Substantial shareholder L1 Capital has confirmed it intends to vote against the conversion of the Platinum Capital into a listed ETF, potentially meaning the deal will be unable to proceed.
Platinum intends to merge two LICs into listed ETFs: Platinum Asia LIC would enter a scheme of arrangement to merge with the open-ended Platinum Asia Fund Complex ETF, which is $85 million in size. Meanwhile, the Platinum Capital LIC would enter a scheme of arrangement to merge with the open-ended $284 million Platinum International Fund Complex ETF.
But it was announced on 12 June that L1 Capital and its holding company First Maven were a substantial shareholder in the Platinum Capital LIC with a 16.8 per cent stake and were against the scheme. This only applies to Platinum Capital LIC, not the Platinum Asia LIC.
At that point in time, Platinum was in early-stage discussions with L1 Capital about a potential merger but no documentation had been signed. However, this changed on 8 July when the parties entered into a binding agreement to merge which will potentially result in a change of control.
While it was unknown at the time of the original announcement whether this opposition meant L1 would vote against or abstain from the vote, it has now been confirmed that the party will be voting against the scheme proceeding resulting in a substantial shareholder risk.
With the scheme needing a high voting threshold of at least 75 per cent of total votes to be passed and at least 50 per cent of shareholders present at the scheme meeting on 12 August, Platinum is urging shareholders to support the scheme as no alternative offer has been put forward by L1 and there is a chance L1’s shareholding may change by the time of scheme meeting.
“Unless as many shareholders as possible cast their votes in favour of the scheme resolution, the scheme resolution has a high probability of failing. This means that shareholders will not be able to exit their shareholding at or around NTA (under the scheme) and the share price discount to NTA is likely to persist.
“If the scheme does not proceed, the board will consider alternative transactions that could address the then board’s key objective of providing a solution, on a continuing basis, to shares trading at a persistent discount to their underlying NTA backing.
“Accordingly, if the scheme is not approved and an alternative transaction is identified by the board, shareholders should expect the company to incur additional costs and for the process to take several months to complete.”
