Crown Place Regulatory News (CRWN)

17 Nov 2005 12:13

Murray VCT 3 PLC17 November 2005 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTOAUSTRALIA, CANADA, JAPAN, OR THE UNITED STATES OF AMERICA. THIS ANNOUNCEMENTDOES NOT CONSTITUTE OR FORM PART OF AN OFFER TO SELL, PURCHASE, EXCHANGE ORSUBSCRIBE FOR ANY SECURITIES OR SOLICITATION OF SUCH AN OFFER IN THE UNITEDSTATES OF AMERICA OR ANY OTHER JURISDICTION. THE SECURITIES REFERRED TO IN THISANNOUNCEMENT HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATESSECURITIES ACT OF 1933, AS AMENDED, AND WILL NOT BE OFFERED OR SOLD IN THEUNITED STATES EXCEPT PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION 17 November 2005 RECOMMENDED MERGER BETWEEN MURRAY VCT 3 PLC, MURRAY VCT PLC AND MURRAY VCT 2 PLCAND RELATED PROPOSALS IntroductionThe boards of Murray VCT 3 PLC ("VCT 3"), Murray VCT PLC ("VCT") and Murray VCT2 PLC ("VCT 2"), today announce that they have agreed the terms of a proposedmerger of VCT 3, VCT and VCT 2 (the "Merger"). The Merger is to be effected byway of a scheme of arrangement under section 425 of the Companies Act 1985, asamended, and is to be carried out by VCT, VCT 2 and VCT 3 (the "Scheme") on aformula asset value ("FAV") basis. The Merger is subject, amongst otherconditions, to the approval of the shareholders of all three companies and theapproval of the High Court of Justice of England and Wales (the "Court").The three companies are listed venture capital trusts, each with a single classof share capital, and have similar investment objectives. They are managed bythe same manager, Close Venture Management Limited (the "Manager").The Scheme involves the cancellation of the existing VCT shares and VCT 2 sharesand the issue of new VCT shares and new VCT 2 shares to VCT 3 in considerationfor which VCT 3 will issue new shares to the former holders of VCT shares andVCT 2 shares. VCT and VCT 2 will become wholly owned subsidiaries of VCT 3 andwill, following the implementation of the Merger, transfer their net assets(having obtained any requisite consents) to VCT 3 pursuant to a transferagreement (the "Transfer Agreement"). VCT and VCT 2 will, following completionof the transfer of all their assets, enter into liquidation. VCT 3 will continueas a listed company and will be renamed "Crown Place VCT PLC" (the "EnlargedCompany"). Shareholders in each of the three companies (other than shareholders resident inthe US, Australia, Canada and Japan ("Excluded Overseas Shareholders")) will beentitled to tender up to 10 per cent. of their existing shares in the relevantcompany (a shareholder's "Basic Entitlement") in a tender offer to WinterfloodSecurities (the "Tender Offers"). In addition, each shareholder may tendershares in excess of their Basic Entitlement but such excess tenders will only besatisfied to the extent that other shareholders have not tendered all or anypart of their Basic Entitlement. Tenders in excess of the Basic Entitlement willbe satisfied pro rata in proportion to the excess over the Basic Entitlementtendered, rounded down to the nearest whole number of shares. The Tender Offersare designed to enable those shareholders who wish to realise shares for cash inVCT, VCT 2 and VCT 3 to do so at a price much closer to the net asset value ofthe relevant company than is currently available through selling shares in themarket. The boards of VCT, VCT 2 and VCT 3 are pleased to recommend the Merger to theirrespective shareholders. Full details of the Merger, Scheme and Tender Offers are set out in circularsfor each company and a prospectus for VCT 3 which are expected to be senttomorrow to shareholders in VCT, VCT 2 and VCT 3. Financial information on VCT, VCT 2 and VCT 3As at 31 August 2005, VCT's audited net asset value was £8.5 million (or 30.1pence per VCT share) and gross assets were £9.3 million. The loss on ordinaryactivities after taxation for the year ended 31 August 2005 was £0.22 million.As at 31 August 2005, VCT 2's unaudited net asset value was £12.7 million (or35.7 pence per VCT 2 share) and gross assets were £13.2 million. The loss onordinary activities after taxation for the year ended 28 February 2005 was £0.17million. As at 31 August 2005, VCT 3's unaudited net asset value was £16.7 million (or41.9 pence per share) and gross assets were £17.3 million. The loss on ordinaryactivities after taxation for the year ended 28 February 2005 was £0.08 million. Changes to the boardsIt is intended that the board of the Enlarged Company will comprise PatrickCrosthwaite (Chairman), Rachel Beagles, Andrew Cubie (currently a director ofVCT 3), Vikram Lall (currently a director of VCT