TST Touchstar Plc

 
TIDMIGV 
 
THE INCOME & GROWTH VCT PLC 
 
2 MARCH 2010 
 
RECOMMENDED PROPOSALS TO MERGE THE SHARE CLASSES OF THE COMPANY AND MAKE 
CONSEQUENTIAL AMENDMENTS TO THE ARTICLES, APPROVE REVISED MANAGEMENT AND 
ADMINISTRATION ARRANGEMENTS, AMEND THE INVESTMENT POLICY OF THE COMPANY AND 
RENEW AND INCREASE THE AUTHORITY TO ISSUE AND BUY-BACK SHARES. 
 
SUMMARY 
 
The board of directors of the Company ("Board"), which is managed by Matrix 
Private Equity Partners LLP ("Matrix Private Equity"), is pleased to advise 
that they are today writing to shareholders with proposals to consolidate the 
share classes of the Company into one class of share ("Share Merger") 
 
The Share Merger, if approved, is expected to become effective on 29 March 
2010. The proposal requires the approval of resolutions to be proposed to 
shareholders of the Company at an extraordinary general meeting and separate 
class meetings to be held on 26 March 2010 ("the Meetings"). 
 
The Board also consider it appropriate, subject to the Share Merger becoming 
effective, to approve revised management, administration and performance 
incentive arrangements with Matrix Private Equity and amend the existing 
articles of association to reflect the Share Merger. In addition, it is also 
proposed to amend the investment policy of the Company in relation to its 
uninvested cash and renew and increase share issue and share repurchase 
authorities. The proposals require the approval of resolutions to be proposed 
to shareholders of the Company at the Meetings. 
 
BACKGROUND 
 
The Company was originally launched in 2000 and initially raised funds pursuant 
to an issue of ordinary shares of 1p each in the capital of the Company 
("Ordinary Shares"). The Company then raised further funds through the issue S 
ordinary shares of 1p each in the capital of the Company ("S Shares") in 2008. 
It was agreed that the Company should raise this additional capital through a 
separate class of shares on the basis that it would be managed solely by Matrix 
Private Equity, unlike the then Ordinary Shares which was originally managed by 
multiple fund managers, including Matrix Private Equity. 
 
It was envisaged that the Ordinary Shares fund and S Shares fund would continue 
to be managed separately due to their then differing investment management 
mandates and arrangements. In March 2009, Matrix Private Equity became the sole 
investment manager in respect of the Ordinary Shares fund (although it assumed 
responsibility for all of the Ordinary Share fund in October 2008). As a result 
of Matrix Private Equity now being the sole investment manager of both the 
Ordinary Shares fund and S Shares fund, the investment policies of both classes 
have become aligned, thus reducing the original rationale to keep the share 
classes separate. 
 
The Board therefore propose to merge the share classes which will provide the 
Company with cost savings and strategic benefits. 
 
THE SHARE MERGER 
 
The Share Merger will be effected by first merging the Ordinary Shares into the 
S Shares and then redesignating the S Shares as Ordinary Shares (this being 
referred to herein as "New Ordinary Shares"). 
 
The Share Merger will be completed by reference to the relative NAVs of the 
Ordinary Shares fund and the S Shares fund (adjusted for dividends to be paid) 
as at 31 December 2009. 
 
MATRIX PRIVATE EQUITY AND THE REVISED MANAGEMENT, ADMINISTRATION AND 
PERFORMANCE INCENTIVE ARRANGEMENTS 
 
Matrix Private Equity is the Company's investment manager and it has also 
assumed the responsibilities of providing administrative services in place of 
Matrix-Securities Limited following a reorganisation of the Matrix Group. 
Matrix Private Equity will continue to be the investment manager to the Company 
following the Share Merger on, in light of the Share Merger, the revised terms 
(subject to Shareholder approval) as follows: 
 
  * The existing management and administration arrangements between the 
    Company, Matrix Private Equity and Matrix-Securities Limited (amongst 
    others) will be replaced with a new investment management agreement with 
    Matrix Private Equity covering both management and administration services 
    for an annual fee (inclusive of VAT, if any) of an amount equivalent to 2.4 
    per cent. of the net assets of the Company (one-sixth of which to be 
    subject to a minimum of GBP130,000 and a maximum of GBP150,000, the remainder 
    of such fee not being subject to any cap). 
 
  * The new agreement will be on substantially the same terms as the existing S 
    Share fund management and administration arrangements, subject to being 
    supplemented by any material arrangements within the Ordinary Share fund 
    management and administration arrangements and the appointment being on 12 
    months' notice (albeit there currently being an initial fixed period in 
    respect of the S Share fund arrangements which has not expired). Matrix 
    Private Equity has agreed to continue to meet the annual expenses of the 
    Company in excess of 3.25 per cent. of the NAV of the Company for each 
    financial period, this being the annual expenses cap as currently provided 
    under the existing annual expenses deed and which will also be provided for 
    in the new agreement. 
 
