TIDMBNS
RNS Number : 2232N
Baronsmead VCT 4 PLC
27 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 3 plc
Baronsmead VCT 4 plc
27 January 2016
Publication of a Prospectus and Circulars in connection with
recommended proposals for the merger of Baronsmead VCT 3 plc and
Baronsmead VCT 4 plc (the "Companies") and an offer for
subscription to raise up to GBP10 million
The boards of the Companies (the "Boards") announced on 10
December 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 4 plc ("BVCT4")
under section 110 of the Insolvency Act 1986 (the "Scheme"). The
Scheme provides for the undertaking, assets and liabilities of
BVCT4 to be transferred to the Company in consideration for the
issue of new shares (the "New Shares") in Baronsmead VCT 3 plc
("BVCT3") of an equivalent value to BVCT4 shareholders ("BVCT4
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 GBP157 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"). Until close of business on 15 February 2016
the Offer will be open exclusively to existing shareholders of the
Companies. Should the Offer not be fully subscribed before this
time, the remaining New Shares to be issued under the Offer will be
used to satisfy subscriptions from shareholders in the Baronsmead
VCTs until close of business on 3 March 2016. If the Offer is not
fully subscribed by close of business on 3 March 2016, the balance,
if any, will be used to satisfy the subscriptions of any other
investors. The full terms and conditions of the Offer are set out
in the prospectus which was published by BVCT3 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 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 shareholders
of the Companies benefitting from estimated aggregate costs savings
of the Enlarged Company of approximately GBP355,000. In addition,
the Directors believe that the size of the Enlarged Company will
give it greater presence in the market for making investments. For
these reasons the directors of the Companies believe that their
respective shareholders' interests will be best served by the
Merger.
Performance track record
Both of the Companies have been managed by Livingbridge and its
predecessor businesses since their respective launches in 2001.
Since its launch, BVCT3 has paid an average annual dividend of 6.9
pence per share (equivalent to 9.1 pence per share to investors who
are higher rate tax payers). Over the last five years BVCT3 has
paid an average annual dividend of 9.4 pence per share (equivalent
to 12.5 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
annual
Average dividends
annual paid per NAV total
dividends share return
paid per in the per share
share past 5 since
Launch NAV* since years** launch
Company date (GBPm) launch**(p) (p) *++
--------- ---------- -------- ------------- ----------- -----------
January
BVCT3 2001 82.1 6.9 9.4 286.8
--------- ---------- -------- ------------- ----------- -----------
December
BVCT4 2001 75.1 5.9 8.2 232.3
--------- ---------- -------- ------------- ----------- -----------
Notes:
* As at 30 November 2015.
** As at 31 December 2015. These figures include the interim
dividend that was paid on 18 December 2015.
++ 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 1 year 3 years 5 years Since launch
to 30 November
2015
----------------- ------- -------- -------- -------------
BVCT3 114.0 135.0 161.5 286.8
----------------- ------- -------- -------- -------------
BVCT4 113.3 129.3 152.3 232.3
----------------- ------- -------- -------- -------------
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 BVCT3 to be issued to BVCT4
Shareholders under the Scheme will be based on the adjusted net
asset value of an ordinary share in BVCT3 (the "FAV per BVCT3
Share") and the adjusted net asset value of an ordinary share in
BVCT4 (the "FAV per BVCT4 Share"). The FAV per BVCT3 Share and the
FAV per BVCT4 Share will be calculated as at 10 March 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 BVCT3 Share will be the net asset value of an
ordinary share in BVCT3 adjusted to add back the costs and expenses
of the Scheme already incurred by BVCT3 prior to the effective date
of the Scheme, expected to be 11 March 2016 (the "Effective Date").
The FAV per BVCT4 Share will be calculated in accordance with the
Scheme and will be the net asset value of an ordinary share in
BVCT4 adjusted to add back the costs and expenses of the Scheme
already incurred by BVCT4 prior to the Effective Date.
Shareholders in BVCT4 will be issued such number of New Shares
with a FAV per BVCT3 Share equal to 100 per cent. of the FAV per
BVCT4 Share of their shareholding in BVCT4. The New Shares issued
pursuant to the Scheme will rank equally in all respects with the
existing issued ordinary shares of BVCT3.
The Offer
The Offer will be open exclusively to existing shareholders of
the Companies until close of business on 15 February 2016. Should
the Offer not be fully subscribed before this time, the remaining
New Shares to be issued under the Offer will be used to satisfy
subscriptions from shareholders in the Baronsmead VCTs until close
of business on 3 March 2016. If the Offer is not fully subscribed
by close of business on 3 March 2016, the balance, if any, will be
used to satisfy the subscriptions of any other investors.
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 and
thereafter in multiples of GBP1,000. 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 BVCT3 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.
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