Last checked at 
11 Aug 2010 17:03
INVESTEC STRUCTURED PRODUCTS CALCULUS VCT PLC
11 AUGUST 2010
RECOMMENDED PROPOSALS TO AUTHORISE THE ISSUE OF ORDINARY SHARES, AMEND THE ARTICLES, CREATE AND AUTHORISE THE ISSUE OF C SHARES, RENEW THE AUTHORITY TO REPURCHASE SHARES, CANCEL SHARE PREMIUM, AMEND THE INVESTMENT OBJECTIVE AND POLICY AND APPROVE THE RELATED PARTY TRANSACTIONS
SUMMARY
The board of directors of the Company ("Board") is pleased to advise that they are today writing to shareholders with proposals to authorise further funds being raised through the issue of ordinary shares of 1p each ("Ordinary Shares") and then a subsequent issue of C ordinary shares of 1p each ("C Shares"), the latter to be managed as a separate pool of assets.
In order to proceed with these fundraisings, approval from shareholders is required to authorise the issue of Ordinary Shares and C Shares. In addition, amendments to the existing articles of association ("Articles") and the investment objective and policy are required to take into account a separate class of C Shares, as well as enter into related party transactions with Investec Structured Products and Calculus Capital Limited (the investment managers of the Company ("the Managers")). The Board also proposes to renew its general share allotment and buyback authorities and cancel share premium created by the issue of further shares.
The above proposals require the approval of resolutions to be proposed to shareholders of the Company at a general meeting to be held on 6 September 2010 ("the General Meeting").
BACKGROUND
The Company was launched in March 2010 and raised £3.8 million (before expenses). The Board was encouraged by the level of investor demand for this first funding round for the Company, particularly given its late launch before the end of the 2009/2010 tax year.
ORDINARY SHARE OFFER
The Board intends to launch the offer for Ordinary Shares ("Ordinary Share Offer") in early September 2010 to raise up to £10 million.
The offer price for the Ordinary Shares will be linked to NAV plus offer costs so as to avoid dilution to existing holders of Ordinary Shares. The funds raised will be added to the existing Ordinary Shares fund and invested in accordance with the investment policy of the Company. If the Ordinary Share Offer proceeds and funds are raised, the Company will increase its size and annual running costs can be split over a larger asset base.
CREATION OF C SHARE AND THE C SHARE OFFER
The Articles will be amended to provide for the rights attaching to the C Shares and the funds raised by the issue of C Shares will be managed and accounted for separately by the Company.
The C Shares will rank pari passu with the Ordinary Shares from the date of issue, save that each class of share will be entitled to the assets, distributions and returns on liquidation arising in respect of their relevant fund.
The segregation of the Company's assets into two funds will mean that the holders of Ordinary Shares will be exclusively entitled to receive the net returns flowing from the investments made out of the Ordinary Shares fund, whilst the holders of C Shares will be exclusively entitled to receive the returns flowing from investments made out of the C Shares fund. Each fund will bear its pro rata share (based on net assets) of the annual running costs of the Company, unless expenses can be attributed to a particular fund.
The Board intends to launch the offer for C Shares ("C Share Offer") to raise up to £25 million in December 2010 and to close the C Share Offer at the end of April 2011. The C Shares, as a new separate class, will be issued at £1 per share. Creation of a separate class of C Shares and the C Share Offer seeks to further increase the size of the Company over which the annual running costs can be spread.
AMENDMENT TO THE INVESTMENT OBJECTIVE AND POLICY
The existing investment objective and policy of the Company is specifically drafted on the basis of there being one share class in issue. In order to provide for an investment objective and policy which sits across both the Ordinary Shares fund and the C Shares fund (as well as any subsequent class of shares the Company may issue in the future), it is proposed that the existing investment objective and policy be amended to be generic and stand alone.
RELATED PARTY TRANSACTIONS
The existing management and performance incentive arrangements and other provisions relating to the Ordinary Shares fund will automatically extend and apply to the funds raised pursuant to the Ordinary Share Offer.
Supplemental investment management agreements with each of the Managers will be entered into in respect of investment management services for the C Shares fund, materially on the same terms as the existing arrangements for the Ordinary Shares fund. Pursuant to these supplemental arrangements, Calculus Capital will receive an annual investment management fee of an amount equivalent to 1.0 per cent. of the net assets of the Company attributable to the C Shares fund. Investec Structured Products will not receive any annual management fees from the Company in respect of the C Shares fund.
A supplemental performance incentive agreement with both of the Managers will also be entered into in respect of performance incentive fees for the C Shares fund, materially on the same terms as the arrangements for the Ordinary Shares fund. Pursuant to this supplemental arrangement, the Managers will each receive a performance incentive fee payable in cash of an amount equal to 10 per cent. of dividends and distributions paid (including the relevant distribution being offered) to the holders of C Shares over and above 105p per C Share. Such payment will be subject to holders of C Shares having received an interim return per C Share, the amount to be agreed before launch of the C Shares Offer, (whether through dividends or other distributions on C Shares, C Share buy-backs and any other proceeds or value received or offered per C Share, excluding initial income tax relief on subscriptions for C Shares) on or before 14 December 2016.
Investec Structured Products will also act as promoter to the Ordinary Share Offer and the C Share Offer and will be paid a commission of 5.0 per cent. of the gross proceeds raised from each offer, from which all costs and expenses (including initial intermediary commission but excluding trail commission) of the relevant offer will be paid. Any costs above this will be met by Investec Structured Products.
The proposed management and performance incentive arrangements to be entered into in respect of the C Shares fund and the proposed commission payment of 5.0 per cent. of the funds raised pursuant to the offers to Investec Structured Products are related party transactions under the Listing Rules and therefore require the approval of the Company's shareholders.
SHARE ISSUE AND BUY-BACK AUTHORITIES AND CANCELLATION OF SHARE PREMIUM
In addition to taking Shareholder authority to allot Ordinary Shares and C Shares in connection with the offers, the Company also proposes to renew and increase its general share issue authorities at the General Meeting (in particular to take into account the expected enlarged share capital position following the offers). It is also proposed to renew and increase the buy-back authority at the General Meeting (again in particular to take into account the expected enlarged share capital position following the offers).
The issue of new shares pursuant to the Ordinary Share Offer and C Share Offer will result in the creation of further share premium. The Board considers it appropriate to obtain approval of the Company's shareholders at the General Meeting to cancel the further share premium attributable to shares issued pursuant to such offers (subject to court sanction) to create further distributable reserves to fund distributions to Shareholders and buy-backs, to set off or write off losses and for other corporate purposes of the Company.
FURTHER INFORMATION
Shareholders will receive a copy of a circular convening the General Meeting to be held on 6 September 2010 at which shareholders will be invited to approve resolutions in connection with the proposals. A copy of the circular for the Company has also been submitted to the UK Listing Authority and will be shortly available for inspection at the UK Listing Authority's Document Viewing Facility which is situated at:
Financial Services Authority25 The North ColonnadeCanary WharfLondon E14 5HSTelephone: 0207 066 1000
For further information, please contact:
Investment Manager to the Structured Products PortfolioInvestec Structured ProductsGary DaleTelephone: 020 7597 4065Investment Manager to the Venture Capital PortfolioCalculus Capital LimitedSusan McDonaldTelephone: 020 7493 4940
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