Prospectus • Aug 4, 2017
Prospectus
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THIS DOCUMENT IS IMPORTANT AND REQUIRES IMMEDIATE ATTENTION. If you are in any doubt as to any aspect of the proposals referred to in this document or as to the action you should take you are recommended to seek your own financial advice immediately from a stockbroker, solicitor, accountant, or other independent adviser authorised under the Financial Services and Markets Act 2000 ("FSMA"). If you have sold or otherwise transferred all of your Shares in Calculus VCT plc (the "Company"), please pass this document together with all accompanying documents to the purchaser or transferee, or to the person who arranged the sale or transfer so they can pass them to the person who now owns the Shares. Application will be made to the UKLA for the Consideration Shares and the Offer Shares to be listed on the premium segment of the Official List and an application will be made to the London Stock Exchange for such Consideration Shares and the Offer Shares to be admitted to trading on its main market for listed securities. The Consideration Shares and the Offer Shares will rank pari passu with the existing issued Shares from the date of issue. The Company's existing Shares are listed on the premium segment of the Official List and traded on the London Stock Exchange's main market for listed securities.
Beaumont Cornish Limited (the "Sponsor") which is authorised and regulated in the United Kingdom by the Financial Conduct Authority ("FCA") is acting as sponsor to the Company. The Sponsor is not acting for any other person in connection with the matters described in this document. Apart from the responsibilities and liabilities, if any, which may be imposed on the Sponsor by FSMA or the regulatory regime established thereunder, the Sponsor will not be responsible to anyone other than the Company for providing the protections afforded to clients of the Sponsor and is not advising any other person in relation to any transaction contemplated in or by this document.
(Incorporated in England and Wales under the Companies Act 2006 with registered number 07142153)
You will find, set out at the end of this document, notice of a general meeting of the Company to be held at the offices of Calculus Capital, 104 Park Street, London W1K 6NF on 31 August 2017 at 11.00 a.m. in connection with proposals seeking Shareholders' authority to (i) acquire the assets and liabilities of Neptune; (ii) launch an offer for subscription for new Ordinary Shares; (iii) approve general allotment and repurchase authorities; (iv) reduce the share premium account; and (v) make various amendments to the Company's articles of association to remove extraneous references to the old C share and D share classes which no longer exist ("General Meeting").
Whether or not you plan to attend the General Meeting, please complete and submit a proxy form in accordance with the instructions printed on the enclosed form. Proxy forms must be received by close of business on 29 August 2017. This document should be read in conjunction with the Prospectus issued by the Company dated 4 August 2017. The Prospectus accompanies this document and is available in hard copy from the Company's registered office during normal business hours and at www.calculuscapital.com/calculus-vct.
Your attention is drawn to the letter from the chairman of the Company set out in Part 2 of this document which contains a recommendation to vote in favour of the resolutions to be proposed at the General Meeting referred to on the same page. Your attention is also drawn to the risk factors set out in Part 3 of this document.
| Page | ||
|---|---|---|
| PART 1 | EXPECTED TIMETABLES FOR THE MERGER AND THE OFFER | 3 |
| PART 2 | LETTER FROM THE CHAIRMAN OF CALCULUS VCT PLC | 5 |
| PART 3 | RISK FACTORS | 10 |
| PART 4 | THE SCHEME | 12 |
| PART 5 | ADDITIONAL INFORMATION | 15 |
| PART 6 | DEFINITIONS | 18 |
| CORPORATE INFORMATION | 21 | |
| NOTICE OF GENERAL MEETING OF ALL SHAREHOLDERS OF THE COMPANY TO BE HELD | ||
| ON 31 AUGUST 2017 AT 11.00 A.M. | 22 | |
| EXPLANATIONS OF RESOLUTIONS | 24 | |
| NOTES TO THE NOTICE OF GENERAL MEETING | 25 | |
| EXPECTED TIMETABLE FOR THE COMPANY | 2017 |
|---|---|
| Latest time for the receipt of forms of proxy for the General Meeting | 11.00 a.m. on 29 August |
| General Meeting | 11.00 a.m. on 31 August |
| Calculation Date | 11 September |
| Effective Date for the transfer of the assets and liabilities of Neptune to the Company and the issue of Consideration Shares |
12 September |
| Completion of the Scheme | 12 September |
| Admission and dealings in the Consideration Shares to commence | 13 September |
| CREST accounts credited with the Consideration Shares issued pursuant to the Scheme |
13 September |
| Certificates for Consideration Shares dispatched by | 27 September |
| EXPECTED TIMETABLE FOR NEPTUNE | 2017 |
| Date from which it is advised that dealings in Neptune Shares should only be for cash settlement and immediate delivery of documents of title |
23 August |
| Ex dividend date for special dividend | 5.00 p.m. on 24 August |
| Record date for payment of special dividend | 5.00 p.m. on 25 August |
| Latest time for receipt of forms of proxy for the First Neptune Meeting | 11.30 a.m. on 29 August |
| First Neptune Meeting | 11.30 a.m. on 31 August |
| Record Date for Shareholders' entitlements | close of business on 4 September |
| Register of members closed | close of business on 4 September |
| Latest time for receipt of forms of proxy for the Second Neptune Meeting | 3.00 p.m. on 8 September |
| Calculation Date | 11 September |
| Dealings in Neptune Shares suspended | 7.30 a.m. on 11 September |
| Second Neptune Meeting | 3.00 p.m. on 12 September |
| Effective Date for the transfer of Neptune's assets and liabilities to the Company and the issue of Consideration Shares pursuant to the Scheme |
12 September |
| Payment of special dividend | 18 September |
| Cancellation of the listing of the Neptune Shares | 8.00 a.m. on 20 September |
| Offer opens | 4 August 2017 |
|---|---|
| Closing date (for 2017/18 tax year) | 3 April 2018 |
| Closing date (for 2018/19 tax year) | 31 July 2018 |
| First allotment | no later than 5 April 2018 |
| Effective date for the listing of Offer Shares and commencement of dealings |
three Business Days following allotment |
| Share certificates and tax certificates to be dispatched | ten Business Days following allotment |
| * The Directors reserve the right to extend the closing date at their discretion. The Offer will close earlier than the date stated above if fully subscribed or otherwise at the Directors' discretion. |
|
| Offer Statistics | |
| Maximum amount to be raised by the Company* | £5 million |
| Unaudited NAV per Share as at 30 June 2017** | 91.2p |
| Maximum number of Offer Shares to be issued*** | 5.45 million |
| Estimated net proceeds of the Offer*** | £4.75 million |
| Discount for applications received by 2 February 2018**** |
0.5% |
| Discount for applications received from existing investors in the Company**** |
0.5% |
* The Directors reserve the right to increase the size of the Offer by up to an additional £5 million.
