Foresight 4 VCT plc - Tender Offer, Reduction o...

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Foresight 4 VCT plc (Company)  

16 July 2018

Tender Offer, Reduction of Share Premium and Notice of General Meeting     

The Company has today posted to shareholders of the Company a circular (Circular) in connection with a tender offer to purchase ordinary shares of 1p each in the capital of the Company (Shares) having an aggregate value of up to £5 million (Tender Offer), recommended proposals to reduce the amount standing to the credit of the Company’s share premium account by £36 million, repurchase Shares and issue new Shares and notice of a general meeting to be held on 8 August 2018 (General Meeting). Terms used in this announcement shall have the same meaning as in the Circular.

Introduction

Shareholders will recall that the tender offer made available in 2017 was fully subscribed and through which the Company returned £5 million to participating Shareholders. Following the success of that tender offer, the Board advised of their intention to make available a further tender offer in 2018 if circumstances permitted. The Board is delighted to be writing to Shareholders today to make a further tender offer opportunity available. The terms of the Tender Offer, and how to participate, are set out in the Circular.

The Company requires authority from Shareholders to reduce the amount standing to the credit of the share premium account of the Company by £36 million (subject to the confirmation of the Court) to create additional distributable reserves to facilitate the Company’s ability to implement the Tender Offer. Authority from Shareholders is also required for the Company to repurchase Shares under the Tender Offer. In addition, it is proposed to take the opportunity to renew approval from Shareholders to issue new Shares in the Company which will be used, in particular, for the purposes of issuing new Shares pursuant to the recently launched offer for subscription (Offer). Such approvals are being sought at the General Meeting to be held at the offices of Foresight Group LLP, The Shard, 32 London Bridge Street, London SE1 9SG at 11.00 a.m. on 8 August 2018.

The Tender Offer

The Tender Offer is being made to all Shareholders (other than certain Overseas Shareholders). Full details of the Tender Offer, including the terms and conditions on which it is being made, are set out in the Circular and on the Tender Form which has been sent to Shareholders who hold their Shares in certificated form.

The Tender Offer is conditional on the passing of the Resolutions to be proposed at the General Meeting
and the satisfaction of the other Conditions specified in Part III of the Circular. This includes the approval from Shareholders to issue new Shares in the Company (to be used for the purposes of the Offer), which will allow the Company to replenish cash used for the Tender Offer to maintain net assets and support investment opportunities.

The Tender Offer involves the following:

?      The Tender Offer is being made to Shareholders (other than certain Overseas Shareholders) for up to a number of Shares (rounded down to the nearest whole number of Shares) equal in value, in aggregate, to £5 million at the Tender Price.

?      The Tender Price will be an amount equal to 92.5% of the most recently published NAV per Share as at the date of purchase under the Tender Offer (adjusted for dividends declared and for which the record date for payment has passed at the time of purchase), rounded down to four decimal places (i.e. a 7.5% discount to NAV). The Board considers this to be an appropriate discount to take into account the costs of the Tender Offer and balance the interests of selling Shareholders and remaining Shareholders.

?      The number of Shares to which the Tender Offer will apply will be determined by dividing £5 million (being the total amount being made available to purchase Shares under the Tender Offer) by the Tender Price, and rounding the result down to the nearest whole number of Shares, subject to a maximum of 8.5 million Shares (representing 6.3% of the issued share capital of 135,118,304 Shares on 13 July 2018 (no Shares are held in treasury), this being the latest practicable date prior to the publication of the Circular).

?      Each Shareholder (other than certain Overseas Shareholders) will be entitled to have purchased from their holding at the Tender Price under the Tender Offer such percentage (the Basic Entitlement Percentage) of their holding of Shares on the Record Date as is equal to the percentage which the total number of Shares to which the Tender Offer will apply bears to the total number of Shares in issue on the Record Date, rounded down to the nearest whole number of Shares (such entitlement being a Shareholder’s Basic Entitlement). Shareholders may tender a higher or lower percentage of their holdings but tenders in excess of the Basic Entitlement will only be satisfied to the extent that other Shareholders tender less than their Basic Entitlement.

?      Shareholders (other than certain Overseas Shareholders) will be able to decide whether to continue their existing investment in the Company without tendering any Shares or to tender some or all of their Shares within the overall limit of the Tender Offer.

?      All Shares validly tendered by any Shareholder up to their Basic Entitlement (which represents such Shareholder’s pro rata share of the total number of Shares to be acquired under the Tender Offer) will be accepted in full.

