Sprott's hostile bid for Canada metal trusts gains ground-source

Tue Aug 18, 2015 3:26pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Mike Stone

Aug 18 (Reuters) - Nearly a third of investors in precious metals funds Central GoldTrust and Silver Bullion Trust have agreed to a bid from Canada's Sprott Asset Management, a person familiar with the offer said on Tuesday.

Sprott, a Toronto-based money manager, has been trying to wrestle control of Central GoldTrust and Silver Bullion Trust from Central Fund of Canada Ltd in a rare example of a hostile bid in Canada.

The two funds are backed by physical precious metal holdings of over $750 million in gold and $44 million in silver respectively.

A source told Reuters more than 30 percent of Central GoldTrust's and Silver Bullion Trust's investors have already tendered, or committed to tender in the offer, which will expire on Sept. 18. It needs the support of two thirds of investors.

Typically, investors tender their shares or units only days ahead of the close.

Sprott has launched a tender offer where investors in Central GoldTrust can exchange their holdings for units of Sprott's Physical Gold Trust, an option that Sprott says will give an immediate boost to the value of the investments.

Sprott allows its investors to redeem their gold at net asset value, an option the Central Fund of Canada funds do not have.

Central GoldTrust trades at a 6.5 percent discount to its net asset value while Sprott's Physical Gold Trust recently traded at a 0.6 percent discount to net asset value.   Continued...