THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Transcription

1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt about the action to be taken, you should immediately consult your bank manager, stockbroker, solicitor, accountant or other independent financial adviser authorised pursuant to the Financial Services and Markets Act If you have sold or otherwise transferred all of your Shares in TP5 VCT plc ( the Company ), please send this document and accompanying documents, as soon as possible, to the purchaser or transferee or to the stockbroker, independent financial adviser or other person through whom the sale or transfer was effected for delivery to the purchaser or transferee. TP5 VCT PLC (Registered in England and Wales with registered number ) Recommended Proposals to acquire the assets and liabilities of TP VCT plc redesignate the Company s share capital grant the authority to issue and repurchase New B Shares amend the Company s investment policy amend the articles of association cancel the share premium account Your attention is drawn to the letter from the chairman of the Company set out in Part III of this document which contains a recommendation to vote in favour of the resolutions to be proposed at the meetings referred to below. Your attention is also drawn to the risk factors set out in Part II of this document. You will find set out at the end of this document a notice of a General Meeting to be held on 15 September 2009 at 12 noon to approve the Scheme and other resolutions to effect the proposals contained herein. This meeting will all be held at 4-5 Grosvenor Place, London SW1X 7HJ. To be valid, the form of proxy attached to this document for the meeting should be returned not less than 48 hours before the meeting, either by post or by hand to the Company s registrar, Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA. For further information please call Neville Registrars Limited on telephone number Calls are charged at 10p per minute (including VAT) from a BT landline. Other service providers costs may vary. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. For legal reasons, Neville Registrars will be unable to give advice on the merits of the Proposals or provide financial, tax or investment advice. Page 1

2 This document should be read in conjunction with the prospectus issued by the Company dated 24 August 2009 which is available on the Company s website at Page 2

3 CONTENTS EXPECTED TIMETABLES 4 CORPORATE INFORMATION 5 PART I DEFINITIONS 6 PART II RISK FACTORS 9 PART III LETTER FROM THE CHAIRMAN 13 PART IV THE SCHEME 26 PART V ADDITIONAL INFORMATION 30 NOTICE OF GENERAL MEETING 36 FORM OF PROXY 39 Page 3

4 EXPECTED TIMETABLES EXPECTED TIMETABLE FOR THE COMPANY Latest time for receipt of forms of proxy for the General Meeting 5.00 pm on 11 September 2009 General Meeting 12 noon on 15 September 2009 Calculation Date Effective Date for the transfer of the assets and liabilities of TP to the Company and the issue of New B Shares after 5.00 pm on 31 August September 2009 Announcement of the results of the Scheme 30 September 2009 Admission of and dealings in the New B Shares to commence 9 October 2009 Certificates for the New B Shares despatched 16 October 2009 EXPECTED TIMETABLE FOR TP Latest time for receipt of forms of proxy for the TP First General Meeting TP First General Meeting Latest time for receipt of forms of proxy for the TP Second General Meeting Record Date for TP Shareholders entitlements under the Scheme 2.00 pm on 11 September am on 15 September pm on 25 September August 2009 TP Register of Members closed 31 August 2009 Calculation Date TP Second General Meeting Effective Date for the transfer of the assets and liabilities of TP to the Company and the issue of New B Shares after 5.00 pm on 31 August am on 29 September September 2009 Announcement of the results of the Scheme 30 September 2009 Admission of and dealings in the New B Shares to commence 9 October 2009 Certificates for the New B Shares despatched 16 October 2009 Page 4

5 CORPORATE INFORMATION Directors Sir John Lucas Tooth (Chairman) Michael Stanes Claire Ainsworth (all of the registered office) Registered Office and Principal Place of Business 4-5 Grosvenor Place London SW1X 7HJ Auditors Grant Thornton UK LLP, 1 Westminster Way Oxford OX2 0PZ Telephone: Website: Company Number Registrars Neville Registrars Limited Neville House 18 Laurel Lane, Halesowen West Midlands B63 3DA Investment Manager, Administrator and Company Secretary Triple Point Investment Management LLP 4-5 Grosvenor Place London SW1X 7HJ Solicitors Howard Kennedy 19 Cavendish Square London W1A 2AW Page 5

6 PART I - DEFINITIONS Articles Board or Directors CA 1985 CA 2006 Calculation Date the articles of association of the Company, as amended from time to time the board of directors of the Company Companies Act 1985, as amended Companies Act 2006, as amended the date on which the Merger Values will be calculated, this being 31 August 2009 Companies the Company and TP Companies Acts CA 1985 and CA 2006 Company or TP5 Effective Date Enlarged Company GAM Diversity GAM Diversity 2.5XL TP5 VCT plc the date on which the Scheme will be completed, this is anticipated as being 30 September 2009 the Company, following implementation of the Scheme GAM Diversity Inc, a fund of hedge funds GAM Diversity GBP 2.5XL class, a 1.5 times leveraged version of GAM Diversity, more particularly described in Part III of this document General Meeting the general meeting of the Company to be held on 15 September 2009 GSAM HMRC IA 1986 ICTA 1988 ITA 2007 Liquidators London Stock Exchange Goldman Sachs Asset Management International Her Majesty s Revenue & Customs Insolvency Act 1986, as amended Income and Corporation Taxes Act 1988, as amended Income Tax Act 2007, as amended Alan John Roberts and Adrian John Denis Rabet of Begbies Traynor, Charles House, Charles, Street, St Helier, Jersey JE2 4SF London Stock Exchange plc Page 6