and VCT 2) and Geoffrey Vero(the "New Board"). Background information on the New Board is set out in Appendix II.Following the Merger becoming effective, Sir David Trippier (Chairman), RonaldHollidge, David Mathewson and Iain Tulloch will retire as directors of VCT,Maxwell Packe (Chairman), James Cooper, Ronald Hollidge and Vikram Lall willretire as directors of VCT 2 and Peter Timms (Chairman), James Cooper andAlistair Mair will retire as directors of VCT 3. Benefits of the MergerFor illustrative purposes only, if the Merger and the Tender Offers had takenplace on 31 August 2005 the net assets of the Enlarged Company, after the costsof the Merger and assuming full take up under the Tender Offers, would have beenapproximately £33.8 million. Each of the boards of the three companies considerthat the immediate and long term benefits of the Merger are:- a significant reduction in the annual running costs as a percentage of net assets by reducing overlapping overheads;- an increase in the range and diversity of the investment portfolio and an improved spread of risk and opportunity in the Enlarged Company;- the potential for a more regular flow of dividends; and- the potential for an increase in share liquidity. Reduction in annual running costsFor the twelve month period ending 31 August 2006, the overall running costs ofVCT 3 (including irrecoverable VAT and exclusive of any performance fee) areestimated to be approximately £0.5 million, representing 3.2 per cent. of thenet assets as at 31 August 2005. The annual running costs of VCT and VCT 2calculated on the same basis represented approximately 4.4 per cent. and 3.6 percent. respectively of the net assets of each company as at 31 August 2005.It is estimated that the annual cost efficiencies for the Enlarged Company willbe approximately £0.3 million. The annual running costs will be reduced as a result of, amongst others, thefollowing factors:- a reduction in the total number of directors from 10 across the boards of all three companies to 5 in the Enlarged Company; and- the reduction in company secretarial fees resulting from having one company rather than three. Increase in the range and diversity of the investment portfolioAs at 31 August 2005, the portfolios of the three companies included thefollowing: Unquoted investments AIM stocks Cash Gilts (£million) (£million)VCT 29 6 1.4 2.3VCT 2 33 7 3.4 2.6VCT 3 41 4 3.8 2.9 Shareholders in VCT will gain exposure to twenty new investments. Shareholdersin VCT 2 will gain exposure to sixteen new investments. Shareholders in VCT 3will gain exposure to twelve new investments. Potential for a more regular flow of dividendsThe greater spread of the portfolio of the Enlarged Company should increase thepotential for realisations in each accounting period and reduce the volatilityof income receipts thus enabling a smoother flow of dividends. The New Board aims, if the capital and revenue profits and the requirement forfurther investment in portfolio companies allow, to implement a progressivedividend policy commencing at a level of approximately 1 pence per share for theyear to 28 February 2007. Potential for an increase in share liquidityFollowing the Tender Offer, the New Board intends to adopt an active discountmanagement policy via a share buyback programme with the overall aim of limitingthe discount to net asset value at which the Enlarged Company's shares maytrade. The Enlarged Company will be more than double the size of VCT 3. Risk is reducedboth by the resulting stronger balance sheet and the lower overhead base. Thepooling of the cash and liquid resources of the three companies will enable amore flexible buyback programme. Risk is further reduced by an increase inportfolio diversity as shareholders gain access to an increased number ofinvestments. The Merger and its financial impactThe Merger is proposed to be conducted by means of the Scheme. Following theMerger, VCT 3 will be the continuing company, having acquired VCT and VCT 2.Under the terms of the Scheme, new shares in the Enlarged Company ("New Shares")will be issued to VCT shareholders and VCT 2 shareholders and VCT 3 will beissued with new VCT shares and new VCT 2 shares. The number of New Shares to beissued to VCT shareholders and VCT 2 shareholders will be that number of NewShares as shall, in aggregate, have attributable to them a value (at the VCT 3formula asset value per share) equal to:- in the case of a former holder of VCT shares, the VCT formula asset value multiplied by the number of VCT shares held by such holder; and- in the case of a former holder of VCT 2 shares, the VCT 2 formula asset