Wal-Mart is keeping the trail commission from those former Asda shareholders who choose to convert t...
Wal-Mart is keeping the trail commission from those former Asda shareholders who choose to convert their loan notes to holdings in Fleming funds.
These shareholders, who received loan notes following Wal-Mart's acquisition of Asda, are being offered the chance to exchange their notes for equity investment into Fleming Managed Growth investment trust or S&P Premier Equity Growth.
The normal annual management charge is applicable to the transferred holdings. For the investment trust it is 0.3% and 1.5% for the unit trust. Wal-Mart collects any renewal commission which would normally be paid to brokers. Lough Callahan, consultant at Ernst & Young which put the deal together, said: "This is aimed at moving shareholders' capital into better performing equity investment without incurring a capital gains tax liability. After sufficient time has passed for taper relief to take effect, the investment can be cashed in at a less punitive CGT rate."
This is the first time that a non-financial company has enacted this type of deal. Callahan helped put together a similar deal when Merrill Lynch took over Mercury Asset Management. Note-holders were offered a switch into the Mercury Asset Allocator fund.
He added that he was working on three other similar cases. However, these are all with financial companies, so the investment management alternative to be offered will be an in-house option, not an external manager.
Note-holders will receive forms of election by post. These must be returned by 3.00pm on Friday 7 April 2000.
Contact 0800 403070 or visit www.flemings.co.uk/its or www.prosper.co.uk
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