EIN Eaglet It

 
TIDMEIN 
 
Eaglet Investment Trust plc ("Eaglet" or the "Company") 
 
 Proposals for change of investment policy, change of name, amendments to the 
  Articles of Association, Tender Offer to purchase up to 58 per cent. of the 
Shares in issue, granting of Authority to make Market Purchases, New Investment 
Management Agreement, Management Warrants Deed, Investment Advisory Agreement, 
    cancellation of share premium account and re-election of N Jeffrey as a 
                                   Director 
 
The Company is pleased to announce that it has today published a circular (the 
"Circular") in respect of the proposals comprising the change of investment 
policy, change of name, amendments to the Articles of Association, Tender Offer 
to purchase up to 58 per cent. of the Shares in issue, granting of Authority to 
make Market Purchases, New Investment Management Agreement and Investment 
Advisory Agreement, Management Warrants Deed, cancellation of the Company's 
share premium account and re-election of N Jeffrey as a Director (together the 
"Proposals"). 
 
The Circular sets out the background to and reasons for the Proposals and why 
the Board of the Company believes the Proposals to be in the best interests of 
Shareholders as a whole as well as including a notice convening the 
Extraordinary General Meeting to seek Shareholder approval for the Proposals. 
 
Introduction 
 
In October 2008 the Board put forward certain proposals in relation to the 
Company which included, amongst other things, proposals for: 
 
1. a change of investment policy to invest in UK listed shares which are 
identified as having patterns of directors' dealing which suggest that 
following such signals (whether acquiring or disposing) will lead to superior 
investment performance; and 
 
2. a tender offer for the Company's Shares. 
 
Following the extraordinary general meeting in November 2008 convened to 
consider those proposals where certain of the resolutions did not secure the 
required majorities, the Board discussed the Company's future with certain of 
the larger shareholders to address concerns which had been expressed. 
 
The Board is now pleased to put forward revised proposals which provide the 
following options to Shareholders: 
 
1. Shareholders can remain fully invested in the Company, whose new investment 
policy will be to 
 
invest in companies listed on regulated investment exchanges in the United 
Kingdom in accordance with patterns of directors' dealing as further described 
below; or 
 
2. those Shareholders who are not Restricted Shareholders or certain Overseas 
Shareholders can decide whether to tender some or all of their Shares within 
the overall limits of the Tender Offer (but tenders in excess of a 
Shareholder's Basic Entitlement (being 58 per cent. of their Shares held on the 
Record Date) will only be accepted to the extent that other Shareholders tender 
less than their Basic Entitlement or do not tender any Shares). 
 
As at the Calculation Date, the Company's unaudited Net Asset Value amounted to 
GBP57.8 million. This included approximately GBP34.9 million of cash and cash 
equivalents and approximately GBP22.6 million in investments in a portfolio of 
some 30 companies which are generally illiquid. 
 
Calculation of the Tender Price will be calculated by reference to, among other 
things, the unaudited Net Asset Value as at the Calculation Date and the costs 
of the Proposals. The costs of the Proposals will be borne, pro rata, by those 
Shareholders whose Shares are to be repurchased by the Company pursuant to the 
Tender Offer. As a result, the Tender Price will be dependent, inter alia, on 
the total number of Shares tendered pursuant to the Tender Offer. 
 
The Directors' Dealing Investment Trust Plc 
 
Following completion of the Proposals the Company's investment policy will be 
to achieve attractive returns for Shareholders primarily through capital 
appreciation by investing, generally, in companies listed on regulated 
investment exchanges in the United Kingdom. The investment premise of The 
Directors' Dealing Investment Trust Plc (as the Company is proposed to be 
re-named) is that directors of listed companies are better informed than the 
market generally and therefore their investments in the companies they manage 
are expected to outperform the market. 
 
The Directors' Dealing Investment Trust Plc will invest in shares of UK listed 
companies which are identified as having patterns of directors' dealing which 
suggest that following such patterns could lead to attractive investment 
returns. These patterns have been combined to form various dealing strategies 
which have historically outperformed the relevant FTSE index. The Board and KAM 
(the proposed investment manager of the Company) believe that no other listed 
investment trust in the United Kingdom offers investors the opportunity to gain 
exposure to such dealing strategies. 
 
