The value of the Woodford Equity Income Fund has dropped by 16.8 per cent due to the anticipated liquidation of one of its holdings.
In a letter to shareholders yesterday (June 15), Karl Midl, managing director of Link Fund Solutions, said on June 13 Rutherford Health, a holding in the fund, appointed an official receiver to liquidate the company.
Midl said when the fund received the “extremely disappointing” news that the board of directors of the company were looking to wind it up, the value of the fund’s holding was cut to zero.
As a result, the fund’s overall valuation fell from £142.5mn to £118.6mn between May 31 and June 15.
Midl said because the fund now holds relatively few assets, and because some of the shareholdings have relatively large weightings compared to others, a change in the value of some of the remaining assets will lead to a “disproportionately large” increase or decrease in the fund’s NAV.
Link emphasised it had “worked hard” alongside other shareholders in Rutherford Health to support the new management to improve the company’s financial situation.
“Over recent months bridging finance was provided by key shareholders, including [the Woodford fund], to enable an investment banking process to explore longer term funding options.
“A significant number of parties were approached in the process and substantive discussions took place with one third party.”
Unfortunately, Link said, a deal could not be reached and the appointment of an official receiver was “unavoidable”, and at this stage it in unclear if any value can be recovered from the business for the fund’s investors.
Midl said investors are reminded that due to the “illiquid nature and maturity” of some of the fund’s remaining assets, their valuation can change.
Link will now report the fund’s NAV on a quarterly basis, but is unable to confirm when the next investor payout will take place.
To date, £2.54bn has been returned to investors.
Claim against Link
This week, two law firms launched a claim against Link Fund Solutions over the company’s handling of the Woodford Equity Income fund.
Leigh Day and Harcus Parker submitted a group litigation order at the High Court on June 15 on behalf of more than 3,000 investors in the fund, which collapsed in 2019.
The firms believe the claim will be worth more than £100mn.
Both companies had previously begun court proceedings against the fund’s authorised corporate director - Leigh Day in September last year and Harcus Parker last month.