Our little arbitrage on Alinta Energy (AEJ) looks headed for a successful conclusion. I outlined the potential returns on offer in Alinta Energy Makes It Two From Two and Photon or Alinta? Lucking Out On AGMs. Consents from lenders and the courts have been obtained, a meeting date has been set (15 March) and, assuming the vote goes through, which is highly likely, we should have our 10 cents per security before the end of March.
We’ll then be left with $3.7m in cash, which will be used to wind the business down over the next 18 months, and the equity in Redbank Power Station. The later is looking increasingly worthless but, given the securities will probably trade at a price commensurate with that assessment, they are worth throwing in the bottom drawer as an option on something remarkable happening (note that the directors are proposing a 1,000-for-consolidation, a name change to Redbank and that the entity will be delisted by August in order to preserve cash, all post payment of the 10 cents).
All in all, it’s looking like a nice 17% return in just a few months. As John “Hannibal” Smith used to say on The A-Team, I love it when a plan comes together.
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Forager Funds is a boutique fund manager specialising in a value investing approach. We offer an ASX listed Australian Shares Fund as well as an International Shares Fund both aimed at delivering returns for long term investors.