Listed investment company Premium Investors has resolved a quarrel with disgruntled shareholders, supported by financial advisory firm Dixon Advisory, over the ability to sell shares at a price that reflects the value of the company's assets.
In recent months, Premium's share price has traded at a substantial discount to its net tangible asset (NTA) per share, reaching a low point in March when the discount crept up to 50 per cent.
Premium has now proposed to buy back up to 65 per cent of its shares directly from shareholders at a 1.75 per cent discount to NTA per share.
But Premium expects to see low redemption requests.
"We think enough people like Premium that it won't be anywhere near the maximum amount," Premium Investors chairman Tom Collins told InvestorDaily.
Under the new proposals, Premium also seeks shareholder approval for buying back an additional 15 per cent of shares on the stock market over the next 12 months.
But it said a decision on proceeding with this transaction would take place at the discretion of the board.
The proposals seem to be a concession to Dixon, which earlier proposed a buy-back of up to 75 per cent or an entire winding up of the company.
Dixon has withdrawn its request to replace Premium board members with its own staff following the announcement of the new proposals.
"We're pleased that the board has listened to us and to shareholders," Dixon managing director of strategy Chris Brown said.
"We believe this will provide enough liquidity," he said. "So there is no need to get on the board."
The number of shareholders that eventually will take the company up on its offer is likely to depend on the difference between NTA per share and the share price on the market at the time the buy-back is approved.
Shareholders will vote on the proposals in a meeting to be held before the end of August.
