NSF.L Regulatory News (NSF)

20 Nov 2007 13:59

New Star Financial Opp Fd Ltd20 November 2007 New Star Financial Opportunities Limited (the "Company") Recommended proposals to implement a reconstruction of the Company and a TenderOffer to purchase up to 50 per cent. of the Company's issued share capital 20 November 2007 The Company announces proposals for a reconstruction of the Company to coincidewith the redemption of the Zero Dividend Preference Shares issued by NSFSecurities Limited, the Company's subsidiary (the "Subsidiary"), and thewinding-up of the Subsidiary on 11 December 2007. The Proposals were formulatedfollowing a review of the Company's options beyond that date. Terms used and not defined in this announcement shall, unless the contextotherwise requires, bear the meaning given to them in the Circular issued by theCompany dated 19 November 2007. The Proposals include (amongst other things): - a continuation of the Company's exposure to financials, with a broader investment policy, under the management of Nick Brind at New Star. Mr. Brind has managed the Company's assets since March 2003 and generated a NAV total return of 284.25 per cent. on the Shares to 31 October 2007, compared with a return of 109.5 per cent. on the FTSE Financials Index over the same period; - a continuation of the Company's high income objective, with the aim of delivering dividends in the year to 30 November 2008 of 4.4 pence per Share, with the potential for achieving growth in the dividend. Such a dividend would represent an initial annualised dividend yield to Shareholders of 6 per cent. based on the Net Asset Value per Share as at 15 November 2007. This does not constitute a forecast of the profits or returns from an investment in the Shares and there can be no guarantee of any particular level of profits, dividend or return; - restating the Company's investment objective and adopting a revised investment policy encompassing investment predominantly in European financial companies, with the ability to invest in unquoted financial securities or limited partnerships, which themselves invest in financial companies, and to enter into short sale transactions and maintain gearing in most market conditions; - changing the benchmark for measuring the Company's investment performance from the FTSE Financials Index to the Dow Jones STOXX 600 Financials Index to reflect the proposed change in the Company's investment policy; - introducing an annual tender and taking powers to buy back Shares with the aim of ensuring that the Shares trade at a relatively narrow discount to their Net Asset Value per Share; - introducing a performance fee for New Star in addition to its annual management fee of 0.8 per cent. of the net assets of the Company under management; - implementing a tender offer in respect of up to 30,750,000 Shares, representing 50 per cent. of the Company's issued share capital, at a price close to Net Asset Value; and - postponing the obligation for the Board to propose an ordinary resolution at the annual general meeting of the Company to be held in 2008 and every five years thereafter that the Company should continue as an investment company for a further five years until the annual general meeting of the Company to be held in 2018 and every ten years thereafter. Background to and reasons for the Proposals The Subsidiary's Zero Dividend Preference Shareholders are entitled to repaymentof their final capital entitlement of 168.48 pence per share on 11 December 2007in accordance with the terms of the Subsidiary's articles of association,following which the Subsidiary will be wound up in a members' voluntaryliquidation. The redemption of the Zero Dividend Preference Shares and thewinding-up of the Subsidiary (together with details of how Zero DividendPreference Shareholders may roll their entitlement to repayment into anopen-ended fund managed by New Star) is explained in more detail in a circularto be issued by the Subsidiary today. The Zero Dividend Preference Shares, through the Subsidiary, provide gearing forthe Shares, thereby increasing the gross capital that can be used by the Companyto generate income to pay a dividend. The redemption of the Zero DividendPreference Shares referred to above will be funded by the Company and would, ifno other action were taken, result in a substantial decrease in the amount ofthe dividend payable to Shareholders and in the gearing ratio of the Shares. TheBoard recognises that the Shares may not continue to be attractive to investorsin such circumstances, and therefore has decided to re-gear the Company,initially through a credit facility from a prime broker, with the aim ofmaintaining substantially the same dividend for Shareholders. Notwithstanding this proposal and the fact that the Company's articles ofassociation do not provide for