Downing Protected VCT III plc
Shareholder Update - Ordinary Shares
4 August 2009
The Company's Chairman, Hugh Gillespie, has today sent a letter to
all Ordinary Shareholders updating them on developments within the
Ordinary Share pool as follows:
"Further capital distribution
I am pleased to inform you that your Company's Ordinary Share pool
has achieved a number of further investment realisations. Each of
the realisations that took place were at (or close to) the previous
valuations and were achieved with the assistance of funding from the
new 'C' Share pool. As a result, the Board has declared a dividend of
8p per Ordinary Share, which will be paid on 28 August 2009 to
Ordinary Shareholders on the register at 14 August 2009.
Returns from the investment
Following the payment of the above dividend, Ordinary Shareholders
will have received total proceeds of 89.0p per share compared to the
original cost, net of income tax relief, of 60p per share. The
tax-free return for original subscribers over the life of the
investment is now 10.8% p.a., which is equivalent to 18.0% gross to a
40% taxpayer. In the Board's opinion this represents a satisfactory
outcome over the last four years.
Performance incentive
The Company has redeemed the loan notes held by the Board and
Management under the performance incentive arrangements at a price
equivalent to 5.0p per Ordinary Share. A total consideration of 8.5p
per Ordinary Share was due under the performance incentive
arrangements, which was higher than we originally anticipated because
funds have been returned to Shareholders at a much quicker rate than
originally envisaged. The Board and Management Team have agreed to
accept the lower sum (and to forgo any further amounts that that
might have become due) for the benefit of Shareholders. As a result,
the above dividend is 3.5p per share higher than would have been the
case if the full entitlement under the performance incentive had been
taken. The Board and Management Team feel that this provides a fair
outcome for Shareholders.
Outlook
After payment of the above dividend, there will be little value left
in the investment. The Ordinary Share pool will have an estimated Net
Asset Value of approximately 1.5p per Ordinary Share, represented by
a small number of investments. The Investment Manager believes that
the current market value of some of the remaining investments is
unacceptably low and is, therefore, unwilling to exit at these
prices. A number of options are being pursued, which may or may not
lead to a sale of the remaining investments at prices higher than the
current valuations. It would be prudent for Ordinary Shareholders to
assume that they will not receive any further returns from this
investment in the near future, however, if and when profitable exits
from the remaining investments are achieved, these proceeds will be
distributed to Shareholders."
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This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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