Publication of Prospectus

JOINT ANNOUNCEMENT 

18 MAY 2022 

OXFORD TECHNOLOGY 2 VCT PLC ("OT2" or “COMPANY”)   LEI: 2138002COY2EXJDHWB30 
OXFORD TECHNOLOGY VCT PLC ("OT1")     LEI: 213800HI61VDMTDOAX43 
OXFORD TECHNOLOGY 3 VCT PLC ("OT3")  LEI: 2138008W5QZKMHHWRY76 
OXFORD TECHNOLOGY 4 VCT PLC ("OT4")  LEI: 213800O9M2EQZD452H80 
(TOGETHER, THE "COMPANIES" AND OT1, OT3 AND OT4 TOGETHER THE "TARGET VCTS" AND EACH A "TARGET VCT") 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO ANY JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.  

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.  

RECOMMENDED PROPOSALS FOR  

A MERGER OF THE COMPANIES TO BE COMPLETED BY WAY OF SCHEMES OF RECONSTRUCTION UNDER SECTION 110 OF THE INSOLVENCY ACT 1986 (“MERGER”);  

A CHANGE TO THE COMPANY’S INVESTMENT POLICY; AND 

AN OFFER FOR SUBSCRIPTION TO RAISE UP TO £10 MILLION WITH AN OVER-ALLOTMENT FACILITY FOR A FURTHER £10 MILLION THROUGH THE ISSUE OF LEISURE SHARES (“OFFER”) 

On 4 March 2022 the boards of the Companies (together the “Boards” and each a “Board”) announced that they had entered into discussions regarding the Merger and, concurrently with the Merger, the Company intends to issue a new class of “leisure” ordinary share (“Leisure Shares”) by way of an offer for subscription to raise up to £10 million to invest in investments focussed on leisure (with an over-allotment facility of £10 million).  The Company also announced that it intended to engage Edition Capital Investments Limited (“Edition”) to be investment manager with responsibility for this new share class.   

The Boards are now pleased to announce that they have reached agreement on recommended proposals for the Merger to create a single enlarged VCT.  The Merger is intended to be effected by the Target VCTs being placed into members’ voluntary liquidation pursuant to schemes of reconstruction under section 110 of the Insolvency Act 1986 (“Schemes”). The Merger and the Offer are conditional upon, inter alia, the approval of existing shareholders of OT2 (“OT2 Shareholders”) at the general meeting to be held on 20 June 2022 (“OT2 General Meeting”) and the Merger is also conditional upon, inter alia, the approval of the shareholders of the Target VCTs (“Target VCT Shareholders” and, together with the OT2 Shareholders, the “Shareholders”) at the Target VCTs general meetings to be held on 20 June 2022 (“Target VCTs First General Meeting”) and 30 June 2022 (“Target VCTs Second General Meeting” and, together with the Target VCTs First General Meeting, the “Target VCT General Meetings”). The Merger and the Offer are not, however, conditional on each other and the Schemes (which form part of the Merger) are also not conditional on each other.   

The Board has arranged a webinar at 10am on Tuesday 7 June 2022, to give Shareholders the chance to hear from the existing manager (Oxford Technology Management Ltd (“OTM”)), Edition as the proposed new investment manager responsible for the new class of Leisure Shares and the Board, and provide an opportunity for them to ask questions. In order to register for this event please visit https://tinyurl.com/mtu6s8cf. 

Full details are set out in the circulars being posted to the Companies’ respective shareholders shortly following this announcement (“Circulars”) alongside a prospectus published by OT2 in connection with, amongst other things, the Merger and the Offer (the “Prospectus”). 

MERGER AND MERGER COSTS 

The Merger is expected to complete on 30 June 2022 and is intended to be effected by each Target VCT being placed into members' voluntary liquidation and all the assets and liabilities of each Target VCT will then be transferred to the Company in exchange for the issue of Consideration Shares to the Target VCT Shareholders with each Target VCT Shareholder receiving a Consideration Share of the corresponding class on a “one for one” basis for each Target VCT Share held as set out in the table below: 

Pre-Merger Share Classes of Target VCTs	Post-Merger Share Classes of the Company relating to the Target VCTs (together the “Consideration Shares”)
OT1 Shares	New OT1 Ordinary Shares
OT3 Shares	New OT3 Ordinary Shares
OT4 Shares	New OT4 Ordinary Shares

The Merger is expected, in time, to deliver cost savings and other benefits to all of the Companies’ shareholders which the boards of each of the Companies believe is in line with the strategy to expand the size of their respective net asset bases and be better positioned to improve shareholder value. The Boards have estimated the payback period will be between 9 and 36 months, based on the estimated Merger costs and annual cost savings post Merger (which varies depending on whether and when Leisure Shares are first issued and how many of the Schemes proceed). 

The Board also believes that, in time, there will be other benefits for Shareholders arising from participating in a larger company with an increased net asset base, including simplifying the process for the Companies to ensure compliance with the VCT Rules and a reduced need to maintain liquid assets allowing the Company to consider making additional returns to Shareholders. 

Each Scheme is conditional upon:  

• the passing of resolutions 1 (relating to the Scheme for OT1), 2 (relating to the Scheme for OT3), 3 (relating to the Scheme for OT4), 5, 6 and 8 to be proposed at the OT2 General Meeting;  

• the passing of each of the resolutions to be proposed at the Target VCTs General Meetings;  

• notice of dissent under section 111 of Insolvency Act 1986 not having been received from shareholders of the relevant Target VCT who hold more than 10% in nominal value of that Target VCT’s issued share capital (this condition may be waived by the Board of the relevant Target VCT and the OT2 Board);  

• each Target VCT confirming to the Company that, in each case, it has not received any notice of any claims, proceedings or actions of whatever nature threatened or commenced, as relevant, against the Target VCT which the OT2 Board regard as material; and  

• each Target VCT and the Company maintaining VCT status.  

If not all of the conditions set out above have been satisfied by 30 September 2022, it is possible that none of the Schemes shall become effective and the Company may continue in its current form.  

The Schemes are not conditional upon each other and any Scheme that is approved will proceed and become effective immediately after the passing of the special resolution for the winding up of the relevant Target VCT (in each case expected to be 30 June 2022). 

OFFER 

The OT2 Board has decided to take the opportunity to raise further funds through an offer for subscription. This will provide all Shareholders and new investors with the opportunity to invest in the Company and benefit from the tax reliefs available to qualifying investors in a VCT.  

The Board believes that there are attractive opportunities to make further growth investments in order to generate returns for investors as Edition (which is to be appointed as investment manager of the Company in respect of the new class of Leisure Shares) continues to experience strong deal flow and is seeing a significant number of high quality private equity investment opportunities. Funds raised under the Offer will allow the Company to take advantage of the continuing flow of investment opportunities being received by Edition and further increase the net assets of the Company and portfolio diversification in line with the current strategy of the Company. Funds raised will also be used in due course to fund payment of dividends and market purchases of shares and to meet annual running costs. 

Full details of the Offer are set out in the Prospectus. The Offer opens today and will close on 16 May 2023 (unless closed earlier or extended by the OT2 Board).  

INVESTMENT POLICY 

In light of the multiple new share classes in the Company being required as a result of the Merger and the Offer, it will be necessary for the Company to amend its existing investment policy.  Accordingly, the Company will seek approval to change its investment policy at the OT2 General Meeting.   

The proposed change will provide for a more generic policy of investing in unquoted companies.  The proposed change to the investment policy will also better encompass the investments which are intended to be acquired from the Target VCTs as part of the Merger.  It will also cover the various different share class funds which will exist going forwards (each of which will be managed in accordance with the revised investment policy).  This proposed change to the investment policy is not expected to adversely impact on the risk profile of the Company and/or its investments, nor change anything regarding the portfolios of the existing shareholders of each of the Companies. 

RELATED PARTY TRANSACTIONS: 

Investment Manager Details 

OT2’s existing investment manager is OT2 Managers Ltd (“OT2M”), which subcontracts services to OTM as investment adviser. Subject to, and conditional upon, the Merger becoming unconditional and the approval of OT2 Shareholders, an amended Investment Management Agreement (“Amended IMA”) between the Company and OT2M shall come into effect.  Pursuant to the Amended IMA, OT2M shall continue in its capacity as investment manager for an interim period pending the first admission of Leisure Shares to the premium segment of the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange’s main market for listed securities (“Admission”).  With effect from the first Admission of Leisure Shares, Edition will replace OT2M as the Company’s investment manager under a new investment management agreement (the “Edition IMA”). 

OT2M is regarded as a related party of the Company under the Listing Rules and entry into the Amended IMA constitutes a related party transaction for the purpose of the Listing Rules and requires the approval of the existing OT2 Shareholders. Subject to the approval of resolution 6 at the OT2 General Meeting, under the terms of the Amended IMA, OT2M will be entitled to an annual management fee (payable monthly in arrears), consistent with the Companies’ current annual management fees which are payable, in an amount equal to:  

- 1% of the net asset value of the pool of assets and liabilities attributed to the existing OT2 Ordinary Shares, New OT3 Ordinary Shares and New OT4 Ordinary Shares; and  

- 0.5% of the net asset value of the pool of assets and liabilities attributed to the New OT1 Ordinary Shares,  

in each case such net asset value being measured as at 28 February 2022 (in the first year of the Amended IMA) and at the end of the preceding accounting year of the Company (in each subsequent year while the Amended IMA remains in force).  This annual management fee will continue to be passed on to OTM through the applicable sub-contracting arrangements until such time as the Amended IMA is terminated and replaced by the Edition IMA. 

Subject to implementation of each of the Schemes and the first Admission of Leisure Shares pursuant to the Offer, the Company will be renamed Edition VCT Plc. It will have five listed share classes, each having its own separate portfolio of assets and liabilities, managed on a stand-alone basis pursuant to the Company’s revised investment policy, with Edition as investment manager. Given its knowledge of the existing portfolios and sectors in which the Company and the Target VCTs have invested, OTM (the current investment adviser for the Company and each of the Target VCTs) will be retained by the Company and Edition as portfolio monitor in respect of the assets and liabilities comprised in each of the share classes, other than the Leisure Shares. Pursuant to its appointment as portfolio monitor under a new agreement (which will come into effect from first Admission of the Leisure Shares), the fees currently payable to OTM will be halved to reflect the transfer of administrative activities to Edition. 

Directors’ Remuneration     

Each of the Directors has also entered into a new letter of appointment with the Company (each dated 18 May 2022), which shall replace their existing letter of appointment and which shall come into effect on the earlier of (i) the date of first Admission of Leisure Shares and (ii) the date the Merger is approved. 

1. Under the terms of their new letters of appointment, with effect from 1 March 2023 each Director shall be entitled to a fee per annum as more particularly detailed below (the increased amounts payable to Richard Roth being in recognition of his role as chairman of the Company and as chairman of the Company’s Audit Committee and to Robin Goodfellow being in recognition of his role as a member of the Company’s Audit Committee).   

Director	Remuneration with effect from 1 March 2023 (£)
Richard Roth	27,000
Alex Starling	14,000
David Livesley	14,000
Robin Goodfellow	18,000

In addition to the above fees (and subject to the Schemes being approved), the Directors will continue to be entitled to participate in the performance fee incentive arrangements as currently exist for them in respect of the Companies (as described in more detail in the Prospectus).   

(b) In addition, in recognition of the additional work which has been undertaken by certain of the Directors in connection with the Merger and the Offer, the Company has agreed to make an additional one-off payment in the sum of £30,000.  Of this sum, Richard Roth will receive £27,000 and David Livesley will receive £3,000, both of which will be paid shortly following the Merger becoming effective (but these payments are not conditional upon the Merger proceeding).   

The payments referred to in (a) and (b) above constitute smaller related party transactions for the purposes of the Listing Rules and, as such, Listing Rule 11.1.10 applies. 

TIMETABLE S 

Further details of the expected timetables of events for each of OT2 (in respect of the Merger and the Offer) and the Target VCTs (in respect of the Merger) are set out in the Prospectus and Circulars. 

DOCUMENTS AND APPROVALS 

The Circular issued by OT2 contains notice of the OT2 General Meeting to be held on 20 June 2022 setting out resolutions to approve, inter alia, the Schemes, the allotment of the Consideration Shares and the Leisure Shares (together, the “New Shares”), the disapplication of pre-emption rights which are required to allot the New Shares, the adoption of new articles of association for OT2, material changes to the Company’s investment policy (the Listing Rules require the changes to the investment policy to be approved by existing OT2 Shareholders) and, in addition, a resolution to approve the Amended IMA with OT2M in relation to the Consideration Shares.  

The approval of resolutions in connection with the Merger, the Offer and related proposals will be proposed to OT2 Shareholders at the OT2 General Meeting (to be held on 20 June 2022). The approval of resolutions in connection with the Merger will be proposed to Target VCT Shareholders at the Target VCTs First General Meeting (to be held on 20 June 2022) and the Target VCTs Second General Meeting (to be held on 30 June 2022).  

The Circulars convening these general meetings at which all shareholders will be invited to approve various resolutions in connection with the proposals will be sent to each Companies’ shareholders shortly. The directors of each of the Companies unanimously support the proposals and will be voting in favour of all resolutions (where permitted to do so) at each of the meetings. The directors also look forward to answering shareholder questions, either at the webinar on 7 June 2022 or subsequently in writing on the website.  

Copies of the Circulars and the Prospectus have been submitted to the FCA and shall shortly be available for download from the following website (https://www.oxfordtechnologyvct.com/) and the national storage mechanism (https://data.fca.org.uk/#/nsm/nationalstoragemechanism). 

F or further information, please contact: 

Enquiries: Lucius Cary, Andrea Mica and Richard Roth via [e-mail] 

This announcement contains inside information as stipulated under the UK version of the Market Abuse Regulation No 596/2014 which is part of English Law by virtue of the European (Withdrawal) Act 2018, as amended. Upon the publication of this announcement via a Regulatory Information Service, this information is now considered to be in the public domain.