RAB Capital attempts restructuring of poorly performing funds

By Devika Patel

Knoxville, Tenn., Sept. 10 - RAB Capital plc said it has negotiated a restructuring proposal for its special situations funds, RAB Special Situations Fund Ltd. and RAB Special Sits LP.

The funds are being restructured due to a very weak market for early stage natural resources and other development stocks and poor liquidity within the special situations strategy.

In August, RAB announced, the special situations strategy fell by an estimated 22% over the month, taking the year-to-date estimated reduction to 48%.

The restructuring proposal aims to increase investors' capital commitment in the funds over a longer term and reduce RAB's fees, which RAB has concluded is the best solution for all investors.

The share classes affected by the restructuring have quarterly redemption cycles, 180 calendar day notice periods, and fees of 2% per annum and 20% per annum for management and performance respectively.

Under the proposal, the next redemption date will be postponed by three years, to Oct. 3, 2011 from Oct. 1, 2008.

In consideration for the longer-term commitment of capital, RAB will receive reduced management and performance fees of 1% per annum and 15% per annum, respectively.

The proposal affects only RAB's special situations strategy. As of Sept. 1, the assets managed in the special situations strategy were estimated to be $923 million and the total assets RAB manages are $4.7 billion.

Investors will vote on this proposal by close of business (Cayman time) on Sept. 29. RAB said that a number of major investors in the strategy have indicated their support for the proposal.

If the proposal is not approved, RAB and the funds' boards have concluded that liquidating the funds would be the only solution which would provide an equitable treatment for all investors.

This would only be considered if the restructuring proposal is not approved.

London's RAB Capital is an investment management company that offers a range of absolute return products.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.