Octopus Apollo VCT plc ("Apollo") Octopus Eclipse VCT plc ("Eclipse")
(together the "Companies")
4 November 2016
Publication of a Prospectus (the "Prospectus") and Circulars (the "Circulars") in connection with recommended proposals to merge the Companies (to be completed pursuant to a scheme of reconstruction (the "Scheme" or "Merger") under section 110 Insolvency Act 1986) and an offer for subscription by Apollo.
On 27 September 2016, the boards of Apollo and Eclipse (the "Boards") announced that they had entered into discussions to merge the Companies into one company (the "Enlarged Company") and the Apollo Board announced that it also intended to raise further funds into Apollo pursuant to an offer for subscription (the "Offer"). The Boards are pleased to advise that discussions have now concluded and that the Companies have today issued the Circulars to set out the proposals for the Merger for consideration by their respective shareholders and that Apollo has issued a Prospectus relating to the Offer and Merger. The Companies have similar investment mandates and are both managed by Octopus Investments Limited ("Octopus").
The Offer
Apollo is seeking to raise £20 million under the Offer, which is subject to the approval of the Apollo shareholders. The expected timetable for the Offer is set out below.
The Scheme
The Merger is expected to deliver a number of additional benefits to shareholders including:
- participation in a larger VCT with a more diversified portfolio, thereby spreading the portfolio risk across a broader range of investments;
- efficiencies in annual running costs and administration for the Enlarged Company compared to the separate companies;
- enhancing the ability of the Enlarged Company to find high quality new investments, raise funds, as well as pay dividends and support buybacks in the future.
The mechanism by which the Merger will be completed is as follows:
- Eclipse will be placed into members' voluntary liquidation pursuant to a scheme of reconstruction under Section 110 IA 1986; and
- all of the assets and liabilities of Eclipse will be transferred to the Company in consideration for the issue of Scheme Shares.
The Scheme will be completed on a relative unaudited net asset value basis, adjusted for the anticipated costs of the Scheme, based on the latest unaudited valuations of the Companies' investments. An accounting firm will review the latest unaudited net asset values of the Companies and valuations of the Companies' investments prior to the Merger becoming effective and will confirm that they have been prepared in accordance with similar principles as would have been used in producing year end accounts. The effect of the Scheme will be that the Eclipse shareholders will receive Apollo shares with the same total net asset value as their Eclipse shares.
The Scheme is conditional upon its approval by the Apollo shareholders and by the Eclipse shareholders, as well as the other conditions set out in the Prospectus and Circulars.
As the Companies have a similar investment objective and policy, the same investment manager and other common advisers, the proposed Merger should be achievable without major additional cost or disruption to the Companies and their combined portfolio of investments.
The aggregate anticipated cost of undertaking the Merger is approximately £331,000, including VAT, legal and professional fees, stamp duty and the costs of winding up Eclipse. The costs of the Merger will be split proportionately between the Companies by reference to their respective net asset values immediately prior to the Merger.
Shareholders and investors should note that the merger by way of the Scheme will be outside the provisions of the City Code on Takeovers and Mergers.
The portfolio of assets which will be transferred from Eclipse to the Company as part of the Scheme is considered to be in keeping with Apollo's investment policy. The extent of the liabilities (if any) which will be transferred from Eclipse to Apollo as part of the Scheme will be those which are incurred in the ordinary course of business and merger costs which remain unpaid at the time of transfer. Any such liabilities are expected to be nominal in comparison to the value of the assets.
Eclipse shareholders who do not vote in favour of the Resolution to be proposed at Eclipse's first general meeting, as referred to in the timetable below, are entitled to dissent and have their shareholding purchased by the liquidators of Eclipse (the "Liquidators") at a price agreed between the dissenting Eclipse shareholders and the Liquidators (or by arbitration), which would be expected to be at a significant discount to the net asset value of an Eclipse share. If the conditions of the Scheme are not satisfied, the Companies will continue in their current form and the Boards will continue to review all options available to them regarding the future of the Companies.
Clearance has been requested from HMRC that the Scheme meets the requirements of the Merger Regulations and, therefore, that the implementation of the Scheme should not affect the status of Apollo as a VCT. It is the intention of the Apollo Board to continue to comply with the requirements of ITA 2007 following the Merger so that Apollo continues to qualify as a VCT.
