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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Core Vct I | LSE:CR. | London | Ordinary Share | GB00B03FH337 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 72.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMCR3 TIDMCR. TIDMCR2 RNS Number : 8534T Core VCT III PLC 12 June 2009 JOINT ANNOUNCEMENT CORE VCT I PLC CORE VCT II PLC CORE VCT III PLC 12 June 2009 RECOMMENDED PROPOSALS FOR A MERGER BETWEEN CORE VCT I PLC ("VCT I"), CORE VCT II PLC ("VCT II") AND CORE VCT III PLC ("VCT III") (VCT I, VCT II AND VCT III TOGETHER THE "CORE VCTS") TO BE COMPLETED BY PLACING VCT I AND VCT II INTO MEMBERS' VOLUNTARY LIQUIDATIONS PURSUANT TO SECTION 110 OF THE INSOLVENCY ACT 1986 AND THE TRANSFER BY VCT I AND VCT II OF ITS ASSETS AND LIABILITIES TO VCT III IN CONSIDERATION FOR NEW SHARES IN VCT III ("NEW VCT III SHARES") AND THE CANCELLATION OF THE LISTING OF THE VCT I SHARES ("VCT I SHARES") AND VCT II SHARES ("VCT II SHARES") SUMMARY The boards of the Core VCTs ("the Boards") announced on 20 April 2009 that agreement in principle had been reached for the merger of the three companies and that the Boards expected to be in a position to present a detailed proposal for consideration by Shareholders shortly. The Boards are pleased to now be able to put the proposals to the Core VCT shareholders for consideration. The proposals will, if effected, result in VCT I and VCT II being merged into VCT III, creating an enlarged company ("Enlarged Company") having net assets of approximately GBP37 million. Each of the Core VCTs has completed its initial three year investment period, and they have each invested above 70 per cent. of its assets in VCT qualifying investments in compliance with VCT legislation. Accordingly, there is no need to retain three separate listed vehicles and a merger is being recommended to achieve costs savings. The merger will result in a reduction in the annual running costs compared to the aggregate annual running costs of the three separate companies and will enable the Enlarged Company to pass this benefit on to shareholders through the ability to pay larger distributions in the future. In addition, the creation of a single VCT with a greater capital base should result in greater investment flexibility. The Core VCTs each have an innovative incentive structure for the investment manager, Core Capital LLP ("Core Capital"), which provides for no annual management fee and a 30 per cent. share in distributions above 60p per ordinary share, as more fully explained below. This incentive operates in materially the same way for each of the Core VCTs and, following the merger, will continue to do so for the Enlarged Company. Further, the Boards are pleased to be able to declare, conditional on the merger being effected, the payment of special dividends ("Special Dividends") referred to below. Meetings of the shareholders of each Core VCT are being convened to approve resolutions to effect the merger. VCT III will also take this opportunity to renew share issue and share repurchase authorities, amend its articles of association and cancel its share premium account. In addition, it is proposed that VCT III change its name to Core VCT plc, subject to the merger becoming effective. BACKGROUND VCT I was launched in 2004 with VCT II and VCT III being subsequently launched in 2005. Their objective was achieving long-term capital and income growth and to distribute tax-free dividends comprising realised gains and investors' capital investment, the policy being to maximise distributions. The investment approach has been to invest capital into management buy-outs and development capital in established private companies alongside each of the Core VCTs. This syndication has allowed the Core VCTs to access larger transactions than would otherwise have been the case had it invested independently As at 30 April 2009 VCT I had an unlisted investment portfolio with an aggregate value of GBP8.5 miilion and an unaudited net asset value of GBP9.9 million (90.9p per ordinary share ("VCT I Ordinary Share") and 1p per VCT I B Share ("VCT I B Shares")). As at 30 April 2009, VCT II had an unlisted investment portfolio with an aggregate value of GBP13.2 million and an unaudited net asset value of GBP16.7 million (101.5p per VCT II ordinary share ("VCT II Ordinary Share") and 0.01p per VCT II B share ("VCT II B Share")). As at 30 April 2009, VCT III had an unlisted investment portfolio with an aggregate value of GBP13.2 million and an unaudited net asset value of GBP16.6 million (100.8p per VCT III ordinary share ("VCT III Ordinary Share") and 0.01p per VCT III B share ("VCT III B Share")). In order to comply with VCT regulations, a VCT is required to be listed on the Official List, which involves a significant level of cost in listing and related fees and in ensuring that the VCT complies with all relevant legislation. As a VCT becomes fully invested and starts to return capital through dividends, the running costs become a proportionally greater burden and may have an adverse effect on a VCT's return for its shareholders. A larger VCT is therefore better placed to absorb such running costs, and therefore able to pay a higher level of dividends to shareholders over its life. In September 2004, the Merger Regulations were introduced, allowing VCTs to be acquired by, or merge with, each other without prejudicing tax reliefs obtained by their shareholders. A number of VCTs have now taken advantage of these regulations to create larger VCTs where running costs can be spread over a substantially greater asset base. Following detailed consideration of the portfolio and financial position of each of the Core VCTs, the Boards have reached an agreement to merge the companies (subject to the conditions set out in the circulars to be sent to shareholders). The basis of the merger has been simplified significantly as all three Core VCTs are managed by Core Capital, have the same investment objectives and policies, have the same board and advisers and hold common investments. The Boards consider that this merger will bring significant benefits to all three groups of shareholders through: * a reduction in annual running costs for the Enlarged Company compared to the aggregate annual running costs of the three separate companies; * creation of a single VCT of a more economically efficient size with a greater capital base over which to spread administration and management costs; * each of the Core VCTs being able to pay the Special Dividends as a result of the larger size and lower anticipated proportionate running costs of the Enlarged Company; * the ability to pay larger distributions in the future due to the increased size and the reduced proportionate running costs; and * the creation of a single VCT with a greater capital base resulting in an increased flexibility in meeting the various requirements for qualifying VCT status and providing greater investment flexibility. MERGER OF THE CORE VCTS The merger will result in the assets and liabilities of the VCT I and VCT II being transferred to VCT III in consideration for the issue of New VCT III Shares to the shareholders of VCT I and VCT II. The merger will be completed on a relative net asset value basis and will be subject to both the schemes of reconstruction becoming unconditional. The VCT I Ordinary Shares and VCT II Ordinary Shares will effectively be merged into the VCT III Ordinary Shares on a relative net asset basis. The number of new VCT III Ordinary Shares to be issued to the shareholders of VCT I and VCT II will be calculated by reference to the relative net asset values of the ordinary class of share in each company, such new VCT III Ordinary Shares allocable to each of VCT I and VCT II to be issued pro rata to the respective shareholdings in each of VCT I and VCT II. The VCT I B Shares and VCT II B Shares will effectively be merged into the VCT III B Shares by issuing new VCT III B Shares which will represent, together with the existing VCT III B Shares in issue, 40 per cent. of the Share capital of the Enlarged Company immediately following the issue of New VCT III Shares pursuant to the Schemes. The new VCT III B Shares will be issued between VCT I and VCT II proportionally by reference to the new VCT III Ordinary Shares allocable to their respective shareholders and then, in respect of VCT I, pro rata to holdings of VCT I B Shares and, in respect of VCT II, 75 per cent. to the Nominees and the balance pro rata to the other holdings of VCT II B Shares. Following the transfer, the listing of the VCT I Shares and VCT II Shares will be cancelled and VCT I and VCT II will be wound up. The Boards believe that the Schemes provide an efficient way of effecting a merger with an acceptable level of costs compared with other merger routes. Although any of the three companies could have acquired the assets and liabilities of the other, VCT III was selected as the acquirer because of its marginally greater size in relation to VCT I, (and, therefore, a lower stamp duty cost on the transfer of assets and liabilities from VCT I and VCT II). Shareholders