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Investment Trust Research & Insights

Investment Trust Times: September 16-22

F&C Commercial Property has reduced its fees as part of its renegotiated terms of management following a failed merger attempt

Jackie Beard, FCSI, 22 September, 2010 | 11:14AM
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Atlas Estates (ATLS), the Emerging European property company, has announced its intention to hold an EGM on October 15, 2010, at which it will seek approval to cancel its listing of ordinary shares on AIM. This comes as no surprise, given the cash offer made by Fragiolig Holdings Ltd on May 7, 2010, which was declared unconditional less than a week later. The offer was made at 90 pence cash per share.

BlueCrest AllBlue (BABS) has announced a proposed share placing representing up to 9.99% of each class of the company’s share capital. There are three classes in total: GBP, USD and EUR. The placing will be conducted through an institutional book-building process, subject to certain conditions being met, and this will be carried out by RBS Hoare Govett and Dexion Capital. The number of placing shares to be issued, and their price, will be determined once the book-building has completed; this is expected to be today (September 22). The company currently trades at a slight premium to its NAV.

CQS Rig Finance (RIG) has confirmed the completion of its sale of Sevan Drilling Bond 2012. While this will have little, if any, impact on the company’s NAV, the proceeds will be used to reduce the company’s debt.

The directors of Eastern European Property Fund (EEP) are proposing a change to the company’s investment policy, management and fees, subject to shareholders’ vote on 29 October. The proposed change to policy is to shift the focus of the company away from Bulgaria and Romania and instead to focus exclusively on Turkey. If approved, all existing assets would need to be sold and the proceeds reinvested in Turkish property. The company also proposes significant changes to its fee structure; this would see the AMC fall by 50bps to 1.25% and a change to the calculation method for the performance fee. Currently, the performance fee is based on performance of adjusted NAV; the proposal is to base it on total distribution to shareholders when a realisation event takes place.

Following the rejection last month of merger proposals with UK Commercial Property (UKCM), the directors of F&C Commercial Property Trust (FCPT) have announced revised terms for the management of its property portfolio by F&C REIT Property Asset Management plc. These terms include a reduction in the base AMC from 0.6% to 0.5% of net assets, with total annual fees (including the performance fee) capped at 0.6%, down from 1%, of average total assets.

JPMorgan Mid Cap (JMF) does not plan to renew its authority to re-issue shares from Treasury at a discount to NAV. Shares held in Treasury will only be re-issued at a premium to NAV at the time of re-issue. The company currently holds 4.0% of its share capital in Treasury, with the maximum set at 5%. These proposals are subject to approval at the AGM to be held October 29.

On August 5, the board of London & Stamford Property (LSP) notified shareholders of two resolutions that were to be put forward at last week's EGM. At that EGM, both resolutions were passed. The company will be converting to a UK REIT (real estate investment trust) and the shares will be moving to the Official List and no longer quoted on AIM. Both proposals must first be sanctioned by the Guernsey Court, due to take place on September 28. The move to the main market should improve liquidity; at the time of writing the company trades at a discount of approximately 7% to its NAV.

Plans are underway at Nordic Land (NLD) to dispose of the company’s Swedish assets (subject to approval). Proceeds are expected to be around 23 pence per share, with an initial distribution of 15 pence and a final distribution of 8 pence when the company is wound up. Approval will be sought at the AGM on October 7 and, if passed, the disposal is likely to complete shortly thereafter.

Northern Venture Trust (NVT), a UK venture capital company, has announced it will be holding a general meeting on October 13 at which it will propose a resolution to carry out a tender offer and share issue, with the aim of raising up to £15 million. Investors will be able to apply for both the tax year 2010/11 and 2011/12 and shares are expected to be issued at a premium to the last published NAV at time of issue, to cover issue costs and to avoid any material dilution effect.

Oakley Capital Investments (OCL) has announced the disposal of Host European Corporation Ltd for £22 million. This is expected to result in an uplift in NAV of between 6 pence and 8 pence. At the time of writing, the company trades on a discount of circa 18% to its NAV.

Pacific Alliance China Land (PACL) has announced a tender offer to buy up to 6% of the ordinary shares in issue at NAV on August 31, when the fund was trading at a discount of more than 39% to its NAV.

There are several changes to report at the Puma VCT series of companies, managed by Shore Capital. Puma VCT (PUA) and Puma VCT II (PMV) have been wound up and their listings cancelled on the Official List, effective 16 September 2010. Sir Aubrey Brocklebank has resigned from the Board of Puma VCT III (PUMC) but retains his position as Chairman of Puma VCT IV (PUMD). Conversely, David Brock has resigned from the Board of Puma VCT IV, but remains as a director on the board of Puma VCT III.

Queen’s Walk Investments Ltd (QWIL) has changed its name to Real Estate Credit Investments Ltd (RECI).

Property company Wichford (WICH) has completed the sale of St Cloud, its French asset, for EUR 6.13 million. Separately, the company has extended its debt facility of £114.6 million by two years to October 2012.

Non-Executive Directors – Appointments
F&C Investment Trust (FRCL) – Jeffrey Hewitt
Octopus Eclipse VCT 3 (OEC3) – Ruth McIntosh
Octopus Eclipse VCT 4 (OEC4) – Rob Mills
Orchid Developments (OCH) – Joseph Drescher, Amir Rosentuler, Mark Holdsworth
Puma VCT III (PUMC) – Chris Rigg
Puma VCT IV (PUMD) – Adam Teeger

Director Resignations
Elephant Capital (ECAP) – Niraj Agarwal
Octopus Eclipse VCT 4 (OEC4) – Greg Melgaard
Orchid Developments (OCH) – Tim Childs
Puma VCT III (PUMC) – Sir Aubrey Brocklebank
Puma VCT IV (PUMD) – David Brock

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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