Edge Performance VCT PLC Publication of Circular and Notice of GM (9051O)

TIDMEDGH

RNS Number : 9051O

Edge Performance VCT PLC

03 February 2023

 
 Edge Performance VCT public limited company 
  LEI Number: 213800PAOE1WTGQGSH39 
  3 February 2023 
                                           Publication of Circular 
 Further to the announcement made by Edge Performance VCT public 
  limited company (the "Company") on 14 December 2022, the Company 
  has today published a circular (the "Circular") to the Company's 
  Shareholders setting out recommended proposals (the "Proposals") 
  for a members' voluntary liquidation of the Company and an 
  associated related party transaction. 
 The Proposals are subject to Shareholder approval and the 
  Circular contains a notice convening a general meeting of 
  the Company to be held at the offices of Simons Muirhead Burton 
  LLP, 87-91 Newman Street, London W1T 3EY at 10.00 a.m. on 
  28 February 2023 (the "General Meeting"). 
 Introduction 
 As announced by the Company on 14 December 2022, following 
  lengthy discussions with Edge Investments Limited (the "Investment 
  Manager") as to the Company's current position and the overall 
  market outlook, your Board does not foresee any reasonable 
  opportunity for the Company to grow in the short term. Accordingly, 
  after careful consideration, the Board believes that it is 
  in Shareholders' best interests that the Company be wound 
  up, with the intention that there will be an orderly winding-down 
  of the Company, realisation for cash of the Company's assets 
  and a return of that cash to Shareholders in a manner which 
  will be intended to preserve VCT tax-reliefs. The Board's 
  aim in making this recommendation is to seek to ensure the 
  most efficient and maximum return to Shareholders as is possible. 
 In order to ensure an efficient realisation process and in 
  seeking to maximise value for Shareholders, the Board and 
  the proposed Liquidators have agreed, subject to Shareholder 
  approval, that the Company enters into an advisory agreement 
  with the Investment Manager. Under this agreement, the Investment 
  Manager will be paid a fee, which includes a performance incentive 
  element, to assist the Liquidators with the asset realisation 
  process during a period of up to two years (which may be extended 
  by mutual agreement between the Liquidators and the Investment 
  Manager) following the commencement of the liquidation. The 
  entry into this advisory agreement will constitute a related 
  party transaction under the FCA's Listing Rules (the "Related 
  Party Transaction") and a summary of its material terms is 
  set out in Part 2 of the Circular. 
 Background to the Proposals 
 As Shareholders will be aware, the Company's Net Asset Value 
  has reduced significantly since the previous financial year 
  end, with payments to Shareholders by way of (i) dividends 
  totalling GBP4,058,489 and (ii) share buybacks totalling GBP888,791, 
  and contractual performance incentive fees payable in accordance 
  with the terms of the existing Investment Management Agreement 
  of GBP2,586,146 paid to the Investment Manager, having depleted 
  the Company's cash, in addition to market-related reductions 
  in the portfolio valuations. As a result, the Board and the 
  Investment Manager are of the opinion that the Company is 
  sub-scale and that the Company's ongoing charges ratio (being 
  approximately 17.61 per cent.) renders the ongoing operation 
  of the Company uneconomic. 
 In addition, without raising additional capital to invest, 
  the Company faces the issue of potentially having to make 
  further investments to meet the requirements of the VCT Rules 
  which could delay the return of Shareholders' funds whilst 
  also potentially resulting in the Company having insufficient 
  cash to operate. 
 The existing Investment Management Agreement, and the associated 
  obligations of the parties, including the Company's obligations 
  to pay the Investment Manager its annual management charge 
  and performance incentive fee and the Investment Manager's 
  obligations in respect of the cost cap, will terminate automatically 
  in accordance with the terms of the relevant agreements on 
  the Company's entry into liquidation with no further amounts 
  payable in respect of such arrangements. 
 However, the Board considers it critical to maximising the 
  return of funds to Shareholders as a result of any asset realisation 
  process that the Investment Manager's services be retained 
  in respect of such process. The Investment Manager made the 
  investments in the portfolio companies, holds the relationships 
  with portfolio management teams and possesses full knowledge 
  of the portfolio companies, the markets in which they operate 
  and the detailed insight into individual company performance. 
  The Investment Manager has therefore agreed, pursuant to an 
  advisory services agreement (the "EIL Advisory Services Agreement") 
  and subject to Shareholder approval of this appointment as 