value multiplied by the number of VCT 2 shares held by such holder. Where the total number of New Shares to be issued to a holder of VCT shares orVCT 2 shares produces a fractional entitlement, the number of New Shares to beissued to such person shall be rounded down to the nearest whole number.Fractions of New Shares will be aggregated and sold in the market for thebenefit of the Enlarged Company. The New Shares to be received by VCT shareholders and VCT 2 shareholders willrank pari passu in all respects with the VCT 3 shares currently in issue andwill be eligible to participate in any share buy back schemes taking place afterthe Scheme becomes effective. In particular, they will rank for the dividendexpected to be paid in or around July 2006, subject to approval by shareholdersof the Enlarged Company at the next annual general meeting. Formula Asset ValuesThe FAVs for the three companies will be calculated in accordance with the termsof the Scheme. In summary, the assets and liabilities of each of VCT 3, VCT andVCT 2 will be valued as at the FAV calculation date which is expected to be 9January 2006 (the "FAV Calculation Date") using the relevant companies'valuations as at 31 August 2005 for this purpose, save that:- the value of investments listed on a recognised stock exchange, including AIM, will be calculated by reference to the bid prices on the FAV Calculation Date and government bonds will be valued at the bid price as at the close of business on the FAV Calculation Date; and- where there has been an event in the period between 31 August 2005 and the FAV Calculation Date which would require a revaluation of an investment or where there has been some other event in the period between 31 August 2005 and the FAV Calculation Date which, in the reasonable opinion of the boards of VCT 3, VCT and VCT 2 has had a material impact then the value attributed to the relevant investment as at 31 August 2005 shall be adjusted as agreed between the boards of VCT 3, VCT and VCT 2. The actual FAV's will be determined for the purpose of the Scheme on or shortlyfollowing the FAV Calculation Date, but before the Scheme becomes effective(expected to be on 13 January 2006). It is therefore not possible until then tospecify the actual number of New Shares to which the holders of VCT and VCT 2shares will become entitled. Costs of the ProposalsThe costs relating to the Merger, the Scheme, the Tender Offers and allassociated arrangements (the "Proposals") are estimated to amount toapproximately £0.8 million (including irrecoverable VAT and £0.1 million ofcosts relating to the Tender Offers). The costs of the Merger equate to justunder 1.8 per cent. of the gross assets of VCT, VCT 2 and VCT 3 as at 31 August2005. The terms of the Merger provide for each company to bear a proportionateshare of the costs and expenses of the Merger, pro rata to the FAV of eachcompany. If the Merger should not complete for any reason, each of VCT 3, VCT and VCT 2would bear the costs incurred up to the relevant date in proportion to theirrespective net asset values. Investment objective and policy for the Enlarged Company following the MergerThe investment objective of the Enlarged Company will continue to be to achievelong term capital and income growth principally through investment in smallerunquoted companies in the United Kingdom. Investment management arrangementsThe investment management agreement between VCT 3 and the Manager (the"Management Agreement") will remain in place and the Enlarged Company willcontinue to be managed by Close Venture Management. The Manager will continue toreceive a management fee of 1.75 per cent. of the net asset value of VCT 3 (plusVAT), payable quarterly, and an administration and secretarial fee of £50,000per year. The Manager will also continue to be entitled to an incentive fee if theaggregate of the net asset value at the end of the financial year and theaggregate amount of dividends per share (both revenue and capital) declared bythe board and, where appropriate, approved by shareholders, at the end of therelevant financial year, exceeds a target return. The target return iscalculated as the net assets at the beginning of the year, plus the base rate ofThe Royal Bank of Scotland averaged over the relevant financial period, plus 2per cent applied to the net asset value on the accounting date immediately priorto the start of the relevant financial period. The Manager is entitled to aperformance fee of 20 per cent. of the excess. Subject to the approval of Shareholders at the Extraordinary General Meeting ofVCT 3, it is proposed to amend the Management Agreement so