a cash exit at the current time, the Boardrecognises that certain Shareholders may wish to realise all or a part of theirinvestment in the Company for cash at a price close to the Net Asset Value perShare. The Board is also aware that a number of Shareholders wish to continuetheir investment in the Company. The Board has formulated the Proposals to address the differing views ofShareholders. Benefits of the Proposals The Board believes the Proposals should have the following benefits forShareholders: - the opportunity to maintain investment exposure to a portfolio of financial securities managed by New Star through its fund manager, Nick Brind; - the opportunity to benefit from the greater investment flexibility conferred on the Manager by a wider investment policy - the prospect of maintaining a high rate of annual dividend; - the benefit of a lower-cost of borrowing compared to the Zero Dividend Preference Shares, to provide enhanced prospects for long-term income and capital returns associated with gearing; - the proposed annual tender and share buy-back powers should assist in managing any discount which may arise between the market price of the Shares and their underlying Net Asset Value; - the opportunity for Shareholders wishing to do so to realise a significant proportion of their investment in the Company at a small discount to Net Asset Value by way of the Tender Offer; and - as a high income conventional, rather than a split capital, investment company, the Company should be attractive to a wider group of investors. High income conventional investment companies have typically traded at a small premium to net asset value, compared to an 8.1 per cent. discount (average discount for the 12 months to 15 November 2007 (Source: Cazenove)) on all conventional investment companies. Management and performance The Company has a record of providing strong total returns since Nick Brind, thefund manager at New Star with day to day responsibility for managing theCompany's assets, first began managing the Company's assets in March 2003 in hiscapacity as an employee of Exeter Asset Management. Mr. Brind will continue tobe the fund manager at New Star with responsibility for managing the Company'sassets. Mr. Brind joined New Star from Exeter Asset Management in April 2005 whenmanagement of the Company's assets was transferred to New Star. Mr. Brind has 12years of investment experience. In addition to managing the Company's assets, heis responsible for the management of two other closed-end funds. The combinedvalue of the assets under his management at 31 October 2007 was approximately£266 million. Mr. Brind holds the Securities Institute Diploma. Mr. Brind is supported in this role by the team of New Star fund managers,including Guy de Blonay who as at 31 October 2007 managed approximately £525million of assets invested in financials. Reflecting the wider resources available at New Star, the Company's investmentpolicy was widened to invest in pan-European Financials, rather than just thosein the UK, with effect from 30 November 2005. The investment performance of theCompany since Mr. Brind took responsibility for investing the Company's assetsis shown in the table below: Total return in period to 31 October 2007 (per cent.) Since 30 Since 31 March November 2005 2003* 6 months 1 year 3 yearsGross assets of the Company** -3.14 7.75 59.29 29.13 114.72Gross assets benchmark*** -3.72 -0.35 37.71 17.02 78.29Ordinary Shares NAV -8.04 7.81 100.55 42.41 284.25FTSE Financials -5.50 -0.65 47.44 21.61 109.49 * When Mr. Brind first began managing the Company's assets ** Gross assets include the assets attributable to the Ordinary Shareholders andthe Zero Dividend Preference Shareholders (Source: New Star, unaudited) *** A composite index comprising 60 per cent. FTSE Financials, 40 per cent. FTSEGov British All Stocks Index Investment Outlook The Directors and Manager believe that the long term outlook for the financialssector is positive despite the turbulence in equity markets in recent months. The Directors and Manager believe that the following factors contribute to thelong term attractiveness of the global financial services sector: - banking, pensions, insurance and asset management companies all stand to benefit from ageing populations and rising wealth in developed and emerging market countries and, with fewer people working to provide for those who retire, governments are encouraging people to turn to these companies for their retirement needs; - globalisation produces consolidation, which may provide astute investors the opportunity to capture premia paid by acquirers and share in the synergies gained by well-run companies from rationalisation; and - financial trading has become internationalised and new products continue to be developed, providing additional revenues for