Issue of Equity
January 20 2004 - 11:13AM
UK Regulatory
RNS Number:4473U
Close Brothers Aim Vct PLC
20 January 2004
20 January 2004
Close Brothers AIM VCT PLC
Further 'D' Share Issue to raise up to #15 million
* Proposals for an Offer for Subscription of up to 15 million 'D' Shares.
* Top performing AIM venture capital trust amongst those with a similar
life.
* Investors who wish to defer a capital gain through investment in a VCT
should be able to do so under the Offer but may not be able after the end of
the current tax year.
* The Offer is designed to take advantage of what the Manager believes will
be attractive market conditions for acquiring a new AIM portfolio.
* Intention of a tender offer and related new issue next year.
* Policy to reduce share price discount.
Andrew Buchanan, Managing Director of Close Investment Limited said, "We're
delighted to be working with Brewin Dolphin to continue the progress of the
Close Brothers AIM VCT. It has performed well and we see a great chance for
investors to access new issues at an attractive point in the investment cycle
which is improving after three poor years to early 2003. The 'D' Share issue is
part of a wider plan to enhance shareholder value through the proposed tender
offer and further issue next year under the new VCT rules. The Company also has
a policy of endeavouring to reduce the share price discount. We look forward to
continuing to serve shareholders well".
For further details contact:
Lenny Norstrand Brewin Dolphin Securities Ltd Tel: 020 7246 1162
Andrew Buchanan Close Investment Limited Tel: 020 7426 4139
Kate Tidbury Close Investment Limited Tel: 020 7426 4048
Introduction
The Company announces the following proposals:
i. the creation of 25 million 'D' Shares and an offer for subscription of up to
15 million 'D' Shares to raise up to #15 million before expenses;
ii. an extension to the existing life of the Company until the annual general
meeting in 2009;
iii. an intention to invite Shareholders to participate in a Tender Offer
whereby the Company may purchase up to 10 per cent of the Shares following
the merger of the Ordinary Shares and 'C' Shares in May 2004;
iv. consequential amendments to, and extension of, the management arrangements;
and
v. the cancellation of the share premium account which will be created upon the
issue of the 'D' Shares.
A circular has been sent to Shareholders today setting out details of these
proposals. The prospectus for the 'D' Share Offer has also been published. The
issue of the 'D' Shares under the Offer is conditional, inter alia, on the
passing of all of the resolutions at the EGM to be held at 12.00 noon on 12
February 2004. The Subscription List for 'D' Shares will open at 10.00 am on 13
February 2004 and may be closed at any time thereafter but in any event not
later than 3.00pm on 31 March 2004.
Investment Record
Since the successful launch of Close Brothers AIM VCT in 1998 and the subsequent
'C' Share issue in 2000, the Manager has implemented its investment strategy of
investing principally in AIM quoted companies. Significant gains have been
realised in relation to some holdings and the Company has taken the opportunity
to distribute these gains periodically by way of capital dividends.
The investment performance of the Company as at 9 January 2004 is summarised
below:
Ordinary Shares 'C' Shares
Gross dividends for the period to 28 February 1999 1 3.75p -
Net dividends for the year to 29 February 2000 12.25p -
Net dividends for the year to 28 February 2001 32.25p 1.25p
Net dividends for the year to 28 February 2002 4.00p 2.00p
Net dividends for the year to 28 February 2003 0.50p 1.00p
Total dividends (capital and revenue) 52.75p 4.25p
Net Asset Value at 9 January 2004 (unaudited) 83.50p 89.30p
Total Return since launch 136.25p 93.55p
Basic rate income tax relief 20.00p 20.00p
Shareholder Return per share 156.25p 113.55p
AIM index with dividends reinvested2 -11.00 per cent -45.28 per cent
1 dividends paid before 5 April 1999 were paid inclusive of the tax credit
2 taken from respective first trading days of 17 March 1998 and 23 October 2000
As at 9 January 2004, Shareholder Return for holders of Ordinary Shares was
156.25 pence per share and for holders of 'C' Shares was 113.25 pence per share
(compared to the issue price in both cases of 100 pence). The Directors consider
that in the very difficult market circumstances of the past three years both the
Ordinary Shares and the 'C' Shares have performed creditably. From first trading
on 17 March 1998 to 9 January 2004, the Total Return on the Ordinary Shares has
been +136.25 per cent compared to -11.00 per cent for the AIM Index as a whole
(with dividends reinvested) over the same period. From first trading of the 'C'
Shares on 23 October 2000 to 9 January 2004, the Total Return on the 'C' Shares
was -6.45 per cent compared to -45.28 per cent for the AIM Index as a whole
(with dividends reinvested) over the same period. As at 31 December 2003, the
Company had exceeded the investment level of 70 per cent of Qualifying
Investments for shares required under the VCT legislation in both the Ordinary
and 'C' Share portfolios. The Company now wishes to build upon this successful
track record by raising further funds.
