Statement re merger proposals between Northern 3 VCT PLC and Northern AIM VCT PLC

 
TIDMNNA 
 
JOINT ANNOUNCEMENT 
 
NORTHERN 3 VCT PLC 
NORTHERN AIM VCT PLC 
 
17 August 2011 
 
RECOMMENDED PROPOSALS FOR A MERGER BETWEEN NORTHERN 3 VCT PLC ("NORTHERN 3") AND 
NORTHERN AIM VCT PLC ("NORTHERN AIM") TO BE COMPLETED BY PLACING NORTHERN AIM 
INTO MEMBERS' VOLUNTARY LIQUIDATION PURSUANT TO SECTION 110 OF THE INSOLVENCY 
ACT 1986 AND THE TRANSFER BY NORTHERN AIM OF ALL OF ITS ASSETS AND LIABILITIES 
TO NORTHERN 3 IN CONSIDERATION FOR NEW ORDINARY SHARES OF 5 PENCE EACH IN 
NORTHERN 3 ("NEW NORTHERN 3 SHARES") AND THE CANCELLATION OF THE LISTING OF THE 
ORDINARY SHARES OF 5 PENCE EACH IN NORTHERN AIM ("NORTHERN AIM SHARES") 
 
SUMMARY 
 
The boards of Northern 3 and Northern AIM announced on 3 June 2011 that 
agreement in principle had been reached for the merger of the two companies. 
These discussions have now concluded and both boards are writing to their 
respective shareholders with proposals for consideration for the proposed merger 
(the "Scheme"). 
 
The Scheme will be effected by Northern AIM being placed into members' voluntary 
liquidation pursuant to a scheme of reconstruction under Section 110 of the 
Insolvency Act 1986.  All of the assets and liabilities of Northern AIM will be 
transferred to Northern 3 in exchange for New Northern 3 Shares (which will be 
issued directly to the shareholders of Northern AIM).  The merger will be 
completed on a relative net asset basis, subject to certain adjustments as set 
out in the Northern 3 prospectus dated 16 August 2011. 
 
The effective date for the transfer of the assets and liabilities of Northern 
AIM and the issue of New Northern 3 Shares pursuant to the Scheme is expected to 
be 26 September 2011 (the "Effective Date"), following which the listing of the 
Northern AIM Shares will be cancelled and Northern AIM will be wound up. 
 
The Scheme is conditional, inter alia, on the approval of resolutions to be 
proposed to shareholders of Northern 3 and Northern AIM at general meetings to 
be held on 14 September 2011 for Northern 3 ("Northern 3 GM"), 16 September 
2011 for Northern AIM ("Northern AIM GM 1") and 26 September 2011 for Northern 
AIM ("Northern AIM GM 2") and dissent not having been expressed by shareholders 
of Northern AIM holding more than 5% of the issued Northern AIM Shares. 
 
The board of Northern AIM has declared a special dividend of 3.0p per Northern 
AIM Share (the "Special Dividend") which will, subject to the Scheme becoming 
effective, be paid on 7 October 2011 to shareholders on the register on 23 
September 2011. 
 
The board of Northern 3 also considers it appropriate to renew share issue 
authorities for Northern 3 and to cancel the share premium account of Northern 
3. 
 
BACKGROUND 
 
In September 2004, the Venture Capital Trusts (Winding-up and Mergers) (Tax) 
Regulations 2004 were introduced, allowing venture capital trusts ("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. 
 
With the above in mind, the boards of Northern 3 and Northern AIM entered into 
discussions to consider a merger of the companies to create a single larger VCT 
and reduce the overall running costs.  Following detailed consideration of the 
portfolio and financial position of each company (both of which are managed by 
NVM Private Equity Limited (the "Manager"), and have broadly similar investment 
policies) the boards of Northern 3 and Northern AIM have reached an agreement to 
recommend that the companies be merged. 
 
The main purpose of the proposed merger is to create a single larger VCT that 
will bring a number of commercial advantages to both sets of shareholders, 
namely: 
 
  a reduction in the annual running costs of the enlarged Northern 3 compared to 
  the aggregate annual running costs of the separate companies; 
 
 
  the creation of a single VCT of a more economically efficient size with a 
  greater capital base over which to spread administration, regulatory and 
  management costs; and 
 
 
  participation in a larger VCT with a more diversified portfolio thereby 
  spreading the portfolio risk across a broader range of investments and 
  businesses; 
 
 
 
The boards believe that the Scheme provides an efficient way of effecting a 
merger with an acceptable level of costs compared with other merger routes.  The 
merger is a step towards enhancing performance and improving cost efficiency in 
the enlarged company.  Shareholders should note that the merger will be outside 
the provisions of the City Code on Takeovers and Mergers. 
 
EXPECTED TIMETABLES 
 
EXPECTED TIMETABLE FOR NORTHERN 3 
 
(Dates subject to variation if any General Meeting is adjourned) 
 
Prospectus and circular to shareholders    16 August 2011 
(including notice of the Northern 3 GM) 
published 
 
Latest time for receipt of forms of proxy  2.15pm on Monday 12 September 2011 
for the Northern 3 GM 
 
Northern 3 GM                              2.15pm on Wednesday 14 September 2011 
 
Calculation Date                           after 5.00pm on 23 September 2011 
 
Effective Date for the transfer of the     26 September 2011 
assets and liabilities of Northern AIM to 
Northern 3 and the issue of Consideration 
Shares to Northern AIM Shareholders 
 
