Die Insolvenz wurde abgewandelt
Absolute Capital shares soar 28%
Investors back restructuring to keep funds operating
By Simon Kennedy, MarketWatch
Last Update: 10:59 AM ET Oct 29, 2007Print E-mail Subscribe to RSS Disable Live Quotes
LONDON (MarketWatch) -- Shares in hedge-fund manager Absolute Capital Management jumped as much as 28% Monday after investors in four of its funds narrowly approved a restructuring plan that will allow the funds to keep operating for another year.
Investors agreed to leave their money locked up in the funds for 12 months as Absolute Capital (UK:ACMH: news, chart, profile) unwinds illiquid holdings that were discovered following the resignation of co-founder Florian Homm and former CEO Sean Ewing in September.
Shortly after Homm's departure Absolute Capital put a temporary bar on withdrawals from the funds he managed, revealing they had invested heavily in pink sheets and OTC bulletin board stocks, which could not be easily sold to meet rising redemption demands.
If investors hadn't backed the restructuring, the four funds -- Absolute East West Fund, Absolute Return Europe Fund, Absolute European Catalyst Fund and Absolute Octane Fund -- would likely have gone into liquidation.
Shares in the fund manager climbed steadily throughout the London session to stand around 28% higher in afternoon trading. The stock, however, was still trading around 80% below its early-September price.
Close-run vote
Voting at the weekend meeting in the Cayman Islands was tight.
Absolute Capital said 76% of investors in its Absolute Octane Fund approved the restructuring, just beating the 75% majority needed to proceed.
The other funds had majorities of between 86% and 95% of investors approving the plans.
"I am very happy with, and appreciative of, the support shown for the Absolute Capital team, and am confident that fund investors have taken a decision which is in the best interests of all stakeholders," said CEO Jonathan Treacher in a statement.
The vote of confidence from investors, however, only came after Absolute Capital agreed to several demands, including the appointment of three independent investment professionals to recommend options for selling the illiquid assets.
The fund manager also agreed to changes in the way it calculated fees to make sure it didn't benefit from a likely rebound in the portfolio value once the restructuring is implemented.
"Over the past six weeks, we have listened carefully to fund investors' concerns and are mindful of the challenges ahead. We will work diligently to deliver value for fund investors through the restructuring process," said Treacher.
Simon Kennedy is the City correspondent for MarketWatch in London.