VES Vestpa

RNS No 3608f
VOYAGEUR EUROPEAN SMALLER COMPANIES TRUST PLC
17th October 1997

           VOYAGEUR EUROPEAN SMALLER COMPANIES TRUST PLC
           ---------------------------------------------
                                 
               RECOMMENDED RECONSTRUCTION PROPOSALS
               ------------------------------------

INTRODUCTION
------------

The Directors announced on 24 September 1997 an outline of
recommended proposals for the reconstruction of the Company.  Full
details of the proposals have now been finalised and include:

-    a scheme of reconstruction under section 110 of the Insolvency
Act 1986 involving the winding up of Voyageur European Smaller
Companies Trust Plc (Voyageur);

-    the opportunity for those Shareholders who wish to continue
with their investment to do so by rolling over their investment in
Voyageur, in a tax efficient manner, into Capital Opportunities
Trust PLC (Capital Opportunities), a new investment trust which
will be managed by J O Hambro & Partners Limited (J O Hambro) and
which will seek long term capital growth from a highly flexible, UK
orientated investment policy;

-    the opportunity for those Shareholders who do not wish to
continue with their investment to receive cash in respect of their
Ordinary Shares on the winding up of Voyageur via RealisationCo, a
specially incorporated company which will be liquidated immediately
following the reconstruction; and

-    paying an amount in cash to Warrantholders representing their
entitlement on a conventional winding up under the terms of the
Warrant Instrument adjusted to take account of movement in
Voyageur's asset value subsequent to the announcement of the
Proposals on 24 September 1997.

Capital Opportunities, which will be managed by J O Hambro, is also
seeking to raise additional funds of between #25 million and #50
million by way of a Placing of C Shares.

With effect from 10 October 1997, and in anticipation of
implementation of the Proposals, Voyageur International Asset
Management Limited's (VIAM) appointment as investment manager of
Voyageur was terminated and J O Hambro was appointed in its place.
A termination payment of #291,239 was paid by Voyageur to VIAM on
16 October 1997 but, as more fully explained under 'Expenses'
below, J O Hambro has agreed to make a matching contribution to the
assets of Voyageur.  The investment management agreement between
Voyageur and J O Hambro will terminate without compensation on
implementation of the Proposals.

On 16 October 1997, the Company sold investments for an aggregate
consideration of #9.739 million.  The sale was effected by way of
an agency cross trade transacted by Merrill Lynch on behalf of the
Company and Orange European SmallCap Fund at mid-market prices
prevailing at the close of business on 16 October 1997 where
available.  The proceeds of sale will be used to repay borrowings
and the balance will be held in a readily realisable form with some
new investments being made in order to ensure that the Company's
shares continue to be qualifying investments for Personal Equity
Plan purposes.  Neil Dunn, who was formerly involved in the
management of the Company's assets, is involved in the management
of Orange European SmallCap Fund's Assets.

BACKGROUND
----------

The Company was launched in April 1994 and although performance has
been satisfactory it has not been reflected in the price of the
Ordinary Shares which have traded at a discount to their underlying
net asset value.  Over the 12 months to 23 September 1997, the day
prior to the first announcement of the Proposals, the average
discount to the underlying net asset value per Ordinary Share was
approximately 13 per cent.  The Board, which has been concerned for
some time at the level of the discount, believes that the principal
reasons for the discount are the small size of the Company, its
narrow shareholder base and the consequent lack of liquidity in the
Ordinary Shares, which make it unrealistic to expect that the
Ordinary Shares will maintain a satisfactorily narrow discount in
the future.  The persistence of the discount has, in turn, made it
impractical to seek to raise new capital from investors within the
current structure and investment policy.

