CC Japan Income & Growth Trust

22 January 2021

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, TO THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA OR TO ANY NATIONAL, RESIDENT OR CITIZEN OF THE UNITED STATES, AUSTRALIA, NEW ZEALAND, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY MEMBER STATE OF THE EEA

CC Japan Income & Growth Trust plc

Publication of Prospectus and Notice of General Meeting

Further to the announcement made by the Board of CC Japan income & Growth Trust plc (the "Company") on 26 November 2020 in which it was stated that the Company was considering a bonus issue of subscription shares to the Company's existing shareholders (the "Bonus Issue"), the Company has today published a prospectus (the "Prospectus") setting out details of the proposed Bonus Issue and convening a general meeting to consider a resolution to give effect, inter alia, thereto.

Implementation of the Bonus Issue requires certain amendments to the Company's articles of association to provide for the rights of the Subscription Shares and to obtain authority to allot the Subscription Shares. The Bonus Issue is conditional upon the passing of the Special Resolution to be proposed at the General Meeting of the Company to be held on 15 February 2021, as well as on the admission of the Subscription Shares to the standard segment of the Official List and to trading on London Stock Exchange plc's main market for listed securities.

Publication of the Prospectus

The Prospectus has been approved by the Financial Conduct Authority. A copy of the prospectus will be available for inspection at the National Storage Mechanism which is located at  https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The Prospectus will also shortly be available to view on the Company's website at www.ccjapanincomeandgrowthtrust.com.

The Bonus Issue

The Company is proposing to issue up to 26,946,122 Subscription Shares to Qualifying Shareholders on the basis of one Subscription Share for every five Existing Ordinary Shares held on the Record Date, subject to the passing of the Resolution set out in the Notice of General Meeting. The Subscription Shares will be issued by way of a bonus issue to Qualifying Shareholders. 

Each Subscription Share will confer the right (but not the obligation) to subscribe for one Ordinary Share on exercise of the rights attaching to the Subscription Shares (the "Subscription Share Rights") and on payment of the Subscription Price, as set out below.

Notice of the exercise of the Subscription Share Rights may be given on the last Business Day of each calendar quarter commencing on 31 May 2021 and finishing on the last Business Day in February 2023, after which the Subscription Share Rights will lapse except where the circumstance under paragraph 3(h) of Part 4 of the Prospectus applies. The Ordinary Shares arising on exercise of the Subscription Share Rights will be allotted within ten Business Days of the relevant exercise date. To be exercised, a notice of exercise must be received by the Registrar no later than 6.00 p.m. on the relevant Subscription Date.

Qualifying Shareholders' entitlements will be assessed against the register of members on the Record Date, which will be 6.00 p.m. on 15 February 2021.

Please note that, whilst the Record Date for the Bonus Issue will be 6.00 p.m. on 15 February 2021, the ex-date for the Bonus Issue will be 18 February 2021 (the "Ex-Date"). Unless the counterparties specifically agree otherwise, a buyer of the Company's Ordinary Shares ahead of the Ex-Date will assume the benefit to the Subscription Shares, and the seller would need to pass the benefit to the buyer, even if the seller is the registered holder of such Ordinary Shares at the Record Date.

Subscription Shares will rank equally with each other and will not carry the right to receive any dividends from the Company or to attend and/or vote at general meetings of the Company (although the holders of the Subscription Shares have the right to vote in certain circumstances in the event where there is a variation of the rights attached to the Subscription Shares).

The Subscription Price will be equal to the unaudited published NAV per Ordinary Share as at the close of business on 15 February 2021, plus a one per cent. premium to such NAV per Ordinary Share, rounded up to the nearest whole penny.

The NAV for the purpose of calculating the Subscription Price will be the unaudited value of the Company's assets calculated in accordance with the Company's accounting policies (including revenue items for the current financial year) less all prior charges and other creditors at their par value (including the costs of the Bonus Issue). Prior charges include all loans and overdrafts that are to be used for investment purposes.

The New Articles provide that the Subscription Price is subject to adjustment upon the occurrence of certain corporate events affecting the Company before the last Business Day in February 2023. The relevant corporate events include consolidations or sub-divisions of share capital, pre-emptive offers of securities to Ordinary Shareholders, takeover offers and the liquidation of the Company. Such adjustments serve to protect any intrinsic value of the Subscription Shares or the time value of the Subscription Shares, or both.

The New Articles also provide for certain circumstances whereby the Subscription Share Rights may be modified, for example, in the event that the Company is subject to a takeover offer, to the extent that any Subscription Share Rights remain unexercised at that point.

