Polar Securities disagrees with ISS Analysis provided to Central Goldtrust Unitholders

  • ISS displays lack of capital markets understanding
  • ISS ignores peer comparisons, governance failures and needless value destruction
  • CGT discount to NAV could widen further without effective redemption feature
  • Polar has proposed the ONLY solution to eliminate the significant trading discount to NAV

TORONTO, April 16, 2015 /CNW/ - Polar Securities Inc. ("Polar") today commented on a report issued by Institutional Shareholder Services Inc. ("ISS") a proxy advisor firm to Unitholders of Central GoldTrust ("CGT" or the "Trust") (TSX:GTU-U; NYSE MKT:GTU) in respect of Polar's proposed unit redemption amendments and Polar's trustee nominees ("Polar Nominees") who will shepherd the Trust through these changes and unlock value for ALL unitholders of the Trust ("Unitholders").

Polar disagrees with ISS' analysis and recommendation to Unitholders, finding it to be severely deficient and displaying a lack of capital markets understanding.

"Our communications with shareholders show that the investor sentiment is at odds with ISS' recommendation, and we expect that institutional shareholders, acting as fiduciaries, will form their own independent opinions about Polar's proposal and Polar's Nominees. ISS' advice to Unitholders appears to mirror that of CGT management – continue to suffer the destruction of value until the price of gold improves. CGT and ISS have failed to consider that the trading discount to NAV could widen without an effective redemption feature," said Paul Sabourin, CIO of Polar.

"We note that Pekin Singer Strauss Asset Management, a United States-based investment advisor and CGT's largest reported Unitholder, has independently declared their support for Polar's proposal, the ONLY proposed solution to unitholders to eliminate the significant trading discount to net asset value ("NAV"). Unitholders who share our views and want CGT to unlock ~$65 million of value should vote their BLUE proxy today," continued Mr. Sabourin.

In arriving at its conclusion, ISS appears to ignore the following fundamental issues that have contributed to the destruction of approximately USD $65 million of Unitholder value:

  • Over the past 3 years, the trading price of the Units has materially underperformed the returns of gold (7.8% underperformance to March 31, 2015), and for the past 2 years, the Units have consistently traded at a discount to NAV. This is a problem that can be solved through positive action.

  • Without an effective redemption feature, like those adopted by industry leaders Sprott Asset Management LP ("Sprott") and the Royal Canadian Mint (the "Mint"), there is no mechanism to ensure that market price of the units reflects the underlying NAV. By adopting the redemption proposal, Polar anticipates that Unitholders of all sizes will have the ability to sell units in the market at a price close to NAV.

  • The trading discount to NAV could actually widen further without the adoption of an effective redemption feature.

ISS failed to acknowledge the Trustees' entrenchment tactics and failure to engage with shareholders:

  • Most troubling, Polar has never been able to speak to the independent trustees in a constructive manner without Stefan Spicer, Chairman and CEO of CGT, present and leading the conversation. Polar had one short meeting without him, and no meaningful engagement with the Trustees.

  • Polar offered the Board (and their legal advisors) the opportunity to engage directly with Polar's legal advisors. This offer was not accepted.

Confusingly, for a governance oriented organization, ISS paid little notice to the lack of alignment and governance failures on the CGT board:

  • Management collects their fees, over $1.7 million in 2014 alone, based on the NAV and not the market price of the Units, and have no motivation to close the discount to trading value.

  • The incumbent Trustee's interests are not aligned with Unitholders because together, the Trustees own less than 0.01% of the Units.

  • Put another way over the last 5 years, the Trustees have earned over USD$600,000 in fees from the Trust and own just USD$105,950 in CGT Units.

  • The Trustees appear to work for Mr. Spicer – not Unitholders. All but one of the Trustees sit on the boards of two other funds managed by Mr. Spicer, Chairman, President and CEO of CGT, making it impossible for them to be truly independent.

  • "Independent" trustee Mr. Parente is a former 12 year employee of Mr. Spicer and yet serves on the audit committee and the corporate governance and nominating committee of the Trust.

The Trustees are using tax issues as a scare tactic to mislead unitholders and ISS:

  • The proposal will have no material tax consequences for non-redeeming US holders.

  • Tax consequences will only arise if redemptions occur. Second, tax consequences are experienced only by U.S. persons that have made a QEF Election in respect of their Units.

  • Even a speculative $396 tax bill per 1,000 units highlighted by the Trustees represents only 0.89% of the NAV. This pales in comparison to the $3,102 (or 7.1%) benefit that should accrue to Unitholders.

  • Finally, the majority of any taxes paid will reduce your tax bill when a Unitholder eventually sell their Units.


Polar is proposing to amend CGT's existing redemption features with proven, industry standard redemption features to benefit ALL Unitholders, regardless of the size of their holdings. Based on March 31, 2015 closing prices, Unitholders should expect to gain at least USD$3,102 of additional value for each 1,000 Units held.

Polar has nominated 5 independent trustees who bring decades of experience from Canada's largest financial institutions and extensive public board experience. Their combined expertise, both managing and advising public and private companies, will enable them to unlock value at CGT for ALL Unitholders.


Vote the BLUE proxy today in favour of Polar's redemption proposal and for Polar's five highly qualified and independent nominees.

In order to ensure that your vote is counted, your vote must be submitted before 12:00 p.m. (noon) (Toronto time) on Tuesday, April 28, 2015.

For additional information please visit Polar's website www.UnitholdersForCGT.com.

If you have any questions or need assistance in voting your BLUE proxy, please contact Shorecrest Group Ltd. at 1-888-637-5789 (toll free within North America) or 647-931-7454 (collect calls accepted), or by email at contact@shorecrestgroup.com.


Established in 1991, Polar, based in Toronto, Canada, is registered as an Investment Dealer, Investment Fund Manager and Futures Commission Merchant with the Ontario Securities Commission and is a member of the Investment Industry Regulatory Organization of Canada. Polar acts as the investment manager for certain investment funds and manages over CAD$2 billion of client funds. Polar's investment philosophy focuses on capital preservation and low volatility. During its tenure, Polar has invested in more than 10 Canadian precious metals funds and more than 75 Canadian closed-end products and has extensive expertise in structuring, managing and investing in complex investment products.

SOURCE Polar Securities Inc.

For further information: Unitholders of CGT: Shorecrest Group Ltd., 1-888-637-5789 (toll free within North America), 647-931-7454 (collect calls accepted), contact@shorecrestgroup.com; Media: Riyaz Lalani, Bayfield Strategy, Inc., (416) 907-9365, rlalani@bayfieldstrategy.com

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