Product Launch

Close Technology & General VCT PLC
07 November 2005


7 November 2005

Close Technology & General VCT PLC

Proposed Offer for Subscription of C Shares


The Company has today posted a Circular to Shareholders and published a
Prospectus in connection with a proposed Offer for Subscription of up to 35
million C Shares at an issue price of 100p per C Share. The Circular also
contains proposals to extend the life of the Company and to amend the existing
management fee arrangements.



Implementation of the Proposals requires the approval of Shareholders at an
Extraordinary General Meeting convened for 12 noon on 8 December 2005.



Reasons for the C Share Offer



The Company was launched as a venture capital trust in 2000. Since its launch
the Manager has successfully implemented the investment strategy of the Company.
The unaudited interim accounts for the six months to 30 June 2005 show the
significant progress that has been made in achieving a strong return to
Shareholders through a diversified portfolio of technology and non-technology
unquoted investments. As at 30 June 2005, the unaudited net asset value per
Ordinary Share had risen to 118.5 pence and, at that date, 17 pence of dividends
had been paid or declared since launch.



It is the Company's policy, over the medium term, to create a strong and
predictable dividend stream by supplementing dividends derived from investment
income with distributions from realised capital profits. This has already been
achieved in respect of the Ordinary Shares, where dividends declared have
increased to 8 pence per Share in the current financial year.



The C Shares will have a similar policy of supplementing dividends derived from
revenue profits with distributions from realised capital profits.



Both the Directors and the Manager now consider that an increase in the capital
base of the Company would offer existing Shareholders a number of advantages as
follows:


-    the fixed overhead costs of the Company will relate ultimately to a larger 
     investment portfolio and the economies of scale which result should 
     increase both the Company's profitability and the dividends payable to 
     Shareholders;


-    the increase in the size of the Company and the number of shares in issue 
     should lead to greater liquidity in the market for its shares after the 
     conversion of the C Shares into Ordinary Shares which will occur following 
     the annual general meeting to be held in 2011 to approve the accounts to 31
     December 2010; and


-    the Company will be able to make more VCT qualifying investments. Following 
     conversion of the C Shares into Ordinary Shares, therefore, existing 
     Shareholders should achieve a wider spread of investment than would 
     otherwise be the case.





Details of the C Share Offer



The Offer will be available both to existing investors in the Company and to new
investors.


The net proceeds from the C Share Offer will be managed as a separate pool of
assets for a period of approximately five years. This period has been chosen in
order to allow the building up of a full and mature investment portfolio. The C
Shares will convert into new Ordinary Shares on the basis of the net assets
attributable to each pool as disclosed in the audited accounts for the year to
31 December 2010. This initial segregation should ensure that the returns to
existing Ordinary Shareholders will be protected from any adverse effects which
might arise, for example from the Company holding a larger proportion of
uninvested cash than would otherwise be the case. The segregation of the assets
attributable to the C Shares will also mean that:


-    all the expenses of the C Share Offer will be paid out of the pool of 
     assets attributable to the C Shares and, therefore, will be borne by the 
     subscribers for those Shares. Expenses will be capped at 5.5 per cent. of 
     total issue proceeds;


-    income and capital dividend payments to C Shareholders will be made out of 
     the net income and net realised capital profits derived from the assets 
     attributable to the C Shares. In determining the net income available, the 
     C Shares will bear their pro rata proportion of the running expenses of the
     Company; and


-    after five years, the underlying assets attributable to both the Ordinary 
     Shares and the C Shares will be valued and the C Shares converted into 
     Ordinary Shares by applying the conversion ratio set out in the resolution 
     included in the notice of meeting of the EGM.





Application will be made to the FSA for the C Shares to be admitted to the
Official List and to the London Stock Exchange for admission to trading on the
London Stock Exchange's market for listed securities. It is expected that
Admission will become effective and that dealings in the C Shares in respect of
the first closing of the Offer will commence on the London Stock Exchange on 4
January 2006. The final closing of the Offer (unless closed earlier) will be 4
April 2006. The C Shares to be issued pursuant to the Offer will rank pari passu
in all respects with the Ordinary Shares upon their conversion into Ordinary
Shares, which is expected to occur following the annual general meeting of the
Company to be held in 2011.



Life of the Company



Although it is not intended that the Company will have a limited life, under the
Company's existing Articles of Association a resolution is to be proposed at the
annual general meeting to be held in 2010 (and every five years thereafter)
regarding whether the Company should continue as a venture capital trust. Under
the proposed changes to the Articles of Association the Directors are seeking
authority from Shareholders for this resolution to be postponed for two years
until the annual general meeting to be held in 2012 and every five years
thereafter. This is to allow the Company to build up, in respect of the C
Shares, a full and mature investment portfolio up to and following their
conversion.





Proposed Changes to the Management Arrangements



Management Performance Incentive



The Company has a policy of creating a strong and predictable flow of dividends
to Shareholders. These dividends are derived not only from revenue profits but
also profits on the sale of investments. Following a series of highly successful
exits from investments comprised in the Ordinary Share portfolio over the last
year, the Company has declared total dividends in the current year of 8 pence
per Ordinary Share and expects this level to be maintained for payment in future
years, so far as revenue and capital profits allow. The Company therefore has a
policy of paying out by way of dividend over the medium term substantially all
of its revenue and capital profits. This is an estimate of dividends only and is
not intended to be, nor should it be taken as, a forecast of profits.



