14:16:58 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Sprott Physical Gold Trust
Symbol PHY
Shares Issued 148,763,093
Close 2015-09-02 U$ 9.34
Market Cap U$ 1,389,447,289
Recent Sedar Documents

Sprott urges GTU, SBT holders to tender units

2015-09-03 08:51 ET - News Release

Also News Release (C-PHS) Sprott Physical Silver Trust

Mr. Glen Williams reports

SPROTT HIGHLIGHTS THE ONGOING VALUE DESTRUCTION AND HIGH COSTS TO CENTRAL GOLDTRUST AND SILVER BULLION TRUST UNITHOLDERS

Sprott Asset Management LP, together with Sprott Physical Gold Trust and Sprott Physical Silver Trust, today highlighted the continuing destruction of value and costly entrenchment by the trustees of Central GoldTrust and Silver Bullion Trust.

By tendering their units to the Sprott offers before Sept. 18, 2015, GTU and SBT unitholders have a unique opportunity to exit underperforming securities that consistently fail to track the value of the underlying bullion investors have purchased. In addition, the GTU and SBT trustees are interconnected with the Spicer family, which has been the architect of a system of vague and/or undisclosed consulting contracts, payments and fees to these very same trustees that are supposed to act in the best interest of unitholders and free from conflict.

GTU and SBT unitholders should consider the following:

  • For the last two years, GTU and SBT have traded at as much as a 12-per-cent and 14-per-cent discount to net asset value (NAV), respectively, while Sprott Physical Gold and Sprott Physical Silver have traded at, near or above NAV.
  • The management expense ratio (MER) for GTU, compared with Sprott Physical Gold, is 88 per cent higher in the last six months, and 27 per cent higher in the trailing 12-month period.
  • MER for SBT, compared with Sprott Physical Silver, is 292 per cent higher in the last six months, and 126 per cent higher in the trailing 12-month period.
  • GTU's and SBT's respective expenses are grossly disproportionate to the work of their respective administrators and trustees. In fact, GTU's and SBT's respective administrators do not reinvest fees in the promotion or management of the trusts, and have no responsibilities related to the redemption of physical bullion. Simply put, they seem to have pocketed the fees and done absolutely nothing to support your investment.
  • Despite their persistent underperformance, the Spicer family has used every conceivable tactic to preserve 100 per cent of the fees received from GTU and SBT unitholders, including forcing unitholders to pay millions in costs incurred through wasteful litigation initiated by the trustees in a transparent attempt to protect Spicer family profits.
  • Sprott, on the other hand, pays its own legal fees and reinvests fees collected from Sprott Physical Gold and Sprott Physical Silver unitholders into marketing those funds, creating buying demand that supports the price of Sprott Physical Gold and Sprott Physical Silver units, enhances liquidity, and leads to asset growth.
  • The Spicer family has been making payments to "independent" GTU and SBT trustees or awarding consulting contracts to their families, the details and extent of which had never been publicly disclosed.
  • GTU and SBT trustees do not possess the expertise or infrastructure to address the persistent discount to NAV and seem content to assist the Spicer family collect fees, whatever the cost to GTU and SBT unitholders.
  • Indeed, in the recent Ontario Superior Court of Justice proceedings, it was revealed that GTU's and SBT's former lead "independent" trustee, and former chair of their respective corporate governance and nominating committees, Ian McAvity, receives 6 per cent of the gross revenue of the Spicer-controlled administrator for Central Fund of Canada Ltd. The details of these payments, including their significant amount and lifetime term, were never publicly disclosed to GTU and SBT unitholders.
    • Mr. McAvity has received, and continues to receive, millions of dollars from the Spicer family under this royalty alone, including $1.4-million in the past three years and $3.3-million from 2005 through 2014.
  • The fact that the trustees of GTU and SBT see no issues with Mr. McAvity's lucrative side-arrangements with the Spicers speaks volumes as to their conflicts and lack of independence.
  • The court process also uncovered that the chair of SBT's audit committee and special committee, Bruce Heagle, and his family have long-standing personal and professional ties to the Spicer family, and Mr. Heagle's father continues to receive "consulting" fees from a Spicer family bullion administration vehicle.
  • Sprott is offering unitholders an ability to exchange their GTU and SBT units for an immediate premium and with the assurance of management by a regulated entity that is committed to their best interests.

Soliciting dealer information

Sprott is committed to providing GTU and SBT unitholders with an opportunity to own a superior product. In order to reach these unitholders, as is common in transactions with a large retail base, Sprott has agreed to pay to each soliciting dealer a solicitation fee of 13.58 U.S. cents per GTU unit and 4.48 U.S. cents per SBT unit deposited through such soliciting dealer if such unit is either (i) taken-up and paid for under the applicable Sprott offer, or (ii) provided the merger transaction (as defined in the applicable Sprott offer) is completed, deemed to be withdrawn from the applicable Sprott offer under the merger election (as defined in the applicable Sprott offer), subject to a minimum fee of $50 (U.S.) and a maximum fee of $1,500 (U.S.) with respect to each beneficial unitholder of GTU or SBT, and a minimum deposit of 300 GTU units or 1,000 SBT units. Where units deposited and registered in a single name are beneficially owned by more than one person, only one minimum and maximum amount will be applied.

