Statement re merger proposals between Northern ...

JOINT ANNOUNCEMENT

NORTHERN 3 VCT PLC
NORTHERN AIM VCT PLC

17 August 2011

RECOMMENDED PROPOSALS FOR A MERGER BETWEEN NORTHERN 3 VCT PLC ("NORTHERN 3") AND
NORTHERN AIM VCT PLC ("NORTHERN AIM") TO BE COMPLETED BY PLACING NORTHERN AIM
INTO MEMBERS' VOLUNTARY LIQUIDATION PURSUANT TO SECTION 110 OF THE INSOLVENCY
ACT 1986 AND THE TRANSFER BY NORTHERN AIM OF ALL OF ITS ASSETS AND LIABILITIES
TO NORTHERN 3 IN CONSIDERATION FOR NEW ORDINARY SHARES OF 5 PENCE EACH IN
NORTHERN 3 ("NEW NORTHERN 3 SHARES") AND THE CANCELLATION OF THE LISTING OF THE
ORDINARY SHARES OF 5 PENCE EACH IN NORTHERN AIM ("NORTHERN AIM SHARES")

SUMMARY

The boards of Northern 3 and Northern AIM announced on 3 June 2011 that
agreement in principle had been reached for the merger of the two companies.
These discussions have now concluded and both boards are writing to their
respective shareholders with proposals for consideration for the proposed merger
(the "Scheme").

The Scheme will be effected by Northern AIM being placed into members' voluntary
liquidation pursuant to a scheme of reconstruction under Section 110 of the
Insolvency Act 1986.  All of the assets and liabilities of Northern AIM will be
transferred to Northern 3 in exchange for New Northern 3 Shares (which will be
issued directly to the shareholders of Northern AIM).  The merger will be
completed on a relative net asset basis, subject to certain adjustments as set
out in the Northern 3 prospectus dated 16 August 2011.

The effective date for the transfer of the assets and liabilities of Northern
AIM and the issue of New Northern 3 Shares pursuant to the Scheme is expected to
be 26 September 2011 (the "Effective Date"), following which the listing of the
Northern AIM Shares will be cancelled and Northern AIM will be wound up.

The Scheme is conditional, inter alia, on the approval of resolutions to be
proposed to shareholders of Northern 3 and Northern AIM at general meetings to
be held on 14 September 2011 for Northern 3 ("Northern 3 GM"), 16 September
2011 for Northern AIM ("Northern AIM GM 1") and 26 September 2011 for Northern
AIM ("Northern AIM GM 2") and dissent not having been expressed by shareholders
of Northern AIM holding more than 5% of the issued Northern AIM Shares.

The board of Northern AIM has declared a special dividend of 3.0p per Northern
AIM Share (the "Special Dividend") which will, subject to the Scheme becoming
effective, be paid on 7 October 2011 to shareholders on the register on 23
September 2011.

The board of Northern 3 also considers it appropriate to renew share issue
authorities for Northern 3 and to cancel the share premium account of Northern
3.

BACKGROUND

In September 2004, the Venture Capital Trusts (Winding-up and Mergers) (Tax)
Regulations 2004 were introduced, allowing venture capital trusts ("VCTs") to be
acquired by, or merge with, each other without prejudicing tax reliefs obtained
by their shareholders.  A number of VCTs have now taken advantage of these
regulations to create larger VCTs where running costs can be spread over a
substantially greater asset base.

With the above in mind, the boards of Northern 3 and Northern AIM entered into
discussions to consider a merger of the companies to create a single larger VCT
and reduce the overall running costs.  Following detailed consideration of the
portfolio and financial position of each company (both of which are managed by
NVM Private Equity Limited (the "Manager"), and have broadly similar investment
policies) the boards of Northern 3 and Northern AIM have reached an agreement to
recommend that the companies be merged.

The main purpose of the proposed merger is to create a single larger VCT that
will bring a number of commercial advantages to both sets of shareholders,
namely:

  a reduction in the annual running costs of the enlarged Northern 3 compared to
  the aggregate annual running costs of the separate companies;


  the creation of a single VCT of a more economically efficient size with a
  greater capital base over which to spread administration, regulatory and
  management costs; and


  participation in a larger VCT with a more diversified portfolio thereby
  spreading the portfolio risk across a broader range of investments and
  businesses;



The boards believe that the Scheme provides an efficient way of effecting a
merger with an acceptable level of costs compared with other merger routes.  The
merger is a step towards enhancing performance and improving cost efficiency in
the enlarged company.  Shareholders should note that the merger will be outside
the provisions of the City Code on Takeovers and Mergers.

EXPECTED TIMETABLES

EXPECTED TIMETABLE FOR NORTHERN 3

(Dates subject to variation if any General Meeting is adjourned)

Prospectus and circular to shareholders    16 August 2011
(including notice of the Northern 3 GM)
published

Latest time for receipt of forms of proxy  2.15pm on Monday 12 September 2011
for the Northern 3 GM

Northern 3 GM                              2.15pm on Wednesday 14 September 2011

Calculation Date                           after 5.00pm on 23 September 2011

Effective Date for the transfer of the     26 September 2011
assets and liabilities of Northern AIM to
Northern 3 and the issue of Consideration
Shares to Northern AIM Shareholders

Announcement of the results of the Scheme  26 September 2011

Admission of and dealings in the New       27 September 2011
Shares to commence

CREST accounts credited with the New       27 September 2011
Shares

Certificates for the New Shares dispatched By 11 October 2011


EXPECTED TIMETABLE FOR NORTHERN AIM

(Dates subject to variation if any General Meeting is adjourned)

Latest time for receipt of forms of proxy  12.30pm on Wednesday 14 September
for the Northern AIM GM 1                  2011

Northern AIM GM 1                          12.30pm on Friday 16 September 2011

Latest time for receipt of forms of proxy  12.30pm on Saturday 24 September 2011
for the Northern AIM GM 2

Record Date for Northern AIM shareholders' 23 September 2011
entitlements under the Scheme

Northern AIM Register of Members closed    23 September 2011

Calculation Date                           after 5.00pm on 23 September 2011

Dealings in Northern AIM Shares suspended  7.30am on 26 September 2011

Northern AIM GM 2                          12.30pm on Monday 26 September 2011

Effective Date for the transfer of the     26 September 2011
assets and liabilities of Northern AIM to
the Company

Announcement of the results of the Scheme  26 September 2011

Cancellation of the Northern AIM Shares'   7.30am on 27 September 2011
listing

Payment of the Special Dividend            7 October 2011


BACKGROUND TO NORTHERN AIM AND NORTHERN 3

Northern AIM is a venture capital trust and was launched in 2000, raising £22
million (before issue costs) with the intention of investing in VCT-qualifying
companies traded on AIM as well as some later-stage unquoted companies.  As at
30 April 2011 (the date to which the most recent unaudited half-yearly report to
Shareholders was drawn up) Northern AIM had net assets of £6.5 million and its
NAV per share was 29.0p.  The investment portfolio at that date comprised 20 AIM
quoted and eight unquoted holdings.  Northern AIM has paid dividends totalling
£5.6 million, or 25.3p per Share, since its launch.  The investment policy of
Northern AIM is broadly similar to that of the Company and, accordingly, the
proposed acquisition of the assets of Northern AIM is consistent with the
Company's investment policy.

Northern 3 is a venture capital trust launched in 2001.  It has raised over £46
million to date through its public share offers.  Northern 3 invests mainly in
unquoted venture capital holdings but also holds a number of AIM-quoted
investments, with its remaining assets invested in a portfolio of listed fixed-
interest and equity investments and bank deposits.  As at 31 March 2011,
Northern 3's audited NAV was 92.2p per share.  Since incorporation, Northern 3
has paid a total of 31.4p per share in dividends.

Northern 3 and Northern AIM are both managed by NVM, an independent specialist
firm of venture capital managers based in Newcastle upon Tyne, Reading and
Manchester.  NVM also acts as manager of three other listed investment companies
and has a total of approximately £210 million under management.

It is not intended that there will be any change in the composition of the
Northern 3 board following completion of the proposed merger.

DOCUMENTS AND APPROVALS

Northern 3 shareholders will receive a copy of the Northern 3 prospectus
together with a circular convening the Northern 3 GM to be held on 14 September
2011 at which Northern 3 shareholders will be invited to approve resolutions in
connection with the Scheme and to renew share issue authorities and to cancel
Northern 3's share premium account.

Northern AIM shareholders will receive a copy of the Northern 3 prospectus
together with a circular convening the Northern AIM GM 1 on 16 September 2011
and the Northern AIM GM 2 on 26 September 2011 at which Northern AIM
shareholders will be invited to approve resolutions in connection with the
Scheme.

Copies of the prospectus and the circulars for Northern 3 and Northern AIM have
been submitted to the UK Listing Authority and will be shortly available for
download at the National Storage Mechanism at: www.hemscott.com/nsm.do.  Copies
of the prospectus and the circulars for Northern 3 and Northern AIM are also
available on the NVM Private Equity website at: www.nvm.co.uk.

Investment Manager for Northern 3 and Northern AIM
NVM Private Equity Limited
Alastair Conn/Christopher Mellor - 0191 244 6000

Sponsor to Northern 3
Howard Kennedy Corporate Services LLP
Keith Lassman - 0207 636 1616

The directors of Northern 3 accept responsibility for the information relating
to Northern 3 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 Northern 3 and its
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 Northern AIM accept responsibility for the information relating
to Northern AIM 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 Northern AIM
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.

Howard Kennedy Corporate Services LLP, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting as sponsor for
Northern 3 and no-one else and will not be responsible to any other person for
providing the protections afforded to customers of Howard Kennedy (subject to
the responsibilities and liabilities imposed by FSMA and the regulatory regime
established thereunder) or for providing advice in relation to any matters
referred to herein.

Neither the contents of the NVM Private Equity Limited website nor the contents
of any website accessible from hyperlinks on the NVM Private Equity Limited
website (or any other website) is incorporated into, or forms part of, this
announcement.






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Source: Northern 3 VCT PLC via Thomson Reuters ONE

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