BARONSMEAD SECOND VENTURE TRUST PLC

Prospectus • Oct 17, 2016

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RNS Number : 7499M

Baronsmead Second Venture Trust PLC

17 October 2016

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 FOR 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

Baronsmead VCT 5 plc

Baronsmead Second Venture Trust plc

17 October 2016

Publication of a Prospectus and Circulars in connection with recommended proposals for the merger of Baronsmead VCT 5 plc and Baronsmead Second Venture Trust plc (the "Companies" and each a "Company")

The boards of the Companies (the "Boards") announced on 11 August 2016 that they had entered into discussions regarding a possible merger of the Companies (the "Merger"). The Boards are pleased to announce that they have reached agreement in respect of the Merger and that the Companies have today issued circulars to set out the proposals for the Merger for consideration by their respective shareholders (the "Circulars"). Both of the Companies are managed by Livingbridge VC LLP ("Livingbridge").

The Merger will be completed pursuant to a scheme of reconstruction and winding up of Baronsmead VCT 5 plc ("BVCT5") under section 110 of the Insolvency Act 1986 (the "Scheme"). The Scheme provides for the undertaking, assets and liabilities of BVCT5 to be transferred to Baronsmead Second Venture Trust plc ("BSVT") in consideration for the issue of new shares in BSVT (the "New Shares") of an equivalent value to BVCT5 shareholders ("BVCT5 Shareholders"). The Scheme is subject to, amongst other conditions, approval by the shareholders of the Companies. The Merger will create a larger merged company with net assets of £180 million (the "Enlarged Company").

Background to and reasons for the Scheme

Prior to April 2012, the VCT rules restricted the amount a VCT could invest in a portfolio company to £1 million per annum. This led to investment managers, such as Livingbridge, establishing numerous VCTs that pursued the same investment strategy allowing larger investments to be made in VCT qualifying companies. With effect from 6 April 2012, the VCT rules were amended and the annual investment limit was increased to £5 million per investee company. As a result there is no longer as significant an advantage in having multiple VCTs pursuing the same investment strategy.

Since 2012 Livingbridge have been reviewing the merits of merging the Baronsmead VCTs. In April 2014 changes to the stamp duty rules significantly reduced the overall cost of a merger. As a result, the Board believes that there is a compelling argument for the merger of BSVT and BVCT5 from a cost savings point of view, with Shareholders and BVCT5 Shareholders benefiting from estimated aggregate costs savings of the Enlarged Company of approximately £345,000 per annum. In addition, the directors of the Companies believe that the size of the Enlarged Company could mean that the shares would become more widely available on investment platforms and potentially make the Enlarged Company more attractive to private client wealth managers, which may enhance the liquidity of the shares in the secondary market. For these reasons, the directors of the Companies believe that their respective shareholders' interests will be best served by the Merger of the Companies.

The Scheme

The number of New Shares to be issued to BVCT5 Shareholders under the Scheme will be based on the adjusted net asset value of an ordinary share in BSVT (the "FAV per BSVT Share") and the adjusted net asset value of an ordinary share in BVCT5 (the "FAV per BVCT5 Share"). The FAV per BSVT Share and the FAV per BVCT5 Share will be calculated as at 28 November 2016 (the "Calculation Date") using each Company's respective accounting policies (which are identical). The investments held by the Companies which are listed, quoted or traded on either AIM or a recognised stock exchange will be valued by reference to the bid price on the principal stock exchange where the relevant investment is listed, quoted or dealt. Unquoted investments held by the Companies will be valued at their fair value as at the Calculation Date as determined by the Boards respectively.

The FAV per BSVT Share will be the net asset value of an ordinary share in BSVT adjusted to take account of the costs and expenses of the Merger apportioned to BSVT under the Scheme. The FAV per BVCT5 Share will be the  net asset value of an ordinary share in BVCT5 adjusted to take account of the costs and expenses of the Merger apportioned to BVCT5 under the Scheme. Any costs incurred by the Companies in relation to the Merger, prior to the Calculation Date, will be added back to the relevant Company's net asset value prior to the apportionment of the costs of the Merger between the Companies.

BVCT5 Shareholders will be issued such number of New Shares with a FAV per BSVT Share equal to 100 per cent. of the FAV per BVCT5 Share of their holding of BVCT5 Shares. The New Shares issued pursuant to the Scheme will rank equally in all respects with the existing issued ordinary shares of BSVT.

Costs and expenses of the Merger

The aggregate costs and expenses to be incurred by the Companies in connection with the Scheme are expected to be approximately £355,000 (including VAT and stamp duty). The Boards have agreed that the most appropriate way to split the costs of the Merger is to allocate them on the basis of the relative ongoing cost savings for each company. On this basis the costs of the Merger will be split 25 per cent. to BSVT and 75 per cent. to BVCT5. This method of splitting the costs ensures that the existing BSVT shareholders and the BVCT5 shareholders will have the same payback period of approximately 12 months.

In the event that the Scheme does not become effective, it is estimated that the costs incurred by the Companies in connection with the Scheme will be in aggregate approximately £215,000 (including VAT). BSVT and BVCT5 have agreed to bear these abort costs on the same basis as the Merger costs, being 25 per cent. and 75 per cent. respectively.

Expected Scheme timetable

	2016
Latest time and date for receipt of forms of proxy for the general meeting of BSVT	2.00 p.m. on 4 November
Latest time and date for receipt of forms of proxy for the first general meeting of BVCT5	3.00 p.m. on 4 November
General meeting of BSVT	2.00 p.m. on 8 November
First general meeting of BVCT5	3.00 p.m. on 8 November
Time and date from which it is advised that dealings in BVCT5 Shares should only be for cash settlement and immediate delivery of documents of title	8.00 a.m. on 24 November
Latest time and date for receipt of forms of proxy for the second general meeting of BVCT5	11.00 a.m. on 28 November
Calculation Date	5.00 p.m. on 28 November
Record Date for BVCT5 Shareholders' entitlements under the Scheme	6.00 p.m. on 28 November
Dealings in BVCT5 Shares suspended	7.30 a.m. on 30 November
Second general meeting of BVCT5	11.00 a.m. on 30 November
Effective Date for implementation of the Scheme and commencement of the liquidation of BVCT5	30 November
Admission to listing and dealings commence in the New Shares issued pursuant to the Scheme	8.00 a.m. on 2 December
New Shares issued in uncertificated form credited to CREST accounts of BVCT5 Shareholders under the Scheme	8.00 a.m. on 2 December
Cancellation of listing of BVCT5 Shares on the premium segment of the Official List and trading on the Main Market	8.00 a.m. on 2 December
Share certificates in respect of New Shares issued in certificated form pursuant to the Scheme despatched to Shareholders entitled thereto	week commencing 12 December

Note: Each of the times and dates in the above expected timetable (other than in relation to the General Meetings) may be altered at the sole discretion of the directors of each Company respectively. If any of the above times and/or dates change, the revised time(s) and/or dates will be notified to shareholders by an announcement through a Regulatory Information Service.

Copies of the Prospectus and Circulars will shortly be available for inspection at the National Storage Mechanism, which is located at:

http://www.hemscott.com/nsm.do

and on the website of the Companies:

http://www.baronsmeadvcts.co.uk

For additional information, please contact:

Michael Probin - VCT Investor Relations Director

Livingbridge VC LLP

Tel: 020 7506 5796

This information is provided by RNS

The company news service from the London Stock Exchange

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