financial institutions and more efficient ways to hedge their risks. Financials comprise a number of sectors which exhibit differing investmentcharacteristics and provide opportunities for the Manager to perform indifferent economic and market environments. Banks represent the largest sectorof the financials industry in Europe, at approximately 65 per cent. Othersectors within the financial industry include broker dealers, asset managers,life assurance, non-life assurance (including reinsurance), real estate andspeciality finance (credit cards, leasing, financial guarantors, etc). The so called "credit crunch" that resulted principally as a consequence oflosses in the US sub-prime residential mortgage market led to the share pricesof certain financial stocks falling sharply. In the short term, the share pricesof certain financial companies may remain volatile while greater disclosure ofexposure to potential losses is made. However, the Manager believes thatvaluations now discount significant further negative news-flow, and historicallyfinancial stocks have provided attractive returns from these levels. The current relative dividend yield of the European banking sector relative tothe broader European equity market is at its highest since 2000, following whichfinancials enjoyed a period of very strong performance. Similarly, the price earnings ratio for the European banks sector relative tothe broader European equity market has fallen to an attractive level relative toits historical range. In the opinion of the Directors and Manager, there also continues to besignificant opportunities in the other sectors of the financials industry.Private banking and asset management companies have been beneficiaries of thelong-term demand for savings products and investment advice and services, inparticular for alternative assets such as private equity and hedge funds. Stockexchanges and inter-dealer brokers, though, with their operational leverage,have been substantial beneficiaries of the recent volatility in equity markets(and also structural changes such as increased algorithmic trading) resulting invery strong growth in volumes of shares and derivatives traded. The non-lifeinsurance sector has also performed well on the back of expectations of anotheryear of low claims and therefore higher profitability. Elsewhere in the sector, real estate companies have suffered sharp falls intheir share prices in recent months resulting in a widening of discounts to netasset value; this increases the attractiveness of the sector for investment.Life assurance companies have also seen their share prices weaken despite recentmerger and acquisition activity and a number of potentially positive catalystscoming to light. The Proposals Investment objective and investment policy The Company's existing investment objective is to provide Shareholders with ahigh level of income payable quarterly together with the potential for incomeand capital growth and to provide Zero Dividend Preference Shareholders with apre-determined final capital entitlement. In light of the proposed liquidationof the Subsidiary, the Directors consider it appropriate to restate theCompany's investment objective with effect from completion of the Proposals asfollows: "The investment objective of the Company is to provide Shareholders with a highlevel of income and the potential for capital and income growth." The Company's existing investment policy is "to invest in securities offinancial companies, the majority of which will be listed on a RecognisedInvestment Exchange". The Company's investment policy has included an ability to invest inpan-European securities since November 2005 and the Directors wish to continuethis focus whilst allowing some additional flexibility for the Manager to takeadvantage of opportunities elsewhere. In particular, the Board considers itappropriate that the Company's investment policy should include: - flexibility to sell stocks or other securities short so as to provide the Manager with an additional tool to implement investment ideas and provide a greater ability to hedge portfolio risk. Aggregate short sales will be limited to 20 per cent. of total assets with a limit on individual stock positions of five per cent. of total assets; - continuation of the use of financial gearing. Initially, this will be achieved through the use of credit facilities provided for in a prime brokerage agreement to be entered into with the Prime Broker. However, the Company also may employ bank debt or other gearing techniques from time to time, if these were to be more advantageous. The Board will limit borrowing to 50 per cent. of total assets; and - the ability to invest in unquoted investment opportunities in the financials sector. Any unquoted investments will be restricted to 10 per cent. of total assets. In