DETAILS OF THE PROPOSALS
------------------------

SHAREHOLDERS
------------
Under the Proposals, Shareholders on the register at close of
business on Thursday, 14 November 1997 will be entitled, subject to
the conditions referred to under the heading 'Conditions of the
Proposals' below, to elect to receive one Capital Opportunities
Ordinary Share or one RealisationCo Share for each Ordinary Share
held.  Those Shareholders who wish to receive cash for their
investment in Voyageur following its winding up should elect for
RealisationCo Shares.  In terms of the Scheme, the net assets of
the Company (after providing for expenses incurred by Voyageur in
connection with the Proposals and the entitlements of the
Warrantholders under the Scheme and the Liquidators' contingency
fund of #75,000) will be divided between Capital Opportunities and
RealisationCo.  The value of the assets to be transferred to
RealisationCo will be 99 per cent of the proportion of the net
assets of Voyageur representing the proportion of Ordinary Shares
in respect of which elections are received to take RealisationCo
Shares.  The remaining balance of Voyageur's net assets will be
transferred to Capital Opportunities.  Based on:

-    the estimated net asset value per Ordinary Share of 141.16p as
at 14 October 1997;

-    Voyageur's estimated expenses of #150,000 (inclusive of
irrecoverable VAT) in connection with implementing the Proposals;

-    an estimated entitlement of Warrantholders of 38.1p per
Warrant;

-    the Liquidators' contingency fund of #75,000; and

-    an assumption that the holders of 65 per cent of the Ordinary
Shares elect for Capital Opportunities Ordinary Shares,

the initial net asset values of a Capital Opportunities Ordinary
Share and of a RealisationCo Share would have been 132.0p and
130.0p respectively if the Scheme had become effective on 14
October 1997.

WARRANTHOLDERS
--------------
If the Proposals had been announced and become effective on 24
September 1997 (and based on an average Warrant price of 38.1p for
the 10 dealing days ended 23 September 1997 and a net asset value
per Ordinary Share of 136.1p (after expenses incurred by Voyageur
in implementing the Scheme) as at 24 September 1997) the
subscription price payable on the exercise of a Warrant would have
been reduced from 100p to 90.5p.  On this basis each Warrantholder
would have received a net payment of 38.1p in respect of each
Warrant held on a deemed exercise of the Warrants on 24 September
1997 and receipt of the proceeds of liquidation in respect of the
Ordinary Shares resulting from such exercise after deduction from
the liquidation proceeds of the subscription price of 90.5p per
Warrant.  The Board considers that the payment to Warrantholders
should take account of any fluctuation in the net asset value of
Voyageur between 22 September 1997 and the winding up of Voyageur.
Accordingly, the Scheme provides that each Warrantholder will be
sent a cash payment on the Effective Date (expected to be 20
November 1997) of 38.1p per Warrant adjusted to take into account
any change in the net asset value of Voyageur between 22 September
1997, the date on which the net asset value was last published
prior to the Proposals being first announced, and the Valuation
Date (the day two days prior to the Effective Date).

CAPITAL OPPORTUNITIES
---------------------
Under the Proposals, Shareholders who elect to roll over their
investment in Voyageur will do so into Capital Opportunities, a new
investment trust which will be managed by J O Hambro.

Capital Opportunities will seek long term capital growth from a
highly flexible, UK orientated investment policy.  It will be
benchmarked against the FTSE-A All Share Index.  It will have an
initial life of seven years, with a continuation vote at the annual
general meeting in 2004.

It is anticipated that the portfolio will include a broad range of
quoted companies by market capitalisation.  The proportion of the
portfolio invested in larger companies is likely to be
significantly less than the proportion of larger companies
comprising the FTSE-A All Share Index under normal circumstances
and the focus within smaller companies is likely to be on companies
with a capacity to evolve into medium and larger sized companies.
Up to 10 per cent of the portfolio may also be invested in unquoted
securities.  Such investments are likely to involve companies where
the management is known to J O Hambro and the opportunity to invest
is one sought by J O Hambro rather than offered by financial
intermediaries.

Capital Opportunities will be able to invest up to 50 per cent of
its net assets in overseas markets, although such a high proportion
would be exceptional and only likely to arise if J O Hambro
believes the UK market to be significantly overvalued relative to
overseas markets.  A UK investment perspective regularly identifies
opportunities in other markets through comparable or related
companies and, in some sectors which are highly international, the
best or, even only, investment opportunity in that sector may arise
overseas.

With the objective of enhancing returns to shareholders of Capital
Opportunities, the directors of Capital Opportunities will be
prepared to borrow up to a limit of 30 per cent of the net assets
of Capital Opportunities at the time of borrowing.  Borrowings are
likely to be short term and the level of gearing is likely to vary
considerably over time.  If J O Hambro believes that equity markets
no longer appear attractive, gearing may be reduced to zero or the
portfolio may hold net cash for a time.

