TIDMNEP TIDMCLCD TIDMTTM TIDMTTM TIDMCLCN
RNS Number : 2126N
Neptune-Calculus Income &Growth VCT
04 August 2017
JOINT ANNOUNCEMENT
4 August 2017
CALCULUS VCT PLC ("Calculus VCT")
NEPTUNE-CALCULUS INCOME AND GROWTH VCT PLC ("Neptune")
(Together the "Companies")
TIDM: CLCD and CLCN
RECOMMED PROPOSALS FOR:
- MERGER WITH NEPTUNE; AND
- OFFER FOR SUBSCRIPTION OF UP TO GBP5 MILLION (WITH AN OVER
ALLOTMENT FACILITY OF A FURTHER GBP5 MILLION)
SUMMARY
On 19 June 2017 the board of the Companies (together the
"Boards" and each a "Board") announced that they had agreed in
principal to merge the Companies (the "Merger"). Each of the
Companies is managed by Calculus Capital Limited ("Calculus
Capital").
The Boards are now pleased to announce that they have reached
agreement on recommended proposals for the Merger to create a
single enlarged VCT. The Merger is conditional upon certain
conditions (including the approval of each company's shareholders)
being satisfied as further set out in the circulars being posted to
the Companies' respective shareholders today ("Circulars")
alongside a prospectus published by Calculus VCT in connection
with, amongst other things, the Merger (the "Prospectus").
The Boards consider that the interests of shareholders in both
Companies will be better served by an enlarged single company with
reduced annual running costs per share. The Companies are each
currently managed by Calculus Capital and so the continuity of the
management will be preserved by the Merger.
The most cost-effective way to achieve Merger is to undertake a
Scheme whereby Neptune is placed into members' voluntary
liquidation and all of the assets and liabilities of Neptune are
transferred to Calculus VCT in exchange for the issue of
Consideration Shares to the Neptune Shareholders. The investment
policies of Calculus VCT and Neptune are broadly similar and so
continuity for shareholders of both Companies would be
preserved.
The Consideration Shares are not being offered to the existing
Shareholders of Calculus VCT or the public (though Calculus VCT
proposes to launch a public share offer following the completion of
the Merger). A total of approximately 2.38 million Consideration
Shares are expected to be allotted pursuant to the Merger (assuming
no dissenting shareholders).
In connection with the Merger, Calculus VCT has also published a
circular (the "Calculus VCT Circular"), which is being dispatched
to shareholders of Calculus VCT. The Calculus VCT Circular contains
proposals relating to the Merger which will include the Enlarged
Company entering into a revised management agreement with Calculus
VCT"s Manager, Calculus Capital, which constitutes a related party
transaction under the Listing Rules. Neptune has also published a
similar circular (the "Neptune Circular").
MERGER
In recommending that Calculus VCT participates in Merger, which
will result in an Enlarged Company with a net asset base of
approximately GBP10 million, the Board of Calculus VCT expects to
bring a number of benefits to Calculus VCT's existing Shareholders
and to Neptune Shareholders whilst maintaining or enhancing
existing aspects of Calculus VCT. The Board of Neptune VCT also
expects the merger to bring these benefits to Neptune
Shareholders
Benefits of the Merger
The Merger should result in the following benefits for
Shareholders of Calculus VCT and Neptune:
-- a reduction in the expected annual running costs for
Shareholders due to operational expenses being spread over a larger
base;
-- a larger pool of potentially distributable reserves to
support future dividend payments; and
-- the opportunity for future buy backs, particularly for
Shareholders who have held their shares for more than 5 years;
and
-- exposure to a more diversified portfolio.
Additional attractive features of the Merger include:
-- Calculus VCT's venture capital investment manager, Calculus
Capital has agreed to contribute 33% of the costs of the Merger,
meaning that the costs will be split evenly between Calculus
Capital, Calculus VCT and Neptune; and
-- no impact on the tax position of Shareholders.
Transfer
The Merger of the Companies will be effected in the following
way:
-- Neptune will be placed into members' voluntary liquidation
pursuant to a scheme of reconstruction under section 110 IA 1986;
and
-- all of Neptune's assets and liabilities will be transferred
to Calculus VCT in consideration for the issue of the Consideration
Shares to the Neptune Shareholders.
Following the transfer of the assets and liabilities of Neptune
to Calculus VCT pursuant to the Merger, it is proposed that the
listing the Neptune Shares will be cancelled and Neptune will be
wound up.