7 Merger Regulations Venture Capital Trusts (Winding-up and Mergers) (Tax) Regulations 2004 Merger Values the Ordinary Shares Roll-Over Value and the TP Ordinary Shares Roll-Over Value NAV or net asset value New B Shares New B Share Fund New B Share Offer Official List Ordinary Shares Ordinary Share Fund net asset value the new B Shares of 1p each in the capital of the Company to be issued to TP Shareholders in accordance with the Scheme (and each a New B Share ) the net assets representing the New B Shares from time to time as further described in the Articles the offer of New B Shares pursuant to the Scheme the official list of the UKLA ordinary shares of 1p each in the capital of the Company (and each an Ordinary Share ) the net assets representing the Ordinary Shares from time to time as further described in the Articles Ordinary Shares Roll-Over Value the value of the Ordinary Shares at 31 August 2009 Proposals Prospectus the proposals to effect the merger by way of the Scheme and pass the resolutions to be proposed at the General Meetings the prospectus issued by the Company dated 24 August 2009 Record Date 31 August 2009 Shareholder Scheme Shares a holder of Ordinary Shares the proposed merger of the Company with TP by means of placing TP into members voluntary liquidation pursuant to Section 110 of IA 1986 and the acquisition by the Company of TP s assets and liabilities in consideration for New B Shares as set out in Part IV of this document the Ordinary Shares and New B Shares (and each a Share ) Page 7

8 TCGA 1992 Taxation of Chargeable Gains Act 1992, as amended TP General Meetings the TP First General Meeting and the TP Second General Meeting TP First General Meeting the first general meeting of TP to be held on 15 September 2009 TP Second General Meeting the second general meeting of TP to be held on 29 September 2009 Transfer Agreement the agreement between the Company and TP (acting through the Liquidators) for the transfer of all of the assets and liabilities of TP by the Liquidators to the Company pursuant to the Scheme TPIM or Investment Manager TP Triple Point Investment Management LLP, the investment manager to the Company and TP of 4-5 Grosvenor Place, London SW1X 7HJ TP VCT plc, registered in England and Wales under number , whose registered office as at 4-5 Grosvenor Place, London SW1X 7HJ TP Board the board of directors of TP TP Circular the circular to TP shareholders dated [21] August 2009 TP Ordinary Shares ordinary shares of 1p each in the capital of TP (and each a TP Ordinary Share ) TP Ordinary Shares Roll- Over Value TP Shareholders UK UKLA or UK Listing Authority VCT or venture capital trust the value of the TP Ordinary Shares at 31 August 2009 holders of TP Ordinary Shares the United Kingdom the UK Listing Authority, being the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Market Act 2000 a company satisfying the requirements of Chapter 3 of Part 6 of ITA 2007 for venture capital trusts Page 8

9 PART II - RISK FACTORS Holders of Ordinary Shares should consider carefully the following risk factors in addition to the other information presented in this document when considering and voting upon the Proposals. The risks and uncertainties described below are not the only ones the Company, the Board or Shareholders will face. Additional risks not currently known to the Company or the Board, or that the Company or the Board currently believe are not material, may also adversely affect the Company s business, financial condition or results of operations. The value of the Shares could decline due to any of the risk factors described below and Shareholders could lose part or all of their investment. Holders of Ordinary Shares should consult an independent financial adviser authorised under the Financial Services and Markets Act References to the Company in this section should be taken as including the Enlarged Company. Completion of the Proposals is dependent upon a number of conditions precedent being fulfilled, including the approval of the holders of Ordinary Shares and the Scheme becoming effective. Whilst the Board has identified a number of potential benefits for the Enlarged Company, there is no certainty that these benefits will lead to improved prospects for the Enlarged Company. Shareholders may be adversely affected by the performance of the investments, whether acquired from TP or made by the Company. The performance of the investments acquired from TP and of the investments of the Company may restrict the ability of the Company following the merger to distribute any capital and revenue gains achieved on the investments transferred from TP and on the investments of the Company. The value of Shares can fluctuate and Shareholders may not get back the amount they invested even taking into account the tax reliefs associated with such an investment. In addition, there is no certainty that the market price of Shares will fully reflect their underlying NAV or that any dividends will be paid, nor should Shareholders rely upon any Share buy-back policy to offer any certainty of selling their Shares at prices that reflect the underlying NAV. Although the existing Ordinary Shares have been (and it is anticipated that the New B Shares to be issued pursuant to the Scheme will be) admitted to the Official List and are (or will be) traded on the London Stock Exchange s market for listed securities, the secondary market for VCT shares is generally illiquid and, therefore, there may not be a liquid market (which may be partly attributable to the fact that initial tax reliefs are not available for VCT shares generally bought in the market and because VCT shares usually trade at a discount to NAV) and Shareholders may find it difficult to realise their investment. An investment in the Company should, therefore, be considered as a longterm investment. The past performance of the Company, TP and/or TPIM is no indication of future performance of the Company or other funds managed by TPIM. The return received by Shareholders will be dependent on the performance of the underlying investments. The value of such investments and dividends from them may rise or fall. Although the Company may receive conventional venture capital rights in connection with some of its investments, as a minority investor it may not be in a position to fully protect its interests. The Company s investments may be difficult, and take time, to realise. There may also be constraints imposed on the realisation of investments in order to maintain the VCT tax status of the Company. Page 9

