Contango Asset Management : WCM Global Long Short Limited | Proposed restructure to address share price discount to net tangible assets

Published: 2022-01-24 22:57:06 ET CGA.AX

Shareholders of WCM Global Long Short Limited (ACN 160 959 991) (ASX:WLS) (the Company or WLS) will be aware from previous announcements that your Board has been focused on improving the performance of the Company's portfolio and addressing the Company's share price discount to net tangible assets per share (NTA).

More specifically, the Board has previously confirmed its intention to monitor the share price closely and prioritise the implementation of corporate strategies to address the discount, should the Company's share price continue at a material discount to NTA per share during the initial two year period of the existing investment management agreement (IMA) with Contango Asset Management Limited (the Manager) and WCM Investment Management, LLC (WCM) as Investment Advisor. It is pleasing that the performance of the investment portfolio has improved since the full implementation of the WCM Quality Global Growth Long Short Equity Strategy on 1 July 2021. However, the Board understands that the share price discount to NTA remains a material concern for the Company's shareholders and, to this end, it established an independent board committee (IBC) to consider and review potential strategies to address this matter.

The Company is now pleased to advise that the IBC is in the process of negotiating the commercial terms of a proposed restructure that it believes will address the share price discount. The proposed restructure would be implemented by way of a capital reduction and scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Scheme).

The Scheme, if implemented, would result in:

If the Scheme is implemented, investors will continue to have access to a portfolio of investments managed by WCM and constructed using the WCM Quality Global Growth Long Short Equity Strategy which was approved by shareholders in September 2020. However, the new trust structure will provide investors the opportunity to enter and exit the fund at values much closer to the underlying NTA of the portfolio.

Implementation of the proposed restructure is expected to be conditional upon the satisfaction of various conditions, including:

Full terms of the proposed restructure will be documented in the Scheme Implementation Deed, which the IBC is currently negotiating on the Company's behalf. A copy of the Scheme Implementation Deed will be released via the ASX once signed.

The WCM Quality Global Growth Long Short Equity Strategy (the Strategy) has, since inception on 30 June 2014, generated a return of 24.2% per annum outperforming its benchmark, the MSCI All Country World Index (Benchmark), by an annualised 9.9% per annum1.

Since the implementation of the Strategy by the Company on 1 July 2021, WLS's portfolio has generated a return of 10.4%, exceeding the Benchmark by 1.2%2. This is a pleasing result, and the improved portfolio performance has been achieved notwithstanding the impact of the market rotation towards value stocks over the past year.

Value of $10,000 invested1

Shareholders are not required to take any action at this time.

Assuming the Scheme Implementation Deed is agreed, full details of the proposed restructure will be provided in the Scheme booklet, which the Company expects will be distributed by April 2022.

An indicative timetable for the restructure is set out below.

*Subject to Court availability

Shareholders consider the resolutions required to approve the proposed restructure

*Subject to Court availability

Scheme orders lodged with ASIC / Last day of trading in the Company's shares on ASX (with shares suspended from trading on ASX from close of trading)

Scheme consideration is issued / The New Head Trust acquires 100% of the Company

Note: These dates are indicative only and subject to change.

1 Data as at 31 December 2021. WCM applies the same investment principles, philosophy and execution approach of its WCM Quality Global Growth Long Short Equity Strategy Composite, which was created on 30 June 2014, to the WLS portfolio. Past performance is not indicative of future performance. Performance is in AUD, net of fees, and includes the reinvestment of all dividends and income. The benchmark for the WLS portfolio is the MSCI All Country World Index (MSCI ACWI Index). For further information please refer to contango.com.au.

2 Inception date refers to the date at which the WLS portfolio was fully invested in the Strategy. Data as at 31 December 2021. Past performance is not indicative of future performance. Performance is in AUD, net of fees, and includes the reinvestment of all dividends and income. The benchmark for the WLS portfolio is the MSCI All Country World Index (MSCI ACWI Index).

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Disclaimer

Contango Asset Management Limited published this content on 25 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 January 2022 03:56:03 UTC.