Notice of EGM
March 10 2010 - 12:08PM
UK Regulatory
TIDMWII
WELSH INDUSTRIAL INVESTMENT TRUST PLC
PROPOSAL FOR VOLUNTARY WINDING-UP
AND NOTICE OF GENERAL MEETING
The Board of Welsh Industrial Investment Trust PLC (the "Company") announces
that it has today issued a Circular to shareholders in relation to the proposed
voluntary winding-up of the Company. Terms used in this announcement shall have
the same meaning as set out in the Circular.
Background to and reasons for the Proposals
Shareholders will be aware that three shareholders representing 62.1% of the
Ordinary Shares in the Company have called for the liquidation of the Company
and the return of capital to Shareholders as soon as possible. On 6 November
2009 the Company's Directors announced that it had already begun a short-term
realisation policy towards achieving these objectives and, would in due course
send a circular to Shareholders incorporating the necessary Notice of General
Meeting.
The Board has carried out the realisation of the assets of the Company insofar
as it has considered it appropriate to do so.
Preference Shares
The Company has in issue 1,350,000 Ordinary Shares of 5p each and 225,000 8.75%
Preference Shares of 20p each. The voting rights attached to the Preference
Shares are restricted to resolutions to winding up the Company, or to vary the
special rights attached to the Preference Shares. In the current circumstances
therefore holders of the Preference Shares are entitled to vote at the General
Meeting on these resolutions and upon the winding-up of the Company. The
Preference Shares rank first in the return of capital, being however, restricted
to the return to them of the nominal amount paid up on such Preference Shares,
together with any arrears of the preference dividend.
The Proposals
The three shareholders (representing 62.1% of the Ordinary Shares and 68.9% of
the Preference Shares) who in November 2009 called for the liquidation of the
Company and the return of capital to shareholders consider that it was the only
way in which Ordinary Shareholders could expect to realise close to net asset
value for their Ordinary Shares. The Shares seldom change hands and the closing
mid-market price of the Ordinary Shares on 5 November 2009 (immediately prior to
the announcement by the Company to The London Stock Exchange on 6 November 2009
("the Announcement")) stood at 155p being a substantial discount to the
unaudited net asset value as at 5 October 2009 of 334.4p
In reaching a decision as to how to vote their shares, Shareholders are advised
to take into account the performance of the Company since 1973, when Mr Stirling
was first appointed investment manager. At that time the net assets were
approximately GBP61,000 (to which GBP54,519 was added by way of a rights issue two
years later, making approximately GBP115,500) and they have subsequently increased
to over GBP4.5m as at 5th October, 2009, being the Company's half year end. This
represents a gain of about 39 times the original value of the portfolio over 34
years, which is an average of approximately 115% per annum over a third of a
century.
Shareholders may therefore consider that to liquidate the Company now would be
taking a short term view of the current circumstances, during what has been
recently a turbulent market, and that a longer term perspective, in line with
the Company's historic and successful investment policy, would be more
appropriate.
Shareholders should therefore consider carefully their own position when
deciding whether to approve the Proposals now being put to them.
The Proposal now being put to Shareholders for approval is that the Company will
be placed into members' voluntary liquidation on 1 April 2010 and that Guy
Harrison of BN Jackson Norton be appointed liquidator of the Company. From that
point the Liquidator will take over the management of the Company from the
Directors. The payment of fees to Mr Murray and Mr Oury will cease when the
Liquidator is appointed. I have waived my fees since 7 March 2009. No payments
for loss of office will be made.
Under the Proposals, the Company will be wound up by means of a voluntary
winding-up in accordance with its Articles and pursuant to the provisions of
section 84(1)(b) Insolvency Act 1986. The winding up of the Company will become
effective immediately upon the passing of Resolution 1 to be proposed at the GM,
and Resolution 2, which will only be proposed if Resolution 1 is duly passed,
will give the Liquidator the authority to exercise the powers under the
Insolvency Act 1986 necessary to conduct the liquidation.
