Octopus VCT 2 PLC Octopus Vct 2 Plc : Publication Of A Prospectus And Circulars In Respect Of Proposals To Merge With Octopus...
03 November 2015 - 4:46AM
UK Regulatory
TIDMOVC2
Octopus Apollo VCT plc ("Apollo")
Octopus VCT 2 plc ("OVCT2")
(together the "Companies")
2 November 2015
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 6 October 2015, the boards of Apollo and OVCT2 (the "Boards")
announced that they had entered into discussions to merge the Companies
into one company (the "Enlarged Company") and the Apollo Board announced
that it also intended to raise further funds into Apollo pursuant to an
offer for subscription (the "Offer") 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 and a
Prospectus relating to the Offer and Merger. Each of the Companies is
managed by Octopus Investments Limited ("Octopus").
The Merger will be completed by OVCT2 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.
OVCT2 shareholders will receive one D ordinary share of 1p in the
capital of Apollo ("Scheme Shares" or "D Ordinary Shares") for every
ordinary share of 1p held in OVCT2 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 GBP30 million under an offer for subscription
for new ordinary shares ("Offer Shares"), with an over allotment
facility of a further GBP10 million. The Offer is subject to the
approval of the Apollo shareholders.
Background
Since launch in 2006, Octopus Apollo VCT has been managed, with on the
aim of providing shareholders with a stable, regular income. OVCT2 was
launched in January 2011 with a similar investment mandate and is
managed by the same Octopus team as Apollo. Octopus was founded in
March 2000.
The latest unaudited NAV of Apollo, as at 21 August 2015, was 83.4p per
ordinary share and the latest unaudited NAV of OVCT2, as at 30 June
2015, was 100.0p per ordinary share. The table below sets out the
unaudited NAVs of the Companies and provides further detail on the
venture capital investments in their portfolios.
NAV per Number of
Net Assets share venture
(unaudited) (unaudited) capital Carrying value of the venture capital investments
Company (GBP'm) (p) investments (GBP'm) NAV plus cumulative dividends paid* (p)
Apollo 105 83.4 30 91.5 113.4
OVCT2 19 100.0 14 14.3 105.0
* the sum of (i) the unaudited 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 a stable, regular income and capital return
by investing their funds in a broad spread of unquoted UK companies
which meet the relevant criteria for 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 OVCT2 who wish to exit
after their 5 year qualifying holding period 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:
-- OVCT2 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 OVCT2 will be transferred to Apollo
in consideration for the issue of Scheme Shares; and
-- the assets and liabilities of OVCT2 transferred to Apollo will constitute
a separate share fund.
The effect of the Scheme will be that OVCT2 shareholders will receive
one Scheme Share in Apollo for each OVCT2 share held.
The Scheme is conditional upon its approval by the Apollo shareholders
and by the OVCT2 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 GBP290,000, including VAT, legal and professional fees,
stamp duty and the costs of winding up OVCT2. The costs of the Merger
will be split proportionately between the Companies by reference to
their respective NAVs immediately prior to the Merger.
Shareholders and investors should note that the merger by way of the
Scheme will be outside the provisions of the City Code on Takeovers and
Mergers.
The portfolio of assets which will be transferred from OVCT2 to Apollo
as part of the Scheme is all considered to be in keeping with Apollo's
investment policy. The extent of the liabilities (if any) which will be
transferred from OVCT2 to Apollo as part of the Scheme will be those
which are incurred in the ordinary course of business and 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.
OVCT2 shareholders who do not vote in favour of the resolution to be
proposed at OVCT2's first general meeting, as referred to in the
timetable below, are entitled to dissent and have their shareholding
purchased by the liquidators of OVCT2 (the "Liquidators") at a price
agreed between the dissenting OVCT2 shareholders and the Liquidators (or
by arbitration), which would be expected to be at a significant
reduction to the net asset value of an OVCT2 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 Apollo as a
VCT. It is the intention of the Apollo Board to continue to comply with
the requirements of Income Tax Act 2007 following the Merger so that
Apollo continues to qualify as a VCT.
Exit opportunity for OVCT2 Shareholders
After 30 June 2016, once the VCT qualifying period for the current OVCT2
shareholders has been achieved, an opportunity will be provided for the
holders of D Ordinary Shares to exit their investment in Apollo or,
should they wish to continue their investment, to have their D Ordinary
Shares converted into Ordinary Shares on a relative NAV basis in
accordance with Apollo'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 am on 26 November
for the General Meeting 2015
General Meeting 11 am on 30 November
2015
Scheme Calculation Date after 5.00 pm on 26
January 2016
Scheme Effective Date for the transfer of the assets 27 January 2016
and liabilities of OVCT2 to the Company and the issue
of Scheme Shares
Announcement of the results of the Scheme 27 January 2016
Admission of, and dealings in, Scheme Shares issued 28 January 2016
to commence
CREST accounts credited (if applicable) 28 January 2016
Certificates for Scheme Shares despatched to OVCT2 Week commencing 15
Shareholders February 2016
OVCT2
Latest time for receipt of forms of proxy for the 3.00 pm on 14 January 2016
OVCT2 First General Meeting
OVCT2 First General Meeting 3.00 pm on 18 January 2016
(MORE TO FOLLOW) Dow Jones Newswires
November 02, 2015 12:46 ET (17:46 GMT)
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