10 It can take a period of years for the underlying value or quality of the businesses of smaller companies, such as those in which the Company invests, to be fully reflected in their market values and their market values are often also materially affected by general market sentiment, which can be negative for prolonged periods. The small companies in which VCTs invest often have limited product lines, trading records, markets or financial resources and may be dependent for their management on a small number of key individuals. In addition, the market for securities in smaller companies is often less liquid than that for securities in larger companies, bringing with it potential difficulties in acquiring, valuing and disposing of such securities. Proper information for determining their value or the risks to which they are exposed may also not be available. Investment returns will, therefore, be uncertain and involve a higher degree of risk than investment in a company listed on the Official List. Whilst it is the intention of the Board that the Company will continue to be managed so as to qualify as a VCT, there can be no guarantee that such status will be maintained. Failure to continue to meet the qualifying requirements could result in Shareholders losing the tax reliefs available for VCT shares, resulting in adverse tax consequences including a requirement to repay the tax reliefs obtained. Furthermore, should the Company lose its VCT status, dividends and gains arising on the disposal of Shares would become subject to tax and the Company would also lose its exemption from corporation tax on its capital gains. If a Shareholder disposes of his or her Shares within five years of issue, he or she will be subject to clawback by HMRC of any income tax reliefs originally claimed. For these purposes, the date of issue of the New B Shares issued pursuant to the Scheme will be the original date of issue of the TP Ordinary Shares in respect of which such New B Shares are issued. If at any time VCT status is lost for the Company, dealings in its Shares will normally be suspended until such time as proposals to continue as a VCT or to be wound-up have been announced. The tax rules, or their interpretation, in relation to an investment in the Company and/or the rates of tax may change during the life of the Company and may apply retrospectively. Any purchaser of Shares in the market will not qualify for the then (if any) available tax reliefs afforded to subscribers of new VCT shares on the amount invested. There can be no guarantee, because of the size of the Ordinary Share Fund and the B Share Fund, that all the Enlarged Company s investment objectives will be achieved or that suitable investment opportunities will be identified in order to create a diversified portfolio. The fixed costs of running the Enlarged Company will be proportionately higher the smaller the level of funds and may make it more difficult to find smaller unquoted companies to invest in. In addition, there are certain risks specifically associated with hedge fund investments or indirect exposure to hedge fund strategies which should be carefully considered by holders of Ordinary Shares: The performance of the Company s hedge fund investments is affected by the selection of funds and portfolio managers by TPIM and by investment decisions of such portfolio managers. There is no guarantee that the Company will meet its investment objective. TPIM, the chosen hedge fund providers, the receiving agents or any of their respective directors, officers, employees, agents and affiliates and the Directors and any person or company with whom they are affiliated or by whom they are employed (each an Page 10

11 Interested Party ) are and may be involved in other financial, investment or other professional activities which may cause conflicts of interest with the Company. An Interested Party may not be liable to account for any profit made in connection with these activities. All or most of the protections provided by the UK regulatory system do not apply to the Company s investment in or exposure to the GAM International Management Limited funds ( GAM funds ). For example, the Company will not benefit from the Financial Services Compensation Scheme and may not be eligible to make an application under the Financial Services Ombudsman Scheme. The Company s hedge fund portfolio and exposure is subject to market fluctuations. There can be no assurance that appreciation will occur or that losses will not be incurred. Asset allocation will vary during market cycles. Hedge fund investments are normally intended for professional and sophisticated Investors who can afford the risks inherent in this type of investment, including the loss of the entire amount invested by the Investor. Investment in the Company involves exposure to currencies other than sterling, the base currency of the Company. Changes in rates of exchange may cause the value of investments in the Company to go up or down and may affect the value of dividends and interest earned. To the extent that hedging techniques are used, there is no guarantee that these will have the intended effect. There is no obligation to employ such techniques. The Company plans to be exposed to GAM Diversity 2.5 XL, a 1.5 times leveraged version of GAM Diversity, a fund of hedge funds.. Leverage offers the potential for significant profits but also entails a high degree of risk, including the risk of substantial or total loss of the value of the investment. The operation of the leverage arrangements may at times cause the Company s exposure to be over- or under-leveraged relative to the latest NAV. GAM Diversity GBP 2.5XL Class may underperform the cost of the leverage taken on by GAM Diversity GBP which is currently LIBOR plus 1% p.a. Investing in securities of foreign issuers involves special risks, including currency rate fluctuations, political and economic instability, foreign taxes and different regulatory, auditing and reporting standards. The political, regulatory and economic risks inherent in investments in emerging markets securities are significant and may differ in kind and degree from the risks presented by investments in the world s major securities markets. The risks may include greater price volatility, substantially less liquidity and controls on foreign investment and limitations on repatriation of invested capital. Costs relating to investment will also tend to be higher. Certain investment practices or trading strategies such as investment in financial and commodity futures and in derivative instruments and use of other investment techniques entail separate and substantial risks. Leverage can be employed in a variety of ways including direct borrowing, margining, short selling and the use of futures, warrants, options and other derivative products. Generally, leverage is used to increase the overall level of investment in a portfolio. Higher investment levels may offer the potential for higher returns. This exposes Investors to increased risk as leverage can increase the portfolio s market exposure and volatility; the risk of leverage in futures contracts and investing in warrants is that small price movements can result in large losses or profits. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. If assumptions made by investment managers are wrong or if the instruments do not work as anticipated, the relevant fund could lose more than if the fund had not used such investment techniques. Page 11