As part of the implementation of the Proposals, the investment policy will be 
changed so that the Company invests in accordance with the `directors' dealing' 
strategy. 
 
Over a period of up to 18 months from the date of approval of the Proposals the 
Company intends to realign the investment portfolio to reflect the new 
investment policy and to operate further regular tender offers. Further details 
on the realisation of the Existing Portfolio and the Board's intentions 
regarding subsequent tender offers are set out in the paragraphs "Further 
Regular Tender Offers" and "Portfolio management" below. Accordingly, over the 
course of such 18 month period the investment portfolio is likely to comprise 
certain investments from the Existing Portfolio, cash and cash equivalents and 
certain new investments made in accordance with the new investment policy, the 
relevant proportions of which will be dependent, inter alia, on the timing of 
realisation of the Existing Portfolio, the expected timing of a subsequent 
tender offer, the results of subsequent tender offers and the availability of 
suitable investment opportunities in accordance with the new investment policy. 
 
Tender Offer 
 
The Tender Offer is being made by Arbuthnot Securities. Arbuthnot Securities 
will, as principal, purchase the Shares tendered by means of on-market 
purchases and, following the completion of all those purchases, sell them to 
the Company pursuant to the terms of the Repurchase Agreement. All shares 
acquired by the Company under the Tender Offer will be cancelled. 
 
Shareholders (other than Restricted Shareholders and certain Overseas 
Shareholders) will be able to decide whether to tender some or all of their 
shares within the overall limits of the Tender Offer (but tenders in excess of 
a Shareholder's Basic Entitlement (being 58 per cent. of their Shares held on 
the Record Date) will only be accepted to the extent that other Shareholders 
tender less than their Basic Entitlement or do not tender any Shares). 
 
If the Tender Offer is accepted in full then the Company will be returning 
approximately GBP33.5 million to Shareholders, which represents substantially all 
of the Company's current surplus cash after providing for the costs of the 
Proposals and taking account of the Company's working capital requirements 
(including a creditors' reserve for the purposes of cancellation of the 
Company's share premium account). 
 
Costs 
 
The Directors expect that the total costs of the Proposals (excluding stamp 
duty payable by the Company on the repurchase of its Shares pursuant to the 
Tender Offer) will amount to approximately GBP0.5 million (inclusive of VAT). 
This amount represents approximately 0.87 per cent. of the unaudited Net Asset 
Value as at the Calculation Date. These costs will be borne, pro rata, by those 
Shareholders whose Shares are to be repurchased by the Company pursuant to the 
Tender Offer. 
 
Investment trust status 
 
The Company may not, with respect to its current accounting period, qualify for 
investment trust status for tax purposes. Further details of this (and the 
consequences) are set out in the Circular. 
 
The City Code on Takeovers and Mergers 
 
Arbuthnot Securities will purchase, as principal, Shares under the Tender Offer 
which could result in Arbuthnot Securities temporarily owning 30 per cent. or 
more of the issued share capital of the Company. Arbuthnot Securities has 
undertaken that, immediately subsequent to such purchase, it will sell all 
those Shares to the Company at the Tender Price for cancellation. Accordingly, 
a waiver has been obtained from the Panel in respect of the application of Rule 
9 to the purchase by Arbuthnot Securities of the Shares under the Tender Offer. 
 
QVT and Laxey are no longer treated as acting in concert either together, or 
individually with KAM 
 
or KIL. Furthermore, the Directors are no longer treated as acting in concert 
with QVT, Laxey, KAM or KIL. Accordingly, in the context of the Proposals in 
relation to QVT and Laxey, Rule 9 does not now give rise to any potential 
implications under the City Code and it will not be necessary for the Proposals 
to include (as was the case in the context of the proposals described in the 
October 2008 Circular) a waiver of the obligation to make a general offer that 
would have otherwise arisen under Rule 9 as a result of the Proposals. 
 
