A proposal by disgruntled securityholders to oust the manager of an ASX-listed micro-cap fund could jeopardise the $180 million redevelopment of the historic Waltons building above Brisbane’s Fortitude Valley train station.
The development, which has already secured Torrens University as the anchor tenant in stage one, is being spearheaded by Millinium Capital.
Millinium is the manager of the Millinium’s Alternatives Fund (MAX), which is due to acquire the Walton buildings at 240 Brunswick Street and 11 Overells Lane on September 20.
Millinium struck a 12-year leasing deal with Torrens University’s parent, Nasdaq-listed Laureate International Universities, to occupy two existing building, which will be refurbished with a 30-storey residential tower proposed in stage two.
In its most recent update, Millinium said it had secured “acceptable debt finance and received firm interest from equity investors for the first stage” of the project.
Howeve,r two MAX investors, Mahauga Trustee Co Ltd and Salvesen Family Acct, which combined have an 8.13 per cent stake, have called for investors to boot out Millinium Capital and replace them with WA-based Primary Securities.
Their reason: fees and expenses charged by Millinium Capital over the past 3½ years have totalled $2.7 million, almost half MAX’s market cap of $6 million.
“On average, these costs exceed 12 per cent of the current fund assets per annum,” said representatives Kevin Harris and Michael Salvesen.
To succeed, 75 per cent of voting members must first pass a special resolution on August 29 to change the fund’s constitution to create an investor committee that will oversee fees and costs.
Should this succeed, then the two interrelated ordinary resolutions to oust Millinium Capital and appoint Primary Securities as responsible entity in its place requires the support of 50 per cent of voting members.
In response, a spokesman for Millinium Capital Managers said it believed strongly that passing these resolutions “would not be in the best interests of unitholders”.
“[Millinium] intends to oppose them vigorously and, over the coming days, will explain to unitholders why they should vote against them.
“Since Millinium Capital Managers was appointed responsible entity of Millinium’s Alternatives Fund (MAX) at the request of Macquarie Investment Management Limited, Millinium has provided unitholders with a liquidity event, made several investments and spent considerable time and money searching for, and conducting due diligence on, a number of substantial assets [including the Waltons building],” the spokesman said.
Millinium became the responsible entity of MAX (formerly known as the van Eyk Alternatives Plus Fund) in February 2014, replacing Aurora Funds Management Limited at the request of its then major unitholder, Macquarie Investment Management Limited.
Following a liquidity event, which reduced MAX’s assets to an “uneconomic” $1.65 million, Millinium has set a target of MAX having assets under management of $500 million through investments in agriculture, infrastructure, financial services and property.
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