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West Palm Beach (HedgeCo.net) - Hedge fund manager Rosseau Asset Management Ltd. and certain related parties have filed a dissident’s proxy circular (the "Dissident’s Circular") to Noront Resources Ltd., in which the hedge fund group controls over approximately 9.2% of common shares.
Rosseau asks Noront’s shareholders to vote against the re-election of the Company’s current Board of Directors and instead vote to elect a new slate of directors at the upcoming annual meeting of shareholders scheduled to be held on October 28, 2008.
During recent meetings between Rosseau and Noront’s management, the hedge fund manager indicated it wanted significant changes to Noront’s Board of Directors and some senior management.
Rosseau rejected Noront’s compromise proposal and has commenced its proxy fight with the filing of the Dissident’s Circular, saying, "Rosseau’s action is not in the best interest of shareholders. It is an opportunistic attempt, in light of extraordinary recent market conditions……Norent will respond (to the circular) shortly."
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Globe and Mail - Daniel Gross, writing on Slate, makes an interesting point about the latest version of the U.S. government’s bailout plan: The plan, officially known as the Emergency Economic Stabilization Act of 2008, looks a lot like the prospectus for a hedge fund.
“In the past, hedge funds – secretive pools of capital – were open only to qualified (read: rich) investors,” he said. “But with the stroke of a pen, President Bush will soon make all American citizens investors in the world’s biggest fund – and a democratic one at that.”
Hedge funds often use leverage, or borrowed money, to amplify their returns and often use the money to buy beaten up assets. Similarly, the bailout plan, which Mr. Gross dubs the Universal Hedge Fund, will use $750-billion (U.S.) of borrowed money to buy distressed assets. But the similarities don’t end there. The manager of the Universal Hedge Fund can hold bonds to maturity or flip them for a profit. The manager can also bring in outside expertise, making the fund look like a fund of funds.
“Like many of today’s sharpest hedge funds, the Universal Fund will also have the ability to drive a harder bargain by demanding equity stakes, or new debt securities, from the institutions it is helping,” Mr. Gross said.
Slate - The Wall Street bailout is alive again. In an effort to make the $700 billion bailout palatable, the architects of the law have larded it up with all sorts of goodies, such as increasing the levels of deposit insurance, sparing some taxpayers the ravages of the Alternative Minimum Tax, and extending tax breaks for alternative energy. Henry Paulson’s three-page sprig has sprouted into a 451-page Christmas tree.
What’s most interesting about the Emergency Economic Stabilization Act of 2008 is just how much it reads like a prospectus for a hedge fund. In the past, hedge funds—secretive pools of capital—were open only to qualified (read: rich) investors.
But with the stroke of a pen, President Bush will soon make all American citizens investors in the world’s biggest fund—and a democratic one at that. Taxpayers won’t just be the investors. We’ll own the management company, too. Best of all? For at least a few months, we’ll have the former CEO of Goldman Sachs run our investment for a very small fee. Call it the "Universal Hedge Fund."
New York (HedgeCo.Net) - Harbinger Capital has taken an 8 percent stake in Cablevision Systems Corp., according to a regulatory filing done yesterday with the Securities and Exchange Commission.
The activist hedge fund now owns nearly 19 million shares of the cable operator. The filing communicated Harbinger’s views that the stock is undervalued and also touched on the possibility of a strategic restructuring, saying they may “seek to influence or change the control” of the company.
It is not uncommon for hedge funds and other private equity firms to try to replace or enhance a company’s board of directors in order to give them more control or decision making privileges. Hedge funds generally seek high returns in a short time frame, and are more than prepared to try and replace management should the current slate fail to share their views.
Harbinger is no stranger to this practice. Already, the hedge fund has sought seats on two of the boards of companies in which they invest: The New York Times and Media General. Harbinger was awarded three seats on Media General’s board and two seats on the board of the Times after a much publicized near proxy battle.
Shares of Cablevision closed at $32.46 on Thursday, down 10 cents.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Miami Herald- CSX is resuming its annual meeting in Jacksonville, but it is uncertain what will be on the agenda.
When the board met in June in New Orleans, it halted the meeting so it could continue counting votes for a slate of directors pushed by hedges fund. CSX rescheduled the meeting for Friday.
CSX said last week that preliminary results of the vote showed four of the five directors pushed by hedge funds had been elected.
But Chairman Michael Ward said the new directors cannot be seated until a court proxy battle wraps up. The hedge funds say the railroad company is stalling.
The Business Sheet- After spending nine months trying to close a $450-million film financing deal to offset the cost of 30 upcoming movies, Paramount has been forced to give up the chase.
The studio was working with Deutsche Bank to try to arrange what would be its third slate film-financing arrangement, but after the bank was unable to syndicate the senior debt part of the funding, the deal has come to a screeching halt ,and Deutsche Bank has decided to shutter its pioneering film-financing operation, according to the Financial Times.
Over the past four years more than $13 billion has poured into Hollywood from once-rich hedge funds, private-equity firms and investment banks in the form of co-financing deals with practically every major Hollywood studio. In fact, both Deutsche Bank and Paramount were early participants in such deals, with Paramount completing the first of these slate deals with Merrill Lynch in 2004 and Deutsche Bank following soon thereafter with a $600 million deal between Sony Pictures Entertainment, Universal and Ryan Kavanaugh’s Relativity Media.
Reuters- U.S. railroad CSX Corp, locked in a proxy battle with two hedge funds, urged shareholders in a letter on Tuesday to vote against the activist investor group’s proposed slate of five directors, saying they had "no plan" for the company.
"The TCI Group, which is promoting a slate of five new directors for the CSX board, has no plan and no new ideas for the company," wrote Michael Ward, chairman and chief executive of Jacksonville, Florida-based CSX. "They’ve made demands that we believe would damage CSX and impair the value of your investment — ideas such as saddling CSX with ‘junk’-rated debt or doing a leveraged buyout at $50 a share, with the stock price now in the high $60s."
Reuters- The chief executive of CSX Corp said in court on Wednesday he felt targeted by activist investors seeking to get seats on the board of directors, but the rail company negotiated with them in good faith to try to find common ground.
CSX sued The Children’s Investment Fund Management, a hedge fund known as TCI, and another fund, 3G Capital Partners, in March, contending they violated securities laws in their efforts to nominate a slate of directors for election at the company’s annual shareholder meeting.
The funds are trying to get five directors onto the 12-member CSX board.