** This is a blended figure. The NAV attributable to shareholders not entitled to a dividend for the year ended 28 February 2017 (those who invested after 25 October 2016) is 89.1 pence per share. The NAV attributable to shareholders who are entitled to the dividend is 93.3 pence per share.
*** Approximate figure, assuming full subscription, no use of the over-allotment facility and total Offer costs of 5% of funds raised.
**** Discounts for early applications and for existing investors in the Company will be applied through an increase in the number of Offer Shares allocated via the Pricing Formula.
| Advised Investors | |
|---|---|
| Promoter's Fee | 3.0% of funds invested |
| Adviser charge | as agreed between Investor and Intermediary |
Promoter's Fee 3.0% of funds invested Commission 2.0% up front 0.5% trail per annum (maximum of 3.0%)
Promoter's Fee 5.0% of funds invested
(Registered in England and Wales with registered number: 07142153)
Current Directors Michael O'Higgins (Chairman) Kate Cornish-Bowden Arthur John Glencross Steven Guy Meeks
Registered Office 104 Park Street London W1K 6NF
Proposed Director Diane Seymour-Williams
4 August 2017
Dear Shareholder
Proposed Merger with Neptune-Calculus Income & Growth VCT plc ("Neptune"), Approval of Related Party Transaction, Offer for Subscription to raise up to £5 million (with an over-allotment facility of up to an additional £5 million) and Notice of General Meeting
On 19 June 2017, it was announced that the Board had agreed in principle with the board of Neptune to merge the two VCTs (the "Merger") by means of placing Neptune into members' voluntary liquidation pursuant to Section 110 of IA 1986 and the acquisition by the Company of all of Neptune's assets and liabilities in consideration for the issue of Consideration Shares (the "Scheme").
Conditional upon the Merger being effected, the Company's Manager, Calculus Capital Limited ("Calculus Capital"), has agreed to increase its potential contribution to the running costs of the Enlarged Company by reducing the cost cap. This requires the Enlarged Company entering into a revised management agreement with Calculus Capital which constitutes a related party transaction under the Listing Rules.
In addition, conditional upon the Merger being effected, the Company intends to seek further investment of up to an initial £5 million to be allotted in the 2017/18 and 2018/19 tax years with an over-allotment option of up to a further £5 million (the "Offer"). Further details of the Offer are set out in paragraph 9 of this letter and in the enclosed Prospectus issued by the Company dated 4 August 2017.
The purpose of this letter is to set out the proposals for the Merger, the Offer and the Related Party transaction for consideration by Shareholders, and to seek your approval accordingly.
If the Merger is effected, the Company should have increased net assets of approximately £10 million, prior to any shares being issued under the Offer.
The Merger should result in the following benefits for Shareholders:
Additional attractive features of the Merger include:
Subject to the Merger taking place, Calculus Capital has agreed to increase its potential contribution to the running costs of the Company by reducing the cost cap to ensure that the annual running costs of the Enlarged Company (excluding irrecoverable VAT, annual trail commission and performance incentive fees) do not exceed 3% of the net assets of the Enlarged Company. This represents a reduction from the Company's current blended costs cap between 3.0% and 3.4% of gross amounts raised under earlier offers.
Assuming full subscription of the Offer (including the over-allotment option) the estimated annual costs of the Enlarged Company would be 2.9% of NAV.
The expected overall cost savings to be gained by spreading administration, directors' fees, audit and management costs over a greater capital base together with the proposed reduced cost cap is estimated to be in excess of £125,000 per annum compared to the aggregate of the costs which would be incurred if each VCT were to maintain an independent existence. It is projected that the running costs savings that will accrue to the Company over the 10 months following the Merger will exceed the costs of the Merger being borne by the Company and Neptune.
The amendment of the investment management agreement to reduce the cost cap as set out in section 2 above will constitute a related party transaction under the Listing Rules, as Calculus Capital is an investment manager of the Company and accordingly the approval of Shareholders to the amendment will be sought at the General Meeting. John Glencross, as the chief executive of Calculus Capital and a non-independent Director, did not take part in the Board's consideration of, nor vote on, the proposed amendment of the investment management agreement.
The Board which has been so advised by Beaumont Cornish, the Company's Sponsor, considers the proposed amendment to be fair and reasonable insofar as the Company's shareholders are concerned.
