CIE board says shareholders should take no action
In response to an unsolicited takeover offer made by WAM Capital, Contango Income Generator’s (CIE) board is unanimous that shareholders should take no action.
Earlier this week, WAM Capital made an off-market takeover bid for CIE, offering shareholders an opportunity to exit as CIE failed to provide shareholder value, according to the firm.
However, according to CIE’s board, the offer was “consistent with its earlier efforts to destabilise the company, which is unfortunate and costly distraction given the recent strong endorsement by shareholders of CIE’s new investment strategy”.
The board also noted that it was significant that CIE shareholders approved the new global long short investment strategy, managed by WCM Investment Management (WCM) at the recent extraordinary general meeting (EGM).
Therefore, in respect of the proposed offer, the CIE board said there was no need for shareholders to do anything or to make any decision in relation to it until the board had had an opportunity to fully consider the bidder’s statement and issue its formal recommendation.
Under the proposed offer, there would a be a significant transfer of wealth from CIE shareholders to WAM shareholders where CIE shareholders would receive scrip consideration in WAM with pre-tax net tangible assets (NTA) equivalent to only 58 cents per CIE share, compared with CIE’s last published pre-tax NTA of 73.4 cents per share which would represenet a 21% reduction in NTA per share, the board said.
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