order to effect the above, the Board is proposing to adopt the followingrevised investment policy: "The Company will seek to achieve its investment objective by investingpredominantly in the equity, debt or other securities of listed European and UKfinancial companies. The Company may invest up to 25 per cent. of its totalassets (at the time of purchase) in financial companies listed outside Europeand the UK. The Company also may invest up to 10 per cent. of its total assets (at the timeof purchase) in unquoted financial securities and limited partnerships whichthemselves invest in financial companies. Individual holdings will be limited to 7.5 per cent. of total assets at the timeof purchase. The Company will not invest more than 10 per cent. of total assets(at the time of purchase) in other listed investment companies. The Company may enter into short sale transactions which shall be limited to 20per cent. of total assets in aggregate with a limit on short sales of individualstocks limited to five per cent. of total assets. The Company will maintain gearing in most market conditions, with borrowingslimited to 50 per cent. of total assets at the time of draw-down, other than forshort-term settlement or cash flow purposes." The Board may agree additional limits with the Manager from time to time inaddition to those set out in the investment policy. Under the Listing Rules, the Board is required to seek Shareholders' approvalfor this change in the Company's investment policy. Change in benchmark To reflect the Company's revised investment policy on implementation of theProposals, the benchmark index for measuring the Company's investmentperformance will be changed from the FTSE Financials Index to the Dow JonesSTOXX 600 Financials Index the ("STOXX Financials") expressed in sterling. Notwithstanding its name, there are currently 144 companies in the STOXXFinancials, and the dividend yield was 3.2 per cent. at 15 November 2007). Dividends The Company paid dividends of 1.1 pence per Share in respect of each of the twoquarters to 30 May 2007. For the quarter to 30 August 2007, the Company paid adividend of 1.25 pence per Share. The Company intends to declare a dividend of1.25 pence per Share for the final quarter to 30 November 2007, such dividend tobe declared in December 2007. As a result of the latter two dividends, the Company's revenue reserves will bedrawn on to the extent of approximately 0.5 pence per Share, leaving revenuereserves of approximately 0.7 pence per Share. With effect from 1 December 2007, the Company intends to pay four quarterlydividends of 1.1 pence per Share, that is an initial dividend for the year to 30November 2008 of 4.4 pence per Share, with the potential for growth in thedividend. This represents an annualised dividend yield to Shareholders (based onthe Net Asset Value per Share at 15 November 2007) of 6 per cent. This does notconstitute a forecast of the profits or returns from investment in the Shares,and there can be no guarantee of any particular level of profits or return. Management arrangements Currently, New Star is entitled to receive an annual management fee of 0.8 percent. of the net assets of the Company. The calculation of net assets for thesepurposes includes the assets attributable to the Zero Dividend PreferenceShares. No fees will be payable in respect of the gearing facilities which willbe used to replace the Zero Dividend Preference Shares after their redemption. However, the Board proposes that, with effect from implementation of theProposals, New Star be entitled to receive a performance fee in addition to theannual management fee of 0.8 per cent. of the net assets of the Company. The performance fee will be at a rate of 15 per cent. of the amount by which theNAV total return of the Shares out-performs the total return of the STOXXFinancials (expressed in sterling) plus a hurdle of two per cent. per annum. Thefee will be payable twice yearly with a cap of two per cent. of net assets inrespect of any particular financial year, subject to meeting a high water mark. New Star's entitlement to receive a performance fee will be effected by theCompany and New Star entering into a deed of amendment to the InvestmentManagement Agreement. Discount control The Board recognises that the possibility of discounts to net asset value can bea feature of closed-end investment companies. The Board therefore proposes toconsider each year a further tender offer and to take powers to buy back Shareswith the aim of ensuring that the Shares trade at a relatively narrow discountto Net Asset Value per Share. Starting in 2009, the Company will announce each year, at the same time as theannouncement of its preliminary results in January, whether or not a tenderoffer will be made. Such an announcement will provide at least 30 days notice ofthe date