Webb says the motive of the “Concert party”, which holds a total of 38.71 per cent value of the trust, makes no sense from QVT and Laxey’s perspective as they are supporting a strategy that is leading to an erosion of net asset value
The Unicorn Asset Management founder also says that he expects that if those directors are appointmed their first decision will be to appoint Knox D’Arcy as investment managers with a remit to liquidate the trust. A move which Webb says will destroy value for shareholders.
He says: “I am not aware that Richard Steele and his colleagues at Knox D’Arcy have a proven track record of managing smaller companies – certainly not within Eaglet’s universe. Many investors will recall the ill-fated Knox D’Arcy investment trust.”
He also questioned Knox D’Arcy’s proposal for the trust, in particular where they hoped to get £100m worth of new investors.
Webb believes there is potential for the trust, pointing to Eaglet as the best performing small-cap investment trust in 2006. However, he is worried that shareholders value is being destroyed by a small group “who are clearly contemptuous of the Board and their fellow shareholders.”
Webb says:“This situation is a Corporate Governance nightmare and I believe that someone needs to take a serious look at the connected party issues between QVT, Laxey Partners and Knox D’Arcy. Can shareholders outside the concert party really be sure that they will be treated fairly?
“The arbs want to exit as quickly as they can and on the best terms available but I think they will be disappointed on both counts” says Webb. “Knox D’Arcy seem to be the only ones who gain out of this. I am sure that they would be delighted to get their moribund project back on the road; I just wish that it was not at the expense of all Eaglet shareholders.”