“(RE is a governance structure thatlooks after investors’ interests in a fund in return of [sic] a small fee)”.An RE is supposed to look after investors’ interests but that hasoften not been the case. E+P - especiallyat URF- has been a glaring example of how conflicts of interest, or even mereincompetence, work against investors. The whole RE regime is based on wishful thinking-it relies on the unrealistic premise that an RE will act honestly, diligentlyand put investors’ interests first, even though there may be strong commercial drivesin direct conflict with that. The failed merger proposal by E&P last year was a grotesque example of that. It is hightime that parliament reconsidered this flawed regime.
. “The unitholdersvote is scheduled for June 19 and would need support of 50 per cent of theregister for K2 to come in”.NO -the resolutions are decided by 50%+ of the numbers of votes that are cast-not by the total register. Often large numbersof small investors don’t vote.
Much as I wantE&P to depart asap, I see little merit in K2’s proposal, scope for conflictand the risk that their appointment would make it harder to attract third partyapproaches for M+A activity, secondary sales etc. Why wouldn’ta fund manager want to acquire a $2.5m pa fee stream, for little or niloutlay? K2did not even show respect to investors by making a formal presentation of theircredentials and asking for our support: just the very late and brief lists ofselling points, when opposition emerged. K2 obviously thought this wasa fait accompli to which they were entitled. Many investors will be desperate to dumpE&P, but I think a longer game will be more productive.
I have voted NOfor all my holdings ($2m+). Not advice. DYOR.
CD3 Price at posting:
$1.48 Sentiment: Buy Disclosure: Held
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