TAU.L Regulatory News (TAU)

Tau Capital Plc

("the Company" or "TAU")

Tender Offer by Numis Securities Limited to purchase ordinary shares of Tau Capital PLC at the Repurchase Price for an aggregate gross consideration of up to US$5,500,000

Following an announcement made by the Company on 24 April 2014 the Board are pleased to announce a circular (the "Circular") setting out details for a tender offer (the "Tender Offer") will be sent to shareholders today. Details of the Tender Offer are set out below.

1 Introduction

On 24 April 2014, the Company announced that it was proposing to make a fourth return of capital to

Shareholders in line with the new investing policy adopted at the Annual General Meeting of the Company held on 24 July 2012. In accordance with this announcement, the Company is proposing the Tender Offer.

At the 2012 Annual General Meeting, the Shareholders of the Company approved, amongst other things, there-registration of the Company as a company governed by the Isle of Man Companies Act 2006. The re-registration of the Company became effective on 25 July 2012 and, as a result, the Directors have the power (pursuant to the articles of association adopted by the Company upon re-registration) to effect a buy-back of the Company's shares subject to satisfaction of a statutory solvency test. The proposed Tender Offer follows the successful completion of three previous returns of capital to Shareholders in November 2012, February 2013 and October 2013. These involved the purchase by Numis Securities of a total of 143,624,805 Shares and the subsequent repurchase of such Shares by the Company.

A full explanation of the terms and conditions of the Tender Offer is set out in Part III of this document.

The purpose of this document is to explain the mechanics of the Tender Offer, to provide Shareholders with the terms and conditions relating to the Tender Offer, and to explain how they may tender their Shares, should they wish to do so.

This letter is not a recommendation for Shareholders to tender their Shares under the Tender Offer. Whether or not Shareholders tender their Shares will depend on, among other things, their own view of the Company's prospects and their own individual circumstances, including their tax position, on which they should seek their own independent advice.

2 Background to and reasons for the Tender Offer

At the 2012 Annual General Meeting, Shareholders approved an amendment to the Company's investing policy to implement an orderly divestment of the Company's investments. As a result, the Company's investing policy was changed so that no new investments in private equity investments will be made by the Company, no new investments in public equities will be made without the prior approval of the Board, the liquid part of the portfolio of public equities will be sold within a period of three months from the 2012 Annual General Meeting, the remainder of the portfolio of public equities will be sold within a period of three to six months, and the portfolio of private equity investments will be sold within a period of 12 to 24 months (or such later period as the Board may determine). The Board intends that the net proceeds from the realisation of the Company's assets will be returned to Shareholders, after which the Company will be wound up.

In line with the investing policy adopted at the 2012 Annual General Meeting, an initial return of capital to Shareholders by the Company was completed in November 2012. Under the initial return of capital to Shareholders, Shareholders were given an opportunity to tender Shares for an aggregate gross consideration of US$28,289,100.32. The initial tender offer was completed in November 2012 by the purchase of 48,182,004 Shares by Numis Securities at US$ 0.581075 per Share (calculated by reference to the Net Asset Value (less the costs of such return of capital) as at 30 September 2012) and the subsequent repurchase of such Shares by the Company.

A second tender offer was completed in February 2013 where Shareholders were able to tender Shares for an aggregate gross consideration of US$33,000,000. Under the terms of the tender offer, 63,082,437 Shares were purchased by Numis Securities at US$ 0.520573 per Share (calculated by reference to the Net Asset Value (less the costs of such return of capital) as at 31 January 2013) and such Shares were subsequently repurchased by the Company.

A third tender offer was completed in October 2013 where Shareholders were able to tender Shares for an aggregate gross consideration of US$15,000,000. Under the terms of the tender offer, 32,360,364 Shares were purchased by Numis Securities at US$ 0.460965 per Share (calculated by reference to the Net Asset Value (less the costs of such return of capital) as at 30 August 2013) and such Shares were subsequently repurchased by the Company. Accordingly, the Board has resolved to distribute up to US$5,500,000 to Shareholders from the Company's cash reserves. The Board has concluded that it would be more tax efficient, and therefore in the best interests of Shareholders, for this distribution to be made by way of a Tender Offer. As a result, the Board will offer Shareholders the opportunity to tender Shares for an aggregate gross consideration of up to US$5,500,000 at a price to be calculated by reference to the Net Asset Value (less the costs of the Tender Offer) as at 30 April 2014 (the "Repurchase Price"). The Board expects to announce the Net Asset Value as at 30 April 2014 and the Repurchase Price on or around 02 July 2014.

The remainder of the Company's cash reserves expected to be approximately US$2.3 million following the completion of the Tender Offer, will be retained by the Company for on-going working capital purposes and to ensure that the Company meets the solvency requirements of the Companies Act. In addition, as all the remaining assets are illiquid, the Board believes it is prudent to retain a reserve of cash should any further support for an investment be required which it considers would be in the best interests of Shareholders to support. The Board intends to make further returns of capital to Shareholders as and when realisations from the Company's remaining portfolio so permit.

