Ann: MEETING: MLN: MLN - Non-binding proposed res

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MLN
17/10/2012 17:22
MEETING

REL: 1722 HRS Marlin Global Limited

MEETING: MLN: MLN - Non-binding proposed resolution

17 October 2012

Dear Shareholder

Resolution proposed by Elevation Capital Management Limited for consideration
at the Annual Shareholders' Meeting

Introduction
Marlin has received a proposal dated 15 October 2012 from Elevation Capital
Management Limited (Elevation Capital).  The proposal is that a resolution be
put to shareholders at the Annual Shareholders' Meeting (to be held on 1
November 2012) that the Board terminates the current management agreement
with Fisher Funds, and returns all capital to shareholders.

The Independent Directors of Marlin do not support the Elevation Capital
proposal and urge shareholders to vote against it.

Elevation Capital is the manager of the Elevation Capital Value Fund, which
is a shareholder in Marlin, having purchased shares in September 2012. The
attached letter from Elevation Capital sets out its proposed resolution and
an explanation from Elevation Capital in relation to its proposal.

Marlin Independent Directors Do Not Support the Elevation Capital Proposal

The Independent Directors are firmly of the view that the interests of
shareholders are best served by continuing to operate the Company and not by
winding it up and returning the recovered capital to shareholders.  The
reasons the Independent Directors do not support the proposal are:

o Marlin continues to provide a unique opportunity for New Zealand investors
to invest in a portfolio of global small-cap stocks managed by an experienced
and highly respected investment manager.  The Independent Directors believe
that shareholders should focus on the prospects for Marlin to provide them
with capital growth and dividends over the long term.  All shareholders will
be aware of the turmoil in global equity markets over recent years.  Despite
this, Marlin has been the best performing of 29 comparable New Zealand
portfolio investment entities investing internationally since inception.  The
Independent Directors believe that Marlin is well placed to provide superior
returns to shareholders as global equity markets recover.

o Marlin shares are publicly traded.  All shareholders are free to buy and
sell as they please.  There is no need to wind up the Company for
shareholders to access their capital.

o Elevation Capital focuses on the differential between the Marlin share
price (70 cents as at 15 October 2012) and the Net Asset Value (NAV) of the
Company (83 cents as at 9 October 2012). This is a differential of 16%.
Elevation Capital states that shareholders could receive 81 cents per share
if the Company was wound up and capital distributed.  Shareholders should
note the following:

o Based on advice received from KPMG in 2009 in response to a similar
shareholder proposal and advice from the Manager, the Independent Directors
believe that shareholders could get a payout materially lower than the 81
cents per share suggested by Elevation Capital.  Costs likely to be incurred
in the winding up of Marlin include trading costs as the portfolio is sold,
the manager's termination fee, legal costs and the costs associated with
calling an extraordinary meeting and commissioning an independent report.

o A differential between the share price of a Company and its NAV is not
unusual in listed investment companies. There is nothing extraordinary about
the current situation, indeed the discount has narrowed over the past two
years. The current discount certainly does not warrant anything as extreme
as winding up the Company.  The Manager and Directors have implemented
capital management initiatives that have reduced the average discount from
25% prior to the introduction of the quarterly distribution policy in August
2010 to 14% since, and continue to look to find ways to reduce it further.

o Marlin has a Manager in place whose performance compares extremely
favourably to managers of similar funds.  As noted earlier, the review of the
Manager's performance since inception in 2007 to 31 May 2012, conducted as
part of the recent management contract renewal process, ranked Marlin as a
top performer of 29 New Zealand portfolio investment entities investing
internationally over that timeframe.  Independent research house Morningstar
noted in its report of 4 October 2012 that "Marlin is one of the few
international equities options based out of New Zealand, and we think it's a
great catch".

o Finally, the Independent Directors also note that Elevation Capital (a
competing fund manager) has only been a Marlin shareholder for a matter of
weeks. Shareholders are encouraged to look past this short term opportunism
and focus on the unique opportunity Marlin offers them, the underlying and
undoubted quality of the Manager and the strong results relative to other
international equity options that have been achieved in extremely difficult
markets.