Cancellation of share premium account 
 
In order to ensure that there are sufficient distributable profits to enable 
the Company to have the ability to complete the Tender Offer, it is proposed 
that the Company's share premium account (currently standing at GBP28,318,619) be 
cancelled thereby creating additional distributable reserves available for such 
purpose. Such cancellation will require confirmation by the Court. To the 
extent of any distributable profits remaining unused following the Tender 
Offer, such balance will be available to enable the Company to make further 
market purchases pursuant to the Authority to Make Market Purchases or to make 
purchases pursuant to any future proposed tender offer. 
 
Further information concerning the cancellation of the share premium account is 
set out in the Circular. 
 
Further regular tender offers 
 
It is the Board's intention that, subject to there being sufficient 
distributable reserves available to the Company for such purpose, further 
tender offers will be considered by the Directors based on the proceeds 
realised from the sale of the Existing Portfolio. It is expected that such 
tender offers will be considered at least every 6 months during the period of 
18 months from the date of approval of the Proposals. Any such further tender 
offer will be subject to Shareholder approval to be sought at the relevant 
time. The Board expects to fund purchases of Ordinary Shares by the Company 
under the further tender offers from cash resources arising from the 
realisation of the Existing Portfolio and, if necessary, from the realisation 
of assets invested in accordance with the Company's new investment policy. 
 
In the event that the Company has insufficient distributable reserves then the 
Board will consider alternative ways to provide Shareholders with the 
opportunity to share in the realisation proceeds from the sale of the Existing 
Portfolio. 
 
Portfolio management 
 
A realignment of the investment portfolio to reflect the changed investment 
policy will commence following the passing of the Resolutions in relation to 
the Proposals and it is expected that the realisation will be completed or 
substantially completed within approximately 18 months of the approval of the 
Proposals. The Board intends to maintain approximately 50 per cent. of the 
proceeds in cash or cash equivalents prior to the further tender offers 
referred to above with the balance invested in accordance with the new 
investment policy (and initially in companies with a market capitalisation of 
over GBP150 million). To the extent that the realisation proceeds held in cash or 
cash equivalents are not utilised as part of a subsequent tender offer they 
will be invested in accordance with the new investment policy. 
 
Amendments to Articles of Association 
 
Given that it is proposed that the Company adopt a new investment policy it is 
proposed that certain changes be made to the Articles of Association. 
 
The Articles of Association currently provide that an ordinary resolution will 
be put to the Shareholders at the 2011 Annual General Meeting proposing that 
the Company continue as an investment trust for an unlimited period thereafter. 
The Articles of Association go on to provide that if such resolution were to be 
defeated at that time, the Directors would be obliged to draw up proposals for 
the voluntary liquidation, unitisation or other reorganisation of the Company 
for submission to Shareholders no later than the 2012 Annual General Meeting 
(and requiring approval by special resolution). It is proposed that the 
relevant article be amended in the New Articles so that such ordinary 
resolution is not required to be put to Shareholders until the 2019 Annual 
General Meeting and, were it to be defeated at that time, the Directors would 
be obliged to submit the proposals to Shareholders no later than the 2020 
Annual General Meeting. 
 
In addition, the New Articles take account of the proposed new name of the 
Company and, if approved, will also allow the Company to borrow up to 30 per 
cent. of its gross assets (at the time the borrowing is made). The New Articles 
will also reflect the removal of an article dealing with the maximum price at 
which purchases by the Company of its own shares can be made. Such provision is 
considered to be inappropriate and unnecessary since the Company is bound to 
comply with the pricing restrictions imposed by the Listing Rules. 
 
These changes are enshrined in the New Articles which it is proposed should be 
adopted. 
 
Savings Scheme 
 
Savings Scheme Participants will receive a copy of the Circular. Savings Scheme 
Participants who were Savings Scheme Participants on the Record Date will also 
receive a Savings Scheme Tender Form which they can use to tender all or part 
of their beneficial holding of Shares. All Savings Scheme Participants will 
also receive a Form of Direction with the Circular with which to indicate the 
manner in which they wish their Shares to be voted at the Extraordinary General 
Meeting. 
 
Extraordinary General Meeting 
 
In order to implement the Proposals, the Company requires the consent of 
Shareholders at an Extraordinary General Meeting to be held on 11 March 2009. 
The re-election of Nicholas Jeffrey (which is not part of the Proposals as 
such) will also be considered at the EGM. 
 
