Fisher warns on delisting equity fund

Fisher Funds Management says investors in its Marlin global equities fund will lose the protection of NZX listing rules and suffer costs and tax complications if the fund is delisted.

Christchurch shareholder Gary Cross has placed advertisements in national newspapers targeting Marlin investors seeking the 5 per cent support required to call a meeting to vote on his proposal to delist the fund.

Cross argues the fund has consistently traded at substantial discount to its net asset value (NAV) and delisting it represents the best prospect of realising the value of his and his fellow shareholders' investment.

However, in a letter to Marlin investors this week, Marlin chairman Rob Challinor and Fisher Funds managing director Carmel Fisher say that while Cross's proposal "sounds simple and appealing... it is not entirely straightforward".

They said if Marlin was delisted it would "lose a level of protection which is provided for them under NZX listing rules".

"A unit trust is not a low-cost option to establish and all of the upfront structural costs of Marlin have already been incurred."

A restructuring would have complications around tax, and also with regard to the position of warrant holders who have an interest in the NAV of the fund until the exercise date in October next year.

If Cross is successful in generating the 5 per cent support for a meeting to vote on his proposal, it will require a 75 per cent majority to pass. Challinor and Fisher point out it will also require the assent of warrant holders.

Cross said responses suggested he was almost certain to gain sufficient support for an extraordinary meeting.