should note that the merger will be outside the provisions of the City Code on Takeovers and Mergers. The merger of the three companies should result in cost savings and enhanced administrative efficiency. Due to their common features, this is achievable at a lower level of costs in terms of amalgamating the constitution of the boards and the investment and administrative arrangements of the three companies for the Enlarged Company. The aggregate anticipated cost of undertaking the merger by way of the Schemes is approximately GBP453,000, including VAT, legal and professional fees, stamp duty and the costs of winding up VCT I and VCT II. The costs of the merger by way of the Schemes will be split proportionally between the VCT I, VCT II and VCT III by reference to their respective unaudited adjusted NAVs in 30 April 2009. Following completion of the merger by way of the Schemes, annual cost savings for the Enlarged Company of at least GBP187,000 per annum, representing 0.5 per cent. per annum of the projected net assets of the Enlarged Company, are expected to be achieved. On this basis, the Board believes that the costs of the merger by way of the Schemes will be recovered within three years. CORE CAPITAL AND THE REVISED MANAGEMENT ARRANGEMENTS The Enlarged Company will continue to be managed by Core Capital. At the time of the launch of the Core VCTs, Core Capital was issued with such number of B shares so that it would receive 30 per cent. of distributions but only after the holders of ordinary shares have received their effective initial cost ("Effective Initial Cost") (60p when taking into account the initial 40 per cent. income tax relief received on the 100p paid per ordinary share) and subject to an amount equal to 5 per cent. per annum (compounded annually and calculated on a daily basis from the date of issue of the ordinary shares) on such part of the Effective Initial Cost that remains to be paid to the holders of Ordinary Shares being achieved. This was provided for in VCT II and VCT III by the B Shares representing 60 per cent. of the issued Share capital, 50 per cent. of which was issued to Core Capital (now held by the nominees). This mechanism was achieved in VCT I through the VCT I B Shares representing 40 per cent. of the issued share capital but with Core having been issued with 75 per cent. of the VCT I B Shares (now held by the nominees). This carried interest right in the Core VCTs will be combined for the Enlarged Company using the VCT I structure (ie the VCT III B Shares will, following the merger, represent 40 per cent. of the aggregate issued share capital, 75 per cent. of which will be attributable to Core Capital (through the holdings in the nominees)). As a result of the merger and to amalgamate the B share mechanisms from the three Core VCTs, adjustments will need to be made to the B share mechanism in VCT III. This will be achieved by adjusting the existing number of B shares in issue in VCT III so that it will represent VCT III's relevant proportion of B shares in the Enlarged Company following the merger and to achieve Core Capital (through its holding in the Nominees) holding 75 per cent. of this number of B shares. Whilst these adjustments may have the affect of marginally accelerating the potential date of receipt of the Investment Manager's incentive during the period of the equalisation payment, it will not affect the amount of the total payment once the hurdle rate has been fully achieved. SPECIAL DIVIDENDS The Boards are pleased to be able to declare, conditional on the merger being effected, the payment of Special Dividends of capital, as follows: +----------------+-------------------+ | | Special Dividends | | | | +----------------+-------------------+ | | | +----------------+-------------------+ | VCT I | 10p | +----------------+-------------------+ | VCT II | 12p | +----------------+-------------------+ | VCT III | 12p | +----------------+-------------------+ such Special Dividends to be paid on 28 July 2009, to shareholders in the relevant company on the register on 15 July 2009. APPROVALS VCT III shareholders will receive a copy of a circular convening an extraordinary general meeting ("EGM") of VCT III, a VCT III Ordinary Share meeting and a VCT I B Share meeting, all to be held on 7 July 2009 (together with the VCT III prospectus) at which VCT III shareholders will be invited to approve resolutions in connection with the Schemes, to amend the articles of association, renew the authority to issue and repurchase shares, cancel the VCT III share premium account and