Amati Merger

[UncleEbenezer]

Message today about the Amati VCTs merging (with real loss of flexibility from the six-month rule). This is from H-L, as my Amati are held in a Vantage account with them.

Not having paid sufficient attention to any relevant RNS notices, I was slightly surprised to see VCT 2 is to absorb VCT 1 rather than vice versa. VCT 1 is the bigger, and I have always thought senior, fund. Both have the same 1.75% management fee, though VCT 2 has a somewhat higher admin fee (both are index-linked).

H-L's note to me refers to a letter to shareholders dated March 9th, which I don't have. Anyone able to share that via LemonFool? Or is it the same as the RNS https://www.investegate.co.uk/amati-vct ... 38423315H/ , which appears to be the relevant one.

[scotia]

H-L's note to me refers to a letter to shareholders dated March 9th, which I don't have. Anyone able to share that via
LemonFool?

Apologies - I received all of the Amati 1 and 2 communications, but I appear to have mislaid them when I was ordered to clear up my work room for the arrival of the grandchildren (my work room doubles as their bunk room). I have looked in all of the likely places that I may have placed them, but can't find them So they are either in a very safe place, or they went out in the scrap paper disposal (which I fear).
Like you I was surprised that VCT2 was gobbling up VCT1, and also like you I was disappointed by the merger which makes the 6 month rule even more onerous. Having recently disposed of some Amati 2, I had originally planned buying some Amati 1, but I think I'll now wait a full 6 months.

[UncleEbenezer]

Thanks for looking!

I guess it would've made more sense to ask H-L. I shall do so on Monday unless someone here finds & shares it or confirms that the RNS contains all that's of interest.

[PinkDalek]

This covering letter?:

http://www.amatiglobal.com/documents/Co ... Letter.pdf

[scotia]

From Amati email today:-

The joint VCT fundraising launched in October 2017 by Amati VCT plc & Amati VCT 2 plc has reached its target of £20m and therefore the Offers are now closed. In view of continued interest from investors and advisers, later this year the Directors of the Company may look to make use of some or all of the £10m over-allotment facility which becomes available under the Offers subject to the completion of the proposed Merger. The extent to which this facility might be used will depend on the availability of new investment opportunities over the next few months.

Its nice to see an approach which does not put the cart before the horse. Hopefully there will be a further fund raise in six months time - so as not to clash with my recent sale of some of my Amati investments.

[BusyBumbleBee]

Its nice to see an approach which does not put the cart before the horse. Hopefully there will be a further fund raise in six months time - so as not to clash with my recent sale of some of my Amati investments.

The offer opened in October and has only just filled. Money dribbles in to the AMATI offers so I would say you have a very good chance of being able to invest. If not they will almost certainly have another low key offer later in the year or early next (tax) year.

Very much the unsung hero of the AIM VCTs.

[Vulgaris]

Amati 1 has had a very good run -- up 50% these last 18 months and outrunning other AIM VCTs.

I now find myself in a quandary. I've been piling up VCT holdings since 2010/11 as pension limits began to bite. I now hold as much as I want, at 12% of all assets. Accordingly I will start selling, leaving a 6 month gap, then re-buying the same or a different VCT so as to keep generating tax relief, which I need to shelter other income, without increasing overall exposure.

Amati was among the first VCTs I bought in any quantity, in 2010/11, so I'm over the 5-year period and the holding ought to be a sizeable part of this ploy.
But I'm loth to be out of the market just now, with the rally continuing, whilst hanging on increases the risk that I'll still be in the 6 month purdah period when the 18/19 offer comes

[rhowitt]

I share the issue of what to sell, however, I would not sell Amati currently. A vibrant AIM market and good management is a powerful combination even if some AIM stocks are fully valued. Rather I would be looking at generalist VCTs who have been most affected by not being able to participate in new MBOs

[scotia]

OK - the Amati Merger Details.
Amati VCT 2 is renamed AMATI AIM VCT
Amati VCT (1) is liquidated, and its shares are converted to AMATI AIM VCT shares.
Its the conversion ratio which I find obscure.

resulting in a rollover ratio of 5.98787 shares in Amati AIM VCT plc being issued for each 10 shares in Amati VCT plc, rounded down to the nearest whole share

What do they mean by that statement? Do they mean "0.598787 shares in Amati AIM VCT plc being issued for each 1 share in Amati VCT plc, rounded down to the nearest whole share"
Or do they mean - "divide your Amati VCT shares by 10, ignore any remainder, then multiply by 5.98787, and ignore any remainder".
I would hope it is the first of the above prescriptions, but then why introduce the concept of 10 Amati shares? Is it just that accountants have a difficulty in contemplating a number less than one share when defining a ratio?

[UncleEbenezer]

Oh, wonderful. Seems I'm losing more than a whole Amati 1 share in the rounding down. 1.40 shares, to be precise

If they'd done the merger the other way, noone could've lost that much. And they'd've pocketed less in the rounding. Contrast the recent (bizarre) share split in SSP, where they rounded down but credited balances in cash (at least, as I understand it).

[scotia]

On the most favourable of my assumptions (simply using 0.598787 as a multiplier, then ignoring fractions), I lose 1.48 Amati (1) shares.
On the least favourable assumption (double rounding) I lose 4.82 Amati (1) shares.

[scotia]

I have received my AMATI AIM VCT share certificate to replace a number of AMATI 1 VCT shares. And now I realise what a further nuisance this merger has been - my AMATI 1 VCT share purchases took place over a number of years. These have been replaced by a single certificate dated 8/5/2018. I assume my original purchase date is still valid for the 5 year rule, but If I want to sell my (previous AMATI 1) shares when they reach the 5 year date, what do I do? Do I need to transfer my single certificate into a nominee account with my broker, then calculate how many of the shares can be sold at each 5 year expiry date? And of course, there is a further complication that I have AMATI 2 share certificates which are now AMATI AIM VCT shares, although the certificates won't be replaced. And remembering the VCT rule that the earliest purchase is sold first, will their dates interact with the AMATI 1 VCT date purchases?

[BusyBumbleBee]

Totally agreed - never did like the idea of the merger - but we can console ourselves with the good gains made this year. I don't want to invest any more into new VCTs so the it doesn't much matter to me - I am content with 5% of NAV each year tax free.

[scotia]

but we can console ourselves with the good gains made this year.

Agreed