RNS Number:4503P
Govett European Tech & Inc Tst PLC
05 September 2003

GOVETT EUROPEAN TECHNOLOGY AND INCOME TRUST PLC


Proposed Voluntary Winding Up - Revised Proposals


The Company has today posted a circular to shareholders seeking their approval
for the Company to be placed into members' voluntary liquidation and setting out
proposals for the distribution of the Company's assets (after payment of its
liabilities) on such winding up.


Background


In May of this year the Company published a circular putting forward proposals
for the voluntary liquidation of the Company and the distribution of its assets.
The background to those proposals was the prior repayment of the Company's bank
borrowings, which had necessitated the sale of the majority of the Company's
investments. This in turn had significantly reduced the income that could be
expected to be generated by the remaining Portfolio in the period to the Planned
Winding Up Date of 31 July 2007 to the extent that the Company projected that,
in the 12 month period ending 31 March 2004, expenses would exceed anticipated
income by approximately #124,000. Payment of those expenses (and any further
dividends paid in respect of Preferred Income and/or Ordinary Shares) would
further erode the amount capable of being returned to Shareholders on a winding
up of the Company. The then directors did not believe that this was a
sustainable position and accordingly recommended that Shareholders vote in
favour of a voluntary winding up of the Company and a division of the Company's
assets in a manner which those directors believed was fair and equitable.

Before putting forward those proposals the Company had held discussions with
major Shareholders of each class. Whilst the Company was aware that a major
Preferred Income Shareholder holding (at the time of posting the previous
circular) 5.65 per cent. of the issued Ordinary Shares and 36.06 per cent. of
the issued Preferred Income Shares might not support those proposals, the then
directors believed that it was still in the best interests of all Shareholders
to convene shareholder meetings and put resolutions to Shareholders to enable
them to vote on these matters. A majority of those Shareholders voting at each
of the Previous Meetings were in favour of the Previous Proposals. Also, a
majority of votes cast were in favour of the special resolution proposed at the
previous extraordinary general meeting although this majority was short of the
75 per cent majority of those voting needed for the resolution to be passed.

Accordingly, in line with the views set out in the previous circular, the then
directors invited major Shareholders of each class to nominate new directors for
appointment. Mr Lillis was so nominated and was appointed on 17 June 2003, and
on the same day, after consultation with the Company's advisers, the previous
directors appointed Mr Gowans as non-executive Chairman. The previous directors,
Messrs Sherwood, Haines and Williams then resigned.

Reasons for the Proposals

Shortly before the time at which the Previous Proposals were rejected (on 11
June 2003) the Company's unaudited net asset value was approximately #1.66
million (excluding the costs of putting those proposals forward of approximately
#187,294). As at 27 August 2003 (the latest practicable date prior to the
printing of this document) the Company's unaudited net asset value was
approximately #1.38 million and unaudited revenue reserves at that date stood at
approximately #800,899. Looking forwards, the continuing projected reserve
deficit (together with any further dividends which may be paid) will further
erode the Company's asset base to the detriment of all Shareholders.

Accordingly, and having consulted with the Company's advisers, the Directors
consider that a voluntary winding up of the Company as soon as possible
continues to be in the best interests of all Shareholders. However, the
Directors are very conscious that putting forward revised Proposals will involve
the Company in significant expense and hence the Company and its advisers have
consulted extensively with major Shareholders to formulate Proposals which are
likely to command sufficient support from those major Shareholders before
formally putting them forward. The Board has now received irrevocable
undertakings to support the Proposals set out in this document from major
Shareholders between them holding 26.5 per cent. of the issued Ordinary Shares,
86.4 per cent. of the issued Preferred Income Shares and 29.9 per cent. of the
issued ZDP Shares.

Calculation of entitlements under the Proposals

The Company is not due to be wound up in the ordinary course until 31 July 2007.
Whilst the Directors do not believe that it is viable for the Company to
continue with a revenue deficit expected to be in excess of #124,000 per year
they recognise that the Company's articles of association currently require, on
an early winding up of the Company, that all of the Company's assets after
payment of its liabilities should go to holders of ZDP Shares. Barring an almost
inconceivable rise in the value of the Company's investments there would be
insufficient assets to make any capital distribution to Ordinary or Preferred
Income Shareholders. At the same time the Company has paid, and continues to be
capable of paying, from reserves, a small dividend to the holders of Preferred
Income Shares.

The support of each class of Shareholders will be needed for a winding up of the
Company before 31 July 2007. The Directors understand that holders of Preferred
Income Shares would not be prepared to sacrifice the prospect of a continuing
dividend on their Shares, albeit small, and support an early winding up without
some recompense. Moreover, in the circumstances there is no incentive for
holders of Ordinary Shares to vote in favour of any such proposal.

Accordingly, the Directors have considered, amongst other things, the range of
dividends which the Company might reasonably expect to be capable of paying to
holders of Preferred Income Shares in the period to the Planned Winding Up Date
of 31 July 2007. The Directors have also considered the amounts that a holder of
the relevant class of Shares would be entitled to if the Company were to be
wound up at the present time. The Directors have taken these considerations into
account in determining a reasonable division of the current net assets of the
Company between each class of Shareholder but have also given substantial weight
to the views of major Shareholders as to what they would be prepared to support.