At the close of business on 28 February 2010 (being the latest practicable date
prior to the publication of the circular), the unaudited net assets of the
Company were GBP4.86 million and comprised GBP1.93 million in liquid assets, GBP0.26
million in illiquid investments and GBP2.67 million in cash. On liquidation, the
Liquidator will set aside sufficient liquid assets in the Liquidation Fund to
meet the Company's liabilities, including the costs of the Proposals. Any
remaining illiquid assets will also be transferred to the Liquidation Fund,
together with a Retention that the Liquidator considers sufficient to meet any
contingent and unknown liabilities of the Company. This Retention is currently
not expected to exceed GBP 75,000.
The expenses, including VAT, incurred in relation to the Proposals (including
all printing costs, postage costs, professional advice and the Liquidator's
fees) are currently estimated to amount to GBP 90,000 (equivalent to approximately
6.67p per Ordinary Share).
The Liquidator intends to make an initial liquidation distribution as soon as
practicable after the Company is placed into liquidation. Assuming no change in
the net asset value, the Board estimates that, after allowing for the provisions
detailed above and the payment of the interim dividend referred to below, the
first cash distribution would be approximately 200 pence per Ordinary Share.
Resolution 3, which will also only be proposed if Resolution 1 is duly passed
and the Company is therefore placed into liquidation, will approve the
cancellation of the listing of the Company's shares on the Official List of the
UK Listing Authority and cancellation of the admission to trading of such shares
on the London Stock Exchange. Such cancellation would take effect no later than
31st March 2011.
The Board believes the foregoing is the most efficient and cost effective method
of winding up the Company. The Proposals set out in Resolutions 2 and 3 are
conditional on the passing of Resolution 1 at the General Meeting.
Interim Dividend
In order to ensure the Company's continuing compliance with section 842 of the
Income and Corporation Taxes Act 1988 and thus the retention of its investment
trust status for the period up to the date on which the Liquidator is appointed,
the Board intends to declare an interim dividend which will be paid on or
shortly before 1 April 2010.
Dealings, settlement and cancellation of listing
The Register will be closed and the Ordinary Shares will be disabled in CREST at
the close of business on 29 March 2010 and, to be valid, all transfers must be
lodged before that time. The last day for trading in the Ordinary Shares on the
London Stock Exchange for normal settlement (in order to enable settlement prior
to the Record Date) will be 24 March 2010. As from 25 March 2010, dealings
should be for cash settlement only and will be registered in the normal way if
the transfer, accompanied by documents of title, is received by the Registrar by
5.00 p.m. on 29 March 2010. The Record Date, being the date for determining
which Shareholders are entitled to receive liquidation distributions, is the
close of business on 29 March 2010. Transfers received by the Registrar after
that time and date will be returned to the person lodging them.
Dealings in the Ordinary Shares on the London Stock Exchange will be suspended
at 7.30a.m. on 1 April 2010 and, at the same time, the listing on the Official
List will be suspended. Shareholders should be aware that, should the Proposals
be implemented, it is intended that the listing of the Ordinary Shares on the
Official List will be cancelled no later than 31 March 2011.
The Liquidator intends to make an initial distribution to Shareholders as soon
as practicable after his appointment. The balance of the Liquidation Fund will
be distributed to Ordinary Shareholders after realising any remaining illiquid
assets, which may not be before March 2011, paying the costs of the liquidation
and settling all tax and other liabilities of the Company. The exact timing of
any further distributions will depend on the progress of the liquidation and the
receipt by the Liquidator of confirmation from the tax authorities that the
Company has no outstanding tax liabilities.
Resolutions to be proposed at the General Meeting
The Notice incorporates the resolutions required to be put to the General
Meeting and a brief explanation of the purpose of each of the resolutions is
given below. As the business of the GM includes a resolution to wind up the
Company holders of Preference Shares are, pursuant to Article 4 (3) of the
Articles of Association of the Company, entitled to attend and vote at the GM.
