The company behind West Perth-based LinQ Resources Fund has recommended its shareholders vote against a resolution from stakeholder Carrousel Capital, which it says will have a negative effect on the fund's performance.
The company behind West Perth-based LinQ Resources Fund has recommended its shareholders vote against a resolution from stakeholder Carrousel Capital, which it says will have a negative effect on the fund's performance.
LinQ said the proposal, which demands the fund boost its share price and lower its discount to net tangible asset price, would force the introduction of "frequent, regular and unplanned redemptions at NTA less costs at the request of unitholders", which it said would have a negative effect on the fund's performance.
The full text of a LinQ announcement is pasted below
LinQ Capital Ltd, the Responsible Entity for the LinQ Resources Fund (ASX:LRF) (the Fund), has lodged an Explanatory Memorandum in response to the surprise request from a Cayman Islands-based hedge fund, Carrousel, requesting a meeting of unitholders to consider their resolution.
The Board of LinQ Capital recommends that unitholders support LinQ's strategy for the future of the Fund by voting 'NO' to the resolution.
The Chairman of LinQ Capital, Mr Gordon Toll, said unitholders should not support the resolution requiring the Board to develop a written outline of strategies to address the discount to Net Tangible Assets (NTA) which the units trade at on the ASX and provide a regular facility for investors to redeem units at a price equal to NTA less costs.
"LinQ has been successfully addressing the issue of the discount to NTA for some time, including the introduction of a buy-back facility and future initiatives. These strategies are already working, the discount to NTA has been reduced significantly, and the Board is confident that its strategy will continue to benefit all unitholders.
"The Board believes that Carrousel's objective is to force the introduction of frequent, regular and unplanned redemptions at NTA less costs at the request of unitholders and this would have a serious negative effect on your Fund's investment performance. The Fund is already listed on the ASX and investors can trade their units through the exchange.
"Any suggestion that the Fund should introduce frequent and regular redemptions at unitholders' request is totally rejected. This would require the Fund to breach the ASX listing rules; something we cannot and will not do," he said.
The LinQ Resources Fund performed strongly over the year to 30 June 2007. The capital return on the Fund's Portfolio (excluding cash) was approximately 113 per cent with unitholders receiving a distribution of 8.54 cents per unit.
Mr Toll said the Fund was well positioned to capitalise on this strong growth and would also introduce additional initiatives to reduce further the discount to NTA including an aggressive buy-back policy, a planned redemption facility and the more frequent release of NTA figures.
"The Board believes that implementation of these proposals will allow the Fund to maintain its current investment policy, management and style to the benefit of all unitholders.
"As a result we recommend unitholders vote NO to the resolution."
The meeting of unitholders has been convened for Monday 22 October 2007.
A fuller explanation of the Board's recommendation is contained in the Explanatory Memorandum which can be viewed on the LinQ Resources website at www.linqresources.com or obtained from LinQ Capital Ltd.
