Witan to reduce its stake in Henderson: Investment trust loosens ties with manager
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Your support makes all the difference.WITAN, the pounds 900m investment trust, is untangling its ties with its manager, Henderson Administration, and three of the group's other trusts by way of a pounds 14.9m share sale and a pounds 56m bond issue.
Christopher Clarke, Witan's managing director, said the moves were driven by a desire to reduce exposure to Henderson and its trusts, not by corporate governance concerns.
Witan has long held a stake of 23.4 per cent in Henderson and substantial stakes in Electric and General, Greenfriar and Lowland, together worth pounds 48m. All three trusts have broadly general investment policies, similar to Witan's own.
Witan has cut its holding in Henderson to 15.2 per cent and has made the investment trust holdings subject to an issue of exchangeable bonds.
Holders of the bonds will be able to swap them for a basket of shares in the three trusts. The exchange price will be at a 15.6 per cent premium to Wednesday's closing mid-market price of the basket shares. If Witan had sold in the market it would have had to accept a discount to the trusts' net asset values.
The bonds will pay a coupon of 6.25 per cent, the bottom end of the range hoped for by Baring Brothers and Cazenove, managers to the issue. Witan has an option to redeem the bonds after October 1998.
Two-thirds of the bonds were taken up by British institutions, with most of the rest going to Swiss investors. A Barings executive said they allowed Swiss bond funds to gain exposure to the UK equity market.
Together with its unused bank facilities, yesterday's transactions give Witan more than pounds 100m 'to enliven the growth prospects of the portfolio'. Witan does not intend to reduce its stake in Henderson further for at least another year. The trust is still Henderson's biggest shareholder.
Henderson shares closed down 3p at 890p while Witan rose 3p to 202p.
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