Following Admission, Capital Opportunities will take steps to
enable its board at its discretion to make purchases of Capital
Opportunities' own shares should the share price fall to a
significant discount to net asset value.

Robin Stormonth Darling is the Chairman of Capital Opportunities
and David Woods is also a director of Capital Opportunities.  They
are joined on that board by Neil Dunn and by James Hambro, a
director and founder shareholder of the J O Hambro group.

J O HAMBRO & PARTNERS LIMITED
-----------------------------

J O Hambro group is a London based investment management firm.  It
was formed in 1986 by members of the Hambro family to advise
institutional investors.  J O Hambro, in which Equitable Life
Assurance Society ("Equitable Life") has an interest, currently has
funds under management or administration of approximately #300
million.

The investment management of Capital Opportunities' portfolio will
be handled by Malcolm King and Caroline Harris, both formerly of
Finsbury Asset Management where their responsibilities included
investment management of Finsbury Growth Trust PLC, Finsbury
Smaller Companies Trust PLC and the "Market Investments" portfolio
of Finsbury Trust PLC.  Malcolm King was employed by Finsbury Asset
Management from 1988 until April 1997 and Caroline Harris was
employed by Finsbury Asset Management from January 1996 until April
1997.

The investment policy of Capital Opportunities will be similar to
that of the "Market Investments" portfolio of Finsbury trust PLC,
which comprised investments of #36.4 million at 31 March 1997.  Its
net asset value per share increased by 209.3 per cent in the five
years to 31 March 1997 compared with an increase of 79.2 per cent
in the FTSE-A All Share Index in that period.  Finsbury Trust PLC
won awards in the 1996 Micropal Awards UK Investment Trusts UK
General Sector for overall performance over five years (first) and
over one year (second).

Over the same five year period, the net asset value of Finsbury
Growth Trust PLC, an investment trust, investing in larger UK
companies, increased by 102.6 per cent and that of the  Finsbury
Smaller Companies Trust PLC increased by 119.3 per cent compared to
an increase in the FTSE-A Smallcaps (excluding investment trusts)
Index of 73.1 per cent.

Capital Opportunities and J O Hambro have entered into an
investment management agreement whereby, conditional upon
Admission, J O Hambro has been appointed to manage the investments
and other assets of Capital Opportunities.  Capital Opportunities
will pay to J O Hambro a quarterly fee (exclusive of Value Added
Tax) payable in arrears equal to 0.1875 per cent of the net assets
of Capital Opportunities at the end of the relevant quarter.  In
calculating net assets the amount of both long and short term
borrowings shall be deducted.  The appointment of J O Hambro as
investment manager is subject to termination by either party giving
to the other not less than one year's notice such notice to expire
on or after the second anniversary of Admission.

In order to incentivise the investment managers at J O Hambro in
the management of Capital Opportunities' investments, Capital
Opportunities will, on or prior to conversion of the C Shares,
grant Malcolm King and Caroline Harris options to subscribe for
Capital Opportunities Ordinary Shares.  No consideration will be
payable for these options which will entitle the optionholders to
subscribe in aggregate for five per cent. Of the issued ordinary
share capital of Capital Opportunities as enlarged by conversion of
the C Shares.

The price payable on exercise of the options will be equivalent to
the net asset value of a Capital Opportunities Ordinary Share as
calculated for the purpose of converting the C Shares although
this option price may be subject to an appropriate adjustment in
the event of any capital reorganisation.

These options are intended as a long term incentive and, subject to
certain exceptions, will be capable of exercise at any time during
the period commencing five years after the date of grant and
expiring on the day immediately prior to the seventh anniversary of
the date of grant.  No option may be exercised unless the diluted
capital return per Capital Opportunities Ordinary Share over the
period from conversion of the C Shares to the proposed date of
exercise exceeds the capital return on the FTSE-A All Share Index
by one per cent or more per annum (on the basis that all management
options had been exercised).

Early exercise of the options will be permitted in the event that
Capital Opportunities is taken over or wound up or in the event
that, as a result of circumstances which are outside the control of
the relevant optionholder, Malcolm King or Caroline Harris ceases
to be involved in the management of Capital Opportunities'
investments.  The board of Capital Opportunities will also have a
discretion to permit early exercise of the options in other
circumstances which the board considers to be exceptional.  Early
exercise will not be permitted in any circumstances unless the
performance condition mentioned above has been satisfied in the
period between the conversion of the C Shares and the proposed
date of early exercise.

