Wilson free to go again, page-6

Hi Oceaneagle,

Agree re buyback - I just can't see NAOS doing this without some major pressure from shareholders. I suggest as many shareholders as possible attend the AGM as possible and put forward many questions on these issues!

I got out of NSC mid-month, selling my original holding that I bought just post GFC. As part of my due diligence before exit I looked at GW being our knight in shining armor ... but concluded this unlikely for a very long time. Reasons being the management agreement that NSC was gifted when they took over. As I read it:

- NAOS can't be ousted in initial 5 year term (of which there's over 4 years to run)
- NAOS can be ousted after 5 years ... but they get paid their management fee for the whole of the second 5 year period anyway!

So, if they were ousted immediately after the end of the first 5 year period ... I calculate that the cost would be 1.15% x no. years remaining off the portfolio value. Given the portfolio is leveraged by ~15% - this would be a massive 6.6% off NTA given to NAOS in cash or a transfer of holding for them to walk away! They could be ousted at the end of the second term (9 years away) without penalty ... but it has to be done then as a third term will automatically start and then it'll be another 5 years worth of fees to get rid of them.

I can't believe this agreement got up and that the then CTN directors thought this was reasonable (the previous agreement with Contango had a higher fee, but exit clause was far more favourable to the LIC). I voted against it - but maybe I should have been on HotCopper at the time trying to spread the word.

I hope for remaining holder that NAOS can turn the performance around. If low liquidity/large holdings (like COG) do well, its possible.