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Winnipeg Free Press - PRINT EDITION
GrowthWorks ready to dole out cash to ENSIS unitholders
AFTER more than a year in limbo, unitholders in the old ENSIS Growth Fund can apply to get their money back.
But if you were thinking about holding your breath in anticipation of an immediate windfall -- please exhale.
The GrowthWorks Canadian Fund, which bought ENSIS in late 2007, has had its "redemption management plan" rejected by regulators after 13 months of deliberations.
The Vancouver-based fund has responded by announcing it is now open to redemption requests and will dole capital out when it's available on a pro-rata basis. The redemption-request form is available by clicking on the Canadian Fund link on the company's website (www.growthworks.ca).
GrowthWorks had hoped to restrict shareholder redemptions to two windows a year and a maximum of $20 million annually in an effort to keep a tight rein on requests.
David Levi, president of GrowthWorks, said he was disappointed in the regulator's decision, but now his board will provide shareholders with 30 to 40 days' notice when there's an opportunity to redeem their shares.
"As cash becomes available, the board will review it on a regular basis. The redemptions will be voluntary. It won't be forcing people to pay a tax penalty (if they haven't owned their shares for the minimum eight-year holding period)," he said.
Cash, however, is at a premium. According to the fund's financial statements for the year ended Aug. 31, 2012, cash reserves are at $160,000, down from $1.87 million a year earlier.
The share price has been in steady decline for more than five years, too. At the beginning of 2007, it was north of $10. As of last Friday, it sat at $5.59, down about 15 per cent in 2012.
The wheels fell off the fund in the middle of 2011. Up until then, it was bringing in between $40 million and $50 million per year from selling off companies in its portfolio. That summer, however, the markets for initial public offerings, mergers and acquisitions dried up and it has only just started to rebound.
GrowthWorks has realized between $2 million and $4 million from a number of small sales during the latter part of 2012, Levi said.
Even though he hasn't been involved for about five years, Bill Watchorn, former CEO of ENSIS, said GrowthWorks' pro rata approach is "reasonable."
"Even large pools of capital that weren't labour-sponsored do this," he said.
He doesn't have precise figures, but from what he has heard anecdotally, a significant number of ENSIS shareholders redeemed their funds as soon as their eight-year holding period expired.
"I know I did. I redeemed every time. If I have any shares left, it's not much," he said.
geoff.kirbyson@freepress.mb.ca
Republished from the Winnipeg Free Press print edition December 18, 2012 B7
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