RNS Number:2668M
Schroder Emerging Countries Fd PLC
12 June 2003

Introduction

The Board of Directors of Schroder Emerging Countries Fund plc (the "Company")
announces that it proposes to recommend reconstruction proposals to be
implemented pursuant to section 110 Insolvency Act 1986 (the "Scheme") giving
shareholders the option, as part of a voluntary winding-up of the Company, to
roll over their investment into an existing Schroder authorised unit trust,
Schroder Global Emerging Markets Fund ("Schroder GEM"), and/or to receive cash
in accordance with their entitlements in the winding-up.

As at the close of business on 11 June 2003, the middle market price of an
Ordinary Share was 49.5 pence (representing a discount of 16.1 per cent. to the
estimated net asset value of 59.0 pence as at that date) and the middle market
price of a Warrant was 3.0 pence.

Background

Last year the Company's directors introduced a number of measures with the aim
of improving the Company's performance. These measures included a proposed
change in the individual portfolio manager responsible for the day-to-day
investment of the Company's portfolio; a reduction in the base fee payable to
the Company's investment manager from 1 June 2002; the concurrent introduction
of a performance fee; and a reduction in the notice period required for
termination of the management contract, to take effect from this year's Annual
General Meeting, scheduled for September.

In order to allow a period for the new arrangements to have an effect on
performance, whilst also allowing shareholders an opportunity to consider
whether the Company should continue in its present form at an earlier date than
was previously envisaged, the Board also undertook that shareholders would be
given the opportunity to consider, at this year's Annual General Meeting,
whether the Company should continue as an investment trust.

This year's Annual General Meeting is due to take place in September and it is
at that meeting that a continuation vote would have been proposed. However, in
reviewing the Board's recommendation to shareholders on the continuation vote,
the Board has considered the Company's recent performance, the continuing wide
discount at which the Ordinary Shares have been trading and the views expressed
by a number of the Company's major shareholders. In the circumstances, the Board
has concluded that the interests of shareholders are best served by the early
introduction of reconstruction proposals.

The Scheme

Shareholders

The Scheme provides two options for shareholders, the rollover option and the
cash option.

The rollover option

Shareholders electing for this option will receive units in Schroder Global
Emerging Markets Fund unit trust, an existing authorised unit trust. The number
of units which a shareholder will receive will be based on the net asset value
of the Ordinary Shares held by that shareholder less their pro rata share of the
costs of formulating and implementing the Scheme (other than the payment to the
Investment Manager described below in the section headed "Expenses"). There will
be no initial charge on issue of units under the Scheme.

Schroder GEM has a similar investment policy and investment management team to
the Company. It is an authorised unit trust with net assets of approximately
#92m which has been in existence for over nine years.

The rollover option allows those shareholders who wish to remain exposed to
emerging markets to do so. At the same time the rollover option will not
crystallise a gain or loss for UK tax resident shareholders, with the
acquisition cost of the units they acquire being deemed, for tax purposes, to
be, in effect, the original acquisition cost of their shares.

The cash option

Shareholders electing for this option will receive a cash distribution in
sterling equal to the net asset value of the Ordinary Shares held by them less
(i) their pro rata share of the costs of formulating and implementing the
Scheme, (ii) the payment to the investment manager described in the section
below entitled "Expenses" and (iii) the costs of disposal of the portfolio
assets forming part of the liquidation pool (essentially the difference between
the actual selling price after commission and other expenses and the market
quotations on the basis of which net asset value is calculated).

The disposal costs will depend on market conditions at the time and on the
proportion of the portfolio which has to be sold. By way of example, had it been
necessary to realise half the portfolio on an average trading day during the
last month, the Investment Manager estimates that disposal costs would have
represented approximately 1.25 per cent. of net asset value per Ordinary Share.

Shares and cash

Shareholders may elect to roll over only part of their shareholding and to
receive cash for the remainder.

Shareholders who do not make a valid election will be deemed to have elected for
the rollover option in respect of their holding of Ordinary Shares.

Shareholders should be aware that the net asset values relevant to the options
available to them will be different from the current net asset value of the
Company because the assets of the Company will be subject to market movements in
the period between now until the date upon which the Scheme will be implemented
and because the Company will incur costs in relation to the Scheme, including
the costs of realising some holdings.

