Ann: Appendix 3C - Announcement of On-Market Share Buy-Back, page-2

Finally, some positive news.

There are 63 million shares. Net assets = $142.7 million

Jan 31 2020 Post-tax NTA: $2.2653

Rough calc: If they bought back 6.3 million shares at an average price of $1.50 = $9.45 million reduction in net assets

So direct impact on Post-tax NTA = $133.25 million / 56.7 million shares = $2.35

But who knows how much will actually be bought back and at what discounts?

A more accurate way of looking at it is that 10% of the fund has the opportunity to make a return of whatever the current discount to Post-tax NTA is at that time. Let's say the current Post-tax NTA is $2.10. The current discount is $1.475 / $2.10 = 30%. If Post-tax NTA fell to $2.00 the discount is 26%

So regardless of where the discount currently is exactly there is no way TGF are finding investment opportunities elsewhere with guaranteed returns of over 26%

Tribeca has probably been dragged to this due to the reputational impact of running a LIC with such an egregious discount and appalling buy-side liquidity. They run several unlisted funds and Tribeca Investment Partners manages A$1.9 billion. With TGF now having a market cap of only $97 million the ongoing grief, overhead, media articles and Hotcopper threads aren't worth the damage to the rest of the business.

The main impact of a daily buyback with buy-side liquidity of on average 25,000 shares per day (6.3 million / 250 trading days) is that at times when the discount is at ridiculous levels those who feel they just have to get out at whatever price may at least track the typical discount the buyback is being placed at and wait to sell at that level.

So the next question is what discount will TGF instruct this buyback to be run at? If we dreamily imagined around 15% then if Post-tax NTA today is $2.10 then that would mean $1.78

But imagine the rush to get out if there were large volumes available at that price currently? Buy-backs prices and volumes always have to be measured against current selling pressure so as to not exhaust it too quickly.


Why aren't such funds obvious wind-up, takeover or merge targets?

Let's say Pre-tax NTA is currently $2 then Net Assets = $126 million

But you can buy the whole thing for around $97 million at current price, liquidate the portfolio and have around $25 million in cash at the end.

If another LIC takes it over then it gets the Post-tax Asset value (deferred tax assets) so throw in a few more million.

VGI Partners is actively looking but seemingly at ones of bigger scale with a more natural fit
https://www.copyright link/street-talk/vgi-lics-lips-as-discounts-widen-20200218-p541r5

WAM is often on the hunt though again fit is a query:
https://www.copyright link/companies/financial-services/geoff-wilson-triples-profits-amid-franking-credits-crusade-20191031-p5362g

Perhaps most interesting to consider is why Tribeca's two unlisted equivalent funds don't merge with TGF but via acquiring at on-market prices not by converting it at NTA?
https://tribecaip.com/global-natural-resources

There is literally $25-30 million going begging here.

Another way to think about it is that all existing investors in Tribeca's two unlisted equivalent funds should immediately exit at NAV and buy TGF at a 30% discount. They are literally giving up a 30% return on the exact same portfolio!!