TIDMDPV7
JOINT ANNOUNCEMENT
15 JUNE 2015
DOWNING STRUCTURED OPPORTUNITIES VCT 1 PLC ("DSO")
DOWNING PLANNED EXIT VCT 2011 PLC ("DP011")
DOWNING PLANNED EXIT VCT 6 PLC ("DP6")
DOWNING PLANNED EXIT VCT 7 PLC ("DP7")
(TOGETHER, THE "COMPANIES" AND DP2011, DP6 AND DP7 TOGETHER THE "TARGET
VCTS" AND EACH A "TARGET VCT")
RECOMMENDED PROPOSALS TO MERGE THE COMPANIES PURSUANT TO SCHEMES OF
RECONSTRUCTION UNDER SECTION 110 OF THE INSOLVENCY ACT 1986
The boards of the Companies (the "Boards") are pleased to announce that
they have agreed terms to merge the four Companies and that they are
today writing to set out the merger proposals to their respective
shareholders for consideration. Each of the Companies is managed by
Downing LLP ("Downing").
The merger ("Merger") will be effected by the Target VCTs each being
placed into members' voluntary liquidation pursuant to schemes of
reconstruction under section 110 of the Insolvency Act 1986 ("Schemes"
and each a "Scheme"). Shareholders should note that the Merger by way of
the Schemes will be outside the provisions of the City Code on Takeovers
and Mergers. It is proposed that the name of DSO be changed to "Downing
FOUR VCT plc" immediately following the Merger.
The planned exit strategy of each of DSO's share classes, as well as
those of the Target VCTs, will not be affected by the Merger as new
share classes will be created in line with the current, pre-merger share
classes in the Target VCTs as illustrated in the table below.
Pre-Merger Share Classes of Target Post-Merger Share Classes of the
VCTs Enlarged Company
DP2011 General Ord Shares New DP2011 General Ord Shares
DP2011 A Shares New DP2011 General A Shares
DP2011 Structured Ord Shares New DP2011 Structured Ord Shares
DP2011 Structured A Shares New DP2011 Structured A Shares
DP2011 Low Carbon Ord Shares New DP2011 Low Carbon Ord Shares
DP6 Shares New DP67 Ord Shares
DP7 Shares New DP67 Ord Shares
Each Scheme requires the approval of resolutions by the DSO shareholders
and the relevant Target VCT's shareholders. The DP6 and DP7 Schemes are
conditional on the DP2011 Scheme going ahead.
The Merger will, if effected, result in an enlarged DSO ("Enlarged
Company") with net assets of over GBP60 million.
Estimated costs of the Merger are GBP400,000, but Downing LLP has agreed
to contribute 50% of the costs, so net costs for shareholders will be
GBP200,000. These net costs will be borne by DSO and the Target VCTs on
a basis which is pro rata to their current net asset values and the
expected remaining life of each share class. As a result, the running
cost savings for each share class over their expected remaining life is
expected to exceed the net costs of the Merger borne by that share
class.
For the 12 months following the Merger, Downing has also agreed to
reduce its investment management fee in respect of DSO Assets from 1.5%
to 1.3% and, in respect of the DP2011 Assets, from 1.8% to 1.6%. The
applicable investment management fee in respect of DP6 Assets and DP7
Assets will remain at 1.35%.
As part of the proposals, DSO will seek approval to broaden its
Investment Policy to allow each share class after the Merger to continue
to be managed in the same way as previously, to renew allotment and
share purchase authorities, to approve amendments to its articles of
association and to approve the cancellation of its share premium
account.
Further details of the proposals are set out below. The approval of
resolutions in connection with these proposals will be proposed at
general meetings of the Companies ("Meetings") being convened as set out
in the expected timetable below.
BACKGROUND
VCTs are required to be listed on the premium segment of the Official
List, which involves a significant level of costs associated with the
listing as well as related fees to ensure they comply with all relevant
legislation and regulations. A larger VCT is able to spread the fixed
elements of such running costs across a larger asset base and, as a
result, reduce running costs as a percentage of net assets. In September
2004, the Merger Regulations were introduced allowing VCTs to be
acquired by, or merge with, each other without prejudicing the VCT tax
reliefs obtained by their shareholders. A number of VCTs have taken
advantage of these regulations to create larger VCTs for economic and
administrative efficiencies.
With the above in mind, the Boards and Downing entered into discussions
to consider a merger of the four Companies to create a single, larger
VCT. The aim of the Merger is to achieve strategic benefits and
reductions in the annual running costs for each set of shareholders,
while maintaining a platform from which the planned exit strategy of
each of the share pools can continue to be executed as it is now.