change the name of VCT III to Core VCT plc. VCT I shareholders will also receive a circular convening the VCT I EGM 1 and the VCT I B Share meeting on 7 July 2009 and the VCT I EGM 2 on 16 July 2009 (together with the VCT III prospectus) at which VCT I shareholders will be invited to approve resolutions in connection with the Schemes. VCT II shareholders will also receive a circular convening the VCT II EGM 1 and the VCT II B Share meeting on 7 July 2009 and the VCT II EGM 2 on 16 July 2009 (together with the VCT III prospectus) at which VCT II shareholders will be invited to approve resolutions in connection with the Schemes. EXPECTED TIMETABLE VCT I EGM 1 3.30 p.m. on 7 July 2009 VCT I B share class meeting 3.40 p.m. on 7 July 2009 VCT II EGM 1 3.50 p.m. on 7 July 2009 VCT II B share class meeting 4.00 p.m. on 7 July 2009 VCT III EGM 1 4.10 p.m. on 7 July 2009 VCT II ordinary share class meeting 4.20 p.m. on 7 July 2009 VCT II B share class meeting 4.25 p.m. on 7 July 2009 Record date for VCT I and VCT II shareholders' entitlements under the merger 15 July 2009 Calculation date after 5.00 p.m. on 15 July 2009 Suspension of listing of the VCT I and VCT II shares 7.30 a.m. on 16 July 2009 VCT I EGM 2 9.00 a.m. on 16 July 2009 VCT II EGM 2 9.10 a.m. on 16 July 2009 Effective Date for transfer of assets and liabilities of VCT I and VCT II to VCT III and the issue of New VCT III Shares 16 July 2009 Announcement of results of the Schemes 16 July 2009 Cancellation of listing of the VCT I and VCT II shares 17 July 2009 Admission of and dealings in New VCT III Shares to commence 17 July 2009 Share certificates for the New VCT III Shares to be issued pursuant to the Schemes despatched 28 July 2009 Special Dividend payment date 28 July 2009 DOCUMENTS Copies of the prospectus and the circulars for VCT I, VCT II and VCT III have been submitted to the UK Listing Authority and will be shortly 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 Telephone: 020 7066 1000 CONTACTS AND RESPONSIBILITY Investment Manager to the Core VCTs Core Capital LLP Stephen Edwards Telephone: 020 7317 0155 Solicitors to the Core VCTs Martineau Kavita Patel Telephone: 0870 763 2000 Sponsor to VCT III Howard Kennedy Keith Lassman Telephone: 020 7636 1616 The directors of VCT I accept responsibility for the information relating to VCT I and its directors contained in this announcement. To the best of the knowledge and belief of such directors (who have taken all reasonable care to ensure that such is the case), the information relating to VCT I and its directors contained in this announcement, for which they are solely responsible, is in accordance with the facts and does not omit anything likely to affect the import of such information. The directors of VCT II accept responsibility for the information relating to VCT II and its directors contained in this announcement. To the best of the knowledge and belief of such directors (who have taken all reasonable care to ensure that such is the case), the information relating to VCT II and its directors contained in this announcement, for which they are solely responsible, is in accordance with the facts and does not omit anything likely to affect the import of such information. The directors of VCT III accept responsibility for the information relating to VCT III and its directors contained in this announcement. To the best of the knowledge and belief of such directors (who have taken all reasonable care to ensure that such is the case), the information relating to VCT III and its directors contained in this announcement, for which they are solely responsible, is in accordance with the facts and does not omit anything likely to affect the import of such information. Howard Kennedy, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for VCT III and for no one else in connection with the matters described herein, and will not be responsible to anyone other than VCT III for providing the protections afforded to customers of Howard Kennedy or for providing advice in relation to any matters referred to herein. Martineau are acting exclusively for VCT I, VCT II and VCT III and for no one else in connection with the matters described herein and will not be responsible to anyone other than VCT I, VCT II and VCT III for providing the protections afforded to clients of Martineau or for providing advice in relation to the matters described herein. This information is provided by RNS The company news service from the London Stock Exchange END MEREASKAFSDNEFE
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