Annex B (continued)|
Aberdeen Preferred Income Trust PLC
The Group invests mainly in securities which
produce high investment yields, including convertible preference
shares, preference shares, income shares of other investment trusts
and other fixed interest securities including bonds to produce
a high gross portfolio yield together with an exposure to equity
Gilts strong particularly shorter
Convertibles mainly lower
An extraordinary month in the securities markets
with extreme volatility in equity markets and a flight to quality
in bond markets. High yield bonds were generally very nervous
on worries about the overall economic background. Equities were
very weak and volatile in the absence of serious buying interest.
Over the month the FTSE 100 Index lost nearly 9 per cent however
the fall was nearly 20 per cent at one stage before a late rally.
In the circumstances convertibles were again relatively resilient
although lower for choice. The split capital sector could find
no support in the face of the poor market background and July
and August have seen the suspension of a number of trusts some
of which have announced liquidation/receiverships.
The Ordinary shares, Subordinated Loan Stock
and 2008 Zeros currently have no attributable asset value. The
Stepped Preference Share asset value is represented only by its
accrued income. The asset values of the 2003 and 2005 Zeros have
seen further marked erosion since the end of July.
Aberdeen High Income Trust PLC
Aberdeen High Income Trust aims to provide high
income and potential for capital and income growth from investment
mainly in UK split capital investment trusts.
Company remains in breach of bank
and debenture covenants.
Debenture stockholders meeting held
10 June 2002 to approve proposals for the future.
Proposals accepted by debenture holders,
no further dividend payments to shareholders until bank repaid
The Company has already announced that it is
in breach of its financial covenants under the terms of the loan
agreement with Bank of Scotland PLC and the Trust Deed of the
7.1 per cent Debenture Stock 2008. The Company issued a circular
convening a meeting for Debenture holders on 10 June 2002. The
circular provided an update of the Company's financial position;
put forward proposals to address the issues concerning the breach
of the covenants contained in the trust deed and the facility
agreement with Bank of Scotland PLC and sought approval from Stockholders
to amend the Trust Deed in conjunction with those porposals.
Details of the Proposals can be found in the
circular a copy of which is available from Aberdeen Asset Managers'
Limited, One Bow Churchyard, London EC4M 9HH. The following summary
of the proposals should not be read in isolation:
The Company will not seek an immediate realisation
of the portfolio, although it may sell individual holdings as
£12 million will be prepaid to the bank
and debenture holders and the Company will seek to make quarterly
payments against the remaining value of the bank loan and Debenture.
Covenant breaches will be waived and the covenant
suspended for two years. The Company will not be required to maintain
investment trust status. Aberdeen Asset Manager's Limited has
agreed to waive its management fee payable on the gross assets
of the company and the Directors have reduced their fees.
As a result of the breach of the financial convenants
and the level of the Company's assets, the Company remains unable
to pay dividend in respect of the ordinary shares and preferred
income shares and in the circular it stated that it will make
no distributions to shareholders without the consent of Bank of
Scotland PLC, without their permission, until all amounts due
to the bank have been repaid in full.
Leveraged Income Fund Limited
Launched in April 1998. The Company's principal
investment objective is to provide Ordinary Income shareholders
with an initial high income and opportunity for capital growth
over the planned life of the Company and to provide Zero Dividend
Preference shareholders with their fixed capital entitlement.
The Company principally invests in equities and bonds, with a
particular focus upon returns from split capital investment trusts
and closed end funds.
Agreement with Bank of Scotland on
amendments to the loan facility.
Seeking loan stock holders approval
to new terms.
On 11 June the board announced that it had reached
agreement with RBS for amendments to the terms of the loan facility,
subject to the agreement of the loan stock holders. From revenue
received each year the company will repay up to £3 million
of the loan in the first six months, following which 50 per cent
of the revised annual loan stock coupon of 4 per cent may be paid.
Any surplus revenue in the six months will further reduce bank
debt. Within 12 months up to £5 million of the loan will
be repaid from revenue, after which the balance on the revised
annual loan stock coupon of 4 per cent may be paid. Various other
conditions also apply to this revised facility, but the loan stock
holders will need to agree to the revised arrangements. The outstanding
£875,000 interest payment relating to the loan stock holders
will be authorised by the bank if the requisite document is signed
and certain conditions are satisfied.
The Enhanced Zero Trust PLC
The Enhanced Zero Trust PLC aims to achieve
an above average return from investment in zero dividend preference
shares through the use of gearing.
Reconstruction approved by shareholders.
£7.25 million debt repaid.
£6 million injection by Aberdeen
Asset Management PLC.
Since the end of July the Company has made the
"The Company announces today, 14 August
2002, that the financial reconstruction of the Company approved
by Ordinary Shareholders at a class meeting and at an extraordinary
general meeting held on 7 August 2002, has today been completed.
Accordingly, the Company has repaid £7.25
million of its existing bank loan, converted £20.25 million
of its existing bank loan into 20,250,000 Class `C' Preference
Shares which have been allotted to The Governor and Company of
the Bank of Scotland, and allotted 6,075,000 Class `D' Preference
Shares, including 6,000,000 to Aberdeen Asset Management PLC as
consideration for a £6 million cash injection".