ATI2 Amati Vct 2

 
TIDMATI2 
 
JOINT ANNOUNCEMENT 
 
VICTORY VCT PLC 
 
AMATI VCT 2 PLC 
 
29 SEPTEMBER 2011 
 
RECOMMENDED PROPOSALS FOR A MERGER BETWEEN VICTORY VCT PLC ("VICTORY") AND 
AMATI VCT 2 PLC ("AMATI VCT 2") TO BE EFFECTED BY PLACING AMATI VCT 2 INTO 
MEMBERS' VOLUNTARY LIQUIDATION PURSUANT TO SECTION 110 OF THE INSOLVENCY ACT 
1986 AND THE TRANSFER BY AMATI VCT 2 OF ALL OF ITS ASSETS AND LIABILITIES TO 
VICTORY IN CONSIDERATION FOR NEW SHARES OF 5 PENCE EACH IN VICTORY ("VICTORY 
SHARES") AND THE CANCELLATION OF THE LISTING OF THE ORDINARY SHARES OF 10 PENCE 
EACH IN AMATI VCT 2 ("AMATI VCT 2 SHARES") AND OTHER RECOMMENDED PROPOSALS IN 
RELATION TO VICTORY, INCLUDING SHARE OFFERS TO RAISE UP TO GBP30 MILLION, ENHANCE 
D SHARE BUY BACK AND REINVESTMENT FACILITY, A SHARE RECONSTRUCTION, A CHANGE TO 
THE INVESTMENT POLICY AND A DIVIDEND REINVESTMENT SCHEME. 
 
SUMMARY 
 
The boards of ViCTory and Amati VCT 2 announced on 7 July 2011 that that they 
were in discussions with a view to a possible merger of the two companies. 
These discussions have now concluded and both boards are writing to their 
respective shareholders with proposals for consideration for the proposed 
merger (the "Scheme") and other proposals relating to ViCTory. The boards of 
ViCTory and Amati VCT 2 consider that the interests of each company's 
shareholders will be better served by the merger which will result in a single 
company with a larger asset base, with increased cost efficiencies and an 
improved spread of risk, with the ability to raise further funds whilst 
sustaining share buy back demand. 
 
Regulations in force since 2004 have permitted VCTs to merge without 
shareholders losing their VCT tax relief. 
 
The Scheme will be effected by Amati VCT 2 being placed into members' voluntary 
liquidation pursuant to a scheme of reconstruction under Section 110 of the 
Insolvency Act 1986. All of the assets and liabilities of Amati VCT 2 will be 
transferred to ViCTory in exchange for New ViCTory Shares (which will be issued 
directly to the shareholders of Amati VCT 2). The merger will be completed on a 
relative net asset basis. 
 
The effective date for the transfer of the assets and liabilities of Amati VCT 
2 and the issue of New ViCTory Shares pursuant to the Scheme is expected to be 
8 November 2011 (the "Effective Date"), following which the listing of the 
Amati VCT 2 Shares will be cancelled and Amati VCT 2 will be wound up. 
 
The Scheme is conditional, inter alia, on the approval of certain resolutions 
to be proposed to shareholders of ViCTory and Amati VCT 2 at general meetings 
to be held on 31 October 2011 for ViCTory ("ViCTory GM") and Amati VCT 2 (" 
Amati VCT 2 GM 1"), and 8 November 2011 for Amati VCT 2 only ("Amati VCT 2 GM 2 
") and dissent not having been expressed by shareholders of Amati VCT 2 holding 
more than 5 per cent. of the issued Amati VCT 2 Shares. 
 
In addition to the Scheme, the board of ViCTory is proposing to undertake Share 
Offers to raise up to GBP30 million and to introduce an Enhanced Share Buy Back 
and Reinvestment Facility for ViCTory Shareholders (and Amati VCT 2 
Shareholders after they have received their New ViCTory Shares on the Scheme 
taking effect) who wish to use the proceeds from selling Shares in ViCTory in 
order to apply for Offer Shares under the Share Offers. The Share Offers are 
conditional on the passing of certain of the resolutions to be proposed to 
ViCTory Shareholders at the ViCTory GM. 
 
The board of ViCTory is also proposing to undertake a Share Reconstruction and 
to establish a Dividend Reinvestment Scheme, both of which are standalone 
proposals. 
 
