The Value Catalyst Fund Limited ("VCF" or "the Company")
Annual Report and Notice of AGM
Shareholders are advised that the Annual Report & Accounts of VCF for the year
ended 30 June 2007 were posted yesterday.
A notice of the Annual General Meeting of the Company ("AGM") to be held at 12-
13 Hill Street, Douglas, Isle of Man on Wednesday, 21 November 2007 at 2pm was
also posted to shareholders. In addition to the ordinary business, the Board
has proposed resolutions to sub-divide the Company's ordinary share capital and
amend the articles of association in relation to written resolutions of the
Board and restrictions on the issue of Ordinary Shares. Further information on
these items of special business is set out below.
Sub-division of Share Capital
In recent years, the price of the Company's Ordinary Shares has risen to the
point where they are now one of the more highly priced stocks quoted on the AIM
market of the London Stock Exchange. The Directors consider that having a
larger number of Ordinary Shares with a lower market price than at present will
serve to improve the marketability and liquidity of the shares. As a result,
the Board is proposing, by virtue of Resolution 11 as a special resolution, that
each shareholder on the Company's register of members as at 3 pm on 21 November
2007 will receive new shares on the following basis:
100 new Ordinary Shares of US$0.00001 each for every 1 Ordinary share of
Following the sub-division, each shareholder will hold one hundred times the
number of Ordinary Shares held previously but his or her shareholding as a
percentage of the total number of shares in issue will be the same before and
after the share sub-division and the value of the aggregate shareholding is
therefore not affected. There will be no fractional entitlements. The new
Ordinary Shares will have the same rights, including voting and dividend rights
as the existing Ordinary Shares.
The aggregate nominal value of the Company's issued and authorised share capital
will remain the same. Assuming no further Ordinary Shares are issued or re-
purchased between the date of the notice of AGM and the date Resolution 11
becomes effective, the issued share capital will comprise 126,173,100 Ordinary
Shares of par value US$0.00001 each on the date that Resolution 11 becomes
This proposal requires the approval of shareholders by special resolution and
Resolution 11 will be proposed at the Annual General Meeting for this purpose.
Resolution 11 is conditional on, but will have effect immediately prior, to
Admission (defined below). Application will be made to the AIM market of the
London Stock Exchange for the new Ordinary Shares of US$0.00001 each in the
capital of the Company resulting from the sub-division to be admitted to trading
on the AIM market of the London Stock Exchange ("Admission"). Subject to the
passing of Resolution 11, it is expected that dealings in the existing Ordinary
shares of US$0.001 each in the Company will continue until close of business on
21 November 2007 and that Admission of the new Ordinary Shares of US$0.00001
each will become effective and that dealings in the new Ordinary Shares will
commence at 8 am on 22 November 2007.
If Admission does not occur the sub-division will not be implemented and the
existing Ordinary shares of par value US$0.001 each will remain listed on the
Those shareholders who hold their existing Ordinary Shares in uncertificated
form will hold the new Ordinary Shares in uncertificated form. The new Ordinary
Shares will be credited to shareholders current participant ID and member
account ID. The Company will ensure that CRESTCo is instructed to credit the
appropriate stock account in CREST by 22 November 2007.
Those shareholders who currently hold their existing Ordinary Shares in
certificated form will receive new share certificates relating to their
entitlement to new Ordinary Shares. Current share certificates relating to the
existing Ordinary Shares will automatically become void on the sub-division
becoming effective; they will no longer have any value and should be destroyed
upon receipt of the new share certificate. It is expected that new share
certificates representing shares in the new denomination will be despatched to
all shareholders on 3 December 2007.
Shareholders who hold their existing Ordinary Shares in certificated form and
who wish to hold the new Ordinary Shares in uncertificated form will need to
comply with the relevant procedure for the conversion of such shares into
uncertificated form in accordance with CRESTCo procedures following receipt of
their definitive share certificates.
Further to the sub-division of share capital on 22 November 2007 the dividend
receivable will be US$0.1121.
Certain limited information on UK taxation with regard to the sub-division is
set out below. If you are in any doubt as to your tax position, or you are
resident or subject to tax in any jurisdiction other than the UK, you should
consult your professional adviser.
