WCM Global Long Short Limited | Proposed restructure to address share price discount to net tangible assets

Shareholders of WCM Global Long Short Limited (ACN 160 959 991) (ASX:WLS) (the Company or WLS) will be aware from previous announcements that your Board has been focused on improving the performance of the Company’s portfolio and addressing the Company’s share price discount to net tangible assets per share (NTA).

More specifically, the Board has previously confirmed its intention to monitor the share price closely and prioritise the implementation of corporate strategies to address the discount, should the Company’s share price continue at a material discount to NTA per share during the initial two year period of the existing investment management agreement (IMA) with Contango Asset Management Limited (the Manager) and WCM Investment Management, LLC (WCM) as Investment Advisor. It is pleasing that the performance of the investment portfolio has improved since the full implementation of the WCM Quality Global Growth Long Short Equity Strategy on 1 July 2021. However, the Board understands that the share price discount to NTA remains a material concern for the Company’s shareholders and, to this end, it established an independent board committee (IBC) to consider and review potential strategies to address this matter.

The Company is now pleased to advise that the IBC is in the process of negotiating the commercial terms of a proposed restructure that it believes will address the share price discount. The proposed restructure would be implemented by way of a capital reduction and scheme of arrangement under Part 5.1 of the Corporations Act 2001 (Scheme).

The Scheme, if implemented, would result in:

  • a new unlisted unit trust (New Head Trust) acquiring 100% of the Company’s shares, becoming the Company’s parent entity; and
  • WLS shareholders exchanging their shares for units in the New Head Trust on a one-for-one basis.

If the Scheme is implemented, investors will continue to have access to a portfolio of investments managed by WCM and constructed using the WCM Quality Global Growth Long Short Equity Strategy which was approved by shareholders in September 2020. However, the new trust structure will provide investors the opportunity to enter and exit the fund at values much closer to the underlying NTA of the portfolio.

Implementation of the proposed restructure is expected to be conditional upon the satisfaction of various conditions, including:

  1. execution of a definitive scheme implementation deed in a form acceptable to the Company and the Manager (Scheme Implementation Deed);
  2. the IBC formally concluding that the proposed restructure is in the best interests of shareholders and recommending shareholders vote in favour of the proposed restructure in the absence of a superior proposal;
  3. the Company’s shareholders passing the resolutions required to approve the restructure;
  4. an independent expert concluding that the restructure is in the best interests of the Company’s shareholders as a whole; and
  5. all required regulatory and court approvals being obtained.

Full terms of the proposed restructure will be documented in the Scheme Implementation Deed, which the IBC is currently negotiating on the Company’s behalf. A copy of the Scheme Implementation Deed will be released via the ASX once signed.

The WCM Quality Global Growth Long Short Equity Strategy

The WCM Quality Global Growth Long Short Equity Strategy (the Strategy) has, since inception on 30 June 2014, generated a return of 24.2% per annum outperforming its benchmark, the MSCI All Country World Index (Benchmark), by an annualised 9.9% per annum1.

Since the implementation of the Strategy by the Company on 1 July 2021, WLS’s portfolio has generated a return of 10.4%, exceeding the Benchmark by 1.2%2. This is a pleasing result, and the improved portfolio performance has been achieved notwithstanding the impact of the market rotation towards value stocks over the past year.

Value of $10,000 invested1

Next steps and indicative timetable

Shareholders are not required to take any action at this time.

Assuming the Scheme Implementation Deed is agreed, full details of the proposed restructure will be provided in the Scheme booklet, which the Company expects will be distributed by April 2022.

An indicative timetable for the restructure is set out below.

Event  Date 
Execute Scheme Implementation Deed February 2022
Provide draft Scheme booklet to ASIC and ASX for review Late February – Early March 2022
First Court Date

*Subject to Court availability

March – April 2022
General meetings of WLS shareholders

Shareholders consider the resolutions required to approve the proposed restructure

April – May 2022
Second Court Date

*Subject to Court availability

Late May 2022
Effective Date

Scheme orders lodged with ASIC / Last day of trading in the Company’s shares on ASX (with shares suspended from trading on ASX from close of trading)

June 2022
Implementation Date

Scheme consideration is issued / The New Head Trust acquires 100% of the Company

July 2022

Note: These dates are indicative only and subject to change.

DISCLAIMER: This material has been prepared for WCM Global Long Short Limited (WLS), a listed investment company (LIC) on the ASX, by its investment manager, Contango Funds Management Limited (CFML) (ABN 52 085 487 421). CFML is a Corporate Authorised Representative (CAR No. 1277505) of AGP Investment Management Limited (AGP IM) (ABN 26 123 611 978, AFSL 312247). This material has been prepared for general information only. It does not take into account the objectives, financial situation or needs of any particular individual. Past performance is not indicative of future performance. Investors in LICs should understand the distinction between Investment Portfolio Performance, NTA Performance and Share Price return. While efforts have been made to ensure the information is correct, no warranty of accuracy or reliability is given and no responsibility is accepted for errors or omissions. Neither WLS, CFML, AGP IM nor their respective related entities, directors or officers guarantees the performance of, or the repayment of capital or income invested within WLS or any associated product. You are strongly encouraged to obtain detailed professional advice and to read any relevant offer document in full before making any investment decision. WLS may not be suitable for your investment needs. This is not an offer to invest in any security or financial product. Relevant information relating to WLS can be obtained by visiting www.associateglobal.com.