THE SCHEMES
The Merger will be effected in the following way.
First, each Target VCT will be placed into members' voluntary
liquidation pursuant to a scheme of consolidation under section 110 of
the Insolvency Act 1986, subject to shareholders' approval.
Secondly, all of the assets and liabilities of each Target VCT will be
transferred to DSO in consideration for the issue of Consideration
Shares by DSO directly to the shareholders of the relevant Target VCT.
Each Scheme requires the prior approval of the shareholders of the
relevant Target VCT and the Shareholders of DSO. If a shareholder of a
Target VCT does not vote in favour of the Merger and expresses his
dissent in writing then he may require the Liquidators to purchase his
shares at their break-value price, this being an estimate of the amount
he would receive in an ordinary winding up of the relevant Target VCT if
all of the assets had to be realised. The break-value is expected to be
significantly below the net asset value of the relevant Target VCT.
For these purposes, whilst there will only be one general meeting of DSO
at which shareholders will be invited to consider and vote in favour of
the Mergers, there will be two general meetings for each of the Target
VCTs. At the Target VCTs' First General Meetings, Target VCT
shareholders will be invited to approve the Merger. At the Second Target
VCT Meetings, Target VCT Shareholders will be invited to pass a special
resolution for the winding up of the relevant Target VCT.
In addition to the approval of Shareholders being sought at the General
Meeting, each Scheme is dependent on:
* the relevant Scheme being approved by the shareholders of DSO and
the relevant Target VCT;
* notice of dissent not being received from shareholders (of the
relevant Target VCT) who hold more than 10% in nominal value of the
issued share capital; and
* DSO confirming that it has received no notice of any claims,
proceedings or actions of whatever nature threatened or commenced
against any of the Target VCTs which the board of DSO regard as material,
* the DP2011 scheme becoming effective,
and so will proceed and become effective immediately after the passing
of the special resolution for the winding up of the relevant Target VCT.
The number of Consideration Shares to be issued will be on a "one for
one" basis with Consideration Shares being issued in a new corresponding
share class created in DSO. There is one exception being the DP2011 LC
Shares where 935 Consideration Shares will be issued for every 1,000
existing DP2011 LC Shares held. (This is because the DP2011 LC shares
were originally issued at a price of 93.5p per share instead of the more
common VCT issue price of 100p per share. This adjustment rebases the
shares to an equivalent original issue price of 100p.)
Each Scheme is conditional upon certain conditions being satisfied as
further set out in the circulars being posted to shareholders today,
including resolutions to be proposed to shareholders of each of the
Companies. Each Target VCT will apply to the UKLA for cancellation of
the listing of its shares, upon the successful completion of its Scheme,
such cancellation is anticipated to take place on 24 August 2015 (the
cancellation requiring the approval of the relevant Target VCT's
shareholders).
The Merger will result in the creation of an enlarged company and should
result in savings in running costs and simpler administration. As all of
the Companies have similar investment policies, a number of common
investments and are managed by Downing, this is achievable without
material disruption to the Companies and their combined portfolio of
investments.
The boards of the Companies consider that the Merger will bring a number
of benefits to all of the Companies' groups of shareholders through:
* A reduction in the expected annual running costs for most
shareholders;
* Annual running costs capped by Downing at 3% of net assets;
* a reduction in Downing's investment management fees for the 12
months following the Merger by 0.2% of the NAV per annum in respect of
each DSO Share;
* increased flexibility for exit and wind up strategies for different
groups of shareholders; and
* enhanced prospects for the possibility of creating an Target share
class which could be offered to those Shareholders who may wish to
remain invested and continue to receive tax free dividends at the end of
the initial planned exit period.
Additional attractive features of the Merger include:
* Downing has agreed to contribute 50% of the costs of the Merger
meaning that DSO and the Target VCTs will only bear GBP200,000 of the
GBP400,000 estimated costs;
* Downing has agreed to cover 100% of any costs of the Merger in
excess of GBP420,000; and
* no impact on the tax position of Shareholders - existing VCT tax
reliefs carry over and attach to the post- Merger shares for all
Shareholders.
The Merger is comprised of three separate Schemes and will only go ahead
if at least the DP2011 Scheme becomes unconditional. If one or two of
the Schemes become unconditional, then the resulting Enlarged Company
will be commensurately smaller than if all three Schemes become
unconditional with the result that the Enlarged Company will have a
smaller net asset base across which to spread the costs of the Schemes
that do go ahead and the running costs of the Enlarged Company going
forward. In this case, the costs of the Schemes that do go ahead may
take longer to recover than they would if the full four-way Merger was
implemented.
