Foresight 4 VCT PLC : Statement re Board Compos...

Foresight 4 VCT plc

Statement re Board Composition & Potential Merger with Foresight 3 VCT plc

The Board announces that following the Annual General Meeting, where a number of the resolutions, including that of Director re-election, were passed by a narrow majority, it proposes making a number of changes as follows:

Board Composition

The Chairman of the Board, Philip Stephens, has indicated his intention to retire from the Board on the earlier of a new independent chairman being appointed, the completion of a corporate action or 31 March 2017.

Peter Dicks has also indicated his intention to retire from the Board on the earlier of the completion of a corporate action or the annual general meeting in 2017.

A specialist recruitment firm is being engaged to assist in the process of identifying suitable candidates for appointment to the Board.

The intention would be to have only the independent Directors, including any new appointments to the Board, to consider the options available to the Company before any recommendations are made to Shareholders.

Potential Merger with Foresight 3

The Board has previously announced that it has been in discussions about a potential merger with Foresight 3 VCT plc ('Foresight 3'), which will be one of the options considered by the independent members of the Board, as noted above, before any recommendations are made to Shareholders.

In that regard, the Board wishes to seek Shareholders' views with respect to the potential merger with Foresight 3 before incurring any significant merger costs and will do so at the time of publishing the half-yearly report during November 2016. This will be achieved through an advisory vote open to all Shareholders which will be carefully considered by the independent Directors in addition to all other options. Details of how to vote will be enclosed with the half-yearly report.

The Board has had preliminary discussions with the board of Foresight 3 and the benefits of a merger, should it proceed, are anticipated to be as follows:

• A combined VCT with assets of approximately £70 million;
• Based on the costs of the merger being in the region of £450,000, a recoup period of approximately  12 months is expected;
• A reduction in the aggregate number of Board directors from six to four, possibly to three over time;
• A reduction in the annual management fee paid to the manager from 2.25% to 2.0% of net assets of the Company;
• A portfolio of over 25 companies, many of which are making good progress and are profitable and which have delivered the recent improvements in the NAV of the Company;
• A reduction in the annual expenses cap from 3.5% to 2.95% of net assets of the Company;
• An enlarged entity better positioned to raise further funds and continue with the current investment strategy; and
• The ability to consider realisations within an enlarged entity to assist with creating liquidity events for Shareholders and support dividend payments.

             
A merger should create an enlarged VCT with sufficient critical mass to enable it to generate sufficient income and realisations to meet an attractive dividend target, as well as maintaining a regular program of share buybacks aimed at maintaining a discount to NAV at which the Company's shares trade in the region of 10%.

It should be noted that a merger between Foresight VCT plc, Foresight 3 and the Company is not possible without the divestment of significant holdings which, together, being over 50%, would otherwise be non-qualifying under the VCT rules.

The Board anticipates that the following would also be put in place for all shareholders of the enlarged VCT, following the completion of a merger:

Tender Offer post-Merger
The Board recognises that the discount to NAV at which the Company's shares trade has been too wide for a prolonged period of time. In that regard, the Board anticipates that the enlarged VCT will undertake a tender offer as soon as possible after a merger.

Buyback Commitment post-Merger

In addition to the proposed tender offer referred to above, over time the Board also expects to be in a position following a merger to implement a series of share buybacks to enable the enlarged VCT to achieve its target of a discount to NAV in the region of 10%.

Dividend post-Merger

In addition to the tender offer and share buyback objective noted above, the Board also expects that the enlarged VCT would be in a position to pay a post-merger dividend.

Following the advisory vote, and the appointment of new independent directors, a recommendation on the preferred option of the independent Directors of the Board will be sent to Shareholders for their consideration.

For further information please contact:

Gary Fraser, Foresight Group: 0203 667 8100

---

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Foresight 4 VCT PLC via Globenewswire