Foresight 2 VCT Plc Foresight 2 Vct Plc : Recommended Proposals For A Merger

 
TIDMFTN 
 
 
   JOINT ANNOUNCEMENT 
 
   13 November 2015 
 
   FORESIGHT VCT PLC ("F1") 
 
   FORESIGHT 2 VCT PLC ("F2") 
 
   (together the "Companies" and each a "Company") 
 
   TIDM: FTV and FTN 
 
 
 
   RECOMMENDED PROPOSALS FOR A MERGER BETWEEN F1 AND F2 TO BE COMPLETED BY 
WAY OF A SCHEME OF RECONSTRUCTION UNDER SECTION 110 OF THE INSOLVENCY 
ACT 1986 AND THE TRANSFER BY F2 OF ITS ASSETS AND LIABILITIES TO F1 IN 
EXCHANGE FOR THE ISSUE OF NEW SHARES IN F1 
 
   SUMMARY 
 
   Further to the announcement made on 15 October 2015, the boards of the 
Companies (the "Boards") are pleased to announce that they have reached 
agreement on recommended proposals for the merger of the Companies (the 
"Merger"), to create a single enlarged VCT with net assets of 
approximately GBP117 million (the "Enlarged Company"). The Companies are 
each managed by Foresight Group CI Limited ("Foresight"). 
 
   The Merger is conditional upon certain conditions being satisfied as 
further set out in the circulars being posted to the Companies' 
respective shareholders today (the "Circulars"). F1 has also today 
published a prospectus in connection with the Merger (the "Prospectus"). 
 
   The Merger will be effected by F2 being placed into members' voluntary 
liquidation pursuant to a scheme of reconstruction under section 110 of 
the Insolvency Act 1986 (the "Scheme").  The assets and liabilities of 
F2 will then be transferred to F1 in exchange for the issue of new F1 
shares to existing F2 shareholders. As both Companies have three 
equivalent share classes (ordinary shares, planned exit shares and 
infrastructure shares), each existing share class in F2 will effectively 
be merged into the corresponding share class in F1 on a relative net 
asset basis. 
 
   The approval of resolutions in connection with these proposals will be 
proposed at a general meeting of F1 to be held on 10 December 2015 and 
general meetings of F2 to be held on 10 December 2015 and 18 December 
2015.  Further details of the proposals are set out below. 
 
   BACKGROUND 
 
   In September 2004, regulations were introduced allowing VCTs to be 
acquired by, or merge with, each other without prejudicing the VCT tax 
reliefs obtained by their shareholders.  A number of VCTs have taken 
advantage of these regulations to create larger VCTs for economic and 
administrative efficiencies. One advantage of a larger VCT is that it is 
able to spread the fixed elements of its running costs across a larger 
asset base and as a result reduce running costs. 
 
   Taking the above into account, the Boards entered into discussions to 
consider a merger of the Companies into one enlarged VCT.  The aim of 
the Merger is to attain strategic benefits and reductions in the annual 
running costs per share for all shareholders, while ensuring that the 
planned exit strategy of the planned exit share portfolios and 
infrastructure share portfolios in each Company can continue. 
 
   THE SCHEME 
 
   Firstly, pursuant to a scheme of reconstruction under section 110 of the 
Insolvency Act 1986, F2 will be placed into members' voluntary 
liquidation. Secondly, all of the assets and liability of F2 will be 
transferred to F1 in consideration for the issue of new shares in F1 
directly to the shareholders of F2.  Thirdly, F2 shall be wound up. 
Implementation of the Merger will require resolutions being approved by 
each Company's shareholders. 
 
   Whilst there will only be one general meeting of F1, at which 
shareholders will be invited to consider and vote in favour of the 
Merger and authorise the issue of new shares pursuant to the Merger, 
there will be two general meetings for F2. At F2's first general meeting, 
the shareholders will be invited to approve the Merger and authorise the 
liquidators to implement the Scheme and at the second general meeting, 
the shareholders will be invited to pass a special resolution to wind up 
F2 and cancel the listing of the F2 shares. 
 
   If a shareholder in F2 does not vote in favour of the Merger and 
expresses his dissent in writing then he may require the liquidators to 
purchase his shares at their break-value price (this being an estimate 
of the amount he would receive in an ordinary winding up of F2 if all of 
the assets had to be realised).  The break-even is expected to be 
significantly below the net asset value of F2. 
 
