Morley Fund Management is to ask investors in its Global Opportunities split-capital trust to vote o...
Morley Fund Management is to ask investors in its Global Opportunities split-capital trust to vote on a proposal to merge the fund.
It is seeking to combine it with another split, Morley Absolute Growth, which invests in other splits but has exposure to a long/short European strategy.
Investors from both trusts will be asked to vote on 2 September. If 75% of those voting in each trust opt for the merger, the reconstruction shares in both trusts will be suspended on 3 September. Dealing on the combined trust would begin nine days later.
Morley said the reconstruction has been forced on it by falling equity markets.
Annual growth of around 6.4% is needed in Global Opportunities just to pay back income shareholders. The required annual growth is 30.8% for capital shares and 11.1% for zero shareholders.
Analysts have welcomed the move. HSBC's Paul Locke said it had become clear Global Opportunities was unlikely to meet its objectives.
According to Locke, the reconstruction, which would cost around £4.5m, offers a forward-thinking alternative.
Without it, he said, further repayments of debt would have to be made, requiring liquidation of assets, further undermining the trust's position.
The rolling over of assets from Global Opportunities to Absolute Growth, a Guernsey-incorporated trust, would follow the repayment of £28.58m in debt. Shareholders in each trust would have their existing shares swapped for shares in the combined trust. The new trust would have a shortened life, winding up on 31 March 2006.
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