The Proposals

The Proposals are that the Company be placed into members' voluntary liquidation
and that the Company's assets (after payment of its liabilities and after
deducting the costs of implementing the Proposals) on such winding up be
distributed as follows:

For each Preferred Income Share            3.3p
For each Ordinary Share                    0.2p
For each ZDP Share                         the balance of the assets of the Company proportionally


Illustrative financial effects of the Proposals

For holders of Preferred Income Shares

The last quarterly dividend paid per Preferred Income Share was 0.5p paid on 11
March 2003 in respect of the period to 31 December 2002. However, the Directors
believe that this level of dividend may not be sustainable given the very
significant reduction in the Company's annual income and the erosion of revenue
reserves which would result from the continuing revenue account deficit.

The net asset value per Preferred Income Share as at 27 August 2003 (the latest
practicable date prior to the printing of this document) was nil.

The mid-market price per Preferred Income Share as at the close of business on
27 August 2003 (the latest practicable date prior to the printing of this
document) was 3.13p whilst the bid price on that date was 2.25p.

Under the Proposals, holders of Preferred Income Shares would receive on the
winding up 3.3p per Preferred Income Share. No dividend is expected to be paid
or become payable prior to such winding up.

For holders of Ordinary Shares

As mentioned above, no dividend is currently being paid or is planned to be paid
to holders of Ordinary Shares.

The net asset value per Ordinary Share as at the close of business on 27 August
2003 (the latest practicable date prior to the printing of this document) was
nil.

Whilst the mid-market price per Ordinary Share as at the close of business on 27
August 2003 (the latest practicable date prior to the printing of this document)
was 0.38p, it should be noted that there was a very wide variation between the
bid and offer prices. At that date the bid price was 0.25p, which would be
further reduced by the costs of dealing in such shares.

Under the Proposals, holders of Ordinary Shares would receive on the winding up
0.2p per Ordinary Share.

Illustrative financial effects for holders of ZDP Shares

If the Company was to be wound up now, all of the Company's assets (including
revenue reserves) after payment of its liabilities would be attributable to the
holders of ZDP Shares.

In considering the current value of the Company's investments the Directors have
been advised by the Manager that the Company's Equity Portfolio should, as a
whole, be capable of being sold at or about mid-market value (as at the time of
sale). As at 27 August 2003 the aggregate mid-market value of such equity
investments was approximately #702,448.

The Directors have also been advised by the Manager that the Company's Fixed
Income Portfolio should also be capable of being sold at or very close to
mid-market value (as at the time of sale). As at 27 August 2003 the aggregate
mid-market value of the Company's fixed income investments was approximately
#609,951.

It is, however, considerably more difficult for the Directors to illustrate
possible values for the Company's Split Capital Portfolio since, for many of
those investments, there may be a considerable difference between the mid-market
and bid prices quoted and many of those investments may be illiquid.

Whilst the Directors have given careful consideration to offering Shareholders
the opportunity to take part of their entitlement on the winding up by way of a
distribution in specie of the Split Capital Portfolio, they have concluded that
the difficulties and expense involved in this process, given the value of the
Split Capital Portfolio, outweigh the potential benefits to Shareholders.

In illustrating the amount which could be raised through a sale of the Split
Capital Portfolio on or before the proposed winding up, the Directors have shown
below the illustrative effects of a sale of those split capital investments at
both mid-market and bid prices although it is emphasised that such prices are
for illustrative purposes only and do not represent an estimate or forecast of
the prices at which such investments could be sold and the actual amount
realised may be lower than either such illustrative figure.

Since the Proposals involve the payment of fixed amounts to the holders of
Ordinary and Preferred Income Shares and, as noted above, there is considerable
uncertainty as to the amount that might be realised on, in particular, the
disposal of the Split Capital Portfolio, this in turn means that the amount
which holders of ZDP Shares may receive on a winding up of the Company may vary
considerably from the illustrative amounts set out below.

On the basis of the unaudited value of the Company's Portfolio as at 27 August
2003, and on the assumptions set out in the notes below, the following table
illustrates the amounts ZDP Shareholders might receive on a winding up of the
Company under the Proposals if that winding up had taken place as at 27 August
2003:

        Sale of Split Capital Portfolio at   Sale of Split Capital Portfolio  Mid-market ZDP Share price as at 27
        mid-market price                     at bid price                     August 2003
        8.58p                                8.02p                            12.0p


The above is for illustrative purposes only and should not be taken as any
estimate or forecast of the value of the Split Capital Portfolio or the amounts
which may be raised on its realisation or distributed to ZDP Shareholders on a
winding up.

The Directors wish to emphasise that the amounts set out above which may be
available for distribution on a winding up to ZDP Shareholders are illustrative
amounts only based on the assumptions set out. The actual amounts distributed
may vary significantly from those amounts if, for instance, the assumptions turn
out to be incorrect, the value of the Company's investments or the amount raised
on their realisation changes, all or part of the Company's investments are not
sold before or shortly after the Meetings, unforeseen liabilities come to light
or the Liquidator retains additional assets to cover unforeseen or contingent
liabilities.