The board of ViCToryalso considers it appropriate to renew share issue 
authorities for ViCTory and to cancel both the share premium account and the 
capital redemption reserve of ViCTory. 
 
The board of Amati VCT 2 has previously declared a second interim dividend of 
3.0p per Amati VCT 2 Share which, irrespective of the implementation of these 
proposals, will be paid on 14 October 2011 to Amati VCT 2 Shareholders on the 
register on 14 September 2011. The board of ViCTory has also declared an 
interim dividend of 1.0p per ViCTory Share which, irrespective of the 
implementation of these proposals, will be paid on 18 October 2011 to ViCTory 
Shareholders on the register on 23 September 2011. 
 
BACKGROUND 
 
In September 2004, the Venture Capital Trusts (Winding-up and Mergers) (Tax) 
Regulations 2004 were introduced, allowing venture capital trusts ("VCTs") to 
be acquired by, or merge with, each other without prejudicing tax reliefs 
obtained by their shareholders. A number of VCTs have now taken advantage of 
these regulations to create larger VCTs where running costs can be spread over 
a substantially greater asset base. 
 
With the above in mind, the boards of ViCTory and Amati VCT 2 entered into 
discussions to consider a merger of the companies to create a single larger VCT 
and reduce the overall running costs. Following detailed consideration of the 
portfolio and financial position of each company, both of which are managed by 
Amati Global Investors Limited (the "Manager") and have broadly similar 
investment policies, the boards of ViCTory and Amati VCT 2 have reached an 
agreement to recommend that the companies be merged. 
 
The main purpose of the proposed merger is to create a single larger VCT that 
will bring a number of advantages to both sets of shareholders, namely: 
 
  * restoring efficiencies of scale through the creation of a single VCT of a 
    larger size with a greater capital base over which to spread 
    administration, regulatory and management costs (including the significant 
    fixed costs of maintaining the listing of a VCT on the Official List); 
 
  * extending the potential life of both VCTs through the enlarged VCT, 
    allowing investors to benefit from the mature portfolio of qualifying 
    investments which has been built up over many years and which, following 
    the restructuring undertaken by the Manager, will be focused on businesses 
    which the Manager believes have strong prospects even against a difficult 
    economic backdrop; 
 
  * facilitating the possibility of raising new funds, and hence also being 
    able to sustain a share buy back policy for investors who wish to exit; and 
 
  * ViCTory and the Manager agreeing that (if the Scheme takes effect) the 
    annual running costs will be capped at 3.5 per cent. of the Enlarged 
    Company's net assets, any excess being met by the Manager by way of a 
    reduction in future management fees. 
 
Shareholders should note that the merger will be outside the provisions of the 
City Code on Takeovers and Mergers. 
 
The board of ViCTory believes that the proposed Share Offers are attractive 
because: 
 
  * investors will gain access to an attractive and mature portfolio of 
    Qualifying Investments, which is diversified by a spread of Non-Qualifying 
    Investments encompassing a range of global investment themes; 
 
  * the Enlarged Company's top 20 investments (as at 31 August 2011) would 
    represent over 48 per cent. of the combined net asset value. These 
    investments would have a weighted average market capitalisation of GBP154 
    million, and be in companies which, in the Manager's view, have good 
    prospects for earnings growth, and robust financial positions. If the two 
    portfolios were combined as at 31 August 2011 the top ten holdings would 
    have been Lo-Q (4.0 per cent.), Brooks Macdonald (3.1 per cent.), Synergy 
    Health (2.8 per cent.), Green Compliance (2.7 per cent.), Anglo Pacific 
    (2.7 per cent.), Tikit (2.7 per cent.), Prezzo (2.6 per cent.), Idox (2.6 
    per cent.), Asian Citrus (2.5 per cent.) and Cupid (2.4 per cent.); 
 
  * the Manager is an award winning small cap team, and has recognised 
    expertise in managing AIM VCTs, with the most recent share offer from Amati 
    VCT plc having been awarded the highest rating (87 out of 100) amongst VCT 
    share offers in the last tax year from Martin Churchill's independent 
    publication, Tax Efficient Review; 
 
  * the Directors and Manager believe AIM remains an attractive source of 
    financing for innovative and high-quality companies, and that compelling 
    Qualifying Investment opportunities will continue to arise in this market. 
 
The board of ViCTory is proposing to allocate up to GBP2 million of New Shares 
which may be issued pursuant to the Share Offers for the Dividend Reinvestment 
Scheme, further details of which are provided below. 
 