Conditionality
The Scheme is dependent on:
-- the relevant resolutions approving the Scheme being passed at
the General Meeting, the First Neptune Meeting and the Second
Neptune Meeting;
-- notice of dissent not having been received from Neptune
Shareholders who hold more than 10% in nominal value of Neptune's
issued share capital;
-- each of Calculus VCT and Neptune confirming that it has
received no notice of any claims, proceedings or actions of
whatever nature threatened or commenced against the other which the
relevant board of directors regard as material; and
-- Calculus VCT and Neptune maintaining their VCT status,
and would become effective immediately after the passing of the
special resolution for the winding up of Neptune at the Second
Neptune Meeting.
Costs of the Merger
The costs of the Merger are estimated to be approximately
GBP150,000 and will be borne by in equal thirds by Calculus VCT,
Neptune and the Manager, Calculus Capital.
Terms of the Scheme
On the Effective Date, the Liquidators shall receive all the
cash, undertakings and other assets and liabilities of Neptune and
shall deliver to Calculus VCT:
-- particulars of all of the assets and liabilities of Neptune;
-- a list certified by the registrars of the names and addresses
of, and the number and class of Neptune Shares held by each of the
Neptune Shareholders on the register at 5.30 p.m. on the Record
Date;
-- an estimate of the winding-up costs of Neptune which will
form part of the Merger Costs; and
-- the amount estimated to be required to purchase the holdings
of any dissenting Neptune Shareholders.
On the Effective Date, Calculus VCT and the Liquidators (on
behalf of Neptune) will enter into the Transfer Agreement (subject
to such modifications as may be agreed between the parties thereto)
pursuant to which the Liquidators will procure the transfer of all
of the assets and liabilities of Neptune to Calculus VCT in
exchange for the issue of Consideration Shares (fully paid) to the
Neptune Shareholders on the basis set out below.
Calculus VCT will, pursuant to the Transfer Agreement, undertake
to pay all liabilities incurred by the Liquidators including but
not limited to the implementation of the Merger, the winding up of
Neptune and the purchase for cash of any holdings of dissenting
Neptune Shareholders.
Once the Merger is effected, the Enlarged Company should have
net assets of approximately GBP10 million and over 11 million
Shares in issue. An important advantage of the Merger will be to
reduce the running costs per Share and this benefit will accrue to
all Shareholders within the Enlarged Company.
The Merger process is expected to complete in September
2017.
Investment Policy
The Enlarged Company will invest in line with the Calculus'
investment policy.
A reduction in the expected annual running costs
Subject to the Merger taking place, Calculus Capital has agreed
to increase its potential contribution to the running costs of
Calculus VCT by reducing the cost cap (excluding irrecoverable VAT,
annual trail commission and performance incentive fees) from the
aggregate of 3.0% of the gross amount raised under the Old Ordinary
and C Share offers and 3.4% of the gross amount raised under the D
Share offers to 3.0% of the net assets of the Enlarged Company.
Assuming full subscription under the Offer (including the
over-allotment facility), the estimated annual costs of the
Enlarged Company would be 2.9% of NAV.
The expected overall cost savings to be gained by spreading
administration, directors' fees, audit and management costs over a
greater capital base together with the proposed reduced cost cap is
estimated to be in excess of GBP125,000 per annum, compared to the
aggregate of the costs which would be incurred if each VCT were to
maintain an independent existence. It is projected that the running
costs savings that will accrue to Calculus VCT over the 10 months
following the Merger will exceed the costs of the Merger being
borne by Calculus VCT and Neptune. Costs may be further reduced
going forward by a reduction in the size of Calculus VCT's
Board.
Related Party Transaction
The amendment of the investment management agreement to reduce
the cost cap as set out in the Calculus VCT Circular will
constitute a related party transaction under the Listing Rules, as
Calculus Capital is an investment manager of Calculus VCT and
accordingly the approval of Calculus VCT Shareholders to the
amendment will be sought at the Calculus VCT General Meeting. John
Glencross, as the chief executive of Calculus Capital and a
non-independent Director, did not take part in the Calculus VCT
Board's consideration of, nor vote on, the proposed amendment of
the investment management agreement.
The Calculus VCT Board which has been so advised by Beaumont
Cornish, Calculus VCT's Sponsor, considers the proposed amendment
to be fair and reasonable insofar as Calculus VCT's shareholders
are concerned.
