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EEA secures shareholder support to lift suspension
by Michelle Abrego on Oct 18, 2013 at 11:32
Shareholders in the suspended EEA Life Settlement Fund have voted in favour of restructuring the fund and lifting their suspension.
Shareholders have been in limbo since the fund was suspended in November 2011 following a wave of redemptions after the Financial Services Authority warned investors over the risks involved in life settlement funds.
In September the fund’s board proposed a restructure which would lift the suspension and allow investors to continue to hold their current shares or switch them for run-off shares.
Shareholders who elect for continuing shares will continue to hold their existing shares in the same cell of the fund in which it is currently held with additional dealing restrictions.
Any surplus cash generated from the maturity or sale of policies attributable to a continuing cell will be reinvested in a new Irish-domiciled life settlements fund or in other similar instruments.
However, investors who hold the continuing shares will not be able to redeem those shares for a 23-month lock-up period from when the restructure becomes effective. Following this period, redemptions will be quarterly upon giving 95 days’ notice.
Those who elect for run-off shares will exchange their existing shares for shares in a newly created corresponding cell of the fund. These will not reinvest cash generated from policies that mature or are sold, but every six months surplus cash will be distributed among shareholders until proceeds from the final policy held in respect of each run-off cell have been returned to shareholders.
Of the 64% shareholders who voted on the proposals 95.4% voted in favour of the restructure which will begin on 1 November, while 4.6% voted against it.
Simon Shaw, chairman of EEA Fund Management, said: ‘The board of the fund was strongly of the view that this proposal offered the best way forward for shareholders and they have overwhelmingly agreed.
‘We know this period has been extremely frustrating for them and we are grateful for their understanding and support. We continue to have confidence in the ability of the life settlements asset class to deliver attractive returns. A large number of shareholders share that view and have elected to remain long-term investors in the asset class by opting for the continuation share class.’
In August, EEA reported a 10% drop in the net asset value in the suspended fund due to changes in the fund's valuation policy.
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