Henderson split-cap to restructure

The trust is currently structured as a split-capital investment trust. However, its zero-dividend preference shares mature in September.

Members of the board recently voted to convert the trust to a conventional structure and repay all zeros to shareholders by the end of September. The fund was originally launched in 1989 and later reconstructed in 2000.

In spite of plans to redeem the entitlement of the fund’s zeros, the trust, which is managed by Alex Crooke, still posted a net asset value total return of 26.1% last year with declared dividends of 9.9p.

Over the same period the FTSE All-Share index saw a 12.8% rise in value. A quarter of the investment trust’s assets are currently held in fixed interest securities, while 75% is in equities.

Following the change in October, borrowings, including a flexible £35m banking facility, will provide the company’s gearing. “With the zeros gone, ordinary shares are less highly geared. Obviously the lack of zeros money, which usually provides gearing, will be replaced by bank borrowing,” says de Sausmarez. Ordinary shareholders’ gearing will be reduced from 84% to 50% in October, according to the company.

Shareholders who held zeros in the fund will be given the option either to purchase new ordinary shares in the investment trust or receive their repayment in cash, according to Crooke (pictured). He adds that the trust is also looking at whether there is demand for it to open up to new shareholders in the near future.

The trust has set a new minimum dividend of 7.75p which will take effect in October. The dividend would produce a forecast yield of 5.9% for the following year. “We hope to be able to rebase the dividend to a level where we can re-grow it again,” says Crooke.

The investment trust’s annual general meeting will be held at the end of April, when shareholders will vote on the continuation of the trust with its new simplified structure.