Packer Sweetens Exit For Hedge Fund Investors
The Age
Thursday September 11, 2008
JAMES Packer's listed hedge fund, Ellerston GEMS, has sweetened the terms of a scheme enabling shareholders to cash out of the fund.
But the owners of 5% of the shares in the fund argue that it should be wound up immediately to give a better return and said that shareholders should vote down the scheme.Under the terms of the new scheme, the $558 million fund will allow 20% to be paid out instead of only 10%. The rest will receive a part-redemption or must wait until next year when a further 50% 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% of the net asset value of their share at the time. This has now been increased to 95% of the value at the time.Shareholders will only get the full asset value of their units if they stay in the fund until September next year.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 first offer made by Ellerston last month.Shares in the fund yesterday closed at $1.92, 23% less than their value at listing a year ago.The fund lost $42 million over the year in global markets.Despite the poor performance, the managers of the fund were paid $18 million in management fees in the past year.Those who are lobbying for a winding up argue that shareholders should get a more generous payout than that offered by the fund managers.A meeting of shareholders will be held on October 3 in Sydney. If the holders of 50% or more of the 240 million units in the fund vote against the delisting, it will be wound up.
© 2008 The Age
