TIDMBDV
RNS Number : 4713L
Baronsmead VCT PLC
11 January 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR SOUTH
AFRICA OR ANY JURISDICTION WHICH THE SAME COULD BE UNLAWFUL. THE
INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF
SECURITIES FOR SALE IN ANY JURISDICTION, INCLUDING IN THE UNITED
STATES, CANADA, AUSTRALIA, JAPAN OR SOUTH AFRICA
Baronsmead VCT plc
Baronsmead VCT 2 plc
11 January 2016
Publication of a Prospectus and Circulars in connection with
recommended proposals for the merger of Baronsmead VCT plc and
Baronsmead VCT 2 plc (the "Companies") and an offer for
subscription to raise up to GBP10 million
The boards of the Companies (the "Boards") announced on 11
November 2015 that they had entered into discussions regarding a
possible merger of the Companies (the "Merger"). The Boards are
pleased to announce that they have reached agreement in respect of
the Merger and that the Companies have today issued circulars to
set out the proposals for the Merger for consideration by their
respective shareholders (the "Circulars"). Both of the Companies
are managed by Livingbridge VC LLP ("Livingbridge").
The Merger will be completed pursuant to a scheme of
reconstruction and winding up of Baronsmead VCT plc ("Baronsmead
VCT") under section 110 of the Insolvency Act 1986 (the "Scheme").
The Scheme provides for the undertaking, assets and liabilities of
Baronsmead VCT to be transferred to the Company in consideration
for the issue of new shares (the "New Shares") in Baronsmead VCT 2
plc ("Baronsmead VCT 2") of an equivalent value to Baronsmead VCT
shareholders ("BVCT Shareholders"). The Scheme is subject to,
amongst other conditions, approval by the shareholders of the
Companies. The Merger will create a larger merged company with net
assets of GBP170 million (the "Enlarged Company").
Subject to the Merger completing the Enlarged Company will carry
out an offer for subscription to raise up to GBP10 million (before
costs) (the "Offer"). The Offer is exclusively available for the
existing shareholders of the Companies. The full terms and
conditions of the Offer are set out in the prospectus which was
published by Baronsmead VCT 2 today (the "Prospectus").
Background to and reasons for the Scheme
Prior to April 2012, the VCT rules restricted the amount a VCT
could invest in a portfolio company to GBP1 million per annum. This
led to investment managers, such as Livingbridge, establishing
numerous VCTs that pursued the same investment strategy allowing
larger investments to be made in VCT qualifying companies. With
effect from 6 April 2012, the VCT rules were amended and the annual
investment limit was increased to GBP5 million per investee
company. As a result there is no longer as significant an advantage
in having multiple VCTs pursuing the same investment strategy.
Since 2012 the Boards and Livingbridge have been reviewing the
merits of merging the Baronsmead VCTs. In April 2014 changes to the
stamp duty rules significantly reduced the overall cost of a
merger. As a result, the Boards now believe that there is a
compelling argument for a merger from a cost savings point of view,
with combined costs savings of approximately GBP300,000 per annum
for the shareholders of the Companies following the Merger. In
addition over the last year there has been increasing demand from
shareholders to have fewer Baronsmead VCTs. For these reasons the
directors of the Companies believe that their respective
shareholders' interests will be best served by the Merger of the
Companies.
Performance track record
Both of the Companies have been managed by Livingbridge and its
predecessor businesses since their respective launches in 1995 and
1998. Since its launch, Baronsmead VCT 2 has paid an average annual
dividend of 6.9 pence per share (equivalent to 9.2 pence per share
to investors who are higher rate tax payers). Over the last five
years Baronsmead VCT 2 has paid an average annual dividend of 8.6
pence per share (equivalent to 11.5 pence per share to investors
who are higher rate tax payers). Summaries of the track records of
the Companies are set out in the table below.
Average
Average annual
annual dividends
dividends paid per NAV total
paid per share return
share in the per share
since past 5 since
Launch launch* years* launch
Company date NAV* GBPm (p) (p) *++
------------ ---------- ---------- ----------- ----------- -----------
Baronsmead November
VCT 1995 83.7 7.0 7.0 390.5
------------ ---------- ---------- ----------- ----------- -----------
Baronsmead April
VCT 2 1998 87.2 6.9 8.6 361.5
------------ ---------- ---------- ----------- ----------- -----------
* As at 30 November 2015
++ Note: AIC methodology: NAV total return to the investor,
including the original amount invested (rebased to 100p) from
launch, assuming dividends paid were reinvested at the NAV of the
Companies at the time the shares were quoted ex-dividend.
