Radiotrust, managed by Aberdeen Asset Management, is to change its investment remit and its capital ...
Radiotrust, managed by Aberdeen Asset Management, is to change its investment remit and its capital structure.
The trust, managed by Andrew Elder, invests predominantly in quoted and unquoted shares in UK and overseas companies involved in sound broadcasting.
It has proposed widening its investment universe so it can invest in a range of companies within the media industry in general and including, when relevant, some companies within the telecommunications and technology sectors. The main reason behind the change in remit is the consolidation which has taken place in the radio industry over the past decade.
According to Jonathan Maxwell, investment trust analyst at Brewin Dolphin, when the trust was launched in 1989 the number of radio companies was much larger than it is today. As a result of widening the remit the trust's name will be changed to Media and Income trust.
Over the three years to 18 July the trust has performed well returning £344 to shareholders for every £100 invested. Over one year the share price increased by 94%.
Despite the level of capital growth the trust has consistently traded at a relatively wide discount in excess of 15%. More recently the trust has signed an irrevocable undertaking in respect of a recommended cash offer for one of its unquoted holdings. The sale will increase the NAV per share by 28.36p.
With the introduction of gearing and zero dividend preference shares to the trust's capital structure it is hoped the discount will narrow to close to NAV or that the trust will stand at a premium. The extra capital raised through bank borrowings and the issuance of zeros will be invested in fixed interest and other high yielding securities, a proportion of which will be fixed interest stocks of media and media related companies.
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