Calculus Capital and its associates, who together hold 23,796 shares representing approximately 0.27% of the entire issued share capital of the Company, intend to vote in favour of all the Resolutions to be proposed at the general meetings save for the resolution approving the amendments to the investment management agreement (Resolution 6) on which they are not permitted to vote. Calculus Capital has taken all reasonable steps to ensure that its associates will not vote on Resolution 6 at the General Meeting.
The Merger will be effected in the following way.
First, Neptune will be placed into members' voluntary liquidation pursuant to a scheme of consolidation under section 110 of the Insolvency Act 1986, subject to Neptune Shareholders' approval.
Secondly, all of the assets and liabilities of Neptune will be transferred to the Company in consideration for the issue of Consideration Shares by the Company directly to the Neptune Shareholders.
The Scheme requires the prior approval of both the shareholders of Neptune and the Shareholders of the Company. If a shareholder of Neptune does not vote in favour of the Merger and expresses his/her dissent in writing then he/she may require the Liquidators to purchase his/her shares at their breakvalue price, this being an estimate of the amount he/she would receive in an ordinary winding up of Neptune if all of the assets had to be realised. The break-value is expected to be significantly below the net asset value of Neptune.
For these purposes, whilst there will only be one general meeting of the Company at which shareholders will be invited to consider and vote in favour of the Merger, there will be two general meetings for Neptune. At Neptune's first general meeting, Neptune Shareholders will be invited to approve the Merger. At the second Neptune Meeting, Neptune Shareholders will be invited to pass a special resolution for the winding up of Neptune.
In addition to the approval of Shareholders being sought at the General Meeting, the Scheme is dependent on:
The number of Consideration Shares to be issued will be calculated on a relative net asset value basis as set out in Part 4 of this Circular.
Had the Merger been effected in accordance with the scheme illustration set out in Part 4 of this document, the number of Consideration Shares that would have been issued to Neptune Shareholders would have been approximately 2.38 million (0.2123 Consideration Shares for every Neptune Share held). The Consideration Shares would, on this basis, have represented approximately 21.2% of the Enlarged Company. The Consideration Shares would have been issued to all Neptune Shareholders pro rata to their holdings in Neptune (assuming no dissenting Shareholders).
In November 2015, Shareholders approved proposals to merge the Company's three classes of ordinary shares namely the Old Ordinary Shares, C Shares and D Shares following realisation of its structured products and consequent alignment of the investment strategy of the three classes. The final structured product was sold in February 2017 and the merger of the classes completed on 1 August 2017.
Subject to Shareholders' approval, it is proposed that the Company's Articles be altered to remove reference to the Old Ordinary Shares and C Shares and the respective rights attached to them. There are no proposed amendments to the rights attached to the Company's remaining ordinary shares.
Pursuant to section 596 of CA 2006, the Company is obliged to obtain an independent valuer's report that the net assets of Neptune to be accepted by the Company in consideration for the issue of the Consideration Shares have been valued on a reasonable basis. Accordingly, prior to the allotment of the Consideration Shares, the Company will be posting to Neptune Shareholders (or their receiving agent) and uploading on to the Company's website a valuation report which will be prepared by the Independent Valuer (the "Section 593 Report"). The Section 593 Report will confirm to the Company that the value of Neptune's assets and liabilities which are being transferred to the Company as part of the Merger is not less than the aggregate amount treated as being paid up on the Consideration Shares being issued to Neptune Shareholders pursuant to the Scheme.
The portfolio of assets which will be transferred to the Company by Neptune as part of the Scheme are all considered to be in line with the Company's investment policy. The extent of the liabilities (if any) which will be transferred to the Company by Neptune as part of the Scheme will be those which are incurred in the ordinary course of business. The contribution towards the costs of the merger which is to be borne by the Neptune shareholders will be reflected in the valuation of Neptune's assets.
The information contained in this document is based on current UK law and practice, is subject to changes therein, is given by way of general summary and does not constitute legal or tax advice. If you are in any doubt about your position, or if you may be subject to tax in a jurisdiction other than the UK, you should consult your independent financial adviser.
The implementation of the Merger should not affect the status of the Company as a VCT or the tax
reliefs obtained by Shareholders on subscription of existing Shares. It is the intention of the Board to continue to comply with the requirements of ITA 2007 following implementation of the Scheme so that the Enlarged Company continues to qualify as a VCT.
It is proposed that, if the Merger is approved, it is intended that the Board of the Enlarged Company will be:
Subject to Shareholders' support for the proposed Merger, I would like to take this opportunity to welcome Diane Seymour-Williams to the Board and to thank the outgoing member of the Neptune Board, David Kempton, for the constructive way in which the discussions leading to these proposals have been conducted.
If the Merger is not approved, the Board will remain as it is currently constituted.
The Offer provides the opportunity for Existing Shareholders and new Investors to invest in the Company. The previous top-up offer, which closed early on 2 February 2017, raised approximately £3.5 million, net of offer costs, and the Directors believe that the Enlarged Company can benefit from raising further funds over the coming months to support its investment programme and to bring down costs per share across the Company. The terms of the Offer are intended to be substantially similar to those of the previous top-up offer and key information regarding the expected timetable, statistics and costs are set out on page 3.
Offer Shares to be issued will rank pari passu with the Company's Existing Shares and the Consideration Shares, other than that they will not be entitled to any dividend in respect of the year to 28 February 2018. The Company's Shares may be held in certificated or uncertificated form (through CREST) and no fractions of Shares will be issued.
