Octopus Titan VCT 1 Octopus Titan Vct 1 Plc : Publication Of A Prospectus And Circulars With Recommended Proposals To Merge T...
September 16 2014 - 1:10PM
UK Regulatory
TIDMOTV1
Octopus Titan VCT 1 plc ("Titan 1")
Octopus Titan VCT 2 plc ("Titan 2")
Octopus Titan VCT 3 plc ("Titan 3")
Octopus Titan VCT 4 plc ("Titan 4")
Octopus Titan VCT 5 plc ("Titan 5")
(together the "Companies" and Titan 1, Titan 3, Titan 4 and Titan 5
together "Titan 1, 3, 4 and 5" and each a "Target VCT")
16 September 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 under
section 110 Insolvency Act 1986) and an offer for subscription by the
Companies
The boards of the Companies (the "Boards") announced on 3 September 2014
that the terms for the merger of the Companies into one company (the
"Enlarged Company") had been agreed in principle (the "Merger" or
"Scheme"). 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 Titan 1, 3, 4 and 5 each 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.
The Merger will be completed on a relative net asset basis and the
benefits shared by each set of shareholders, with the costs being split
proportionately based on their respective merger net asset values. The
Merger requires the approval of resolutions by the Companies'
shareholders.
The Companies are also seeking to raise GBP50 million under an offer for
subscription for new ordinary shares ("Offer Shares"), with an over
allotment facility of a further GBP20 million (the "Offer"), split
equally in respect of each allotment between those Companies
participating in the Offer at the time of that allotment. Participation
by each of the Companies in the Offer is subject to the approval of its
shareholders and, in the case of Titan 1, 3, 4 and 5, participation in
respect of any allotment is conditional on the Scheme not having taken
place prior to the time of that allotment.
Titan 2 is also 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 agreements with
Octopus, being arrangements with Octopus which is a related party under
the Listing Rules, and a change of its name to Octopus Titan VCT plc if
the Merger proceeds.
Background
Titan 2 was launched in October 2007 and has been managed by the Octopus
team since inception. Octopus was launched in March 2000.
The latest unaudited NAV of Titan 2, taken from its unaudited management
accounts to 31 July 2014, was 91.6p per share, and the latest unaudited
NAVs of Titan 1, 3, 4 and 5, taken from their respective unaudited
management accounts to 31 July 2014, was 91.6p per share, 91.4p per
share, 102.8p per share and 91.8p per share respectively.
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 that date.
NAV per Number of
Net Assets share venture Total
(unaudited) (unaudited) capital Carrying value of the venture capital investments Return
Company (GBP) (p) investments (GBP) (p)
Titan 1 29,981,847 91.6 37 21,703,823 139.1
Titan 2 29,974,279 91.6 37 21,703,823 139.1
Titan 3 33,167,724 91.4 37 26,006,640 127.4
Titan 4 40,258,949 102.8 35 32,319,093 107.8
Titan 5 28,669,345 91.8 30 16,306,512 91.8
The Companies have the same overall investment objective and policy of
providing their shareholders with an attractive income and capital
return by investing their finds 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.
In addition, the changes announced to the VCT investment limits and size
test, in particular the removal of the GBP1 million per annum investment
limit per VCT in an investee company, will reduce the need for sister
VCTs to co-invest in order to participate in larger investments
(effective for investments made on or after 6 April 2012).
The Merger is expected to cost approximately GBP1 million and deliver
annual cost savings of approximately GBP0.5 million and will bring a
number of additional benefits to existing and future including:
-- amalgamation of the Companies' portfolio assets, many of which are
commonly held, for efficient management and administration;
-- participation in a larger VCT with the longer term potential for a more
diversified portfolio thereby spreading the portfolio risk across a
broader range of investments;
-- the creation of a single VCT of a more economically efficient size with a
greater capital base over which to spread administration, regulatory and
management costs;
-- efficiencies in annual running costs for the Enlarged Company compared to
the separate companies;
-- enhancing the ability of the Enlarged Company to raise new funds, as well
as pay dividends and support buy backs in the future;
-- the potential for greater liquidity in the secondary market;
-- the removal of potential conflicts relating to the Companies' portfolio
investments;
-- streamlining communications with shareholders; and
-- improving risk management in respect of compliance with the VCT rules.
The Scheme
The mechanism by which the Merger will be completed is as follows:
-- Titan 1, 3, 4 and 5 will be placed into members' voluntary liquidation
pursuant to a scheme of reconstruction under Section 110 IA 1986; and
-- all of the assets and liabilities of Titan 1, 3, 4 and 5 will be
transferred to Titan 2 in consideration for the issue of new ordinary
shares ("Scheme Shares") (to be issued directly to Titan 1, 3, 4 and 5
shareholders).
