Fund manager Geoff Wilson's call for Hunter Hall Global Value to allow all investors to sell out of the fund at the asset value of the shares has been rebuffed, which threatens to spark a joust for control of the fund.
Mr Wilson has previously threatened to call a shareholder meeting to challenge the board if it rejected his call.
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However, the board of the fund has stood firm, in a statement released late on Tuesday that any offer to investors to acquire their assets at their underlying worth would force the liquidation of the fund.
The rebuff threatens to unravel the worth of the manager of the fund, Hunter Hall International, where there are competing takeover offers on the table following the surprise decision late last month of the group's founder, Peter Hall, to sell out. Management of the $300 million Global Value Fund is Hunter Hall International's largest asset.
"For the buy-back to be equitable for all shareholders, it would require the total Hunter Hall Global Value portfolio to be liquidated to fairly determine the net tangible asset backing for all shareholders," the board noted in a statement to the sharemarket.
"The liquidation to meet Wilson Asset Management's demand would impact the portfolio with transaction costs, potential price liquidity discounts for some stocks and tax consequences. These costs would be borne by all shareholders, not just those that might choose to exit via the buy-back."
Additionally, the narrowing of the gap between the traded price of Hunter Hall Global Value shares and their underlying net worth to less than 1 per cent from more than 15 per cent when Mr Wilson's funds bought in, indicates that shareholders could sell and effectively receive the full value of their holding.
Mr Wilson said that if the board of Hunter Hall Global Value was confident of the continued performance of the investment team at the company, then it shouldn't expect shareholders apart from Mr Wilson's funds to accept a buy-back.
"We're looking after the small shareholder here," Mr Wilson said, while pointing out that no one from Hunter Hall Global Value has contacted him since the board's decision to reject an equal access buy-back.
Wilson Asset Managed and other funds within the group hold a combined 11.5 per cent of Hunter Hall Global Value's shares, ranking as the largest shareholder. The Wilson Asset Management funds had begun to reduce their holding in the Hunter Hall fund but following the recent upheaval, moved to raise their holding.
In late December, Hunter Hall group founder Peter Hall decided to quit as the chief investment officer of the group following poor investment performance around the time of the US presidential elections in November. He has already liquidated a large portion of his shareholding in Hunter Hall International, which manages the group's various funds which have around $1 billion in funds under management.
Washington H. Soul Pattinson and Co has emerged as a 19.9 per cent shareholder in Hunter Hall, buying the block of shares from Mr Hall for $1 a share which was well below the $3 price for the shares before the recent upheaval. It has offered to buy all other shares at $1, which Mr Hall has stated shareholders should not accept.
Late Monday, Pinnacle Investment Management Co said it would offer $1.50 a share, rising to $2 if it managed to gain control of Hunter Hall.