Irrevocable undertakings and non-binding letter of intent 
 
The Company has received irrevocable undertakings from certain institutional 
Shareholders to vote in favour of all the Resolutions, in respect of a total of 
9,793,618 Shares representing 44.3 per cent. of the Company's issued share 
capital as at 17 February 2009 (being the latest practicable date prior to 
publication of this document). 
 
In addition, the Company has also received a non-binding letter of intent to 
vote in favour of all the Resolutions from an institutional Shareholder in 
respect of 1,865,216 Shares representing 8.4 per cent. of the Company's issued 
share capital as at 17 February 2009 (being the latest practicable date prior 
to publication of this document). 
 
In total therefore, the Company has received irrevocable undertakings and a 
non-binding letter of intent to vote in favour of the Resolutions in respect of 
11,658,834 Shares representing 52.7 per cent. of the Company's issued share 
capital as at 17 February 2009 (being the latest practicable date prior to 
publication of this document). 
 
Expected Timetable 
 
                                                                           2009 
 
Calculation Date                                        close of business on 31 
                                                                        January 
 
Record Date for Tender Offer                            close of business on 17 
                                                                       February 
 
Latest time and date for receipt of Savings Scheme         3.00 p.m. on 6 March 
Tender Forms 
 
Latest time and date for receipt of Forms of               3.00 p.m. on 6 March 
Direction for the EGM 
 
Latest time and date for receipt of Tender Forms          11.00 a.m. on 9 March 
 
Latest time and date for receipt of Forms of Proxy        11.00 a.m. on 9 March 
for the EGM 
 
Extraordinary General Meeting                            11.00 a.m. on 11 March 
 
Change of name and new investment policy effective,                    11 March 
New Investment Management Agreement, Investment 
Advisory Agreement and Management Warrants Deed and 
New Articles effective 
 
Result of EGM and Tender Offer announced                               11 March 
 
Review documents in relation to the cancellation of                    20 March 
share premium account of the Company with Court 
(Directions hearing) 
 
Court hearing of application to confirm cancellation                    1 April 
of the share premium account of the Company 
 
Effective date of cancellation of the share premium                     2 April 
account of the Company 
 
Tender Price announced                                                  3 April 
 
Cheques despatched in respect of proceeds of the          as soon as reasonably 
Tender Offer and CREST accounts credited with         practicable after 3 April 
proceeds of Tender Offer and unsold uncertificated 
Shares 
 
Balance certificates despatched in respect of unsold      as soon as reasonably 
certificated Shares                                   practicable after 3 April 
 
The dates set out in this expected timetable of principal events may be 
adjusted by the Company and Arbuthnot Securities, in which event details of the 
new dates will be notified to the UKLA, the London Stock Exchange and, where 
appropriate, to Shareholders and Savings Scheme Participants. 
 
All references are to London time. 
 
Enquiries: 
 
Steve Winrow                            01624 623994 
 
Knox D'Arcy Asset Management Ltd 
 
Alastair Moreton                        020 7012 2000 
 
Hannah Pearce 
 
Arbuthnot Securities Limited 
 
Capitalised terms used in this announcement will have the same meaning as in 
the Circular to be sent to Shareholders today unless the context requires 
otherwise. 
 
The above information is extracted from the Circular being sent to Shareholders 
today and should be read in conjunction with the full text of the Circular 
which will shortly be available to view at www.eagletinvestmenttrust.co.uk. 
 
Copies of the Circular are also being submitted today to the UK Listing 
Authority and will shortly be available for inspection at the UK Listing 
Authority's Document Viewing Facility, which is situated at: 
 
Financial Services Authority 
 
25 The North Colonnade 
 
Canary Wharf 
 
London E14 5HS 
 
Arbuthnot Securities Limited, which is regulated by the Financial Services 
Authority, is acting for Eaglet Investment Trust plc and no-one else and will 
not be responsible to any person for providing the protections afforded to its 
customers nor for providing advice in relation to the Proposals nor any other 
matter referred to in this announcement. 
 
 
 
END 
 

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