Boards propose merger of three trusts

The boards of three venture capital trusts (VCTs) have proposed a merger. Under the proposals, the assets and liabilities of the Pennine Downing Aim and Ethical Aim trusts will transfer into Pennine Downing Aim VCT 2 on January 16, 2008.

In return, Pennine Downing Aim and Ethical Aim investors will receive new shares in Pennine Downing Aim VCT 2. The trusts also announced a special 10p interim dividend, to be paid if the schemes become unconditional, shortly after the effective date.

According to an announcement to the London Stock Exchange last week, the merger aims to spread investment management and administration costs and to diversify risk. The boards predict a cost saving of at least £250,000 a year.

Following changes to the regulations in 2004, VCTs can merge without prejudicing the tax reliefs obtained by shareholders on their original investments.