TORONTO, ONTARIO — (Marketwire) — 12/29/11 — The Northwater Market-Neutral Trust (the “Trust”) announced today it has received binding offers from multiple bidders to purchase all of the remaining non-cash assets of the Trust. The closing of each of these sales is subject to a number of conditions including the consent of managers of the relevant underlying funds. Northwater Fund Management Inc. (the “Manager”), in its capacity as manager of the Trust, expects to close most of such sale transactions by not later than March 31, 2012 and to make distributions of the net proceeds from such sales as soon as reasonably practicable after such closings occur.
In an effort to achieve optimal value for the remaining assets of the Trust, the Manager engaged an unrelated, arms- length third party broker on behalf of the Trust to solicit a variety of bids from a wide range of potential purchasers who are active in the hedge fund secondary market. The broker determined that value could be optimized by dividing the underlying funds held by the Trust into several groups and packaging them for sale to the highest bidder. None of the purchasers is related to or affiliated with Northwater Fund Management Inc. or its affiliates.
The impact to the Trust of these sales will result in a reduction to the net asset value of the Trust per unit which reflects the discounts applied by each purchaser to each of the illiquid hedge fund positions being purchased. On an aggregate basis, the overall impact of these sales on the Trust-s net asset value is likely to result in a reduction by approximately 31% of the reported net asset value as at November 30, 2011. However, the final financial impact of the sales transactions remains subject to various closing adjustments, foreign exchange fluctuation and other related adjustments. The final valuation will be confirmed by the 15th business day of January, 2012.
As announced previously, the Trust has been engaged in ongoing efforts to liquidate the remaining assets of the Trust in a reasonable manner since the scheduled termination date of the Trust. The Trust was scheduled to terminate on December 31, 2009 (the “Termination Date”).
The Manager has continued to manage the Trust-s assets as it sought appropriate means of liquidating the remaining portfolio of assets held by the Trust in the aftermath of the 2008 global financial crisis. The Manager has attempted to conduct an orderly wind-down of the Trust without compromising the remaining value of the Trust-s assets. The illiquidity of the remaining portfolio of underlying funds held by the Trust has made it clear that the secondary market transfers described herein were reasonable at this time. In addition, without taking this action, the Trust would have continued to exist for the next several years and would have continued to incur significant fixed regulatory and administrative costs.
The Trust will continue to exist and unitholders will have a right to the return of their pro rata share of the assets of the Trust until such time as all such assets are liquidated through the completion of the sales described herein. Additional information regarding distributions shall be announced as such information becomes available to the Manager of the Trust.
Contacts:
Northwater Capital Management Inc.
Dan Mills
(416) 360-2101