by which tender forms will need to be submitted and the record date forparticipating in the Tender Offer, and will state the total number of Sharesthat the Company will purchase and the discount to net asset value at which theShares will be purchased. The record date for determining the number of Shares which a Shareholder maytender will be the date 90 days prior to the date on which the relevant tenderis effected. Similarly, any scaling back would be pro rata to holdings at thatrecord date. It is the Board's intention that future tenders be made at a discount to NetAsset Value per Share of no wider than three per cent. and be for at least 10per cent. of the issued share capital of the Company. The Board will have regardto market conditions, the prevailing level of discount and the expected effecton the size of the Company in exercising its discretion to announce a tenderoffer. In addition to tender offers, the Directors currently have authority to buy backup to 14.99 per cent. of the Shares currently in issue and intend to seek annualrenewal of this authority from Shareholders at each annual general meeting. Anybuy-back of Shares will be made subject to the Listing Rules (which set a cap onthe price that the Company can pay) and within guidelines established from timeto time by the Board. The making and timing of any future tender offers and buy-backs will be at theabsolute discretion of the Board, and will be dependant upon the Company beingin a position, pursuant to the Law, to acquire Shares at that time. Purchases ofShares will be made through the market for cash only at prices below theprevailing Net Asset Value per Share where the Directors believe such purchaseswill enhance Shareholder value. The Directors will exercise their discretion to repurchase Shares where theyconsider that to do so would be in the best interests of Shareholders as awhole. Shares bought back may be cancelled or held in treasury at the Board'sdiscretion. Subject to Shareholder approval, Shares held in treasury may besubsequently sold in the market at a discount to their prevailing Net AssetValue provided that (i) the discount at which the Shares are sold is narrowerthan the weighted average discount at which they were acquired and (ii) theprice at which the Shares are sold is higher than the weighted average price atwhich they were acquired (in both cases accounting for acquisitions and sales ona "first in, first out" basis). No more than 10 per cent. of the issued sharecapital may be held in treasury at any time and Shares may only be held intreasury for up to 12 months from their purchase date, after which they will becancelled. Under the Articles, the Company has wide authority to issue Shares and, subjectto requirements to issue a prospectus, intends to issue Shares to investors at asmall premium to Net Asset Value per Share from time to time. Tender Offer In order to provide the opportunity for certain Shareholders to realise part oftheir investment in the Company, the Directors propose that a Tender Offer bemade for up to 30,750,000 Shares, representing 50 per cent. of the Company'sissued share capital. Under the Tender Offer, Shareholders (other than certain Overseas Shareholders)will (subject to the Company having sufficient distributable reserves) be ableto realise up to 50 per cent. of their holdings (their "Basic Entitlement") forcash. Shareholders will also be able to tender additional Shares in excess oftheir Basic Entitlement, but such tenders will only be satisfied, pro rata, tothe extent that other Shareholders tender less than their Basic Entitlement. The Tender Offer is being made at the Tender Price which will represent adiscount of three per cent. to the Net Asset Value per Share on the CalculationDate (after accruing for the costs of the reconstruction and winding-up of theSubsidiary). The Tender Offer is being made by Winterflood Securities. Winterflood Securitieswill, as principal, purchase validly tendered Shares by means of on-marketpurchases and, upon completion of those purchases, seek to sell them topurchasers in the market or to the New Star Funds as described below, failingwhich they will be acquired by the Company from Winterflood Securities at theTender Price. The repurchase of Shares by the Company will be funded from the Company's cashresources, by the sale of investments in the Company's portfolio and by the useof gearing facilities made available by the Prime Broker. Of the Shares boughtback under the Tender Offer, up to 10 per cent. of the issued Shares will beheld in treasury. Subject to Shareholder approval as to the right to sell sharesat a discount to Net Asset Value, Shares held in treasury may be subsequentlysold in the market as set out above under "Discount control". The Tender Offer is subject to Shareholder approval. The Company has