Fidelity China Special Situations PLC (FCSS.L) announced Tuesday that it has agreed heads of terms with the Board of abrdn China Investment Co. Limited or ACIC regarding a proposed combination.
The combination is subject to approval by the companies' respective shareholders, in addition to regulatory and tax approvals. If approved, the deal will be effected by way of a Guernsey scheme of reconstruction and winding up of ACIC and the associated transfer of part of the cash, assets and undertaking of ACIC to Fidelity China. This will be in exchange for the issue of new ordinary shares in Fidelity China.
The Proposals are anticipated to become effective by the end of the first quarter of 2024.
Under the Scheme, ACIC shareholders will be deemed to have elected to receive New FCSS Shares in respect of their ACIC shares. The Cash Option is limited to 33 percent of ACIC's shares in issue.
The Cash Option will be offered at a discount of 2 percent to the ACIC FAV per share.
The combined Fidelity China will continue to be managed by FIL Investment Management (Hong Kong) Limited with Dale Nicholls continuing as the named portfolio manager.
Subject to implementation of the Scheme, FCSS will also commit to holding a continuation vote in 2029 and every five years thereafter.
FCSS Chairman Mike Balfour said, "The proposals will also help spread costs over a larger base of assets, thereby reducing the ongoing charges for both new and existing shareholders... As a Board, we are positive about the long-term prospects of investing in China. FCSS is seen by many as the one-stop shop solution for exposure to this asset class and this proposal enhances the prospect of the Company building on its long-term success story."
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