Financial advisers against Rural Funds merger

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A group of financial advisers are trying to halt a meeting run by Rural Funds Management to have unit holders vote on its plans to merge its chicken, wine and almond orchard funds into a single, listed real estate investment trust.  

RFM intend to put the highly contested plans to RiverBank fund investors at a meeting on 18 November. The dispute is heated and has already been reported to the Australian Securities and Investments Commission, and legal proceedings begun.

An investor – a trustee of Sunset Amber – served court documents on RFM late Monday afternoon. It alleges the November 18 unit holders’ meeting to decide on the funds’ merger is unlawful. The case will be heard in the Victorian Supreme Court tomorrow.

The dissenters say the unit price 'reset' is against the RiverBank constitution as it would wipe approximately 7.4% off the units, and that paying a 15% premium on the value of the Wine Fund assets would confer a benefit to this funnd and therefore be illegal related party transaction.

RFM said on its website that in light of the court proceedings, it is "vitally important and urgent" that investors and advisers return proxy forms so RFM can show Segue and the court the high level of unitholder support.

While RFM say the proposed merger will improve liquidity, lower costs and diversify the portfolio, the investor action group says $5.1 million is being thrown away on a proposal.

RFM managing director David Bryant claims to have the support of about 90 per cent of investors and blames the opposition on a group of professional advisers and bankers based in the east of Melbourne, reports AFR.

Buyers are ready to move if the under-performing funds are dissolved.

ProTen, one of Australia’s biggest managers of chicken processing plants, has separately made an offer to buy unitholder interests in one of RFM’s funds  – the Chicken Income Fund (CIF) – for 70c per unit.

The investor action group are recommending investors look at this option, as they believe this offer is higher than the best possible outcome for revaluation as detailed in the proposal documents.

The CIF is slated to merge with RFM’s wine and property assets, to create a $115 million single, listed fund.

If the unit holders meeting goes ahead and investors vote for the merger, the Rural Funds Group is likely to be launched before year’s end.

  • Paul S on 14/11/2013 8:24:55 AM

    My clients are looking for the liquidity that the listing will offer. They may not need it now but when they want it they can exercise it via the ASX.
    Over the years David Bryant & the team at RFM have had my confidence in the way they have managed the funds & bad)- and retain this confidence in trying to take the funds to the ASX. Personally I hope it succeeds.
    I wonder if some of the advisers who are acting against this move are worried about the trailing commissions they may lose.
    As for the vultures like Proten -my clients have told me that Proten can take their 70c and put it elsewhere.

  • Onlooker on 21/11/2013 10:41:27 AM

    You can go on about constitutional "rights" but at the end of the day you can't get blood out of a stone. Take the liquidity option and get out now or fight for your constitutional right and watch the NTA dribble down to virtually nothing!

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