received non-binding letters from Shareholders holding, inaggregate, 66.6 per cent. of the Shares in issue expressing their intentions inrespect of the Tender Offer and their intentions to vote in favour of theResolutions. Assuming that such intentions are implemented in accordance withtheir terms and that the remaining Shareholders (from whom no letters of intenthave been received) tender, in aggregate, 75 per cent. of their shareholdings,it is expected that a single Shareholder who tenders all of his Shares should beable to realise approximately 85 per cent. of his holding. Matching facility The Directors believe that there may be demand amongst certain existing or newinvestors to acquire Shares in the Company, and accordingly, concurrently withthe Tender Offer, the Directors have arranged for Winterflood Securities to usereasonable endeavours to sell any tendered Shares in the market to suchinvestors. Such sales will be transacted at a discount of at least two per cent.to Net Asset Value per Share and Winterflood Securities will be entitled toretain the difference between the Tender Price and the sale price for its ownbenefit. Except in relation to the commitment of the New Star Funds, theobligation to use reasonable endeavours to sell any tendered Shares has not beenunderwritten and there is no assurance as to the number of Shares (if any) forwhich purchasers will be found. New Star has committed on behalf of the New Star Funds to make an investment inthe Company by acquiring validly tendered Shares from Winterflood Securities.The New Star Funds will acquire such number of Shares as represents, subject toadjustment as set out below, an investment of £3.1 million (calculated byreference to the Tender Price) provided that their resulting holding, togetherwith persons acting in concert with them, would be no more than 29.9 per cent.of the issued share capital of the Company upon the implementation of theProposals. To the extent that New Star Funds have purchased any Shares in the market priorto the Closing Date, their obligation to acquire validly tendered Shares fromWinterflood will be reduced by the amount paid for such Shares on market prorata. New Star Funds have committed not to tender any Shares so purchased underthe Tender Offer. In the event that the Company repurchases further Shares following the TenderOffer and such repurchases would cause, in the absence of any other action, theholdings of the New Star Funds, together with any persons acting in concert withthem, to exceed 29.9 per cent. of the issued share capital of the Company, NewStar has committed that the New Star Funds would sell such number of Shares tothe Company as would be required to maintain their holding below this threshold. Reduction of capital In order for the Company to acquire its own Shares pursuant to the Tender Offer(to the extent required), pursuant to any future tender offers which the Companymay announce or pursuant to any exercise by the Directors of their authority tobuy back Shares, it must have sufficient distributable reserves at the time ofeach such acquisition. Accordingly, to ensure that the Company has sufficientdistributable reserves with effect from the implementation of the Proposals, itis proposed that, subject to the approval of the Royal Court of Guernsey, (i)the nominal value of the Shares, whether or not in issue, be reduced from 25pence each to 0.1 pence each and (ii) the amount standing to the credit of theshare premium account of the Company (including any share premium created by thereduction in the nominal value of the Shares referred to above) be cancelled andthe amount so cancelled be credited to a reserve established in the books ofaccount of the Company to be applied in any manner in which the profitsavailable for distribution are able to be applied, including the acquisition ofthe Company's own Shares. Life of the Company Under the Articles, the Board is currently obliged to propose an ordinaryresolution at the annual general meeting of the Company to be held in 2008 andevery five years thereafter that the Company should continue as investmentcompany for a further five years. In light of the reconstruction of the Companybeing proposed, the Board proposes to amend this provision in the Articles so asto postpone the Board's obligation to propose such an ordinary resolution untilthe annual general meeting of the Company to be held in 2018 and every ten yearsthereafter. Accounting policy Following the implementation of the Proposals, the Board proposes to alter theCompany's accounting policy with respect to the treatment of expenses. Whereasexpenses are currently charged against the revenue account of the consolidatedstatement of operations, the proposed policy will provide that they are chargedagainst the capital account of the statement of operations. The