EXPECTED TIMETABLE, OFFER STATISTICS AND COSTS
Expected Timetable for the Scheme
Apollo
| Latest time and date for receipt of Forms of Proxy for the General Meeting | 2.30 pm on 8 December 2016 |
| General Meeting | 2.30 pm on 12 December 2016 |
| Scheme Calculation Date | after 5.00 pm on 16 December 2016 |
| Scheme Effective Date for the transfer of the assets and liabilities of Eclipse to the Company and the issue of Scheme Shares | 19 December 2016 |
| Announcement of the results of the Scheme | 19 December 2016 |
| Admission of, and dealings in, Scheme Shares issued to commence | 20 December 2016 |
| CREST accounts credited (if applicable) | 20 December 2016 2016 |
| Certificates for Scheme Shares despatched to Eclipse Shareholders | Week commencing 9 January 2017 |
Eclipse
| Latest time for receipt of forms of proxy for the Eclipse First General Meeting | 2.30 pm on 5 December 2016 |
| Eclipse First General Meeting | 2.30 pm on 7 December 2016 |
| Latest time for receipt of forms of proxy for the Eclipse Second General Meeting | 10.30 am on 15 December 2016 |
| Final expected date of trading of the Eclipse Shares | 16 December 2016 |
| Scheme Record Date for Eclipse Shareholders' entitlements under the Scheme | 5.00 pm on 16 December 2016 |
| Scheme Calculation Date | after 5.00 pm on 16 December 2016 |
| Dealings in Eclipse Shares suspended* | 7.30 am on 19 December 2016 |
| Eclipse register of members closed | 9.30 am on 19 December 2016 |
| Eclipse Second General Meeting | 10.30 am on 19 December 2016 |
| Scheme Effective Date for the transfer of the assets and liabilities of Eclipse to the Company and the issue of Scheme Shares | 19 December 2016 |
| Announcement of the results of the Scheme | 19 December 2016 |
| Cancellation of the Eclipse Shares' listing | 8.00 am on 20 December 2016 |
(*The final expected date of trading of the Eclipse shares will be 16 December 2016. See the timetable for Apollo with regard to admission, CREST accounts being credited and certificates being despatched in respect of the Scheme Shares)
Expected Timetable for the Offer
| Launch date of the Offer | 4 November 2016 |
| Deadline for receipt of applications for first allotment | 9.00 am on 5 January 2017 |
| First allotments under the Offer | 6 January 2017 |
| Deadline for receipt of applications for final allotment in 2016/17 tax year | 12 noon on 5 April 2017 |
| Deadline for receipt of applications for final allotment in 2017/18 tax year | 12 noon on 3 November 2017 |
| Closing date of the Offer | 12 noon on 3 November 2017 |
- The Offer will close earlier if fully subscribed. The Apollo Board reserves the right to close the Offer earlier and to accept applications and issue ordinary shares under the Offer ("Offer Shares") at any time following the receipt of valid applications.
- The results of the Offer will be announced to the London Stock Exchange through a Regulatory Information Service provider authorised by the Financial Conduct Authority.
- Dealing is expected to commence in Offer Shares within ten business days of allotments and share and tax certificates are expected to be despatched within 14 business days of allotments.
- The dates set out in the expected timetable above may be adjusted by Apollo, in which event details of the new dates will be notified through a Regulatory Information Service.
Offer Statistics
| Costs of Offer | Up to 7.5% of gross proceeds of Offer |
| Initial adviser charge or intermediary commission | Up to 4.5% of gross proceeds of Offer |
| Ongoing adviser charge or annual ongoing charge | Up to 0.5% per annum of the latest NAV of gross sums invested in the Offer for up to 9 years |
- The cost of the Offer is capped at 7.5%. Octopus has agreed to indemnify Apollo against the costs of the Offer in excess of this amount.
Related Party Transaction
In connection with the Offer, Octopus will receive a fee of up to 5.5% of the gross proceeds received by Apollo under the Offer (comprising an initial charge of 3.0% of the gross funds raised and an initial commission of up to 2.5% of gross funds raised from investors who have not invested their money through a financial intermediary ("Direct Investors")) and an additional ongoing charge of 0.5% of the net asset value of the investment amount received by Apollo from Direct Investors, payable for up to nine years, provided the Direct Investors continue to hold their Offer shares.
The above arrangement falls within Listing Rule 11.1.10 R.
Copies of the Prospectus and Circulars will shortly be available for inspection at the National Storage Mechanism, which is located at:
http://www.morningstar.co.uk/uk/NSM
and on the Company's website:
http://www.octopusinvestments.com
For further information please contact:
Nicola Board Company Secretary 0207 776 8663