that (i) thedefinition of net asset value for the purposes of the calculation of theincentive fee be amended so as to exclude any shares held in treasury; (ii) thebase net asset value used in the calculation of the incentive fee in the initialfinancial period be amended to equal the FAV and (iii) all such otherconsequential amendments as are necessary to give effect to such amendments bemade. As the Manager is treated as a related party for the purposes of the listingrules of the Financial Services Authority (the "FSA") the approval of VCT 3shareholders is required to authorise the amendment to the Management Agreement. Implementation AgreementVCT 3, VCT and VCT 2 have entered into an implementation agreement (the "Implementation Agreement"). The Implementation Agreement requires each party totake all steps necessary to effect the Tender Offers and the Merger.The Merger has been structured such that the Proposals will either beimplemented in their entirety or not at all. Subject to the sanction of theCourt to the Scheme, the approval of the Proposals by shareholders of all threecompanies and the delivery of a certificate of confirmation by each party, theImplementation Agreement requires each company to confirm to the others that itwill take the necessary measures to complete the Tender Offer in respect of thatcompany and make the Scheme effective. Transfer AgreementFollowing the Merger becoming effective, VCT 3, VCT and VCT 2 will enter into atransfer agreement (the "Transfer Agreement") pursuant to which VCT 3 will agreeto acquire and VCT and VCT 2 will agree to transfer their net assets (includingcash) as at the date on which the Scheme becomes effective, subject to anynecessary consents being obtained. In consideration for the transfer of the net assets effected pursuant to theTransfer Agreement, VCT 3 will pay to VCT and VCT 2 an amount equal to the valueof the net assets of VCT and VCT 2, respectively and VCT 3 will indemnify VCTand VCT 2 in respect of all costs, claims or liabilities incurred in connectionwith all known and unknown actual and contingent liabilities of VCT and VCT 2.The Company will only be required to indemnify VCT and VCT 2 as described aboveto the extent that the Merger is completed and the net assets are transferred.The net assets shall equal such of the securities and other assets of VCT andVCT 2 as have a value calculated in accordance with the schedule to the Schemeequal to the difference between the assets and liabilities of the respectivecompanies. The consideration for the assets acquired by VCT 3 is intended to beleft outstanding as an inter-company loan. No part of the consideration forthese transactions will be payable to shareholders. VCT and VCT 2 will,following the Merger and transfer of the assets, enter into liquidation or bedissolved in due course, and the debt owed by the Company to VCT and VCT 2 underthe Transfer Agreement will thereby be extinguished. Shareholder meetingsMeetings of VCT3, VCT and VCT 2 shareholders will be held on 12 December 2005 inorder for shareholders to consider resolutions to approve the Merger. The Mergerrequires the approval of shareholders of all three companies. Conditions and approvals of the MergerThe conditions of the Scheme and the Merger are set out in Appendix I. The mainconditions are:(i) the approval of the Scheme by a majority in number representing three-fourths in value of the VCT shareholders at a Court meeting of VCT; (ii) the approval of the Scheme by a majority in number representing three-fourths in value of the VCT 2 shareholders at a Court meeting of VCT 2;(iii) the passing at the extraordinary general meetings of each of VCT and VCT 2 of the special resolutions required to implement the Scheme and the associated reductions of capital;(iv) the passing, at the Extraordinary General Meeting, of a special resolution to approve the Merger and other Proposals, to increase the authorised share capital and to authorise the purchase of shares by VCT 3;(v) (a) the admission to the Official List of the FSA of the New Shares becoming effective in accordance with the Listing Rules or the UK Listing Authority agreeing to admit such shares to the Official List and (b) the admission to trading of the New Shares becoming effective in accordance with the rules of the London Stock Exchange or the London Stock Exchange agreeing to admit such shares to trading;(vi) the delivery of a certificate of confirmation by each of VCT 3, VCT and VCT 2 on the day prior to the date on which the Scheme becomes effective that it will take all measures necessary to effect the Merger in accordance with the