Steel Imposes Deadline On Take-It-Or-Leave-It Listing Plan

May 27 2009 | 10:11am ET

A pair of lawsuits and a multitude of angry investors apparently won’t keep Warren Lichtenstein from his dream of permanent capital.

New York-based hedge fund Steel Partners this week that it is moving forward with plans to list its flagship Steel Partners II, offering up the latest version of its controversial proposal. Lichtenstein also gave investors in the fund a June 5 deadline to take—or leave—his deal.

Investors can either choose to remain with Steel and back its plan to convert the fund into a publicly-traded holding company—an option Lichtenstein describes in the letter as “too compelling to ignore”—or they can choose to receive a share of some of the fund’s assets over time. A third option which gave investors the opportunity to vote for putting the fund’s assets into a liquidating trust, has been eliminated, Reuters reports. Lichtenstein said that calls for an immediate liquidation of the fund are “imprudent.”

So instead, investors who opt out of Lichtenstein’s more “compelling” offer will have their assets put into a new entity that will be slowly liquidated. According to Steel, just over one-third of its assets can be sold off quickly.

Meanwhile, those who stick with Steel post-listing would have the chance to cash out daily. And Lichtenstein said that, after two years, investors can vote to liquidate the holding company.

It is unclear whether Lichtenstein’s plaintive new missive will change any minds. As of last month, investors representing only 36% of the fund’s assets had voted in favor of the plan. The rest filed redemption requests or abstained from voting.

And, of course, there are still the two lawsuits that seek to derail the whole plan in the courts. One is led by a Carl Icahn-controlled company, the other includes hedge fund Archstone Partners and several endowments.

Lichtenstein said that Steel remains in talks with the dissidents over a settlement. But he sounded anything but chastened when discussing the lawsuits.

“We have been unable to reach an agreement thus far, and indeed we believe that the plaintiff investors’ demands are unreasonable and not in the best interests of all investors,” he wrote.

The three sides are due back in court on June 19.


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