Magellan to challenge Bolton push for a vote

afr.com:

The battle between Magellan and activist Nick Bolton is headed to court after the fund manager decided to legally challenge Mr Bolton’s right to convene a meeting of unitholders in its closed end fund.

Magellan asked the New South Wales Supreme Court to rule whether Mr Bolton’s meeting request was valid.

Keybridge Capital’s Nick Bolton. Jessica Shapiro

Last week, Mr Bolton’s listed vehicle Keybridge advised the responsible entity behind Magellan’s $2.65 billion Magellan Global Fund that it had gathered the 100 unitholder signatures required to call a meeting. But Magellan wants the court to decide whether this complies with an alternative threshold requiring holders representing 5 per cent of votes.

The fund manager is seeking judicial advice based on an interpretation of the Corporations Act and the fund’s own constitution.

Mr Bolton has snapped up millions of options in the strategy and has been agitating for a wind-up or conversion ahead of the options expiring in March 2024.

The options entitle holders to buy units in the fund at a 7.5 per cent discount to their net asset value. Magellan this week said it intended to convert the strategy into an open-ended fund in “the first half of calendar year 2024”, suggesting it would only act once the options are converted.

Mr Bolton said Magellan’s interpretation, if correct, was “unusual” because it implied 100 members could request a meeting to consider a resolution “just as long as it’s not this resolution”.

“It would entrench Magellan in their role where they generate $40 million a year in fees, no matter how poorly they ran the fund, totally disenfranchising their retail members of a fundamental right to ask for their money back at fair value,” he said.

Magellan Global