Shareholder approval, pursuant to CA 2006, is required to issue Consideration Shares and Offer in connection with the Merger and the Offer respectively. Accordingly, Shareholders are being asked to approve an allotment authority of up to 5 million Consideration Shares and up to 15 million Offer Shares.
A specific resolution to approve the acquisition of the assets and liabilities of each of Neptune pursuant to the Scheme is not required under the Listing Rules or any other regulations which govern the Company but such a resolution is included as part of the Resolutions to be proposed at the General Meeting. Additionally, pursuant to section 596 CA 2006, the Company is obliged to obtain an independent valuer's report that the net assets of Neptune-Calculus VCT to be accepted by the Company in consideration for the issue of the Consideration Shares have been valued on a reasonable basis.
Where Neptune Shareholders hold their shares in certificated form, they will receive a new certificate for the Consideration Shares issued pursuant to the Merger and existing certificates will no longer be valid. Where Neptune Shareholders hold their shares in uncertificated form, their CREST accounts will be credited with the replacement holding in Consideration Shares. Any fractions of shares will be retained for the benefit of the Enlarged Company.
Before taking any action, you are recommended to read the further information set out in this document.
Shareholders will find enclosed with this document the form of proxy for use at the General Meeting.
Whether or not you propose to attend the General Meeting, you are requested to complete and return the form of proxy attached so as to be received not less than 48 hours before the time appointed for holding of the General Meeting. Completion and return of a form of proxy will not prevent you from attending and voting in person at the General Meeting, should you wish to do so.
The Board is of the opinion that the Resolutions to be proposed at the General Meeting are in the best interests of the Shareholders as a whole and, with the exception of John Glencross in respect of the resolution approving the amendments to the investment management agreement (Resolution 6), unanimously recommends you to vote in favour of all the Resolutions as they intend to do in respect of their own holdings representing 1.7% of the voting rights in the Company.
I look forward to welcoming you at the Meeting and to your support for the Resolutions to be proposed at them.
Yours faithfully
Chairman
Shareholders and prospective Shareholders should consider carefully the following risk factors in addition to the other information presented in this document as a whole. If any of the risks described below were to occur, it could have a material effect on the Company's businesses, financial condition or results of operations. The risks and uncertainties described below are not the only ones the Company, the Board or investors in the Shares will face. Additional risks not currently known to the Company or the Board, or that the Company or the Board currently believe are not material, may also adversely affect the Company's businesses, financial condition and results of operations. The value of Shares could decline due to any of these risk factors, and investors could lose part or all of their investment. Investors who are in any doubt about what to do should consult their independent financial adviser. The attention of prospective investors is drawn to the following risks:
Completion of the Scheme is dependent upon a number of conditions precedent being fulfilled, including the approval of both Shareholders and Neptune Shareholders, and also on notice of dissent not being received from Neptune Shareholders holding more than 10% in nominal value of the issued share capital of Neptune. Whilst the Board has identified a number of potential benefits for the Enlarged Company, there is no certainty that these benefits will lead to improved prospects for the Enlarged Company. If the Scheme does not become unconditional, the Company will have to bear costs incurred in its preparation which would no longer be offset by cost savings going forward.
Pursuant to the Merger, the Company will indemnify the liquidators of Neptune against any costs or losses arising from its liquidation and so may incur costs if creditors, or other liabilities of Neptune, come to light following the completion of the Merger.
The value of Shares and the income from them can fluctuate and Investors may not get back the amount they invested. In addition, there is no certainty that the market price of Shares will fully reflect the underlying Net Asset Value or that Shareholders will be able to realise their shareholding or that dividends will be paid. Investment in the Company should be seen as a long-term investment. The past performance of the Company, Neptune or of other funds managed by Calculus Capital, the investment manager to the Company, is not necessarily an indication of the future performance of the Enlarged Company.
The Net Asset Value of the Shares will reflect the values and performance of the underlying assets in the respective portfolios. The value of the investments and income derived from them can rise and fall. Realisation of investments in unquoted companies can be difficult and may take considerable time. There may also be constraints imposed on the realisation of investments in order to maintain the VCT status of the companies which may restrict the Company's ability to obtain maximum value from its investments or to achieve the intended timing of distributions. To be qualifying holdings, VCT funds must be invested in smaller companies with gross assets of not more than £15 million prior to the investment (£16 million post investment). In addition, to be qualifying holdings, VCT funds must be invested in companies which have no more than 250 full time (equivalent) employees and do not obtain more than £5 million of investment from VCTs, companies under the corporate venturing scheme and individuals claiming relief under the Seed Enterprise Investment Scheme and/ or Enterprise Investment Scheme in any rolling 12-month period (and, in most cases, £12 million over entire their lifetime).
There can be no guarantee that suitable investment opportunities will be identified in order to meet the Company's objectives. Although the Company may receive conventional venture capital rights in connection with its investments, as a minority investor it will not be in a position to fully protect its interests. Investment in smaller and unquoted companies involves a higher degree of risk than investment in larger companies and those traded on the main market of the London Stock Exchange. Smaller companies generally may have limited product lines, markets or financial resources and may be more dependent on their management or key individuals than larger companies. Markets for smaller companies' securities may be less regulated and are often less liquid, and this may cause difficulties in valuing and disposing of equity investments in such companies.
