The board of Downing Strategic Micro-Cap (DSM) has decided that “now is the appropriate time” for shareholders to vote on the potential voluntary liquidation of the company.
DSM initially decided to return capital to shareholders in 2023, following a “dispiriting time for micro-cap stocks”, with shares trading at a discount of between 15% and 1%. Ultimately, the board concluded a managed wind-down would be in the best interest of investors.
Since then, shareholders have received special dividends of 63.9p per share in aggregate, and the portfolio now holds just one listed investment in Centaur Media, alongside a secured loan note in Real Good Food and cash. Net asset value currently stands at £2.3m.
The trust’s investment in Centaur has not yet been realised, according to the board, due to “indications of strategic action by the management team”.
“Your board now seeks the most effective way to return cash to shareholders and limit further costs,” it stated. “With the company’s portfolio significantly reduced and the special dividends paid, your board has determined that it is now the appropriate time to put proposals to shareholders to undertake a members’ voluntary liquidation of the company, which will eliminate certain of the costs associated with running a listed vehicle.”
In order to enter into members’ voluntary liquidation, shareholder approval at an upcoming meeting must reach at least 75%. The meeting will take place at Dickson Minto’s offices in Old Broad Street on the 21 February at 10am.
Under the proposals, Derek Neil Hyslop and Richard Peter Barker of Ernst & Young have been appointed as the liquidators. They will have the authority to distribute cash to shareholders, after the trust’s liabilities have been paid and wind-up costs have been taken into account. The liquidators are expected to make an initial distribution during the week beginning 3 March 2025 of approximately 2p per share.