LEXPERT MAGAZINE
|
JULY/AUGUST 2016 37
| ART OF THE DEAL |
Spicer
Every mutiny is sparked by stewing dissatis-
faction leading to a critical incident. In the
case of the Bounty in 1789, an uprising was
seeded when ship captain Lieutenant Wil-
liam Bligh chided his carpenter for cutting
poor quality billets of wood. In the Spicers'
case, an institutional unitholder chided
the poor performance and management of
both CGT and SBT and wanted trustees to
walk the plank.
For years, the Spicer family and their di-
rectors ran and controlled the two physical
bullion trusts founded through parent com-
pany Central Fund of Canada Ltd. CFOC
was founded by family patriarch Philip M.
Spicer in 1961. In 2003 his son Stefan Spicer
founded CGT, and in 2009, SBT. CGT and
SBT operated from a brick manse on a leafy
street in Ancaster, Ontario.
e heavier of CFOC's two trust funds,
with about $1.2 billion in assets, was CGT.
SBT held about $50 million. Both trusts
traded on the TSX and NYSE, with unit-
holders consisting mainly of mom-and-pop
retail investors. But it was an institutional
investor, Polar Securities Inc., which first
attempted a mutiny for the bullion.
Polar
Polar, a Toronto hedge fund, had bought
stakes in the Spicer treasure chests in 2013
– 10.02 per cent in SBT, 4.4 per cent in
CGT – but the firm had quickly soured
on management's handling of the funds.
Compared to peers, SBT and CGT units
consistently traded at a troubling discount
to the net asset value (NAV) of the gold
and silver in each fund. In a press release
at the time, Polar complained the average
discount to NAV for SBT was 7.4 per cent
and 5.7 per cent for CGT.
On February 3, 2015, Polar pulled out its
rapier with a requisition for a unitholder meet-
ing. Polar sought to change how unitholders
could redeem units. It wanted SBT and CGT
to amend their Declarations of Trust (DoT)
dictating how management should adminis-
ter the assets held on behalf of unitholders. It
also wanted to remove three directors on the
board of SBT, where the hedge fund's sizable
stake gave it clout, and replace them with its
own representatives.
CFOC put together a special committee
of trustees for its three entities. With the
help of Staley's Bennett Jones team it fend-
