Central GoldTrust
("GoldTrust") GTU (C$) GTU (US$) (NYSE MKT: GTU) (US$)
confirmed today that the unsolicited offer by Sprott Asset Management LP and
Sprott Physical Gold Trust ("Sprott PHYS"; and collectively, "Sprott") for
all of the outstanding Units of GoldTrust has once again failed to achieve
sufficient acceptance to satisfy the required minimum tender condition. As a
result, Sprott has yet again, for the 6(th) time, extended the expiry date
of the offer, which is now set to expire on November 20, 2015.
The Board of Trustees of GoldTrust (the "Board") has reaffirmed its
recommendation that Unitholders should continue to reject Sprott's
inadequate offer, which provides no material premium to GoldTrust
Unitholders. GoldTrust Unitholders should retain their Units, withdraw any
tendered Units and support GoldTrust's proposed enhanced cash redemption
feature, which your Trustees believe will provide greater benefits to ALL
long-term GoldTrust Unitholders than Sprott's physical redemption feature.
The Trustees again wish to set the record straight by informing Unitholders
of key deficiencies in Sprott's offer and correcting several of Sprott's
misleading statements:
-- The affairs of GoldTrust are overseen by an independent Board of
Trustees
for the benefit of its Unitholders. The majority of the Trustees are
independent of the Spicer family, which founded and originally funded
GoldTrust and which owns a controlling interest in GoldTrust's
administrator. The executives of GoldTrust and its administrator take
their direction from the Board, which has always acted in the best
interests of Unitholders, keeping administration fees low and stewarding
Unitholders' bullion assets in the most secure and tax effective manner.
The independent members of the Board have made all decisions and
recommendations regarding Sprott's offer after careful consideration and
consultation with the Board, its counsel and the Special Committee's
financial advisors and legal counsel. The administrator and the Spicer
family have been supportive of the Board since GoldTrust was established
in 2003 and have never dictated how the Board should decide on any
matter.
-- The Trustees will continue to act in the best interests of ALL
Unitholders and cannot endorse a deficient offer that does not benefit
ALL Unitholders. Principally because we don't agree with them, Sprott
has
waged a smear campaign claiming poor governance and entrenchment of the
Trustees. Their numerous unfounded allegations are intended to distract
Unitholders from the deficiencies of their inadequate offer: no material
premium, higher management fees, lower bullion security and safeguards,
significantly reduced governance rights and higher potential tax
liability for certain U.S. Unitholders1.
-- Sprott's claims that GoldTrust Units have "traded for most of their
existence at double-digit discounts"2 are completely false. In fact,
GoldTrust Units have traded at an average premium to net asset value
("NAV") of 1.5% since GoldTrust was established in 20033.
-- To address the recent trading discounts to NAV, which have occurred as a
result of the protracted bear market for gold, the Trustees have
approved
and intend to implement an enhanced cash redemption feature at 95% of
NAV. This enhanced cash redemption feature would be available to ALL
GoldTrust Unitholders, large and small, at any time. By contrast,
Sprott's physical redemption feature is only available on a monthly
basis
and would only be available to GoldTrust Unitholders with holdings
greater than approximately US$450,000, which represents less than 1% of
all Unitholders. This enhanced cash redemption feature would also be
accretive to non-redeeming Unitholders, reduce the likelihood of
physical
gold bullion arbitrage by hedge funds and avoid the potential negative
tax implications of Sprott's physical redemption feature. For these
reasons, your Trustees have concluded that this proposed enhanced cash
redemption feature is a superior alternative to Sprott's physical
redemption feature, a similar version of which was overwhelmingly
rejected by Unitholders in May of this year. Through legal intervention,
Sprott has thus far managed to deprive all GoldTrust Unitholders of the
clear benefits of this enhanced cash redemption feature in order to
facilitate their self-serving, hostile takeover bid.
-- Sprott's poor track record as a fund manager should concern GoldTrust
Unitholders. A review of Sprott's performance shows their abysmal track
record as a fund manager, and yet despite this poor track record, they
would charge GoldTrust Unitholders 75% higher management fees4. Sprott
PHYS has seen the number of its outstanding units decline by
approximately 25% due to redemptions by its own investors5. Sprott's
assets under management have declined by approximately 24% since the
third quarter of 20126. Sprott Inc., Sprott's flagship publicly-traded
company, whose shareholders are funding Sprott's hostile takeover bid,
has lost approximately 75% of its value since its IPO7. Sprott Resource
Corp. has seen its NAV decline by 62% over the past year and was trading
at a 57% discount to NAV according to Sprott Resource Corp.'s most
recent
quarterly filings8. In addition, the market price of Sprott PHYS units
has declined by 7% since its IPO in 2010, while the market price of
GoldTrust Units has risen by over 175% since GoldTrust's IPO in 20039.
Sprott's interest in GoldTrust has nothing to do with benefiting
GoldTrust's Unitholders, their offer is nothing more than a desperate
attempt to offset the precipitous decline in Sprott's asset base and
plummeting fee income.
Bruce Heagle, Chair of the Special Committee of the Board of Trustees of
GoldTrust stated: "Sprott initiated this whole process with an inadequate,
deficient offer, which has remained substantially unchanged since it was
announced in April. Principally because we don't agree with them, Sprott has
embarked on a drawn-out smear campaign. Moreover, Sprott's opposition to
GoldTrust's proposed enhanced cash redemption feature has deprived
Unitholders, at least for the time being, of a superior alternative to
Sprott's physical redemption feature, and has resulted in costly litigation.
Nothing material has changed in Sprott's offer, and neither has the
recommendation of the Trustees. GoldTrust Unitholders are urged to send a
clear message to Sprott that it is time to stop destroying investors'
capital, stop harassing Unitholders and terminate their inadequate offer. We
thank GoldTrust Unitholders for their patience and continued support."
GoldTrust Trustees continue to recommend that Unitholders REJECT Sprott's
offer, TAKE NO ACTION, DO NOT TENDER their Units to Sprott's offer and
WITHDRAW their Units if already tendered.
Unitholders who have already tendered to Sprott's
offer should withdraw their Units immediately by contacting
D.F. King & Co at 1-800-251-7519, or via email at
inquiries@dfking.com
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