Packer Fund Sweetens Cash-out Scheme
Sydney Morning Herald
Thursday September 11, 2008
JAMES PACKER'S listed hedge fund, Ellerston GEMS, has sweetened the terms of a scheme enabling shareholders to cash out.
But the owners of 5 per cent of shares in the fund who argue it should be wound up immediately said shareholders should vote down the scheme because they can get a better return by cashing in now. Under the terms, the fund will allow 20 per cent to be paid out instead of only 10 per cent of the value of the $558 million fund. The rest will receive a part-redemption or must wait until next year when a further 50 per cent of the fund will be allowed to cash in.Under the previous proposal, shareholders who wished to take their money before 2010 would only be paid 92.5 per cent of the net asset value of their share at the time. This has been increased to 95 per cent. Shareholders will only get the full asset value if they stay in until September 2009.Shareholders had hoped to get as much as $2.33 for each share - the net asset value at the end of July. But under the proposal they are likely to get $2.21 at most, up from the estimated $2.15 they would have got under the offer made last month by Ellerston.Shares closed yesterday at $1.92, 23 per cent less than their value at listing a year ago. The fund lost $42 million in a tumultuous year in global markets. Despite the performance, managers were paid $18 million in management fees. Those who are lobbying for a winding up argue that shareholders should get a more generous payout than that offered by the fund managers. They say that Ellerston will need to generate a return of 44 per cent next year and 59 per cent after two years for unitholders to be in an equivalent position to that prevailing if they vote for the immediate winding up. One shareholder, John Dalley, said last night he remained unsatisfied with the outcome."Having [the redemption] progressively over time and at a discount is not our objective but it's good to see that they are coming closer to an acceptable solution," he said. "But it is still not where we want it to end up." A meeting for shareholders to vote on the proposed delisting will be held on October 3 in Sydney. If the holders of 50 per cent or more of the 240 million units vote against the delisting, it will be wound up. The fund is named after Mr Packer's polo and golfing estate in the Hunter Valley, and promoted itself at listing as giving people a chance to invest alongside Mr Packer and profit from the strategies used by his family company, Consolidated Press Holdings. As the unit price sank, Mr Packer's private investment company soaked up stock, increasing his stake to 14 per cent from 8 per cent.
© 2008 Sydney Morning Herald