The Directors are continuing to focus on reducing the operating costs of the Company as it reduces in size as a result of the tender offers. As part of this exercise, Richard Horlick and Graham Smith agreed to stand down as Directors on 1st January 2014. The Board has instructed the Company's Investment Advisor to pursue actively the realisation of the Company's investments in both Lucent and Stopharm within the timespan agreed at the 2012 Annual General Meeting. The Investment Advisor remains actively engaged in this process.

3 The Tender Offer

As set out in Part II of this document, Numis Securities is inviting Shareholders to tender Shares for an aggregate gross consideration of up to US$5,500,000 (the "Aggregate Gross Consideration") at the Repurchase Price. Each Shareholder shall be entitled to have Numis Securities repurchase a certain percentage of its holding of Shares (the "Basic Entitlement"). This percentage is the same as the percentage which the total number of Eligible Shares capable of being purchased under the Tender Offer represents of the entire issued share capital of the Company (rounded down to the nearest whole number of Shares).

Shareholders will, however, be entitled to tender any percentage of their holdings for purchase under the Tender Offer (the "Excess Application Facility"), but tenders in excess of the Basic Entitlement will only be satisfied, on a pro rata basis, to the extent that other Shareholders tender less than their Basic Entitlement. Tenders will be rounded down to the nearest whole number of Shares.

The Tender Offer is subject to the Conditions set out in paragraph 2 of Part III of this document. The results of the Tender Offer are expected to be announced on or around 23 July 2014. Accordingly:

· Shareholders (other than Excluded Shareholders) are invited to tender any or all of their Shares by returning a Tender Form specifying the number of Shares that they are prepared to tender to Numis Securities for purchase. If the Shares are held through CREST, Shareholders (other than Excluded Shareholders) should submit the relevant TTE Instruction instead.

· Each Shareholder shall be entitled to have Numis Securities repurchase the Basic Entitlement.

· Tendering Shareholders will bear the costs of the Tender Offer through the application of the Tender Discount. The Tender Discount, which is currently estimated at 0.91%, will be equal to the Tender Costs as a percentage of the Aggregate Gross Consideration.

· The Repurchase Price will be an amount equal to the NAV per Share as at 30 April 2014 less the Tender Discount.

· The maximum aggregate number of Shares the subject of the Tender Offer will be a number equal to the Aggregate Gross Consideration divided by the Repurchase Price, rounded down to the nearest whole number of Shares.

· By way of example, if (i) the Repurchase Price had been calculated as at 31 December 2013 (being the last practicable date prior to the publication of this document in respect of which the NAV per Share has been calculated), (ii) the costs of the Tender Offer were US$50,000 and (iii) the Tender Offer was taken up in full:

o the Aggregate Gross Consideration would have been US$5,500,000;

o the Maximum Tender would have been 18,333,333 Shares (being US$5,500,000 divided by the estimated NAV per Share of US$0.30, rounded down to the nearest whole share);

o the Basic Entitlement would have been 24.78% (being the Maximum Tender divided by the issued Share capital of 73,983,659;

o the Tender Discount would have been 0.91% (being the costs of the Tender Offer as a

percentage of the Aggregate Gross Consideration);

o the Repurchase Price would have been US$0.2973 per Share (being a discount of 0.91% to the estimated NAV of US$0.30 per Share, expressed to four decimal places in US cents); and

o the Repurchase Price would have represented a premium of 65.2% to the mid-market closing price per Share of US$0.18 on 20 June 2014 (the latest practicable date prior to the date of this document).

· Shareholders who validly tender a number of Shares that is less than or equal to their Basic

Entitlement will have their tenders satisfied in full (subject to the Tender Offer not having lapsed or been terminated) (the number of Shares subject to such tenders being the "Satisfied Tenders").

· Shareholders taking advantage of the Excess Application Facility who validly tender a number of Shares that is higher than their Basic Entitlement (such Shareholder being an "Excess Tender Shareholder" and the number of Shares subject to such tenders being the "Excess Tenders") will (subject to the Tender Offer not having lapsed or been terminated) have their tenders either:

o satisfied in full if the aggregate of the Excess Tenders is less than or equal to the Maximum Tender less the aggregate of the Satisfied Tenders; or

o satisfied to the level of their Basic Entitlements plus such number of Shares as is derived from the application of the formula set out in paragraph 1.4.8 of Part III of this document.

Please refer to paragraph 1.4.9 of Part III for a worked example of this formula.