Warrantholders

Under the Scheme, Warrantholders will receive cash at the rate of 3.25 pence per
Warrant, constituting a small premium to the sum the Warrantholders would
otherwise receive in a straightforward liquidation of the Company (namely the
average market price of a Warrant as derived from the London Stock Exchange
Daily Official List over the period of 10 business days prior to this
announcement, being 3.0 pence per Warrant ).

Mechanics of the Scheme

The Company's directors will shortly despatch a circular to shareholders and
warrantholders convening two Extraordinary General Meetings and a Warrantholders
Meeting accompanied by a Form of Election to enable shareholders to choose
whether to roll over all or part of their shareholdings into Schroder GEM, or to
realise all or the remainder of their shareholdings for cash.

At the First Extraordinary General Meeting, a special resolution will be
proposed to approve the Scheme (and approve the changes to the Company's
articles of association necessary for its implementation). If the resolution is
approved those shareholders who elect to roll over into Schroder GEM will hold A
Shares giving them the right to receive units in Schroder GEM on a winding-up of
the Company and those shareholders who elect for cash will hold B Shares giving
them the right to receive cash on a winding-up of the Company.

If the Scheme is approved by warrantholders at the Warrantholders Meeting,
warrantholders will be entitled to receive cash at the rate of 3.25 pence per
Warrant, representing a small premium to the 3.0 pence per Warrant which they
would otherwise receive on a winding-up.

After the First Extraordinary General Meeting, if the Scheme is approved by
shareholders, the Company's assets will be divided into two pools, the Rollover
Pool and the Liquidation Pool, according to the elections made or deemed to be
made by shareholders.

At the Second Extraordinary General Meeting, another special resolution will be
proposed to put the Company into voluntary liquidation and to appoint James
Robert Drummond Smith and Nicholas James Dargan of Deloitte & Touche as
Liquidators.

Immediately after their appointment the Liquidators will provide for the
outstanding and contingent liabilities of the Company and then distribute the
Liquidation Pool (which will be cash following the realisation of the
investments in the Liquidation Pool during the period between the First and
Second Extraordinary General Meetings) to the B Shareholders. At the same time
the assets in the Rollover Pool will be transferred to Schroder GEM in exchange
for an issue of units direct to the A Shareholders. The number of units to be
issued will be calculated on the basis of the net asset value per A Share and
the issue price for units at the time of the transfer. No initial charge on the
issue of these units will be made.

Portfolio Realisation

The vast majority of the Company's portfolio is held in readily realisable
stocks with a settlement period of five business days or less. It is therefore
intended that the Company should retain these stocks in the portfolio up until
the date of the First Extraordinary General Meeting. Following that meeting, and
assuming that the Scheme has received the requisite approval from shareholders,
the Company's assets will be divided into two pools, the Rollover Pool and the
Liquidation Pool; the investment manager will seek to realise stocks held within
the Liquidation Pool with the intention that all necessary realisations will
have been effected and settled by the time of the Liquidator's appointment at
the Second Extraordinary General Meeting.

The Investment Manager may however seek to initiate the realisation process
prior to the First Extraordinary General Meeting in respect of the small
minority of stocks within the Company's portfolio which the investment manager
considers may be particularly illiquid or which may require a protracted
settlement period.

Benefits of the Proposals

The Company's directors believe the Scheme to be in the best interests of
shareholders as a whole because:


  * The Scheme offers shareholders greater flexibility than in a
    straightforward liquidation, with shareholders who wish to retain an equity
    exposure to emerging markets being able to do so through the Schroder GEM
    portfolio

  * Shareholders who elect to roll over into Schroder GEM can also maintain
    continuity of investment manager, investment objective and investment style

  * Shareholders wishing to roll over into Schroder GEM will, as a result of
    Schroder GEM's open-ended structure, have the ability to realise their
    investment in due course at a price close to its underlying asset value at
    the time of sale

  * Shareholders wishing to realise their holding for cash will be able to do
    so in a timely manner and at a price closer to net asset value than the
    prices at which shares have been trading recently

Conditions

Implementation of the Scheme is conditional on the passing of the necessary
resolutions at the Extraordinary General Meetings and the approval of the
warrantholders at the Warrantholders Meeting.

If the Scheme is approved by shareholders but not warrantholders, the Directors
intend to recommend that the Company commence a straightforward winding-up,
which does not require the consent of the warrantholders, at the Second
Extraordinary General Meeting. If such a liquidation is approved warrantholders
will receive 3.0 pence per Warrant (the average market value for the warrants
over the ten business days preceding this announcement) while shareholders will
receive cash based on the realised value of the assets after all the Company's
liabilities have been discharged.