Implementation Agreement;(vii) no notice having been received by VCT 3 from HM Revenue & Customs which indicates that VCT or VCT 2 may not remain as a venture capital trust pursuant to every law for the time being in force concerning venture capital trusts and affecting VCT 3 before the scheme record time (being 6.00 p.m. on the last business day immediately prior to the date on which the Scheme becomes effective);(viii) the sanction (with or without modification) of the Scheme by the Court; and(ix) the registration of the order of the Court sanctioning the Scheme under Section 425 of the Companies Act 1985 as amended and confirming the reductions of capital therein under Section 137 of the Act (the "Court Order"). It is anticipated that the Scheme will become effective on 13 January 2006. Ifit has not become effective by 31 January 2006 (or such later date as the Courtmay allow and each of VCT 3, VCT and VCT 2 may agree), the Proposals will lapse,the Merger and the Tender Offers will not take place, and VCT shareholders andVCT 2 shareholders will remain shareholders in VCT and VCT 2 respectively, whichwould then continue as independent listed companies. MiscellaneousVCT 3 neither owns nor controls any shares in VCT or VCT 2.Neither VCT 3 nor any person acting in concert with VCT 3 holds any option topurchase any VCT or VCT 2 shares. The Manager, in its capacity as the manager of VCT 3, would be deemed to beacting in concert with VCT 3 in respect of investments managed on adiscretionary basis. However, there are no VCT 3 shares which are managed onsuch basis by the Manager. In addition, there are no VCT or VCT 2 shares whichare managed on such basis by the Manager. No irrevocable commitments have been made to vote in favour of the Scheme. Expected timetable: Shareholder meetings of VCT 3, VCT and VCT 2 12 December 2005 FAV calculation date 9 January 2006 Court hearing to consider sanctioning scheme 12 January 2006 Effective date of merger 13 January 2006 Dealings commence in new VCT 3 shares 13 January 2006 Enquiries Patrick Reeve 020 7422 7830Emil Gigov 020 7422 7830Close Venture Management LimitedTodd Nugent 0131 226 7011Noble Grossart Limited, advisers to VCT 3Allan Treacy 01223 422 396AGM Corporate Finance, advisers to VCTRobert Lo 020 7710 7400Nabarro Wells & Co Limited, advisers to VCT 2John West 020 7920 3150Clemmie CarrTavistock CommunicationsShareholder helpline 020 7621 1358HQB Consulting Limited The directors of VCT 3 accept responsibility for the information relating to VCT3 and its directors in this document. To the best of the knowledge and belief ofsuch directors (who have taken all reasonable care to ensure that such is thecase), the information relating to VCT 3 and its directors contained in thisdocument, for which they are solely responsible, is in accordance with the factsand does not omit anything likely to affect the import of such information. The directors of VCT accept responsibility for the information relating to VCTand its directors in this document. To the best of the knowledge and belief ofsuch directors (who have taken all reasonable care to ensure that such is thecase), the information relating to VCT and its directors contained in thisdocument, for which they are solely responsible, is in accordance with the factsand does not omit anything likely to affect the import of such information. The directors of VCT 2 accept responsibility for the information relating to VCT2 and its directors in this document. To the best of the knowledge and belief ofsuch directors (who have taken all reasonable care to ensure that such is thecase), the information relating to VCT 2 and its directors contained in thisdocument, for which they are solely responsible, is in accordance with the factsand does not omit anything likely to affect the import of such information. Noble Grossart Limited, AGM Corporate Finance and Nabarro Wells & Co Limited areacting exclusively for VCT 3, VCT and VCT 2, respectively, and for no one elsein connection with the matters described herein and will not be responsible toanyone other than VCT 3, VCT and VCT 2, respectively, for providing theprotections afforded to clients of Noble Grossart Limited, AGM Corporate Financeand Nabarro Wells & Co Limited nor for providing advice in relation to thematters described herein. Appendix I - Implementation of the Scheme and the Merger is conditional upon: (a) the approval of the Scheme by a majority in number representing at least three-fourths in value of the holders of VCT Shares and VCT 2 Shares present and voting either in person or by proxy at the Court convened meetings of