Listed investment company van Eyk Three Pillars (VTP) has reached an in-principle agreement to terminate its investment management contract with van Eyk Research and administration arrangement with VTP Management (VTPM) for $200,000.
The in-principle agreement is subject to VTP not receiving a better offer that is likely to result in an improved position for VTP shareholders by 5 April, VTP director Chris Brown said.
“Under the management agreements, VTP’s investment and administration management functions are outsourced for a term of 25 years that expires in November 2028,” Brown said.
“The in-principle agreement to terminate the management agreements follows the VTP board considering a number of potential strategic options in respect of its external management, and determining that it would be in the best interests of VTP to seek to terminate the management agreements.”
Van Eyk Research is currently responsible for picking stocks for the VTP portfolio, while VTPM handles tasks such as accounting.
“If the in-principle agreement to terminate the management agreements is implemented, the VTP board intends to undertake responsibility for the management of VTP’s investment portfolio and administrative functions either directly or via other finance professionals,” Brown said.
“The VTP board presently intends that, following termination of the management agreements, VTP’s investment portfolio would be approximately 90 per cent invested in an ASX 300 index fund or similar, with the remainder to be held in cash pending exploration of further strategic options for VTP.”
In 2009, VTP shareholders voted to oust all of the company’s board members and replace them with executives of financial planning group Dixon Advisory.
Shareholders elected to replace VTP managing director and current van Eyk Research chief executive Mark Thomas, VTPM director Cameron McCullagh and independent directors David Iliffe and Andrew Grant with Dixon executives Alan Dixon, Alex MacLachlan, Chris Brown and Chris Duffield.
Stuart Nisbett subsequently joined as VTP’s independent chairman and John Vatovec as independent director.
In 2010, the refreshed board proposed to return around 95 per cent of VTP’s capital to investors and seek ways to boost the performance of the remaining assets and cut costs.
Once the capital is returned, the rest of the assets would remain with VTP and the company would still be listed.
The directors would then undertake a reverse one-for-20 stock split and seek ways to boost the performance of VTP’s remaining assets and shed costs.
“Prior to the board’s election, VTP’s share price had significantly underperformed the S&P/ASX 300. It had also been trading at an unacceptable discount to the value of its assets for a considerable time,” Nisbett said at the time.
In July last year, Dixon Advisory awaited a class ruling from the Australian Taxation Office on the planned capital return of VTP before 30 July.
The ruling was the last obstacle that stands in the way of returning capital amounting to about 95 per cent of the value of VTP’s gross tangible assets, as approved by shareholders in April this year.
