Watermark Global Leaders Fund Limited (ASX: WGF) and Equity Trustees Limited (Responsible Entity) have agreed to effect the restructuring of the ownership of WGF’s assets by way of a scheme of arrangement between WGF and WGF Shareholders.
On 12 March 2019, the company released a Restructure scheme booklet in which its Independent Directors have unanimously recommended its shareholders to vote in favour of the Scheme, in the absence of a superior proposal.
This announcement came after Federal Court of Australia authorized the company to convene a meeting of WGF Shareholders to consider and vote on the previously announced scheme of arrangement (Scheme) to delist the company and convert it into an unlisted trust. The Court also approved the dispatch of the Scheme Booklet to WGF shareholders.
Under the scheme, WGF will reduce its share capital to zero, and all WGF Shares will be cancelled by way of the Capital Reduction. WGF will distribute the Units to WGF Shareholders by way of an in-specie distribution to WGF Shareholders. The Capital Reduction requires separate approval from WGF Shareholder.
The WGF Scheme is being conducted contemporaneously with another scheme which is being carried out by Watermark Market Neutral Fund Limited (WMK). Under the WMK Scheme, it is proposed that all the assets of WMK (minus the retention amount retained for paying transaction costs and other liabilities after the implementation date for the WMK Scheme and deferred tax assets) will also be transferred to the Fund.
As a part of the Scheme, WGF is going to retain the retention amount to pay for the transaction costs and other liabilities in relation to the operation of WGF.
One of the reasons for the shareholders to vote in favour of the Scheme is that the scheme will provide shareholders with the ability to apply to withdraw their Units on a monthly basis at NAV. The ability for WGF's Shareholders to withdraw their Units at NAV will allow them to exit their investment at NAV, as opposed to a discount to the NTA that they would have received if they had attempted to sell their WGF Shares prior to the announcement of the Scheme on 20 December 2018.
One of the reasons to vote against the Scheme is that there may be additional administrative and compliance requirements in managing investment in a unit trust which does not apply to investors buying and selling shares on market and via a broker. Further, the Shareholders may deem that the restructure being affected by the Scheme is unnecessary and an unwarranted expense.
In the last six months, the share price of the company has delivered a return of 12.79% as on 11 March 2019. WGF’s shares are trading at $0.970 with a market capitalization of circa $71.15 million as on 12 March 2019 (AEST 4:00 PM). It has 52 weeks high of $1.00 and 52 weeks low $0.850 with an average volume of ~211,402.
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