Platinum Capital Limited's Strategic Scheme of Arrangement with PIXX
PMC (PMC) Share Update November 2024 Wednesday 13th
Platinum Capital Limited Announces Strategic Scheme of Arrangement
Platinum Capital Limited (PMC) has announced a strategic scheme of arrangement with Platinum International Fund (PIXX) to address its share price discount and enhance shareholder value.
Instant Summary:
- PMC's statutory pre-tax operating profit of $18.2 million for FY2024.
- Post-tax operating profit of $12.8 million and fully-franked dividend of 6 cents per share.
- Investment return of 3.7% versus MSCI AC World Net index return of 19%.
- Strategic scheme of arrangement with PIXX to close share price discount.
- Shareholders to receive PIXX units in exchange for PMC shares.
Financial Performance
For the financial year ending 30 June 2024, Platinum Capital Limited reported a statutory pre-tax operating profit of $18.2 million and a post-tax operating profit of $12.8 million. The company declared a fully-franked final dividend of 3 cents per share, totaling 6 cents per share for the year, representing a grossed-up dividend yield of 6.1% based on the closing share price as of 30 June 2024.
Despite delivering an investment return of 3.7% for the year, the company's performance lagged behind the MSCI AC World Net index, which returned 19%. This underperformance was primarily due to underweight positions in US technology stocks and a higher exposure to China.
Strategic Scheme of Arrangement
In response to the persistent share price discount, Platinum Capital Limited announced a strategic review and has decided to pursue a scheme of arrangement with Platinum International Fund (PIXX). PIXX is an open-ended managed fund quoted on the ASX AQUA market. Under the proposed scheme, PMC shareholders will receive PIXX units in exchange for their shares, calculated based on the relative NAV per unit of PIXX and the post-tax net tangible asset backing per share of PMC.
This arrangement aims to provide shareholders with continued access to Platinum Asset Management's global equity strategy while addressing the share price discount by aligning PIXX units closer to their net asset value.
Implementation and Outlook
The scheme is expected to be implemented by late July 2025, with the Scheme Booklet anticipated in May 2025. The company is also seeking a class ruling from the Australian Taxation Office to clarify the tax implications for shareholders.
Since the announcement, the share price discount has narrowed significantly, and the board believes this scheme is in the best interests of shareholders. The board looks forward to shareholder support as they navigate this strategic transition.
The proposed scheme of arrangement is expected to positively impact Platinum Capital's stock by addressing the share price discount and aligning shareholder interests with the fund's net asset value. This strategic move could enhance investor confidence and attract new investments.
Investor Reaction:
Analysts have generally reacted positively to the announcement, noting that the scheme could effectively address the share price discount issue. However, some investors may remain cautious until the scheme is fully implemented and the tax implications are clarified.
Conclusion:
Investors should closely monitor the progress of the scheme and consider its potential long-term benefits. The successful implementation of this arrangement could significantly enhance shareholder value and align PMC's market performance with its intrinsic value.