?      The Tender Form to be completed by Shareholders who hold their Shares in certificated form contains a box to enable those Shareholders who wish to tender their Basic Entitlement to do so. If you hold your Shares in certificated form and you tick this box, the Company’s receiving agent, Computershare Investor Services Limited (Computershare) will calculate your Basic Entitlement on the Record Date. If you wish to tender a different number of Shares to your Basic Entitlement, insert such number of Shares in the alternate box provided on the Tender Form.

?      Shareholders who hold their Shares in uncertificated form (i.e. in CREST) and who wish to tender their Basic Entitlement should send a TTE instruction through CREST to the basic entitlement member account as set out in the Circular. Computershare will calculate your Basic Entitlement on the Record Date and return any excess Shares. If you wish to tender a different number of Shares to your Basic Entitlement, you should send a TTE Instruction through CREST to the alternate member account specifying such number of Shares as set out in the Circular.

?      If the aggregate value, at the Tender Price, of the number of Shares validly tendered by all of those Shareholders that have taken part in the Tender Offer equates to a value of £5 million or less, all such Shares will be accepted and purchased.

?      If the aggregate value, at the Tender Price, of the number of Shares validly tendered equates to a value of more than £5 million, tenders will be accepted in the order set out below:

–      all Shares validly tendered by any Shareholder up to their Basic Entitlement will be accepted in full; and

–      all Shares validly tendered by Shareholders in excess of their Basic Entitlements will be satisfied in proportion to the number of Shares tendered by each Shareholder in excess of their Basic Entitlement so as to ensure that the aggregate price paid in respect of all Shares purchased under the Tender Offer does not exceed £5 million.

?      The expected timetable for the Tender Offer is set out below. Unless suspended, extended or terminated in accordance with the provisions set out in the Circular, the Tender Offer will close at 1.00 p.m. on 14 September 2018. It is expected that on 17 September 2018 the Company will make a public announcement relating to the number of Shares tendered and the Tender Price.

?      All successfully tendered Shares purchased by the Company will be cancelled and will not rank for any future dividends. The issued share capital of the Company will be reduced by the number of Shares purchased and cancelled.

?      Any rights of Shareholders who choose not to tender their Shares will be unaffected.

        ?      The Board is making no recommendation to Shareholders in relation to participating in the Tender Offer and Shareholders are recommended to take their own investment, financial and tax advice.

The Tender Price (based on the latest published unaudited NAV per Share as at 31 December 2017 of 69.4p) would be 64.1950p.

Shareholders who remain invested should be aware that the Tender Offer may (though unlikely) have the effect of increasing their percentage of the total share capital in the Company remaining in issue to a level above 3%, in which case they will be required to notify the Company under the Disclosure Guidance and Transparency Rules.

Reduction of the Share Premium Account

The Company requires additional reserves to be created in order to facilitate implementation of the Tender Offer. The issue of Shares pursuant to the Merger and recent fundraisings has resulted in the creation of further share premium and the Board proposes that the share premium account of the Company (£51,184,143 as at 31 March 2018) is reduced by £36 million, subject to the confirmation of the Court. Authority for such cancellation (as required under the Companies Act 2006 (the Act)) is being sought at the General Meeting.

The amount to be cancelled is related to share premium created by the issue of Shares on or before 31 March 2015 and is not, therefore, regarded under VCT legislation as restricted capital which should not be used to make, directly or indirectly, payments to Shareholders.

The further special reserve created will be used to write or set-off losses, facilitate distributions and buybacks (including the Tender Offer) and for other corporate purposes. Prior to confirming the reduction of the share premium account, the Court will need to be satisfied that the reduction will not prejudice the interests of the Company’s creditors. The Company will take such steps as are necessary to satisfy the Court in this regard.

The reduction of share premium will take effect once the Court order confirming the reduction of capital has been registered by the Registrar of Companies.

Authority to Repurchase Shares

The Company requires authority from Shareholders to repurchase Shares pursuant to the Tender Offer. Authority (as required under CA 2006 and the Listing Rules) to repurchase up to 8.5 million Shares is being sought at the General Meeting.

The number of Shares under the authority includes some headroom in case the net asset value per Share changes and the actual number of Shares to be repurchased is greater than the estimate referred to above.

Authority to issue new Shares

On 14 June 2018, the Board launched an offer for subscription to raise up to £50 million (with an over-allotment facility to raise a further £30 million) through the issue of new Shares. The Company is currently utilising existing Shareholder authorities, however these authorities are due to expire during the Offer period.

The Board originally intended to renew Shareholder authorities to allot new Shares at the Company’s annual general meeting to be held in 2018. The Shareholder authorities required for the Tender Offer have, however, provided the Board with an opportunity to seek such authority at the General Meeting.

