 3 per cent. Although the investment of the proceeds, if any, of the Issue may reduce dividend cover in the short term, the Board intends to maintain its policy of targeting a high level of dividend cover over the medium term.
General Meeting
The Related Party Transaction is conditional on the approval by way of an ordinary resolution by Independent Shareholders at the General Meeting. The Conversion and the Issue are conditional on the approval by way of special resolutions by all Shareholders at the General Meeting. The Company has received an irrevocable undertaking from Standard Life Investments to vote in favour of the Resolutions to be proposed, other than the resolution to be approved by Independent Shareholders, at the General Meeting.
It is expected that the Board will convene the General Meeting of the Company to be held in late June/early July. If the resolutions in connection with the Related Party Transaction and the Conversion are not approved neither the Conversion nor the Issue will be implemented.
Dealings in new Ordinary Shares
It is expected that the new Ordinary Shares will be issued and admitted to listing, and dealings in such shares will commence, on or around 15 July 2011.
Definitions
The following definitions apply throughout this announcement unless the context requires otherwise:
Adjusted NAV per Share | the NAV per Ordinary Share in pence on 30 June 2011 including all income to that date but after deduction of any dividend accrued to that date to which the new Ordinary Shares will not be entitled |
Admission | the admission of the new Ordinary Shares to the Official List and to trading on the Main Market |
Admission Condition | (i) the UKLA having acknowledged to the Company or its agent (and such acknowledgement not having been withdrawn) that the application for the admission of the new Ordinary Shares arising under the Conversion or the Issue, as the case may be, to the Official List with a premium listing has been approved and (after satisfaction of any conditions to which such approval is expressed to be subject ("listing conditions")) will become effective as soon as a dealing notice has been issued by the Financial Services Authority and any listing conditions having been satisfied and (ii) the London Stock Exchange having acknowledged to the Company or its agent (and such acknowledgement not having been withdrawn) that the new Ordinary Shares will be admitted to trading |
Application Form | the application form for use in connection with the Open Offer; |
Bank Facility | the £85 million term loan facility provided to the Company by The Royal Bank of Scotland plc pursuant to the Facility Agreement |
Board or Directors | the directors of the Company |
Circular | the circular to be sent to Shareholders in connection with the proposed Conversion and Issue |
Company | Standard Life Investments Property Income Trust Limited, a company incorporated in Guernsey with registered number 41352 |
Conversion | the conversion of the Preference Shares currently held by Standard Life Assurance into new Ordinary Shares at a premium of two per cent. to the Adjusted NAV per Share rounded to two decimal places |
Conversion Date | the business day prior to Admission which is expected to be 14 July 2011 |
Excess Application Facility | the arrangement pursuant to which each Qualifying Shareholder may apply for new Ordinary Shares in excess of their Open Offer Entitlement of up to a maximum amount equal to five times their Open Offer Entitlement provided they have agreed to take up their Open Offer Entitlement in full and such application may be subject to scaling back in accordance with the provisions of the Prospectus |
Excluded Jurisdictions | the United States, Canada, Australia, Japan, New Zealand and the Republic of South Africa |
Facility Agreement | the facility agreement between, among others, The Royal Bank of Scotland plc and the Company dated 4 December 2003
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FSA | the Financial Services Authority |
General Meeting | the general meeting of the Company to be held in late June/early July 2011 at which resolutions will be proposed to approve the Related Party Transaction, the Conversion and the Issue
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Group | the Company, the Property Subsidiary and any other direct or indirect subsidiary (as that term is defined in the Law) of the Company from time to time;
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Independent Shareholders | Shareholders other than Standard Life Investments, Standard Life Assurance and any of their associates or discretionary clients
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Investment Manager | Standard Life Investments (Corporate Funds) Limited, a company incorporated in Scotland with registered number SC111488
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Issue | the issue of new Ordinary Shares pursuant to the Placing and Open Offer |
Issue Price | the price per Ordinary Share under the Placing and Open Offer equal to a premium of four per cent. to the Adjusted NAV per Share rounded to two decimal places
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Law | The Companies (Guernsey) Law, 2008 as amended from time to time |
Listing Rules | the listing rules made by the Financial Services Authority under the Financial Services and Markets Act 2000 as amended from time to time
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London Stock Exchange | London Stock Exchange plc |
Main Market | the London Stock Exchange's main market for listed securities being a regulated market for the purposes of Directive 2004/39/EC the "Markets in Financial Instruments Directive"
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NAV | in relation to an Ordinary Share, means its net asset value on the relevant date calculated in accordance with the Company's normal accounting policies
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new Ordinary Shares | the Ordinary Shares to be issued pursuant to the Conversion and the Issue including the Excess Application Facility
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Official List | the Official List of the UK Listing Authority |
Open Offer | the proposed invitation by the Company to Qualifying Shareholders to apply for Ordinary Shares at the Issue Price and on the terms and subject to the conditions to be set out in the Prospectus
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Open Offer Entitlement | the entitlement of a Qualifying Shareholder to apply for one new Ordinary Share for every three Ordinary Shares held by him or her on the Record Date
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Ordinary Shares | ordinary shares of 1p each in the capital of the Company
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Overseas Shareholders | Ordinary Shareholders with registered addresses in, or who are resident or ordinarily resident in, or citizens of jurisdictions outside the United Kingdom
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Placing | the placing of Ordinary Shares at the Issue Price |
Preference Shares | the six million redeemable zero dividend preference shares of 25p each in the capital of the Company
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Preference Share Liability | the liability attached to the Preference Shares determined in accordance with the accounting policies of the Company including the accrued finance costs
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Property Portfolio | the direct and indirect property assets of the Group |
Property Subsidiary | Standard Life Investments Property Holdings Limited, a company incorporated in Guernsey with registered number 41351
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Proposals | the Conversion and the Issue |
Prospectus | the prospectus to be published by the Company in connection with the Placing and Open Offer and the introduction of the new Ordinary Shares in connection with the Conversion
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Qualifying Shareholders | the holders of Ordinary Shares as set out in the register of members of the Company at 5.00 p.m. on the Record Date
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Record Date | the record date for qualification for the proposed Open Offer being 3 June 2011 |
Related Party Transaction | the Conversion, being a "related party transaction" for the purposes of Chapter 11 of the Listing Rules
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Resolutions | the resolutions to be proposed at the General Meeting in connection with the Conversion and the Placing and Open Offer
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Shareholders | holders of the Ordinary Shares |
Standard Life Assurance | Standard Life Assurance Limited a company incorporated in Scotland with registered number SC286833
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Standard Life Group | Standard Life plc and its subsidiary undertakings |
Standard Life Investments | Standard Life Investment Funds Limited a company incorporated in Scotland with registered number SC068442 |
Important notices
Winterflood Securities Limited and Dickson Minto W.S., each of which is authorised and regulated in the UK by the Financial Services Authority, are acting exclusively for the Company and for no-one else in connection with the contents of this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to the respective clients of Winterflood Securities Limited and Dickson Minto W.S., or for affording advice in relation to the contents of this announcement or any matters referred to herein.
