BH Macro is offering shareholders the chance to exit now via a tender. They are instituting some transition arrangements covering the period between the tender and March 2019. After March 2019 it will be easier to exit the fund without paying a big penalty.
100% Tender
BH Macro is holding a tender for all its shares at a price equivalent to 96% of asset value. The tender will happen next year, based on the net asset value at the end of February. 2% of the asset value will go to the manager as compensation for its fees. The other 2% stays in the fund benefitting the remaining shareholders. If two thirds or more of the shares head for the exit, the fund will be liquidated (though they might move the goalposts to 75%). BH Macro say they’ll pay out the proceeds of the tender in April 2017. They will also convert any share class that has less than $25m of assets into another share class.
10% exit penalty
Assuming BH Macro survives this tender, there will be a transition period where the fund will have to pay a 10% penalty to cash in its investment in the Master Fund. This period will last until 1 March 2019. During this time, the annual management fee will drop to 0.5% from 2% but the managers will still get their 20% performance fee and a 0.5% operational services fee. Some of the company’s articles, relating to class closures and annual partial capital returns, will not apply for 2016, 2017 and 2018.
Discount triggered discontinuation vote
Between 1 December 2017 and 30 November 2018, any class of shares that trades at an average 8% of higher discount will face a discontinuation vote. If they lose the vote, these classes will pay out 97.5% of net asset value with the rest staying in the Master Fund. The fund would pay out half the money after February 2019 and the other half after May 2019. If all the classes lose the vote, then they’ll liquidate the whole fund.
Post March 20219
If the fund survive post March 2019, the lower fees will still apply and the class closure provisions will kick in again. The trigger for class closure will be an 8% discount though. The 10% penalty falls away and the notice period under the management agreement will reduce to 3 months from 2 years.
BHMG / BHMU : BH Macro says exit now or after March 2019 unless you want to pay a big penalty