As currently structured, the management performance incentive is at odds with
this policy. The incentive provides for the manager to be paid a fee of 20 per
cent. of the return (comprising dividends paid and rises in asset value) over a
hurdle of 8 per cent. per annum on the initial offer price of 100 pence per
Ordinary Share, such hurdle rate to be compounded and therefore to increase year
on year. The compounding element rewards the Manager for retaining profits for
further investment rather than paying them out to Shareholders by way of
dividend, which is contrary to the Company's policy. The board therefore
proposes that the words 'on a compounded basis' be deleted from the definition
of 'Target Return' in the management agreement and that the first potential
payment under the management performance incentive which is due following the
publication of the accounts to 31 December 2005 be calculated without the use of
compounding. This amendment would have the effect of reducing the hurdle rate
for an incentive fee to be payable.



This means that the Target Return (in order for an incentive fee to be payable),
comprising dividends paid and net asset value, for the five years ending 31
December 2005 would be reduced from 146.9 pence per Ordinary Shares to 140 pence
per Ordinary Share. This compares to the unaudited actual return at 30 June 2005
of 135.5 pence per ordinary Share.



Management arrangements in respect of the C Shares



It is proposed that the Manager enters into similar terms for the management of
the funds to be invested in respect of the C Share portfolio, following the
method set out above (after approval by Shareholders of the proposed amendment).



(i)Management Agreement

In addition to the exiting management arrangements, the Company and the Manager
will enter into a side letter making amendments to the management agreement
pursuant to which the Manager will manage the funds attributable to the C Share
portfolio for an annual fee equal to 2.5 per cent. (plus any applicable VAT) of
the net asset value of the C Share portfolio, payable quarterly in arrears.



(ii) Management Performance Incentive

Similar incentive arrangements as those described above in respect of the
Ordinary Shares (after the proposed amendment has been approved by Shareholders
at the EGM) will also apply to the C Shares; the hurdle will be based off the
original issue price of the C Shares of 100 pence.



Related Party Transaction



In view of the interest of Close Venture Management in the Management Agreement
and in the proposed changes to the management performance incentive fee, the
proposal relating to the new management fee arrangements constitutes a related
party transaction for the purposes of the Listing Rules. In accordance with the
Listing Rules an ordinary resolution will be proposed at the EGM at which
Shareholders will be asked to approve the proposal.



The Manager and its associates (which, for the avoidance of doubt do not include
employees of the Manager) do not own, beneficially or otherwise, any Shares. The
Manager and its associates will not vote on the resolution to amend the
management arrangements to be proposed at the Extraordinary General Meeting.



Cancellation of Share Premium Account



The share premium account relating to the Ordinary Shares was cancelled pursuant
to a special resolution which was approved by the Court on 8 August 2001.
Shareholders are being asked at the EGM to approve the cancellation of the share
premium account which will arise on the issue of the C Shares. This will create
a sizeable reserve which may be used to buy-in the Company's Shares for
cancellation. In addition, the Companies Act 1985 places restrictions on the
payment of dividends by public limited companies. In particular they can pay
dividends only to the extent that accumulated realised profits exceed realised
and unrealised losses. This means that the Company will have to take into
account any realised and unrealised capital losses suffered in relation to the C
Share funds when determining whether it can pay dividends on the C Shares. The
reserve created by the cancellation of the share premium account relating to the
C Shares should be sufficient to off-set the effect of any reasonably
foreseeable capital losses before the Company is able to distribute its revenue
profits in accordance with the Companies Act 1985. Assuming the special
resolution to cancel the share premium account is passed at the EGM, it is
anticipated that the necessary court order confirming the cancellation will be
made during May 2006.





EXPECTED TIMETABLE OF PRINCIPAL EVENTS


Extraordinary General Meeting                        12 noon  on 8 December 2005


Subscription list for Offer opens                                  3 January 2006


Dealings in C Shares commence in respect of the first allotment of 4 January 2006
C Shares


Final Closing for the Offer (unless closed earlier)                4 April 2006


Commencement of dealings in respect of the final allotment of C     5 April 2006
Shares







The Directors reserve the right to allot and issue C Shares at any time whilst
the Offer remains open. Definitive C Share and tax certificates will be
despatched and CREST accounts credited as soon as practicable following any such
allotment.




Terms used in this announcement shall, unless the context otherwise requires,
bear the meaning given to them in the documents issued by Close Technology &
General VCT PLC on 7 November 2005.



Enquiries:


Patrick Reeve
Close Venture Management                             020 7422 7830


John West/Clemmie Carr
Tavistock Communications                             020 7920 3150





Copies of the Circular and the Prospectus have been submitted to the FSA and
will shortly be available for inspection at the UK Listing Authority's Document
Viewing Facility, which is situated at:



Document Viewing Facility
UK Listing Authority
25 The North Colonnade
Canary Wharf
London  E14 5HS
Tel. [phone]






                      This information is provided by RNS
            The company news service from the London Stock Exchange