MA Credit Income Trust’s Buy-Back Could Shift Unit Liquidity and Voting Power
Equity Trustees Limited announces an off-market buy-back offer for MA Credit Income Trust units, allowing eligible unitholders to sell up to 5% of total units at net asset value as of 31 December 2025.
- Off-market buy-back offer for up to 5% of MA1 units
- Buy-back price set at NAV per unit on 31 December 2025
- Buy-back open from 1 to 22 December 2025 with record date 24 November
- Units bought back will be cancelled, reducing total units on issue
- Tax implications outlined for Australian and New Zealand unitholders
Overview of the Buy-Back
Equity Trustees Limited, acting as the Responsible Entity for MA Credit Income Trust (ASX, MA1), has announced a significant capital management initiative, an off-market equal access buy-back offer. This offer allows eligible unitholders to tender up to 5% of the Trust's total units at a price equal to the net asset value (NAV) per unit as calculated on 31 December 2025.
The buy-back is designed to provide unitholders with a flexible and cost-effective way to exit their investment, without the need to sell on-market where units can sometimes trade at a discount to NAV. Importantly, the buy-back price will be determined by an independent administrator, ensuring transparency and fairness.
Key Dates and Participation Details
The buy-back record date is set for 24 November 2025, meaning unitholders registered by this date are eligible to participate. Personalized buy-back election forms will be dispatched on 27 November, with the offer officially opening on 1 December and closing at 7, 00pm Sydney time on 22 December 2025.
Unitholders wishing to participate must submit their election forms by the closing date. If the total units tendered exceed 5% of the Trust's issued units, a scale-back mechanism will apply proportionally to ensure the buy-back does not exceed this limit. Units bought back will be transferred to the Responsible Entity and cancelled on 2 January 2026, effectively reducing the total units on issue from approximately 285.9 million to around 271.6 million if the full 5% is bought back.
Financial and Structural Implications
The buy-back will be funded from the Trust’s assets, including proceeds from the redemption of units in the underlying fund. This capital management move is expected to enhance unit value by reducing supply and potentially improving liquidity dynamics. However, the reduction in units may also impact trading liquidity and increase the voting power of unitholders who do not participate.
Equity Trustees Limited confirms it holds no units in the Trust, nor do its associates, ensuring the buy-back is conducted on an equal access basis without conflicts of interest. The buy-back is not expected to change control of the Trust.
Tax Considerations and Risks
Participating unitholders should be aware of the tax consequences. Australian unitholders may realise capital gains or losses depending on their cost base relative to the buy-back price, with potential eligibility for discounted capital gains tax treatment if units have been held for over 12 months. New Zealand unitholders face tax implications under either the foreign investment fund rules or dividend tax rules, depending on their circumstances.
The Responsible Entity advises unitholders to seek professional tax advice before deciding to participate. Additionally, there is a risk of scale-back if demand exceeds the buy-back limit, and unitholders who sell will lose future exposure to the Trust’s performance on the units sold.
Next Steps for Investors
Unitholders who do not wish to participate need take no action and will retain their holdings unchanged. Those interested should carefully review the detailed buy-back booklet available on the MA Financial website and consider their individual circumstances. The offer represents a strategic opportunity to realise value at NAV, potentially superior to on-market sales, but requires timely action before the 22 December deadline.
Bottom Line?
The MA Credit Income Trust buy-back offers a rare chance for unitholders to exit at NAV, but participation decisions will shape the Trust’s capital structure and future trading dynamics.
Questions in the middle?
- What level of unitholder participation will trigger a scale-back?
- How will the buy-back impact the Trust’s liquidity and unit price post-cancellation?
- Will the Responsible Entity consider future buy-backs or other capital management initiatives?