The NAV of the Gartmore Split Capital Opportunities Trust's (GSCOT) ordinary shares fell to nil on 2...
The NAV of the Gartmore Split Capital Opportunities Trust's (GSCOT) ordinary shares fell to nil on 21 December 2001.
The drop was due to prolonged falls in the market prices of its investments in other investment trusts, combined with its own structural gearing, the company said.
The board of the trust, with its advisers, is actively considering steps to ensure the company's dividend-paying ability, with a view to putting proposals to shareholders at an EGM yet to be called.
Any proposals put forward would, the board said, be likely to require the approval of both zero and capital share holders.
On 21 December, the zeros in the trust, which are issued by a subsidiary, GSCOT Securities, were nearly fully covered at 0.99 times.
The value of the company's net assets had fallen to less than half of its issued share capital by 21 December when the company had called-up share capital of £458,776, undistributable reserves of nil and net liabilities of approximately £373,000.
Unless the company's asset position improves prior to 31 January 2002, it will suspend dividend payments pending the implementation of any proposals.
In a statement, the board said: 'The board wishes to emphasise that the asset calculations referred to relate only to the technical position under sections 264 and 142 of the Companies Act and have no consequences for the banking covenants. As at 21 December 2001, the company's total debt, as a percentage of its NAV, was approximately 53%, compared to the covenant limit of 100%.'
Vee Montebello, head of communications at Gartmore, said: 'This problem was discovered on 24 December once the end of day figure for 21 December were calculated, so we wanted to make the announcement as soon as we discovered it.'
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