Foresight VCT PLC : RECOMMENDED PROPOSALS FOR A...

JOINT ANNOUNCEMENT

13 November 2015

FORESIGHT VCT PLC ("F1")
FORESIGHT 2 VCT PLC ("F2")
(together the "Companies" and each a "Company")

TIDM: FTV and FTN
   

RECOMMENDED PROPOSALS FOR A MERGER BETWEEN F1 AND F2 TO BE COMPLETED BY WAY OF A SCHEME OF RECONSTRUCTION UNDER SECTION 110 OF THE INSOLVENCY ACT 1986 AND THE TRANSFER BY F2 OF ITS ASSETS AND LIABILITIES TO F1 IN EXCHANGE FOR THE ISSUE OF NEW SHARES IN F1

SUMMARY

Further to the announcement made on 15 October 2015, the boards of the Companies (the "Boards") are pleased to announce that they have reached agreement on recommended proposals for the merger of the Companies (the "Merger"), to create a single enlarged VCT with net assets of approximately £117 million (the "Enlarged Company"). The Companies are each managed by Foresight Group CI Limited ("Foresight"). 

The Merger is conditional upon certain conditions being satisfied as further set out in the circulars being posted to the Companies' respective shareholders today (the "Circulars"). F1 has also today published a prospectus in connection with the Merger (the "Prospectus").

The Merger will be effected by F2 being placed into members' voluntary liquidation pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986 (the "Scheme").  The assets and liabilities of F2 will then be transferred to F1 in exchange for the issue of new F1 shares to existing F2 shareholders. As both Companies have three equivalent share classes (ordinary shares, planned exit shares and infrastructure shares), each existing share class in F2 will effectively be merged into the corresponding share class in F1 on a relative net asset basis.

The approval of resolutions in connection with these proposals will be proposed at a general meeting of F1 to be held on 10 December 2015 and general meetings of F2 to be held on 10 December 2015 and 18 December 2015.  Further details of the proposals are set out below.

BACKGROUND

In September 2004, 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 for economic and administrative efficiencies. One advantage of a larger VCT is that it is able to spread the fixed elements of its running costs across a larger asset base and as a result reduce running costs.

Taking the above into account, the Boards entered into discussions to consider a merger of the Companies into one enlarged VCT.  The aim of the Merger is to attain strategic benefits and reductions in the annual running costs per share for all shareholders, while ensuring that the planned exit strategy of the planned exit share portfolios and infrastructure share portfolios in each Company can continue.

THE SCHEME

Firstly, pursuant to a scheme of reconstruction under section 110 of the Insolvency Act 1986, F2 will be placed into members' voluntary liquidation. Secondly, all of the assets and liability of F2 will be transferred to F1 in consideration for the issue of new shares in F1 directly to the shareholders of F2.  Thirdly, F2 shall be wound up. Implementation of the Merger will require resolutions being approved by each Company's shareholders.

Whilst there will only be one general meeting of F1, at which shareholders will be invited to consider and vote in favour of the Merger and authorise the issue of new shares pursuant to the Merger, there will be two general meetings for F2. At F2's first general meeting, the shareholders will be invited to approve the Merger and authorise the liquidators to implement the Scheme and at the second general meeting, the shareholders will be invited to pass a special resolution to wind up F2 and cancel the listing of the F2 shares.

If a shareholder in F2 does not vote in favour of the Merger and expresses his dissent in writing then he may require the liquidators to purchase his shares at their break-value price (this being an estimate of the amount he would receive in an ordinary winding up of F2 if all of the assets had to be realised).  The break-even is expected to be significantly below the net asset value of F2.

In addition to the approval of shareholders being sought at the general meetings, the Scheme is conditional upon:

• notice of dissent not being received from shareholders of F2 who hold more than 10% in nominal value of the issued share capital of F1;
   
• F1 confirming to F2 and F2 confirming to F1 that, in each case, it has not received any notice of any claims, proceedings or actions of whatever nature threatened or commenced, as relevant, against F1 which the F2 Board regard as material or against F1 which the F2 Board regard as material; and
   
• the Companies maintaining their VCT status.

Subject to the above, the Scheme shall proceed and become effective immediately after the passing of the special resolution for the winding up of F2 to be proposed at the F2 second general meeting and will be binding on all F2 shareholders, including dissenting F2 shareholders, and all persons claiming through or under them.

If the conditions have not been fulfilled by 31 January 2016, the Scheme will not proceed.

BENEFITS ANTICIPATED FROM THE MERGER

In recommending that the Companies participate in the Merger, which will result in an Enlarged Company with a net asset base of approximately £117 million, the Boards expect to bring a number of benefits to the shareholder of each Company as follows:

• there will be a reduction in the forecast combined annual running costs and costs per share for all shareholders;
• the Merger will preserve existing VCT tax reliefs which will carry over and attach to the post-Merger holdings for shareholders,

and in respect of the enlarged ordinary shares fund, shareholders will benefit from:

• an enlarged ordinary share fund with a significantly wider spread of investments;
• a larger fund with greater flexibility to sustain a programme of new investments;
• a larger capital base which will facilitate liquidity management and enhance prospects for the maintenance of regular dividend payments to ordinary shareholders;
• a larger capital base allowing the Enlarged Company to sustain a programme of share buybacks; and
• based on the above, the Enlarged Company is expected to be more attractive to potential investors and enjoy an enhanced ability to achieve future capital raisings.