The percentage premium applying on exercise and the resulting Subscription Price reflect the Board's confidence in the Company's medium to long-term prospects and its hope that Qualifying Shareholders will be able to exercise their Subscription Share Rights and acquire Ordinary Shares on favourable terms in the future.

It is expected that an announcement setting out the Subscription Price will be made on 16 February 2021.

Fractions of Subscription Shares will not be allotted or issued and entitlements will be rounded down to the nearest whole number of Subscription Shares.

Benefits of and reasons for the Bonus Issue 

The Directors believe the Bonus Issue has the following attractions:

·      Qualifying Shareholders will receive securities which will give them the right to convert them into Ordinary Shares at a predetermined price; the Board believes that Subscription Shares should represent an attractive way for Qualifying Shareholders to participate in any future growth of the Company; 

·      Qualifying Shareholders will receive securities which could have an immediate monetary value and which may be traded in a similar fashion to their existing Ordinary Shares or converted into Ordinary Shares;

·      provided that the Company maintains its status as an investment trust approved by HMRC, Qualifying Shareholders will receive securities which should generally be eligible to be held in an ISA and for inclusion in a SIPP (subject to the rules of the SIPP and discretion of the trustees of the SIPP);

·      the ongoing charges per Ordinary Share may fall on the exercise of the Subscription Share Rights as the capital base of the Company will increase and the Company's fixed costs will be spread across a larger number of Ordinary Shares;

·      liquidity in the market for the Company's Ordinary Shares may improve on exercise of the Subscription Share Rights as the number of Ordinary Shares in issue will increase; and

·      the Bonus Issue may broaden the Company's Shareholder base as the Subscription Shares are dispersed in the market which may attract new investors and may also improve liquidity for Shareholders.

The Bonus Issue is also intended to result in an amount of proceeds being raised (through the exercise of any Subscription Share Rights to convert any Subscription Shares into Ordinary Shares), being an amount up to the aggregate Subscription Price of all Subscription Shares the Subscription Share Rights of which have been exercised.

The net proceeds resulting from the exercise of any Subscription Share Rights (thereby converting any Subscription Shares into Ordinary Shares) will be invested in accordance with the investment objective and policy of the Company.

Implementation of the Bonus Issue

The implementation of the Bonus Issue will require Shareholders to approve the Resolution which is to be proposed at the General Meeting as a special resolution. If passed, the Resolution will:

(a)              approve the adoption of the New Articles containing the rights attaching to the Subscription Shares;

(b)              authorise the Directors to allot the Subscription Shares pursuant to the Bonus Issue;

(c)              waive statutory pre-emption rights in relation to the issue of the Subscription Shares and the allotment of Ordinary Shares pursuant to the exercise of the Subscription Share Rights;

(d)              authorise the capitalisation of sums standing to the credit of the Company's reserve accounts or to the credit of the share premium account, capital redemption reserve, profit and loss account or otherwise available for the purpose of paying up in full at par the Subscription Shares to be issued pursuant to the Bonus Issue;

(e)              authorise the consolidation, sub-division or redemption of any share capital in connection with the exercise of the Subscription Share Rights so as to enable conversion of the Subscription Shares into Ordinary Shares in accordance with the Subscription Share Rights; and

(f)               authorise the purchase by the Company of Subscription Shares representing up to 14.99 per cent. of the Company's issued Subscription Share capital following Admission (subject to certain conditions), as more fully described under the heading "Authority to repurchase Subscription Shares" below.

Authority to repurchase Subscription Shares

In order to allow the Company to repurchase Subscription Shares, the Company is seeking authority at the General Meeting to buy back up to 14.99 per cent. of the issued Subscription Share capital following Admission. This authority to purchase Subscription Shares is contained within the Resolution, which needs to be approved as a special resolution in order to authorise the Company to implement the Bonus Issue.

Any Repurchases of Subscription Shares will be made at the discretion of the Board, and will only be made when market conditions are considered by the Board to be appropriate and in accordance with the Listing Rules.

Purchases through the market will not exceed the higher of (i) 5 per cent. above the average of the middle market quotations (as derived from the Official List) for the 5 consecutive dealing days ending on the dealing day immediately preceding the date on which the purchase is made and (ii) the higher of the price quoted for (a) the last independent trade of, or (b) the highest current independent bid for Subscription Shares on the trading venue where the purchase is carried out. Any Subscription Shares repurchased by the Company will be cancelled and will not be held in treasury for re-issue or resale.

It is intended that authorisation for repurchases of Subscription Shares will be renewed at the AGM of the Company in March 2022.