12 Investment in bonds and other fixed income securities is subject to the risk (generally lower where securities are rated above investment grade) that payments may not be made by issuers on due dates or at all. Such investments are also subject to loss in value or liquidity due to changes in credit ratings. Variation in interest rates will influence the value of funds invested in bonds and other fixed income securities. The investment vehicles, into which GAM funds may invest, including shared companies and subsidiaries, may not be subject to any form of authorisation or regulatory supervision. They may not be required to have an independent custodian or any custodian at all. Therefore, investment in such vehicles carries a high potential risk. The ability of the Company to return funds to Shareholders may be adversely affected by illiquidity in underlying assets. No assurance can be given that a liquid market will exist for any particular futures contract at any particular time. Many futures exchanges and boards of trade limit the amount of fluctuation permitted in futures contract prices during a single trading day. Once the daily limit has been reached in a particular contract, no trades may be made that day at a price beyond that limit, or trading may be suspended for specified periods during the trading day. It may be difficult to deal in investments for which there is no recognisable market or to obtain reliable information about their value or the extent of the risks to which such investments are exposed. GAM funds and funds held through GAM funds may have redemption periods or take other actions that affect liquidity and which could result in either the premature realisation of investments or in restrictions on the ability of any investor to redeem investments in such funds. The Company may be required to accept in specie redemptions from an underlying portfolio manager, fund or company. In such a situation, the investments may be illiquid and not readily realisable. Both GAM and the managers of underlying funds invested in by GAM may impose timing restrictions on investors wishing to realise their investments in their funds. GAM funds may not be eligible to participate or invest in any class of securities which may share in profits attributable to newly issued securities, as provided under applicable rules of the National Association of Securities Dealers. GAM funds may have the power to borrow and may do so not only to meet redemptions but also within the GAM fund as part of its investment philosophy. In addition, underlying funds invested in by GAM funds may also be permitted to borrow. Page 12

13 PART III - LETTER FROM THE CHAIRMAN TP5 VCT Plc (Registered in England and Wales with registered number ) Directors: Sir John Lucas-Tooth (Chairman) Michael Stanes Claire Ainsworth Registered Office: 4-5 Grosvenor Place London SW1X 7HJ 24 August 2009 Dear Shareholder, Recommended Proposals for a merger by way of Scheme of Reconstruction of the Company The Board announced on 24 August 2009 that agreement in principle had been reached with the TP Board for the merger of the two Companies and that it expected to be in a position to present a detailed proposal for consideration by Shareholders shortly. I am now pleased to be able to put the Proposals to Shareholders for consideration. The Proposals will, if effected, result in TP being merged into the Company, creating an Enlarged Company having net assets of over 20 million. The merger will result in a significant reduction in the annual running costs compared to the aggregate annual running costs of the two separate Companies and will enable the Company to pass this benefit on to Shareholders through the ability to pay larger distributions in the future. In addition, the creation of a single VCT with a greater capital base will result in an increased flexibility in meeting the various requirements for qualifying VCT status and providing greater investment flexibility. To effect the Proposals, the consent of Shareholders is required pursuant to the Companies Acts, IA 1986 and the Listing Rules and is being sought at the General Meeting to approve the merger pursuant to the Scheme, to renew the authority to issue and repurchase Shares, amend the Articles and cancel the share premium account of the Company. Shareholders should also note and consider carefully the risk factors set out in Part II of this document. Background Both TP5 and TP are investment trusts which have obtained provisional approval as VCTs from HMRC. Both are managed by TPIM. The Prospectus for the original offer for Ordinary Shares was dated 12 September 2008 and the offer closed on 30 June The Prospectus for the original offer for TP Ordinary Shares was dated 19 December 2008 and the offer closed on 30 April Up to the dates when the two offers closed the following amounts had been raised: Page 13