The Scheme will be completed on a relative audited NAV basis, adjusted
for the anticipated costs of the Scheme. The calculation of the NAV of
the Titan VCTs will take into account any subscription monies received
by the Titan VCTs under the Offer prior to the Merger. The Merger Value
and the Titan 1, 3, 4 and 5 Roll-Over Values will be based on the latest
unaudited valuations of the Titan VCTs' investee companies. In addition,
independent valuations will be carried out of those unquoted investee
companies into which the Titan VCTs have not invested in the previous 12
month period and which are more than 5% of any of the value of any of
the Titan VCTs. The effect of the Scheme will be that the Titan 1, 3, 4
and 5 Shareholders will receive Titan 2 Shares with the same total value
as their Titan 1, 3, 4 and 5 Shares.
The Scheme is conditional upon its approval by the Titan 2 shareholders
and by the Titan 1, 3, 4 and 5 shareholders, as well as the other
conditions set out in each of the Prospectus and Circulars.
As the Companies have the same 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.
Offer Agreements
Pursuant to the Offer Agreements, Octopus will receive:
-- a fee of up to 5.5% of the gross proceeds received by the Companies under
the Offer (comprising an initial charge of 3 % of the gross funds raised
and an initial commission of up to 2.5% of gross funds raised from
investors who have not invested their money through a financial
intermediary ("Direct Investors")); and
-- an additional ongoing charge of 0.5% of the net asset value of the
investment amounts received by the Companies from Direct Investors,
payable for up to nine years, provided the Direct Investors continue to
hold the shares.
Expected Timetable for the Offer
Titan 2
Latest time and date for receipt of Forms of Proxy 11.00 am on 14 October
for the Titan 2 General Meeting 2014
Titan 2 General Meeting 11.15 am on 16 October
2014
Scheme Calculation Date after 5.00 pm on 27
October 2014
Scheme Effective Date for the transfer of the assets 28 October 2014
and liabilities of Titan 1, 3, 4 and 5 to Titan 2
and the issue of Scheme Shares
Announcement of the results of the Scheme 28 October 2014
Admission of, and dealings in, Scheme Shares issued 29 October 2014
to commence
CREST accounts credited (if applicable) 29 October 2014
Certificates for Scheme Shares dispatched to Titan Week commencing 17
1, 3, 4 and 5 Shareholders November 2014
Titan 1, 3, 4 and 5
Latest time for receipt of forms of proxy for the 11.00 am on 14 October2014
Titan 1, 3, 4 and 5 First General Meetings
Titan 1 First General Meeting 11.30 am on 16 October2014
Titan 3 First General Meeting 2.15 pm on 16 October2014
Titan 4 First General Meeting 11.45 am on 16 October2014
Titan 5 First General Meeting 2.30 pm on 16 October2014
Latest time for receipt of forms of proxy for the 10.45 am on 24 October2014
Titan 1, 3, 4 and 5 Second General Meetings
Titan 1, 3, 4 and 5 register of members closed 27 October2014
Final expected date of trading of the Titan 1, 3, 27 October 2014
4 and 5 shares
Scheme Record Date for Titan 1, 3, 4 and 5 Shareholders' 5.00 pm on 27 October 2014
entitlements under the Scheme
Scheme Calculation Date after 5.00 pm on 27 October
2014
Dealings in Titan 1, 3, 4 and 5 Shares suspended 7.30 am on 28 October 2014
Titan 1 Second General Meeting 11.30 am on 28 October 2014
Titan 3 Second General Meeting 11.15 am on 28 October 2014
Titan 4 Second General Meeting 11.00 am on 28 October 2014
Titan 5 Second General Meeting 10.45 am on 28 October 2014
Scheme Effective Date for the transfer of the 28 October 2014
assets and liabilities of Titan 1, 3, 4 and 5 to the
Company and
the issue of Scheme Shares *
Announcement of the results of the Scheme 28 October 2014
Cancellation of the Titan 1, 3, 4 and 5 Shares' listing 8.00 am on 29 October 2014
(*The final expected date of trading of the Titan 1, 3, 4 and 5 Shares
will be 27 October 2014. See the timetable for Titan 2 with regard to
admission, CREST accounts being credited and certificates being
dispatched in respect of the Scheme Shares)
Expected Timetable for the Offer
Launch date of the Offer 16 September 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
in 2015/16 tax year September 2015
First allotments under the Offer 17 November 2014
Closing date of the Offer 1 September 2015
-- The Offer will close earlier if fully subscribed. The Boards reserve 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 the Offer Shares within ten business
days of allotments and share and tax certificates are expected to be
dispatched within 14 business days of allotments.
-- The dates set out in the expected timetable above may be adjusted by the
Companies, in which event details of the new dates will be notified
through a Regulatory Information Service.
Offer Statistics
Costs of Offer Up to 7.5% 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 7.5%. Octopus has agreed to indemnify
the Companies 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:
Patricia Standaloft
Company Secretary
0207 710 6471
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 Titan VCT 1 PLC via Globenewswire
HUG#1856407
http://www.octopusinvestments.com
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