NOT
FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO
DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION.
Date: 20 May
2024
For Immediate Release
abrdn European Logistics
Income plc
Conclusion of the Strategic
Review and Formal Sale Process
The Board of abrdn European Logistics
Income plc (the "Company") announces the outcome of the Strategic
Review (the "Strategic Review") and Formal Sale Process that
commenced on 27 November 2023.
Strategic Review Background
The Board launched the Strategic
Review recognising that the Company faces a number of challenges,
at both a macro and company specific level. As previously noted,
these challenges include the Company's materially uncovered annual
target dividend of 5.64 cents (€) per share, a market
capitalisation of £234 million¹ liable to deter some potential investors due to lower
share liquidity, and the Company's shares trading at a significant
and persistent discount to the net asset value per share.
Additionally, in line with
its constitutional terms as set out on launch in December 2017, the
Company has proposed a continuation vote at the forthcoming Annual
General Meeting on 24 June 2024.
Following the commencement of the
Strategic Review, the Company's Financial Adviser, Investec Bank
plc ("Investec") has engaged with a significant number of
interested parties with a view to facilitating an indicative
proposal which would fulfil the Strategic Review's objective of
maximising returns for Shareholders. Following a period of due
diligence, eleven interested parties submitted an initial
indicative proposal in the first quarter of 2024. Submissions
included proposals regarding all-share mergers, changes to the
investment management arrangements, recapitalisation schemes and
cash offers for the portfolio or Company. Reflecting continued
Shareholder feedback, the Board and Investec focused efforts on
those submissions proposing a cash offer for the portfolio or the
Company. Access to additional confidential non-public Company
information was provided and following a further period of due
diligence, remaining interested parties were invited to submit
revised offers, as a result of which a limited number of indicative
offers were forthcoming.
As part of the Strategic Review, the
Company's investment manager, abrdn Fund Managers Limited (the
"Investment Manager"), provided the Board with analysis of, and a
proposal involving, a managed disposal of the portfolio in a timely
manner. The analysis comprised a range of detailed disposal
scenarios over an illustrative period of 12-24 months for the
entire portfolio, with capital being returned to Shareholders from
Q4 2024 and expected quarterly thereafter; and it considered the
impact of likely disposal costs, local applicable capital gains
taxes, the ongoing running costs of the Company and the optimal
approach to repaying or maximising the value of the Company's fixed
cost debt.
Outcome of the Strategic Review
Following a detailed review of the
options available to the Company and after consultation with its
advisers, as well as taking into account feedback received from a
number of larger Shareholders, the Board has concluded that it
would be in the best interests of Shareholders as a whole to put
forward a proposal for a managed wind-down of the Company (the
"Managed Wind-Down"). In arriving at this decision, the Board
placed particular importance on the following factors:
· Shareholder Value
Maximisation: the indicative
potential value from the Managed Wind-Down is materially in excess
of the net value achievable from the indicative cash offers
received, all of which were subject to a number of preconditions
and all of which represented material discounts to the Company's
current net asset value. With an EPRA vacancy rate of
6.5%², the Managed
Wind-Down provides the potential opportunity to capture the value
associated with letting this vacant space ahead of a disposal.
· Feedback from Potential
Offerors: a significant majority of
interested parties communicated a strong preference to acquire
assets within certain geographies or individual assets as an
alternative to acquiring the entire portfolio, providing comfort as
to the likely level of offeror interest in the Managed Wind-Down
process. With a diversified portfolio of 25 urban and mid-box logistics assets
with an aggregate value of approximately €616 million³, the pool of potential
offerors is expected to be large, with many of these parties now
conversant with the Company's assets.
· Indicative
Timeline: while further details will
be provided in due course, under the Managed Wind-Down it is
expected that the majority of the assets will have been disposed of
by the end of the second quarter of 2025. The Company's advisers
have completed a substantial amount of preparatory work including
commissioning fully updated technical and environmental due
diligence reports for the entire portfolio, ensuring that the
Managed Wind-Down process can commence promptly after Shareholder
approval of the required amendments to the Company's investment
objective and investment policy.
· Macroeconomic
Backdrop: alongside positive
thematic demand drivers for logistics tenants such as e-commerce
and nearshoring, a forecast lower interest rate environment in the
second half of 2024 and first half of 2025 is expected to support
transaction volumes and pricing, resulting in a more favourable
investment backdrop against which to wind down the
portfolio.
As the Strategic Review and Formal
Sale Process have now concluded, the Company is no longer in an
"offer period" as defined by the City Code on Takeovers and Mergers
(the "Takeover Code") and the disclosure requirements pursuant to
Rule 8 of the Takeover Code are no longer applicable from the time
of this announcement.