Comments from the Manager, Fisher Funds Management Limited
The Independent Directors have requested Fisher Funds Management Limited to
provide its views on the comments made in Elevation Capital's letter.  A
letter from Fisher Funds Management is attached.

Other Comments on Elevation Capital's Proposal

In addition to our view that Elevation Capital's proposal should not be
supported, there are some other aspects of the proposal we draw to your
attention.

o The resolution proposed by Elevation Capital is a resolution relating to
the management of the Company and, if it was passed, it would not be a
binding resolution.

o The Board of the Company does not have rights to terminate the Management
Agreement except on the occurrence of certain events such as the liquidation,
receivership or insolvency of the Manager or material breach, gross
negligence or serious misconduct by the Manager in the performance of its
duties.  None of those events have occurred.

o With the initial term of the Management Agreement due to expire on 1
November 2012, the Board of the Company has already conducted a comprehensive
review process, and as announced to the NZX, the Management Agreement has
been renewed for a further five years to 1 November 2017.  The Company's
ability not to renew would only have arisen if the Company had been
dissatisfied with the Manager's performance after discussions with the
Manager, had then commissioned an independent expert's review of the
Manager's performance, sent a summary of that review to shareholders and
obtained shareholder approval to the non-renewal.

o If all capital was to be returned to shareholders, approval of shareholders
by special resolution would be required (which would require approval by 75%
or more of the votes cast on a specific special resolution to that effect).

Additional Proxy/Voting Form
Also enclosed is an additional proxy/voting form in relation to the
resolution proposed by Elevation Capital.  If you wish to appoint a proxy to
vote on that resolution please complete and return that form in accordance
with the directions on the form.

The Independent Directors are firmly of the view that the interests of Marlin
shareholders are best served by continuation of the Company and, as stated
earlier, we encourage shareholders to vote against this resolution proposed
by Elevation Capital.

If you are unable to attend the meeting we encourage you to appoint a proxy
to vote on your behalf by completing and returning the enclosed proxy form.

Yours sincerely

Alistair Ryan
Chairman

Carol Campbell
Director

Marlin Global Limited
Attn: The Chairman
PO Box 33549
Takapuna
Auckland
15 October 2012

Resolution proposed by Elevation Capital Management Limited - Manager of the
Elevation Capital Value Fund which is a shareholder in Marlin Global Limited
("Marlin Global").

"That the Board of Marlin Global Limited (MLN:NZX) terminate the current
management contract and return all capital to shareholders at Net Asset Value
less costs of termination, impairments and portfolio liquidation."

Explanation:
As long-standing Marlin Global Shareholders will know an investment in Marlin
Global has been disappointing for a number of reasons:

(i) Since inception, Marlin Global has traded at a persistent and sizeable
discount to Net Asset Value (NAV). This is despite the Board putting in place
a share buy-back and quarterly dividend policy. In our opinion, shareholders
have little prospect of seeing the current discount close if the status quo
prevails. The chart below is sourced from Marlin Global's own website
(www.marlin.co.nz) and vividly illustrates the persistent and sizeable nature
of the discount.

(ii) In June 2009, Mr Gary Cross proposed converting Marlin Global from a
listed investment company to an open-end fund (managed fund) as a means to
address the sizeable and persistent discount at the time. An independent
report by KPMG was commissioned by the Board in September 2009 to review Mr
Cross's proposal. It is interesting to review the Independent Report at this
time. KPMG commented on page 4 of the report that - "In our view, the
objective sought by the Cross Proposal, being the reduction and/or
elimination of the discount to NAV may also be promoted by other means such
as share-buybacks, implementing a managed dividend policy, delisting and
wind-up of Marlin or a combination(s) of these options." Since this
Independent Report was published the Board has implemented share buy-backs
and a managed dividend policy and still a sizeable discount to NAV prevails.
Based on the persistence and size of the discount we believe there are
limited options left for the Board to consider other than delisting and
wind-up as KPMG have previously suggested.

