Hargreave Hale AIM VCT 1 plc : Publication of P...

OFFER BY HARGREAVE HALE AIM VCT 1 PLC AND HARGREAVE HALE AIM VCT 2 PLC: SHARE OFFER AND ENHANCED SHARE BUY BACK

Share Offer and Enhanced Share Buy Back

The Directors of Hargreave Hale AIM VCT 1 and Hargreave Hale AIM VCT 2 are pleased to announce the launch today of offers for subscription for new shares in both VCTs. The companies are also today launching Enhanced Share Buy Backs for existing shareholders who have held their shares for at least 5 years.

STRUCTURE OF THE OFFERS

Hargreave Hale AIM VCT 1.

Hargreave Hale AIM VCT 1 is seeking to raise £5m through an offer for subscription of new Ordinary Shares.  Existing shareholders who have held their shares for 5 years are invited to subscribe through an Enhanced Share Buy Back.

In addition, Hargreave Hale AIM VCT 1 is seeking to raise a further £10m through a C Share Offer.  This offer is open to new and existing shareholders.

The Investment Manager will manage the proceeds of the C Share Offer as a separate pool of assets with an amended investment policy.  Further details of the proposed amendments to the investment policy, which require shareholder approval, are outlined below.  The C Shares will convert into Ordinary Shares on a relative value basis with reference to the net asset value per share on 30 September 2017.  If less than £2m is raised under the offer, the C Shares will convert into Ordinary Shares on a relative value basis per share with reference to the net asset value per share on 30 September 2012.

Hargreave Hale AIM VCT 2.

Hargreave Hale AIM VCT 2 is seeking to raise £10m through an offer for subscription of new Ordinary Shares.  The offer is open to new and existing shareholders.  Existing shareholders who have held their shares for 5 years can also participate in the offer through an Enhanced Share Buy Back.  Shareholders will be asked to approve an amendment to the investment policy that will allow up to 75% of the proceeds, subject to a maximum of 20% of gross assets, to be invested in the Marlborough Special Situations Fund pending investment into qualifying investments.

Enhanced Share Buy Back

Subject to shareholder approval, the Companies are today launching Enhanced Share Buy Back for existing shareholders who have held their shares for at least 5 years. The Companies will buy back Ordinary Shares at the Net Asset Value per Ordinary Share as most recently announced to the London Stock Exchange prior to the purchase, where the selling shareholder subscribes for new shares in the same VCT under the Offers with the net proceeds from the sale of the shares to the relevant Company.  The reinvestment will be at a 5% premium to the same net asset value per share, although the Companies will offer existing shareholders who subscribe for new Ordinary Shares under the Enhanced Share Buy Back an effective rebate through the issue of additional New Shares in the relevant Company equivalent to 2 per cent. of the amount subscribed with the proceeds of the sale of the shares to the relevant Company.  Where applicable, the introducing agent or intermediary will receive a 1% initial commission, payable by the Investment Manager.

PROPOSED REVISIONS TO THE INVESTMENT POLICY

Hargreave Hale AIM VCT 1

Shareholders are asked to approve two revisions to the investment policy of Hargreave Hale AIM VCT 1 as applied to the C Share Fund:

1. The C Share Fund will not make targeted investment in equities which are Non-Qualifying Investments on an opportunistic basis. 

2. Instead, within the C Share Fund, the investment manager will seek to preserve shareholder value through selective investment of surplus funds, namely funds that are not invested in Qualifying Investments, in a non-VCT qualifying portfolio of fixed income securities and cash. 

Hargreave Hale AIM VCT 2

Shareholders are asked to approve one revision to the investment policy of Hargreave Hale AIM VCT 1 that will allow the investment manager to maintain the Company's exposure to small companies through an initial investment of new capital into the Marlborough Special Situations Fund pending investment into Qualifying Companies.  The change of policy is designed to allow effective management of the proceeds of the Offer and maintain the Company's exposure to small companies pending investment into Qualifying Companies. 

If Shareholder approval to make these changes is not received the relevant Offer will not proceed.

REASONS FOR THE OFFER

The basic rationale remains unchanged from previous offers: namely, to raise new capital into both Companies to ensure they have sufficient capital to support their investment objectives of investing in both VCT qualifying and non-VCT qualifying opportunities; promote their long term viability; meet expenses and reduce the Total Expense Ratios.   At the same time, the offers will provide existing and new investors with the opportunity to invest into small companies through a tax efficient structure and with an award winning investment team that has a long track record of successful investment into small companies.

PRICING FORMULA

New Ordinary Shares issued pursuant to the Offers will be priced at a 5% premium to the last published Net Asset Value per share of an existing Ordinary Share as released by the relevant Company to the London Stock Exchange prior to the allotment.

The C Shares will be issued at 100 pence per C Share. 

MANAGEMENT OF SHARE LIQUIDITY

In order to improve the liquidity in the shares of both companies, the Boards have established buy-back policies whereby each company will purchase shares for cancellation. Hargreave Hale AIM VCT 1 has consistently demonstrated its commitment to improving shareholder liquidity through its regular share buy-back policy, which has seen it acquire 7.8m Ordinary Shares at a discount of approximately 10% to the prevailing Net Asset Value per share.  The Directors believe it is in shareholders' best interest to target a reduced buy-back discount.  As a guide, and subject to the Boards' discretion and providing that, in the opinion of the Boards, there is adequate surplus cash available, each company will consider buying back Ordinary Shares and C Shares at a 5% discount to the last published Net Asset Value per share. This reduced discount will not come into effect until after the Tender Offer has closed. 

The Directors believe that reducing the discount between the share price and the Net Asset Value per share is in Shareholders' best interest as it will improve returns on exit and may help attract new capital.  The target is non-binding and at the Directors' discretion and they reserve the right to return to the previous policies of purchasing shares at 10% below Net Asset Value per share should the move bring instability to the Shareholder base and place the Companies' liquid assets under undue pressure.

CONDITIONS

The Offers are subject to shareholder approval and the Companies have today published a circular setting out the resolutions sought and the date of the General Meeting.  The C Share Offer will not proceed unless valid subscriptions amounting to not less than £700,000 are received by 5 April 2012.

The Share Offer prospectus and the Tender Offer circular, as well as the Share Offer and Tender Offer application forms, will be available until the Share Offer and Tender Offer close from:

Hargreave Hale Ltd - 9-11 Neptune Court - Hallam Way - Blackpool - FY4 5LZ

The Company's website at  http://www.hargreave-hale.co.uk/fund-management/venture-capital-trusts/

A copy of the Share Offer prospectus and Tender Offer circular will shortly be submitted to the National Storage Mechanism and will be available to the public for viewing online at the following web site address:

http://www.hemscott.com/nsm

Enquiries should be directed to Oliver Bedford at Hargreave Hale Limited on 0207 009 4937.

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Source: Hargreave Hale AIM VCT 1 plc via Thomson Reuters ONE

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