The board of Templeton Latin America, managed by Mark Mobius, is posting a circular to shareholders ...
The board of Templeton Latin America, managed by Mark Mobius, is posting a circular to shareholders detailing its recommended proposals for the reconstruction of the company.
Shareholders are to be offered a cash exit, a rollover into Templeton's similar mandated Luxembourg-listed Sicav, the Templeton Latin America Fund, or a combination of the two.
According to Templeton's estimates, based on an NAV per share of 94.9p on 23 August 2001, shareholders who elect for the Sicav option would receive approximately 98.35% of NAV. Shareholders who elect for cash would receive approximately 98.35% of NAV under the scheme.
The offered shares in the Templeton Latin America Fund are Class A (accumulation) shares, which will not carry any rights to dividends. Income and gains realised by investors in this Sicav are subject to a different UK taxation regime than that for income and gains realised by investors in the investment trust.
Shareholders who do not return a form of election so that it is received by 15.00 on 18 September 2001 will be deemed to have elected to receive cash if the proposal becomes effective.
In accordance with current Inland Revenue practice, if shareholders opt for a straight rollover into a unit trust, Oeic, or Sicav, it is not treated as a chargeable event.
However, in the judgement of the high court in the Fallon case, one not connected with investment trusts, this practice has been brought into question, and it is unknown whether or not this practice may be withdrawn in the future.
While it is too early to say what impact this case will have, it has raised issues on rollovers and CGT and how tax impacts rollovers.
As such, a statement of caution by the board said if current Revenue practice is withdrawn, shareholders who elect to receive accumulation shares in the Sicav will be treated as disposing of their shares and a taxable gain or allowable loss may arise.
A first EGM will be held on 20 September and the latest time for receipt of forms of proxy for the second EGM will be on 26 September. A second EGM is scheduled for 28 September, and if the proposals are voted through this will be the effective date of reconstruction.
Over three years to 22 August 2001, in terms of share price, the Templeton Latin America Investment Trust is ranked second in the Latin America sector, returning 42.7% compared to the sector average of 33.3%. Over one year it is ranked first, returning -6.35 compared to the sector average of -17.6%.
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