  * The existing S Share fund performance incentive arrangement will be 
    terminated while the performance incentive arrangement of the Ordinary 
    Share fund shall continue but be amended fin light of the Share Merger to 
    cover the amalgamated share class. New investments made (i.e. no 
    performance incentive fees will be payable on the S Share fund investments 
    made) by the Company following the Share Merger will be added to the 
    calculation in respect of 70 per cent. only (both in terms of cost and in 
    assessing gains and losses over (this being the current investment 
    allocation between the Ordinary Shares fund and the S Shares fund). In 
    addition, the "High Watermark Test" will be amended to provide that the 
    losses of the S Shares fund existing investments as at 31 December 2009 
    will need to be made up before any payment is due to Matrix Private Equity. 
 
The ongoing entitlement of Foresight Group to performance incentive fees in 
respect of the portfolio of the Ordinary Shares fund they previously managed 
will continue in its current form. 
 
The Board believes that these arrangements are the most appropriate for the 
Company at the current time and considers that they best achieve the principle 
of Shareholders not being disadvantaged. Shareholders should be aware that any 
future incentive payments will only crystallise in the event of a significant 
increase in the current value of the investment portfolio. 
 
Matrix Private Equity, created by a merger between GLE Development Capital 
Limited and Matrix Private Equity Limited, is the private equity arm of Matrix 
Group and manages funds primarily through a range of VCTs raised from private 
investors. Total funds under management are circa GBP120 million across six funds 
with the portfolio of equity investments in companies currently numbering 
forty. 
 
Matrix Private Equity specialises in backing management buy outs and takes a 
partnership approach to investing, working alongside ambitious, entrepreneurial 
management teams wishing to buy businesses. Equity investments, typically up to 
GBP7 million, are made in UK privately owned companies across a broad range of 
industries and sectors, helping entrepreneurial management teams to achieve 
substantial gains for all shareholders. Matrix Private Equity often works with 
a highly experienced operating partner who has direct management experience and 
a wide range of contacts. Matrix Private Equity is recognised as one of the 
most experienced teams and active investors in this segment of the private 
equity market. 
 
Matrix Private Equity (telephone: 0203 206 7000) was incorporated and 
registered in England and Wales as a limited liability partnership on 27 June 
2006. Matrix Private Equity's registered office and principal place of business 
is at One Vine Street, London W1J 0AH. Matrix Private Equity is authorised and 
regulated by the FSA to provide investment management services. The principal 
legislation under which Matrix Private Equity operates is the provisions of the 
Limited Liability Partnership Act 2000 and the relevant provisions of the 
Companies Act 2006 (and regulations made thereunder). 
 
AMENDMENT TO THE INVESTMENT POLICY 
 
The Board believes that the current investment policy on the uninvested funds 
constrains them from considering a wider range of alternatives to the current 
holdings in money-market funds and, accordingly, shareholders are being asked 
to approve a change in investment policy relating to the funds awaiting 
investment, so that the Company's cash and liquid resources be invested to 
maximise income returns in a range of instruments of varying maturities, 
subject to the overriding criterion that the risk of loss of capital be 
minimised. 
 
The Board will consider whether the Company's cash resources could be invested 
in a wider range of opportunities, to aim to achieve a higher rate of income 
return, while still aiming to safeguard the Company's capital. The Board wishes 
to emphasise strongly that it is not their present intention to increase the 
level of risk associated with higher levels of income. However, the Board would 
like to be able to consider a wider range of alternatives in the future should 
a suitable situation occur, subject to the general aim of safeguarding the 
Company's capital being maintained. 
 
EXPECTED TIMETABLE 
 
Share Merger NAV Reference Date                                31 December 2009 
 
Extraordinary General Meeting                         10.30 am on 26 March 2010 
 
Ordinary Share Class Meeting                          10.40 am on 26 March 2010 
 
S Share Class Meeting                                 10.45 am on 26 March 2010 
 
Record Date for the Share Merger                  close of business on 26 March 
                                                                           2010 
 
Effective Date for the Share Merger               close of business on 29 March 
                                                                           2010 
 
Amendment to the listing of Shares                                30 March 2010 
 
CREST accounts re-credited                                        31 March 2010 
 
Certificates for the New Ordinary Shares                           5 April 2010 
dispatched 
 
FURTHER INFORMATION 
 
Shareholders will receive a copy of a circular convening the Meetings to be 
held on 26 March 2010 at which shareholders will be invited to approve 
resolutions in connection with the proposals. A copy of the circular for the 
Company has also been submitted to the UK Listing Authority and will be shortly 
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: 0207 066 1000 
 
For further information, please contact: 
 
Investment Manager to the Company 
 
Matrix Private Equity Partners LLP 
 
Mark Wignall 
 
Telephone: 020 3206 7000 
 
Administrator to the Company 
 
Matrix Private Equity Partners LLP/Matrix-Securities Limited 
 
Robert Brittain/Sarah Penfold 
 
Telephone: 020 3206 7000 
 
Solicitors to the Company 
 
Martineau 
 
Kavita Patel 
 
Telephone: 0870 763 2000 
 
 
 
END 
 

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