THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA OR THE REPUBLIC OF SOUTH AFRICA
10 November 2016
M&G High Income Investment Trust P.L.C.
Reconstruction Proposals
M&G High Income Investment Trust P.L.C. (the "Company") has a fixed life and is due to wind up on 17 March 2017 (the "Wind-Up Date"). Having taken independent advice from its financial adviser, Winterflood Securities Limited ("Winterflood"), the board of the Company (the "Board") intends to put forward proposals for a reconstruction of the Company to coincide with the Wind-Up Date (the "Proposals"). In the Company's annual report and accounts for the year ended 31 May 2016, the Board noted its intention to offer shareholders at least one option alongside the liquidation of the Company, which would allow a tax-efficient rollover for those wishing to continue with their investment. The Board also noted that it expected to consider both open-ended and closed-ended investment vehicles for this purpose.
Open-ended investment companies rollover options
The Board is pleased to have agreed with M&G Investments ("M&G"), that M&G will make available as rollover options the following open-ended investment companies it manages:
- M&G Extra Income Fund, which has a high degree of overlap between the investment objectives and the underlying holdings of the Company and benefits from continuity of management as it is managed by the same portfolio manager, Richard Hughes, who is also responsible for managing the Company's assets. This fund will be the default option for shareholders in the Company who do not choose one of the other alternative options;
- M&G Strategic Corporate Bond Fund; and
- M&G Dividend Fund.
Closed-ended investment company rollover option
The Board, conscious that some shareholders may favour maintaining their investment in a closed-ended structure has, along with Winterflood, conducted an extensive review of potential closed-ended rollover options. The Board is pleased to announce that it has agreed heads of terms with the board of JPMorgan Elect plc ("JPMorgan Elect") for JPMorgan Elect to act as the closed-ended rollover option in connection with the Proposals. JPMorgan Elect provides investors access to a number of different investment strategies, including one focussed on UK equity income, through a multi-share class structure and the Board believe this will appeal to the Company's shareholders and unitholders.
JPMorgan Elect, which has total net assets of circa £290 million (as at 31 October 2016), has three share classes, and quarterly conversion between share classes is permitted. The investment objectives of the three classes, which the Board considers to be comparable to the Company's overall investment objective, are set out below:
- Managed Income - A growing income return with potential for long term capital growth by investing in equities, investment companies and fixed income securities.
- Managed Growth - Long term capital growth from investing in a range of investment trusts and open-ended funds managed principally by JPMorgan Asset Management.
- Managed Cash - Preservation of capital with a yield based on short term interest rates by investing in a range of liquidity funds and short dated AAA-rated UK or G7 government securities hedged into sterling.
It is expected that each of JPMorgan Elect's share classes will be made available as rollover options for the Company's shareholders. Each share class is listed separately and traded on the main market of the London Stock Exchange and JPMorgan Elect's shareholders are able to switch between the three share classes on a quarterly basis without incurring a liability to UK capital gains tax.
Pursuant to the Proposals, which will be subject to approval by the Company's shareholders, the Company, through a scheme of reconstruction under section 110 of the Insolvency Act 1986, will be wound up voluntarily and its shareholders, in respect of their shares, will be offered a choice of the following:
- A tax and cost efficient rollover into new shares or units, as the case may be, to be issued by:
- M&G Extra Income Fund; and/or
- M&G Strategic Corporate Bond Fund; and/or
- M&G Dividend Fund; and/or
- JPMorgan Elect plc; and/or
- A cash exit at NAV less costs.
The costs to be borne by the Company will be limited to £350,000, being the amount which would have been incurred had the Company simply been placed into liquidation. It has been agreed that M&G and JPMorgan Funds Limited, the manager of JPMorgan Elect, will meet the substantial additional costs to be incurred by the Company, above those of a simple liquidation, as a result of including the tax efficient rollover options. M&G and JPMorgan Funds Limited have agreed to contribute towards the excess costs pro rata to the amount rolling over into their respective funds.
The Company will release specific details of the Proposals early in 2017.
For further information, please contact:
| M&G Investments Alexandra Ranson | Info.mghighincome@mandg.co.uk |
| Winterflood Securities Limited Neil Morgan | +44 (0)20 3100 0000 |