Although the existing Shares issued by the Company have been (and it is anticipated that the Consideration Shares and the Offer Shares will be) admitted to the Official List of the UK Listing Authority and traded on the London Stock Exchange's market for listed securities, it is unlikely that there will be a liquid market as there is a limited secondary market for VCT shares and investors may find it difficult to realise their investments. The market price of the Shares may not fully reflect, and will tend to be at a discount to, their underlying net asset value. Such a discount may be exacerbated by the availability of income tax relief on the issue of new VCT shares. If the Company lacks sufficient cash reserves to purchase its own Shares and during prohibited periods when the Company may be unable to purchase its own Shares the market price of Shares may not fully reflect, and will tend to be at a discount to, their underlying net asset value.
The information, including tax rules, contained in this document is based on existing legislation. The tax rules or their interpretation in relation to an investment in the Company and/or the rates of tax, or other statutory provisions to which the Company is subject, may change during the life of the Company and such changes could be retrospective.
If an investor who subscribes for Shares disposes of those Shares within five years, the investor is likely to be subject to claw back by HMRC of any income tax relief originally obtained on subscription.
While it is the intention of the Directors that the Company will be managed so as to continue to qualify as a venture capital trust, there can be no guarantee that this status will be maintained. A failure to meet the qualifying requirements could result in the loss of tax reliefs previously obtained, resulting in adverse tax consequences for investors, including a requirement to repay the income tax relief obtained, and could also cause the Company to lose its exemption from corporation tax on capital gains.
Shareholders may be adversely affected by the performance of the investments, whether acquired from Neptune or made by the Company. The performance of the investments in Neptune as well as the investments of the Company may restrict the ability of the Company following the Merger to distribute any capital and revenue gains achieved on the investments transferred from Neptune to the Company (as well as investments made by the Company).
Shareholders may be adversely affected by a change in the VCT status of the Company if a number of the investments acquired from Neptune, or the investments of the Company, are or become unable to meet VCT requirements.
On the Effective Date, the Liquidators of Neptune shall receive all the cash, undertakings and other assets and liabilities of Neptune and shall deliver to the Company:
On the Effective Date, the Company and the Liquidators (on behalf of Neptune) will enter into the Transfer Agreement (subject to such modifications as may be agreed between the parties thereto) pursuant to which the Liquidators will procure the transfer of all of the assets and liabilities of Neptune to the Company in exchange for the issue of Consideration Shares (credited as fully paid up) to the Neptune Shareholders on the basis set out below.
In further consideration of such transfer of assets and liabilities of Neptune to the Company, the Company will, pursuant to the Transfer Agreement, undertake to pay all liabilities incurred by the Liquidators including, but not limited to, the implementation of the Scheme, the winding up of Neptune and the purchase for cash of any holdings of dissenting Neptune Shareholders.
The number of Consideration Shares to be issued to the holders of Neptune Shares (save for any dissenting Neptune Shareholders) will be calculated as follows:
The Roll-Over Value of Neptune will be calculated as:
$$
A-(B+C)
$$
$$
D
$$
where:
The Merger Value per Ordinary Share will be calculated as follows:
E – F
G
The number of Consideration Shares to be issued to Neptune Shareholders (save for any dissenting shareholders) will be calculated as follows:
H x J I
Where:
H = the Roll-Over Value;
I = the Merger Value; and
J = the number of Neptune Shares in issue as at close of business on the Record Date (save for any such shares held by dissenting Neptune Shareholders).
The number of Consideration Shares to be issued pursuant to the Scheme will not be greater than 5 million and will be issued directly to Neptune Shareholders pro rata to their existing holdings (disregarding Neptune Shares held by dissenting Neptune Shareholders) on the instruction of the Liquidators by applying the Merger Ratio to Neptune Shareholders' holdings of Neptune Shares.
The Merger Ratio will be rounded down to four decimal places and entitlements will be rounded down to the nearest whole number of Consideration Shares. Any fractional entitlements of Consideration Shares in respect of each holding of Neptune Shares (which, in each case, will not exceed £1) will be retained for the benefit of the Enlarged Company.
As at 30 June 2017, the unaudited NAV of a Neptune Share (taken from the Neptune management accounts to that date) was 29.66p. The Roll-Over Value, had the Scheme been completed on that date and calculated as set out above) would have been 18.71p (assuming no dissenting Neptune Shareholders).
The number of Consideration Shares that would have been issued to Neptune Shareholders, had the Scheme been completed on 30 June 2017 and calculated as set out above, would have been 2,379,931 (0.2123 Consideration Shares for every Neptune Share held).
The Scheme is dependent on:
Provided that a Neptune Shareholder does not vote in favour of the first resolution to be proposed at the First Neptune Meeting, such Neptune Shareholder may, within seven days following the First Neptune Meeting, express his/her dissent to the Liquidators in writing at the registered office of the Company and require the Liquidators to purchase that Neptune Shareholder's holding.
The Liquidators will offer to purchase the holdings of dissenting Neptune Shareholders at the break value price of a Neptune Share, this being an estimate of the amount a Neptune Shareholder would receive per Neptune Share in an ordinary winding-up of Neptune if all of the assets of Neptune had to be realised. The break value of a Neptune Share is expected to be significantly below the unaudited NAV per Neptune Share due to the nature of the underlying assets. Neptune Shareholders should also be aware that a purchase by the Liquidators will be regarded as a disposal for HMRC purposes, thereby triggering the repayment of up-front income tax relief received on the original subscription if the Neptune Shares have not been held for the requisite holding period to maintain such relief.
The provisions of the Scheme shall have effect subject to such non-material modifications or additions, which may include changes to the timetable, as the parties to the Transfer Agreement may from time to time approve in writing.
