Albion VCTs Merger Proposal Set for Major Restructuring

Proposed Merger and Strategic Offers

Proposed Merger and Strategic Offers

Albion Venture Capital Trust PLC (AAVC) with LEI Code 213800JKELS32V2OK421, is taking a significant step towards enhancing efficiency through a recommended restructuring. The plan involves merging six key entities into three, specifically: Albion Technology & General VCT PLC (AATG), Albion Development VCT PLC (AADV), Albion Crown VCT PLC (CRWN), Albion Enterprise VCT PLC (AAEV), Albion KAY VCT PLC (KAY), and of course, AAVC itself.

Overview of the Merger

In recent discussions, the boards of the Albion VCTs recognized the potential advantages of merging the six distinct entities into three focused groups. This initiative aims at realizing operational and administrative efficiencies while also delivering a streamlined structure for shareholders. Following preliminary agreements, the respective boards have moved forward by issuing a joint circular that details this plan.

Details of the Merger

The anticipated mergers, which will be decided on in respective shareholder meetings, aim to transfer assets and liabilities among the groups involved. For example, AADV will merge into AAEV, KAY into AATG, and AAVC into CRWN. This restructuring is designed to maintain equity values while optimizing management resources.

The merger agreements allow for the issuance of new shares based on the respective net asset values of the transferring entities. As the teams align their operational strategies, shareholders are anticipated to benefit from the agility gained through these consolidations.

Benefits Expected from the Merger

Shareholders can look forward to several advantages as a result of this consolidation:

• Projected cost savings will total around £1.5 million annually, with a noticeable reduction in management and administrative expenses.
• The merger will simplify the investment landscape for shareholders who hold interests across multiple Albion entities.
• Enhanced long-term stability and resilience for sustained returns are expected.
• Albion Capital's focus on investment management will improve as combined resources will facilitate better strategic decisions.
• Greater compliance ease and investment flexibility will enhance the ability of the merged entities to deliver value to investors.

Offers for Subscription

With the impending mergers driving operational synergy, the Acquirer VCTs are preparing offers for subscription. This opens the door for both current shareholders and new investors to participate in the offerings, thus benefiting from favorable VCT tax reliefs. Notably, the VCT scheme has been extended, providing a generous window for investors up until at least April 2035.

The specifics of these offers include:

• AAEV Offer: up to £10 million, with an additional £10 million available through over-allotment.
• AATG Offer: targeted at £20 million, also allowing for an additional £10 million via over-allotment.
• CRWN Offer: seeking £20 million with an optional £10 million for over-allotment.

The opportunity to apply for these offers opens on 6 January 2025 and will close on 4 April 2025, unless filled prior to that date.

Related Party Transactions

Post-merger, adjustments to investment management fee arrangements will be introduced for AAEV and CRWN as part of our strategic shift to align performance incentives with shareholder outcomes. This evolution is designed to foster fair compensation tailored to shareholder value creation.

In accordance with regulators, these arrangements require shareholder approvals, which will be sought in upcoming general meetings.

Strategic guidance from financial advisors ensures that these arrangements are optimal for current shareholders, maintaining fair and beneficial transactions throughout the process.

Timelines for the Merger Implementation

Expected timelines indicate a significant push for merger completion by mid-December 2024. Reservations for proxy submissions and general meetings are on the agenda as we work to align varied timelines across different entities involved in the merger.

Shareholders will gain relevant updates throughout this transition, ensuring all parties remain informed and engaged.

The Path Forward

In summary, the merger between Albion VCTs stands to bolster shareholder value through enhanced operational efficiency, significant cost savings, and a clearer investment strategy. The community of stakeholders is invited to participate actively in this transformative journey.

Frequently Asked Questions

What is the purpose of the merger proposal?

The merger aims to consolidate six Albion VCTs into three to enhance efficiency, reduce costs, and simplify the investment structure for shareholders.

When will the offers for subscription open?

The offers for subscription are set to open on 6 January 2025 and will close on 4 April 2025, unless filled sooner.

What benefits can shareholders expect from the merger?

Shareholders can anticipate annual cost savings, improved management focus, and a more streamlined experience in monitoring their investments.

How will the management fee arrangements change?

Post-merger, management fee structures will be revised to better align with outcomes achieved for shareholders, promoting fairness and value.

Where can shareholders find more information?

More information will be made available through the Companies' website, and a copy of the Circular will be circulated for comprehensive shareholder insight.

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