Pirate investors between rock and hard place
INVESTORS in two frozen stockmarket funds, both named after dead buccaneers, have been left with choosing between the lesser of two evils in a Brisbane-based takeover offer.
An independent expert has said the offer to buy out shares in Henry Morgan Ltd and Benjamin Hornigold Ltd is unfair as it is too cheap.
But the same expert, Leadenhall Corporate Advisory, said the offer is also reasonable because of risks associated with the two funds continuing on their own - even though a takeover itself contained potential pitfalls.
The two funds have share-based takeover offers from their investment manager John Bridgeman Ltd, and all three entities are run by Brisbane-based Stuart McAuliffe, who cited his academic studies of Napoleon and Julius Caesar as helping spur his investment strategies.
John Bridgeman Ltd, listed on the little-known NSX, is offering to swap 0.95 of one its shares for every Henry Morgan Ltd share, and 0.65 of its shares for every Benjamin Hornigold Ltd share. Both funds have had their trading frozen on the ASX.
The expert estimated the John Bridgeman Ltd offer was worth at least 57c a share and needed to be at least 28c higher to be a fair price in a takeover of Henry Morgan Ltd. It was worth at least 39c and need to be 13c higher in the Benjamin Hornigold Ltd offer.
But if investors did not agree to the takeover, then the share prices of both funds could suffer selling pressure once their stock was unfrozen, the experts warned. Further, the expert said both funds would be unlikely to attract any outside capital due to factors including perceived conflicts of interest.
The advantage of the takeover would include reducing their operating costs as a listed company, the experts said.
But they also said that being part of John Bridgeman Ltd "might not be desirable for some shareholders". This due to the investment manager's "mixed investment track record" and the "seemingly difficult relationship" between John Bridgeman Ltd and regulators "may persist".
John Bridgeman Ltd shares might also attract "an ongoing discount" partly due to its complex operations, they said.
The pirate funds and investment manager were last week subject to rowdy annual general meetings with investor questions heavily curtailed or unanswered.