The board of Hunter Hall Global Value has hit back at claims made by Wilson Asset Management regarding the adequacy of its governance and rejected the company’s request for a share buyback.
On 19 January 2017, Wilson Asset Management (WAM) chair Geoff Wilson wrote a letter to the board of the listed investment company asking the board to buy back shareholders’ stakes at net tangible asset value to give shareholders the opportunity to “exit the company at fair value”.
Mr Wilson said WAM had sought to work with the Hunter Hall Global Value (HHV) board to close the discount to net tangible assets through governance related advice since WAM began purchasing shares in the company in July 2013, but added that Peter Hall’s resignation from the LIC and its parent company Hunter Hall Limited posed a challenge to investors.
“The corporate governance crisis caused by the unexpected and unprofessional resignation of Peter Hall – founder, chief executive officer, chief investment officer and portfolio manager of HHV’s investment manager, Hunter Hall Limited – has created new problems for shareholders,” he said.
In a response issued to the ASX on 24 January, HHV said the company “does not agree with a number of assertions” made by Mr Wilson.
“There is no ‘corporate governance crisis’, as asserted in the WAM letter, caused by Mr Hall’s resignation as a director of HHV earlier this month,” HHV said.
“It was appropriate and is in accordance with market practice for Mr Hall to resign as a director of the company immediately following his resignation from the roles of CEO and CIO of the company’s investment manager.”
Furthermore, HHV said Mr Wilson’s request for a share buyback “incorrectly implies that the entry and exit feature of a listed investment company such as HHV should be the same to those of a unit trust”.
HHV said it would likely have to liquidate all its assets to find enough liquidity to offer the buyback WAM had requested, which would be inequitable for shareholders looking to remain invested in the company.
“The board of HHV firmly believes that the buyback proposed by WAM is not in the best interests of HHV shareholders,” the company said.