  a related party transaction, to assist the Liquidators with 
  the realisation of the Company's remaining assets during the 
  course of the proposed liquidation. Retaining the Investment 
  Manager whilst removing the Company's listing and reducing 
  the Board size will minimise the Company's ongoing running 
  costs and the impact that these would have on Shareholders' 
  future returns. 
 Accordingly, after careful consideration, the Board has concluded 
  that it is in Shareholders' best interests that the associated 
  Related Party Transaction with the Investment Manager be approved 
  by Shareholders. 
 The Board has considered the Proposals in the context of ensuring 
  periodic distributions will continue to be made to Shareholders. 
  The Board is satisfied that this will be the case and that 
  the Liquidators will be able to pay out net realisation proceeds 
  to Shareholders as part of the liquidation process (although 
  the timing and quantum of any such distributions will be at 
  the Liquidators' sole discretion). 
 The members' voluntary liquidation 
 The Board is recommending that the Company be placed into 
  the members' voluntary liquidation. This requires the approval 
  of Shareholders at the General Meeting. 
 It is proposed that Paul Cooper and Asher Miller, both licensed 
  insolvency practitioners of Begbies Traynor (London) LLP, 
  29th Floor, 40 Bank Street, London, E14 5NR be appointed as 
  joint liquidators of the Company (the "Liquidators"), and 
  that their remuneration shall be determined by the Company. 
  The winding-up of the Company will be a solvent winding-up 
  in which it is intended that all creditors will be paid in 
  full. The appointment of the Liquidators becomes effective 
  immediately upon the passing of Resolution 2 at the General 
  Meeting, at which point the powers of the Directors will cease. 
 The Liquidators will then assume responsibility for the winding-up 
  of the Company, including the realisation of the remaining 
  assets of the Company, the payment of fees, costs and expenses, 
  the discharging of the liabilities of the Company, obtaining 
  and, where they consider it appropriate, acting upon advice 
  from the Investment Manager in its advisory capacity (if appointed) 
  and the distribution of the Company's surplus assets to Shareholders. 
 The net proceeds of the realisation of the Company's assets 
  will be distributed to Shareholders after the Company's outstanding 
  liabilities and the costs of implementing the Proposals, including 
  the Liquidators' and the Investment Manager's fees, have been 
  met. Cash held by the Company will be distributed to Shareholders 
  through one or more distributions in accordance with the provisions 
  of the Articles. 
 In order to facilitate the implementation of the Proposals, 
  the Shares will be suspended from listing on the Official 
  List and from trading on the London Stock Exchange with effect 
  from 7.30 a.m. on 28 February 2023, being the date of the 
  General Meeting. 
 If Resolution 2 is subsequently passed at the General Meeting, 
  this will also result in the cancellation of the listing of 
  the Shares on the Official List and the Shares ceasing to 
  trade on the London Stock Exchange. It is expected that the 
  cancellation of listing and trading would take effect from 
  8.00 a.m. on 1 March 2023. 
 Distributions to Shareholders 
 Assuming Resolution 2 is passed, the Liquidators expect to 
  make an initial capital distribution to Shareholders in May 
  2023 (the "Initial Distribution"). It is estimated that the 
  value of the Initial Distribution will be not less than 5 
  pence per Share and this is in place of the previously announced 
  intention pay a dividend of 5 pence per Share prior to the 
  Company's entry into liquidation. 
 As the Liquidators realise the Company's assets, and once 
  they have satisfied the claims of creditors of the Company 
  and paid the costs and expenses of the liquidation, it is 
  expected that the Liquidators will make further periodic distributions 
  to Shareholders. 
 All Shareholders on the Register as at 6.00 p.m. on 27 February 
  2023 will be entitled to any distributions made during the 
  course of the liquidation. 
 Related Party Transaction 
 As noted above, the Board believes it is critical to maximising 
  the return of funds to Shareholders, and ensuring this is 
  achieved in an orderly manner, that the Investment Manager's 
  services are retained in respect of the asset realisation 
  process. Accordingly, the Company has entered into the EIL 
  Advisory Services Agreement with the Investment Manager and 
  the Liquidators pursuant to which the Investment Manager has 
  agreed to provide discretionary investment advisory services 
  to the Company for the two years immediately following the 
  Company's entry into members' voluntary liquidation. The EIL 
  Advisory Services Agreement will not become effective unless 
  and until Shareholders pass both Resolutions at the General 
  Meeting. 
 Under the terms of the EIL Advisory Services Agreement and 

