Appointment of K2

I have spoken with both K2 and Samuel Terry over the last couple of days. Having had these conversations, I'm still making up my mind on the best path forward, but here are their respective arguments as I interpreted them.

Note: none of this should be taken as gospel, this was just my understanding. STAM / K2 may not agree with this summary, I may have mischaracterised / misheard etc. etc.

K2

• Internalisation being undertaken by unitholders (as opposed to the manager) is irregular and will be difficult to pull off, it may result in a breach of s601 of the corps act if not executed correctly. K2 are hiring the supporting team of accountants, admin people etc. and this would be hard for an internal manager to reproduce.
• A new tender process will need to be undertaken, will result in E&P staying as RE for another 6+ months before an internal RE could be installed.
• K2 are aligned with the liquidation of the fund, they are not seeking to draw out the process and noted they are inquiring as to whether the buyback can be accelerated. They see a business opportunity to be the stewards of underperforming Funds such as URF which need to be liquidated in an orderly fashion to max value for unitholders. There are many other examples on the ASX, so if they can prove themselves on URF, there is a longer term business model that doesn't require them to draw out the liquidation.
• K2 will create a unitholder advisory committee to ensure interests are aligned as much as possible.

STAM

• Appointing K2 is risky given they are a loss-making entity, who effectively need this transaction to be consummated to stay in business over the medium term. This introduces a significant risk to URF holders if they can't turn the ship around.
• E&P have a legal responsibility to the Fund, so in the event that an internalisation is not achievable, they would be obligated to continue to act as RE, so URF would not be left in the lurch.
• STAM thinks the new E&P team are doing a good job, so no need to rock the boat, safer to stay with the status quo.

So to my mind it comes down to risk appetite. I thought the K2 team was credible, and could likely do a better job accelerating a liquidation / reducing discount to NAV, but clearly there is some level of additional risk vs. the status quo.