effect of thiswill be to increase the amount available for distribution to Shareholders by wayof dividend, with a corresponding reduction in capital-only performance. Entry into a prime broking agreement Prior to implementation of the Proposals, the Company will enter into a primebrokerage agreement with the Prime Broker. The Prime Broker will provide custodyservices, facilities for entering into short sale transactions and finance forgearing purposes. Costs and Expenses The costs of repaying the Zero Dividend Preference Shares and the reconstructionand winding-up of the Subsidiary, which are expected to amount to approximately£160,000, are payable by the Company and will be accrued ahead of theCalculation Date such that they are attributed to all Shareholders whether ornot they tender their Shares. These costs will be defrayed in part or in whole out of a one per cent. initialcharge levied by New Star Investment Funds on the issue of units in New StarDiversified Absolute Return Fund (the unit trust into which Zero DividendPreference Shareholders may elect to roll their final capital entitlement). Thischarge will be remitted in whole to the Company, with the Company making up anyshortfall or benefiting from any excess. The costs and expenses of the Proposals are expected to amount to approximately£325,000, which is equivalent to less than 0.38 per cent. of the net assets ofthe Group as at the close of business on 15 November 2007. These costs will beaccrued after the Calculation Date and will be mitigated to the extent that theCompany repurchases Shares for cancellation pursuant to the Tender Offer. Expected Timetable 2007 Latest time and date for receipt of Tender Forms 1.00 p.m. on 7 DecemberRecord Date for Tender Offer 5.00 p.m. on 7 DecemberLatest time and date for receipt of Forms of Proxy for the 10.50 a.m. on 9 DecemberExtraordinary General MeetingExtraordinary General Meeting 10.50 a.m. on 11 DecemberChange to investment management arrangements becomes effective and 11 Decemberresult of take up levels for the Tender Offer announcedCalculation Date for Tender Price 5.00 p.m. on 14 DecemberTender Price announced 17 DecemberCheques despatched in respect of proceeds of sale due under the Tender 21 DecemberOffer, balancing certificates despatched in respect of unsoldcertificated Shares and CREST accounts credited with proceeds of TenderOffer and unsold uncertificated Shares Definitions "Articles" the articles of association of the Company, as amended from time to time "Board" or "Directors" the board of directors of the Company "Calculation Date" the day as at which the Company calculates the Tender Price for the purposes of the Tender Offer, expected to be the close of business on 14 December 2007 (or as deferred in accordance with the provisions of the Tender Offer set out in the Circular) "Group" the Company and the Subsidiary "Listing Rules" the Listing Rules of the UK Listing Authority "Net Asset Value per Share" the Net Asset Value divided by the number of Shares in issue at the relevant time "New Star" or "Manager" New Star Asset Management Limited, the investment manager of the Company "New Star Funds" discretionary clients of New Star or any other member of the New Star group all or some of whose assets are managed by New Star or any other member of the New Star group on a discretionary basis "Prime Broker" Credit Suisse Securities (Europe) Limited "Proposals" the proposals set out in the Circular "Resolutions" Special Resolutions 1, 2, 3 and 4 as set out in the Notice of Extraordinary General Meeting at the end of the Circular "Share" an ordinary share of 25 pence in the capital of the Company "Shareholders" holders of Shares "Tender NAV" the net asset value of the Company calculated for the purposes of the Tender Offer "Tender Offer" the invitation by Winterflood Securities to Shareholders (other than certain Overseas Shareholders) to tender Shares for purchase on the terms and subject to the conditions set out in the Circular and the Tender Form "Tender Price" the price per Share equal to 97 per cent. of the Tender NAV on the Calculation Date at which Shares will be purchased pursuant to the Tender Offer "Winterflood Securities" Winterflood Securities Limited, acting through its division Winterflood Investment Trusts Copies of the Circular have been submitted to the UK Listing Authority and willshortly be available for inspection at the UK Listing Authority's DocumentViewing Facility which is situated at: Financial Services Authority25 The North ColonnadeCanary WharfLondonE14 5HSTel. no. 020 7066 1000 EnquiriesRavi Anand/Robert Peel 0207 225 9292/6171New Star Asset Management Limited David Benda/Katie Standley 020 3100 0291/0293Winterflood Investment Trusts This information is provided by RNS The company news service from the London Stock Exchange