(iii) Since inception, Marlin Global has clearly failed to reach or beat the
performance benchmark (on a cumulative basis) established on page 3 of the
Prospectus (dated 3 October 2007) and detailed in the most the recent Annual
Report for the year ending 30 June 2012 (page 52). This performance benchmark
is detailed as the "Change in the NZX 90 Day Bank Bill Index during the
calculation period plus 5% per annum." We would also point out that there is
no graphical presentation of the performance benchmark versus Marlin Global
in any recent update or on the Company website which as a shareholder we
would like to know why or where it is located? We have sourced the chart
below from Morningstar Direct, which details the NZX 90 Day Bank Bill Index
plus 5% per annum versus the Marlin Global share price, which illustrates the
sizeable underperformance a shareholder has experienced versus the
performance benchmark (on a cumulative basis) set out in the Prospectus.

(iv) Marlin Global has also failed to beat the MSCI Global Small Cap Gross
Index (NZD) as detailed in the August 2012 monthly update published on the
Marlin Global website. According to this document, Marlin Global has
delivered a Total Shareholder Return*(since inception) for the period ending
31 August 2012 of -14% versus the MSCI Global Small Cap Gross Index (NZD)
-7.9%. (*Assumes all dividends are reinvested, but excludes imputation
credits.)

(v) Marlin Global has also underperformed other international equity
offerings available to New Zealand investors since its inception and while we
acknowledge differing strategies,
we would point out that Marlin's performance (total return) has been aided by
the introduction of the dividend policy, which sees the company distribute 2%
of the average unaudited NAV in dividends per quarter (rather than just
distributing the income earned off its investments). With the income stream
from investments below 2% of Marlin Global's unaudited NAV per quarter,
Marlin Global is essentially (at present) selling assets and returning
capital to shareholders to meet these obligations. While we acknowledge this
results in a high yield, we can see no reason why this return of capital is
not expedited and all capital is returned to shareholders rather than a drawn
out process, which exposes investors to further market and manager risk with
the underlying investments and erosion of capital via a high total cost of
operation.

(vi) Marlin Global (in our opinion) has a high cost of operation with a Total
Expense Ratio (TER)averaging 2.48% since inception. Refer the table below,
which sources all data from Marlin Global Annual Reports.

FY12 FY11 FY10 FY09 FY08 Average
Total Equity(NZ$mln)
91.218 108.527 106.384 100.431 94.932
Total Expenses(NZ$mln)
1.747 2.867 3.623 2.339 1.319
TER*(%) 1.92% 2.64% 3.41% 2.33% 2.08%** 2.48%
*Elevation Capital Management Limited calculations/**Annualised

(vii) Marlin Global has recently appointed a new portfolio manager and while
we acknowledge this person's experience, a "wait and see" approach and
renewal of the current management contract on this basis is not satisfactory
(in our opinion) for long suffering Marlin Global shareholders.

Should shareholders vote in favour of this resolution we estimate the value
uplift from the current Marlin Global share price of NZ$ 0.70 cents per share
(cps) as a result of termination of the management contract, impairments and
liquidation of the portfolio would result in a 15.71% return to shareholders,
subject to market conditions and actual costs. (Note: we have estimated
NZ$0.0234cps for the cost of termination, impairment and portfolio
liquidation which should result in a net return of NZ$ 0.8100cps compared to
a published NAV of NZ$ 0.8334 as at 9 October 2012, subject to market
conditions and actual costs.)

We look forward to seeing shareholders and the Board of Marlin Global on
Thursday, 1 November 2012 (10:30am) at the ASM and we would be happy to
present to shareholders the facts that we
have summarised in this letter.