holders of VCT Shares and VCT 2 Shares (other than any such shares owned by VCT 3);(b) the passing at extraordinary general meetings of VCT and VCT 2 of the special resolutions required to implement the Scheme and the associated reductions of capital and to approve the Transfer Agreement;(c) the passing at an extraordinary general meeting of VCT 3 of a resolution to approve the Merger and the Transfer Agreement, to authorise the allotment of New Shares pursuant to the Scheme, to increase the authorised share capital of VCT 3 and to authorise the buy-back of shares by VCT 3;(d) the admission to the Official List of the FSA of the New Shares becoming effective in accordance with the Listing Rules and the admission of such shares to the London Stock Exchange's market for listed securities becoming effective or (if VCT, VCT 2 and VCT 3 so determine and subject to the consent of the Panel on Takeovers and Mergers) the FSA agreeing or confirming its decision to admit such shares to the Official List and the London Stock Exchange agreeing or confirming its decision to admit such shares to trading subject only to (i) the allotment of such shares and/or (ii) the Scheme becoming unconditional in all respects;(e) the confirmation by each of VCT 3, VCT and VCT 2 on the day prior to the date on which the Scheme becomes effective Effective Date that it will take all measures necessary to effect the Merger in accordance with the Implementation Agreement;(f) tax clearances having been issued in relation to the Merger under section 136 of the Taxation of Chargeable Gains Act 1992, Section 707 of the Taxes Act and Part 2 of Schedule 33 of the Finance Act 2002, as supplemented by the VCT Merger Regulations;(g) the following conditions being satisfied by 6.00 p.m. on the business day immediately preceding the date of the commencement of the hearing by the Court of the petition to sanction the Scheme and confirm the reduction of capital provided for by the Scheme:(i) no notice having been given or action taken by the HM Revenue & Customs which indicates that VCT or VCT 2 may not remain approved as a venture capital trust pursuant to Section 842 AA of the Taxes Act up to the time when the Scheme becomes effective, or that the Merger might cause VCT or VCT 2 to cease to be approved as a venture capital trust;(ii) no governmental authority, regulatory body, court or other person having instituted or threatened any action, proceedings or investigation, or enacted or proposed any statute, regulation or order, which would or might make implementation of the Scheme and the other steps involved in the Merger void or illegal, or restrict or prohibit the implementation of the Merger, or impose material additional conditions in relation to that implementation, or otherwise adversely affect in any material respect the business of VCT, VCT 2 or VCT 3;(iii) there being no material pending or threatened litigation, arbitration proceedings, prosecution or other legal proceedings against VCT, VCT 2 or VCT 3;(iv) VCT or VCT 2 not having incurred any liability for or in the nature of borrowings, or any material contingent liability not reflected in its latest annual report and accounts or disclosed to VCT 3 in writing before the announcement of the Merger;(v) VCT 3 not having incurred any liability for or in the nature of borrowings, or any material contingent liability not reflected in its latest annual report and accounts or disclosed to VCT and VCT 2 in writing before the announcement of the Merger;(vi) except as publicly disclosed before the announcement of the Merger or contemplated by the Scheme, VCT or VCT 2 not having issued any ordinary shares or other securities or securities convertible into, or warrants or options to subscribe for, its ordinary shares or other securities, or entered into any commitment to do so, or made any material change in its investment policies other than as agreed between VCT, VCT 2 and VCT 3, or entered into any material agreement or commitment which is of a long term or unusual (by reference to VCT's or VCT 2's prior practice) nature or magnitude, other than agreements the existence of which has been disclosed in writing to VCT 3 before the announcement of the Merger;(vii) except as publicly disclosed before the announcement of the Merger or contemplated by the Scheme or as described in this document, VCT 3 not having issued any shares or other securities or securities convertible into, or warrants or options to subscribe for, its shares or other securities, or entered into any commitment to do so, or made any material change in its investment policies other than as