The Liquidators and the Company shall be entitled to act and rely, without enquiry, on any information furnished or made available to them or any of them, as the case may be, in connection with the Scheme and the Transfer Agreement including, for the avoidance of doubt, any certificate, opinion, advice, valuation, evidence or other information furnished or made available to them by the Companies, the Boards, any individual director of the Companies, Calculus Capital, the Registrar or the custodians or bankers of the Companies or its or their other professional advisers and the Liquidators shall not be liable or responsible for any loss suffered as a result thereof.
Nothing in the Scheme or in any document executed under or in connection with the Scheme shall impose any personal liability on the Liquidators or either of them save for any liability arising out of any negligence, breach of duty or other default by the Liquidators in the performance of their duties and this shall, for the avoidance of doubt, exclude any such liability for any action taken by the Liquidators in accordance with the Scheme or the Transfer Agreement.
Prior to the allotment of the Consideration Shares pursuant to the Scheme, the Company will provide to Neptune Shareholders who participate in the Merger, and will upload onto its website, the Section 593 Report prepared by an Independent Valuer. The Section 593 Report will confirm that the value of the assets and liabilities being transferred by Neptune to the Company as part of the Merger is not less than the aggregate amount treated as being paid up on the Consideration Shares being issued to Neptune Shareholders pursuant to the Scheme.
The Scheme shall, in all respects, be governed by and construed in accordance with the laws of England and Wales
The Company and the Directors accept responsibility for the information in this document. To the best of the knowledge and belief of the Company, the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.
As at 3 August 2017 (this being the latest practicable date prior to publication of this document), the Company is not aware of any person who has, or immediately following the issue of Consideration Shares pursuant to the Scheme will have, an interest in the Company's capital and voting rights which is notifiable under UK law (under which, pursuant to CA 2006 and the Listing Rules and the Disclosure Guidance & Transparency Rules of the FCA, a holding of 3% or more of the voting rights of each class of Share must be notified to the Company). No shares are held in treasury.
On 1 August 2017, the Company merged its three classes of shares (Old Ordinary Shares, C Shares and D Shares) into a single class of Ordinary Shares on a relative net assets basis by the conversion of a number of Old Ordinary Share and C Shares into deferred shares which were then repurchased by the Company for nominal consideration.
Apart from the above, there has been no significant change in the financial or trading position of the Company which has occurred since 28 February 2017, being the end of the last financial period for which either audited financial information or interim financial information has been published.
Detailed pro forma financial information as to the position of the Company immediately following the Merger is set out in Part 6 of the Prospectus.
The Directors' and Proposed Director's shareholdings in the Company and Neptune are as set out in the table below.
| Name of Director/Proposed Director | Shares held in the Company | Shares held in Neptune |
|---|---|---|
| Michael O'Higgins | 79,383 Ordinary Shares | - |
| Steven Meeks | 7,838 Ordinary Shares | - |
| Kate Cornish-Bowden | 37,301 Ordinary Shares | 134,059 ordinary shares |
| John Glencross | 23,796 Ordinary Shares | 85,942 ordinary shares |
| Diane Seymour-Williams | 2,884 Ordinary Shares | 54,504 ordinary shares |
Michael O'Higgins, Steven Meeks and John Glencross were appointed under letters of appointment dated 22 February 2010. Kate Cornish-Bowden was appointed under a letter of appointment dated 10 February 2011. The appointments are subject to an initial period expiring immediately following the first annual general meeting, and (subject to re-election at the first annual general meeting) thereafter the appointments may be terminated on 3 months' notice. The total annual remuneration receivable by Michael O'Higgins as chairman is £20,000 (plus applicable employers' National Insurance Contributions). The total annual remuneration receivable by Steve Meeks and Kate Cornish-Bowden is £15,000 each (plus applicable employers' National Insurance Contributions). John Glencross does not receive any remuneration from the Company in respect of his appointment. Aggregate Directors' emoluments for the year ended 28 February 2017 were £50,000 (plus applicable employers' National Insurance Contributions).
Diane Seymour-Williams will be appointed on the same terms as Steve Meeks and Kate Cornish-Bowden on completion of the Merger.
If the Merger does not proceed, the Board will remain as currently constituted.
A summary of the material contracts reasonably required by Shareholders in order to make a properly informed assessment of how to vote is set out below.
The following contracts will be entered into, subject, inter alia, to the approval by Shareholders of the Resolution 1 at the General Meeting and the Scheme becoming effective.
Calculus Capital Limited has consented to the issue of this Circular with the inclusion of references to their name appearing in the form and context in which they appear.
RW Blears LLP has consented to the issue of this Circular with the inclusion of references to their name appearing in the form and context in which they appear.
Beaumont Cornish Limited has consented to the issue of this Circular with the inclusion of references to their name appearing in the form and context in which they appear.
Jeffreys Henry LLP has consented to the issue of this Circular with the inclusion of references to their name appearing in the form and context in which they appear.
