Why Is L1 Capital Blocking Platinum Capital’s ETF Restructure?
L1 Capital and its associates, holding nearly 17% of Platinum Capital, oppose the proposed restructure into an ETF, while the Board urges shareholders to approve the scheme.
- L1 Capital holds 16.85% stake and opposes the scheme
- Proposed restructure converts shares into Platinum International Fund Complex ETF units
- Board maintains scheme is in shareholders’ best interest
- Scheme booklet with expert report expected late June or early July
- No competing proposal from L1 Capital yet; alternative plans if scheme fails
Background to the Scheme
Platinum Capital Limited (ASX – PMC) is pursuing a significant restructure via a scheme of arrangement that would allow shareholders to swap their existing shares for units in the Platinum International Fund Complex ETF (ASX – PIXX). This move aims to address the persistent discount of the company’s share price to its net tangible assets (NTA) by transitioning to an actively managed ETF structure.
L1 Capital’s Opposition
However, a major shareholder, L1 Capital Pty Limited, along with its associated entities, which collectively hold 16.85% of PMC shares, has publicly declared its opposition to the scheme. They have confirmed they will not vote in favour of the restructure at the upcoming scheme meeting. This dissent introduces a notable hurdle for the Board, as the scheme requires shareholder approval to proceed.
Board’s Position and Next Steps
Despite this opposition, the Board remains confident that the scheme is in the best interests of shareholders and continues to recommend its approval. They have indicated that a detailed Scheme Booklet, including the directors’ rationale and an independent expert’s report, will be distributed to shareholders in late June or early July. This document will be critical in informing shareholders ahead of the vote.
Potential Outcomes if the Scheme Fails
Should the scheme not gain the necessary approval, the Board has signalled its intention to explore alternative transaction structures aimed at reducing the share price discount to NTA. While no competing proposal has yet emerged from L1 Capital, their opposition leaves open the possibility of alternative strategies or negotiations in the near future.
Market Implications
This development underscores the challenges faced by investment companies in managing shareholder expectations and market valuations. The outcome of the scheme vote will be closely watched, as it could set a precedent for how listed investment companies address structural inefficiencies and shareholder value concerns.
Bottom Line?
The upcoming shareholder vote will be a pivotal moment for Platinum Capital’s future direction and market positioning.
Questions in the middle?
- Will L1 Capital propose an alternative restructuring plan if the scheme fails?
- How will other major shareholders respond to L1 Capital’s opposition?
- What impact will the scheme vote outcome have on PMC’s share price and discount to NTA?
