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To conduct an orderly realisation of its assets, to be effected in a manner that seeks to achieve a balance between maximising the value of the investments and progressively returning cash to Shareholders.
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22/3/24 Annual Results
I do not understand why no final or special dividend when deciding how to return cash. However I do appreciate the commentary below.
"We are now in a position where we have net assets of £34.4m, comprising primarily an investment portfolio of £7.5m and cash (or equivalents) amounting to £26.5m. We have outstanding commitments to funds in which we are investors of £7.6m. We are reviewing the optimum way of returning further value to our shareholders. One of the options open to us is to place the Company into a members' voluntary liquidation, as we flagged in November last year at the time of the sale of our investment in Premier Hytemp. We recognise that shareholders value the flexibility of maintaining the Company's listed status which would be lost once we enter the liquidation process. Our conclusion is that we should keep this option closely under review while seeking to sell as many of our remaining investments as possible. We have only five underlying portfolio company investments remaining.
At the forefront of our mind, when deciding whether to carry out further tenders, is that these tend to be relatively expensive to execute, particularly for smaller amounts of capital. Also, in our experience, many individual shareholders (who constitute either directly or indirectly a large proportion of our share register) tend not to participate in tenders. It may also be the case that those shareholders who hold their shares through ISAs or other vehicles may encounter problems with continuing to hold their shares in this way once the Company loses its listed status following the start of the liquidation process."
488p to buy and 490p to sell
HNY everyone
Yes, i take the point that the liquidation may be "unconventional" to suit the particular circumstances of Dunedin. Presumably the Directors will recognise that retail shareholders form the majority of the shareholder base and will structure the liquidation accordingly.
Now trading ex div which partly explains the lower SP, but still looks good value to me
Here is an example of a liquidation without appointing a 3rd party, hopefully something DNE can do IF a vote to liquidate has to take place.
HAPPPY NEW YEAR to you and yours when it comes.
Settlement of Fund I Loan
https://www.lse.co.uk/rns/OCI/
Oakley Capital Private Equity L.P. ("Fund I"), one of the Oakley Funds1 advised by Oakley Capital2, has reached the end of its term and is being liquidated, whereupon Oakley Capital Manager Limited ("OCML") was appointed as liquidating trustee. Fund I's remaining investments consisted solely of shares in Time Out Group PLC ("Time Out"). On 28 December 2023, Fund I made an in-specie transfer of these shares to all Fund I investors, which has increased Oakley Capital Investments Limited's3 ("OCI" or the "Company") direct shareholding (the "In-Specie Transfer").
An agreement (the "Agreement") has also been entered into by Fund I and the Company to, immediately prior to the In-Specie Transfer, settle Fund I's outstanding loan (the "Fund I Loan") previously extended to it by OCI and comprising approximately £8.0m of principal and £0.1m of interest outstanding, via the transfer of shares in Time Out (settlement of the Fund I loan together with the In-Specie Transfer, the "Transaction").
Yes I was surprised to get more at 504.40 this morning.
Happy New Year to you & yours when it comes
GLA
Trades at 504 are buys - at least one is - looks good value compared to quoted 520.
Hi both,
Delisting can happen at any time, it doesn't require a liquidation. If the Company enters a voluntary liquidation control would pass from the directors to the liquidator and delisting would then be their decision. The significance of a voluntary liquidation is that the shareholders vote for it and the company is solvent - but it is still a liquidation under the control of a liquidator.
To me it would make most sense if the bulk of the assets are distributed while listed and then ,if the liquidation is going to drag on, consider a delisting. If the shares were delisted today the deemed buy/cost price outside of the ISA would be c510, with a potential distribution of around the NAV of 617. So this would be a taxable gain of 20%. The situation would be even worse if some of the distribution was by way of dividend rather than capital. Further the proceeds when received will then be permanently outside of an ISA and will take time to reinvest back into an ISA (£20k annual limit)
The majority of Dunedin's share base is retail investors so the risk of a delisting is a big issue. Of course the problem would be that the institutional shareholders would vote a delisting through since it doesn't impact them, while retail shareholders are notoriously poor at voting.
I have contacted Dunedin to make them aware that the issue of delisting/lost of ISA is an important one for their shareholder base. Might be useful if you both did likewise ! - there is a contact email on the website.
I know there is no mention of a delisting at the moment but i would prefer to make the point now and avoid it, rather than have to fight a vote, which as i say will be problematic with institutional shareholders involved.
