 The Times Business CommentarySaba at a lossNot all activist shareholders are the same or deliver similar results. The proof? An earlier foray by Saba Capital into the UK - before the US hedge fund's boss Boaz Weinstein started gunning for seven investment trusts.In December 2020, he took an initial 5 per cent in Crystal Amber, the activist fund whose investment adviser Richard Bernstein has lately played a key role in bringing happier times to the shareholders of De La Rue. Without him rallying investors to boot out its former chairman Kevin Loosemore in April 2023, when the shares were around 40p, the banknote printer wouldn't now be looking at a proposed bid at 125p.Anyway, having bought its Crystal Amber stake when the shares were trading at a 28 per cent discount to net asset value, Saba had by June 2021 upped its holding to 25.4 per cent. It was a key level, as Saba knew that in 2013 the fund had set a 75 per cent hurdle for its continuation. It then started throwing its weight around, calling for the fund to be wound up: a plan rejected by 99 per cent of the other shareholders.Even so, by early 2022, investors approved a new investment policy - broadly orderly asset realisations to trade buyers. Saba badgered Crystal Amber to sell its then 24 per cent stake in Equals Group at 45p a share. Thankfully, the fund resisted, finally selling at an average 85p: still a big loss of value, now the payments outfit has agreed a bid at 140p.Whatever, when Saba joined Crystal Amber's register, its net asset value stood at 142p a share. Since then, it has paid out 55p in dividends but still managed to increase NAV to today's 181p, helped by its 16.5 per cent stake in De La Rue.Yet, here's the catch: despite Saba's claims to be a whizz at closing discounts, the hedge fund's antics, including selling assets at the wrong price, have increased it. Crystal Amber shares now stand at 103p: a discount to NAV of 43 per cent. What exactly is the grand plan of Saba, now with 29.8 per cent, to close it? Indeed, if this is typical of its efforts, it's more likely to destroy value than create it. |
Yes, Second paragraph (f) of Part 4 is the reference to the £40,000/month New IMA I referred to. It came into effect after the other clauses were overtaken by the sale of interests.
I expect them to leave it in place,especially because things seem to be moving at DLAR. |
Hi Wbodger,
Is this the document? Page 6? |
I cannot open the page with links to AIM Rule 26, I get blocked by a diversion to DH Interactive or Ocorian.
Fortunately I still have this, previously downloaded, about changing the management fee structure of the Investment Management Agreement of 7th March 2022:
Recommended proposals for a Change of Investment Policy and new
management and incentive arrangements for the Investment Manager
and
Notice of Extraordinary General Meeting
If you can see and can link to that Crystal Amber page (possibly via a Web search on that headline) it includes the change of IMA to a new IMA which involved a significant drop to £40,000 a month as the Fund was being liquidated. Last AGM, presumably adding expenses, my unreliable memory says they passed a motion which provided £50,000/month.
I am waiting to find out what the Board is doing about the IMA, and will post if someone returns my call. There is no need to be secretive, and perhaps the current IMA does not need reviewing. Still, a communication would be nice, even just a motion which would appear in the Minutes. |
Anyone seen an Agenda?
I don't need to rock the boat, but if no-one asks, they'll just renew the Management fee without question and we'll be paying £600,000 a year for management of, basically, DLAR and MM. MM still depends on US approval, so it all depends on the incoming administration.
I will contact Ocorian, or the Board tomorrow or before Friday in case the Agenda is somewhere I haven't looked. If anything relevant I'll post although surely no-one's going to go. |
AI B-shares summary
Crystal Amber Fund Limited's B shares are a proposed share scheme that will allow for capital returns. The B shares will have the following characteristics:
They will be non-transferable
They will not be traded on any exchange, including AIM
They will have limited rights
Each issue and redemption of B shares will be announced via a Regulatory Information Service
A summary of the tax consequences of the proposal will be provided for certain categories of UK tax residents |
CRS own 16.8% of De La Rue |
Rise in CRS could now be larger in that of DLAR today. Seems like a great deal for DLAR, debt sorted out, pension scheme topped up, and cash left on the books. |
De La Rue, a provider of authentication software and currency printing services, said it will sell its authentication division to Crane NXT at an enterprise value of GBP300 million. |
I agree mbaxter, a brain-hurts moment, because of the ‘B’ shares wrinkle. But ignoring it, which is just a mechanism to distribute value, and it is pretty simple:
They only still have DLAR, MMI and odds-and-ends like Allied Minds and Sutton Harbour. The odds-and-ends are worth less than a tenth of the total. The RNS confirms they no longer have any Prax DCUs.
So it looks like end-game. I can see no point in continuing to pay £50,000 a month on admin when the directors have almost no chance to add value to the assets. Anyway there should be a motion about it at the AGM later this month.
Aside from MMI everything else can be monetised and distibuted through ‘B’ shares: DLAR proceeds would be distributed through the mechanism, similarly the best available exit for Allied Minds (and Sutton Harbour etc) taken and distributed and perhaps the CRS listing would then represent the value of MMI alone. (I would welcome clarity on the MMI situation, and how the the "unaudited indicative valuation" is supported.)
Presumably the date for the AGM will be included in a results RNS, which must be about due. |
Performance: https://www.trustnet.com/factsheets/T/C8T2/crystal-amber-fund-limited-ord-1p |
whats the annual charge for this tripe ?
avoid |
Oooo!! My brain hurts. I think the RNS means 'steady as she goes' in terms of their wind-up strategy. |
Trustnet has an article by one of the investors in CA:
//www.trustnet.com/news/13426816/the-woodford-holding-that-was-the-best-performer-for-capital-gearing-this-year
(Not sure how to make the link work. Try it with https: as a prefix, or just google-search the words.) |
4.7 pence reduction in NAV between July 31 and August 31. Vague reference to "unaudited indicative valuation" of Morphic remains word for word the same as September 11 RNS. DLAR share price lost 10% to end of August, that ought to account for about £3.3 million in the NAV calculation, or 4.5 pence per CA share.
Last year Results came out on October 25, and the AGM was on November 22. |
Monday's RNS reiterates the instruction to Winterflood, extending buybacks to October 31 but not committing any more funds to it. The total since December is now at £8,434,313.60 and they had previously authorised £10 million. Technically they could go £34,300 over but probably won't. Clearly they have just retained enough cash for the buyback programme. For reference, even a 10 pps dividend would cost £7.265 million plus Withholding tax. That's not affordable without an exit from DLAR.
But at least Winterflood is offering a more tempting exit if you're impatient. |
They are sensibly buying shares back with existing cash and until they get a realisation ie sale of dela rue they don't have cash to return! |
Do we have any idea when there might be another capital distribution /dividend?
It is a while since the last couple of [big] ones. |
great news. |
Great outcome RB 172p with De la rue also in play ! |
I don't like this financial engineering.
Just pay dividends, or make returns of capital. |
23/5 RNSs: Share repurchases budget pushed out by another £2.5 million. Purchases until 30/6/24.
At an average of 80 pence per share that will buy 3,125,000 shares taking the shares trading to 70 million.
NAV per share as at 30/4 was 115.84, perhaps reflecting improvement of DLAR in April.
Not sure why sellers are accepting 80 pence a share if the portfolio is really valued at nearly 120 (assuming continued improvement in DLAR during May). |
At fewer than 75 million shares in trading hands, £3 million on the NAV is 4 pence on the NAV per share. |
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