THE ENLARGED COMPANY BOARD

The Boards have considered the size and composition of the Enlarged Company board and it has been agreed that, subject to completion of the Merger, Jocelin Harris, the current chairman of F2, will be appointed as a director to the Enlarged Company board.

MERGER ILLUSTATION

In terms of the proposed number of consideration shares to be issued if the Merger proceeds, this will be calculated based on a relative net assets basis, by reference to the formulas contained in the Circulars.

Had the Merger been completed on the basis of the Scheme examples set out in the Circulars (which are based on the unaudited net assets of the Companies as at 30 June 2015), the number of Consideration Shares which would be issued for each existing F2 share would be as follows:

	Consideration Shares to be issued per F2 Share	Percentage of share capital of each class in the Enlarged Company held by F2 Shareholders
F2 Ordinary Shares	0.6290 F1 Ordinary Shares	32.9%
F2 Planned Exit Shares	0.9602 F1 Planned Exit Shares	49.2%
F2 Infrastructure Shares	0.9908 F1 Infrastructure Shares	49.8%

EXPECTED TIMETABLE

Expected Timetable for F1
Latest time for the receipt of forms of proxy for the General Meeting for F1	10.00 a.m. on 8 December 2015
General meeting	10.00 a.m. on 10 December 2015
Calculation Date	17 December 2015
Effective Date for the transfer of the assets and liabilities of F2 to the Company and the issue of Consideration Shares pursuant to the Scheme	18 December 2015
Announcement of the results of the General Meeting and completion of the Scheme	18 December 2015
Admission and dealings in the Consideration Shares to commence	21 December 2015
CREST accounts credited (where applicable)	22 December 2015
Certificates for consideration shares dispatched by	22 January 2016
Expected Timetable for F2
Date from which it is advised that dealings in F2 Shares should only be for cash settlement and immediate delivery of documents of title	8 December 2015
Latest time for receipt of forms of proxy for the F2 First General Meeting	10.30 a.m. on 8 December 2015
F2 First General Meeting	10.30 a.m. on 10 December 2015
Latest time for receipt of forms of proxy for the F2 Second General Meeting	10.00 a.m. on 16 December 2015
Calculation Date	17 December 2015
F2 register of members closed	5.00 p.m. on 17 December 2015
Record Date for F2 Shareholders' entitlements under the Scheme	5.00 p.m. on 17 December 2015
Dealings in F2 Shares suspended	7.30 a.m. on 18 December 2015
F2 Second General Meeting	10.00 a.m. on 18 December 2015
Effective Date for the transfer of the assets and liabilities of F2 to the Company and the issue of Consideration Shares pursuant to the Scheme	18 December 2015
Announcements of the results of the Scheme	18 December 2015
Cancellation of the listing of the F2 Shares	8.00 a.m. on 22 January 2016

DOCUMENTS AND APPROVALS

F1 shareholders will receive a prospectus together with a circular convening the F1 general meeting to be held on 10 December 2015, at which F1 shareholders will be invited to approve various resolutions in connection with the Merger.

F2's shareholders will receive a circular convening F2's first general meeting on 10 December 2015 and F2's second general meeting on 18 December 2015 at which F2's shareholders will be invited to approve the various resolutions in connection with the Merger.

Copies of the F1 prospectus, the F1 circular and the F2 circular have been submitted to the UK Listing Authority and shall shortly be available for download from the Foresight website (www.foresightgroup.eu) and the national storage mechanism (www.morningstar.co.uk/uk/NSM).

FURTHER INFORMATION

For further information, please contact:

Manager
Foresight Group
Contact: Gary Fraser Tel: [phone]

Solicitors to F1
RW Blears LLP
Contact: Frank Daly Tel: [phone]

Solicitors to F2
Shakespeare Martineau LLP
Contact: Kavita Patel Tel: [phone]

The directors of F1 accept responsibility for the information relating to F1 and its directors and proposed director contained in this announcement.  To the best of the knowledge and belief of such directors and proposed directors (who have taken all reasonable care to ensure that such is the case), the information relating to F1 and its directors and proposed director 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 F2 accept responsibility for the information relating to F2 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 F2 and its directors and proposed director 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.

RW Blears LLP is acting as legal advisers for F1 and for no one else in connection with the matters described herein and will not be responsible to anyone other than F1 for providing the protections afforded to clients of RW Blears LLP or for providing advice in relation to the matters described herein.

Shakespeare Martineau LLP is acting as legal advisers for F2 and for no one else in connection with the matters described herein and will not be responsible to anyone other than F2 for providing the protections afforded to clients of Shakespeare Martineau LLP or for providing advice in relation to the matters described herein.

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX 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 VCT PLC via Globenewswire

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