The beleaguered hedge fund Absolute Capital caved in last night to a list of demands from rebel shareholders who were threatening to block restructuring proposals and force some of its funds into liquidation.
In a revised restructuring proposal released last night, AbCap executives introduced several changes to address most of the concerns raised by the rebels. The development comes days before a crucial shareholder vote on Saturday at a hotel in Grand Cayman to approve the overhaul of four of its eight funds that together manage more than half of the Mallorca-based firm's $3.2bn in assets.
A group of holdouts, being advised by London law firm Simmons & Simmons, said they had corralled enough support for a blocking stake of 25 per cent on the firm's Absolute Octane Fund, and were likely to be able to do so as well on the Absolute European Catalyst Fund. The funds manage $553m between them. Under Cayman Islands law, AbCap's proposals, under which investors have been asked to lock up their money for 12 months while AbCap tries to unwind illiquid holdings, must be approved by 75 per cent of investors. If the votes fail, funds will be put into immediate liquidation.
The chief executive Jonathan Treacher said the new scheme should smooth the way for approval. He said: "We believe that the undertakings we're giving in respect of the restructuring proposals will go a long way to allaying any residual concerns investors may have with the proposed restructuring, and that those investors which have remained undecided thus far will now support our proposals."
In AbCap's new proposal, for example, it said it would reset the base value of the funds based on the highest of its values reached over the next three months. Before it had proposed to reset them at the lower present value, meaning that executives would be able to reap higher fees as the funds' health improved.Reuse content