The proposed Share Offers enable the board of ViCTory to offer the Enhanced 
Share Buy Back and Reinvestment Facility, which allows participating 
Shareholders to sell their Shares to ViCTory at a one per cent. discount to the 
most recently published NAV per ViCTory Share, prior to the allotment if the 
selling Shareholder applies the net proceeds to subscribe for Offer Shares 
under the Share Offers. The board of ViCTory believes that the Enhanced Share 
Buy Back and Reinvestment Facility is attractive because it increases the 
likelihood of establishing a significant pool of Shareholders committed to 
another five years of investment, thus increasing the longevity of the Enlarged 
Company. 
 
The Share Offers effectively mark a re-launch of ViCTory, and to reflect this 
the board of ViCTory is proposing a Share Reconstruction in order to re-base 
the Net Asset Value of ViCTory to approximately 100p per Share. The board 
believes this will make it easier for Shareholders to monitor progress of 
ViCTory from this point on. It is proposed that the Share Reconstruction be 
implemented irrespective of whether the Scheme proceeds or not. 
 
Conditional upon the Scheme becoming effective, the board of ViCTory proposes 
that the name of ViCTory be changed to "Amati VCT 2 plc". 
 
The board of ViCTory is proposing the Dividend Reinvestment Scheme to enable 
Shareholders to use all of their dividends to subscribe for further New Shares 
in a cost effective manner. The price at which New Shares will be issued 
pursuant to the prospectus is the NAV per New Share as close as reasonably 
practical to the dividend payment date. Dividend Reinvestment enables 
Shareholders to increase their total holding in ViCTory without incurring 
dealing costs, issue costs or stamp duty (ViCTory bears all of the costs of 
operating the Scheme). Subject to the limits on investments in VCTs, New Shares 
issued under the Dividend Re-investment Scheme should qualify for the VCT tax 
reliefs that are applicable to subscriptions for new VCT shares. 
 
EXPECTED TIMETABLES 
 
MERGER 
 
EXPECTED TIMETABLE FOR VICTORY 
 
(Dates subject to variation if any General Meeting is adjourned) 
 
Latest time for receipt of forms of proxy            2.00 pm on 29 October 2011 
for the General Meeting 
 
General Meeting                                      2.00 pm on 31 October 2011 
 
Calculation Date                               after 5.00 pm on 7 November 2011 
 
Effective Date for the transfer of the                          8 November 2011 
assets and liabilities of Amati VCT 2 to 
ViCTory and the issue of Consideration 
Shares to Amati VCT 2 Shareholders 
 
Announcement of the results of the Scheme                       8 November 2011 
 
Admission of and dealings in the New Shares                     9 November 2011 
(in respect of the Scheme) to commence 
 
CREST accounts credited with the New Shares                     9 November 2011 
(in respect of the Scheme) 
 
Effective date of the Share Reconstruction         after close of business on 9 
                                                                  November 2011 
 
Amendment to the listing of the Shares                         10 November 2011 
arising 
 
from the Share Reconstruction 
 
CREST accounts credited with the New Shares                    10 November 2011 
(in respect of the Share Reconstruction) 
 
Certificates for the New Shares dispatched                     16 November 2011 
 
EXPECTED TIMETABLE FOR AMATI VCT 2 
 
(Dates subject to variation if any General Meeting is adjourned) 
 
Date from which it is advised that dealings                     29 October 2011 
in Amati VCT 2 Shares should only be for 
cash settlement and immediate delivery of 
documents of title 
 
Latest time for receipt of forms of proxy            2.30 pm on 29 October 2011 
for the Amati VCT 2 First General Meeting 
 
Amati VCT 2 First General Meeting                    2.30 pm on 31 October 2011 
 
Latest time for receipt of forms of proxy            2.30 pm on 6 November 2011 
for the Amati VCT 2 Second General 
 
Record Date for Amati VCT 2 Shareholders'                       7 November 2011 
entitlements under the Scheme 
 
Amati VCT 2 Register of Members closed                          7 November 2011 
 
Calculation Date                               after 5.00 pm on 7 November 2011 
 
Dealings in Amati VCT 2 Shares suspended             7:30 am on 8 November 2011 
 
Amati VCT 2 Second General Meeting                   2.30 pm on 8 November 2011 
 
Effective Date for the transfer of the                          8 November 2011 
assets and liabilities of Amati VCT 2 to 
ViCTory 
 
Announcement of the results of the Scheme                       8 November 2011 
 
Cancellation of the Amati VCT 2 Shares'              8.00 am on 9 November 2011 
listing 
 
THE SHARE OFFERS 
 
EXPECTED TIMETABLE FOR VICTORY 
 
(The Share Offers may close earlier than the dates stated below if they are 
fully subscribed by an earlier date. The allotment of Offer Shares is at the 
Directors' discretion and is expected to be made monthly, although there may be 
additional allotments (at the Manager's discretion).) 
 