A willingness to sell holdings at a profit and return capital as tax free
dividends to Shareholders has been a hallmark of the Company and the Directors
intend that this will continue to be an objective. It should be noted that of
the total dividends of 52.75p paid to Ordinary Shareholders, 43.5p was in
capital dividends.
As the table below shows, Close Brothers AIM VCT has achieved a Total Return on
the Ordinary Shares which ranks it the top performing AIM venture capital trust
amongst those with a similar life.
AIM based VCTs started in tax years 1997/98 and 1998/99
Total Return date of last published NAV first trading day
figure
Venture Capital Trust (pence)
Close Brothers AIM VCT (Ords) 135.8 30/11/03 30-04-98
Pennine AIM VCT (II) 95.9 31/10/03 01-05-97
AIM VCT 95.1 08/01/04 09-12-98
Pennine Downing AIM VCT 84.8 31/10/03 21-05-98
BWD AIM VCT 81.3 31/08/03 25-06-99
Singer & Friedlander AIM VCT 68.4 31/12/03 24-11-98
(Source: Tax Shelter Report - The Allenbridge Group plc;
www.taxshelterreport.co.uk as at 12 January 2004)
The Total Return on the AIM Index as a whole for the period 30 April 1998 to 28
November 2003 was -17.5 per cent.
In respect of the 'C' Share portfolio, the Total Return achieved is shown in the
table below. Although economic and stockmarket conditions have been less
attractive during a significant part of the life of the 'C' Shares compared to
the early years of the Ordinary Shares' life, the 'C' Share portfolio again
ranks amongst the top performing AIM venture capital trusts for the period.
AIM based VCTs started in tax year 2000/2001
Total Return date of last published NAV first trading
figure day
Venture Capital Trust (pence)
Singer & Friedlander AIM 3 VCT 95.0 31/12/03 30-01-01
AIM VCT 2 92.6 08/01/04 04-12-00
Close Brothers AIM VCT 'C' 92.3 30/11/03 11-08-00
Artemis AIM 88.9 31/12/03 20-02-01
Northern AIM 74.2 31/10/03 11-01-01
Singer & Friedlander AIM 2 VCT 58.3 31/12/03 04-04-01
(Source: Tax Shelter Report - The Allenbridge Group plc;
www.taxshelterreport.co.uk as at 12 January 2004)
The Total Return on the AIM Index as a whole for the period 11 August 2000 to 28
November 2003 was -49.5 per cent.
Reasons for the 'D' Share Offer
The Offer is designed to take advantage of what the Manager considers to be
attractive market conditions for acquiring a new AIM portfolio. In the wake of
the volatile and poor share price performance which has characterised the
stockmarket between 2000 and early 2003, and consequently damaged investor
returns and sentiment, the Manager believes that many companies have postponed
proposed flotations or future fund raising plans. As a result, the Manager
believes that the next two years could see a substantial number of Qualifying
Investment opportunities coming to AIM. The Company's interim statement
published in October 2003 referred to the recovery in share prices since the end
of March and noted that "there are signs that companies are beginning to
consider a public listing again". Close Investment believes that these
investment opportunities may be available at attractive valuations. With a
growing level of regulation, accessing new issues as an individual investor has
become increasingly difficult. A VCT portfolio offers investors access to a
spread of potentially attractively priced new issues as well as additional
taxation benefits.