Copies of the following documents will be available for inspection during normal business hours on any day (Saturdays, Sundays and public holidays excepted) from the date of this document until the Effective Date at the offices of RW Blears LLP at 29 Lincoln's Inn Fields, London WC2A 3EG and also at the registered office of the Company:
9.4 the material contracts referred to in paragraph 4 of Part 9 of the Prospectus being contracts entered into otherwise than in the ordinary course of business to which the Company is a party including the material contracts of which details are provided in paragraph 6 above;
9.5 a draft (subject to non-material updating and amendment) of the Transfer Agreement;
In this Circular and in the notice attached the following expressions have the following meanings:
| "Admission" | the date on which the Consideration Shares are listed on the Official List of the UK Listing Authority and admitted to dealing on the LSE's main market for listed securities |
|---|---|
| "Annual Report" | the annual report and financial statements of the Company for the year ended 28 February 2017 |
| "Articles" | the articles of association of the Company, as amended from time to time |
| "Board" | the board of directors of the Company |
| "Boards" | the Board and the Neptune Board |
| "Business Day" | any day (other than a Saturday or Sunday) on which clearing banks are open for normal banking business in the City of London |
| "CA 2006" | Companies Act 2006, as amended |
| "Calculation Date" | the date on which the number of Consideration Shares to be issued is determined, this being after the close of business on 11 September 2017 |
| "Calculus Capital" | Calculus Capital Limited, the Company's and Neptune's venture capital investment manager |
| "Circular" | this document |
| "Companies" | the Company and Neptune |
| "Company" or "Calculus VCT" | Calculus VCT plc (company number: 07142153) |
| "Consideration Shares" | the new shares to be issued by the Company to the shareholders of Neptune in accordance with the Merger (and each a "Consideration Share") |
| "C Shares" | the C ordinary shares in the capital of the Company which were merged with the D Shares and the Old Ordinary Shares pursuant to the Share Class Merger |
| "D Shares" | the D ordinary shares in the capital of the Company which were merged with the C Shares and the Old Ordinary Shares pursuant to the Share Class Merger |
| "Directors" | the Directors and the Proposed Director of the Company whose names are set out on page 25 of this circular |
| "Due Share of Merger Costs" | a proportion of the Merger Costs to be borne by the Companies and by the Manager in equal thirds (estimated to be approximately £50,000 in respect of the Company) |
| "Effective Date" | the date on which the Merger will be completed, anticipated as being 12 September 2017 |
| "Enlarged Company" | the Company, following implementation of the Merger |
| "Existing Shareholders" | holders of Shares in the Company as at the date of this document |
| "FCA" | the Financial Conduct Authority |
| "First Neptune Meeting" | the general meeting of Neptune to be held on 31 August 2017 |
| "FSMA" | the Financial Services and Markets Act 2000, as amended |
| "General Meeting" or "Meeting" the general meeting of the Company to be held on 31 August 2017 convened in accordance with notice enclosed with this circular; |
|
| "HMRC" | HM Revenue & Customs |
| "IA 1986" | Insolvency Act 1986, as amended |
|---|---|
| "Independent Valuer" | Jeffreys Henry LLP |
| "Investor" | an individual who subscribes for Offer Shares pursuant to the Offer |
| "ITA 2007" | Income Tax Act 2007, as amended |
| "Liquidators" | Gareth Harris and Keith Marshall of RSM Restructuring Advisory LLP being the proposed liquidators for Neptune |
| "Listing Rules" | the listing rules of the UKLA |
| "London Stock Exchange" or "LSE" |
London Stock Exchange plc |
| "Merger" | the arrangements for merging the Company and Neptune being, primarily, the Scheme and the revised management arrangements applying to the Enlarged Company |
| "Merger Costs" | the costs of the Merger to borne by the Company, Neptune and the Manager, which are estimated to be £150,000 |
| "Merger Ratio" | the Roll-Over Value divided by the Merger Value rounded down to four decimal places |
| "Merger Regulations" | Venture Capital Trusts (Winding-up and Mergers) (Tax) Regulations 2004 |
| "Merger Value" | the value of an Ordinary Share, calculated in accordance with Part 4 of this document |
| "NAV" | net asset value |
| "Neptune" | Neptune-Calculus Income and Growth VCT plc (company number: 05300876) |
| "Neptune Assets" | assets of Neptune which are transferred to the Company by the Liquidators pursuant to the Scheme |
| "Neptune Board" | the board of directors of Neptune |
| "Neptune Circular" | the circular to the Neptune Shareholders published on 4 August 2017 |
| "Neptune Meetings" | the First Neptune Meeting and the Second Neptune Meeting |
| "Neptune Shareholders" | holders of Neptune Shares (and each a "Neptune Shareholder") |
| "Neptune Shares" | the ordinary shares of 10p each in the capital of Neptune (and each a "Neptune Share") |
| "New Shares" | the Offer Shares and/or the Consideration Shares (as the context dictates) |
| "Offer" | the offer to raise up to £5 million (with an over-allotment facility of up to an additional £5 million) by issues of new Ordinary Shares in the capital of the Company, as set out in Part 3 of the Prospectus |
| "Offer Shares" | the new Ordinary Shares to be issued pursuant to the Offer |
| "Official List" | the official list of the UKLA |
| "Old Ordinary Shares" | the separate class of ordinary shares of the Company in issue prior to the Share Class Merger |
| "Overseas Shareholders" | Shareholders who are not resident in the UK |
| "Proposed Director" | Diane Seymour-Williams |
| "Prospectus" | the prospectus published by the Company dated 4 August 2017 |
| "Record Date" | the record date by reference to which entitlements will be allocated pursuant to the Merger, anticipated as being 4 September 2017 |
| "Related Party Transaction" | the related party transaction as described in Part 2 of this circular |
|---|---|
| "Roll-Over Value" | the value of a Neptune Share, calculated in accordance with Part 4 of this document |
| "Second Neptune Meeting" | the general meeting of Neptune to be held on 12 September 2017 |