14 TP5 TP ,728,000 3,459,000 Less costs of issue 933, ,000 17,795,000 3,257,000 At these levels, it is perfectly possible to run TP5 as a stand alone VCT, however, the complexity of the VCT rules means that it will be difficult and potentially uneconomic to run TP as a stand alone VCT. The investment policies of the Companies can be summarised as follows: TP5 TP A portfolio giving exposure to monetary assets, fixed interest securities and bonds. VCT qualifying investments focused on companies with contractual revenues derived from financially sound counterparties Exposure to GAM Diversity 2.5XL Initially 100% to be reduced to 30% by the end of the third year delivered through GSAM managed and advised collective investment funds. Initially 0% rising to 70% by the end of the third year. Nil Initially 70% to be reduced to 0% by the end of the third year delivered through collective investment funds. Initially 0% rising to 70% by the end of the third year. Up to 30% throughout the life of TP There are significant similarities between the investment policies of the two Companies. They only differ to the extent that up to 30% of NAV throughout the life of TP5 would be exposed to monetary assets, fixed interest securities and bonds, whilst throughout the life of TP , up to 30% would be exposed to GAM Diversity 2.5XL. Furthermore, the exit for shareholders of both Companies is expected to be effected at similar times, as soon as practicable after 30 June Proposals In all the circumstances, TPIM has put together proposals, which have been approved by the boards of both Companies, the principal features of which are as follows: Page 14

15 TP5 and TP will be merged. The merger will be effected under a procedure provided for by the IA 1986 under which TP would be placed in solvent liquidation. The TP Board and TPIM are happy to recommend this procedure to the TP Shareholders as it is one which has been adopted on a number of occasions by VCTs. Subject to Shareholder approval, TP5 will create the New B Shares, the investment policy for which will be substantially the same as TP s current investment policy and at the General Meeting a resolution will be put to the Shareholders to amend the Company s investment policy so that TP s current investment policy can apply to the B Share Fund. More particular details of the rights attaching to the B shares are set out below. An Ordinary Share Fund will be created which will, effectively, be constituted by the net proceeds of subscription for Ordinary Shares and a New B Share Fund will be created which will, effectively, be constituted by the original net proceeds of subscription for the TP Ordinary Shares. The investment policy for the Ordinary Share Fund (more particular details of which are set out below) will be the Company s existing investment policy. Qualifying Investments are targeted to include companies investing in health services and environmental projects. Prior to deployment in Qualifying Investments, the Company intends to invest funds in the Ordinary Share Fund into an actively managed portfolio targeting LIBORrelated returns and has appointed GSAM to manage these Non-Qualifying Investments, which will be delivered through GSAM managed and advised collective funds. The Company intends that up to 30% of the Ordinary Share Fund will remain invested in the managed portfolio over the required five year holding period. The investment policy for the New B Share Fund (more particular details of which are set out below) will be TP s existing investment policy. Qualifying Investments are targeted to include companies investing in health services and environmental projects. Prior to deployment in Qualifying Investments, approximately 70% of the funds in the New B Share Fund will be committed to cash and fixed interest funds selected for credit quality, liquidity and returns. Up to 30% of the funds in the New B Share Fund (approximately 4.5% of the NAV of the Enlarged Company) will be exposed directly or indirectly to GAM Diversity 2.5XL. The costs of the Scheme, including legal and professional fees, printing, VAT, stamp duty and listing authority fees, will be borne by TPIM. Assuming that the Scheme is approved, it is estimated that the additional annual administrative costs to TP5 following the implementation of the Scheme will be 6,000 plus VAT which will be charged wholly to the New B Share Fund and therefore will not represent a charge to the Ordinary Share Fund. Annual running costs will be charged pro-rata between the funds and relative to annual costs prior to the merger should result in net annual savings as follows: Page 15

16 Holders of Ordinary Shares Holders of New B Shares Shares Total 21,100 7,900 29,000 It must be stressed, however, that the principal benefits from the Scheme will be in facilitating the efficient and effective construction of a portfolio of VCT qualifying holdings and non-vct qualifying investments for the holders of both Ordinary Shares and New B Shares. Specific assets will be allocated between the Ordinary Share Fund and the New B Share Fund in accordance with their investment policies and expenses will be apportioned between the Ordinary Share Fund and the New B Share Fund based on their NAVs. Shareholders should also note and consider carefully the risk factors set out in part ii of this document. New B Shares At the General Meeting it is proposed that 5,000,000 of the unissued Ordinary Shares will be re-designated as New B Shares having the rights set out in the Articles. The number of New B Shares to be issued to TP Shareholders (save for any TP Ordinary Shares held by dissenting TP Shareholders) shall be calculated in accordance with the formula set out in Part IV of this document, which sets out the calculation of the Merger Values and the Number of New B Shares to be issued, based upon the TP Ordinary Shares Roll-Over Value, the Ordinary Shares Roll-Over Value and the number of TP Ordinary Shares in issue as at close of business on 31 August 2009 (save for any TP Ordinary Shares held by dissenting TP Shareholders). Application has been made to the UKLA for the New B Shares to be listed on the Official List and will be made to the London Stock Exchange for such New B Shares to be admitted to trading on its market for listed securities. Investment policy Investment strategy To comply with VCT rules, the Company must within a 3 year period have (and subsequently maintain) at least 70 per cent by value of its investments represented by Qualifying Investments. It is the Directors objective to achieve this target, typically in investments ranging between 500,000 and 2,000,000 between the Ordinary Share Fund and the New B Share Fund, in less than three years. The investment strategies for the non VCT qualifying investments will be different for the Ordinary Share Fund and the New B Share Fund. This Company s strategy for VCT qualifying holdings aims to deliver more secure returns than is generally the case in venture capital investments combined with the potential for enhanced returns through a leveraged exposure to fund of hedge funds. In seeking to achieve the Company s objectives, TPIM intends to invest in venture capital investments (which represent Qualifying Investments) on the basis of certain conservative principles. Venture capital investments: TPIM will undertake robust due diligence on target investments. Page 16

