Unhappy Return For Packer Backers
Sydney Morning Herald
Wednesday October 8, 2008
UNIT holders who bought into James Packer's listed hedge fund, Ellerston GEMS, when it floated last year are likely to lose 20 per cent of their investment if they choose to cash in part of their stake at the end of this month.
The crimped payout reflects a dramatic slump in the value of the fund in the past month.The value of the fund fell by $36 million, or 7 per cent, to $509 million in September, well down from the $600 million it was worth last year.Most unit holders who are choosing to cash in are doing so because of the poor performance of the fund, which has been trading well under its asset value.As part of a deal agreed to late last Friday, the holders of 48 million units can choose to cash out their holdings by taking part of the fund's $20 million in cash reserves. But Ellerston's managers estimated on Monday that unit holders would get $2.02 for each unit, down from the $2.50 they paid when the fund listed in July last year.The payout rate is also down on the $2.16 they had been expecting based on the fund's better performance in August.A final figure will be released on October 14.Ellerston GEMS's chief investment officer, Ashok Jacob, warned on Friday that the return would be slashed because of chaos in world equity markets.The value of the units was calculated using the fund's worth at the end of September, which Mr Jacob described as the "worst month that I have ever come across in the investment and hedge-fund world". Unit holders can choose to hold their stakes - but they risk further falls in the value of the fund, which has invested in various companies including a Turkish bank, America's largest natural gas producer and one of the world's largest commodity exchanges, as well as Tabcorp, Toll and Foster's.A further 30 per cent of the units in the fund can be cashed out in June next year.The units, which will continue trading until November 4, closed 2c lower at $1.76 yesterday.
© 2008 Sydney Morning Herald