Re the tax treatment outside of the ISA, I too have never seen HMRC give guidance on what happens on a delisting. That said their published advice re CGT on unquoted shares is that the value should be what you would expect from an open market sale if one was possible. In which case i really can't see how HMRC can argue against using the value from the very last open market trade before the shares were delisted
Just on listing costs, the other expenses were £380k last year and similar the year before. I'd expect the vast majority of those fall away with liquidation, although liquidator costs would kick in.
Hi Dret,
That's a relatively recent article. It's the first time I've seen a suggestion that it isn't nil.
The stance of HMRC has been unhelpful (ie not giving any meaningful guidance) with the implication being that as the share was suspended at the point of transfer, there wasn't a reference share price (as the transfer happened subsequently) so the value becomes that, nil.
I made sure I only held ALM in my SIPP when it delisted for that reason.
If they go into liquidation the decision as to whether to delist will be made by the liquidator, not the directors since they have relinquished control.
Using that calculator 5.5M shares at £5 comes up with an admission fee of £698K but yes I agree ongoing £10K.
Nowhere is DELISTING mentioned by DNE, they will delist AFTER they have liquidated.
I think they have mentioned possible VOLUNTARY liquidation as this is part of WINDING UP which is where we are.
Part of investing is trust and I trust Dunedin.
If you think the decisions are driven by the interests of the investment managers and institutional shareholders then this isn't for you.
GLA
HI Both,
I am not sure the listing fees are that much. if i use the calculator on the LSE website i only get c £10k
https://www.londonstockexchange.com/raise-finance/equity/how-list-equity/calculating-fees
So I still fail to see why a liquidation would be inthe best option of retail shareholders (is it being driven by the interests of the investment managers and institutional shareholders ?)
Re CGT, on leaving the ISA the cost base is deemed to be the market value on the date of leaving. see IC article below. There is certainly a negative in that if a significant amount it will take quite a few years to reinvest the funds back into an ISA wrapper.
https://www.investorschronicle.co.uk/ideas/2023/05/08/i-own-shares-in-a-delisted-company-do-i-have-to-pay-cgt/
I own shares in a delisted company – do I have to pay CGT?'
What happens to shares if they are removed from an Isa?
May 8, 2023
by Leonora Walters
What is the capital gains tax (CGT) treatment of shares that have been removed from an individual savings account (Isa) due to a delisting, which are then sold? What is the deemed cost?
I hold Allied Minds and another company whose shares delisted last year. These were removed from my Isa when the companies delisted and I now hold them in certificated form. My holdings' value was at a loss when they were in my Isa. So is the cost for CGT purposes the cost when I bought the shares within the Isa, or is it the deemed value when the shares were removed from the Isa? JL
Craig Harman, partner at Perrys Chartered Accountants, says:
The income received from investments held within a stocks and shares Isa such as dividends is free from UK income tax. And investors are not subject to CGT on any gains made from the sale of such investments within Isas.
Although it is possible to invest in a wide range of investments within an Isa, this is subject to certain restrictions. Shares, for example, must be officially listed on a recognised stock exchange, or admitted to trading on a recognised stock exchange in the UK or European Economic Area. If such shares are delisted from a stock exchange they can no longer be held within an Isa and must be transferred to the investor, as has happened in your case.
Under the Isa regulations, when the title to an account investment is transferred from the account manager to the investor, there is a deemed disposal of the shares and a subsequent reacquisition. For CGT purposes, this effectively means that the investor is treated as if they acquired the shares based on the market value at the date of the transfer. This value will form the base cost for any future sale.
If the shares increase in value following the transfer, it will give rise to a gain which is subject to CGT. Equally, if the shares fall in value before a sale this will result in a loss which may be offset against other gains now or in the future.
In your case, the shares were sitting at a loss in your Isa pri
Added at 512.75, maybe I need to stop buying as it is over 7% of my ISA but looking the unlisted investments they still hold looks low risk.
Now 514p to buy.
Reading the Articles of Association on Winding Up
160. DISTRIBUTION OF ASSETS OTHERWISE THAN IN CASH
If the Company shall be wound up (whether the liquidation is voluntary, under supervision or
by the court) the liquidator may, with the authority of a special resolution and any other
sanction required by law, divide among the members in specie the whole, or any part of, the
assets of the Company and that whether or not the assets shall consist of property of one kind
or shall consist of properties of different kinds, and may for such purpose set such value as he
deems fair upon any one or more class or classes of property and may determine how such
division shall be carried out as between the members or different classes of members.
So a voluntary liquidation with the ISA sounds good to me.
At the last AGM the company was given authority to buy shares, this would be a good idea wouldn't it?
Resolution 10: Authority to make market purchases of ordinary shares
Proposal to authorise the Directors to make market purchases of ordinary shares up to a
maximum number of 825,090 shares.
Hi both,
There are a couple of key points.
