In view of the imminent closure of BTC-TC and LTC-Global, LTC-ATF will be closing its doors. In theory we could move to another exchange - but there's nowhere which supports securities denominated in LTC so a major restructure would be needed with a massive change to the contract.
The following will happen today, assuming the exchanges are up and the necessary functionality works:
1. All bonds will be recalled at face value. The contracts are explicit that redemption is at face value in the event that LTC-ATF closes.
2. I will buy out all LTC-ATF shares at the NAV/U as of yesterday. The adjusted NAV/U (i.e. post management fee) was 0.69148904 LTC per share.
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Lots of things in your post to comment on, but lets start with the above and have a look at the LTC.AFT contract at LTC-global.
From LTC-AFT's Contract with it's shareholders we read the following:
"LIQUIDITY & FUND CLOSURE
The fund does not pay dividends - so the only way for investors to realise
profits (or losses) is to sell their units. The fund shall attempt at all times
hold at least 5% of fund value in LTC for the purpose of buying back units.
When the manager is online (and has an accurate current valuation of the fund)
this shall be done by bid-walls placed on LTC-GLOBAL at between 95% and 99% of
NAV/U (the precise value within that range may be set by the manager - based,
primarily, on volatility of the LTC/BTC exchange rate).
If significant bids already exist at above 99% of NAV then the manager is
released from the obligation to place bid-walls - but not from the obligation to
hold sufficient liquid LTC to place such walls if the need arises.
If circumstances arise such that the manager is no longer able to continue
operating the fund then the manager shall dispose of all assets held by the fund
and distribute the proceeds to unit holders. Such process shall be conducted in
as timely a fashion as is possible without incurring major loss by selling into
under-priced bids."
The contract say "If circumstances arise such that the manager is no longer able to continue
operating the fund..", it dosen't say if the exchage the fund is listed on were to close down.
I can't see that it would be stranger to run a fund denominated in LTC on an BTC exchange (like Bitfunder or Havelock) than having bonds denominated in BTC on an LTC exchange.....
So BTC-TC and LTC-GLOBAL's closing is not really a reason for closing the fund according to the contract, that is not an option that excist for you to take in this type of situation(it would have been another situation if there woould have been no btcstocktrading platforms or exchanges left or if you had been seriously ill and couldent continue things because of that) accourding to the contract as it's possible to continue running the fund either on another exchange or totally without any exchange, so that looks like a breach of the contract.
The only slight problem i can see in the contract is this line:
"The manager is entitled (and expected) to buy back units. This may only be done
on the LTC-GLOBAL exchange at prices below the current NAV/U."
And i can hardly think investors would object to having trades of the share be done at another exchange instead and the wording in that sentance dosen't mean the funds have to close just because you can't buyback shares at that specific exchange after the 7 october ....
So the action you took on LTC-AFT, LTC-AFT.B1 and LTC-AFT.B2 looks to have been taken to quick and be incorect ones. The coming 2 weeks on LTC-golobal and BTC.TC may also result in a lot of profitable situations for you and your fund so there's probably lots of BTC's and LTC's for the fund and you to make in that period so closing the fund now seemes like a very bad decition for the shareholders and bondholders.
Also the BMF position the fund recently took just a few days ago looks like it can be a very profitable one with those options rights to.
There's also the fact that some(/many ?) people that invested in your fund relatively late will make big losses on the action you decided to do while closing things down, witch probably was in breach of the contract(s) they made there investment based on.
LTC.AFT.B2 has probably for most periods only been trading at max at 4% over face value, but LTC.AFT.B1 for example has at times traded at over 30% or so over face value and even worse the LTC-AFT itself that has been trading at around 300% NAV for quite a while now.
Therefore i think the least thing you should do if you stand by your decition that things should be closed down for good is to compensate those shareholders/bondholders that made a loss on this action you took(as it most likely was a incorrect one), whether they have bought LTC-AFT stocks at above NAV value, LTC-AFT.B1 or LTC-AFT.B2 bonds above face value and havent made there investments back on them sofar, as the LTC-AFT shoulden't have been closed accourding to the contract and therefore neither the bonds should have been bought out.
It also looks like many/most of those LTC-AFT.B1 bonds and LTC-AFT stocks that has been sold at high market prices recently has been sold by either you personally or your other fund DMS that you also own significant amount of shares in, so your quick decition to close things down in what looks like a very profitable situation for shareholders/bondholders if things would have been carried on gives a very bad taste...