The estimated total costs of this four-way merger are GBP400,000.
Downing has agreed to bear 50% of the costs of the Merger and 100% of
any costs in excess of GBP420,000. After Downing's contribution, and
taking into account Downing's reduced management fees in year one
following the Merger, the net costs of the Merger to be borne by the
Companies are estimated at GBP110,000.
As an illustration, had the Merger been completed on the basis of the
Schemes as set out the Circulars, the number of Consideration Shares
that would be issued for each Target VCT share would be as follows:
Downing FOUR
Number of VCT Voting
Current Shares Net share class Shares/ rights
Current share currently in Asset following Consideration following
company class issue Value* Merger shares merger
Number GBPM Number %
Existing Shares
Ordinary DSO Ordinary
DSO Shares 10,288,157 5.54 Shares 10,288,157 9.02%
DSO A Shares 15,506,488 0.02 DSO A Shares 15,506,488 0.02%
DSO B Shares 19,911,070 13.98 DSO B Shares 19,911,070 23.04%
DSO C Shares 29,926,070 0.03 DSO C Shares 29,926,070 0.04%
DSO D Shares 7,877,527 6.36 DSO D Shares 7,877,527 10.22%
Consideration Shares
DP2011 Gen
DP2011 Gen Ords 15,679,241 11.49 Ords 15,679,241 18.70%
DP2011 Gen A 18,453,789 1.11 DP2011 Gen A 18,453,789 1.94%
DP2011
Structured Structured
DP2011 Ords 10,678,725 8.08 Ords 10,678,725 13.11%
DP2011
Structured Structured
DP2011 A 12,572,817 0.78 A 12,572,817 1.32%
Low Carbon DP2011 Low
DP2011 Ords 8,102,222 6.11 Carbon Ords 7,575,577 10.63%
DP6 DP6 5,355,154 3.42 DP67 5,355,154 5.63%
DP7 DP7 6,006,085 3.81 DP67 6,006,085 6.32%
* The Net Asset Values shown here are the unaudited
figures as at 31 March 2015 for DSO, 30 November 2014
for DP2011 (adjusted for dividends paid since) and
31 January 2015 for DP6 and DP7.
The worked example above is produced for illustrative purposes only and
assumes that all Schemes are approved in full with no dissenting
shareholders from any of the Companies. Voting rights of each share
class following the Merger will be broadly in line with their relative
net assets.
MANAGEMENT AND ADMINISTRATION ARRANGEMENTS
Downing is the investment manager of all of the Companies and also
provides administration and secretarial services to all of the
Companies.
Subject to the completion of the Merger, the Enlarged Company will enter
into revised arrangements with Downing pursuant to which Downing will
receive fees as follows: -
Investment Management Fees are to be calculated according to the
specific share class in which the assets in question are held:
Annual Fee
(Pre and
Company post Merger) Comments
Reduced by 0.2% to 1.3% for the 12 months immediately
DSO 1.5% following the Merger
Reduced by 0.2% to 1.6% for the 12 months immediately
DP2011 1.8% following the Merger
DP6/DP7 1.35%
Downing has agreed to provide running cost caps following the Merger as
follows:
Running Cost
Running Cost Cap post-
Company Cap pre-Merger Merger
DSO 3.5% 3.0%
DP2011 3.5% 3.0%
DP6/ DP7 2.9% 2.9%
THE DSO BOARD
The Boards have considered what the size and future composition of the
DSO Board should be following the Merger and it has been agreed that
subject to completion of the Merger, the Board composition will be
rearranged such that two new directors will be appointed to join the
existing DSO Board.
It is proposed that Sir Aubrey Brocklebank and Russell Catley join the
DSO Board from their current appointments as directors of DP2011. The
appointments of Sir Aubrey Brocklebank and Russell Catley as directors
of DSO are subject to the completion of the Merger, and will ensure that
the board of directors of the Enlarged Company have direct experience of
approximately 90% of the Enlarged Company's portfolio (by value). It is
intended that Sir Aubrey Brocklebank will be appointed as the Senior
Independent Director upon joining the DSO Board.
DSO CHANGES TO ITS ARTICLES, RENEWAL OF SHARE ISSUE AND BUYBACK
AUTHORITIES AND CANCELLATION OF SHARE CAPITAL AND RESERVES
As the structure of DSO will change if the Merger goes ahead, due to the
creation of a number of new classes of shares, there are some structural
changes required to the Articles to ensure the smooth and equitable
running of the Enlarged Company. The proposed changes are as follows:
1. The addition to the Articles of the share rights of the New Share
Classes
In respect of rights to receive dividends and distributions of capital,
these will be identical to the rights in the Target VCT's existing
articles of association and will not affect existing Shareholders of DSO
as they will only be relevant to the segregated assets of each New Share
Class which are transferred to DSO pursuant to the Merger.
