Announcements

Northern 3 VCT PLC.

JOINT ANNOUNCEMENT

 

NORTHERN 3 VCT PLC 
NORTHERN AIM VCT PLC

 

17 August 2011

 

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

 

SUMMARY

 

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

 

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

 

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

 

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

 

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

 

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

 

BACKGROUND

 

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

 

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

 

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

 

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

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

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

 

 

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

 

EXPECTED TIMETABLES

 

EXPECTED TIMETABLE FOR NORTHERN 3

 

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

 

Prospectus and circular to shareholders (including notice of the Northern 3 GM) published 16 August 2011
Latest time for receipt of forms of proxy for the Northern 3 GM 2.15pm on Monday 12 September 2011
Northern 3 GM   2.15pm on Wednesday 14 September 2011
Calculation Date after 5.00pm on 23 September 2011
Effective Date for the transfer of the assets and liabilities of Northern AIM to Northern 3 and the issue of Consideration Shares to Northern AIM Shareholders 26 September 2011
Announcement of the results of the Scheme 26 September 2011
Admission of and dealings in the New Shares to commence 27 September 2011
CREST accounts credited with the New Shares 27 September 2011
Certificates for the New Shares dispatched By 11 October 2011

 

EXPECTED TIMETABLE FOR NORTHERN AIM

 

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

 

Latest time for receipt of forms of proxy for the Northern AIM GM 1 12.30pm on Wednesday 14 September 2011
Northern AIM GM 1 12.30pm on Friday 16 September 2011
Latest time for receipt of forms of proxy for the Northern AIM GM 2 12.30pm on Saturday 24 September 2011
Record Date for Northern AIM shareholders' entitlements under the Scheme 23 September 2011
Northern AIM Register of Members closed 23 September 2011
Calculation Date after 5.00pm on 23 September 2011
Dealings in Northern AIM Shares suspended 7.30am on 26 September 2011
Northern AIM GM 2 12.30pm on Monday 26 September 2011
Effective Date for the transfer of the assets and liabilities of Northern AIM to the Company 26 September 2011
Announcement of the results of the Scheme 26 September 2011
Cancellation of the Northern AIM Shares' listing 7.30am on 27 September 2011
Payment of the Special Dividend 7 October 2011

 

BACKGROUND TO NORTHERN AIM AND NORTHERN 3

 

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

 

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

 

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

 

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

 

DOCUMENTS AND APPROVALS

 

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

 

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

 

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

 

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

 

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

 

The directors of Northern 3 accept responsibility for the information relating to Northern 3 and its directors contained in this announcement.  To the best of the knowledge and belief of such directors (who have taken all reasonable care to ensure that such is the case), the information relating to Northern 3 and its directors contained in this announcement, for which they are solely responsible, is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

The directors of Northern AIM accept responsibility for the information relating to Northern AIM and its directors contained in this announcement.  To the best of the knowledge and belief of such directors (who have taken all reasonable care to ensure that such is the case), the information relating to Northern AIM and its directors contained in this document, for which they are solely responsible, is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

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

 

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




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Source: Northern 3 VCT PLC via Thomson Reuters ONE

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