What could possibly go wrong - Triple Point Income VCT e-shares

[MisterNick]

Hi,

This and Octopus Titan form quite a large percentage of my VCT holdings. (I purchased in March 2017)

Triple Point Income VCT is entering a members voluntary liquidation per the circular here https://www.triplepoint.co.uk/documents/68/

It all looks relatively straight forward to me, but having read on TLF of some of the horrors shareholders have experienced in other VCTs, I seem to have the heebie-jeebies. The cynical side of me seems to think that it is in the liquidator and management companies interest to eek this out over three years to maximise their earnings.
The “relatively straightforward” comment stems from the fact that there are only 9 holdings to dispose of.

I have never had experience of this transaction and never needed to read up on it, so wondered what I should be expecting and whether anything in the circular is capable of misinterpretation. Also, any general thoughts would be welcome.

Many thanks for any comments. Nick

[scotia]

Two recent experiences of VCT voluntary liquidation:-

Artemis VCT went into voluntary liquidation on 1/10/2020. In the preceding year there were a series of substantial dividends as the VCT capital was run down. Following the liquidation, two disposals were paid on 27/11/20 and 27/10/21 (according to my records). A smooth operation, with returns much as expected.
Documentation at https://www.artemisfunds.com/en/gbr/investor/funds-and-prices/notifications/artemis-vct-liquidation

Chrysalis VCT went into voluntary liquidation on 26/11/2020. Three disposal payments were made in November 2021, June 2022 and September 2022 (according to my records.) These payments totalled 46.5p per share. This left Coolabi shares that were sold off by providing a Vendor loan, which should have been redeemed by the end of 2022, and should have provided a final disposal payment of around 5p per share. This has not happened, and it seems unlikely that it will. At the start of the liquidation I believe that the estimated share value was around 52.8p.
Documentation at https://www.downing.co.uk/existing-investor/chrysalis-vct - and see the ongoing discussion on the Lemon Fool

[Kidman]

I would be fairly hopeful that your TP E-share liquidation will proceed smoothly.
A well written explanation document, only a few holdings and they all sound saleable assuming they are income producing. No extra costs (as in Chrysalis where some of the directors are taking consultancy fees during the liquidation), so it is in the liquidator's interest to get it done and dusted. As it says there are three years while all the tax breaks are unaffected and significantly cheaper running costs being in liquidation than remaining as a listed VCT.

[MisterNick]

Thanks for the responses. I have followed the Chrysalis thread and this has probably given me a gloomy perspective.
When I read the TP document, I thought it was clear and well well written, but I had nothing to compare it with.

Feel far more optimistic now, so once again thanks for the replies

[UncleEbenezer]

Thanks for the responses. I have followed the Chrysalis thread and this has probably given me a gloomy perspective.
When I read the TP document, I thought it was clear and well well written, but I had nothing to compare it with.

Feel far more optimistic now, so once again thanks for the replies

Another thread on here is the Ventus. A slow but (eventually) happy outcome.

I wonder how different a VCT liquidation is to a general IT holding unlisted assets? I've held Dunedin Enterprise (DNE) since ... I forget when, but longer ago than your 2017. It's been in slow wind-up all that time, and a very profitable holding.

[MisterNick]

Letter from Liquidator in the post today with link to Investment Managers report

NAV down to £0.19p from £0.647p a year ago. The estimated valuation does not include future running costs or any costs associated with winding up the company,

Vertical Growing is the main culprit £11.5m in Mar 23, £0 in Mar 2024

Ouch

[CrackAddick]

Letter from Liquidator in the post today with link to Investment Managers report
.......

MisterNick Did the Investment managers report go into any detail as to why the value was now zero or why the Triple Point Income VCT accounts are overdue at Companies House? (I have a small holding held in a nominee a/c, so hadn't received anything)

It looks like the most of the Vertical growing companies were effectively Triple Point owned companies that had been used to lend money to Perfectly Fresh (the loans being secured on the assets of Perfectly Fresh).