Calculus Capital and its associates, who together hold 23,796
shares representing approximately 0.27% of the entire issued share
capital of Calculus VCT, intend to vote in favour of all the
Resolutions to be proposed at the Calculus VCT general meeting to
be convened at 11.00 a.m. on 31 August 2017, further details of
which are set out in the Notice of General Meeting contained in the
Calculus VCT Circular, save for the resolution approving the
amendments to the investment management agreement (Resolution 6) on
which they are not permitted to vote. Calculus Capital has taken
all reasonable steps to ensure that its associates will not vote on
Resolution 6 at the General Meeting.
SCHEME
The Scheme Calculations
The number of Consideration Shares to be issued to the holders
of Neptune Shares (save for any dissenting Neptune Shareholders)
will be calculated as follows:
The Roll-Over Value of Neptune will be calculated as:
A - (B + C)
D
where:
A = the most recent available unaudited net asset value of
Neptune prior the Calculation Date calculated in accordance with
Neptune's normal accounting policies (including any adjustment that
the Calculus VCT Board and the Neptune Board (acting jointly)
consider appropriate to reflect any other actual or contingent
benefit or liability of Neptune attributable to each Shareholder as
at the Calculation Date, or to reflect any changes since the
Calculation Date, including but not limited to adjustment for the
proposed special dividend of 10.5p per share);
B = the Due Share of Merger Costs attributable to Neptune (to
the extent not already paid by Neptune as reflected in "A"
above)
C = the amount estimated to be required to purchase the holdings
of Neptune Shares from dissenting Neptune Shareholders; and
D = the number of Neptune Shares in issue following close of
business on the Record Date (save for any held by dissenting
Neptune Shareholders).
Calculus VCT - Merger Value
The Merger Value per Ordinary Share will be calculated as
follows:
E - F
G
where:
E = the most recent available unaudited net asset value of
Calculus VCT prior to the Calculation Date, calculated in
accordance with Calculus VCT's normal accounting policies
(including any adjustment that the Calculus VCT Board and the
Neptune Board (acting jointly) consider appropriate to reflect any
other actual or contingent benefit or liability of Calculus VCT
attributable to each Shareholder as at the Calculation Date, or to
reflect any changes since the Calculation Date);
F = the Due Share of Merger Costs attributable to Calculus VCT
(to the extent not already paid by Calculus VCT as reflected in "E"
above); and
G = the number of the Shares in issue following close of
business on the Calculation Date.
Number of Consideration Shares to be issued
The number of Consideration Shares to be issued to Neptune
Shareholders (save for any dissenting shareholders) will be
calculated as follows:
H x J
I
Where:
H = the Roll-Over Value;
I = the Merger Value; and
J = the number of Neptune Shares in issue as at close of
business on the Record Date (save for any such shares held by
dissenting Neptune Shareholders).
The number of Consideration Shares to be issued pursuant to the
Scheme will not be greater than 5 million and will be issued
directly to Neptune Shareholders pro rata to their existing
holdings (disregarding Neptune Shares held by dissenting Neptune
Shareholders) on the instruction of the Liquidators by applying the
Merger Ratio to Neptune Shareholders' holdings of Neptune
Shares.
The Merger Ratio will be rounded down to four decimal places and
entitlements will be rounded down to the nearest whole number of
Consideration Shares. Any fractional entitlements of Consideration
Shares in respect of each holding of Neptune Shares (which, in each
case, will not exceed GBP1) will be retained for the benefit of the
Enlarged Company.
Scheme Illustration
As at 30 June 2017, the unaudited NAV of a Neptune Share (taken
from the Neptune management accounts to that date) was 29.66p. The
Roll-Over Value, had the Scheme been completed on that date and
calculated as set out above) would have been 18.71p (assuming no
dissenting Neptune Shareholders).
The number of Consideration Shares that would have been issued
to Neptune Shareholders, had the Scheme been completed on 30 June
2017 and calculated as set out above, would have been 2,379,931
(0.2123 Consideration Shares for every Neptune Share held).
Conditionality
The Scheme is dependent on:
-- the relevant resolutions approving the Scheme being passed at
the General Meeting, the First Neptune Meeting and the Second
Neptune Meeting;
-- notice of dissent not being received from shareholders who
hold more than 10% in nominal value of the issued share capital of
Neptune;
-- each of Calculus VCT and Neptune confirming that it has
received no notice of any claims, proceedings or actions of
whatever nature threatened or commenced against the other which the
relevant board of directors regard as material; and
-- Calculus VCT and Neptune maintaining their VCT status,
and so will proceed and become effective, subject to the above,
immediately after the passing of the special resolution for the
winding up of Neptune at the Second Neptune Meeting.
