Shareholders in the EEA Life Settlements fund could be offered three restructuring options once dealing in the fund resumes later this year.
Dealing in the fund was suspended on December 1, 2011, after it received a high number of redemption requests following the publication of the Financial Services Authority’s (FSA’s) guidance consultation on traded life policy (TLP) investments.
“The fund’s liquidity was not sufficient to meet such redemption requests in full and it was not reasonably practicable to realise or dispose of the fund’s assets to satisfy such requests,” the asset manager explains.
“As a result, the fund’s board decided to suspend the valuation of the net asset value of all classes of shares in each cell of the fund and all dealings of such shares.”
In a letter sent to shareholders yesterday, the board said it is considering “possible ways of restructuring the fund” after the FSA completes its consultation exercise and believes it will offer shareholders a choice of three options.
The first is for shareholders to continue to hold existing shares in cells in the continuing EEA Life Settlements fund with some additional dealing restrictions, such as a lock-in period, applied
A second option sees them exchange existing shares for shares in a run-off vehicle, where distributions will be made as policies mature and proceeds are received.
The final option allows shareholders to sell their shares to institutional investors if they require immediate access to cash.
The fund’s board hopes to offer further details in April, assuming the FSA publishes its final guidance on TLP investments.
In its guidance consultation, the FSA described TLP investments as “high risk, toxic products” – a label which was attacked by providers such as EEA Fund Management.