Foresight Solar VCT PLC : Publication of Circular

FORESIGHT SOLAR VCT PLC ("FORESIGHT SOLAR" OR "COMPANY")

15 February 2013

CIRCULAR TO SHAREHOLDERS OF THE COMPANY AND NOTICE OF GENERAL MEETING

SUMMARY

The board of Foresight Solar has today issued a circular to its shareholders containing proposals to:

• create and authorise the issue of c ordinary shares ("C Shares"); 

• reduce the share premium account arising on the issue of C Shares; and 

• approve related party transactions. 

These proposals require the approval of shareholders and are being sought at a meeting of the Company to be held on 25 March 2013 at the offices of Foresight Group LLP, ECA Court, South Park, Sevenoaks, Kent TN13 1DU.

Background and reasons for the offer

The board proposes to offer for subscription to existing shareholders and new investors a new class of C Shares ("Offer") to raise, in aggregate, up to £20 million to be invested in accordance with the Company's investment policy.

The net funds raised by the Company since 2010 by the issue of Ordinary Shares were invested mainly in Qualifying Companies trading as solar energy generation companies, producing and selling electricity to the national grid under the UK Government's Feed-in Tariff Scheme (FIT).

The Ordinary Share Fund became fully invested before 5 April 2012, since when the law has been changed so that it is no longer possible for venture capital trusts to raise additional capital to invest in companies concerned with the FIT subsidised generation or export of electricity.

Accordingly, the additional funds to be raised by the issue of C Shares will be invested mainly in companies concerned with the generation or export of electricity. These investee companies will also generate revenue from the sale of Renewable Obligation Certificates (ROCs), under a long-term government initiative designed to incentivise and support renewable energy producers in addition to income derived from selling the generated electricity.  

An investment made in C Shares should provide investors with access to a strong flow of solar power investment opportunities and the enhanced revenue streams possible under the ROC scheme with the tax benefits of a VCT investment. Foresight sources its opportunities through its established network of contacts in the UK solar sector, and has received approaches from solar entrepreneurs to finance a pipeline of opportunities worth more than £300 million.

Funds raised under the Offer will also increase the Company's net assets overall and allow the Company's administrative costs to be spread across a wider asset base, so that the administrative costs of the Company per Share can be reduced.

The C Shares are a new class of Share and are separate from the Company's existing class of Ordinary Shares. All investments and cash attributable to the existing Ordinary Share Fund will be kept separate from the C Share Fund.

In order to launch the Offer, approval from shareholders is required to amend the articles of association of the Company to provide for the new class of C Shares, to authorise the board to issue such shares (having disapplied pre-emption rights) and enter into, management, performance incentive and  promotion arrangements for the C Shares fund which are regarded as related party transactions with Foresight CI Group Limited and Foresight Group LLP (as further detailed below).

In addition, the board is seeking shareholder approval to make market purchases of C Shares from time to time, as well as cancel the share premium which will be created on the issue of the C Shares to create reserves to be used for general corporate purposes.

RELATED PARTY TRANSACTIONS

It is proposed, subject to Shareholders' approval, that Foresight Group CI Limited, through its agent Foresight Group LLP, be appointed by the Company as its investment manager in respect of the C Share Fund.  Foresight Group CI Limited and Foresight Group LLP (together, "Foresight") already act for the Company in respect of the Ordinary Share Fund and therefore are considered to be related parties to the Company and as such the agreements to be entered into between the Company and Foresight will constitute related party transactions under the Listing Rules of the UK Listing Authority and as such require Shareholder approval.

The terms of the appointment, which will only take effect with Shareholders' approval, are set out below:

• An investment management agreement pursuant to which Foresight Group CI Limited will be appointed to act as the investment manager in respect of the C Share Fund for an annual fee of 1.75% of the Net Asset Value of the C Share Fund, calculated and payable quarterly in advance, together with any applicable VAT thereon in respect of investment management services and an annual fee of 0.3% of the net funds raised by the Offer (subject to a minimum index-linked fee of £60,000) for secretarial and accounting services which are carried out by Foresight Group LLP.  

• A carried interest agreement pursuant to which Foresight Group CI Limited will be entitled to a performance incentive (in cash or new C Shares in the Company issued at par) to a value equal to 20% of Distributions in excess of 100p per C Share until total Distributions reach 120p per Share and thereafter equal to 30% of Distributions over that level. No performance incentive will be distributed to Foresight Group CI Limited until C Shareholders have received Distributions of 100p per C Share. 

• Foresight will be entitled to a promoter's fee in relation to the Offer. The promoter's fee is calculated at 2.5% of the Net Asset Value of C Shares issued to investors who subscribe through authorised intermediaries; or 5.5% of the Net Asset Value of C Shares issued to investors who subscribe directly. 

FURTHER INFORMATION

Shareholders  of  the  Company  will  receive  a  copy  of the circular convening the meeting to be held on 25 March 2013 at 9.30 a.m. at which shareholders will be invited  to  approve  resolutions  in  connection  with  the  above proposals as follows:

A copy of the circular has also been submitted to the UK Listing Authority and will be shortly available for inspection on both the Foresight Group LLP website (www.foresightgroup.eu) as well as at the National Storage Mechanism (www.hemscott.com/nsm.do).

For further information, please contact:

Gary Fraser
For Foresight Fund Managers Limited, Company Secretary

Telephone: [phone]

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Source: Foresight Solar VCT PLC via Thomson Reuters ONE

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