NAV total return per Share (p)
------------------------------------------------------------
Period 1year 3 years 5 years Since launch
to 30 November
2015
----------------- ------ -------- -------- -------------
Baronsmead
VCT 115.6 141.6 165.1 390.5
----------------- ------ -------- -------- -------------
Baronsmead
VCT 2 116.0 139.8 168.8 361.5
----------------- ------ -------- -------- -------------
Note: AIC methodology: NAV total return to the investor,
including the original amount invested (rebased to 100p) from
launch, assuming dividends paid were reinvested at the NAV of the
Companies at the time the shares were quoted ex-dividend.
The past performance of the Companies is not a guide to the
future performance of the Enlarged Company.
The Scheme
The number of New Shares in Baronsmead VCT 2 to be issued to
BVCT Shareholders under the Scheme will be based on the adjusted
net asset value of an ordinary share in Baronsmead VCT 2 (the "FAV
per BVCT2 Share") and the adjusted net asset value of an ordinary
share in Baronsmead VCT (the "FAV per BVCT Share"). The FAV per
BVCT2 Share and the FAV per BVCT Share will be calculated as at 31
January 2016 (the "Calculation Date") using each company's
respective accounting policies (which are identical). The
investments held by the Companies which are listed, quoted or
traded on a recognised stock exchange will be valued by reference
to the bid price on the principal stock exchange where the relevant
investment is listed, quoted or dealt. Unquoted investments held by
the Companies will be valued at their fair value as at the
Calculation Date as determined by the Boards respectively.
The FAV per BVCT2 Share will be the net asset value of an
ordinary share in Baronsmead VCT 2 adjusted to add back the costs
and expenses of the Scheme already incurred by Baronsmead VCT 2
prior to the effective date of the Scheme, expected to be 8
February 2016 (the "Effective Date"). The FAV per BVCT Share will
be calculated in accordance with the Scheme and will be the net
asset value of an ordinary share in Baronsmead VCT adjusted to add
back the costs and expenses of the Scheme already incurred by
Baronsmead VCT prior to the Effective Date.
Shareholders in Baronsmead VCT will be issued such number of New
Shares with a FAV per BVCT2 Share equal to 100 per cent. of the FAV
per BVCT Share of their shareholding in Baronsmead VCT. The New
Shares issued pursuant to the Scheme will rank equally in all
respects with the existing issued ordinary shares of Baronsmead VCT
2.
The Offer
The Offer will be open exclusively to satisfy subscriptions from
existing shareholders in the Companies. Applications will be
processed on a "first come, first served" basis by the Registrar,
subject to the Scheme becoming effective.
The minimum subscription under the Offer is GBP3,000. There is
no maximum investment. However, potential investors should be aware
that tax relief is only available on a maximum of GBP200,000 in
each tax year. Potential investors should consult their
professional or financial advisers before deciding whether and, if
so, how much they should invest under the Offer.
The number of New Shares to be allotted under the Offer will be
determined by dividing the subscription amount by an offer price
calculated on the basis of the following Pricing Formula:
Latest published net asset value of an existing ordinary share
in Baronsmead VCT 2 at the time of allotment divided by 0.97 (to
allow for the costs of the Offer of 3.0 per cent.) rounded up to
the nearest 0.1 pence per share.
The number of New Shares to be issued under the Offer will be
rounded down to the nearest whole number (fractions of New Shares
will not be allotted).
Costs and expenses
Costs and expenses of participation in the Scheme
The aggregate costs and expenses to be incurred by the Companies
in connection with the Scheme are expected to be approximately
GBP415,000 (including VAT and stamp duty). It has been agreed that
all costs of implementing the Scheme will be met by the Enlarged
Company following the completion of the Scheme (including the costs
of purchasing the interests of any dissenting shareholders of
Baronsmead VCT). Should the Scheme be implemented, it is expected
that the costs of the Merger will be recouped from cost savings
achieved by the Enlarged Company within 18 months of the Effective
Date.
January 11, 2016 08:29 ET (13:29 GMT)
The effect of this arrangement is that the costs of the Merger
are borne by the shareholders of the Companies in proportion to
their relative contribution to the net asset value of the Enlarged
Company.