In view of the level of committed support for the Proposals and following
conversations with, and requests from, other major Shareholders, the Directors
will consider instructing the Manager to realise all or part of the Portfolio in
the period before the Meetings in order to mitigate market risk in that period,
and hence give greater certainty to the amounts available for distribution to
ZDP Shareholders.

Liquidation and Dealings

It is proposed that the Company be placed in members' voluntary liquidation and
that Simon Peter Bower and Michael John Hore of RSM Robson Rhodes LLP be
appointed joint liquidators of the Company. On the basis of the NAV of the
Company as at 27 August 2003 (the latest practicable date prior to the printing
of this document) but assuming a sale of the Split Capital Portfolio at bid
prices as referred to above and after deducting the estimated costs of
implementing the Proposals of #114,229 and assuming no retentions by the
Liquidator, the net assets of the Company available for distribution on a
liquidation would be approximately #1.22 million. On the basis that the whole
Portfolio is sold, the Liquidator has indicated that it would expect to make
initial distributions on or about 7 October 2003 of approximately:

                           0.2p per Ordinary Share;
                           3.3p per Preferred Income Share; and
                           7.47p per ZDP Share


The assumed balance of approximately #50,000 (being the Liquidator's retention
in respect of any unidentified liabilities and being equivalent to approximately
0.55p per ZDP Share) would potentially be available for future distributions to
holders of ZDP Shares. The size and timing of any future distributions will
depend on the amount realised on the sale of the whole Portfolio, the ongoing
costs of the Liquidator and settlement of any currently unknown or contingent
liabilities.

If the Proposals are implemented, no further dividends will be declared or
recommended and holders of Ordinary Shares and Preferred Income Shares will not
receive anything on the winding up except as set out above.

The Shareholders' register will be closed at the close of business on 3 October
2003 and, to be valid, all transfers must be lodged with the Registrars before
that time. Transfers received by the Registrars after the close of business on 3
October 2003 will be returned to the person lodging them. If the Proposals
become effective, dealings in Shares on the London Stock Exchange will be
suspended at the close of business on 30 September 2003, and on the same date
the listing on the Official List of the UK Listing Authority will be suspended.

Financial Statements

In an effort to save unnecessary audit costs, the Company's financial period was
recently extended from 31 March 2003 to 30 September 2003. On appointment of the
Liquidator that accounting period will close. Under the requirements of the UK
Listing Authority, the Company is required to produce second interim accounts in
respect of the period ended 31 August 2003 within 90 days of that date. However,
if the Proposals have been approved in accordance with the timetable set out in
this document the Company does not intend to prepare or publish such second
interim accounts since by then the Company's listing will have been suspended
and will subsequently be cancelled.

Commitments to support the Proposals

The Directors recognise the conflicting interests of the different classes of
Shareholder as to the proportion of the Company's net assets that should be
attributed to each class under the Proposals and that a majority of at least
three quarters of the Shares cast at each Meeting is necessary in order to pass
the Resolutions. However, the Directors are firmly of the view that the Company
is not viable with such a small asset base given the foreseeable running costs
of the Company compared to its severely reduced income.

In order to avoid incurring expenses in putting Proposals which were likely to
be rejected it was a condition of the Directors putting forward revised
Proposals that they believed there was sufficient committed support for them
from major Shareholders. Immediately before posting of this document the Company
had received irrevocable undertakings to vote in favour of the Resolutions from
the Shareholders holding 26.5 per cent. of the issued Ordinary Shares, 86.4 per
cent. of the issued Preferred Income Shares and 29.9 per cent. of the issued ZDP
Shares.

Significant Changes in Asset Values

In considering the appropriate division of the Company's assets between the
different classes of Shareholders, the Directors recognise that a significant
change (upwards or downwards) in the value of the Company's assets before the
date on which the Liquidator is appointed may affect the fairness of the
Proposals for one or more classes of Shareholders. Accordingly, if the value of
the Company's investments changes significantly before the Meetings, the
Directors will consider proposing that those Meetings be adjourned in order to
present revised proposals to Shareholders. Any such adjournment will be notified
in writing to Shareholders and any revised proposals will be the subject of a
supplementary circular.


Enquiries:

HSBC
Jonathan Maxwell                                           020 7991 5102

Govett Investment Management
Simon Wilson                                               020 7378 7979

Citigate Dewe Rogerson
Jonathan Flint                                             020 7638 9571




HSBC Bank Plc is acting for Govett European Technology and Income Trust PLC and
no-one else in connection with the Proposals and will not be responsible to any
person other that Govett European Technology and Income Trust PLC for providing
the protections afforded to clients of HSBC Bank Plc or for providing advice in
relation to the Proposals.


A copy of the Circular to Shareholders is available for inspection at the UKLA's
Document Viewing facility at 25 The North Colonnade, Canary Wharf, London E14
5HS.



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

MSCUVSUROSRKRAR