2. The introduction of a structured voting rights system for general
meetings
A proposed new voting rights system (described in more detail below)
aims to ensure that, at a general meeting where holders of all types of
shares may be present, the voting power attributable to the various
existing classes and New Share Classes is broadly proportionate to the
relative value those classes represent in the Enlarged Company. This is
achieved by having a base number of votes for each share in a particular
class, based on that class's current Net Asset Value. There is also a
mechanism for increasing or decreasing the number of base votes in the
event that the NAV of a class rises or falls in increments of 25%.
3. The introduction of mechanism to wind up exiting share classes
As certain of the planned exit classes of shares in the Enlarged Company
are approaching the end of their lifecycles, the Board believes this is
an opportune time to introduce a mechanism into the Articles to allow
the Enlarged Company to efficiently wind up share classes in which the
value has been almost entirely distributed to shareholders.
It is proposed that where the Net Asset Value of a particular class
falls below GBP25,000 or the largest shareholder holds shares with a
value of less than GBP20, the Board will have the right to convert the
remaining shares into deferred shares for repurchase by DSO. This will
prevent an almost 'empty' share class, with minimal economic value, from
persisting inefficiently and incurring fixed costs relating, amongst
other things, to maintaining its listing on the London Stock Exchange.
4. The increase to the directors' annual remuneration cap
An increase to the cap on the aggregate sum to which directors of DSO
are entitled by way of remuneration for their services from GBP100,000
to GBP150,000 is proposed in light of the increase in size of the
Enlarged Company and its board.
EXPECTED TIMETABLE FOR THE MERGER 2015
Latest time for the receipt of forms of proxy for 12 noon on 7
the DSO General Meeting July
DSO General Meeting 12 noon on 9
July
Class Meeting of Ordinary Shareholders 12.05 p.m. on 9
July
Class Meeting of A Shareholders 12.10 p.m. on 9
July
Class Meeting of B Shareholders 12.15 p.m. on 9
July
Class Meeting of C Shareholders 12.20 p.m. on 9
July
Class Meeting of D Shareholders 12.25 p.m. on 9
July
Calculation Date 17 July
Effective Date for the transfer of the assets and 20 July
liabilities of the Target VCTs to DSO and the issue
of Consideration Shares
Announcement of the results of the DSO General Meeting 21 July
and completion of the Schemes
Admission and dealings in the Consideration Shares 23 July
to commence
CREST accounts credited with the Consideration Shares 23 July
issued pursuant to the Schemes
Certificates for Consideration Shares dispatched by 2 August
EXPECTED TIMETABLE FOR DP2011
2015
Latest time for receipt of forms of proxy for the 11.15 a.m. on 7
DP2011 First General Meeting July
DP2011 First General Meeting 11.15 a.m. on 9
July
Date from which it is advised that dealings in DP2011 16 July
Shares should only be for cash settlement and immediate
delivery of documents of title
Latest time for receipt of forms of proxy for the 11.30 a.m. on
DP2011 Second General Meeting 16 July
DP2011 register of members closed 5.00 p.m. 17
July
Record Date for DP2011 Shareholders' entitlements 5.30 p.m. 17
July
Calculation Date 17 July
Dealings in DP2011 Shares suspended 7.30 a.m. on 20
July
DP2011 Second General Meeting 11.30 a.m. on
20 July
Effective Date for the transfer of the assets and 20 July
liabilities of DP2011 to DSO and the issue of Consideration
Shares pursuant to the DP2011 Scheme
Cancellation of the listing of the DP2011 Shares 8.00 a.m. on 24
August
EXPECTED TIMETABLE FOR DP6
2015
Latest time for receipt of forms of proxy for the 12.30 p.m. on 7
DP6 First General Meeting July
DP6 First General Meeting 12.30 p.m. on 9
July
Date from which it is advised that dealings in DP6 16 July
Shares should only be for cash settlement and immediate
delivery of documents of title
Latest time for receipt of forms of proxy for the 12 noon on 16
DP6 Second General Meeting July
DP6 register of members closed 5.00 p.m. on 17
July
Record Date for DP6 Shareholders' entitlements 5.30 p.m. on 17
July
Calculation Date 17 July
Dealings in DP6 Shares suspended 7.30 a.m. on 20
July
DP6 Second General Meeting 12 noon on 20
July
Effective Date for the transfer of the assets and 20 July
liabilities of DP6 to the DSO and the issue of Consideration
Shares pursuant to the DP6 Scheme
Cancellation of the listing of the DP6 Shares 8.00 a.m. on 24
August
EXPECTED TIMETABLE FOR DP7
2015
Latest time for receipt of forms of proxy for the 12.45 p.m. on 7
DP7 First General Meeting July
DP7 First General Meeting 12.45 p.m. on 9
July
Date from which it is advised that dealings in DP7 16 July
Shares should only be for cash settlement and immediate
delivery of documents of title
Latest time for receipt of forms of proxy for the 12.15 p.m. on
DP7 Second General Meeting 17 July
DP7 register of members closed 5.00 p.m. on 16
July
Record Date for DP7 Shareholders' entitlements 5.30 p.m. on 17
July
Calculation Date 17 July
Dealings in DP7 Shares suspended 7.30 a.m. on 20
July
DP7 Second General Meeting 12 noon on 20
July
Effective Date for the transfer of the assets and 20 July
liabilities of DP7 to the DSO and the issue of Consideration
Shares pursuant to the DP7 Scheme
Cancellation of the listing of the DP7 Shares 8.00 a.m. on 24
August
DOCUMENTS AND APPROVALS
DSO shareholders will receive a copy of a circular convening the DSO
general meeting to be held on 9 July 2015 together with a securities
note relating to the Merger (the "Securities Note") at which DSO
shareholders will be invited to approve resolutions in connection with
the proposals.