| "Scheme" | the proposed merger of the Company with Neptune by means of placing Neptune into members' voluntary liquidation pursuant to Section 110 of IA 1986 and the acquisition by the Company of all of Neptune's assets and liabilities in consideration for the issue of Consideration Shares |
| "Share Class Merger" | the merger of the Old Ordinary Shares, C Shares and D Shares of the Company to create a single class of Ordinary Shares, which was approved by Shareholders on 24 November 2015 and completed on 1 August 2017 |
| "Shareholder" | a holder of Shares in the Company |
| "Shares" or "Ordinary Shares" | ordinary shares of 1p each in the capital of the Company |
| "TCGA 1992" | Taxation of Chargeable Gains Act 1992, as amended |
| "Transfer Agreement" | the agreement between the Company and Neptune (acting through the Liquidators) for the transfer of all of the assets and liabilities of Neptune by the Liquidators to the Company pursuant to the Scheme |
| "UK" | the United Kingdom |
| "UKLA" or "UK Listing Authority" |
the UK Listing Authority, being the Financial Conduct Authority acting in its capacity as the competent authority for the purposes of Part 6 of the Financial Services and Market Act 2000 |
| "VCT" or "venture capital trust" |
a company satisfying the requirements of Chapter 3 of Part 6 of ITA 2007 for venture capital trusts |
| "VCT Rules" | the legislation, rules and HMRC interpretation and practice regulating the establishment and operation of venture capital trusts |
Michael O'Higgins (Chairman) Kate Cornish-Bowden Arthur John Glencross Steven Guy Meeks
Diane Seymour-Williams
Calculus Capital Limited 104 Park Street London W1K 6NF
Telephone: 020 7493 4090 Website: www.calculuscapital.com
Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU
RW Blears LLP 29 Lincoln's Inn Fields London WC2A 3EG
Independent Valuer Jeffreys Henry LLP 5-7 Cranwood St London EC1V 9EE
104 Park Street London W1K 6NF
Telephone: 020 7493 4090
Registrars
The City Partnership (UK) Limited 110 George Street Edinburgh EH2 4LH
The City Partnership (UK) Limited 110 George Street Edinburgh EH2 4LH
Beaumont Cornish Limited 2nd Floor Bowman House 29 Wilson Street London EC2M 2SJ
(Registered in England and Wales with registered number 07142153)
Notice is hereby given that a general meeting of Calculus VCT plc (the "Company") will be held at 11.00 a.m. on 31 August 2017 at 104 Park Street, London W1K 6NF for the purposes of considering and, if thought fit, passing the following resolutions, of which resolutions 1, 2 and 6 will be proposed as ordinary resolutions and resolutions 3, 4 and 5 will be proposed as special resolutions.
All capitalised terms used in this notice of meeting shall bear the meanings given to them in the circular to shareholders dated 4 August 2017 (the "Circular").
This resolution is additional to and does not revoke or replace existing and unexercised authorities previously granted to the Directors to allot Shares or grant rights to subscribe for or convert securities into Ordinary Shares.
The power granted by this resolution will expire on on the fifth anniversary of the passing of this resolution save that the Company may, before such expiry make offers or agreements which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of any such offer or agreement notwithstanding that the power conferred by this resolution has expired.
By Order of the Board
Calculus Capital Limited
Resolution 1 is a composite resolution to approve the acquisition of all of the assets and liabilities of Neptune under the Scheme and create and issue Consideration Shares in connection with the Merger. Paragraph 1.1 of the resolution will seek the approval of Shareholders for the purchase by the Company of all of the assets and liabilities of Neptune. Paragraph 1.2 of the resolution will authorise the Directors pursuant to section 551 of the CA 2006 to allot up to 5 million Consideration Shares in the Company. The authority conferred by paragraph 1.2 of the resolution will expire on the fifth anniversary of the date of the passing of this resolution unless renewed, varied or revoked by the Company in general meeting.
If passed, this resolution will authorise the Directors to issue Ordinary Shares in accordance with section 551 of the CA 2006 up to a maximum nominal amount of £150,000 (being 15 million Ordinary Shares). The authority granted by this resolution will expire on the fifth anniversary of the date of the passing of this resolution. The Directors intend to exercise this authority in order to allot Offer Shares as set out in the Prospectus. This resolution is additional and does not revoke the general authority granted at the Company's last annual general meeting.
Resolution 3 allows the Directors to issue the new Ordinary Shares referred to in Resolutions 1 and 2 without first offering them to existing Shareholders in proportion to their holdings.
Resolution 4 gives the Board authority, subject to court approval, to reduce or cancel the share premium account of the Company. If the share premium account is reduced then, unless the court orders otherwise, the reserve created by the cancellation will be treated as a realised profit which can be used, amongst other things, to pay dividends. The Directors intend to utilise this authority shortly after the completion of the Merger.
Resolution 5 seeks Shareholder authority to make a number of 'tidying up' changes to the Company's articles of association following the recently completed Share Classes Merger. These changes consist chiefly of removing extraneous references to the C Shares and D Shares, which no longer exist following the Share Class Merger and the subsequent re-designation of all Shares as a single class of Ordinary Shares. The amended Articles (and a document showing the marked up changes proposed to the existing articles of association) will be available for inspection at the Company's registered office throughout the notice period for the General Meeting and at the General Meeting itself.
Resolution 6 seeks approval for the amendment of the investment management agreement with Calculus Capital to reduce the cost cap. John Glencross, as the chief executive of Calculus Capital and a non-independent Director, is a related party and will not therefore be voting on this resolution.
Person has no such proxy appointment right or does not wish to exercise it, he/she may have a right under such an agreement to give instructions to the member as to the exercise of voting rights at the meeting.
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