Dominic McCormick
Select Asset Management has moved to block what it describes as a “special deal” that would allow a favourable exit for two hedge fund investors from the LinQ Resources Fund.
Select issued a statement late on Tuesday in which it said it believed the arrangement was “both unfair and unreasonable to other investors” and said it had written to those investors informing them of its view.
Select is claiming that the proposals, to be put to an extraordinary general meeting of LinQ shareholders in Perth later this month, involve allowing the two offshore hedge funds to exit LinQ at a 10 per cent and 15 per cent discount respectively to the value of LinQ’s net tangible assets.
It said this special deal compared to the current discount on market of over 25 per cent.
The company said that it was also very concerned that the structuring of the proposals, if passed, would potentially burden remaining investors with unwarranted debt and a further unit overhang in the current volatile environment.
Commenting on the move, Select chief investment officer Dominic McCormick said investors, the broader market and regulators should be deeply concerned that the integrity of listed trusts and investment companies were at stake.
“We are a great supporter of active capital management and providing measures that narrow discounts for investors, but they should be measures that provide benefits for all investors, not just a couple of noisy hedge funds where the manager’s primary justification could be seen as protecting their own fees,” he said.