The listing costs are prohibitive with the company shrinking. That is what is driving a liquidation.
The reason that liquidation is the route is that if you hold the shares in an ISA then a company in liquidation can still be held. If it is delisted then it can't be held in an ISA and will be ejected into a taxable account. Here is the nub - HMRC doesn't recognise the cost from the ISA in this scenario so any proceeds become 100% taxable gains (and with CGT allowances now drastically cut, there's very little tax free) .
Example of a liquidation is HAST (still in my ISA).
Example of delisting RDL (which was ejected from my ISA)
I presume that liquidation in the DNE context would be that the underlying Dunedin/Realza funds would choose when to realise the underlying assets, not the liquidator. The question is also what fee billing a liquidator submits during the process.
This is not a bankrupt company being taken over by its creditors to get loans back though.
I think the Investment trust is capable of liquidating itself.
Quite happy for others to sell into weakness though and I'll keep buying thank you very much.
See you in Charlotte Square if you know where that is!
Hi PB,
The RNS says "the Board and its advisers are exploring whether to wind-up the Company and return cash to shareholders, including the proceeds of the Premier Hytemp realisation, by way of a members' voluntary liquidation."
My understanding is that a member's voluntary liquidation will require the appointment of a liquidator/insolvency practitioner, with the power for "running" the Company passed over to them.
Hi Dret, where is it said anything about calling in 3rd party liquidators?
AFAIK it is the company that will liquidate itself IF and only IF it is BEST interest of all shareholders.
Hi PB & CIT,
I am still concerned that a liquidation would mean that control over the sales process would move from the directors to the liquidators , who may prioritise a quick payout over achieving fair value for the remaining investments. As shareholders we will be ceding our control to the liquidator. I don't understand why the directors don't continue to sell off the investments and then use a liquidation to distribute the assets. I would rather have the directors sell the remaining investments than a liquidator.
I guess we will have to see what the merits of the proposal are and vote accordingly.
Hi PB,
Just using the £7.8m of remaining unlisted assets - that suggests a maximum initial payment of just under 80% of the NAV. So not quite £5.
Hopefully the Board will take a balanced decision. They have decent shareholdings so there should be aligned incentives. They say very little about the portfolio companies so it isn't straightforward to take a 'view' on prospects and what that might mean for an ultimate realisation value. I figure some shareholders will want to let it all play out and not attempt to sell the remaining 'rump' assets at this point.
Nice one - An interim dividend for the year ended 31 Dec 2023 of 10.0p per share is to be paid on 19 Jan 2024.
The ex-dividend date is 21 Dec 2023.
Current spread 12p with Sell at 505p and Buy at 517p
On the POTENTIAL winding-up I see this only happening if this is the best interests of all shareholders.
This is not an AIM listed small cap pharma with no income or miner with a hole in the ground going bankrupt.
The unlisted investments valued at £7.8m cannot easily be sold, however previous realisations were achieved faster than anticipated. I would plan attend the Charlotte Square General Meeting to vote against liquidation if close to full NAV was not forthcoming.
I have full confidence in the board however.
"In particular, the Board and its advisers are exploring whether to wind-up the Company and return cash to shareholders, including the proceeds of the Premier Hytemp realisation, by way of a members' VOLUNTARY liquidation. Any such winding-up would require shareholder approval and a further announcement will be made in due course. "
From what they've said, my interpretation is that they don't expect to realise any of the other investments imminently.
So the liquidation would be that the shares are suspended, the liquidator then returns the available cash in short order and the residual is returned when all the other investments have been realised (say in 3 years from now).
This is why the £9m is key. Receiving £3.50 or so now isn't very appealing. If most of the £9m can be freed up, it could be more like £4.50.
If they liquidate it will involve selling all the investments, the question is will they realise the carrying value.
I trust the board to do the best for the shareholders and that's why I'm a net buyer here, last purchase at 517
GLA
Yes, a tender at this stage would be an unnecessary cost , better to dispose of the remaining investments and liquidate. The disposal would also release the £9m commitment for distribution.
The latest RNS says "in particular, the Board and its advisers are exploring whether to wind-up the Company and return cash to shareholders, including the proceeds of the Premier Hytemp realisation, by way of a members' voluntary liquidation." This makes it sound as if the liquidation would happen without disposing of the remaining investments, with just the Premier Hytemp cash returned ? What would happen to the remaining investments ?
I suspect the liquidation consideration is probably from parsimony - why incur the costs of another tender if you can avoid them?
Key issue for me is the £9m of commitments. Surely these are largely theoretical than probable at this stage but the practice has been to cover these 100% with cash. I'd not be terribly keen on an immediate liquidation with £9m of cash still trapped.