The Target VCTs' shareholders will each receive a circular convening the
Target VCTs' first general meetings on 9 July 2015 and the Target VCTs'
second general meetings on 20 July 2015 (together with the Securities
Note) at which Target VCTs' shareholders will be invited to approve
resolutions in connection with their relevant Scheme.
Copies of the Prospectus (comprising the Securities Note together with a
registration document and summary), the DSO circular and the Target
VCTs' circulars have been submitted to the UK Listing Authority and will
be shortly available for download both from the Downing website
(www.downing.co.uk/D4Merger) and the national storage mechanism
(www.morningstar.co.uk/uk/NSM).
For further information, please contact:
Investment Manager and Administrator for the Companies
Downing LLP - Grant Whitehouse - Telephone: 0207 416 7780
Solicitors to the Companies
RW Blears LLP - Frank Daly - Telephone: 020 3192 5690
Sponsor to DSO
Jonathan Becher - Panmure Gordon (UK) Limited - Telephone: 020 7886 2500
The directors and proposed directors of DSO accept responsibility for
the information relating to DSO and its directors and proposed directors
contained in this announcement. To the best of the knowledge and belief
of such directors and proposed directors (who have taken all reasonable
care to ensure that such is the case), the information relating to DSO
and its directors and proposed directors contained in this announcement,
for which they are solely responsible, is in accordance with the facts
and does not omit anything likely to affect the import of such
information.
The directors of DP2011 accept responsibility for the information
relating to DP2011 and its directors contained in this announcement. To
the best of the knowledge and belief of such directors (who have taken
all reasonable care to ensure that such is the case), the information
relating to DP2011 and its directors contained in this document, for
which they are solely responsible, is in accordance with the facts and
does not omit anything likely to affect the import of such information.
The directors of DP6 accept responsibility for the information relating
to DP6 and its directors contained in this announcement. To the best of
the knowledge and belief of such directors (who have taken all
reasonable care to ensure that such is the case), the information
relating to DP6 and its directors contained in this document, for which
they are solely responsible, is in accordance with the facts and does
not omit anything likely to affect the import of such information.
The directors of DP7 accept responsibility for the information relating
to DP7 and its directors contained in this announcement. To the best of
the knowledge and belief of such directors (who have taken all
reasonable care to ensure that such is the case), the information
relating to DP7 and its directors contained in this document, for which
they are solely responsible, is in accordance with the facts and does
not omit anything likely to affect the import of such information.
RW Blears LLP are acting as legal advisers for the Companies and for no
one else in connection with the matters described herein and will not be
responsible to anyone other than the Companies for providing the
protections afforded to clients of RW Blears LLP or for providing advice
in relation to the matters described herein.
Panmure Gordon (UK) Limited, which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting as sponsor
for DSO and no one else and will not be responsible to any other person
for providing the protections afforded to customers of Panmure Gordon
(UK) Limited or for providing advice in relation to any matters referred
to herein.
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Downing Planned Exit VCT 7 PLC via Globenewswire
HUG#1928638
Downing P.E.7 (LSE:DPV7)
Historical Stock Chart
Von Aug 2024 bis Sep 2024
Downing P.E.7 (LSE:DPV7)
Historical Stock Chart
Von Sep 2023 bis Sep 2024