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

Company’s existing share classes will benefit from fixed costs being spread across a larger asset base,
they will continue, however, to be subject to the overall financial position and performance of that
Company as a number of accounting, company law and VCT tests are applied at Company level. In
addition, if, on liquidation, in the unlikely event there was a deficit in relation to one share class, such
deficit would be borne by the other share classes.
Existing Shareholders will be given the opportunity to receive additional Infrastructure Shares under the
Offer (which will be in both Companies) through the reinvestment of initial commission payable to
financial intermediaries (should their financial intermediary so direct) and a further loyalty commission,
which, in aggregate will be equivalent to 5.5% of the amount invested. Existing shareholders who
subscribe for Infrastructure Shares directly under the Offer will also receive an equivalent incentive.
In order to launch the Offer, approval from Shareholders is required to amend the Articles of each
Company to provide for the new class of Infrastructure Shares, to authorise the Board to issue such
shares (having dis-applied pre-emption rights and enter into promotion, management and performance
incentive arrangements for the Infrastructure Shares fund which are regarded as related party
transactions with Foresight Group. In addition, each Board is seeking Shareholder approval to make
market purchases of Infrastructure Shares from time to time, as well as cancel the share premium which
will be created on the issue of the Infrastructure Shares to create reserves to be used for general
corporate purposes. Such authorities are being sought pursuant to Resolution 1 to be proposed at each
of the Foresight 1 Meetings and the Foresight 2 Meetings. The approval of Shareholders is required
pursuant to CA 2006 and the Articles (other than the approval of the related party transactions which is
required pursuant to the Listing Rules). Shareholder approval under the Listing Rules is also required to
purchase shares at a price higher than 105% of the average of the mid-market quotations of the
Infrastructure Shares for the five business days preceding the purchase.
If the Resolutions are not approved, the Companies will continue in their current forms and the proposed
Offer will not be launched (save that if the Resolutions are passed by one Company and not the other,
the former may decide to proceed with an offer independently).
Details relating to the Infrastructure Shares and related proposals (in particular the Foresight 1 Related
Party Transactions and the Foresight 2 Related Party Transactions) are set out in Part II of this
document. The Offer will, subject to Resolution 1 being passed at each of the Foresight 1 Meetings and
the Foresight 2 Meetings, be contained in a prospectus to be issued jointly by the Companies.
Enhanced Buyback Schemes
Following the positive response from Shareholders of Foresight 1 of an enhanced buyback scheme in
respect of its ordinary shares earlier in the year, each Board intends to provide a new opportunity for its
Shareholders to tender Ordinary Shares in its Company and, in respect of Foresight 2, Foresight 2 C
Shares. The shares of the relevant class of the relevant Company will be repurchased at a price
equivalent to the latest published NAV per relevant share class (less transaction costs) and the proceeds
reinvested in new shares of the relevant share class at a price equivalent to the latest published NAV per
relevant share class.
Each Board will only proceed in offering an enhanced buyback scheme over, in aggregate per Company,
up to 10% of the issued Ordinary Share capital in its Company and/or, in the case of Foresight 2, up to
10% of the issued Foresight 2 C Share capital, if, and to the extent permitted by statutory and other
regulatory provisions and if it considers this to be in the best interests of the relevant Company.
Enhanced buybacks are an efficient mechanism for significantly reducing the cost at which a market sale
of VCT shares can normally be achieved for reinvestment on attractive terms as VCT shares are
generally bought back in the market at a discount to the prevailing net asset value and the typical ‘all in’
prices of fresh issues of VCT shares are usually at a premium of 5.5% of NAV. An enhanced buyback,
therefore, rewards shareholder loyalty with further up front VCT tax relief (depending on the qualifying
status of the shareholder) for reinvesting in the relevant Company and not in another VCT.
The purchase and allotment of shares of the relevant class in the relevant Company at a price equivalent
to their respective most recently published net asset value (less transaction costs) pursuant to an
enhanced buyback scheme will require the approval by the Shareholders of the relevant Company.
Resolution 2 to be proposed at the Foresight 1 Meetings and Resolutions 2 and 3 to be proposed at the
Foresight 2 Meetings seek such approvals. The approval of Shareholders is required pursuant to CA
2006 and the Articles. Shareholder approval under the Listing Rules is also required to purchase shares
of the relevant class of the relevant company at a price higher than 105% of the average of the
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