Merlin plans to alter structure

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MERLIN International Green Investment Trust is planning to alter its capital structure in an attempt to narrow the gap between its share price and its net asset value.

The trust, managed by Jupiter Tyndall, traded at an average discount of 23 per cent last year, about 10 points worse than the average international fund. This was a period when Merlin's asset growth outperformed the FTA All-Share index, rising by 16.9 per cent.

Michael Amory, Merlin's chairman, said: 'The trust has done quite well recently in asset terms, but the shares are standing below what we issued them at. We think that's unfair for shareholders.'

Merlin was the first green trust when it was launched in late 1989 yet its shares have remained below the 100p issue price. Yesterday's announcement prompted an 8p rise to 91p.

The trust intends to make a one-for-one issue of zero dividend preference shares, whose value will rise in a predetermined way from 50p. Merlin's proposals will also limit the life of the trust to eight years.

Mr Amory said: 'Our advisers think the likelihood is that the discount will come down from 23 per cent to about 6-7 per cent.' This latter number applies to the combined units of ordinary shares and zero dividend prefs.

Merlin has already secured the support of shareholders owning 46.5 per cent of the shares for the capital restructuring. Mr Amory said this did not include all of the institutions with disclosable stakes in Merlin since at least one did not like split capital trusts.

The restructuring will cost the pounds 26m trust about pounds 186,000.

The yield on Merlin's portfolio will have to rise from 4.2 per cent to 5.4 per cent, which will restrict the range of stocks the trust will be able to hold.

Merlin's largest shareholders include Lazard Freres, Equitable Life, Jupiter Tyndall Merlin, the South Yorkshire Pension Authority and Somerset County Council.

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