Shareholders will vote on BH Global fees – BH Global’s board has been thinking about how to respond to the investment manager’s letter demanding a fee increase. The manager asked that the fee rate be increased from 1% to 2% and that this increased rate be applied unconditionally to the NAV, removing from the calculation the concepts of reference NAV and base NAV which currently help mitigate the effective cost to shareholders.
The board has consulted the company’s professional advisers and has tried to continue the fee discussions with the manager that were underway before the letter arrived. The board has also listened to shareholder feedback.
The board says that it has made, in good faith, various proposals to the manager but the manager has been unwilling to consider any reasonable alternative to the terms that it put forward in its letter. Some shareholders have indicated that they are minded, albeit in most cases reluctantly, to accept the manager’s proposed fee increase. The board thinks that shareholders, as a whole, should be given the opportunity to determine whether the new fee arrangements should be accepted. It will convene an extraordinary general meeting to allow shareholders to consider and, if they see fit, approve the changes to the fee arrangements.
On the other hand, some shareholders may not want to remain invested in the company if the new fee arrangements are accepted. Consequently, the board has been considering how to best facilitate an exit for any dissenting shareholders, bearing in mind the constraints of the investment management agreement. Again, the board has made various proposals to the manager, but at this stage at least, no agreement has been reached with the manager regarding a relaxation of the constraints to which the company is subject under the agreement.
The board has been advised that the provisions of the agreement permit the board to consider, and implement, a return of capital for those shareholders who want it. Following the EGM, and if the new fee proposals are approved, the board will seek to implement such return of capital on the most advantageous terms for shareholders.
A shareholder circular setting out full details of the fee proposals and giving notice of the EGM has been prepared by the company’s advisers, and is being submitted today to the Financial Conduct Authority for its review. A further announcement will be made by the company when that circular has been approved and is ready for publication.
[We would head for the exit – managers demanding fee increases in this manner do not deserve your support.]
BHGU / BHGG : Shareholders will vote on BH Global fees