In the event that the Scheme does not become effective, it is
estimated that the costs incurred by the Companies will be in
aggregate approximately GBP380,000. The Companies have agreed to
bear these abort costs in proportion to their respective unaudited
net asset values as at 30 November 2015, being 51 per cent. and 49
per cent. respectively.
Costs and expenses of the Offer
Livingbridge, which is a related party of Baronsmead VCT 2 will,
in respect of services provided pursuant to the Offer, receive a
fee of 3.0 per cent. of the gross proceeds of the Offer. Out of
this fee, Livingbridge will pay all costs associated with the
Offer, on behalf of the Enlarged Company. In addition, Livingbridge
will pay permissible annual trail commission payments in relation
to non-advised sales. Livingbridge will be responsible for any
costs associated with the Offer in excess of this fee. This
transaction is classified as a smaller related party transaction
under Listing Rule 11.1.10R. The net proceeds of the Offer will,
therefore, be GBP9,700,000 if the Offer is fully subscribed.
Expected Scheme timetable
2016
Latest time and date for receipt
of the forms of proxy for the
first general meeting of Baronsmead 10.00 a.m.
VCT on 26 January
Latest time and date for receipt
of forms of proxy for the general 11.00 a.m.
meeting of Baronsmead VCT 2 on 26 January
First general meeting of Baronsmead 10.00 a.m.
VCT on 28 January
General meeting of Baronsmead 11.00 a.m.
VCT 2 on 28 January
Calculation Date 31 January
Time and date from which it is
advised that dealings in Baronsmead
VCT shares should only be for
cash settlement and immediate 8.00 a.m. on
delivery of documents of title 2 February
Latest time and date for receipt
of forms of proxy for the second
general meeting of Baronsmead 10.00 a.m.
VCT on 4 February
Record date for BVCT Shareholders 6.00 p.m. on
entitlements under the Scheme 5 February
Dealings in Baronsmead VCT shares 7.30 a.m. on
suspended 8 February
Second general meeting of Baronsmead 10.00 a.m.
VCT on 8 February
Effective Date for implementation
of the Scheme and commencement
of the liquidation of Baronsmead
VCT 8 February
Admission to listing and dealings
commence in the New Shares issued 8.00 a.m. on
pursuant to the Scheme 11 February
New Shares issued in uncertificated
form credited to CREST accounts
of BVCT Shareholders under the 8.00 a.m. on
Scheme 11 February
Cancellation of listing of Baronsmead
VCT shares from the premium segment
of the Official List and trading
on the Main Market of the London 8.00 a.m. on
Stock Exchange 11 February
Share and tax certificates in
respect of New Shares issued
in certificated form pursuant
to the Scheme despatched to Shareholders week commencing
entitled thereto 15 February
Note: Each of the times and dates in the above expected
timetable (other than in relation to the General Meetings) may be
extended or brought forward without further notice. If any of the
above times and/or dates change, the revised time(s) and/or date(s)
will be notified to investors by an announcement through a
Regulatory Information Service provider.
Expected Offer timetable
2016
Record date for the Offer 7 January
Offer opens 13 January
First allotment 8 February
Second allotment 11 March
Final allotment 28 March
Offer closes 28 March
Dealings in New Shares commence 3 business
days after
allotments
Definitive share certificates within 10 Business
despatched Days of allotments
Note: The board of Baronsmead VCT 2 may close the Offer earlier
than the date stated above if it is fully subscribed by an earlier
date or may extend such Offer. The board of Baronsmead VCT 2
further reserves the right to accept subscription forms and to
allot and arrange for the listing of New Shares in respect of
subscriptions received on or prior to the closing date of the Offer
as the Board of Baronsmead VCT 2 sees fit, which may not be on the
dates stated above.
Copies of the Prospectus and Circulars will shortly be available
for inspection at the National Storage Mechanism, which is located
at:
http://www.hemscott.com/nsm.do
and on the website of the Companies:
http://www.baronsmeadvcts.com
For additional information, please contact:
Michael Probin - VCT Investor Relations Director
Livingbridge VC LLP
Tel: 020 7506 5796
This information is provided by RNS
The company news service from the London Stock Exchange
END
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January 11, 2016 08:29 ET (13:29 GMT)
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