The management options may be transferred to any person approved by
the board of Capital Opportunities who is involved in the
management of Capital Opportunities' investments but not otherwise
unless the options have become exercisable or the proposed transfer
has been approved by the board.

PLACING OF C SHARES
---------------------
In addition to the Capital Opportunities Ordinary Shares to be
issued to Shareholders who so elect, it is proposed that C Shares
will be made available to institutional investors by way of a
placing sponsored by SBC Warburg Dillon Read.  The C Shares will
convert into Capital Opportunities Ordinary Shares once the
investments attributed to the Ordinary Share portfolio and to the
C Share portfolio are broadly similar.

No warrants are being issued by Capital Opportunities.

Equitable Life has agreed to subscribe in the Placing 24,424,000
C Shares at a subscription price of #1 per C Share although
this commitment may require to be scaled down to ensure that the
Capital Opportunities Shares are sufficiently widely held to meet
the listing requirements of the London Stock Exchange.

REALISATIONCO
--------------
RealisationCo has been formed to provide a mechanism to enable
those Shareholders who wish to receive a cash payment following the
winding up of Voyageur to do so without prejudicing the treatment
of the Proposals as a reorganisation for tax purposes.  The holders
of RealisationCo Shares will be entitled to RealisationCo's net
assets on winding up.  The investments of RealisationCo will be
sold as soon as is practicable having regard to the maximisation of
value.  RealisationCo will be wound up and the proceeds of
realisation will be distributed.  This is expected to take place
within one month of the Effective Date.  RealisationCo Shares will
not be transferable.

CONDITIONS OF THE PROPOSALS
---------------------------
The Proposals are conditional on the necessary resolutions being
passed at the Warrantholders' Meeting and the Extraordinary General
Meetings and the London Stock Exchange agreeing to admit the
Capital Opportunities Shares to the Official List (subject to
allotment) on or before 27 November 1997.

CONSIDERATIONS FOR SHAREHOLDERS
-------------------------------

The choice between Capital Opportunities Ordinary Shares and
RealisationCo Shares is a matter for each Shareholder and will be
influenced by the personal financial and taxation circumstances of
each Shareholder and their investment objectives.

The election for Capital Opportunities Ordinary Shares is likely to
appeal to those Shareholders for whom liability to UK taxation of
capital gains is a consideration and/or who wish to reinvest their
entitlement in an investment trust managed by J O Hambro with the
investment policy described above.  The election for RealisationCo
Shares is likely to appeal to those Shareholders for whom liability
to UK taxation of capital gains is not a consideration and/or who
do not wish to reinvest their entitlement in Capital Opportunities.

The receipt by Shareholders of Capital Opportunities Ordinary
Shares or RealisationCo Shares should not constitute a disposal of
their Ordinary Shares for the purpose of UK taxation of capital
gains.  However, distributions in the winding up of RealisationCo
will constitute disposals for the purpose of UK taxation of capital
gains and may give rise to a liability to UK taxation of capital
gains depending on the particular circumstances of the Shareholder
concerned.  In assessing their tax position, Shareholders should
bear in mind their annual exemption from capital gains tax
(currently #6,500 for individuals) and the effect of the indexation
allowance on the base cost of their Ordinary Shares.

In terms of the Scheme, the net assets of Voyageur (after providing
for, inter alia, expenses incurred by Voyageur in connection with
the Proposals and the entitlements of Warrantholders under the
Scheme and the Liquidators' contingency fund of #75,000) will be
divided between Capital Opportunities and RealisationCo.  As
explained above, the value of the assets to be transferred to
RealisationCo will be 99 per cent of the proportion of the net
assets of Voyageur representing the proportion of Ordinary Shares
in respect of which elections are received to take RealisationCo
Shares.  The remaining balance of the assets will be transferred to
Capital Opportunities and, as a consequence, the initial net asset
value of a RealisationCo Share will be at least one per cent less
than the initial net asset value of a Capital Opportunities
Ordinary Share.

