I have actually called Wilson Asset Management team and asked...

I have actually called Wilson Asset Management team and asked about this. They were extremely informative with how it all works.
Technically, it's not "cash holding" but it is profit reserves. It's earnings that have been booked out at the end of the month and have tax paid on them (separate to franking credits). It's quite a complex structure, hence why LIC's are different to something more simple like an ETF that just pays out all earnings after fees. That was my understanding of how it was explained to me.

If you'd like to know more, call them. They called me back the same day and were very helpful and knowledgeable.