Magellan targets shareholder meeting to solve standoff

Magellan’s battle with activist investor Nicholas Bolton has taken a turn with a unitholder meeting that could potentially resolve a stand-off and put up to $500m back into investors’ pockets.

Entrepreneur and activist investor Nicholas Bolton in Melbourne.

Global fund manager Magellan’s battle with activist investor Nicholas Bolton has taken a new turn with a unitholder meeting slated for the first half of 2024 to potentially resolve a long-running stand-off that could put up to $500m back into investors’ pockets.

Keybridge Capital, an entity associated with Mr Bolton, together with other investors is seeking the elimination of the trading discount to net asset value per unit of the fund’s closed class units (MGF).

The closed class fund trades at a hefty discount and investors such as Mr Bolton can’t access the investment including options and they also have sought to delist the fund. Keybridge and other investors had submitted a request to convene a meeting of MGF unitholders to consider removing its units from the official list of the ASX and to redeem them at net asset value.

Mr Bolton said it was “a step in the right direction” and he was pleased to see the unit price respond positively.

If the 19 per cent discount of MGF shares at the start of the investors action and the 7.5 per cent discount of options, which expire on March 1 next year, are added up, about $500m would be returned to shareholders and retail investors.

In an ASX announcement Magellan said its board would consider a conversion of the closed class units into open class units and, if implemented, permanently address the trading discount to NAV per unit while providing unitholders with a means to still transact on the securities exchange.

However, Magellan said a conversion raised considerable complexities requiring significant work to address and Magellan would have regard to legal, regulatory and tax matters that required detailed assessment.

“Any conversion would be subject to a number of conditions, including member and regulatory approvals,” it said.

“Magellan expects to update members of the fund as the conversion proposal is developed and once it is in the position to provide further details, with a unitholder meeting targeted for the first half of calendar year 2024, subject to market conditions and the determination at that time that the conversion proposal is in the best interests of members.”

Mr Bolton said he was hopeful Magellan would “do the right thing” and implement the conversion before the options’ expiry in March.

“We need to remember that the mass majority of options are held by MGF unitholders and if they are not exercised, that’s a financial windfall for Magellan at unitholders’ expense,” he said.

“If some certainty can be given about the conversion we will look to withdraw our request to delist and redeem the class; however, for now, this meeting remains the best option.” Melbourne-based Keybridge Capital reported a loss of almost $9m for the year to June 30 after taking a hit on cryptocurrency trading, legal fees and other ­investments.

As a 26-year-old Mr Bolton famously pitted himself against the likes of Macquarie Bank, Leighton and Deutsche Bank in the 2009 BrisConnections saga.

He outplayed the three giants, banking a $4.5m cheque from Leighton in return for handing over voting rights that could have held sway over the $4.8bn Airport Link toll road in Brisbane.

On Monday MGF options rose 53 per cent to .023c and MGF shares were up 4.46 per cent at $1.76.

Originally published as Magellan targets shareholder meeting to solve standoff