(Alliance News) - Woodford Patient Capital Trust PLC has held discussions with broker Winterflood Securities over terminating its contract with fund manager Neil Woodford, the Financial Times reported on Tuesday.
According to people close to the situation, the investment trust's board has discussed the possible "ramifications" of removing Woodford.
These include the renegotiation of a fully drawn GBP150 million overdraft facility with US bank Northern Trust, and agreeing on a new fee model with any new fund manager.
Terminating the contract between the trust and Woodford would require a three-month notice period.
On Monday last week, Woodford's Investment Management took the decision to suspend withdrawals from the equity income fund, due to "an increased level of redemptions", with the fund now needing time to "reposition" its portfolio invested in unquoted and less liquid stocks into more liquid investments.
In addition, on Wednesday last week, asset manager St James's Place removed Woodford Investment Management as as manager of some of its funds in order to ensure "clients' investments continue to be managed effectively."
This had led to a mass sale of holdings in several London-listed companies by Woodford Investment over the last week.
The FT also reported that Winterflood has removed Woodford Patient Capital from its list of recommended investment trusts.
"We believe that it is not possible...to describe Woodford Patient Capital as a value opportunity due to the uncertainty surrounding its common holdings with the [equity income] fund and the potential impact of any sale process on its NAV," Winterflood said in a note.
https://www.ft.com/content/f8bf377a-8c23-11e9-a24d-b42f641eca37
St James's Place (STJ)