FORESIGHT VCT PLC FORESIGHT 2 VCT PLC ... - Foresight Group

Cancellation of Share Premium
Cancelling share premium allows a Company to create a special reserve that can assist in writing off
losses, which will enhance the ability to make distributions. It also facilitates a Company’s ability, where
required, to implement buy backs. The issue of Infrastructure Shares would result in the creation of
share premium for both Companies.
The Boards are therefore seeking the approval of Shareholders to cancel the amount standing to the
credit of the share premium account attributable to the Infrastructure Shares, subject to the sanction of
the Court.
Related Party Transactions
Foresight Group will be appointed as the promoter to the Offer and as investment manager to the
Infrastructure Shares fund.
With regard to its appointment as the promoter to the Offer, Foresight Group will be paid a commission of
5.5% of the gross proceeds raised from which all costs and expenses of the Offer will be paid including
initial intermediary commission but excluding trail commission. Any costs above this will be met by
Foresight Group.
Foresight Group’s appointment as investment manager in respect of the Infrastructure Shares fund will
be on the following terms for each Company:
. An annual management fee of an amount equivalent to 1.75% of the net assets of the
Infrastructure Shares fund (calculated and payable quarterly in advance, together with any
applicable VAT). This will be effected by way of a supplemental investment management
agreement amending the terms of the existing investment management agreement.
. Performance incentive fees of an amount equal in value to 15% of Distributions made to the
holders of Infrastructure Shares in excess of 100p per Infrastructure Share (issued under the
Offer and remaining in issue at the date of calculation). No payment of the performance
incentive fee will be made to Foresight Group until Distributions exceed 100p per
Infrastructure Share (issued under the Offer and remaining in issue at the date of
calculation). The performance incentive fee may, at the discretion of the Board, be
satisfied wholly or partly in cash or by the issue of new Infrastructure Shares (subject to the
issue of shares not being in breach of the Listing Rules, cause the relevant Company to lose
VCT status or result in Foresight Group, together with concert parties, having to make an
offer under the Takeover Code). In respect of an issue of new Infrastructure Shares,
Foresight Group will be entitled to subscribe at par for a number of Infrastructure Shares
which, on issue, will have an aggregate net asset value (using the most recently published net
asset value per Infrastructure Share in the relevant Company) equal to the amount payable in
respect of the performance incentive fee.
Foresight Group is regarded as a ‘related party’ of each Company under the Listing Rules, being an
investment manager of a closed-ended investment fund.
The above promotion, annual management fee and performance incentive fee arrangements in respect
of the Offer and the Infrastructure Shares fund are, therefore, related party transactions for each
Company and require the approval of Shareholders of the relevant Company pursuant to the Listing
Rules. Shareholder approvals of these arrangements with Foresight Group are required in respect of
each Company (Foresight 1 Related Party Transactions and Foresight 2 Related Party Transactions
respectively).
Foresight 1 Meetings and Foresight 2 Meetings
The approval of each Company’s Shareholders is required to implement the above proposals and is
being sought pursuant to Resolution 1 to be proposed at each of the Foresight 1 Meetings and at each of
the Foresight 2 Meetings. An explanation of the Resolutions is set out in full in Part IV of this document. If
the Resolutions are not passed by both Companies, then the Offer will not proceed and each Company
will continue in the existing form. If the Resolutions are not passed by one Company, then the other
Company will consider making an offer for subscription of Infrastructure Shares independently. In
respect of both Companies, the Infrastructure Share proposals are not conditional on the enhanced
buyback scheme proposals having been approved by the relevant Company’s Shareholders.
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