Resolution 1
A special resolution, requiring a 75% majority of those present in person or by
proxy and voting for it to be passed, is required to place the Company into
liquidation and to appoint liquidators in the case of a members' voluntary
winding-up.
This resolution deals with matters connected to the winding up and certain
procedural issues pertaining to the liquidation. It is proposed as a special
resolution and comprises two parts.
Part (a) of the special resolution causes the Company to go into voluntary
liquidation and states the name of a qualified insolvency practitioner who will
be appointed as liquidator for the purposes of the liquidation of the Company.
Mr Guy Harrison of Messrs BN Jackson Norton is proposed as the Liquidator of the
Company.
Part (b) relates to the basis of the Liquidator's remuneration. The Insolvency
Act 1986 requires that the basis of the remuneration of the Company's
Liquidator(s) be approved by its shareholders.
In the event that this resolution is not passed at the General Meeting,
resolutions 2 and 3 will not be put to the General Meeting. The Company will
continue as an investment trust in its current form but the Board will
reconsider its investment policy in the light of that decision.
Resolution 2
This is to be proposed as a special resolution. The resolution is conditional
on Resolution 1 being passed and confers on the Liquidator certain authorities
required to enable him to carry out the duties anticipated in the course of the
liquidation including payment in priority to holders of Preference Shares (in
accordance with the Company's Articles of Association) and the intended
transfer, pro-rata to Ordinary Shareholders, of certain shareholdings currently
owned by the Company.
Proposed distribution in specie
It is intended that, following the payment in full to all Preference
Shareholders, the Company's holding of shares in SpaceandPeople plc and
Wheelsure Holdings plc will not be sold in the market but, subject to the
comments below, distributed to Ordinary Shareholders pro-rata to their
shareholding in the Company by way of a distribution in specie.
With regard to the holding of shares in Wheelsure Holdings plc the Board has
suggested to the proposed Liquidator that those Shareholders who hold less than
100 Ordinary Shares in the Company receive a cash alternative instead of a
distribution in specie. The cash alternative will be based on the bid value of
each of the Wheelsure Holdings plc shares on the day immediately prior to the
passing of the resolution to wind up the Company. The holding of shares in
SpaceandPeople plc will be distributed to Ordinary Shareholders pro-rata to
their shareholdings in the Company on a 1:1 basis.
The proposed Liquidator has indicated that he believes this to be a sensible
option and that he is likely to adopt this proposal. The resolution is worded in
such a way as to enable him to do so.
Resolution 3
This is to be proposed as a special resolution. This resolution is also
conditional upon the passing of Resolution 1 above.
In conjunction with the appointment of the Liquidator, the Board is also
proposing that the Company suspends dealings of its securities listed on the
London Stock Exchange with effect from 7.30 a.m. 1 April 2010. The Company
intends to apply for cancellation at 8.00 a.m. on 31 March 2011 subject to this
Resolution 3 being passed.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Declaration and payment of Interim Dividendon or before 1 April 2010
Latest time and date for receipt of Forms of Proxy10 a.m. on 30 March 2010
Register closes and Record Date for Shareholder entitlements
in respect of the liquidation 5.00 p.m. on 29 March 2010
Suspension of Ordinary Shares from trading on the London Stock
Exchange and suspension of the listing for the Ordinary Shares
on the Official List 7.30 a.m. on 1 April 2010
General Meeting 10.00 a.m. on 1 April 2010
Expected first cash distribution to Shareholders by 5 April 2010
Cancellation of Listing 8.00 a.m. on 31 March 2011
A copy of the Circular can be found on the Company's website
www.welshindustrial.com.
Copies of the circular have also been delivered to the UK Listing Authority and
will shortly be available for inspection at the UK Listing Authority's Document
Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Tel No. (020) 7066 1000
10 March 2010
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