Sprott Private Wealth LP will act as dealer manager for the soliciting dealer groups in Canada, which groups will consist of members of the Investment Industry Regulatory Organization of Canada and the Toronto Stock Exchange. Sprott Global Resource Investments Ltd. will act as dealer manager for the soliciting dealer groups in the United States, which groups will consist of members of the Financial Industry Regulatory Authority.

Inquiries regarding the soliciting dealer groups may be directed to Glen Williams, director of communications for the Sprott Group, at 1-416-943-4394.

GTU and SBT unitholders who have questions regarding the Sprott offers are encouraged to contact Sprott unitholders' service agent, Kingsdale Shareholder Services, at 1-888-518-6805 (toll-free in North America) or at 1-416-867-2272 (outside of North America) or by e-mail atcontactus@kingsdaleshareholder.com.

Each Sprott offer is open for acceptance until 5 p.m. (Toronto time) on Sept. 18, 2015, unless extended or withdrawn.

For more information, unitholders can visit the Sprott Advantage website.

Additional details of the Sprott offers

Each Sprott offer is subject to conditions, including, but not limited to, the number of GTU or SBT units (as applicable) in respect of which an exchange offer election or merger election (as such terms are defined in the Sprott offers) has been made, together with the number of GTU or SBT units (as applicable) held as of the expiry time (as such term is defined in the Sprott offers) by or on behalf of Sprott, if any, representing at least 66-2/3 per cent of the then issued and outstanding GTU or SBT units (as applicable); the receipt of all necessary governmental or regulatory approvals; no material adverse change in relation to GTU or SBT; GTU, SBT and the Sprott Physical trusts not being prohibited by applicable law from completing the merger transactions (as such term is defined in the Sprott offers); and no litigation or regulatory order that may jeopardize the Sprott offers, as described in the offer documents (as defined below).

Each Sprott offer is open for acceptance until 5 p.m. (Toronto time) on Sept. 18, 2015, unless extended or withdrawn. Concurrently with each of the Sprott offers and as contemplated under the declaration of trust of each of GTU and SBT, written consents, by way of a power of attorney granted to Sprott, requiring the approval of the holders of at least 66-2/3 per cent of the GTU units and of the SBT units, respectively, are being solicited as part of the letter of transmittal to, among other things, authorize a qualifying exchange as part of the relevant merger transaction with Sprott Physical Gold Trust and Sprott Physical Silver Trust, respectively; replace the trustees of GTU and SBT (other than administrator nominees), respectively, with nominees to be designated by Sprott; and amend the declaration of trust of each of GTU and SBT to provide that GTU and SBT units shall be redeemable on demand at NAV and to reduce the tender required for a compulsory acquisition to 66-2/3 per cent. In order for units of GTU or SBT to be tendered to the Sprott offers, a depositing unitholder will be required to provide the written consent referred to above and appoint Sprott, or an affiliate thereof, as its attorney and proxy holder for, among other things, the purposes of redeeming such unitholder's units of GTU or SBT, as applicable.

Full details of each Sprott offer are set out in a takeover bid circular and accompanying offer documents (collectively, and as amended by the notice of extension and variation dated June 22, 2015, the notice of extension and variation dated July 7, 2015, the notice of extension and variation dated Aug. 4, 2015, the notice of change dated Aug. 18, 2015, the notice of change dated Aug. 28, 2015, and as further extended and varied, the offer documents), which have been filed with the Canadian securities regulatory authorities. In connection with each Sprott offer, the applicable Sprott Physical Trust has also filed with the U.S. Securities and Exchange Commission (the SEC) a registration statement on Form F-10, which contains a prospectus relating to the applicable Sprott offer. Sprott and Sprott Physical Gold Trust have also filed a tender offer statement on schedule TO with respect to the Sprott offer for GTU. This news release is not a substitute for the offer documents, the prospectuses, the registration statements or the schedule TO.

GTU and SBT unitholders and other interested parties are urged to read these documents, all documents incorporated by reference, all other applicable documents and any amendments or supplements to any such documents when they become available, because each contains or will contain important information about Sprott, the Sprott Physical trusts, GTU, SBT and the Sprott offers. Materials filed with the Canadian securities regulatory authorities are available electronically without charge at SEDAR. Materials filed with the SEC are available electronically without charge at the SEC's website.

We seek Safe Harbor.

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