The sub-division will not constitute a disposal of your existing Ordinary Shares
for the purposes of UK capital gains tax legislation. A shareholder's holding of
new Ordinary Shares derived from that shareholder's existing Ordinary Shares
will be treated for capital gains tax purposes as the same asset as that
shareholders' existing Ordinary Shares and therefore will be treated as having
the same aggregate acquisition cost and having been acquired at the same time as
that shareholder's existing Ordinary Shares. The sub-division should not give
rise to any liability to UK stamp duty or stamp duty reserve tax.
If you have any questions concerning the sub-division please call the Investor
Services department of HSBC Securities Services (Isle of Man) Limited on
+44(0)1624 637777. Calls will be charged at national rates for all calls from
the UK. The Investor Services department will be open from 9.00 to 5.00pm Monday
to Friday. For legal reasons, the Investor Services department will not be able
to provide advice on the merits of the sub-division or to provide legal,
financial or taxation advice.
Amendments to Articles of Association
Written Board Resolutions
The current Articles of Association of the Company state that board resolutions
must be signed by all Directors and that each Director must certify that he is
outside the United Kingdom when each such board resolution is signed. In the
interests of efficiency and practicality, it is proposed that the Articles of
Association are amended (by virtue of Resolution 7) in order that such board
resolutions are signed by all Directors but that only a majority of the
Directors need certify that they are outside the United Kingdom at the time the
resolution is signed for a resolution to become effective.
Restrictions on the issue of shares
The Board has previously indicated (in its AIM admission document dated 7
December 2005) its future intention to amend the Articles of Association to
incorporate restrictions which are similar to section 80 and section 89 of the
Companies Act 1985 of Great Britain with regard to the issue of shares.
The Board now propose (as Resolution 8) that the following amendments are made
to the Articles of Association of the Company: (a) that Directors are permitted
to issue Ordinary Shares up to an amount stated in the relevant resolution
proposed at each Annual General Meeting; and (b) that Directors are permitted to
issue Ordinary Shares for cash (pursuant to the authority proposed at (a)) in
the following circumstances without first having to offer such Ordinary Shares
to the existing Shareholders: (i) the issue of Ordinary Shares to Laxey Partners
Limited pursuant to the terms of the Investment Advisory Agreement (ii) the
issue of Ordinary Shares to the directors, employees and the employee benefit
trust of Laxey Partners Limited and (iii) any issue of Ordinary Shares (other
than detailed at (i) and (ii)) for cash of up to an aggregate nominal value
which is then set out in the relevant resolution passed at the Annual General
Meeting of that year.
The Board will not issue new Ordinary Shares for cash on a non pre-emptive basis
pursuant to the disapplication referred to at (b) above if such issue would
result in a dilution to the net asset value per existing Ordinary Share.
Application will be made for any new Ordinary Shares to be issued under this
authority to be admitted to the AIM market of the London Stock Exchange. It is
also anticipated that should the Articles be amended and the authorities set out
in Resolutions 9 and 10 thereby granted, that these authorities will be renewed
annually at each Annual General Meeting.
Resolutions 9 and 10 are proposed as Special Resolutions and these resolutions
will set the level of the relevant authorities until the next Annual General
Meeting in 2008. These resolutions are conditional on the passing of the
proposed amendments to the Articles contained in Resolution 8. Resolution 9
will authorise the Directors to allot Ordinary Shares for cash up to $4,206
(which sum represents an aggregate nominal value of one third of the nominal
value of the issued Ordinary Shares as at 30 June 2007). Resolution 10 will
authorise the Directors to allot Ordinary Shares for cash on a non pre-emptive
basis up to $1,262 (which sum represents 10 per cent of the nominal value of the
issued Ordinary Shares as at 30 June 2007). Special Resolutions 7 and 8 are
proposed to effect certain technical amendments to the Articles of Association,
the text of which is set forth in the attached Notice of Meeting.
The Directors believe that the adoption of the resolutions to be proposed at the
Annual General Meeting are in the best interests of the Company and its
shareholders as a whole and accordingly recommend shareholders to vote in favour
of those resolutions, which they intend to do in respect of their own
Azhic Basiov / Siobhan Sergeant
Smith & Williamson Corporate Finance Limited
Tel +44 (0)20 7131 4000
26 October 2007