Dissenting Shareholders
Provided that a Neptune Shareholder does not vote in favour of
the first resolution to be proposed at the First Neptune Meeting,
such Neptune Shareholder may, within seven days following the First
Neptune Meeting, express his/her dissent to the Liquidators in
writing at the registered office of Calculus VCT and require the
Liquidators to purchase that Neptune Shareholder's holding.
The Liquidators will offer to purchase the holdings of
dissenting Neptune Shareholders at the break value price of a
Neptune Share, this being an estimate of the amount a Neptune
Shareholder would receive per Neptune Share in an ordinary
winding-up of Neptune if all of the assets of Neptune had to be
realised. The break value of a Neptune Share is expected to be
significantly below the unaudited NAV per Neptune Share due to the
nature of the underlying assets. Neptune Shareholders should also
be aware that a purchase by the Liquidators will be regarded as a
disposal for HMRC purposes, thereby triggering the repayment of
up-front income tax relief received on the original subscription if
the Neptune Shares have not been held for the requisite holding
period to maintain such relief.
The Calculus VCT Board
Subject to approval of the Merger, Diane Seymour-Williams will
step down from the Neptune Board and be appointed as a director to
the Enlarged Company Board. The Enlarged Company Board will then
comprise:
-- Michael O'Higgins;
-- Arthur John Glencross;
-- Kate Cornish-Bowden
-- Steven Meeks; and
-- Diane Seymour-Williams.
If the Merger is not approved, the Board will remain as it is
currently constituted.
OFFER FOR SUBSCRIPTION
The Board of Calculus VCT decided to take this opportunity to
raise further funds through the Offer. The case for investing in
Venture Capital Investments remains as strong as it was at the
launch of Calculus VCT. Calculus VCT, with its focus on investing
in these small and growing businesses, is ideally positioned and
set up to benefit from the investment opportunities available.
Accordingly, Calculus VCT is launching the Offer to source
additional funds to invest in venture capital opportunities for the
benefit of existing and new shareholders.
Terms of the Offer
The Offer opens on 4 August 2017 and will close at 5.00pm on 31
July 2018, unless extended. The Offer is conditional on the
relevant resolutions being passed by Shareholders at the General
Meeting. Applications will be accepted (in whole or part) at the
discretion of the Board, but the Calculus VCT Board intends to meet
applications on a 'first come, first served' basis.
The Offer Shares will be issued at a price determined for each
investor by reference to a pricing formula which takes into account
the level of Promoter's Fee, Adviser Charge/commission and early
application/loyalty discount which is applicable to that
Investor.
Investors whose applications are received by 2 February 2018
will benefit from a 0.5% early application discount. Existing
Shareholders who apply will receive an additional 0.5% loyalty
discount.
The minimum investment by an investor under the Offer is
GBP5,000 (subject to the Calculus VCT Directors' discretion to
accept any lower amount).
Fractions of Offer Shares will not be issued. Subscription
monies of GBP5 or more not used to acquire Offer Shares will be
refunded.
The independent Calculus VCT Directors, each of whom is an
investor in Calculus VCT, have appointed Calculus Capital to manage
Calculus VCT's Venture Capital Investments because of its excellent
track record and experience of tax efficient investing.
Pricing Formula
The number of Offer Shares to be issued to an investor shall be
calculated based on the following Pricing
Formula (rounded down to the nearest whole Share):
Number = Amount subscribed x Dividend ÷ Latest
of Offer less: Entitlement NAV per
Shares (i) Promoter's Factor Share
Fee
(ii) Initial
Adviser Charge/Commission
plus
(iii) Applicable
early application
and/or loyalty
discount
Where "Dividend Entitlement Factor" = 1.047.
Full details of the Offer are set out in part 3 of the
Prospectus.
Documents and approvals
Calculus VCT shareholders will receive the Calculus VCT Circular
convening the Calculus VCT Meeting to be held on 31 August 2017, at
which Calculus VCT shareholders will be invited to approve various
resolutions in connection with the Merger, Related Party
Transaction and the Offer.
Neptune Shareholders will receive the Neptune Circular convening
the Neptune Meetings on 31 August 2017 and 12 September 2017 at
which Neptune Shareholders will be invited to approve the various
resolutions in connection with the Merger.