Proposed Changes in Taxation Benefits
On 11 December 2003, HM Government published proposals which, if implemented,
would change the taxation benefits available to investors in VCTs from the
beginning of the tax year 2004/2005. There is no proposal to change the tax
benefits available in the current tax year.
The Offer of 'D' Shares will close before the end of the tax year 2003/2004 and
will, therefore not be affected by any of these proposals. It is the Directors'
intention, however, to seek Shareholders' permission to make a further offer,
("the 'E' Share Offer"), once it is clear which taxation benefits will apply to
investors who subscribe for ordinary shares in VCTs in the tax year 2004/2005.
Management of Share Liquidity and Proposed Tender Offer
The Directors are aware that the secondary market for the shares of VCT
companies can be illiquid. Accordingly, the Company has two strategies which
seek to alleviate this. First, the Company has a policy of buying its own shares
in the market for cancellation and of facilitating sales by Shareholders where
they contact the Company. The Company will endeavour to facilitate such sales at
a price which represents a discount which is as close as possible to 10 per cent
of the last published NAV. Secondly, the Directors intend to implement a Tender
Offer, during the tax year 2004/2005, for up to 10 per cent of the Shares
following the merger of the Ordinary Shares with the 'C' Shares. The purpose of
this Tender Offer would be to return value to holders of Shares and to seek to
reduce the discount to NAV at which the Company's shares are traded. It would be
the intention of the Directors that any holders of Shares wishing to take
advantage of the Tender Offer would have an opportunity to re-invest all or part
of their proceeds in 'E' Shares if they so wished, subject to the 'E' Share
Offer proceeding.
Current Trading and Future Prospects
As at 9 January 2004 the Company had Qualifying Investments in 52 different
companies with a book cost of #21.6 million. This comprises 35 in the Ordinary
Share portfolio with a book cost of #8.6 million and 43 holdings in the 'C'
Share portfolio with a book cost of #13 million. At that date these investments
had a value of #20.3 million.
In the current financial year, both the Ordinary and 'C' Share portfolios have
seen their NAVs rise, especially from the low point in AIM reached at the
beginning of April 2003. This performance has been driven by the recovery in
investment sentiment generally and by rising share prices across both
portfolios. The Directors believes that, as most companies continue to make
commercial progress, this trend will continue and will be reflected in their
share prices. Accordingly, the Directors believe that the dividends paid by
these companies should increase and it is noticeable that the list includes
companies which paid maiden dividends in the Company's financial year to
February 2004. Such progress by the Company's investments will enhance the NAV
and enable the Company to continue to meet its objective of an increasing return
for shareholders.
Availability of Documents
A circular to Shareholders incorporating a notice of EGM to be held on 12
February 2004, inter alia, requesting authority to issue the new D Shares has
been sent to Shareholders together with the Mini Prospectus. Full details of the
Offer for Subscription of 'D' Shares are set out in the Prospectus. Copies of
the Circular and the Prospectus have been submitted to the UK Listing Authority
and will shortly be available for inspection at the UK Listing Authority's
Document Viewing Facility which is situated at:
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
(Telephone: 020 7066 1000)
Copies of the Prospectus and Mini Prospectus can also be obtained free of
charge, during normal business house on any weekday (excluding Saturday, Sunday
and public holidays) until the last day for application under the Offer from:
Close Investment Limited Brewin Dolphin Securities Limited Brewin Dolphin Securities Limited
10 Crown Place 5 Giltspur Street 48 St Vincent Street
London EC2A 4FT London EC1A 9BD Glasgow G2 5TS
(Tel: 020 4246 1162)
This information is provided by RNS
The company news service from the London Stock Exchange
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