RCU... Have I stuffed this up?

Okay, further to my now many posts on Real Estate Capital Partners Trust (RCU), there has been more corporate activity. Ideally I would have a final blog to finish up this trade, however that is not to be in this case. Despite the big discount to assets, self-interests of other parties are getting in the way of an otherwise nice easy asset play. 

As you may recall, RCU has now sold the majority of its assets. The original idea was to then simply pay out the proceeds to unit-holders and the trust would be wound-up. Instead, some key unit holders blocked the return of cash as they wanted to keep control of the shell and use it as a corporate vehicle for other purposes. Plenty of unit holders have since requested a 'redemption' of their units, which the management of RCU has tentatively agreed to subject to clarifying some legal issues. This is basically a way to get around the blocking stake of  the unit holders. I am not sure of the exact legal issues and whether the redemption process can be stopped; I actually expect the blocking unit holders to try something on and RCU has just gone back into a trading halt, so I don't know what the next move will be. 

The price will be based on the net asset value of the fund at time of redemption, which has not been determined. The catch is we need to apply for redemption by 8 March, so we need to at least have an idea as to what the value might be. The balance sheet as at 31 December showed net assets of 58c. However, that figure will be lower given the non-performing assets are losing money, the property sale means a hair-cut and there are general corporate costs to allow for. Post the Saban sale, the net asset value was estimated to be 54c, however we need to be realistic and budget for a lower figure; I'm banking on 50c. 

If this is the final figure I will end up making a bit of money, but not much. However it does free up capital for other uses. The original purpose of the trade was to participate in the break-up of an asset and I will stick to that original idea. 

In summary: I am applying for redemption of my RCU units.

Kristian