The market price of shares in Capital Opportunities, like all
shares in investment trusts, will not necessarily be the same as
their underlying net asset value.

Equitable Life has agreed to subscribe for 24,424,000 C Shares in
the Placing.  Depending on the eventual size of the Placing, the
number of Voyageur Shareholders electing for Capital Opportunities
Ordinary Shares and the ratio at which the C Shares eventually
convert into Capital Opportunities Ordinary Shares, Equitable Life
is likely to hold more than 50 per cent of the Capital
Opportunities Ordinary Shares and therefore control Capital
Opportunities.

On the basis that all of the C Shares available under the Placing
are allotted and issued and all of the Shareholders elect to
receive Capital Opportunities Ordinary Shares in respect of their
Ordinary Shares and assuming a conversion ratio applicable to the
C Shares of 0.7479, Equitable Life will hold approximately 39.4
per cent of the Capital Opportunities Shares in issue immediately
following conversion of the C Shares.

Capital Opportunities and Equitable Life have entered into an
agreement pursuant to which Equitable Life has irrevocably
undertaken to Capital Opportunities that for so long as it holds 30
per cent or more of the equity share capital of Capital
Opportunities (i) it will not seek to influence the investment
decisions of J O Hambro (or any other investment manager of Capital
Opportunities) and (ii) it will take no action which may render
Capital Opportunities unsuitable for listing under rule 3.13 of the
listing rules published by the London Stock Exchange.

CONSIDERATIONS FOR PEP INVESTORS AND MANAGERS
---------------------------------------------

The board of directors of Capital Opportunities intends that
Capital Opportunities Ordinary Shares will be qualifying
investments for Personal Equity Plan purposes.

However, it should be noted that RealisationCo Shares are not
qualifying investments for Personal Equity Plan purposes and cannot
be held within a Personal Equity Plan.  Accordingly, the proceeds
arising on the liquidation of RealisationCo will be deemed to be a
realisation outside the Personal Equity Plan in which the Ordinary
Shares were held.

EXPENSES
--------

The Board estimates that the expenses of the Proposals payable by
Voyageur inclusive of any irrecoverable VAT will amount to
#150,000.

On 16 October 1997 a payment of #291,239 was made by Voyageur to
VIAM as compensation for termination of VIAM's appointment as
investment manager of Voyageur.  Subject to the Scheme becoming
unconditional, J O Hambro has undertaken to make a matching
contribution to the assets of Voyageur.

DEALING AND SETTLEMENT
----------------------

The last day of dealings on the London Stock Exchange in the
Ordinary Shares and the Warrants for normal account settlement (to
enable settlement prior to the close of business on 14 November
1997, the record date for the Proposals) will be 6 November 1997.
As from 6 November 1997 dealings should be for cash settlement only
and will be registered only if documents of title are delivered
immediately.  The register of members and the register of
Warrantholders will be closed at 5.00 pm on 13 November 1997.
Transfers lodged with the Company's registrars before that time,
accompanied by documents of title, will be registered in the normal
way.  Transfers received after that time will be returned to the
persons lodging them.  Dealings on the London Stock Exchange in the
Ordinary Shares and the Warrants are expected to be suspended from
8.30 am on 14 November 1997.

The closing time for receipt of Forms of Election is 3.00 pm on 14
November 1997.  If Shareholders have sold or transferred all or
part of their holdings of Ordinary Shares, or if they sell them
after receipt of this document, they should not complete a Form of
Election in respect of the sold or transferred part of their
holdings of Ordinary Shares but should instead contact the person
through whom any such sale or transfer was effected who will make
the necessary arrangements.  Buying brokers may obtain further
copies of the Form of Election from the Company's registrars on
behalf of clients who have purchased Ordinary Shares and whose
names are expected to be entered in the register of members by the
close of business on 14 November 1997.

If Shareholders and/or Warrantholders dispose of any of their
Ordinary Shares and/or Warrants otherwise than through the London
Stock Exchange they must make their own arrangements with the other
parties concerned as regards their entitlement to participate in
the Proposals.

If the Proposals become effective, the listing on the London Stock
Exchange of the Ordinary Shares and the Warrants will be cancelled.
Existing certificates in respect of Ordinary Shares and Warrants
will cease to be of value for any purpose upon the Scheme becoming
effective.