Yours sincerely,
Christopher Swasbrook
Managing Director
Elevation Capital Management Limited

17 October 2012

Dear Shareholder

Fisher Funds' view on the Elevation Capital Proposal

We view the proposal from Elevation Capital Management Limited (Elevation
Capital) as an opportunistic attempt by a competitor of Fisher Funds and
Marlin Global (Marlin), to attract new clients and raise its profile as a
shareholder activist.

Fisher Funds rejects the Elevation Capital proposal and urges shareholders to
vote against it.

In our view, the proposal from Elevation Capital should not be supported for
the following reasons:

1. Elevation Capital is a small and very recent Marlin shareholder with a
history of attempts to achieve short-term gains by seeking to wind up or
return capital from Australasian listed companies. These hostile approaches
have been aimed at making one-off gains for Elevation Capital's investors
rather than supporting the broader shareholder interests of the target
companies.

2.Investors participated in the Marlin IPO on the basis of having a long-term
investment focus. Winding up Marlin just five years after its inception would
be contrary to the objectives of the company and its shareholders.   Marlin
shareholders who have been patient throughout the global financial crisis
should not have the opportunity to achieve their long-term investment
objectives removed, in order to make a one-off and relatively limited gain.

Addressing specific points raised by Elevation Capital

Elevation Capital Statement: Para (i)
"Shareholders have little prospect of seeing the current discount close if
the status quo prevails".

Many companies and most listed investment companies trade at a discount to
NAV. This is not a new phenomenon and does not mean that long-term value
can't be generated for shareholders while a discount exists. The discount is
more transparent for Marlin than many operational companies because it is
published each week.  If every listed company was wound up when a short-term
gain could be made upon realisation of the underlying assets, New Zealand
would have a very small capital market.  Decisions about wind up must be made
on the basis of long-term potential for shareholder value not short-term,
opportunistic gains based on a relatively modest discount.

We challenge Elevation Capital's statement that the discount will not close.
The Marlin Board has taken steps to close the discount in the past which has
had a significantly positive effect on the discount.

In addition, when appetite in the broad market or interest in a particular
stock increases, the discount can close quickly. We see no reason why that
would not happen in future.  As an example, appetite for the New Zealand
share market has returned and the discount of Marlin's sister company,
Kingfish Limited, which was as high as 39% in 2007 had narrowed to 8.5% at 30
September 2012.

It is also worth remembering that not all of Marlin shareholders bought at
IPO.  More than 1,000 shareholders, including Elevation Capital, have
purchased their Marlin shares at a discount. Some of those shareholders have
already enjoyed the benefits of the discount subsequently narrowing.

The following table highlights how the Marlin discount has differed each
financial year. It has reduced substantially as the board has introduced new
capital management initiatives and as markets have recovered.

Financial year to 30 June Average Discount
2008     21.37%
2009     31.65%
2010     20.68%
2011     13.68%
2012     14.78%

Elevation Capital Statement: Para (iii)
"Marlin has clearly failed to reach or beat the performance benchmark..."

This statement is simply not true.  Fisher Funds has received performance
fees for Marlin, and these are only paid if our performance (audited and
measured by the change in NAV) exceeds the performance benchmark.
Performance fees have been earned despite the Marlin performance hurdle (NZX
90 Day Bank Bill plus 5% per annum) being the highest of comparable funds
available in the New Zealand market.  Elevation Capital wrongly compares the
Marlin share price with the performance benchmark.

Elevation Capital Statement: Para (v)
"Marlin has also underperformed other international equity offerings..."

The Marlin Board has already conducted research on Fisher Funds' performance
as part of its process in considering renewal of the management agreement.  A
summary of the results of that review are attached in Appendix 1.

We believe it is misleading to compare Marlin with other companies that have
completely different investment strategies.  That is akin to saying that
Telecom should be wound up because it has under-performed other New Zealand
shares on the market, such as Ryman Healthcare, even though both companies
clearly operate in completely different sectors.

Elevation Capital Statement: Para (v)
"Marlin Global is essentially (at present) selling assets and returning
capital to shareholders to meet these obligations... we can see no reason why
this return of capital is not expedited and all capital is returned to
shareholders rather than a drawn out process".

