News blog
Speymill
- BY: Andrew Hore |
- POSTED: 21/07/2009 |
Speymill could be hit by the removal of the five directors of Speymill Macau Property Company and their replacement by three directors of Terra Partners.
Prague-based fund manager Terra is the manager of Worldwide Opportunities Fund (Cayman) Ltd, which is Speymill Macau’s biggest shareholder with a 22.08% stake. Worldwide requisitioned the general meeting which removed the existing directors and replaced them with Howard Golden, Filip Montfort and Yarden Mariuma of Terra. The three men own less than 1% of Speymill Macau. At least two independent directors will eventually be appointed to the board of Speymill Macau.
Even so, it seems sensible to assume that Terra is likely to want to take on the management responsibilities for Speymill Macau.
That would be bad news for Speymill, which owns the investment manager that manages Speymill Macau. Speymill has been having trouble with its contracting side so it is not a good time to be losing revenue from the better performing part of the business. The Speymill Macau management fees, of 2% of NAV each year, are paid monthly in arrears and help Speymill’s cash flow.
Speymill Macau paid management fees of $3.67m during 2008 – according to its accounts – but 40% is paid directly to the property adviser Avila Capital. Speymill also booked a £1.6m performance fee from Speymill Macau in 2008, which Speymill Macau accounted for in the previous year. Speymill reinvested £627,000 of the performance fee in Speymill Macau shares – it held 1.06m shares at the end of 2008. No performance fee was payable for 2008.
The management agreement is subject to 12 months’ notice by either party.
Speymill’s investment management side generated external revenues of £9.91m and reported a profit of £4.57m in 2008. This is a highly operationally geared business so the loss of the Speymill Macau income would have a significant effect on that profit.
So far the Speymill share price is unchanged at 15p, which values the company at £8.75m.
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