Keydata Income VCT 1 plc


 
TIDMKIV 
 
Keydata Income VCT 1 plc and Keydata Income VCT 2 plc 
 
Merger Update and Suspension of Share Listing 
 
The Boards of Keydata Income VCT 1 plc and Keydata Income VCT 2 plc and 
Foresight VCT plc (together "the Companies") today announce that, following the 
merger talks announcement on 19 May 2010, terms for the merger of the Companies 
have been agreed between their respective Boards. 
 
The merger requires the approval of the Companies' shareholders and would be 
effected pursuant to a scheme of reconstruction under s.110 of the Insolvency 
Act 1986 whereby the assets and liabilities of Keydata Income VCT 1 plc and 
Keydata Income VCT 2 plc (the Keydata VCTs) would be transferred to Foresight 
VCT plc in consideration for the issue of Foresight VCT plc ordinary shares 
directly to the shareholders of the Keydata VCTs. A merger effected on this 
basis would be outside the City Code on Takeovers and Mergers. 
 
For the purposes of the merger the underlying value of the assets owned by the 
Keydata VCTs is considered to be made up of two component parts: the physical 
valuation of the assets (mainly engines and gasification equipment in storage 
and cash at bank) and the future operational value of the assets once they are 
generating electricity and potentially inputting to the National Grid. 
 
In recognition of both the current physical valuation and future operational 
value of these assets, it is proposed that the proceeds of the merger for the 
Keydata VCTs' shareholders should be satisfied in two tranches: 
 
  * Initially, on the date of the merger, ordinary shares in Foresight VCT plc 
    will be issued to Keydata VCT shareholders based on a physical valuation of 
    the Keydata VCTs assets at that time. As a consequence of the exclusion of 
    the future operational value of these assets, this physical valuation will 
    be significantly lower than the last announced net asset value of the shares 
    of the  Keydata VCTs; and 
 
  * Further entitlement to additional ordinary shares in Foresight VCT plc 
    shares will be granted as deferred consideration to Keydata VCTs' 
    shareholders. This deferred consideration will be issued after 30 September 
    2013, which will give sufficient time for the plant to be built and the 
    assets to achieve necessary performance milestones. It is anticipated that, 
    if the plant is operationally successful, the value of the deferred 
    consideration will compensate Keydata shareholders for the difference 
    between the physical valuation of the assets at the time of merger and the 
    net asset value of their shares in Keydata VCTs at that time (less merger 
    costs). 
 
The Boards of the Keydata VCTs believe that the above structure takes account of 
the current and potential value of the assets of the Keydata VCTs and recognises 
the execution risks that Foresight VCT plc will be assuming as a consequence of 
the proposed merger. Foresight Group, the Companies' investment manager, is 
confident that the assets can be successfully deployed so as to achieve the 
performance milestones, thereby triggering the deferred consideration payment in 
2013. Although the payment of the deferred consideration is not guaranteed, 
Foresight Group has secured commitments from Foresight VCT plc and other funds 
managed by Foresight Group to invest a further  GBP3 million in the project which 
reflects their confidence in a successful outcome. 
 
The Keydata VCTs are required to publish their annual financial report for the 
year ended 30 April 2010 by 31 August 2010.  As described above the Companies, 
continue to progress the proposed merger, and as a result the Keydata VCTs 
annual financial reports will not be published as required by the Listing Rules 
and therefore the listings of the ordinary shares of the Keydata VCTs have been 
suspended today, 1 September 2010, and will remain so until such time as the 
Keydata VCTs' shareholders have voted on the proposals. Assuming the merger 
proposals are successful, it is expected that the Keydata VCTs' shareholders 
will receive Foresight VCT plc ordinary shares in October 2010 which will be 
listed and tradeable on the London Stock Exchange. 
 
The Companies expect to convene general meetings to vote on the proposals during 
October 2010 and full details of the terms of the proposed merger will be 
published in the coming weeks. 
 
 
 
For further information please contact: 
 
 
 
Gary Fraser, Foresight Group: 01732 471800 
 
 
 
[HUG#1441843] 
 
 
 
 
 
 
 
 
This announcement is distributed by Thomson Reuters on behalf of 
Thomson Reuters clients. The owner of this announcement warrants that: 
(i) the releases contained herein are protected by copyright and 
    other applicable laws; and 
(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
 
Source: Keydata Income VCT 1 plc via Thomson Reuters ONE
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