By Richard Gluyas
Geoff Wilson has secured a victory in the Takeovers Panel in his duel for the listed investment company PM Capital Asian Opportunities Fund (PAF).
The panel decided in favour of Mr Wilson’s WAM Capital, ruling that rival bidder PM Capital Global Opportunities Fund (PGF) had failed to promptly implement appropriate governance controls given the close linkages between PGF and PAF.
Mr Wilson welcomed the panel’s decision, saying it was a partial victory for all PAF’s retail investors.
“The (panel) has confirmed that the boards of PAF and PGF didn’t implement governance protocols appropriate for such closely related entities,” he said.
“The board’s performance is extremely disappointing, and the Paul Moore group’s acquisitions of PAF shares have broken the law, as detailed by the Takeovers Panel.
“PAF shareholders have suffered as a result.”
PAF and PGF are both LICs managed by PM Capital, which is wholly-owned by Mr Moore.
When PGF approached PAF with a proposed scheme of arrangement last September, the same three individuals sat on the board of each company.
Ben Skilbeck, the chief executive of PMC, was the executive director of both companies and neither had any employees.
Governance protocols adopted by the PGF and PAF boards provided for the engagement of a consultant who was appointed a director of PAF only, shortly before a scheme implementation deed was executed.
The deed contained a $500,000 break fee.
The panel found that PGF had recognised the need for governance protocols, but had not implemented them soon enough.
It said there was an “unusually extensive overlap” in the boards and management of PGF, PAF and PM Capital, and that delayed the implementation of governance protocols was unacceptable and had given rise to an association.
This meant that the acquisition of three per cent of PAF shares by the Paul Moore group resulted in a contravention.
A corrected substantial shareholder notice was therefore required, with the disputed shares to be vested in ASIC for sale if the proposed merger did not become effective.
PM Capital said it disagreed with the findings of the Takeovers Panel and was considering all options, including a potential appeal.
The battle for PAF has become increasingly bitter, with Mr Wilson under pressure after The Australian revealed he had said publicly he would advise his daughter not to invest in WAM Capital because it was trading at a premium to its book value.
WAM Capital is using its premium to net tangible assets to make a scrip bid for PAF, which has been trading at a discount to its NTA.
The independent expert Lonergan Edwards advised shareholders to reject the WAM offer and accept the rival in-house bid from PGF, even though its implied value could be lower.
“In our view, the significant dilution in net tangible assets under the WAM offer is not reasonably compensated by the potentially higher consideration,” Lonergan Edwards said.
Mr Wilson said the quoted investment advice to his daughter had been taken out of context.
The stock picker said on Monday that if the PAF and PFG boards had not agreed on an uncommercial break fee, PAF shareholders would have had the benefit of a takeover offer increased by $500,000.
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