Overseas Shareholders
Subject to certain exceptions, none of this announcement, the Open Offer Entitlement, the Excess Application Facility nor any Application Form constitutes an offer to sell or the solicitation of an offer to buy new Ordinary Shares or any entitlements under the Open Offer in the United States (as defined in Regulation S of the Securities Act).
None of the new Ordinary Shares, the Open Offer Entitlement, the entitlements under the Excess Application Facility nor any Application Form have been, or will be, registered under the Securities Act or under the securities legislation of any state or other jurisdiction of the United States. None of the Open Offer Entitlement, the Excess Application Facility, any Application Form nor the new Ordinary Shares may be taken up or delivered in, into or within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with state securities laws. Application Forms are not being posted to any person in the United States and no Open Offer Entitlement or entitlements under the Excess Application Facility will be credited to a stock or share account of any person in the United States.
None of the Open Offer Entitlement, the Excess Application Facility nor any Application Form, have been or will be, registered under the relevant laws of any state, province or territory of any of the Excluded Jurisdictions. Subject to certain limited exceptions (i) none of the Open Offer Entitlement, the Excess Application Facility, any Application Form nor the new Ordinary Shares may be taken up or delivered in, into or within any of the Excluded Jurisdictions (ii) Application Forms are not being posted to any person within any of the Excluded Jurisdictions and (iii) no Open Offer Entitlement or the entitlements under the Excess Application Facility will be credited to a stock account of any person in any of the Excluded Jurisdictions.
The attention of Overseas Shareholders and other recipients of this announcement who are residents or citizens of any country other than the United Kingdom or who have a contractual or other legal obligation to forward this announcement, the Form of Proxy or, where relevant, any Application Form to a jurisdiction outside the United Kingdom (including without limitation custodians, nominees and trustees) is drawn to paragraph 8 of Part II of the Prospectus.
It is the responsibility of any person receiving a copy of this announcement, the Open Offer Entitlement, the entitlements under the Excess Application Facility and/or any Application Form outside the United Kingdom to satisfy himself as to the full observance of the laws and regulatory requirements of the relevant territory in connection therewith, including obtaining any governmental or other consents which may be required or observing any other formalities required to be observed in such territory and paying any other issue, transfer or other taxes due in such other territory. Persons (including, without limitation, nominees and trustees) receiving this announcement, the Open Offer Entitlement, the Excess Application Facility and/or any Application Form should not, in connection with the Issue distribute or send it into any jurisdiction when to do so would, or might contravene local securities laws or regulations.
Forward Looking Statements
This announcement includes statements that are, or may be deemed to be "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "projects", "assumes", "expects", "intends", "may", "will", "would" or "should" or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth strategies and the industries in which the Group operates. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. The forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including without limitation: conditions in the markets, market position of the Company, earnings, financial position, cash flows, return on capital, anticipated investments and capital expenditures, changing business or other market conditions and general economic conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein.
Forward-looking statements contained in this announcement based on past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Subject to the Company's continuing obligations under the Listing Rules, the Disclosure and Transparency Rules made by the Financial Services Authority (the "Disclosure and Transparency Rules"), the City Code on Takeovers and Mergers (the "Takeover Code"), the Prospectus Rules made by the Financial Services Authority (the "Prospectus Rules") and the Financial Services and Markets Act 2000 ("FSMA"), the Company undertakes no obligation to update publicly or revise any forward looking statement whether as a result of new information, future events or otherwise. None of the statements made in this announcement in any way obviates the requirements of the Company to comply with the Listing Rules, the Disclosure and Transparency Rules, the Takeover Code, the Prospectus Rules or FSMA.
Information not contained in this announcement
No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by any member of the Group, Winterflood Securities Limited or Dickson Minto W.S. or any of their respective directors, officers, employees or agents. Subject to the Listing Rules and/or the Prospectus Rules and/or the Disclosure and Transparency Rules and/or the Takeover Code and/or FSMA, neither the delivery of this announcement of any Application Form nor any subscription or acquisition made under it shall, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this announcement or that the information in it is correct as of any subsequent date.
No statement in this announcement is intended as a profit forecast and no statement in this document should be interpreted to mean that the earnings per Ordinary Share for the current or future years would necessarily match or exceed the historical published earnings per Ordinary Share.
This announcement is for information only and does not constitute or form part of any offer or invitation to issue, acquire or dispose of any securities or investment advice in any jurisdiction.