Announcement of the results of the Scheme  26 September 2011 
 
Admission of and dealings in the New       27 September 2011 
Shares to commence 
 
CREST accounts credited with the New       27 September 2011 
Shares 
 
Certificates for the New Shares dispatched By 11 October 2011 
 
 
EXPECTED TIMETABLE FOR NORTHERN AIM 
 
(Dates subject to variation if any General Meeting is adjourned) 
 
Latest time for receipt of forms of proxy  12.30pm on Wednesday 14 September 
for the Northern AIM GM 1                  2011 
 
Northern AIM GM 1                          12.30pm on Friday 16 September 2011 
 
Latest time for receipt of forms of proxy  12.30pm on Saturday 24 September 2011 
for the Northern AIM GM 2 
 
Record Date for Northern AIM shareholders' 23 September 2011 
entitlements under the Scheme 
 
Northern AIM Register of Members closed    23 September 2011 
 
Calculation Date                           after 5.00pm on 23 September 2011 
 
Dealings in Northern AIM Shares suspended  7.30am on 26 September 2011 
 
Northern AIM GM 2                          12.30pm on Monday 26 September 2011 
 
Effective Date for the transfer of the     26 September 2011 
assets and liabilities of Northern AIM to 
the Company 
 
Announcement of the results of the Scheme  26 September 2011 
 
Cancellation of the Northern AIM Shares'   7.30am on 27 September 2011 
listing 
 
Payment of the Special Dividend            7 October 2011 
 
 
BACKGROUND TO NORTHERN AIM AND NORTHERN 3 
 
Northern AIM is a venture capital trust and was launched in 2000, raising  GBP22 
million (before issue costs) with the intention of investing in VCT-qualifying 
companies traded on AIM as well as some later-stage unquoted companies.  As at 
30 April 2011 (the date to which the most recent unaudited half-yearly report to 
Shareholders was drawn up) Northern AIM had net assets of  GBP6.5 million and its 
NAV per share was 29.0p.  The investment portfolio at that date comprised 20 AIM 
quoted and eight unquoted holdings.  Northern AIM has paid dividends totalling 
 GBP5.6 million, or 25.3p per Share, since its launch.  The investment policy of 
Northern AIM is broadly similar to that of the Company and, accordingly, the 
proposed acquisition of the assets of Northern AIM is consistent with the 
Company's investment policy. 
 
Northern 3 is a venture capital trust launched in 2001.  It has raised over  GBP46 
million to date through its public share offers.  Northern 3 invests mainly in 
unquoted venture capital holdings but also holds a number of AIM-quoted 
investments, with its remaining assets invested in a portfolio of listed fixed- 
interest and equity investments and bank deposits.  As at 31 March 2011, 
Northern 3's audited NAV was 92.2p per share.  Since incorporation, Northern 3 
has paid a total of 31.4p per share in dividends. 
 
Northern 3 and Northern AIM are both managed by NVM, an independent specialist 
firm of venture capital managers based in Newcastle upon Tyne, Reading and 
Manchester.  NVM also acts as manager of three other listed investment companies 
and has a total of approximately  GBP210 million under management. 
 
It is not intended that there will be any change in the composition of the 
Northern 3 board following completion of the proposed merger. 
 
DOCUMENTS AND APPROVALS 
 
Northern 3 shareholders will receive a copy of the Northern 3 prospectus 
together with a circular convening the Northern 3 GM to be held on 14 September 
2011 at which Northern 3 shareholders will be invited to approve resolutions in 
connection with the Scheme and to renew share issue authorities and to cancel 
Northern 3's share premium account. 
 
Northern AIM shareholders will receive a copy of the Northern 3 prospectus 
together with a circular convening the Northern AIM GM 1 on 16 September 2011 
and the Northern AIM GM 2 on 26 September 2011 at which Northern AIM 
shareholders will be invited to approve resolutions in connection with the 
Scheme. 
 
Copies of the prospectus and the circulars for Northern 3 and Northern AIM have 
been submitted to the UK Listing Authority and will be shortly available for 
download at the National Storage Mechanism at: www.hemscott.com/nsm.do.  Copies 
of the prospectus and the circulars for Northern 3 and Northern AIM are also 
available on the NVM Private Equity website at: www.nvm.co.uk. 
 
Investment Manager for Northern 3 and Northern AIM 
NVM Private Equity Limited 
Alastair Conn/Christopher Mellor - 0191 244 6000 
 
Sponsor to Northern 3 
Howard Kennedy Corporate Services LLP 
Keith Lassman - 0207 636 1616 
 
The directors of Northern 3 accept responsibility for the information relating 
to Northern 3 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 Northern 3 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 Northern AIM accept responsibility for the information relating 
to Northern AIM 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 Northern AIM 
and its directors contained in this document, 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 Corporate Services LLP, which is authorised and regulated in the 
United Kingdom by the Financial Services Authority, is acting as sponsor for 
Northern 3 and no-one else and will not be responsible to any other person for 
providing the protections afforded to customers of Howard Kennedy (subject to 
the responsibilities and liabilities imposed by FSMA and the regulatory regime 
established thereunder) or for providing advice in relation to any matters 
referred to herein. 
 
Neither the contents of the NVM Private Equity Limited website nor the contents 
of any website accessible from hyperlinks on the NVM Private Equity Limited 
website (or any other website) is incorporated into, or forms part of, this 
announcement. 
 
 
 
 
 
 
This announcement is distributed by Thomson Reuters on behalf of 
Thomson Reuters clients. The owner of this announcement warrants that: 
(i) the releases contained herein are protected by copyright and 
    other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
 
Source: Northern AIM VCT PLC via Thomson Reuters ONE 
 
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