17 TPIM will favour investments where there is a high level of access to material financial and other information on an ongoing basis. TPIM will seek to minimise the risk of losses when investing through careful analysis of the collateral available to investee companies. TPIM targets investments where there is a strong relationship with the key decision makers. Fund of hedge fund investments (which will represent non VCT qualifying investments in respect of the New B Share Fund): In appointing GLL as a sub-adviser to advise on the selection of GAM fund of hedge funds for direct investment, TPIM has selected one of the acknowledged leaders in the fund of hedge fund management industry. GLL has initially advised investment in GAM Diversity GBP 2.5XL a leveraged version of GAM s flagship fund of hedge funds. Launched in 1989, GAM Diversity Inc. is a global, multi-strategy product which seeks capital appreciation with diversification of risk through exposure to underlying hedge funds. Cash and fixed Income investments (which represent non VCT qualifying investments in respect of the Ordinary Share Fund): In appointing GSAM as its sub-adviser to manage the cash and fixed income investments of the Ordinary Share Fund, TPIM has selected one of the acknowledged leaders in the fixed income management industry. Qualifying Investments TPIM will, in respect of both the Ordinary Share Fund and the B Share Fund, pursue investments in a range of industries but the type of business being targeted is subject to the specific investment criteria, discussed below. The objective is to build a diversified portfolio of young unquoted companies which are cash generative and, therefore, capable of producing income and capital repayments to the Company prior to their disposal by the Company. Although invested in diverse industries, it is intended that the Company s portfolio will comprise companies with certain characteristics, for example clear commercial and financial objectives, strong customer relationships and where possible tangible assets with value. TPIM will focus on identifying businesses typically with contractual revenues from financially sound counterparties or a stream of predictable transactions with multiple clients. Businesses with assets providing valuable security may also be considered. The objective is to reduce the risk of losses through the reliability of cash flow or quality of asset backing and to provide Investors with a potentially attractive income stream and modest but accessible capital growth. The criteria against which investment targets will be assessed may include the following: an attractive valuation at the time of the investment. minimising the risk of capital losses. the predictability and reliability of the company s cash flows. the quality of the business counterparties and suppliers. the sector in which the business is active. Key targets include health, environmentally responsible and social enterprise sectors. the quality of the company s assets. the opportunity to structure an investment that can produce distributable income. the prospect of achieving an exit 5 years after the Company s capitalisation. Page 17

18 Non-Qualifying Investments New B Share Fund The initial exposure of the New B Share Fund will be to two classes of non VCT qualifying investments. Approximately 70% of the New B Share Fund will initially be invested in highly liquid interest-bearing instruments or in one or more portfolios selected for credit quality, liquidity and returns delivered through collective investment funds and up to approximately 30% of the New B Share Fund (approximately 4.5% of the NAV of the Enlarged Company) will be exposed to GAM Diversity 2.5XL (in contrast to the equivalent current exposure of TP , which also sought to achieve exposure to the GAM Diversity 2.5XL index through a swap or warrants). GAM Diversity 2.5XL is a leveraged version of GAM s flagship fund of hedge funds, GAM Diversity Inc, launched in 1989 and now a global, multi-strategy product which seeks capital appreciation with diversification of risk through exposure to underlying hedge funds either directly or via a wholly owned Cypriot subsidiary Non-Qualifying Investments- Ordinary Share Fund The initial exposure of the Ordinary Share Fund will be to an actively managed portfolio of cash and fixed income investments delivered through GSAM managed and advised collective investment funds. By the end of the third year this exposure will be reduced to up to 30% of the assets of the Company. With a view to maintaining sufficient liquidity to meet Qualifying Investment requirements, TPIM has appointed GSAM as sub-adviser to manage the Ordinary Share Fund s Non-Qualifying Investments. TPIM will remain responsible for the Company s VCTqualifying tax status, in particular by ensuring appropriate levels of Non-Qualifying Investments, and for maintaining sufficient liquidity for Qualifying Investments. GSAM is a leading provider of fixed income management services and was named Fixed Income Manager of the Year by Professional Pensions UK Pensions Awards GSAM s objectives will include: Maintaining liquidity as directed by TPIM High credit quality (at least investment grade on investment) Active management Maximising returns compared to cash deposits with a target gross return of 3 month LIBOR plus 1% per annum Additional returns over the cash benchmark (3 month LIBOR) will be targeted using four main strategies: Duration/Yield Curve management Geographical interest rate management Currency strategies Credit and sector strategies The allocation of risk between strategies is determined on a daily basis in line with an agreed risk tolerance. The above strategies are led by teams based worldwide and are monitored daily with the objective of ensuring that on an aggregated basis the portfolio is in line with the agreed risk tolerance. Borrowing Powers The Company has no present intention to utilise gearing as a strategy for improving or enhancing returns. To the extent that borrowing is required, the Directors will restrict the borrowings of the Company and exercise all voting and other rights or powers of control over its subsidiary undertakings (if any) so as to secure that the aggregate amount of money borrowed by the group, being the Company and any subsidiary undertakings for the time being, (excluding intra-group borrowings), shall not without the previous sanction of an ordinary resolution of the Company exceed a sum equal to 30% of its Net Asset Value at the time of any borrowing (this excludes, in Page 18

