This article is from the Australian Property Journal archive
360 Capital Group is again attempting to secure management rights to ASX-listed Australian Enhanced Income Fund (AYF), after the takeover target announced its board is exploring multiple ways to close or sell off the fund.
Elstree Investment Management Limited is currently the responsible entity for the fund (AYF), which invests in debt equity hybrid securities.
360 Capital is the fund’s largest unitholder, recently taking an 18.7% stake in the fund and twice putting forward unsolicited proposals early this month after initially making contact in 2019.
After EYR’s announcement, 360 Capital offered $0.12 per unit to all unitholders AYR as a special payment upon 360 Capital FM Limited being appointed as responsible entity, which will be from 360 Capital.
A notice of meeting will be sent to all unitholders.
“We note the current responsible entity has resolved to not treat all unitholders equally by offering some unitholders a redemption facility and not others,” 360 Capital said.
“The responsible entity of a managed investment scheme has a fiduciary obligation to treat all unitholders equally and we are seeking legal advice to the validity of the responsible entity’s decision. If unitholders elect to redeem, they will miss out on the $0.12 per unit special payment from 360 Capital Group.”
360 Capital is being advised by Clayton Utz and Cambridge Investment Partners.
In its earlier statement, AYR said the Board has, “for some time” considered the future of the fund.
“Its small size has resulted in a higher than acceptable expense ratio and limited liquidity and various factors have made it difficult to grow the fund.
“Over the past few years, the performance of the fund has been excellent with the result that even with the high expense ratio, unitholders have done far better than they could have with a market portfolio of hybrids or an investment in one of the other hybrid funds. This may change in the future.”
It said the board would consider multiple alternatives over the next six months, including closure of the fund, the sale of the fund to another manager, and the sale of the empty trust, as well as considering any further unsolicited approaches.
Meanwhile, 360 Capital has fully repaid its $19.8 million childcare loan, advanced in October 2019. The IRR on the loan over this period was 11.7%.
Following repayment, the group’s cash balance is in excess of $100 million.
