TIDMVICT TIDMATI2
RNS Number : 1974P
Victory VCT PLC
29 September 2011
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, ENHANCED 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 ViCTory also 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 2.00 pm on 29 October 2011
proxy 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 8 November 2011
the 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 8 November 2011
Scheme
Admission of and dealings in the 9 November 2011
New Shares (in respect of the
Scheme) to commence
CREST accounts credited with the 9 November 2011
New Shares (in respect of the
Scheme)
Effective date of the Share after close of business on 9 November
Reconstruction 2011
Amendment to the listing of the 10 November 2011
Shares arising from the Share
Reconstruction
CREST accounts credited with the 10 November 2011
New Shares (in respect of the Share
Reconstruction)
Certificates for the New Shares 16 November 2011
dispatched
EXPECTED TIMETABLE FOR AMATI VCT 2
(Dates subject to variation if any General Meeting is
adjourned)
Date from which it is advised that 29 October 2011
dealings 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 2.30 pm on 29 October 2011
proxy 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 2.30 pm on 6 November 2011
proxy for the Amati VCT 2 Second
General
Record Date for Amati VCT 2 7 November 2011
Shareholders' 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 8 November 2011
Scheme
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 5.00 pm on 5 September 2012
the Enhanced Share Buy Back and
Reinvestment Facility
Closing date for 2012/13 Offer 5.00 pm on 10 September 2012
unless 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 allotment
dispatched
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 GBP50 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 2GM 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 ViCTory accept 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCUKRARANAKUAR
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