agreed between VCT, VCT 2 and VCT 3, or entered into any material agreement or commitment which is of a long term or unusual (by reference to VCT 3's prior practice) nature or magnitude, other than agreements the existence of which has been disclosed in writing to VCT and VCT 2 before the announcement of the Merger; and(h) the sanction by the Court of the Scheme and confirmation of the reduction of capital provided for therein by the Court (with or without notification agreed to by VCT, VCT 2 and VCT 3) and the delivery of an office copy of the order of the Court in relation to the Scheme to the Registrar of Companies in England and Wales and, in respect of the reduction of capital provided for by the Scheme, the registration of the order of the Court by the Registrar of Companies of England and Wales. Any of the conditions in paragraphs (f) and (g) above may be waived by VCT, VCT2 and VCT 3 jointly (or, where appropriate, by the party for whose benefit therelevant condition exists), in whole or in part. The Scheme will only becomeeffective if all conditions are satisfied and/or waived (as the case may be). Appendix II - Background information on the New Board Patrick Crosthwaite, aged 62, will be appointed as Chairman of the EnlargedCompany. He was Managing Director of Henderson Crosthwaite Limited, a privateclient fund management and broking business, from 1989 to 1999. Subsequently heserved as a director of Carr Shepherds Crosthwaite (part of the Investec Group)where he was responsible for four regional offices, along with UK and Irishinvestment companies. He served as Chairman of Investec Bank's underwritingcommittee from 2000 until 2002 and was the director responsible for InvestmentProcess and Research at Gerrard Limited from 2003 to 2004. From 1997 to 2001 hewas a director of the London Stock Exchange Private Investors Advisory Committeeand a member of the Authorisation Committee and Individual Registration Panel atthe Securities and Futures Authority from 1996 to 2001. He is currently agovernor of Tonbridge School and chairman of the School's finance committee.Andrew Cubie, aged 59, is a consultant to Fyfe Ireland solicitors, having been asenior partner until April 2003. He has extensive experience of corporate lawand investment, particularly in the private company sector. He is anon-executive director of BLAS Limited, ESPC (UK) Limited and Kinloch AndersonLimited. He was Chairman of CBI Scotland from 1995 to 1997. He is Chairman ofQuality Scotland Foundation and Scotland's Health at Work. He is Chairman of theCourt of Napier University and the author of the Cubie Report in respect ofstudent funding in Scotland. In 2001 he was awarded a CBE for services tobusiness and education in Scotland.Rachel Beagles, aged 37, has gained a wide experience of investment and financein the City where she was Co-Head of the Pan-European Banks Equity Research andSales Team and a Managing Director of Corporate and Investment Bank GroupDivision at Deutsche Bank AG. She is a trustee of Business and Education inLondon South and a board member of Newlon Housing Trust.Virkram Lall, aged 58, was a corporate finance director of Brewin Dolphin untilDecember 2003. He specialises in financial advice and capital raising for smalland medium sized companies. He is a non-executive director of a number ofcompanies including Brewin Dolphin Holdings, ISIS Property Trust, Murray VCT PLCand Murray VCT 2 PLC, and Chairman of the Scottish Industrial DevelopmentAdvisory Board. In 2005 he was awarded the CBE for services to business inScotland.Geoffrey Vero, aged 58, has spent much of his career in venture capital, servingas a director of Causeway Capital Limited and ABN Amro Private Equity (UK) Ltdwhich invested in small and medium sized unquoted businesses. He is anon-executive director of Numis Corporation plc, Akers Biosciences, Inc, EPICReconstruction plc, Westcane Limited and Govern Finance Limited.Following implementation of the Merger, the New Board will be responsible formonitoring the Enlarged Company's investment objective and policy, including thereview of investment activity and performance.There are no existing or proposed service contracts between any of the directorsand VCT 3 or the proposed directors and the Enlarged Company. Each of theproposed directors will enter into a letter of appointment with the EnlargedCompany under the terms of which they will be entitled to an aggregate annualremuneration of £83,500 or such higher amount as the Enlarged Company may fromtime to time determine. This information is provided by RNS The company news service from the London Stock Exchange