2011/2012 Offer opens                                         29 September 2011 
 
Closing date for 2011/12 Offer                 5.00 pm on Thursday 5 April 2012 
 
2012/2013 Offer opens                                              6 April 2012 
 
Closing date for applications under the             5.00 pm on 5 September 2012 
Enhanced Share Buy Back and Reinvestment 
Facility 
 
Closing date for 2012/13 Offer unless              5.00 pm on 10 September 2012 
extended by the Directors (but not beyond 
27 September 2012) 
 
Allotments of Offer Shares                    monthly (or at other times at the 
                                                          Manager's discretion) 
 
Dealings in Offer Shares commence                 second Business Day following 
                                                                      allotment 
 
CREST accounts credited                            within five Business Days of 
                                                                      allotment 
 
Certificates for the Offer Shares                   within ten Business Days of 
dispatched                                                            allotment 
 
BACKGROUND TO AMATI VCT 2 AND VICTORY 
 
ViCTory and Amati VCT 2 are both managed by Amati Global Investors Limited, an 
independent fund management business ultimately owned by its staff. 
 
ViCTory was established as a venture capital trust with the name Singer & 
Friedlander AIM 3 VCT plc in January 2001 and was subsequently merged with two 
other venture capital trusts managed by Singer & Friedlander Investment 
Management Limited - Singer & Friedlander AIM VCT plc and Singer & Friedlander 
AIM 2 VCT plc - in 2006. ViCTory was renamed ViCTory VCT plc on 16 June 2009 
and the Manager was appointed as investment manager on 22 March 2010. At this 
date, ViCTory had net assets of approximately GBP18 million. From this date up to 
31 August 2011, the unaudited NAV Total Return of ViCTory has increased by 4.2 
per cent., during which time the FTSE AIM All Share Total Return Index has 
risen by 3.7 per cent. ViCTory invests mainly in a portfolio of companies whose 
shares are traded on AIM, with its remaining assets invested in a portfolio of 
small and mid cap companies listed on the London Stock Exchange's main market, 
unquoted holdings and bank deposits. As at 22 September 2011, ViCTory's 
unaudited NAV was 41.78p per Share. Since launch, ViCTory has paid a total of 
12.75p per share in dividends (including the interim dividend to be paid on 18 
October 2011). 
 
Amati VCT 2 (previously called Invesco Perpetual AIM VCT plc) is a venture 
capital trust launched in 2004 with the intention of investing in 
VCT-qualifying companies traded on AIM. On 11 February 2011 the Manager was 
appointed as investment manager to Amati VCT 2. From this date to 22 September 
2011, the unaudited NAV Total Return of Amati VCT 2 has fallen by 5.6 per 
cent., during which time the FTSE AIM All Share Total Return Index has fallen 
by 23.7 per cent.. Since taking on this mandate the Manager has restructured 
the portfolio with the same approach that was adopted for ViCTory. To 
illustrate this new approach, the unaudited weighted average market 
capitalisation of the equity investments in Amati VCT 2's portfolio rose from GBP 
50 million on 11 February 2011 to GBP153 million on 31 August 2011. At that date, 
eight of the newly introduced Non-Qualifying Investments purchased by Amati VCT 
2 had also been purchased for ViCTory's portfolio. In addition to this, three 
new Qualifying Investments have been made by both VCTs. 
 
As at 22 September 2011 Amati VCT 2 had unaudited net assets of GBP11.6 million 
and its unaudited NAV per share was 26.76p. The investment portfolio as at the 
date of this document comprises 6 quoted, 46 AIM traded and 4 unquoted 
holdings. Amati VCT 2 has paid dividends totalling 30p per Share since its 
launch (including the second interim dividend to be paid on 14 October 2011). 
The investment policy of Amati VCT 2 is broadly similar to that of ViCTory and, 
accordingly, the proposed acquisition of the assets of Amati VCT 2 is 
consistent with ViCTory's investment policy. 
 
