Fred Woolard's blog

http://fredwoollard.blogspot.com.au/
Asset Resolution Ltd
A large part of our time and effort during the year, especially in recent months, has been devoted to Asset Resolution Ltd. ARL is an unlisted Australian public company with a complex history. Over the last two years, we acquired 18% of ARL at less than half of its net asset value. As ARL’s publicly stated strategy was to sell all its assets, and return the proceeds to shareholders, this was an unusually attractive situation. After each of our ARL purchases, the company repaid us more than we paid, meaning that our ARL shares effectively cost us less than zero.
In April 2015, Hamilton Securities, an investment company 37% owned by the Fund, launched a takeover bid for ARL at less than half of ARL’s net asset value. The Fund supported Hamilton’s bid by providing Hamilton with an interest free loan facility and an offer to underwrite a rights issue, for which it charged no underwriting fee.[1]
Hamilton’s bid was accepted by 6% of ARL shareholders. Soon after the bid closed, we called a meeting of ARL shareholders to replace the board. On 11^th September 2015, Fred Woollard and two of our nominees became directors of ARL, pledging to list ARL’s shares on disallowed and turn ARL into an investment company.
ARL appears in our list of holdings as 10.9% of the Fund. This is before a capital repayment in July that reduced the weighting to its current level of about 5%. Arguably, this undervalues ARL as it prices ARL at less than half of its net asset value.