Maven Income & Growth VCT 4 PLC Statement re Proposed Merger (2018D)

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RNS Number : 2018D

Maven Income & Growth VCT 4 PLC

08 October 2018

Maven Income and Growth VCT 4 PLC ("Maven VCT 4")

Maven Income and Growth VCT 2 PLC ("Maven VCT 2")

(together the "Companies")

5 October 2018

Publication of a prospectus (the "Prospectus") and circulars (the "Circulars") in connection with recommended proposals to merge the Companies (to be effected pursuant to a scheme of reconstruction (the "Scheme" or "Merger") under section 110 of the Insolvency Act 1986)

On 13 September 2018, the boards of Maven VCT 4 and Maven VCT 2 (the "Boards") announced that they were in discussions to merge the Companies into one company (the "Enlarged Company").

The Boards are pleased to advise that discussions have now concluded and that the Companies have today issued the Circulars to set out the proposals for the Merger for consideration by their respective shareholders and a Prospectus relating to the Merger. Each of the Companies is managed by Maven Capital Partners UK LLP ("Maven").

The Boards propose that the Merger be effected by Maven VCT 2 being placed into members' voluntary liquidation pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986. Shareholders should note that the Merger will be outside the provisions of the City Code on Takeovers and Mergers. Consequently, the Merger does not need to follow the timetable and disclosure requirements of the Code, but does need to comply with the Listing Rules and the Prospectus Rules which impose similar disclosure obligations.

The Merger will be implemented on a relative NAV basis, and this will feed into a calculation for determining the number of ordinary shares in Maven VCT 4 to be issued to the Shareholders of Maven VCT 2 under the Merger.

Background

Maven VCT 4 was launched in 2004 with the aim of achieving long term capital appreciation and to generate income for Shareholders. It has been managed by the Maven team since inception, initially at Aberdeen Asset Management plc (Aberdeen) until the senior team of the Aberdeen private equity and VCT business led a buyout to form Maven. Maven VCT 2 was launched in 2001 with a similar investment mandate and has been managed by the same Maven team since 2004.

The latest unaudited published NAV of Maven VCT 4, as at 30 June 2018, was 72.31p per ordinary share and the latest unaudited published NAV of Maven VCT 2, as at 31 July 2018, was 35.28p per ordinary share. The table below sets out the unaudited net asset values of the Companies and provides further detail on the investments in their portfolios as at these respective dates.

 
 Company      Net Assets     NAV per              Number of      Carrying       NAV plus 
               (unaudited)    ordinary             venture        value of       cumulative 
               (GBP'000)      share (unaudited)    capital        the venture    dividends 
                              (p) as at            investments    capital        paid (p) 
                              30 June                             investments 
                              2018 (Maven                         (GBP'000) 
                              VCT 4) and 
                              31 July 
                              2018 (Maven 
                              VCT 2) 
 Maven VCT 
  4           41,742         72.31                67             20,723         145.91 
             -------------  -------------------  -------------  -------------  ------------ 
 Maven VCT 
  2           14,160         35.28                58             12,549         97.56 
             -------------  -------------------  -------------  -------------  ------------ 
 

Each of the Companies has the same investment policy, with an investment objective of achieving long term capital appreciation and to generate income for Shareholders by investing their funds in a broad spread of unquoted UK companies which meet the relevant criteria for VCTs.

In September 2004, the Merger 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, without the loss of VCT tax reliefs.

With the above in mind, the Boards entered into discussions to consider a merger of the Companies to create a single, larger VCT with the potential to deliver improved shareholder value.

The Merger

The Merger is expected to bring a number of benefits to Shareholders including:

-- amalgamation of the Companies' portfolios, for efficient management and administration, with the same existing investment policy applying to the Enlarged Company's portfolio after the Merger;

-- participation in a larger VCT with a more diversified portfolio, thereby spreading portfolio risk; and

-- efficiencies in annual running costs for the Enlarged Company compared to the separate companies (anticipated to save approximately GBP200,000 p.a.).

The Scheme will, if effected, result in an Enlarged Company with net assets of just over GBP55.9 million.

The Scheme

The mechanism by which the Merger will be completed is as follows:

-- Maven VCT 2 will be placed into members' voluntary liquidation pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986; and

-- all of the assets and liabilities of Maven VCT 2 will be transferred to Maven VCT 4 in consideration for the issue by Maven VCT 4 of ordinary shares (the "Scheme Shares") to the Shareholders of Maven VCT 2.

The Scheme will be completed on a relative unaudited NAV basis, adjusted for the anticipated costs of the Scheme, and will be based on the latest unaudited valuations of the Companies' investments. The effect of the Scheme will be that Maven VCT 2 Shareholders will receive Scheme Shares with effectively the same aggregate net asset value as their Maven VCT 2 Shares.

The Scheme is conditional upon the approval by the Shareholders of resolutions to be proposed at the general meetings of each of the Companies, as well as other conditions set out in the Prospectus and Circulars.

As the Companies have the same investment manager and other common advisers, the Merger should be achievable without major cost or disruption to the Companies and the combined portfolio of investments. The costs of the Merger are expected to be recovered from the anticipated costs savings within 25 months.

The aggregate anticipated cost of undertaking the Merger is approximately GBP429,000 including VAT, legal and professional fees, stamp duty and the costs of winding up Maven VCT 2. The Liquidators' fees are expected to be up to GBP15,000 (plus VAT). Maven will also be paid a merger administrative and secretarial services fee by the Companies (for an aggregate amount of GBP100,000) for services provided under the terms of their investment management agreements. The costs of the Merger will be split proportionately between the Companies by reference to their respective net asset values as at the Scheme Calculation Date (see the expected timetable below).