New Articles of Association

If the Resolution is approved, the New Articles will be adopted in place of the Existing Articles. The New Articles will set out the rights attaching to the Subscription Shares, but otherwise will be identical to the Existing Articles.

The New Articles will be on display at the registered office of the Company and at the Company's website www.ccjapanincomeandgrowthtrust.com from the date of the Prospectus until the end of the General Meeting.

Continuation vote

Under the Articles, the Company is required to propose a continuation vote as an ordinary resolution at every third AGM of the Company ("continuation vote"). If a continuation vote is not passed the Directors are required to convene a general meeting within three months of the date of the continuation resolution, at which proposals for the winding up or other reconstruction of the Company would be considered.

The last continuation vote took place at the AGM of the Company held in 2019 and the next continuation vote is due at the AGM of the Company to be held in 2022.

If the next continuation vote is not passed at the AGM of the Company in 2022, and if subsequently an effective resolution is then passed for the liquidation of the Company, subject to the proviso below, each Subscription Shareholder shall be treated as if immediately before the date of the relevant order or resolution for winding-up (as the case may be) his/her/its Subscription Share Rights had been exercisable and had been exercised in full. He/she/it shall be entitled to receive out of the assets available in the liquidation pari passu with Ordinary Shareholders such sum as they would have received had he/she/it been the holder of the Ordinary Shares to which he/she/it would have become entitled by virtue of such subscription after deducting a sum per Subscription Share equal to the Subscription Price (subject to any adjustments in accordance with the rights of the Subscription Shares as set out in Part 4 of the Prospectus).

The above is PROVIDED THAT in such winding-up and on the basis that all Subscription Share Rights then unexercised had been exercised in full and the Subscription Price in respect thereof at the relevant Subscription Date had been received in full by the Company there would be a surplus available for distribution amongst the Ordinary Shareholders, including for this purpose the Ordinary Shares which would arise on exercise of all the Subscription Share Rights (subject to any adjustments in accordance with the rights of the Subscription Shares as set out in Part 4 of the Prospectus), which surplus would, on such basis, exceed in respect of each Share a sum equal to such Subscription Price. 

Subject to the foregoing, all Subscription Share Rights shall lapse on liquidation of the Company. The full rights attaching to the Subscription Shares are set out in Part 4 of the Prospectus.     

Admission and dealings

The Subscription Shares will be in registered form and may be issued either in certificated or uncertificated form. No temporary documents of title will be issued. Pending despatch of definitive certificates, transfers of Subscription Shares in certificated form will be certified against the Company's share register. All documents or remittances sent by or to Shareholders will be sent through the post at the risk of the Shareholder.

Applications will be made to the FCA for the Subscription Shares to be admitted to the standard segment of the Official List and to the London Stock Exchange for such Subscription Shares to be admitted to trading on its main market. It is expected that Admission will occur, and that dealings will commence, in respect of the Subscription Shares on 18 February 2021 (or such later time and date as the Company, the Manager and Peel Hunt LLP may agree). On Admission, the Subscription Shares will confer rights to subscribe for new Ordinary Shares representing, in aggregate, up to 20 per cent. of the then issued ordinary share capital of the Company.

The Ordinary Shares resulting from the exercise of the Subscription Share Rights will rank pari passu with the Ordinary Shares then in issue (save for any dividends or other distributions declared, made or paid on the Ordinary Shares by reference to a record date prior to the allotment of the Ordinary Shares arising on the exercise of the Subscription Share Rights). 

The existing investment objective and investment policy of the Company, as set out in Part 2 of the Prospectus, will not be amended as a result of the Bonus Issue.

Costs of the Bonus Issue

The Company's fixed expenses in connection with the Bonus Issue are estimated to amount to £404,716 inclusive of VAT and £354,680 exclusive of VAT. These expenses will be borne by the Company and will be taken into account in the Company's Net Asset Value with effect from the date of the Prospectus. 

Restricted Shareholders

The issue of the Subscription Shares to persons who have a registered or mailing address in Restricted Territories may be affected by the law or regulatory requirements of the relevant jurisdiction.

The Subscription Shares to be issued under the Bonus Issue are not being issued to Restricted Shareholders (which for the avoidance of doubt include any US Persons that are not Permitted US Shareholders).  

The Board will allot any Subscription Shares due under the Bonus Issue to Restricted Shareholders to a market maker who will sell such Subscription Shares promptly at the best price obtainable. The proceeds of the sale will be paid to the Restricted Shareholders entitled to them save that entitlements of less than £5.00 per Restricted Shareholder will be retained by the Company for its own account.