Expenses

The expenses (inclusive of VAT) incurred in relation to the Scheme, including
financial advice, legal advice and the Liquidator's charges (but excluding
management agreement termination costs and costs in relation to the warrants),
are currently estimated to amount to some 1.20 per cent. of the estimated net
asset value of the Company as at the close of business on 11 June 2003. These
expenses will be met by the shareholders on a pro rata basis and regardless of
the elections a shareholder may make. Costs in respect of the realisation of
assets in the Liquidation Pool will be met by those shareholders who have
elected to receive cash.

The investment manager is entitled to twelve months' notice of termination of
its investment management agreement with the Company. However the Company and
the investment manager have agreed that the Company will pay the equivalent of
only six months' fee (0.375 per cent.) on that portion of the portfolio that is
realised to fund payments to shareholders who elect to receive cash,
notwithstanding that less than 12 months' notice of termination will have been
given. This termination payment will be borne by those shareholders who elect to
receive cash. The investment manager will not receive any performance fee.

ISAs and PEPs

Beneficial holders of Ordinary Shares held through a Schroder PEP or a Schroder
ISA will receive a letter from their nominee explaining in further detail their
entitlements under the Scheme and the action which they should take.

Beneficial owners of Ordinary Shares held through any other PEP or ISA scheme
should consult their PEP or ISA scheme manager.

Shareholder Meetings and Warrantholders Meeting

The Scheme requires the approval of shareholders. Notices of the requisite
Extraordinary General Meetings will be set out in the circular which will be
despatched to shareholders shortly. Both Extraordinary General Meetings will be
held at 31 Gresham Street, London EC2V 7QA.

First Extraordinary General Meeting

The First Extraordinary General Meeting is expected to be held at 11.30 a.m. on
16th July 2003. At this meeting a special resolution will be proposed which will
(a) change the Company's articles of association so as to confer the 'A' Rights
and 'B' Rights on Ordinary Shares for the purposes of the Scheme and (b)
sanction the implementation of the Scheme. This resolution will require the
approval of at least 75 per cent. of the votes cast at the Meeting.

Second Extraordinary General Meeting

The Second Extraordinary General Meeting is expected be held at 9.00 a.m. on
25th July 2003. At this meeting a special resolution will be proposed for the
winding-up of the Company and the appointment of the Liquidator(s) and an
extraordinary resolution will also be proposed to confer appropriate powers on
the Liquidator(s). Each of these resolutions will require the approval of at
least 75 per cent. of the votes cast at the Meeting.

Warrantholders Meeting

The implementation of the Scheme also requires the approval of the
Warrantholders. The requisite Warrantholders Meeting is expected to be held at
12 noon (or as soon thereafter as the First Extraordinary General Meeting has
concluded or been adjourned), on 16th July 2003 at 31 Gresham Street, London
EC2V 7QA.

Expected Timetable

Thursday 12 June                            Announcement by the Company of the Scheme

By Friday 20 June                           Circular despatched to shareholders

Monday 14 July                              Latest date for return of Forms of Election

                                            Latest date for return of forms of proxy for First Extraordinary General
                                            Meeting

                                            Latest date for return of forms of proxy for Warrantholders' Meeting

Wednesday 16 July                           First Extraordinary General Meeting of the Company
                                            Warrantholders' Meeting

Wednesday 23 July                           Latest date for return of forms of proxy for Second Extraordinary General
                                            Meeting

Friday 25 July                              Second Extraordinary General Meeting of the Company

                                            Company placed into liquidation

                                            Cancellation of Warrants

                                            Allotment of units to continuing shareholders

Week commencing Monday 28 July              Cheques posted to exiting shareholders and warrantholders



Enquiries

The Hon. Rupert Carington               (020 7658 3206)

(Chairman, Schroder Emerging Countries Fund plc)

Robin Stoakley                         (020 7658 3567)

(Schroder Investment Management Limited)

Andrew Zychowski                    (020 7623 8000)

(Dresdner Kleinwort Wasserstein)



Dresdner Kleinwort Wasserstein Securities Limited, which is regulated by the
Financial Services Authority, is acting for the Company and for no-one else in
connection with the contents of this document and will not be responsible to
anyone other than Schroder Emerging Countries Fund plc for providing the
protections afforded to customers of Dresdner Kleinwort Wasserstein Securities
Limited, or for affording advice in relation to the contents of this
announcement or any matters referred to herein.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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