Central GoldTrust Issues Letter to Unitholders; Continues to Recommend Rejection of Sprott Offer
(firmenpresse) - TORONTO, ONTARIO -- (Marketwired) -- 06/29/15 -- Dear Fellow Unitholders,
On May 27, 2015, Sprott launched a hostile take-over bid to acquire all of the outstanding Units of Central GoldTrust ("GoldTrust") in exchange for units of Sprott Physical Gold Trust ("Sprott PHYS"). Sprott has made numerous disparaging and inaccurate statements about GoldTrust, its administrator and its Trustees. We believe Sprott seeks to deflect your attention from the deficiencies in their unsolicited offer, their poor track record as investment managers, and their transparent attempt to take over the administration of GoldTrust to generate fees to replace those lost due to significant redemptions in Sprott PHYS.
Sprott does not offer compelling value to Unitholders, and you are better off retaining your GoldTrust Units. Sprott would give you no meaningful premium in exchange for significantly higher costs, increased tax risks, reduced bullion security and dramatically diminished governance rights. In addition, there is a risk that the transaction will not result in a tax-free reorganization for certain U.S. Unitholders.
GoldTrust has approved an enhanced redemption feature
On June 24, 2015, your Trustees approved a significantly enhanced cash redemption feature that will be available to ALL Unitholders, which should reduce any potential future trading discounts to Net Asset Value ("NAV"), while maintaining all of the existing advantages of GoldTrust''s low-cost and tax efficient structure. Your Trustees considered how best to mitigate the potential for GoldTrust Units to trade at discounts in bear markets without altering the advantages of the GoldTrust structure that have allowed it to outperform in bull markets for gold. With the enhanced cash redemption feature in place, and in addition to the significantly lower cost, superior bullion security, vastly superior governance structure and more favourable tax treatment inherent in your GoldTrust Units, there is simply NO COMPELLING REASON FOR GOLDTRUST UNITHOLDERS TO TENDER TO SPROTT.
GoldTrust has filed a lawsuit seeking to enjoin the Sprott Offer due to its many legal deficiencies
GoldTrust has filed a lawsuit in Ontario court seeking to enjoin the Sprott Offer due to its many legal deficiencies that are detrimental to GoldTrust Unitholders. Among the key issues raised with the court, is that the bid is in fact an illegal proxy solicitation, seeks to circumvent and reduce standard takeover bid tender thresholds, includes an irrevocable power of attorney that is detrimental to Unitholders and hinders normal withdrawal rights. The lawsuit also alleges that Polar Securities Inc. ("Polar") and Pekin Singer Strauss Asset Management Inc. ("Pekin") have been illegally acting in concert with Sprott without public disclosure, which is in contravention of Canadian securities laws. In addition to the well documented reasons to reject the Sprott Offer, given the Sprott Offer may not proceed until the legal deficiencies contained therein are opined on by the court, GoldTrust Unitholders can postpone making any decisions with respect to the Sprott Offer.
The Board of Trustees continues to recommend that Unitholders REJECT the Sprott Offer, TAKE NO ACTION and DO NOT TENDER their Units to the Sprott Offer and WITHDRAW their Units if already tendered.
KEY REASONS TO REJECT THE SPROTT OFFER
To view the figure associated with this press release, please visit the following link: .
Conclusion
Your Trustees have at all times acted in the best interest of ALL Unitholders and will continue to do so. In order to address the discount at which GoldTrust Units have traded in the current prolonged bear market, your Trustees have approved a significantly enhanced cash redemption feature, which should not alter the current advantages of GoldTrust''s fee, security, tax and governance structure. The preservation of GoldTrust''s existing structure should allow GoldTrust Units to outperform when positive gold markets return as they have done in the past. With GoldTrust''s new enhanced cash redemption feature, we believe even more strongly that retaining your GoldTrust Units represents a superior alternative for Unitholders as compared to the hostile offer being made by Sprott, which offers Unitholders no meaningful premium, 40% higher costs and the assumption of well-documented risks.
Significantly, Unitholders will continue to benefit from GoldTrust''s much lower expense ratio, superior bullion security and safeguards, tax-efficient structure and best-in-class governance - features that make GoldTrust the clear choice for long-term gold bullion investors.
More detailed information regarding the Sprott Offer and the reasons for your Trustees'' recommendations to GoldTrust Unitholders to REJECT the Sprott Offer can all be found on GoldTrust''s website at or . Unitholders are urged to read the documents provided on our website in detail when determining how or whether they will respond to the Sprott Offer.
The Board recommends that Unitholders REJECT the Sprott Offer, TAKE NO ACTION and DO NOT TENDER their Units to the Sprott Offer and WITHDRAW their Units if already tendered.
Unitholders who have already tendered their Units to the Sprott Offer can withdraw their Units by contacting their broker or D.F. King & Co., North America Toll-Free at 1-800-251-7519; or via email at .
Thank you for your consideration of these concerns, and we thank you for your continued support of GoldTrust.
Sincerely,
Additional Information and Where to Find It
The recommendation of the Board of Trustees of GoldTrust with respect to Sprott''s unsolicited offer to exchange units of GoldTrust for units of Sprott PHYS (the "Sprott Offer") is contained in the Trustees'' Circular, which has been filed with Canadian securities regulatory authorities and a solicitation/recommendation statement (which contains the Trustees'' Circular), which has been filed with the Securities and Exchange Commission ("SEC"). Unitholders are urged to read the Trustees'' Circular and the solicitation/recommendation statement and other relevant materials because they contain important information. The Trustees'' Circular and other filings made by GoldTrust with Canadian securities regulatory authorities may be obtained without charge at and at the investor relations section of the GoldTrust website at . The solicitation/recommendation statement and other SEC filings made by GoldTrust may be obtained without charge at the SEC''s website at and at the investor relations section of the GoldTrust website at .
