Posts

A rolodex of the firms with an interest in the CD Funds

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Summary : With all of the recent machinations, I've decided to maintain a single blog post listing all of the firms with an interest in the CD Funds. There are various intentions: from passively riding the discount opportunity to active interest in clipping some part of the ticket. My main motivation in informing CD Fund shareholders is that they actively organise and advocate for their own interests: such as blocking adverse restructures (e.g. E&P's attempt to convert to an evergreen mashup fund); seeking mergers/exits at fair but not desperate prices (e.g. Pengana's PE1 proposals); extracting timely concessions (e.g. from K2 Asset Management in taking over as responsible entity); or encouraging institutional owners (e.g. WAM) to build stakes and speed up divestment and distributions. New Site : I now run a site dedicated to eliminating almost all ASX Closed End Funds. I maintain a post on the CD Funds on that site. See: >  Captive Capital Patience and vigilance rem
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What are Wilson Asset Management's intentions for the CD Funds?

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Summary : On 9 June 2023, a Wilson Asset Management fund - WAM Strategic Value - posted a media release advising it is voting No to the proposal for KAM to take over as responsible entity of the CD Funds. WAR disclosed it owned CD1, CD2 and CD3 and wants divestment and return of capital expedited. In this post, I provide further details of WAR's CD Fund holdings and discuss WAM's options and possible intentions regarding the CD Funds. If WAM is playing chess; who is playing checkers?
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Voting advice on KAM taking over as responsible entity

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Summary : On 15 May 2023, E&P released ASX announcements for all three CD funds of a proposal to transition its responsible entity role to K2 Asset Management (KAM). E&P's many failures to act in investor's interests have been exposed on this blog and in the media. In their haste to dispatch E&P, CD Fund investors may consider almost any alternative as better. However, KAM hasn't explained how it would be better serving CD Fund investor interests (expediting distributions and realisation via merger or secondary sales). In this post, I detailed several reasons why CD Fund investors should default to voting NO to the Proposal for KAM to take over. Update 19 June : KAM was voted in as RE for all CD Funds. I've updated this post with the commitments it's made in relation to the vote. Don't let E&P burn investors one last time on the way out!
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E&P vultures hide the CD Funds carcass but will it work?

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Summary : The AFR recently revealed the latest material information E&P hadn't disclosed to investors: that Pengana Capital has made two bids for the CD Funds and is very keen on consolidating them into its ASX private equity fund PE1 . E&P not only rejected the proposals and prevented due diligence, but kept everything secret from investors, perhaps hoping Pengana would give up and no other would-be predators would be aroused. E&P seems to think it owns the funds to run for its own interests; "captive capital" indeed! Investors need to contact their CD Fund Directors to insist that merger proposals are actively encouraged in a competitve and transparent way that reaches the best feasible outcome for shareholders (not E&P). CD Fund investors voted overwhelmingly against the proposals put forward by E&P and the current Directors. Investors will obviously need to keep the pressure on and, ultimately, the current Directors may need to be replaced if no
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What companies do CD3 LP Funds own as of Sept 2022?

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Summary : The massive CD1/2/3 discounts are due to E&P's lack of effort and competence in managing such funds, and their history with investor debacles like URF. I do more to provide meaningful insights, unpaid, with a few hours of my free time, than E&P has done in several years. E&P waste millions in investor funds working on proposals that benefit them but are not desired by CD Fund investors, and then spend more fending off acquisition by other funds (e.g. Pengana). Previously, I detailed the specific companies owned by CD2 and CD4. Since then, E&P has actually deleted it's website pages that listed portfolio companies!  Is that an appropriate action for a Responsible Entity?! Using the Wayback Machine I will be republishing these company lists and then, as before, adding extra insight. In this post, I will provide some insight into the specific companies that CD3 owns via its U.S. LP Funds. The more they hide data, the more damning this gets!
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How will CD4 investors ever be able to sell or exit their fund?

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Summary : It turns out that a majority in all four CD funds voted against E&P's Merger Proposal, and given CD4 investors were the only ones who had any chance of benefiting, it is even more humiliating for E&P that they also voted against - presumably because they simply don't trust E&P! But this leaves CD4 investors with an unresolved key problem: E&P has provided no feasible mechanism for them to sell or exit their investment; they can only wait for distributions that are mostly several years away. In this post, I excerpt the shocking truth about what the CD4 PDS said about the ability to sell/exit, and then recommend what a responsible entity should do immediately (list the fund). Thanks to E&P there is still no right to exit for CD4 at any time!
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Merger Proposal dispensed with, next up the Directors and E&P

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  Summary : In a humiliating retreat , the CD Fund Merger Proposal was withdrawn by E&P on Oct 31st as votes already cast made passing the resolutions impossible. Immediate distributions were then announced for CD1, CD2, CD3 releasing some of the cash holdings. However, the work for investors is unfinished. There has almost certainly been a majority vote of no confidence in both the Directors and E&P. The Directors should be replaced. And E&P should then be forced to hand over to a more competent and responsible entity to govern all CD Funds, including CD4 which has the biggest issue of no feasible ability to sell. A humiliating retreat but if they aren't finished off we'll be back here again!
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What are the true aims of the CD fund Merger Proposal?

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Summary : On 26 Oct, E&P released details of its Updated Merger Proposal via a Supplementary Explanatory Memorandum and PDS . I previously summarised concerning questions regarding what the Updated Merger Proposal nominally offers compared to the reality when you parse the tricky language and obfuscation. In this post, I provide further details on the stated aims of the Merger Proposal with my commentary. And then I clarify the true aims, which unsurprisingly are in E&P's interests, not investors in CD1, CD2 or CD3. E&P has already let slip the true aims and can't delete them!
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Concerning questions about the Merger Proposal Update details

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 Summary : Just a week after releasing the secret Merger Proposal, E&P flagged major changes after furious feedback from CD1/2/3 investors seeing they were going to be trapped for several years. On 26 Oct, the details arrived in the form of a Supplementary Explanatory Memorandum and PDS. In a subsequent more detailed post, I will conduct a full examination of the actual purpose of the Merger Proposal. For now, I will simply list a few pertinent questions CD1/2/3 shareholders should consider before voting. Savvy investors can now see the real motivations of the Merger Proposal
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What companies do CD4 LP Funds own as of Sept 2022?

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Summary : In prior posts using CD2 as an example, I explained that if E&P were a truly responsible entity it would be adding value for shareholders by providing a continuous flow of accurate, meaningful information on what each CD fund owns rather than a black box or incomplete, out-of-date or misleading data.  In this post, I will utilise the disclosures in the Explanatory Memorandum to provide some insight into what CD4 owns. This is particularly relevant for CD1/2/3 shareholders as CD4 companies (and their marked-up valuations) will suddenly become their biggest exposure if the Merger Proposal succeeds. An opaque CD4 portfolio is a minefield for CD1/2/3 investors if the merger vote succeeds!
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