  in consideration for providing such services, the Investment 
  Manager will be entitled to the following fees, payable by 
  the Company: 
      1. a fixed management fee of GBP150,000 per annum payable 
       for each of the first two years following the Company's entering 
       liquidation; and 
      2. a performance incentive fee of 20 per cent. of any increase 
       in cash realised for the Company, from realisations of the 
       Company's Qualifying Portfolio which are completed or legally 
       committed to during the Investment Manager's appointment, 
       over the Net Asset Value of the Company's Qualifying Portfolio 
       as at 24 February 2023, subject to a 6 per cent. annual hurdle. 
       For the avoidance of doubt, no performance incentive fee will 
       be paid to the Investment Manager until the Company has received, 
       in cash, an amount equal to the NAV of the Qualifying Portfolio 
       as at 24 February 2023 plus the hurdle amount and any such 
       amount will be calculated on total Qualifying Portfolio returns 
       and not on an asset by asset basis. 
 The Investment Manager is a related party of the Company and 
  the entry into the EIL Advisory Services Agreement constitutes 
  a related party transaction for the purposes of LR11.1.5(1). 
  As such, the Company will seek the approval of the Independent 
  Shareholders for the Company's entry into the EIL Advisory 
  Services Agreement. 
 It will be at the sole discretion of the Liquidators to extend 
  the two year term of the EIL Advisory Services Agreement if 
  they believe that to do so would be in Shareholders' best 
  interests at the relevant time. 
 Once in liquidation, the Company will not make any further 
  investments other than a follow-on investment in an existing 
  Qualifying Portfolio Company which is intended to help facilitate 
  the Company's sale or other disposal of such investment. 
 Expected Timetable 
 Notice of General Meeting                                                                    3 February 2023 
 Last day of dealing in the Shares                                                           23 February 2023 
  through CREST on a normal rolling 
  two-day settlement basis 
 Deadline for receipt of Forms                                                 10.00 a.m. on 24 February 2023 
  of Proxy 
 Close of Register and Record                                                   6.00 p.m. on 27 February 2023 
  Date for participation in the 
  members' voluntary liquidation 
 Suspension of Shares from listing                                              7.30 a.m. on 28 February 2023 
  on the Of cial List and from 
  trading on the London Stock 
  Exchange 
 General Meeting                                                               10.00 a.m. on 28 February 2022 
 Appointment of Liquidators                                                                  28 February 2023 
 Expected date of cancellation                                                      8.00 a.m. on 1 March 2023 
  of the listing of the Shares 
  on the Of cial List and of the 
  trading of the Shares on the 
  London Stock Exchange 
 Note: All references to time in this announcement are to 
  UK time. Each of the times and dates in the above expected 
  timetable (other than in relation to the General Meeting) 
  may be extended or brought forward. If any of the above times 
  and/or dates change, the revised time(s) and/or date(s) will 
  be noti ed to Shareholders by an announcement through a Regulatory 
  Information Service. 
 General 
 This announcement does not contain all the information which 
  is contained in the Circular and Shareholders should read 
  the Circular before deciding what action to take in respect 
  of the Proposals. 
 Defined terms used in this announcement have the meanings 
  given in the Circular unless the context otherwise requires. 
 A copy of the Circular will be submitted to the Financial 
  Conduct Authority and will be available for inspection at 
  the National Storage Mechanism which is located at https://data.fca.org.uk/#/nsm/nationalstoragemechanism 
  and on the Company's website at https://edge.vc/investor-portal/ 
  . 
 Enquiries 
 ISCA Administration Services                               [e-mail] 
  Limited 
 (Company Secretary) 
 Edge Investments Limited                                   [e-mail] 
 (Investment Manager) 
 

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February 03, 2023 06:34 ET (11:34 GMT)