Full details of the Offer are set out in the Prospectus. The Offer will close on 30 April 2019 (unless closed earlier or extended by the Board). The new Shares issued pursuant to the Offer will rank pari passu with the existing Shares from the date of issue.

Taxation

The information below and contained in the Circular is a general guide only and is based on UK tax law as well as the practice of HMRC at the date of this document in relation to Shareholders who are individuals. Shareholders who are in any doubt as to their tax position, or who may be subject to tax in a jurisdiction other than the UK, should consult an appropriate professional adviser. These comments are not exhaustive and do not constitute legal or tax advice.

The purchase of Shares under the Tender Offer will be regarded as a disposal of such Shares.

The purchase of any Shares that have not been held for five years from the date of issue will be subject to clawback of any up-front income tax relief obtained on such Shares. In addition, any deferred capital gains on the original subscription of the Shares will become chargeable to capital gains tax.

The disposal of shares in a VCT within six months before or after a subscription for new shares in the same VCT will result in the amount of the investment in the new shares to which VCT tax reliefs are available being reduced by an amount equal to the proceeds received on disposal.

There could be an income tax charge for Shareholders on any excess of the Tender Price above the original issue price paid for the Shares. Shareholders who do not qualify for VCT tax reliefs may also be subject to a capital gains tax charge by the amount that the original issue price exceeds the price paid.

The timing of the purchase of Shares under the Tender Offer has been set after the expiry of the five year holding period required to maintain up-front income tax relief in respect of Shares issued pursuant to the Enhanced Buyback Schemes and Shares issued pursuant to the Merger which are originally derived from the Foresight 3 Enhanced Buyback Scheme. Shareholders who participated in such schemes should, therefore be able to participate without prejudicing the up-front income tax relief obtained.

Shareholders who may have participated in the F3 Top-Up Offer, the 2017/18 Offer or who have applied, or intend to apply, under the Offer (or have acquired Shares in the Company and/or Foresight 3 at different times), will need to carefully consider the implications of participating in the Tender Offer.

Shareholders can request a delay in Shares being allotted to them under the Offer until after the expiry of six months should they wish to participate in the Tender Offer (please contact Foresight Group using the details below for further information). Shareholders should note that the price at which Shares are issued under the Offer will be based on the most recently published net asset value at the time of allotment which may be different if a delay is requested.

Further details relating to the taxation implications of participating in the Tender Offer are set out in the Circular.

Overseas Shareholders

Shareholders with registered or mailing addresses outside the UK, or who are citizens or nationals of, or resident in, a jurisdiction other than the UK, should read the Circular and the relevant provisions of the Tender Form. It is the responsibility of all Overseas Shareholders to satisfy themselves as to the observance of any legal requirements in their jurisdiction, including, without limitation, any relevant requirements in relation to the ability of such holders to complete and return a Tender Form.

Expected Timetable

Tender Offer opens	16 July 2018
Latest time and date for receipt of Forms of Proxy for the General Meeting	11.00 a.m. on 6 August 2018
General Meeting	11.00 a.m. on 8 August 2018
Tender Offer closes - latest time and date for receipt of Tender Forms and TTE Instructions	1.00 p.m. on 14 September 2018
Record Date for Tender Offer	close of business on 14 September 2018
Announcement of the results and take up level under the Tender Offer	by 8.00 a.m. on 17 September 2018
Completion of purchase of Shares under the Tender Offer	17 September 2018
Settlement date for the Tender Offer: cheques dispatched, assured payments made through CREST	by 24 September 2018
CREST accounts credited for revised holdings of Shares	by 24 September 2018
Dispatch of balance Share certificates for unsold Ordinary Shares	by 24 September 2018

If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by an announcement through the Regulatory Information Service of the London Stock Exchange.

Further Information

A copy of the Circular has been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM.

For information on completion of the Proxy Form, Tender Form or tendering through CREST, please telephone Computershare Investor Services PLC between 9.00 a.m. and 5.00 p.m. (GMT) Monday to Friday (except UK public holidays) on telephone number 0370 703 6385 or, if telephoning from outside the UK, on [phone]. Calls may be recorded and randomly monitored for security and training purposes.

For information on the proposals generally, or to request a delay in Shares being allotted to them under the Offer as set out above, please contact Foresight Group LLP investor relations on 020 3667 8159.

For legal reasons, the Company, Computershare Investor Services PLC and Foresight Group LLP cannot give advice on the merits of the proposals, nor provide financial, legal, tax or investment advice.

Enquiries:

Gary Fraser
Foresight Group LLP
Company Secretary
Tel: [phone]