Deal nears in $375m Chile fund fight

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The Independent Online

The bitter battle for control of one of the biggest Latin American investment trusts appeared close to settlement yesterday after the two warring parties, Regent Kingpin Acquisitions and GT Capital Management announced that they had finally reached a provisional deal.

The outline agreement brings an end to months of warfare over the US $375m (pounds 270m) Chile Fund, which dragged down Chilean shares and trapped millions of pounds invested by some of Britain's biggest managers - including Standard Life and Gartmore.

Under the terms of the deal hammered out between RKA and GT, shareholders in GT's contested Chile Fund will have a choice of investment funds managed by either party or getcash for their shares. The deal still needs the approval of 75 per cent of GT Chile shareholders, the London Stock Exchange, and the Cayman Islands and Chilean authorities.

The takeover battle for the Cayman Islands-based fund, one of the biggest single investors in the Chilean stockmarket, was launched last year by RKA, part of the Regent Pacific Group, in Hong Kong.

Despite opposition from GT, the Chile Fund's managers, RKA managed to seize control of 64 per cent of the investment trust's shares. However, GT, advised by a team at Swiss banking group UBS, together with Barings, fought a rearguard battle over the fund.

Philip Stephens, a managing director at UBS, said: "All the shareholders can get cash, and those investors who want to remain managed by GT can now do so. We hope that a significant proportion of shareholders will choose that option although it is obviously up to them."

Under the terms of the deal two separate funds will be set up, managed by GT and RKA respectively. Minority shareholders in the GT Chile Fund and those holding RKA preference shares will be able to choose either manager or take cash.