Amendments to the Investment Objective and
Policy
The implementation of the Managed
Wind-Down will require amendments to the Company's investment
objective and investment policy. Such amendments are subject to the
approvals of the Financial Conduct Authority and Shareholders
pursuant to Listing Rule 15. Accordingly, the Board intends to
publish a circular (the "Circular")
in June 2024 to convene a general meeting (the
"General Meeting") at which it will seek approval from Shareholders
of the proposed new investment policy by way of ordinary
resolution.
Investment Management Arrangements
The Board has commenced discussions
with the Investment Manager in respect of proposals for the
provision of investment management services during the Managed
Wind-Down under revised terms that will seek to further align the
Investment Manager to achieve the objective of maximising
Shareholder returns in a timely manner. Further information will be
set out in the Circular.
Dividend Policy
Should Shareholders vote to approve
the Managed Wind-Down, it is the Board's current intention to
continue paying dividends in order to maintain the Company's
investment trust status and on the basis of being fully covered by
adjusted earnings. The level of dividend payments will decline as
the portfolio reduces in size and as capital is returned to
Shareholders. Ahead of the General Meeting, the Board expects to
declare a first quarterly interim dividend and a further
announcement is expected shortly on this.
Continuation Vote
In line with its constitutional
terms as set out on launch in December 2017, the Company has
proposed a continuation vote (the "Continuation Vote") at the
forthcoming Annual General Meeting on 24 June 2024. In the 2023
Annual Report, the Board recommended that Shareholders vote in
favour of the Company's continuation to ensure that the Strategic
Review could be satisfactorily completed. In light of the outcome
of the Strategic Review, the Board now recommends that Shareholders
vote against resolution 13 at the Annual General Meeting (being the
Continuation Vote resolution).
Tony Roper, Chairman, abrdn European Logistics Income,
commented: "The Board undertook the
Strategic Review to enable it to comprehensively evaluate all
options for Shareholders, with strong interest shown in the
Company. Despite retaining a high conviction in the logistics asset
class and investment strategy, given the challenges facing both the
Company and the broader investment trust sector, the Board has
concluded that a Managed Wind-Down in a timely manner is the
optimal route to maximise Shareholder value in the short to medium
term. The Board thanks Shareholders for their engagement and
feedback throughout this process."
Enquiries
Investec Bank plc (Financial Adviser and Corporate
Broker)
David Yovichic
Denis Flanagan
|
+44 (0) 20 7597 4000
|
FTI
Consulting
Dido Laurimore
Richard Gotla
Oliver Parsons
|
+44 (0) 20 3727 1000
aseli@fticonsulting.com
|
Investec Bank plc, which is
authorised in the United Kingdom by the Prudential Regulation
Authority and regulated in the UK by the Financial Conduct
Authority and the Prudential Regulation Authority, is acting
exclusively for the Company and no one else in connection with the
Strategic Review and shall not be responsible to anyone other than
the Company for providing the protections afforded to clients of
Investec, nor for providing advice in connection with the Strategic
Review or any matter referred to herein. Neither Investec nor any
of its affiliates (nor any of its or their respective directors,
officers, employees, representatives or agents) owes or accepts any
duty, liability or responsibility whatsoever (whether direct,
indirect, consequential, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of Investec
in connection with the Strategic Review, this announcement, any
statement contained herein or otherwise.
This announcement is not intended
to, and does not, constitute or form part of any offer, invitation
or the solicitation of an offer to purchase, otherwise acquire,
subscribe for, sell or otherwise dispose of, any securities whether
pursuant to this announcement or otherwise.
The distribution of this
announcement in jurisdictions outside the United Kingdom may be
restricted by law and therefore persons into whose possession this
announcement comes should inform themselves about, and observe,
such restrictions. Any failure to comply with the restrictions may
constitute a violation of the securities law or any such
jurisdiction.
This announcement is released by the
Company and the information contained within this announcement is
deemed by the Company to constitute inside information for the
purposes of Article 7 of the UK version of the EU Market Abuse
Regulation (Regulation (EU) No.596/2014) which forms part of UK law
by virtue of the European Union (Withdrawal) Act 2018, as amended.
Upon the publication of this announcement via a Regulatory
Information Service, such information is now considered to be in
the public domain.
LEI Number
The Company's LEI Number is
213800I9IYIKKNRT3G50
¹ Market capitalisation as at 24
November 2023
² EPRA vacancy rate as at 31 March
2024
³ Portfolio valuation as at 31
December 2023, excluding the Meung Sur Loire asset which has been
disposed of per the announcement on 27 March 2024