General

The Tender Offer is being made by Numis Securities. Subject as referred to above, Numis Securities will purchase the Shares tendered as principal and, following the completion of all those purchases, sell the tendered Shares on to the Company at the Repurchase Price pursuant to the terms of the Repurchase Agreement. Those Shares which the Company acquires from Numis Securities will be cancelled. All transactions will be carried out on the London Stock Exchange.

Shareholders' attention is drawn to the letter from Numis Securities set out in Part II of this document and to Part III of this document which, together with the accompanying Tender Form, constitute the terms and conditions of the Tender Offer. Details of how to tender Shares can be found in paragraph 4 of Part III of this document.

Repurchase Price

The Company has already realised all the Company's public equity portfolio to meet the cash requirements of this and the previous Tender Offers. The Repurchase Price payable to Numis Securities will be calculated by reference to (i) the unaudited Net Asset Value per Share as at 30 April 2014 less (ii) the costs of the Tender Offer per Repurchased Share. As a result, the costs associated with the Tender Offer will be borne by only those Shareholders that elect for the Tender Offer, not all Shareholders. Further details of the Repurchase Price are set out in paragraph 3 of Part III of this document.

Conditions of the Tender Offer

The Tender Offer is subject to the Conditions set out in paragraph 2 of Part III of this document.

4 Overseas Persons and Excluded Shareholders

Before participating in the Tender Offer, Shareholders with an address outside the United Kingdom or who are resident outside the United Kingdom should satisfy themselves that they are lawfully entitled to participate in the Tender Offer and should ensure full observance of the laws of any relevant territory in connection therewith (including obtaining any requisite consents, observing any other applicable formalities and paying any taxes required to be paid in such territory). Tender Forms will not be sent to Excluded Shareholders and the Tender Offer may not be accepted from within the United States, Australia, Canada, Japan, New Zealand, the Republic of South Africa or any other Excluded Territory.

Shareholders with a registered or mailing address overseas or who are citizens of, or nationals of, or residents in, a jurisdiction other than the United Kingdom should read paragraph 9 of Part III of this document.

5 Taxation

Shareholders who sell their Shares in the Tender Offer may, depending on their individual circumstances and subject to the availability of any exemption or relief, incur a liability to taxation.

The attention of Shareholders is drawn to Part IV of this document, which sets out a general guide to certain aspects of UK taxation law and HMRC published practice. This information is a general guide and is not exhaustive. Shareholders should seek advice in relation to their own specific circumstances.

Shareholders who are in any doubt as to their tax position should consult an appropriate professional adviser.

6 Action to be taken

Shareholders who hold their Eligible Shares in certificated form and who wish to participate in the Tender Offer should complete the Tender Form in accordance with the instructions set out therein and return the completed Tender Form by post or by hand (during normal business hours only) to the Receiving Agent, Computershare, Corporate Actions Projects, Bristol BS99 6AH, by no later than 1.00 p.m. on 21 July 2014, and they should also return the share certificate(s) and/or other documents of title in respect of Eligible Shares tendered, as described in paragraph 4.2.1 of Part III of this document.

Shareholders who hold their Eligible Shares in uncertificated form (that is, in CREST) and who wish to participate in the Tender Offer should take the appropriate action in CREST to tender their Eligible Shares and should arrange for the relevant Eligible Shares to be transferred to escrow by no later than 1.00 p.m. on 21 July 2014, as described in paragraph 4.2.2 of Part III of this document.

Shareholders are not obliged to tender any Shares under the Tender Offer and, if they do not wish to participate in the Tender Offer, Shareholders should take no action and should not complete or return their Tender Form or tender their Eligible Shares through CREST.

7 General

The extent to which Shareholders participate in the Tender Offer is a matter for each Shareholder to decide, and will be influenced by their own individual financial and tax circumstances and their investment objectives. Shareholders should seek advice from their own independent financial adviser authorised under FSMA.

8 Recommendation

The Board, which has received advice from Numis Securities, considers that the Tender Offer is in the best interests of Shareholders as a whole.

Each of myself, and Terry Mahony, being Directors who hold in aggregate beneficial interests in 324,811 Shares, representing 0.44% of the issued share capital of the Company, intend to tender up to their Basic Entitlement in respect of the Eligible Shares in which they are beneficially interested for purchase under the Tender Offer, and will be entitled to participate in the Excess Application Facility.

EXPECTED TIMETABLE OF EVENTS

2014

Record Date for the Tender Offer 30 June

Announcement of the Net Asset Value as at 30 April 2014 02 July

and Repurchase Price

Latest time and date for receipt of Tender Forms and TTE Instructions 1.00 p.m. 21 July

(Closing Date)

Results of the Tender Offer announced 23 July

Cheques despatched and CREST accounts credited with proceeds 30 July

in respect of successfully tendered Shares (Settlement Date)

Balancing Share certificates dispatched, TFE Instructions and credits to 30 July

CREST accounts in respect of any unpurchased Eligible Shares

Note: All times are London times. Times and dates are subject to change.

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