KONTIKI Growth Fund (KGF) shares in Bligh Water Shipping (BWS) have been sold.
This after KGF entered into a sale and purchase agreement with an unrelated third party in November for the sale of its shareholding in BWS for $21,620 in total consideration.
But the Fund is not happy with the return from the inter-island shipping firm as was its initial projection.
In its third quarter update released last Friday, Fund director Jack Lowenstein said KGF had sought alternative means to realise value in its investment in BWS, which was previously written down to a zero value.
Mr Lowenstein said during the third qaurter, KGF took a leading position among BWS shareholders to continue negotiation with two potential buyers of some or all of BWS.
He said those negotiations were made more difficult by a winding-up petition that a creditor filed against the shipping company.
Although the petition was dismissed by the court, Mr Lowenstein said a secured lender of BWS insisted on repayment of its loan to BWS because of the uncertainty.
He said to receive repayment, the secured lender facilitated a sale of one of BWS's two ships to a third party.
He said despite those difficulties, the Fund and other BWS shareholders were able to receive two bids, "selecting the bid that would maximise proceeds from a sale in the near term and with security for any deferred payout".
"We conducted detailed due diligence with the management of BWS and with the parties that offered to purchase our shares," Mr Lowenstein said.
He said the Fund would recognise this gain in investment during the fourth quarter of this year.
"Using the information available to us, including projections of a restructured BWS with a single-ship operation and its current debts — we determined that the risk/reward and return prospects were more favourable for selling the Fund's shareholding," he said in his report.
"While we are disappointed that the investment in Bligh did not perform well as our initial projections, we are happy to have generated some return for KGF."
KGF would receive the payments in two tranches.
Mr Lowenstein said they would receive the first payment upon completion of share transfer, and the second to be paid within the next six months.
He said the latter payment would be secured by a mortgage over the shares and a charge over the buyer's assets.