Copies of the Calculus VCT Circular, the Neptune Circular and
the Prospectus have been approved by the UK Listing Authority. The
Calculus VCT Circular and the Prospectus shall shortly be available
for download from Calculus VCT's website:
www.calculuscapital.com/calculus-vct-plc/ and the national storage
mechanism: www.morningstar.co.uk/uk/NSM The Neptune Circular and
the Prospectus shall shortly be available for download from
Neptune's website:
www.calculuscapital.com/neptune-income-growth-vct/ and the national
storage mechanism: www.morningstar.co.uk/uk/NSM
Capitalised terms in this announcement are as defined in the
prospectus published on 4 August 2017 unless the context otherwise
requires.
Enquiries Calculus Capital Limited 0207 493 4940
EXPECTED MERGER TIMETABLE
EXPECTED TIMETABLE FOR CALCULUS VCT 2017
Latest time for the receipt of forms 11.00 a.m. on
of proxy for the General Meeting 29 August
General Meeting 11.00 a.m. on
31 August
Calculation Date 11 September
Effective Date for the transfer of 12 September
the assets and liabilities of Neptune
to Calculus VCT and the issue of
Consideration Shares
Completion of the Scheme 12 September
Admission and dealings in the Consideration 13 September
Shares to commence
CREST accounts credited with the 13 September
Consideration Shares issued pursuant
to the Schemes
Certificates for Consideration Shares 27 September
dispatched by
EXPECTED TIMETABLE FOR NEPTUNE 2017
--------------------------------------------
Date from which it is advised that 23 August
dealings in Neptune Shares should
only be for cash settlement and immediate
delivery of documents of title
--------------------------------------------
Ex dividend date for special dividend 5.00 p.m. on
24 August
Record date for payment of special 5.00 p.m. on
dividend 25 August
Latest time for receipt of forms 11.30 a.m. on
of proxy for the First Neptune Meeting 29 August
--------------------------------------------
First Neptune Meeting 11.30 a.m. on
31 August
--------------------------------------------
Record Date for Shareholders' entitlements close of business
on 4 September
Register of members closed close of business
on 4 September
Latest time for receipt of forms 3.00 p.m. on
of proxy for the Second Neptune Meeting 8 September
Calculation Date 11 September
Dealings in Neptune Shares suspended 7.30 a.m. on
12 September
Second Neptune Meeting 3.00 p.m. on
12 September
Effective Date for the transfer of 12 September
Neptune's assets and liabilities
to Calculus VCT and the issue of
Consideration Shares pursuant to
the Scheme
Payment of special dividend 18 September
Cancellation of the listing of the 8.00 a.m. on
Neptune Shares 20 September
EXPECTED OFFER TIMETABLE, STATISTICS AND COSTS
Indicative Offer Timetable
Offer opens 4 August 2017
Closing date (for 2017/18 3 April 2018
tax year)
Closing date (for 2018/19 31 July 2018
tax year)
First allotment no later than 5
April 2018
Effective date for the listing three Business Days
of Offer Shares and following allotment
commencement of dealings
Share certificates and tax ten Business Days
certificates to be dispatched following allotment
* The Calculus VCT Directors reserve the right
to extend the closing date at their discretion.
The Offer will close earlier than the date stated
above if fully subscribed or otherwise at the
Calculus VCT Directors' discretion.
Offer Statistics
Maximum amount to be raised by Calculus GBP5 million
VCT*
Unaudited NAV per Share as at 30
June 2017** 91.2p
Maximum number of Offer Shares to
be issued*** 5.45 million
Estimated net proceeds of the Offer*** GBP4.75 million
Discount for applications received
by 2 February 2018**** 0.5%
Discount for applications received
from existing investors in Calculus
VCT**** 0.5%
* The Directors reserve the right to increase
the size of the Offer by up to an additional
GBP5 million.
** NAV is a blended figure between Ordinary
Shares (designated D Shares as at 30 June 2017)
entitled to dividend for the year ending 28
February 2017 (93.3p) and those not entitled
to that dividend (89.1p).
*** Approximate figure, assuming full subscription,
no use of the over-allotment facility and total
Offer costs of 5% of funds raised.
**** Discounts for early applications and for
existing investors in Calculus VCT will be applied
through an increase in the number of Offer Shares
allocated via the Pricing Formula.
Offer Costs and Commissions
Advised Investors
Promoter's Fee 3.0% of funds invested
Adviser charge as agreed between Investor
and Intermediary
Non-Advised Investors (through
Intermediaries)
Promoter's Fee 3.0% of funds invested
Commission 2.0% up front
0.5% trail per annum
(maximum of 3.0%)
Direct investors (those
without an Intermediary)
Promoter's Fee 5.0% of funds invested
This information is provided by RNS
The company news service from the London Stock Exchange
END
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