[MisterNick]

Jack Rose - Head of Sales Triple Point covering letter
The reduction in valuation is due predominantly to the Company’s holdings in controlled environment agriculture failing to secure additional capital.

in the report
Perfectly Fresh’s operations and fund-raising ambitions have been impacted by three areas in recent months:
1/ Venture capital fund raising has reduced across all sectors making it a difficult market to raise
capital in, especially over the last 18 months....
2/ The biggest single challenge to the controlled environment agriculture sector in the last 12 months has been the significant rise in electricity costs,...
3/ Macroeconomic factors in the UK, such as rising inflation, have led to higher build costs for new facilities. In turn, this has put pressure on Perfectly Fresh’s expansion plans and meant that a higher capital amount needed to be sought. This higher capital requirement has led to a perceived increase in risk for potential funders to get Perfectly Fresh to financial viability.

I presume this document is not in any way confidential, but it doesn't seem to be in the public domain. If so i can post more if you want.

[CrackAddick]

MisterNick, thanks for proving that extra info.

Perfectly Fresh Cheshire (PFC) were due to repay their loans to Aeris, Broadpoint and Funding Path on 18th March, so without new funding, maybe PFC were going to/did default. The most recent (March 2023) accounts for Aeris Power, Broadpoint and Funding Path state that post a "Group reorg", the loans to Perfectly Fresh Cheshire was converted into Preference shares in a company called PF Pre-Seed Ltd, in which Triple Point Income VCT has "significant" control.

PF Pre-Seed in turn have a significant control of Oragen Group Ltd, which in turn now has significant control of PFC!

This all smells less than Perfectly Fresh.....

[UncleEbenezer]

NAV down to £0.19p from £0.647p a year ago.

Am I the only one to find this self-contradicting notation irritatingly ambiguous?

£0.19p = £0.19 (19p) or 0.19p (£0.0019)?

[MisterNick]

NAV down to £0.19p from £0.647p a year ago.

Am I the only one to find this self-contradicting notation irritatingly ambiguous?

£0.19p = £0.19 (19p) or 0.19p (£0.0019)?

Apologies for irritating you. It is 19p, and adding the "p" is an error I am usually well aware of.

[MisterNick]

MisterNick, thanks for proving that extra info.

Perfectly Fresh Cheshire (PFC) were due to repay their loans to Aeris, Broadpoint and Funding Path on 18th March, so without new funding, maybe PFC were going to/did default. The most recent (March 2023) accounts for Aeris Power, Broadpoint and Funding Path state that post a "Group reorg", the loans to Perfectly Fresh Cheshire was converted into Preference shares in a company called PF Pre-Seed Ltd, in which Triple Point Income VCT has "significant" control.

PF Pre-Seed in turn have a significant control of Oragen Group Ltd, which in turn now has significant control of PFC!

This all smells less than Perfectly Fresh.....

Thanks.
i was only quoting what I thought was relevant, but there is also this paragraph under the heading "Sector Review"

To align itself with investors and to support the company’s growth and fundraising initiatives, Triple
Point has since Perfectly Fresh’s inception provided it with its working capital and by committing
considerable time, personnel, and resources to support its growth plans and in recent years its
fundraising process. To date, the Partners at Triple Point have invested over £7.06 million of their own
capital in the project, excluding interest, alongside the Company’s investments of £8.56m, excluding
revaluations and interest. This investment is junior to the funds the Company has invested and
therefore acts as a first loss position.

Amongst other paragraphs

[CrackAddick]

MisterNick Thanks once again. Looks like the TP Partners are in deep too then.

I don't suppose there was anything explaining what the path forward is for this investment?? As when you have lost 2/3rds of the trusts NAV in a single investment, you would expect a bit more clarity. Marking the investment down and carrying it in the accounts at zero isn't unusual. But if down the line they manage to salvage something from the wreckage, how will that be distributed to the shareholders etc. when the company is in the process of being wound up.