The Lemon Fool

Hi folks, new member here. I've had a holding in this trust for a couple of years or so, and have naturally been disappointed by the fall in the share price from around 300p-plus to the current 230p-240p. Obviously I'm aware of the likely merger with Abrdn's Shires trust in the near future, but what's grabbed my interest recently is the announcement of a special dividend of 14.75p, payable on 24 November with an xd date of 9 November. This is without doubt a welcome, and unexpected, bonus for shareholders, being over 5 times the present quarterly payout (2.60p), but I have to wonder about the fairness of this. Presumably any punter could buy the shares before 9 Nov and bag a very tasty dividend with little effort or risk on their part? Surely this kind of deal should be restricted to people who have held the shares for a longer period? Or am I just being naive?

https://www.investegate.co.uk/announcem ... nd/7848306

"In the Company's circular, dated 17 October 2023, the Board declared that, subject to the passing of all resolutions to be presented at the general meeting on 20 November 2023 in relation to the proposed scheme of reconstruction and members' voluntary winding up of the Company (the "Resolutions"), it intends to pay a pre-liquidation interim dividend (the "Pre-liquidation Dividend"). The Pre-liquidation Dividend is to reflect a distribution of substantially all of the Company's accumulated revenue reserves and was estimated to be not less than 14.0p per Ordinary share.

The Board of abrdn Smaller Companies Income Trust plc today declares, subject to the passing of the Resolutions, a Pre-liquidation Dividend of 14.75p per Ordinary share in respect of the year to 31 December 2023, payable on 24 November 2023 to shareholders on the register at close of business on 10 November 2023. The ex-dividend date is 9 November 2023."

Summerdeep wrote:Hi folks, new member here. I've had a holding in this trust for a couple of years or so, and have naturally been disappointed by the fall in the share price from around 300p-plus to the current 230p-240p. Obviously I'm aware of the likely merger with Abrdn's Shires trust in the near future, but what's grabbed my interest recently is the announcement of a special dividend of 14.75p, payable on 24 November with an xd date of 9 November. This is without doubt a welcome, and unexpected, bonus for shareholders, being over 5 times the present quarterly payout (2.60p), but I have to wonder about the fairness of this. Presumably any punter could buy the shares before 9 Nov and bag a very tasty dividend with little effort or risk on their part? Surely this kind of deal should be restricted to people who have held the shares for a longer period? Or am I just being naive?

Answering your questions directly as a general point, no, it's not unfair. In theory the price of the share will fall by the amount of the promised dividend on the xd date, so it should make no difference to the total amount. Share price before XD = share price after XD + Dividend amount.
More specifically, picking up on Monabri's reply, they are getting rid of their "cash" before they 'wind up and combine' (their words) with Shires. But this "cash" amount was baked into their SP, so expect the price to fall by around 14.75 on 9th.

torata