EXTRAORDINARY GENERAL MEETINGS
------------------------------

The implementation of the Proposals will require two Extraordinary
General Meetings which are being convened for 10.00 am on 10
November 1997 and 10.00 am on 19 November 1997 respectively.

At the First Extraordinary General Meeting a special resolution
will be proposed to sanction the implementation of the Scheme and
to amend the Articles to facilitate the Scheme.  This special
resolution will require the approval of 75 per cent of the votes
cast at the meeting.  However, the Scheme will not in any event
become effective until the passing of the second special resolution
to be proposed at the Second Extraordinary General Meeting.

Following the passing of the special resolution to approve the
Scheme to be proposed at the First Extraordinary General Meeting,
two further special resolutions and an extraordinary resolution
will be proposed at the Second Extraordinary General Meeting for
the reorganisation of Voyageur's share capital required for the
purposes of the Scheme, the appointment of the Liquidators and the
winding up of the Company.  The resolutions also require the
approval of 75 per cent of the votes cast at the meeting.

GENERAL MEETING OF WARRANTHOLDERS
---------------------------------

The implementation of the Proposals will require a Warrantholders'
Meeting which is being convened for 10.00 am on 10 November 1997
(or as soon thereafter as the First Extraordinary General Meeting
has concluded or been adjourned).

At the Warrantholders' Meeting an extraordinary resolution will be
proposed to sanction the implementation of the Scheme and any
resulting variation or abrogation of the rights attaching to the
Warrants.  This extraordinary resolution will require the approval
of 75 per cent of the votes cast at the meeting.

The quorum for the Warrantholders' Meeting is at least two
Warrantholders present in person or by proxy, holding or
representing by proxy one third in nominal amount of the Ordinary
Shares in respect of which subscription rights remain exercisable.

RECOMMENDATION
--------------

The Directors, who have been so advised by Rutherford Manson Dowds
("RMD"), believe that the proposals set out in this document offer
an attractive alternative to a straightforward winding up of the
Company, providing Shareholders with an opportunity to continue
their investment in an investment trust.  They consider that the
proposals are fair and reasonable and in the best interests of
Shareholders and Warrantholders as a whole.

Accordingly, the Directors unanimously recommend Shareholders and
Warrantholders to vote in favour of the resolutions to be proposed
at the Extraordinary General Meetings and at the Warrantholders'
Meeting, respectively.

The Directors intend to vote in favour of the resolutions in
respect of their own beneficial holdings amounting in aggregate to
54,000 Ordinary Shares and 10,800 Warrants (together carrying
0.54 per cent of the voting rights of the Company and 0.54 per cent
of the voting rights exercisable at the Warrantholders' Meeting).
In addition, other than Volker Brandt who will not be joining the
Board of Capital Opportunities, the Directors intend to elect to
receive all of their entitlements under the Scheme as Ordinary
Shareholders in the form of Capital Opportunities Ordinary Shares.

Shareholders beneficially holding in aggregate 4,746,999 Ordinary
Shares (together carrying 47.14 per cent of the voting rights of
the Company) have indicated their intentions to support the
Proposal and Warrantholders beneficially holding in aggregate
1,057,800 Warrant (together 52.55 per cent of the voting rights
exercisable at the Warrantholders' Meeting) have also indicated
their intentions to support the Proposals.


Enquiries
---------

Rutherford Manson Dowds
Gordon Neilly                           Tel: 0131 225 4727

SBC Warburg Dillon Read
Jake Elmhirst                           Tel: 0171 568 2542

J O Hambro & Partners Limited
Jamie Hambro                            Tel: 0171 222 2020


This announcement has been issued by SBC Warburg Dillon Read,  a
division of Swiss Bank Corporation, which is regulated by The
Securities and Futures Authority Limited.  SBC Warburg Dillon Read
is acting for the Company and no-one else in connection with the
matters referred to in this announcement and will not be
responsible to anyone other than the Company for providing the
protections afforded to its customers.

RMD, which is authorised to carry on investment business by the
Institute of Chartered Accountants of Scotland, is acting for the
Company and no-one else in connection with the matters referred to
in this announcement and will not be responsible to anyone other
than the Company for providing the protections afforded to the
customers of RMD or for providing advice in relation to the matters
referred to in this announcement.

END

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