Having re-structured the portfolios of both VCTs, the Manager now believes that 
both Amati VCT 2 and ViCTory are in a position to benefit from the mature 
portfolio of qualifying businesses which have been established over a number of 
years. The most successful of these investments have become substantial 
holdings in both VCTs as they have performed strongly, and the manager believes 
that these core holdings in the portfolios look well placed to continue to do 
so over the coming years, even against a difficult economic backdrop. 
 
Amati Global Investors (formerly Noble Fund Managers Limited) is an independent 
fund management business, and is a wholly owned subsidiary of Amati Global 
Partners LLP, which was established by Paul Jourdan and Douglas Lawson to 
effect the management buy-out of Noble Fund Managers Limited. Amati Global 
Partners LLP is wholly owned by the staff of the Manager. 
 
In addition to ViCTory and Amati VCT 2, the Manager manages Amati VCT, the CF 
Amati UK Smaller Companies Fund and the Amati Systematic Trend Fund. From 
launch on 24 March 2005 to 31 August 2011, Amati VCT has generated an unaudited 
NAV Total Return of 3.6 per cent. (excluding subscription costs and tax rebate, 
assuming dividends reinvested at the ex-dividend date), during which time the 
FTSE AIM All Share Total Return Index has fallen by 26.6 per cent. This equates 
to a 63.6 per cent. total return for investors who bought the fund at launch, 
paying the full initial costs, and receiving the full available tax relief 
(which was 40 per cent. in 2005), assuming that the 26.3p of dividends paid 
were reinvested at the ex-dividend date. 
 
Both boards have discussed the size and future composition of the ViCTory board 
and it has been concluded that, subject to implementation of the Merger, James 
Hambro and David Page will resign as directors and two of the existing 
directors of the Amati VCT 2 Board, Julian Avery and Chris Macdonald, will be 
appointed as directors of the Enlarged Company, with Julian Avery becoming 
Chairman. 
 
DOCUMENTS AND APPROVALS 
 
Amati VCT 2 Shareholders will receive a copy of the ViCTory prospectus together 
with a circular convening the Amati VCT 2 GM 1 on 31 October 2011 and the Amati 
VCT 2 GM 2 on 8 November 2011, at which Amati VCT 2 Shareholders will be 
invited to approve resolutions in connection with the Scheme. 
 
ViCTory Shareholders will receive a copy of the ViCTory prospectus together 
with a circular convening the ViCTory GM to be held on 31 October 2011, at 
which ViCTory Shareholders will be invited to approve resolutions in connection 
with the Scheme, the Share Offers, the Enhanced Share Buy Back and Reinvestment 
Facility, the Dividend Reinvestment Scheme, the Share Reconstruction, a change 
in investment policy, and to renew share issue authorities and to cancel both 
ViCTory's share premium account and capital redemption reserve. 
 
Copies of the prospectus and the circular for ViCTory, and a copy of the 
circular for Amati VCT 2, have been submitted to the UK Listing Authority and 
will be shortly available for download at the National Storage Mechanism 
(www.hemscott.com/nsm.do). 
 
Manager for ViCTory and Amati VCT 2 
 
Amati Global Investors Limited 
 
Paul Jourdan/Douglas Lawson 
 
Telephone: 0131 243 0411 
 
Sponsor to ViCTory 
 
Howard Kennedy Corporate Services LLP 
 
Keith Lassman 
 
Telephone: 020 7636 1616 
 
The directors of ViCToryaccept responsibility for the information relating to 
ViCTory 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 ViCTory and its 
directors 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 Amati VCT 2 accept responsibility for the information relating 
to Amati VCT 2 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 Amati VCT 2 and 
its directors contained in this document, 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. 
 
Howard Kennedy Corporate Services LLP, which is authorised and regulated in the 
United Kingdom by the Financial Services Authority, is acting as sponsor for 
ViCTory and no-one else and will not be responsible to any other person for 
providing the protections afforded to customers of Howard Kennedy Corporate 
Services LLP (subject to the responsibilities and liabilities imposed by 
Financial Services and Markets Act 2000 and the regulatory regime established 
thereunder) or for providing advice in relation to any matters referred to 
herein. 
 
                                          M:WDOX03203203200003H4607763.DOC 
 
 
 
END 
 

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