Octopus VCT Octopus Vct Plc : Publication Of A Prospectus And Circulars In Respect Of Proposals To Merge With Octopus Apollo ...
October 24 2014 - 10:42AM
UK Regulatory
TIDMOVCT
Octopus Apollo VCT plc ("Apollo")
Octopus VCT plc ("OVCT")
(together the "Companies")
24 October 2014
Publication of a Prospectus (the "Prospectus") and Circulars (the
"Circulars") in connection with recommended proposals to merge the
Companies (to be completed pursuant to a scheme of reconstruction (the
"Scheme" or "Merger") under section 110 Insolvency Act 1986) and an
offer for subscription by Apollo.
On 29 September 2014, the boards of Apollo and OVCT (the "Boards")
announced that they had entered into discussions to merge the Companies
into one company (the "Enlarged Company") and that it was also intended
to raise further funds into Apollo pursuant to an offer for subscription
at the same time. The Boards are pleased to advise that discussions have
now concluded and that the Companies have today issued the Circulars to
set out the proposals for the Merger for consideration by their
respective shareholders. Each of the Companies is managed by Octopus
Investments Limited ("Octopus").
The Merger will be completed by OVCT being placed into members'
voluntary liquidation pursuant to a scheme of reconstruction under
Section 110 of the Insolvency Act 1986. Shareholders should note that
the Merger will be outside the provisions of the City Code on Takeovers
and Mergers.
OVCT shareholders will receive one C ordinary share of 1p in the capital
of Apollo ("Scheme Shares" or "C Ordinary Shares") for every ordinary
share of 1p held in OVCT and the benefits will be shared by each set of
shareholders, with the costs being split proportionately based on the
net asset values of the Companies. The Merger requires the approval of
resolutions by the Companies' shareholders.
Apollo is seeking to raise GBP20 million under an offer for subscription
for new ordinary shares ("Offer Shares"), with an over allotment
facility of a further GBP10 million (the "Offer"). Participation by
Apollo in the Offer is subject to the approval of the Shareholders and
is conditional on the Scheme having taken place prior to the time of the
first allotment.
Apollo is seeking the approval of shareholders of an offer agreement
relating to the Offer (the "Offer Agreement") and a deed of variation to
its existing management and administration agreement with Octopus, being
arrangements with Octopus which is a related party under the Listing
Rules.
Background
Apollo was launched in July 2006 as Octopus Protected VCT plc and became
part of the Apollo family of VCTs in 2008. It has been managed, with a
capital preservation mandate, by the Octopus team since inception. OVCT
was launched in September 2009 and has also been managed by the Octopus
team since inception.
The latest unaudited NAV of Apollo, taken from its unaudited half yearly
report for the six months to 31 July 2014, published on 15 October 2014,
was 86.9p per share, and the latest unaudited NAV of OVCT, taken from
its unaudited half yearly report for the six months to 31 August 2014,
was 98.8p per share. The table below sets out the unaudited NAVs of the
Companies and provides further detail on the venture capital investments
in their portfolios as at these dates.
NAV per Number of
Net Assets share venture Total
(unaudited) (unaudited) capital Carrying value of the venture capital investments Return*
Company (GBP'000) (p) investments (GBP'000) (p)
Apollo 66,801 86.9 25 57,438 111.9
OVCT 51,427 98.8 47 48,190 104.8
* the sum of (i) the NAV per share and (ii) all distributions per share
paid since the first admission of the shares to the Official List
Each of the Companies has an investment objective and policy of
providing Shareholders with an attractive income and capital return by
investing their funds in a broad spread of unquoted UK companies which
meet the relevant criteria for venture capital trusts ("VCTs").
VCTs are required to be traded on a European Union/European Economic
Area regulated market. The Companies are listed on the premium segment
of the Official List, which involves a significant level of listing
costs, as well as related fees to ensure they comply with all relevant
legislation. The Enlarged Company should be better placed to spread such
running costs across a larger asset base and facilitate better liquidity
management and, as a result, may be able to maximise investment
opportunities and sustain a higher level of dividends to shareholders
over its life.
In September 2004, the Merger Regulations were introduced allowing VCTs
to be acquired by, or merge with, each other without prejudicing the VCT
tax reliefs obtained by their shareholders. A number of VCTs have taken
advantage of these regulations to create larger VCTs.
With the above in mind, the Boards entered into discussions with Octopus
to consider a merger of the Companies to create a single, larger VCT.
The aim of the Boards is to improve shareholder value while also
creating liquidity for those current investors of OVCT who wish to exit
when the 5 year qualifying holding period for all OVCT shareholders has
been reached,. The Boards also expect to achieve, among other things,
strategic and scale benefits through the creation of an enlarged VCT.
The Scheme
The mechanism by which the Merger will be completed is as follows:
-- OVCT will be placed into members' voluntary liquidation pursuant to a
scheme of reconstruction under Section 110 IA 1986;
-- all of the assets and liabilities of OVCT will be transferred to Apollo
in consideration for the issue of Scheme Shares; and
-- the assets and liabilities of OVCT transferred to the Company will
constitute a separate share fund (the "C Ordinary Share Fund").
The effect of the Scheme will be that OVCT Shareholders will receive one
Scheme Share for each OVCT share held.
The Scheme is conditional upon its approval by the Apollo shareholders
and by the OVCT shareholders, as well as the other conditions set out in
the Prospectus and Circulars.
As the Companies have a similar investment objective and policy, the
same investment manager and other common advisers, the proposed Merger
should be achievable without major additional cost or disruption to the
Companies and their combined portfolio of investments.