   In addition to the approval of shareholders being sought at the general 
meetings, the Scheme is conditional upon: 
 
 
   -- notice of dissent not being received from shareholders of F2 who hold 
      more than 10% in nominal value of the issued share capital of F1; 
 
   -- F1 confirming to F2 and F2 confirming to F1 that, in each case, it has 
      not received any notice of any claims, proceedings or actions of whatever 
      nature threatened or commenced, as relevant, against F1 which the F2 
      Board regard as material or against F1 which the F2 Board regard as 
      material; and 
 
   -- the Companies maintaining their VCT status. 
 
 
 
   Subject to the above, the Scheme shall proceed and become effective 
immediately after the passing of the special resolution for the winding 
up of F2 to be proposed at the F2 second general meeting and will be 
binding on all F2 shareholders, including dissenting F2 shareholders, 
and all persons claiming through or under them. 
 
   If the conditions have not been fulfilled by 31 January 2016, the Scheme 
will not proceed. 
 
   BENEFITS ANTICIPATED FROM THE MERGER 
 
   In recommending that the Companies participate in the Merger, which will 
result in an Enlarged Company with a net asset base of approximately 
GBP117 million, the Boards expect to bring a number of benefits to the 
shareholder of each Company as follows: 
 
 
   -- there will be a reduction in the forecast combined annual running costs 
      and costs per share for all shareholders; 
 
   -- the Merger will preserve existing VCT tax reliefs which will carry over 
      and attach to the post-Merger holdings for shareholders, 
 
 
   and in respect of the enlarged ordinary shares fund, shareholders will 
benefit from: 
 
 
   -- an enlarged ordinary share fund with a significantly wider spread of 
      investments; 
 
   -- a larger fund with greater flexibility to sustain a programme of new 
      investments; 
 
   -- a larger capital base which will facilitate liquidity management and 
      enhance prospects for the maintenance of regular dividend payments to 
      ordinary shareholders; 
 
   -- a larger capital base allowing the Enlarged Company to sustain a 
      programme of share buybacks; and 
 
   -- based on the above, the Enlarged Company is expected to be more 
      attractive to potential investors and enjoy an enhanced ability to 
      achieve future capital raisings. 
 
 
   THE ENLARGED COMPANY BOARD 
 
   The Boards have considered the size and composition of the Enlarged 
Company board and it has been agreed that, subject to completion of the 
Merger, Jocelin Harris, the current chairman of F2, will be appointed as 
a director to the Enlarged Company board. 
 
   MERGER ILLUSTATION 
 
   In terms of the proposed number of consideration shares to be issued if 
the Merger proceeds, this will be calculated based on a relative net 
assets basis, by reference to the formulas contained in the Circulars. 
 
   Had the Merger been completed on the basis of the Scheme examples set 
out in the Circulars (which are based on the unaudited net assets of the 
Companies as at 30 June 2015), the number of Consideration Shares which 
would be issued for each existing F2 share would be as follows: 
 
 
 
 
 
                                                                                Percentage of share capital of each class in the Enlarged 
                             Consideration Shares to be issued per F2 Share                  Company held by F2 Shareholders 
F2 Ordinary Shares         0.6290 F1 Ordinary Shares                                                                                32.9% 
F2 Planned Exit Shares     0.9602 F1 Planned Exit Shares                                                                            49.2% 
F2 Infrastructure Shares   0.9908 F1 Infrastructure Shares                                                                          49.8% 
 
 
   EXPECTED TIMETABLE 
 
 
 
 
 
  Expected Timetable for F1 
Latest time for the receipt of forms of proxy for            10.00 a.m. on 8 December 
 the General Meeting for F1                                                      2015 
General meeting                                             10.00 a.m. on 10 December 
                                                                                 2015 
Calculation Date                                                     17 December 2015 
Effective Date for the transfer of the assets and                    18 December 2015 
 liabilities of F2 to the Company and the issue of 
 Consideration Shares pursuant to the Scheme 
Announcement of the results of the General Meeting                   18 December 2015 
 and completion of the Scheme 
Admission and dealings in the Consideration Shares                   21 December 2015 
 to commence 
CREST accounts credited (where applicable)                           22 December 2015 
Certificates for consideration shares dispatched by                   22 January 2016 
 
 Expected Timetable for F2 
Date from which it is advised that dealings in F2                     8 December 2015 
 Shares should only be for cash settlement and immediate 
 delivery of documents of title 
Latest time for receipt of forms of proxy for the            10.30 a.m. on 8 December 
 F2 First General Meeting                                                        2015 
F2 First General Meeting                                    10.30 a.m. on 10 December 
                                                                                 2015 
Latest time for receipt of forms of proxy for the           10.00 a.m. on 16 December 

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