The portfolio of assets, which will be transferred from Maven VCT 2 to Maven VCT 4 as part of the Scheme, are all considered to be consistent with Maven VCT 4's investment policy, particularly as both Companies have investments in predominantly the same companies (with only ten exceptions as at the date of this announcement). The extent of the liabilities (if any) which will be transferred from Maven VCT 2 to Maven VCT 4 as part of the Scheme will be those which are incurred in the ordinary course of business, and merger costs which remain unpaid at the time of transfer. Any such liabilities are expected to be nominal in comparison to the value of the assets.

Maven VCT 2 Shareholders who do not vote in favour of the resolution to be proposed at the Maven VCT 2 first General Meeting are entitled to dissent and have their shareholding purchased by the Liquidators at a price agreed between the dissenting Maven VCT 2 Shareholders and the Liquidators (or by arbitration), which would be expected to be at a significant discount to the net asset value of a Maven VCT 2 Share.

If the conditions of the Scheme are not satisfied, the Companies will continue in their current form and the Boards will continue to review all options available to them regarding the future of their Companies.

Clearance has been obtained from HMRC confirming that the Scheme meets the requirements of the Merger Regulations and, therefore, that the implementation of the Scheme should not affect the status of Maven VCT 4 as a VCT.

EXPECTED TIMETABLE

Expected Timetable for the Scheme

Maven VCT 4

 
 Latest time for receipt of forms of              10.45 am on 30 October 
  proxy for the General Meeting                                     2018 
 General Meeting                                  10.45 am on 1 November 
                                                                    2018 
                                            ---------------------------- 
 Scheme Calculation Date                             After 5.00 pm on 14 
                                                           November 2018 
                                            ---------------------------- 
 Scheme Effective Date for the transfer              After 5.00 pm on 15 
  of the assets and liabilities of Maven                   November 2018 
  VCT 2 to Maven VCT 4 and the issue of 
  Scheme Shares 
                                            ---------------------------- 
 Announcement of the results of the Scheme           After 5.00 pm on 15 
                                                           November 2018 
                                            ---------------------------- 
 Admission of, and dealings in, Scheme            7.30 am on 16 November 
  Shares to commence                                                2018 
                                            ---------------------------- 

 CREST accounts credited (if applicable)                16 November 2018 
                                            ---------------------------- 
 Certificates for Scheme Shares despatched   Week commencing 19 November 
  to Maven VCT 2 Shareholders                                       2018 
                                            ---------------------------- 
 

Maven VCT 2

 
 Latest time for receipt of forms of                 10.30 am on 30 October 
  proxy for the Maven VCT 2 First General                              2018 
  Meeting 
 Maven VCT 2 First General Meeting                   10.30 am on 1 November 
                                                                       2018 
                                                   ------------------------ 
 Latest time for receipt of forms of                10.30 am on 13 November 
  proxy for the Maven VCT 2 Second General                             2018 
  Meeting 
                                                   ------------------------ 
 Final expected date of trading of the                     14 November 2018 
  Maven VCT 2 Shares 
                                                   ------------------------ 
 Scheme Record Date for Maven VCT 2 Shareholders'    5.00 pm on 14 November 
  entitlements under the Scheme                                        2018 
                                                   ------------------------ 
 Scheme Calculation Date                                After 5.00 pm on 14 
                                                              November 2018 
                                                   ------------------------ 
 Dealings in Maven VCT 2 Shares suspended*           7.30 am on 15 November 
                                                                       2018 
                                                   ------------------------ 
 Maven VCT 2 register of members closed              7.30 am on 15 November 
                                                                       2018 
                                                   ------------------------ 
 Maven VCT 2 Second General Meeting                 10.30 am on 15 November 
                                                                       2018 
                                                   ------------------------ 
 Scheme Effective Date for the transfer                 After 5.00 pm on 15 
  of the assets and liabilities of Maven                      November 2018 
  VCT 2 to Maven VCT 4 and the issue of 
  Scheme Shares 
                                                   ------------------------ 
 Announcement of the results of the Scheme              After 5.00 pm on 15 
                                                              November 2018 
                                                   ------------------------ 
 Cancellation of the Maven VCT 2 Shares'             7.30 am on 16 November 
  listing                                                              2018 
                                                   ------------------------ 
 

* The final expected date of trading of the Maven VCT 2 Shares will be 14 November 2018. See the timetable for Maven VCT 4 with regard to admission, CREST accounts being credited and certificates being despatched in respect of the Scheme Shares.

Copies of the Prospectus and Circulars are available from Maven Capital Partners UK LLP at Kintyre House, 205 West George Street, Glasgow G2 2LW.

In accordance with the Listing Rules, the Prospectus and Circular have been submitted to the National Storage Mechanism and will shortly be available for inspection at:

www.morningstar.co.uk/uk/NSM.

Downloadable versions of the Prospectus and Circular will also be available from the each of the Companies' websites: http://www.mavencp.com/migvct2 and http://www.mavencp.com/migvct4.

Any enquiries in respect of the Merger should be directed to:

Maven Capital Partners UK LLP

Telephone: [phone]

E-mail: [e-mail]

Maven Capital Partners UK LLP

Secretary

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October 08, 2018 02:00 ET (06:00 GMT)