Today we sent the following message to holders that we know of
Dear EEA Life Settlements Shareholder,
Southey Capital and a number of other investors are beneficial holders of the shares of EEA Life Settlements Fund (“EEA”). We write today to other known shareholders to communicate our concerns on the proposals set out in a letter (the “Letter”) from the manager of EEA dated 31st October 2022.
We are deeply concerned about the proposed plan for the following key reasons:
- The Continuing and Run-Off cells currently contain $57.4mn of cash or 47.8% of NAV, a good portion of which can be distributed. The current proposal does not consider distributing any of this cash.
- Listed closed end funds regularly trade at a substantial discount to NAV and liquidity is generally poor.
- The nearest comparable is Life Settlement Assets PLC (LSE ticker: LSAA) which trades at a 38% discount to NAV with a 15% bid offer spread. In the last 3 months, shares have only traded 5 times (source: Bloomberg).
- The proposal will invest distributable and excess cash into illiquid assets. Not only does this appear to contravene the ‘run-off’ nature of certain cells, but also presents a potentially unattractive investment proposition, based on the performance history of EEA.
- We believe that the manager of EPE Special Opportunities PLC (LSE ticker: ESO) falls under the same control of the current manager of EEA. ESO has returned a negative year to date performance of 63% and trades at a discount to NAV of 46% (source: Bloomberg).
- Without a formal IPO placing process, there will be little broker coverage of buyers and sellers and this will further erode value through a wide bid offer spread.
- A listed fund typically carries a higher cost than running a private fund and hence it would be more beneficial for shareholders to eradicate the multi-cell structure and focus on reducing running costs in its current form.
We would welcome the opportunity to discuss this further with engaged shareholders in order to formulate an appropriate response strategy to ensure shareholder interests are protected and the current run-off progresses in the most cost efficient, expedient and value preserving manner.
Please contact investors.eea.life@gmail.com to be included in further updates. Should anyone wish to be removed from any further communication please kindly let us know.
Best regards,
Group of concerned investors.