Furthermore, Restricted Persons will not be able to exercise Subscription Share Rights, unless they are Permitted US Shareholders.

As Restricted Shareholders will not receive Subscription Shares pursuant to the Bonus Issue, such Shareholders may be diluted by up to 20 per cent. of their respective shareholdings, depending on the aggregate number of Subscription Share Rights which are exercised on or before the Final Subscription Date.

Notwithstanding any other provision in the Prospectus, the Company reserves the right to permit any Shareholder to take up Subscription Shares under the Bonus Issue if the Company, in its sole and absolute discretion, is satisfied at any time prior to the General Meeting that the transaction in question is exempt from, or not subject to the legislation or regulations giving rise to the restrictions in question.

Restricted Shareholders who believe that they are entitled to take up Subscription Shares under the Bonus Issue (or Restricted Persons that believe they are entitled to exercise Subscription Share Rights) should contact the Company Secretary as soon as possible to discuss the matter. The telephone number for the Company Secretary is +44 (0) 20 4513 9260.

Any Shareholder who is in any doubt as to his position should consult an appropriate independent professional adviser without delay. 

Taxation

The attention of Shareholders is drawn to the summary of United Kingdom tax matters set out in paragraph 10 of Part 5 of the Prospectus. This summary is general in nature and does not constitute tax advice. Any Shareholders who are in any doubt about their tax position or who may be subject to tax in a jurisdiction other than the United Kingdom should consult their own professional adviser.

General Meeting

The Bonus Issue is conditional on, amongst other things, the approval by Shareholders of the Resolution to be proposed at a General Meeting of the Company which has been convened for 11.00 a.m.  on 15  February 2021. The formal Notice of General Meeting is set out at the end of the Prospectus.  The Resolution will allow the Company to implement the Bonus Issue, including the adoption of the New Articles.

The Resolution is to be proposed at the General Meeting as a special resolution, which will require at least 75 per cent. of the votes cast in respect of it to be voted in favour, whether in person* or by proxy, in order for it to be passed. The Board is recommending Shareholders to vote in favour of the Resolution to be proposed at the General Meeting.

*As a result of the Covid-19 pandemic and associated UK Government guidance, attendance at the General Meeting will not be possible. Arrangements will be made by the Company to ensure that a minimum number of Shareholders required to form a quorum will attend the General Meeting in order that the meeting may proceed. In so doing, the Board is relying on the provisions of the Corporate Insolvency and Governance Act 2020. The General Meeting will be held virtually via video conference as the safety of Shareholders and of the Company's service providers is the Board's primary concern. Shareholders (other than those required to form the quorum for the General Meeting) therefore cannot attend the meeting. Whilst there will not be any opportunity to ask questions at the General Meeting, there will be an opportunity to ask questions in advance of the General Meeting. If Shareholders have a question relating to the business of the General Meeting, they should send it by email to [email protected]. To the extent that it is appropriate to do so, the Company will respond to any questions received in a Q&A which will be posted on the Company's website www.ccjapanincomeandgrowthtrust.com in advance of the General Meeting. Please note that all questions should be submitted by close of business on 11 February 2021 to ensure that the Company is able to respond to them in advance of the General Meeting. 

Voting on the Resolution will be conducted on a poll. On a poll, every Shareholder (present by proxy) shall have one vote for every share of which he/she/it is the holder.

The formal notice convening the General Meeting is set out at the end of the Prospectus.

Dilution

The allotment of the Subscription Shares will mean that the equivalent of 20 per cent. of the Company's issued ordinary share capital will be under option immediately following the Bonus Issue. On each occasion that the Subscription Share Rights are exercised, this will dilute the ordinary shareholding of any Ordinary Shareholders who do not exercise a corresponding proportion of the Subscription Share Rights attaching to their Subscription Shares or who have sold their Subscription Shares. However, if a Shareholder continues to hold the Subscription Shares issued to him pursuant to the Bonus Issue and exercises his Subscription Share Rights before their expiry, that Shareholder's percentage interest in the ordinary share capital of the Company will not ultimately be reduced below his percentage interest in the ordinary share capital of the Company immediately prior to the Bonus Issue. If the NAV per Ordinary Share at the time of exercise of the Subscription Share Rights exceeds the applicable Subscription Price, the issue of the Ordinary Shares upon such exercise will also have a dilutive effect on the NAV per Ordinary Share. The extent of such dilution will depend on the number of Subscription Shares which are converted on each occasion and the difference between the applicable Subscription Price and the NAV per Ordinary Share prevailing at the time the new Ordinary Shares are issued pursuant to the exercise of the Subscription Share Rights.

