9 Feb 2010 10:30
Recommendation of a Proposal to Merge Ventus 2 VCT plc & Ventus 3 VCT plc
Recommendation of a proposal to merge Ventus 3 VCT plc ("Ventus 3") and Ventus 2 VCT plc ("Ventus 2") by way of a scheme of reconstruction of Ventus 3 pursuant to Section 110 of the Insolvency Act 1986 (the "Scheme").
Summary
The Boards of directors of Ventus 2 and Ventus 3 have written to shareholders to recommend a proposal that Ventus 2 and Ventus 3 merge on the terms of a scheme of reconstruction set out in the Prospectus dated 8 February 2010.
The creation of a single, larger VCT is expected to bring significant advantages to both sets of shareholders, namely:
• greater flexibility in dealing with the proposed changes to the Listing Rules outlined below;
• a reduction in the annual running costs of the enlarged company when compared to the combined running costs of each separate VCT; and
• potentially increased dividends in the future due to the increased size and reduced running costs of the enlarged company.
Background to the proposal
VCT rules
Ventus 2 was launched in 2006 as part of a joint offering with Ventus 3. At the time there were significant structural advantages to a joint offer in terms of the amounts that Ventus 2 and Ventus 3 could invest in aggregate in an investee company. Specifically, Ventus 2 and Ventus 3 were then able to invest, in aggregate, up to £2 million and (along with Ventus) a total of £3 million per investee company in any tax year. This meant that Climate Change Capital, the investment manager of Ventus 2 and Ventus 3, needed to identify fewer qualifying investment opportunities in order to fully invest the funds raised and had greater flexibility to structure investments. The VCT rules have now changed such that the maximum an investee company can receive from funds raised by VCTs since 6 April 2007 is £2 million per tax year. As such, the benefits of the structure have now been eroded and there is no longer an advantage to operating a third VCT. There is however an incremental cost in operating a third VCT.
Changes to the Listing Rules
The Listing Rules governing the constitution of VCT boards of directors will change in September 2010. Specifically, the definition of "independent" with respect to directors of VCTs will change. It has always been the case that a VCT board was required to have a majority of directors who were independent of the investment manager as well as an independent chairman. From September 2010 however, a director of a VCT will not be considered independent with respect to that VCT if he or she is also a director of another VCT managed by the same investment manager. At present, each of the Ventus VCTs has the same board of directors. This will need to change in order to comply with the new Listing Rules.
Having two rather than three VCTs will allow the Ventus funds more flexibility in adapting to the changes in the Listing Rules and will minimise the disruption to their board compositions. Further, it is expected that compliance with the new Listing Rules whilst maintaining a third VCT would result in an increase in costs across the Ventus funds.
How the Merger works
The merger will involve Ventus 3 shareholders resolving to place Ventus 3 into members' voluntary liquidation. Ventus 3, whilst in liquidation, will transfer all of its assets and liabilities to Ventus 2 in exchange for new shares, which will be issued to Ventus 3 shareholders. The number of new shares will be determined on the basis of the relative net assets of the ordinary share pools of Ventus 2 and Ventus 3, adjusted in accordance with the Scheme. As such, the Scheme is not intended to be dilutive but should be of benefit to the shareholders of Ventus 2 and Ventus 3 in that it could facilitate the payment of increased dividends in the future due to the increased size and reduced running costs of the enlarged company. After the Scheme has been completed, Ventus 3's listing will be cancelled and Ventus 3 will be subsequently wound up.
The Scheme is conditional upon the approval by the Ventus 2 and 3 shareholders of resolutions to be proposed at general meetings.
Expected timetable for Ventus 2
| Latest time for receipt of forms of proxy for the General Meeting | 3.00 pm on 5 March 2010 |
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| General Meeting | 3.00 pm on 8 March 2010 |
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| Calculation Date | after 5.00 pm on 16 March 2010 |
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| Effective Date for the transfer of the assets and liabilities of Ventus 3 to the Company and the issue of New Shares to Ventus 3 Shareholders | 17 March 2010 |
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| Announcement of the results of the Scheme | 17 March 2010 |
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| Admission of and dealings in the New Shares to commence | 24 March 2010 |
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| Certificates for the New Shares despatched to Ventus 3 Shareholders | 7 April 2010 010 |
Expected timetable for Ventus 3
| Date from which it is advised that dealings in Ventus 3 Shares should only be for cash settlement and immediate delivery of documents of title | 19 February 2010 |
| Latest time for receipt of forms of proxy for the Ventus 3 First General Meeting | 2.30 pm on 5 March 2010 |
| Ventus 3 First General Meeting | 2.30 pm on 8 March 2010 |
| Latest time for receipt of forms of proxy for the Ventus 3 Second General Meeting | 10.00 am on 15 March 2010 |
| Record Date for Ventus 3 Shareholders' entitlements under the Scheme | 16 March 2010 |
| Ventus 3 Register of Members closed | 5.00 pm on 16 March 2010 |
| Calculation Date | after 5.00 pm on 16 March 2010 |
| Dealings in Ventus 3 Shares suspended | 8.00 am on 17 March 2010 |
| Ventus 3 Second General Meeting | 10.00 am on 17 March 2010 |
| Effective Date for the transfer of the assets and liabilities of Ventus 3 to the Company and the issue of New Shares | 17 March 2010 |
| Announcement of the results of the Scheme | 17 March 2010 |
| Cancellation of the Ventus 3 Shares' listing | 24 March 2010 |
Notifications to shareholders
Ventus 2 shareholders will shortly receive a circular to convene a general meeting of Ventus 2 on 8 March 2010 at which shareholders will be invited to approve the Ventus 2 board's recommendation that the merger proceed.
Ventus 3 shareholders will also receive a circular to convene the general meetings of Ventus 3 which will be held on 8 March 2010 and 17 March 2010. Again, the shareholders will be invited to approve the Ventus 3 board's recommendation that the merger proceed. Ventus 3 shareholders will also receive a copy of a Prospectus dated 8 February 2010 which describes the matters relevant to Ventus 2 in connection with the issue of Ventus 2 shares to Ventus 3 shareholders should the Scheme progress.
Copies of the Circulars and Prospectus have been submitted to the UK Listing Authority and will be available shortly for inspection at the UK Listing Authority's Document Viewing Facility, which is situated at:
Financial Services Authority
25 The North Colonnade Canary Wharf London
E14 5HS
For further information, please contact:
Matthew Ridley, Climate Change Capital on 020 7939 5350
or
Daniel Cremin, Climate Change Capital on 020 7939 5319