The aggregate anticipated cost of undertaking the Merger is
approximately GBP0.4 million, including VAT, legal and professional fees,
stamp duty and the costs of winding up OVCT. The costs of the Merger
will be split proportionately between the Companies by reference to
their respective NAVs immediately prior to the Merger.
The portfolio of assets which will be transferred from OVCT to the
Company as part of the Scheme is all considered to be in keeping with
the Company's investment policy. The extent of the liabilities (if any)
which will be transferred from OVCT to the Company as part of the Scheme
will be those which are incurred in the ordinary course of business and
any merger costs which remain unpaid at the time of transfer. Any such
liabilities are expected to be nominal in comparison to the value of the
assets.
OVCT shareholders who do not vote in favour of the resolution to be
proposed at OVCT's first general meeting, as referred to in the
timetable below, are entitled to dissent and have their shareholding
purchased by the liquidators of OVCT (the "Liquidators") at a price
agreed between the dissenting OVCT Shareholders and the Liquidators (or
by arbitration), which would be expected to be at a significant
reduction to the net asset value of an OVCT share. If the conditions of
the Scheme are not satisfied, the Companies will continue in their
current form and the Boards will continue to review all options
available to them regarding the future of the Companies.
Clearance has been requested from HMRC that the Scheme meets the
requirements of the Merger Regulations and, therefore, that the
implementation of the Scheme should not affect the status of the Company
as a VCT. It is the intention of the Board of the Company to continue to
comply with the requirements of Income Tax Act 2007 following the Merger
so that the Company continues to qualify as a VCT.
Exit opportunity for OVCT Shareholders
In the summer of 2015, once the five-year VCT qualifying period for the
current OVCT shareholders has been achieved, an opportunity will be
provided for the holders of C Ordinary Shares to exit their investment
in Apollo or, should they wish to continue their investment, to have
their C Ordinary Shares converted into Ordinary Shares on a relative NAV
basis in accordance with the Company's articles of association.
EXPECTED TIMETABLE, OFFER STATISTICS AND COSTS
Expected Timetable for the Scheme
Apollo
Latest time and date for receipt of Forms of Proxy 11.00 am on 19 November
for the General Meeting 2014
General Meeting 11.00 am on 21 November
2014
Scheme Calculation Date after 5.00 pm on 27
November 2014
Scheme Effective Date for the transfer of the assets 28 November 2014
and liabilities of OVCT to the Company and the issue
of Scheme Shares
Announcement of the results of the Scheme 28 November 2014
Admission of, and dealings in, Scheme Shares issued 1 December 2014
to commence
CREST accounts credited (if applicable) 1 December 2014
Certificates for Scheme Shares despatched to OVCT Week commencing 15
Shareholders December 2014
OVCT
Latest time for receipt of forms of proxy for the 11.30 am on 17 November
OVCT First General Meeting 2014
OVCT First General Meeting 11.30 am on 19 November 2014
Latest time for receipt of forms of proxy for the 11.00 am on 26 November 2014
OVCT Second General Meeting
OVCT register of members closed 11.00 am on 28 November 2014
Final expected date of trading of the OVCT Shares 27 November 2014
Scheme Record Date for OVCT Shareholders' 5.00 pm on 27 November 2014
entitlements under the Scheme
Scheme Calculation Date after 5.00 pm on 27 November
2014
Dealings in OVCT Shares suspended* 7.30 am on 28 November 2014
OVCT Second General Meeting 11.00 am on 28 November 2014
Scheme Effective Date for the transfer of the 28 November 2014
assets and liabilities of OVCT to the Company and
the issue of Scheme Shares
Announcement of the results of the Scheme 28 November 2014
Cancellation of the OVCT Shares' listing 8.00 am on 1 December 2014
(*The final expected date of trading of the OVCT Shares will be 27
November 2014. See the timetable for Apollo with regard to admission,
CREST accounts being credited and certificates being despatched in
respect of the Scheme Shares)
Expected Timetable for the Offer
Launch date of the Offer 24 October 2014
Deadline for receipt of applications for final allotment 12 noon on 1 April
in 2014/15 tax year 2015
Deadline for receipt of applications for final allotment 12 noon on 1 October
in 2015/16 tax year 2015
First allotments under the Offer 19 December 2014
Closing date of the Offer 1 October 2015
-- The Offer will close earlier if fully subscribed. The Board reserves the
right to close the Offer earlier and to accept Applications and issue
Offer Shares at any time following the receipt of valid applications.
-- The results of the Offer will be announced to the London Stock Exchange
through a Regulatory Information Service provider authorised by the
Financial Conduct Authority.
-- Dealing is expected to commence in Offer Shares within ten business days
of allotments and share and tax certificates are expected to be
despatched within 14 business days of allotments.
-- The dates set out in the expected timetable above may be adjusted by the
Company, in which event details of the new dates will be notified through
a Regulatory Information Service.
Offer Statistics
Costs of Offer Up to 7.0% of gross proceeds of Offer
Initial adviser charge Up to 4.5% of gross proceeds of Offer
or intermediary
commission
Ongoing adviser charge Up to 0.5% per annum of the latest NAV of gross sums
or annual ongoing invested in the Offer for up to 9 years
charge
-- The cost of the Offer is capped at 7.0%. Octopus has agreed to indemnify
the Company against the costs of the Offer in excess of this amount.
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 Company's website:
http://www.octopusinvestments.com
For further information please contact:
Nicola Board
Company Secretary
0207 776 8663
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Octopus VCT PLC via Globenewswire
HUG#1865719
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