El Oro Ltd - Notice of AGM & Proposal

The Company has today published the notice of its Annual General Meeting, which is also copied below, and details of a new proposal that the board of the Company ("Board") is exploring as an alternative to a liquidation of the Company. This proposal, to be entered into with JPMorgan Elect plc ("JPME") ("JPME Proposal") would offer a real choice to the Company's members ("Members") of cashing out or rolling over into a larger investment company with access to greater investment resource.  This may offer greater flexibility to Members in terms of tax planning.

 

The Board has remained conscious of the concerns expressed by Members during 2016. These included the investment performance of the Company, the lack of liquidity in the Ordinary Shares and their widening discount to net asset value. These concerns were described in the Chairman's letter giving notice of the annual general meeting of the Company held on 17 November 2016. The Board has studied a wide range of options for the future direction of the Company, having regard to the fact that the concerns referred to above remain.

 

The Board is pleased to announce that it has agreed heads of terms with the board of JPME for JPME to provide a "rollover" option for Members.  JPME provides investors access to a number of different investment strategies, including one focussed on UK equity income, through a multi-share class structure and the Board believe this will appeal to Members. 

 

JPME, which has total net assets of £369.6 million (as at 31 August 2018), has three share classes, and quarterly conversion between share classes is permitted.  The investment objectives of the three classes, which the Board considers to be comparable to the Company's overall investment objective, are set out below:

 

·      Managed Income - A growing income return with potential for long term capital growth by investing in equities, investment companies and fixed income securities (the "Income Shares").

·      Managed Growth - Long term capital growth from investing in a range of investment trusts and open-ended funds managed principally by JPMorgan Asset Management (the "Growth Shares").

·      Managed Cash - Preservation of capital with a yield based on short term interest rates (the "Cash Shares").

 

The Board expects that each of the above share classes will be made available as rollover options for Members, with JPME Managed Income being the default.  Each share class is listed separately and traded on the main market of the London Stock Exchange and JPME's shareholders are able to switch between the three share classes on a quarterly basis without incurring a liability to UK capital gains tax.

 

Members who want to rollover their El Oro Shares in a cost and tax efficient way can choose to rollover into new JPME shares.

 

Members who want to exit for cash with broadly the same amounts as they would have received on simple liquidation can choose the cash option.

 

Subject to final agreements being signed with JPME, the Board currently anticipates that appropriate circulars will be issued to Members during the first calendar quarter of 2019, with the restructuring likely to be completed before June 2019.  Under the proposed restructuring of the Company (as currently envisaged), Members will be asked to vote on the proposals.

 

Further information on JPME and full details of the terms of the JPME Proposal will be included in the documentation to be sent to Members in 2019. However, Members are also encouraged to visit the website of JPME at:

 

https://am.jpmorgan.com/gb/en/asset-management/gim/per/products/investment-trusts/jpm-elect-plc 

 

NOTICE OF ANNUAL GENERAL MEETING

 

NOTICE IS HEREBY GIVEN that the Company's NINTH ANNUAL GENERAL MEETING and the
ONE HUNDRED AND FOURTEENTH ANNUAL GENERAL MEETING OF THE EL ORO GROUP will be held on 20 December 2018 at 41 Cheval Place, London SW7 1EW at 12 noon for the following purposes: