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Proven Health VCT (NHF)

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Thursday 27 June, 2013

Proven Health VCT

Circ re.Proposed Merger

Circ re.Proposed Merger

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR SOUTH AFRICA OR ANY JURISDICTION IN WHICH THE SAME COULD BE UNLAWFUL. THE INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION, INCLUDING IN THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR SOUTH AFRICA. 

27 June 2013

PROVEN HEALTH VCT PLC

PUBLICATION OF CIRCULAR

Introduction

In October 2011, the Board sent a survey to Shareholders seeking their views in relation to the future of the Company. Following the feedback provided by Shareholders, the Company changed its investment policy to give it the flexibility to invest in a number of sectors (rather than restrict investments to the health sector) and has undertaken a number of initiatives in an attempt to increase the size of the Company. In March 2012, the Company completed a merger with Longbow Growth and Income VCT plc under which it acquired LGIV's net assets in consideration for the issue of Shares. The Company also carried out an offer for subscription from February 2012 to April 2012 (spanning the 2011/12 tax year and the 2012/13 tax year) raising gross proceeds of £31,000 and an enhanced share buyback with gross proceeds of £1.2 million being reinvested in the Company.

Notwithstanding these initiatives, as at 30 April 2013 the Company had net assets of £7.6 million. In the light of the difficulties encountered by the Board increasing the size of the Company and challenging financial markets, the Board decided to consider alternative strategies. The Board has concluded that Shareholders' interests will be best served by a merger with another larger listed VCT. After considering available options including mergers with a number of other VCTs, the Board has reached agreement with ProVen Growth & Income VCT in respect of a merger of the Company and ProVen Growth & Income VCT pursuant to a scheme of reconstruction and winding up of the Company under section 110 of the Insolvency Act 1986.  ProVen Growth & Income VCT is a venture capital trust which was launched in 2001 and is also managed by the Company's investment manager, Beringea LLP.

The Proposals

Under the Proposals, the Company will be placed into members' voluntary liquidation and its assets will (after setting aside a Liquidation Fund to cover the estimated liabilities and contingent liabilities of the Company) be transferred to ProVen Growth & Income VCT in consideration for the issue of New ProVen Growth & Income VCT Shares to Shareholders. The Scheme will be completed on a relative adjusted net asset value basis. The number of New ProVen Growth & Income VCT Shares to be issued to Shareholders will be calculated based on the unaudited net asset value of both VCTs as at the Calculation Date (expected to be 2 August 2013), adjusted to take into account each VCT's allocation of the estimated costs and expenses of the Proposals.

The New ProVen Growth & Income VCT Shares will rank pari passu with the existing ProVen Growth & Income VCT Shares, save that they shall not qualify for the interim dividend payable by ProVen Growth & Income VCT in respect of the period ended 28 February 2013.

The Company has today published a Circular to its Shareholders in connection with Proposals, convening General Meetings to be held at 10.00 a.m. on 26 July 2013 and at 10.00 a.m. on 6 August 2013.  Shareholders will also be sent a copy of the Prospectus published by ProVen Growth & Income VCT in relation to the Proposals. Implementation of the Proposals is conditional upon the passing of the Resolutions at the General Meetings and the approval of ProVen Growth & Income VCT Shareholders at the ProVen Growth & Income VCT General Meeting to be held on 30 July 2013.  In the event that the relevant resolutions are not passed or any other condition of the Proposals is not met, the Proposals will not be implemented and the Company will continue as a separate VCT. In these circumstances, the Board will reassess the options available to the Company.

As part of the Proposals, Frank Harding (a director of the Company) will join the board of directors of ProVen Growth & Income VCT upon the Scheme becoming effective.  Charles Pinney (the Chairman of the Company) will be appointed as a consultant to the ProVen Growth & Income VCT Board to assist with the transition of the Company's investment portfolio to ProVen Growth & Income VCT.  This Consultancy appointment will last for one year from the Effective Date, with any fees payable in respect of this consultancy appointment met by Beringea.

Interim Dividend

The Company has declared an interim dividend of one pence per Ordinary Share. The Interim Dividend will be paid on 25 July 2013 to Shareholders on the Register on 5 July 2013. The ex-dividend date for the Interim Dividend is 3 July 2013.

In the light of the Proposals, the Company has announced today the suspension of its dividend re-investment scheme. If the Scheme does not become effective and the Company continues as a standalone VCT, the Board will consider lifting this suspension and reopening the dividend re-investment scheme.

Information on ProVen Growth and Income VCT plc

ProVen Growth & Income VCT is a venture capital trust which was launched in 2001. ProVen Growth & Income VCT aims to provide investors with long-term returns greater than those available from direct investment in quoted businesses by investing in a portfolio of carefully selected smaller companies with excellent growth prospects.

ProVen Growth & Income VCT's investment portfolio consists of 25 unquoted investments and 3 quoted investments. As at 26 June 2013 (being the latest practicable date prior to the release of this announcement) the aggregate value of ProVen Growth & Income VCT's investment portfolio was £20.1 million.  In addition, ProVen Growth & Income VCT had cash of approximately £25.7 million. As at 28 February 2013 (being the date of the latest published net asset value of a ProVen Growth & Income VCT Share), the net asset value per ProVen Growth & Income VCT Share was 87.7 pence.

Benefits of the Proposals

The Directors consider that the Proposals have the following benefits for Shareholders:

  • they allow Shareholders to roll over their investment in a tax efficient manner (without incurring an immediate liability to UK capital gains tax); 

  • Shareholders will retain the upfront VCT income tax relief they obtained on subscription for their Shares (provided they retain their New ProVen Growth & Income VCT Shares until at least five years after their Shares were issued); 

  • Shareholders will be invested in a VCT which already has 28 portfolio investments and will therefore be able to gain exposure to a diversified portfolio of VCT qualifying companies without incurring significant reinvestment costs or portfolio reorganisation costs; 

  • Shareholders will be invested in a VCT with greater dividend potential than the Company. The ProVen Growth & Income VCT Board has set an objective of paying dividends each year which equate to a yield of approximately 5 per cent. of net asset value (This is not a profit forecast. There is no certainty that any dividends will be paid by ProVen Growth & Income VCT following the Scheme becoming effective and dividend payments will depend on the amount and timing of profits realised from investments); 

  • the enlarged ProVen Growth & Income VCT will have a more diversified portfolio thereby dispersing the portfolio risk across a broader range of investments and businesses; 

  • the merger of ProVen Growth & Income VCT and the Company will create a single VCT with a greater capital base over which to spread administration and management costs. Shareholders will continue to benefit from the management expertise of Beringea and reduced basic management fees (with the basic investment management fee payable by ProVen Growth & Income VCT being 2.0 per cent. per annum of its net assets compared to the basic investment management fee of 2.5 per cent. of the Company's net assets currently payable) and reduced total expenses as percentage of net assets; 

  • as Beringea will continue to manage the enlarged ProVen Growth & Income VCT's funds after the Scheme is implemented (as Beringea is the investment manager of ProVen Growth & Income VCT), Beringea has agreed to the termination of its existing investment management agreement with the Company on the Effective Date without notice or penalty; and 

  • ProVen Growth & Income VCT operates a share buy-back policy under which it buys back ProVen Growth & Income VCT Shares at a discount of 10 per cent. to net asset value (allowing shareholders wishing to realise their investment on opportunity to do so).  Any such share buy-backs are subject to applicable legislation and VCT regulations and ProVen Growth & Income VCT having sufficient reserves and cash to purchase shares.   

Costs and expenses

The aggregate costs and expenses to be incurred by ProVen Growth & Income VCT and the Company in connection with the Scheme are expected to be approximately £240,000 (including VAT and stamp duty). It is estimated that aggregate costs of approximately £100,000 (including VAT) will be borne by the Company in connection with the Scheme as ProVen Growth & Income VCT has agreed to meet the first £140,000 of the total costs and expenses of the Scheme with £40,000 of this amount to be reimbursed to ProVen Growth & Income VCT by Beringea by means of a partial management fee waiver over one year commencing on the Effective Date (with £10,000 of the management fees otherwise payable to Beringea waived each quarter until £40,000 of the costs and expenses paid by ProVen Growth & Income VCT have been recovered in full). If the total costs and expenses incurred by ProVen Growth & Income VCT and the Company are more than £240,000 (including VAT) ProVen Growth & Income VCT and the Company will each meet 50 per cent. of any such costs in excess of this amount.

The Board has also agreed to a Liquidator's retention of up to £20,000 which will be retained by the Liquidator to meet any unforeseen costs and liabilities. If the Scheme does not become effective, the Company will bear abort costs and expenses estimated at approximately £95,000 (including VAT). In these circumstances, the Board will consider formulating new proposals for the future management of the Company which may result in additional costs being incurred by the Company.

Dealings in Shares on the London Stock Exchange

The Register will remain open until the Effective Date, but the Shares will be disabled in CREST on 31 July 2013. The last day for trading in the Shares on the London Stock Exchange for normal settlement (in order to enable settlement prior to the Record Date) will be 29 July 2013. As from 30 July 2013, dealings should be for cash settlement only and, in the case of certificated Shares, will only be registered if documents of title are delivered immediately. The Record Date, being the date for determining which Shareholders are entitled to participate in the Scheme, is 6.00 p.m. on 2 August 2013. Dealings in the Shares on the London Stock Exchange will be suspended at 7.30 a.m. on 6 August 2013 and it is expected that the listing of the Shares will be cancelled on or around 7 August 2013.

Shareholder meetings

The implementation of the Proposals will require, inter alia, Shareholders to vote in favour of resolutions to be proposed at General Meetings of the Company which have been convened for 10.00 a.m. on 26 July 2013 and 10.00 a.m. on 6 August 2013.  The notices convening the General Meetings, which set out in full the terms of the resolutions which are to be proposed, are set out in the Circular.  The General Meetings will be held at the offices of Beringea LLP, 39 Earlham Street, London WC2H 9LT.

EXPECTED TIMETABLE

All references are to UK time.2013
Record date for the Interim Dividend 5 July
Latest time and date for receipt of BLUE forms of proxy for the First General Meeting 10.00 a.m. on 24 July
Payment date for Interim Dividend 25 July
First General Meeting of Proven Health 10.00 a.m. on 26 July
Time and date from which it is advised that dealings in Shares should only be for cash settlement and immediate  delivery of documents of title 8.00 a.m. on 30 July
ProVen Growth & Income VCT General Meeting 3.00 p.m. on 30 July
Shares disabled in CREST1 7.30 a.m. on 31 July
Latest time and date for receipt of GREEN forms of proxy for the Second General Meeting 10.00  a.m. on 2 August
Calculation Date close of business on 2 August
Record Date for Shareholders' entitlements under the Scheme 6.00 p.m. on 2 August
Dealings in Shares suspended 7.30 a.m. on 6 August
Second General Meeting of ProVen Health 10.00 a.m. on 6 August
Effective Date for implementation of the Scheme and commencement of the liquidation of the Company 6 August
Admission to listing and dealings commence in the New ProVen Growth & Income VCT Shares issued pursuant to the Scheme 8.00 a.m. on 7 August
New ProVen Growth & Income VCT Shares issued in uncertificated form credited to CREST accounts of Shareholders under the Scheme 8.00 a.m. on 7 August
Cancellation of listing of Shares 8.00 a.m. on 7 August
Share and tax certificates in respect of New ProVen Growth & Income VCT Shares issued in certificated form pursuant to the Scheme despatched to Shareholders entitled thereto week commencing 19 August

Notes:

(1)   For the avoidance of doubt, the Register will remain open until the Effective Date.

(2)   Each of the times and dates in the above expected timetable (other than in relation to the General Meetings) may be extended or brought forward without further notice. If any of the above times and/or dates changes, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service provider.

Definitions

The definitions set out below apply in this announcement unless the context requires otherwise:

Admission the admission of the New ProVen Growth & Income VCT Shares to be issued under the Proposals to the Official List with a Premium Listing and to trading on the Main Market
Beringea or Investment Manager Beringea LLP, a limited liability partnership registered in England and Wales with registered number OC342919
Board or Directors the directors of the Company or any duly constituted committee thereof
Calculation Date the time and date, to be determined by the Directors but expected to be close of business on 2 August 2013 (unless the First General Meeting is adjourned), at which the FAV per PHV Share and the FAV per PGIV Share will be calculated for the purposes of the Scheme
certificated or in certificated form a share which is not in uncertificated form
Circular the circular published by the Company on 27 June 2013
Company or ProVen Health ProVen Health VCT plc, a company incorporated in England and Wales with registered number 04131354
Effective Date the date of the passing of the resolution to be proposed at the Second General Meeting or, if later, on all conditions of such resolution being satisfied (which is expected to be 6 August 2013)
FAV per PGIV Share the formula asset value of a ProVen Growth & Income VCT Share calculated as at the Calculation Date in accordance with the Scheme
FAV per PHV Share the formula asset value of an Ordinary Share calculated as at the Calculation Date in accordance with the Scheme
First General Meeting the general meeting of the Company convened for 10.00 a.m. on 26 July 2013, or any adjournment thereof
FSMA the Financial Services and Markets Act 2000 (as amended)
General Meetings the First General Meeting and Second General Meeting
Interim Dividend the interim dividend by the Company to be paid on 25 July 2013
LGIV Longbow Growth and Income VCT plc
Liquidation Fund the liquidation fund to be retained by the Liquidator to meet the liabilities of the Company
Liquidator the liquidator of the Company to be appointed at the Second General Meeting
London Stock Exchange London Stock Exchange plc
Main Market the London Stock Exchange's main market for listed securities
NAV or Net Asset Value net asset value
New ProVen Growth & Income VCT Shares the ProVen Growth & Income VCT Shares to be issued pursuant to the Scheme
Official List the Official List of the UK Listing Authority
Premium Listing a listing on the premium segment of the Official List
Proposals the proposals for the voluntary winding up and reconstruction of the Company (including the Scheme) described in the Circular
Prospectus the prospectus published by ProVen Growth & Income VCT on 27 June 2013
ProVen Growth & Income VCT ProVen Growth and Income VCT plc, a company incorporated in England and Wales with registered number 04125326
Proven Growth & Income VCT Board the directors of ProVen Growth & Income VCT
ProVen Growth & Income VCT General Meeting the general meeting of ProVen Growth & Income VCT convened for 3.00 p.m. on 30 July 2013, or any adjournment thereof
ProVen Growth & Income VCT Shares ordinary shares of 1.6187p each in ProVen Growth & Income VCT
Record Date 6.00 p.m. on 2 August 2013, being the record date for determining which Shareholders are entitled to participate in the Scheme
Register the register of members of the Company
Regulatory Information Service any of the services authorised from time to time by the Financial Services Authority for the purposes of disseminating regulatory announcements
Resolutions the resolutions set out in the notices of the General Meetings
Scheme the scheme under section 110 of the Insolvency Act 1986 set out in Part 3 of the Circular
Second General Meeting the general meeting of the Company convened for 10.00 a.m. on 6 August 2013, or any adjournment thereof
Shareholders holders of Shares
Shares or Ordinary Shares ordinary shares of 1p each in the capital of the Company
UK Listing Authority the Financial Conduct Authority acting pursuant to Part VI of FSMA
uncertificated or in uncertificated form recorded in the register of members of the Company or ProVen Growth & Income VCT (as appropriate) as being held in uncertificated form in CREST and title to which may be transferred by means of CREST
VAT value added tax
VCT or Venture Capital Trust a venture capital trust as defined in section 259 of the Income Tax Act 2007 (as amended)

Enquiries:

For further information please contact.

Steven Tuckley Beringea LLP 020 7845 7820

A copy of the Circular will be submitted to the National Storage Mechanism and will shortly be available for inspection at http://www.hemscott.com/nsm.do




This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.

Source: Proven Health VCT Plc via Thomson Reuters ONE

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