About Central GoldTrust
GoldTrust (established on April 28, 2003) is a passive, self-governing, single purpose trust, which invests primarily in long-term holdings of gold bullion and does not speculate in gold prices. At June 29, 2015, the GoldTrust Units were 99.2% invested in unencumbered, allocated and physically segregated gold bullion. Units may be purchased or sold on the Toronto Stock Exchange and NYSE MKT.
Forward-Looking Statements
Certain statements contained in this press release constitute "forward-looking statements" under United States federal securities laws "forward-looking information" under Canadian securities laws (collectively, "Forward-Looking Statements"), including those related to: any anticipated benefits of the enhanced cash redemption feature, including any anticipated impact on any potential future trading discounts to NAV, any anticipated tax impact on GoldTrust and Unitholders, and any anticipated impact on GoldTrust''s fee, security, tax and governance structure; the reasons of the Board of Trustees for recommending to Unitholders the rejection of the Sprott Offer, not taking any action with respect to the Sprott Offer and not tendering any Units to the Sprott Offer; the anticipated costs, risks and uncertainties associated with the Sprott Offer, including any anticipated impacts on bullion security, governance rights, potential tax risks and fees to be collected by Sprott; the anticipated timing, mechanics, completion and settlement of the Sprott Offer; the value of the Sprott PHYS units that would be received as consideration under the Sprott Offer; the ability of Sprott to complete the transactions contemplated by the Sprott Offer; any anticipated results or performance of Sprott PHYS or any other affiliates of Sprott; any anticipated changes to the market price of Sprott PHYS units or any other securities of Sprott and its affiliates; any anticipated impact of GoldTrust''s structure on future GoldTrust''s NAV or Unit prices; and any anticipated future prices of gold.
GoldTrust cautions investors about important factors that could cause actual results or outcomes to differ materially from those expressed, implied or projected in such Forward-Looking Statements. Such Forward-Looking Statements involve projections, estimates, assumptions, known and unknown risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such Forward-Looking Statements or otherwise be materially inaccurate. No assurance can be given that these projections, estimates, expectations or assumptions will prove to be correct and any Forward-Looking Statements included in this press release should not be unduly relied upon. These Forward-Looking Statements speak only as to GoldTrust''s beliefs, views, expectations and opinions as of the date of this press release. Except as required by applicable securities laws, GoldTrust does not intend and does not assume any obligations to update or revise these Forward-Looking Statements, whether as a result of new information, future events or otherwise. In addition, this press release may contain Forward-Looking Statements drawn from or attributed to third party sources. Factors that could cause or contribute to such differences include, but are not limited to, those risks detailed in GoldTrust''s filings with the Canadian securities regulatory authorities and the SEC.
(1) US$28 mm in lost value calculated based on the difference in the total expense ratio over the last twelve months as at March 31, 2015 between Sprott PHYS and GoldTrust (excluding extraordinary costs associated with the GoldTrust meeting), multiplied by the average end-of-month NAV values of GoldTrust. Assumes this difference in expenses is held constant in perpetuity and discounted at a 5% discount rate.
(2) Percentage decrease in GoldTrust''s total expense ratio was determined by taking the total expense ratio over the last twelve months as at March 31, 2015, and the estimated total annualized expense ratio as per GoldTrust''s first quarterly report as at September 30, 2003.
(3) Sprott PHYS has an expense cap that caps the management fee to ensure total expenses, excluding tax expenses, remain within 1/12 of 0.65% of NAV on a monthly basis, though GoldTrust believes the cap was not applicable during the twelve months ended March 31, 2015 given what GoldTrust estimates to be Sprott PHYS'' expense ratios.
(4) Based on the relative performance of various gold bullion investment products, including GoldTrust, Sprott PHYS, iShares Gold Bullion ETF (TSX-listed), and SPDR Gold Shares ETF ("GLD ETF"), over an illustrative "Bull Market" for gold from May 3, 2010 to October 27, 2011. For additional information, please refer to section 7 of "Reasons for Rejecting the Sprott Offer" in GoldTrust''s Trustees'' Circular filed on June 9th, 2015, which is accessible via EDGAR and SEDAR.
(5) Performance since September 22, 2006, when GoldTrust was listed in the U.S. to June 25, 2015.
(6) For additional information, please refer to section 9 and 10 of "Reasons for Rejecting the Sprott Offer" in GoldTrust''s Trustees'' Circular filed on June 9th, 2015, which is accessible via EDGAR and SEDAR.
(7) US$3 million in annual management fees calculated based on Sprott PHYS'' stated 0.35% management expense ratio applied to GoldTrust''s average end-of-month NAVs over the last twelve months as of March 31, 2015. As noted earlier, Sprott PHYS'' expense cap was considered and determined not to have been in effect during this time period as total expenses, excluding tax expenses, on a monthly basis, did not meet the 1/12 of 0.65% threshold.
Contacts:
D.F. King & Co.
North America Toll-Free: 1-800-251-7519
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Datum: 29.06.2015 - 15:06 Uhr
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