19 the case of the New B Share Fund, the leverage applying to the non-qualifying GAM Diversity exposure). Merger with TP Following detailed consideration of the financial position of TP , the Board has reached an agreement with the TP Board to merge with TP (subject to the conditions set out in paragraph 8 of Part IV of this document). The basis of the merger has been simplified to the extent that both the Company and TP are managed by TPIM. The merger will result in the assets and liabilities of TP being transferred to the Company in consideration for the issue of New B Shares to Shareholders. The merger will be completed on a relative net asset value basis and will be subject to the Scheme becoming unconditional. The Board considers that this merger will bring significant benefits to both groups of shareholders through: a reduction in annual running costs for the Enlarged Company compared to the aggregate annual running costs of the two separate companies; creation of a single VCT of a more economically efficient size with a greater capital base over which to spread administration and management costs; the ability to pay larger distributions in the future due to the increased size and the reduced proportionate running costs; and the creation of a single VCT with a greater capital base resulting in increased flexibility to meet the various requirements for qualifying VCT status and providing greater investment flexibility. The mechanism by which the merger will be effected is by: TP being placed into members voluntary liquidation pursuant to a scheme of reconstruction under Section 110 IA 1986; and the assets and liabilities of TP being transferred to the Company in exchange for New B Shares (which will be issued directly to TP Shareholders ). The Board believes that the Scheme provides an efficient way of effecting a merger with an acceptable level of costs compared with other merger routes. Although TP could have acquired the assets and liabilities of the Company, TP5 was selected as the acquirer because of its greater size (and, therefore, a lower stamp duty cost on the transfer of assets and liabilities from TP ). Shareholders should note that the merger will be outside the provisions of the City Code on Takeovers and Mergers. The merger of the two Companies should result in significant cost savings and enhanced administrative efficiency. The aggregate anticipated cost of undertaking the merger by way of the Scheme is estimated to be approximately 86, ,000, including VAT, legal and professional fees, stamp duty and the costs of winding up TP These costs are being borne by TPIM and will not be borne Page 19

20 by either the Company or TP Following completion of the merger by way of the Scheme, annual cost savings for the Enlarged Company of at least 29,000 per annum (representing 0.1% per annum of the projected net assets of the Enlarged Company), are expected to be achieved. TPIM TPIM is a specialist in tax-efficient investments. As well as managing several market-leading VCTs, TPIM also offers investors a range of investment products that qualify for government sponsored tax reliefs including the Enterprise Investment Scheme (EIS) and Business Property Relief (BPR). The Triple Point investment model - focused on capital security, liquidity and tax-enhanced returns has been built around the group s capabilities in taxation, structured finance and investment to the benefit of every Triple Point product. For more information on TPIM please call Investment Manager Incentives As an incentive to accelerate the return of funds to holders of Ordinary Shares and New B Shares after the 5 year holding period under VCT tax rules, TPIM will receive a 1% fee of any amounts returned those shareholders with effect from 1 October 2014 whilst the 2.25% investment management fee will cease to be payable to TPIM also with effect from 1 October Acquisition of the assets and liabilities of TP pursuant to the Scheme The Scheme provides for TP to be put into members voluntary liquidations and for its assets and liabilities to be transferred to the Company in consideration for New B Shares being issued directly to TP Shareholders. Application has been made to the UK Listing Authority for all of the New B Shares to be listed on the Official List and will be made to the London Stock Exchange for such New B Shares to be admitted to trading on its market for listed securities. It is expected that such admission will become effective and that trading in the New B Shares will commence on 1 October The New B Shares will be issued in registered form, will be transferable and will rank pari passu in all respects with each other. Application will be made for the New B Shares to be admitted to the CREST system and it is anticipated that the holders of New B Shares will be able to hold their New B Shares in certificated or uncertificated form. In the case of holders of New B Shares requesting share certificates, it is intended that definitive share certificates will be despatched before 12 October Prior to the despatch of definitive share certificates, transfers will be certified against the register. No temporary documents of title will be issued In the case of holders of New B Shares requesting their New B Shares in uncertificated form, it is expected that the New B Shares will be issued in uncertificated form before 12 October The Scheme is conditional upon the approval by the Shareholders of resolution 1 at the General Meeting and upon the approval by the TP Shareholders of the resolutions to be proposed at the TP General Meetings, as well as the Scheme becoming unconditional. The other conditions to which the Scheme are subject are set out in paragraph 8 of Part IV of this document. Page 20

