Foresight 3 & 4 merger

[BusyBumbleBee]

it has been partly Foresight’s poor investment strategies which have caused the losses and lack
of cash liquidity

Partly?

[parallellines]

I'm struggling to reconcile the comment of page 5 of the F4 half yearly report that "a number [of attractive investment opportunities] are currently in exclusivity" with the statement on page 3 that the company "is unlikely , in the short term, to invest in any new deals until it has greater liquidity".

For sure returning cash to shareholders and improving the discount needs to be the priority here.

[Karellan]

I have often taken issue with their style of reporting and told them so. The optimistic style and repetition of anything achieved , however small , being at variance with the dividends that arrive at my door annoys me greatly. And I am actually having to pay them for it , I just hope that they do not believe it themselves.

[UncleEbenezer]

So will this ever happen?

We've missed out on a divi from F4 any time in 2016, and F3's divi should be due about March. Unless we've moved completely to ad-hoc special dividends. And the discount is still far too big to exit unless one expects things can only go one way ...

A year ago it looked like a return to regular divi and a potential turnaround in NAV and discount. If those aren't being sustained, we need action. In the absence of a better plan, maybe an orderly winding up and return of assets to shareholders.

[Karellan]

an orderly winding up and return of assets to shareholders.

Bliss.

[Retiringat51]

Any shareholder winding up returns whilst there remain any fees pickings available that are tastier than eating the brown coal?

Unlikely, IMO.

[Kidman]

I would like to get shot of both my Foresight 3 and 4 holdings. They are now fairly small, thanks to Foresight and predecessor managers, they pay little in the way of dividends and I see no reasonable future for them. However, I don't want to sell at a high discount plus charges so am attracted to the proposed tender. Sadly, that is an illusion. The tender, if it ever happens, will probably only be for a very small percentage of the company as Foresight invested almost all available cash so it couldn't be used for dividends or tenders. They also needed to invest under the old rules as they couldn't see any opportunities conforming to the new rules.

A wind-up or any other run-off would be very welcome but as pointed out, Foresight will drag this out to maximise fee income. Perhaps 3 and 4 should be merged as a 'C' class into a non-Foresight VCT for that company's manager to try to extract the best return for us, another very unlikely option.

[helfordpirate]

A wind-up or any other run-off would be very welcome

Not by everyone! Having held all the way from Enterprise->Noble->Foresight I have a £32k capital gain from 1998 sheltered in shares now worth £6k! Not really enough to even pay the tax due. Tax, tails, dogs etc. - never again.

[UncleEbenezer]

F4 announces Michael Gray appointed Director. Part of the process of Dicks and Stephens retiring from the board following that vote.

From the RNS:

The appointment of Michael will enable the independent Non-Executive Directors to consider the views of Shareholders following the recent advisory vote on a potential merger with Foresight 3 VCT plc and expect to communicate any conclusions arising therefrom to Shareholders in the near future.

[Kidman]

Michael is very experienced in financial services and was formerly Chairman, Funds for RBS Corporate Bank and Regional Managing Director, Corporate Banking, RBS International.

Is this the group that was involved in 'corporate recovery', resulting in some recent convictions? I hope not (and seriously I don't think so).

Triton Investment Management and GCP Infrastructure Investments are Jersey companies.
As a 50 year old, he has brought down the average age of the Board.
We await further developments.

[127tolmers]

http://www.londonstockexchange.com/exch ... 34424.html

The Board of Foresight 4 VCT plc is pleased to announce that the Net Asset Value as at 31 December 2016 was 73.6p per Ordinary Share.

That's up 1p since 30 September. No announcement yet from F3 who have the same period end.

[Kidman]

The Board of Foresight 3 VCT plc is pleased to announce that the Net Asset Value as at 31 December 2016 was 63.9p per Ordinary Share.

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/FTD/13141807.html

[127tolmers]

So that's up 0.6p or 1% since 30 Sept and not as a good as F4.

[UncleEbenezer]

http://www.investegate.co.uk/article.as ... 03026H9355

It is intended the Merger will be effected pursuant to a scheme of reconstruction under s.110 of the Insolvency Act 1986 by transferring the assets and liabilities of F3 to F4 in consideration for new F4 shares to be issued to F3 shareholders on a relative net asset value basis.

The usual, yesno?

In addition, it is expected that the enlarged VCT will have enough critical mass to generate sufficient income and realisations to meet an attractive dividend target, as well as maintaining a regular program of share buybacks aimed at maintaining a discount to NAV in the region of 10%.

Well, that'll certainly be an improvement if indeed it comes to pass. But didn't some of the earlier messages about a potential merger also talk of a tender offer?

[127tolmers]

Re tender offers: some shareholders will be locked in by the EBB until July 2018 and thus won't be able to participate.

Lets wait for the small print in the large merger prospectus.

Lets see whether Foresight Group are paying for the merger.

[Kidman]

Weren't we told that two F4 directors would be replaced before the Board made an independent decision about the 'possible' merger? We all know that Foresight run these VCTs and not the directors who aren't doing their jobs.

I suggest it is extremely unlikely Foresight will pay anything towards the merger fees. However I did have some discussions months ago which led me to accept that the costs may be recovered by savings within one to two years. Some other recent mergers have had to plan three years for cost recovery.

The tender offer may go ahead but will be a damp squib. I was told that it would only go ahead as far as distributable funds are available and not needed for the company. In other words, at best it may be for 5-10% of the shares. Wasn't this why Foresight spent as much of F4's cash as possible on new investments, so they couldn't be distributed which would have led to a loss of fees?

In other words, as good as no tender, no reason why there should be any divdends, no money to provide discount control, and surely worse of all - no plan to remove Foresight as manager.

[Kidman]

Philip Stephens, the Chairman of Foresight 4 VCT plc, has retired from the Board with effect from today, 31 March 2017.
The Board of Foresight 4 VCT plc today also announces the appointment of Simon Jamieson as Chairman with immediate effect.

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/FTF/13178038.html

[UncleEbenezer]

One could run short of patience here.

Now both VCTs have paid no dividends in more than a year, and gone quiet on the merger. Only activities the F3 mini-fundraise and F4 director changes. Grim and Grimmer may have reduced the discounts from the days of 40%, but still fail to inspire.

[BusyBumbleBee]

So the merger details have been announced see https://uk.advfn.com/stock-market/londo ... n/74651326

And a fund raise of up to £100 million - and that for a company that does not have a successful record of investment - one to avoid I think.

The document contains this statement

As a result, the Offer is not expected to have any material dilution effect on existing Shareholders.

This is a load of what a bullock no longer has.

£100 million : gives a manager's fee of a minimum of £2.25 million while the cash slops around waiting to be [badly] invested, dragging down NAV year on year - which of course comes from all shareholders - new and old. And any gains on existing investments are spread very thinly. See

-- A reduction in Foresight's annual investment management fee from 2.25% of
net assets to 2% of net assets.

-- A reduction in the annual expenses cap from 3.5% of net assets to 2.95%
of net assets.

I shall accept the tender offer I think.

[Kidman]

I shall accept the tender offer I think.

So will I, but I wonder what chance we have of getting our holding accepted in full as the tender is limited to £5m.