Action to be taken

Shareholders will find enclosed with the Prospectus a Form of Proxy for use at the General Meeting. You are requested to complete and sign the Form of Proxy and return it, in accordance with the instructions printed thereon, to Link Group, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU as soon as possible and in any event so as to arrive by not later than 11.00 a.m. on 11 February 2021. Alternatively, you may register your proxy appointment electronically by visiting https://www.signalshares.com/. Electronic proxy appointments must also be lodged by not later than 11.00 a.m. on 11 February 2021. Further information on appointing a proxy is given in the notes to the notice of General Meeting at the end of the Prospectus. Given Shareholders will not be able to attend the General Meeting, Shareholders are strongly urged to appoint the Chairman of the General Meeting as their proxy to vote on their behalf. If you appoint someone else (other than the Chairman of the General Meeting) to be your proxy, this would result in your proxy not being counted since he/she will not be able to attend the General Meeting.

For Shareholders who hold their Ordinary Shares in uncertificated form (that is, in CREST), to appoint one or more proxies or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system, CREST messages must be received by the Company's agent (ID number RA10) by not later than 11.00 a.m. on 11 February 2021. Please refer to the accompanying notes to the notice of General Meeting at the end of the Prospectus.

If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 11.00 a.m. on 11 February 2021 in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity's associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy.

Recommendation

The Board considers that the Bonus Issue and the passing of the Resolution are in the best interests of the Company and its Shareholders as a whole.  Accordingly, the Board unanimously recommends Shareholders to vote in favour of the Resolution to be proposed at the General Meeting. The Directors intend to vote in favour of the Resolution in respect of their own beneficial holdings of Ordinary Shares which amount to 219,750 Ordinary Shares in aggregate (representing approximately 0.163 per cent. of the issued ordinary share capital of the Company, excluding treasury shares, as at the Latest Practicable Date).

Expected Timetable

The dates and times specified (save for the time and date of the General Meeting) may be adjusted subject to agreement between the Company, the Investment Manager and Peel Hunt. All references to times in the Prospectus are to London time unless otherwise stated. Any changes to the expected timetable will be notified by the Company via a Regulatory Information Service.

^[1] Please note that, whilst the Record Date for the Bonus Issue will be 6.00 p.m. on 15 February 2021, the ex-date for the Bonus Issue will be 18 February 2021. Unless the counterparties specifically agree otherwise, a buyer of the Company's Ordinary Shares ahead of the Ex-Date will assume the benefit to the Subscription Shares, and the seller would need to pass the benefit to the buyer, even if the seller is the registered holder of such Ordinary Shares at the Record Date.

Capitalised terms used in this announcement, to the extent not defined, will have the same meaning ascribed to them in the Prospectus.

This announcement has been released on behalf of the Company by order of the Board.

The Company's LEI is: 549300FZANMYIORK1K98

Enquiries: 

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America.  This announcement is not an offer of securities for sale into the United States.  The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

Solely for the purposes of the product governance requirements contained within Chapter 3 of the Product Intervention and Product Governance Sourcebook of the FCA (the "Product Governance Requirements"), and disclaiming all and any liability whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Subscription Shares have been subject to a product approval process, which has determined that: (i) such securities are compatible with an end target market of retail clients investing through services with a suitability and appropriateness assessment, professional clients and eligible counterparties, each as defined in MiFID II; (ii) all distribution channels for distribution to eligible counterparties and professional clients are appropriate; and (iii) the following channels for distribution of the Subscription Shares to retail clients are appropriate: investment advice and portfolio management, subject to the distributor's suitability and appropriateness obligations under MiFID II, as applicable (the "Target Market Assessment"). 

Notwithstanding the Target Market Assessment, distributors (such term to have the same meaning as in the Product Governance Requirements) should note that: the market price of the Subscription Shares may decline and investors could lose all or part of their investment; the Subscription Shares offer no income and no capital protection; and an investment in the Subscription Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory restrictions in relation to the Bonus Issue. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Peel Hunt will not be procuring any investors since this is a Bonus Issue of Subscription Shares to Qualifying Shareholders only. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the Subscription Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the Subscription Shares and determining appropriate distribution channels. 

It is acknowledged that, subject to the Bonus Issue becoming unconditional, each Qualifying Shareholder will be issued with one Subscription Share for every five Existing Ordinary Shares held by him/her/it on the Record Date by way of a Bonus Issue of such Subscription Shares to him/her/it.