21 As at 30 June 2009, the unaudited NAV of the Ordinary Shares (taken from the management accounts of the Company at that time) was 17,620,000 (93.7p) and the Ordinary Shares Roll- Over Value (this being the unaudited NAV of the Ordinary Shares as at 30 June 2009 plus adjustments in relation to the Scheme, would have been 17,620,000. As at 30 June 2009, the unaudited NAV of the TP Ordinary Shares (taken from the management accounts of TP at that date) was 3,217,000 (93p) and the TP Ordinary Shares Roll-Over Value (this being the unaudited NAV of the TP Ordinary Shares as at 30 June 2009 plus adjustments in relation to the, would have been 3,217,000 (assuming no dissenting shareholders). New B Shares will be issued pro-rata to TP Shareholders on the register of members of TP on the Record Date (other than dissenting shareholders in TP ). For example and based on the unaudited net asset values referred to above, a holder of 10,000 TP Ordinary Shares would receive New B Shares as follows: NAV per TP Ordinary Share 93.0p NAV per Ordinary Share 93.7p conversion factor Number of New B Shares in the Enlarged Company 9,925 Further information regarding the terms of the Scheme is set out in Part IV of this document. Share Issue and Buy-Back Authorities In order to implement the Scheme, the Company will need to re-designate some of its unissued Ordinary Shares as New B Shares and authorise the Board to allot New B Shares pursuant to the Scheme. The Company will also obtain shareholder authority to issue New B Shares up to a nominal amount of 50,000 (having disapplied pre-emption rights) The Board may consider implementing a buy-back programme in the Enlarged Company if it believes it prudent to do so and subject to the maintenance of adequate working capital, investment requirements and maintenance of VCT status. Any such repurchases will be made in accordance with guidelines established by the Board from time to time and will be subject to the Company having the appropriate authorities from its shareholders and sufficient funds available for this purpose. In pursuing any buy-back policy, the Board s priority will be to ensure that it is acting prudently and in the interests of the remaining shareholders of the Company. Any Share buy-backs will also be subject to the Listing Rules and any applicable law at the relevant time. Shares bought back in the market will ordinarily be cancelled. Cancellation of the Share Premium Account One of the main principles of company law is that the capital of a company should be maintained and therefore a company with share capital must obtain proper consideration for the shares that it issues and must not return funds which have been subscribed for shares except in certain Page 21

22 prescribed ways. The principle of maintenance of capital underlies various provisions of the Companies Acts for example, a company may only make distributions to its members out of distributable profits and a company may not buy back its own shares except in limited circumstances. A company can, however, reduce its share capital in circumstances where creditors will not be adversely affected, provided that the company complies with certain procedural requirements. The Companies Acts provide that a company may reduce its capital by special resolution if its articles of association contain the power to do so and subject to confirmation by the court. A special reserve will then be created from the sums set free from such a cancellation which can be regarded as a distributable reserve. A special resolution is therefore being proposed at the General Meeting to cancel the Company s share premium account. The special reserve to be created following court sanction may be used to fund distributions to shareholders and buy backs or to set off or write off losses against and for other corporate purposes of the Company. Taxation The following information is based on current UK law and practice and is subject to changes therein, and is given by way of general summary and does not constitute legal or tax advice. Any Shareholder in doubt about their position, or who might be subject to tax in a jurisdiction other than the UK, should consult their independent financial adviser. The implementation of the Scheme should not affect the status of the Company as a VCT or the reliefs obtained by Shareholders on subscription of existing Shares. It is the intention of the Board to continue to comply with the requirements of ITA 2007 following implementation of the Scheme so as to continue to qualify as a VCT. General Meeting Notice of the General Meeting is set out at the end of this document. The General Meeting will be held at 12 noon on 15 September 2009 at 4-5 Grosvenor Place, London SW1X 7HJ to approve the resolutions to implement the Proposals. An explanation of the resolutions to the proposed at the General Meeting is set out below: Resolution 1 is a composite resolution to approve the acquisition of the assets and liabilities of TP under the Scheme, to create and issue New B Shares, to adopt an amended set of Articles and to approve a change to the Company s investment policy. Paragraph 1.1 of Resolution 1 will seek the approval of Shareholders for the purchase by the Company of the assets and liabilities of TP pursuant to the Scheme. Paragraph 1.2 of Resolution 1 will approve the re-designation of 5,000,000 of the authorised but unissued Ordinary Shares as New B Shares Paragraph 1.3 of Resolution 1 will authorise the Directors pursuant to section 80 CA 1985 to allot New B Shares up to an aggregate nominal value of 50,000 (representing 26% of the Page 22