Richardson stung as investment fund slides on Home Services

Jan

Richardson stung as investment fund slides

posted by admin in Window Cleaning

Ascot Private Equity Ltd, previously known as I-CAP Equity Partners Ltd, was opened to members of the public with a capital raising in 2001 involving more than 30 million units at $1 each.
The money was invested in unlisted companies such as Next Window, Canterbury Ltd, Bungy NZ, and Radius Health Group.
But by March 31 this year, units were valued at just 10.2 cents and the funds assets were worth $4.2 million on a fair value basis. Under GAAP accounting rules, they had a negative valuation.
Richardson, who owns 15,000 units, presided over the fund as chairman since launch.
Things looked bleak enough last year when her annual report to investors informed them their units were worth 40 cents each, but a revaluation by BDO Spicers, arranged by the funds new manager, David Glenn, concluded that was 30 cents a share too high.
In a letter to investors on November 6, Glenn told them the job of restructuring the fund had %26quot;been not too dissimilar to that of a turnaround manager%26quot;.
He said the fund had been encumbered with far too much debt, investments which were surplus to requirements, and had continuing cash-flow issues.
Glenn is now trying to focus on the future, and will not answer questions on where the former management and board went wrong.
In the short term, things could get worse for existing investors.
The fund is seeking to raise $7 million in a rescue bid by offering 140 million new units at 5 cents each, which will dramatically dilute the value of existing units.
Glenn intends to use the capital to maintain the funds main investment: Next Window, a promising touch-screen technology company. The company needs a capital injection, and if the fund cant take part its existing investment will be diluted, and its value slashed.
Richardson denies the fund was encumbered with too much debt.
%26quot;You could tick all the boxes,%26quot; she said, adding: %26quot;We never engaged in pretence with the shareholders.%26quot;
She said the drop to 40c a unit last year was almost entirely attributable to a capital raising by one of the funds old cornerstone holdings, Canterbury Ltd, the sports clothing maker. When Canterbury asked investors for more cash, the fund was unable to come up with enough to stop its existing shareholding being diluted and its value decimated.
%26quot;We were not able to look at anything like the type of fund raising that would have made good our ability to participate,%26quot; she said.
But the directors and managers of the fund had felt the sting of the losses: %26quot;Theres been a lot of shared pain.%26quot;
Richardson had seen her own investment drop in value, though she was still paid $49,000 in directors fees from June 30, 2005, to March 31 this year. The former manager, Intellectual Property Partners (I-CAP), waived some of its management fees.
Richardson said I-CAP recognised a clean break would be needed if the fund were to raise new capital and be turned around. That led the board to seek a new manager.
Richardson said she was now considering whether to invest in the capital raising. %26quot;Clearly as a stockholder, I retain an interest in the fund, I hope it does make good its promise.%26quot;