The reasons the capital should not be returned to shareholders immediately
are that:

1. Shareholders have embraced the dividend policy of Marlin and regularly
advise Fisher Funds and the Board that they enjoy the attractive and
consistent yield on their investment.  There are relatively few investments
with similar yields on the New Zealand share market.

2. Returning capital would remove the significant opportunity that exists for
shareholders to achieve capital gains in the future - both through a
narrowing of the discount and through strong market and portfolio
performance.

To illustrate this point, after the proposal was presented by Gary Cross to
wind up the company in July 2009, the total shareholder return was 44% over
the following two years.  The discount immediately prior to the proposal was
25%.  The Board and shareholders would clearly have been unwise to accept a
short-term gain of less than 20% rather than enjoying a longer term gain of
double that amount.

Elevation Capital Statement: Para (vi)
"Marlin Global ... has a high cost of operation with a Total Expense Ratio
(TER) averaging 2.48% since inception".

Marlin's costs are higher than comparable unlisted funds due to listing costs
and corporate governance, but are lower than similar investment vehicles
available internationally.  It is worth noting that the 2010 TER was
adversely affected by the costs associated with the Cross proposal and that
both the 2010 and 2011 TERs included performance fees (despite Elevation
Capital's suggestion that Marlin has never outperformed the performance
benchmark).

The 2012 and 2008 TERs are based on a reduced management fee of 0.75% of
gross asset value.  This is an important and unique feature of Marlin's fee
structure - Fisher Funds receives a lower management fee in the event that it
achieves a return less than the deposit rate.  No other fund manager in New
Zealand offers investors the same alignment of interests.

Elevation Capital Statement: Para (vii)
"Marlin Global has recently appointed a new portfolio manager and while we
acknowledge this person's experience ... renewal of the management contract
on this basis is not satisfactory (in our opinion) for long suffering Marlin
Global shareholders".

We challenge the grounds for Elevation Capital's statement that Marlin Global
shareholders are "long suffering". This statement is certainly contrary to
the feedback we receive from shareholders, particularly those who have
experienced Marlin's longer-term outperformance.  A shareholder who bought at
IPO and sold out in the first four months of this year would have received a
positive total shareholder return of between 1.5% and 5.3% return (depending
on the month they sold).  This is hardly "suffering", and is a creditable
achievement given the difficult market environment that has prevailed during
Marlin's lifetime.

The Manager of Marlin is Fisher Funds. While investment personnel may change
from time to time, as has been the case with the resignation of Ken Applegate
and the appointment of Roger Garrett as the new portfolio manager, the same
investment strategy and philosophy has been applied to the Marlin portfolio
during the transition process. Rather than a cause for criticism, we believe
the transition to a new and very experienced international investment team
has ensured continuity of management and minimal distruption.

Marlin Global remains a unique, hand-picked portfolio of international growth
companies managed by a team of investment professionals with a time-tested
investment approach.
We look forward to meeting you at the Annual Shareholders Meeting and
encourage you to vote against this opportunistic proposal.

Yours sincerely
Carmel Fisher
Managing Director

(Carmel Fisher is an executive director of Marlin and is also a director and
shareholder of Fisher Funds Management Limited).

Appendix 1: Morningstar Review of Marlin Global Performance
As part of the Marlin management agreement renewal process, the Board of
Marlin has sourced data from Morningstar which has been reviewed by an
independent actuary and shows that Marlin's performance to be ahead of its
peers over 5 years. Marlin's performance is ranked 1st out of 24 over 5 years
and 14th out of 27 over three years compared with similar-sized and
structured international domiciled small cap funds:

Additionally, Marlin's performance is ranked 1 out of 29 over 5 years and
12th out of 40 when compared with similar-sized and structured New Zealand
domiciled portfolio investment entities investing in equities internationally
(all data is to 31 May 2012):
End CA:00228564 For:MLN    Type:MEETING    Time:2012-10-17 17:22:44