This is precisely the sort of situation meant when I said "if manager can't continue running the fund". In theory I could have run it for another week - until trading closed - but that would have been irresponsible. When something is closing because of legal pressure you don't want to leave funds on longer than you have to. Also the closure was BOUND to spark a fall in LTC vs BTC - this way gave investors a chance to get out first if they wanted.
The market, in general, was already falling. These closures are going to cause it to fall further - due to concerns over things like is Bitfunder also exposed (it also is run by someone in the US) and a general wariness of exchanges (whether warranted or not).
You mention the options on BMF as being profitable and me getting to keep them. Do you want them? I'll sell you the shares + warrants + sellback rights if you want.
BMF lost 25% of its NAV/U. Sure - in theory our sellback protects against loss - but how are we supposed to make a profit? The plan for profit was to sell on the market then be able to buy back on the market later if price sell. Price crashing immediately was never part of the plan - and is one of the explicit bad scenarios I described when I explained the decision to buy. Unless it recovers majorly (and it's not even relisted anywhere yet) there's NO chance of profit - just a likelihood of getting initial money back in 2 months and a non-zero risk of being defaulted on (whilst I expect usagi to honour the sellback right I can't guarantee he will). Not sure how you see that as profitable: but if you do then you're welcome to buy LTC-ATF's 50 BTC worth AND my own 100 BTC worth and I'll even give you a small discount on what was paid.
Or maybe you'd like the ASICMINER we held? Which I'd already mentioned being written down once - and in fact sold yesterday for slightly less than they were valued for on our books.
Or do you want the Ice-Drill we were flipping - where the price fell so I'll be lucky now to sell for what we paid.
Or the Kenilworth I was flipping - where I won't be able to sell until after the merge with Bitfunder and then will be lucky to get back what we paid as there'll be loads selling.
On what we held it's likely I'll take around a 10% loss. Had I closed down strictly by contract then you'd be waiting 2 months to get everything back - and get back less than you received now.
So why didn't I continue? Well firstly consider what we'd be trading:
1. No LTC-denominated securities whatsoever.
2. Pretty much nothing on BTC-TC - as nothing there that wasn't listed elsewhere has been relisted yet or has even announced relisting.
So we'd only really be trading on Bitfunder (Havelock only occasionally has worthwhile opportunities). That means we'd use NONE of our LTC-denominated capital and only about half of our BTC-denominated capital. But we'd still have to pay full interest on both sets of bonds. On the bonds the ONLY way for me to buyback at face-value was to close LTC-ATF. In all other circumstances any buyback would have to be at 5% over face value. So to reduce capital we'd have to lose significant NAV/U.
And then we'd be trading in a falling market. It's VERY hard to make profit in a falling market - especiallly one where even on the few securities not dropping fast, volume has fallen right off.
And then there's the problem of relisting. I CAN'T relist denominated in BTC without totally rewriting the contract. I have no right to do that. Which means only way to continue right now would be list on Cryptostocks - and exhange which has twice been hacked and had funds taken from it, which is horrible to use, where the owner changed the contract on his own shares mid-IPO and then stole from his own investors. And where, from his OWN accounts, he doesn't even have even cash to cover all the money of depositors on his currency exchange. That wasn't an option.
Running it off an exchange is theoretically possible - but then there's no liquidity and a lot of extra work for me. Take no liquidity, an immediate drop in NAV/U (to close down LTC-ATF.B1 at 105% - which we'd have to do), likely more drops over a few weeks as other positions are cleared and what do you think you'd be able to sell the units for (if you even could)?
Try looking at the other funds running - are you seeing all these big profits there? The opportunities to make big profits on the closure came for those who were around immediately after the closure announcement - when some people sold dirt cheap into any bids that were up. I'm in the wrong timezone for that - by time I was aware of the situation all the real bargains had gone.
I'm not sure why you're accusing DMS of selling LTC-ATF.B1 or LTC-ATF. It's sold LTC-ATF.B1 in the past - but hadn't sold any for many weeks (it's never held any LTC-ATF). It has a public portfolio and its holdings are reported every day. Its LTC-ATF.B1 got bought out at face value exactly the same as everyone else's.
After I saw the announcement I didn't trade ANY of our securities - I just locked them then moved funds around and paid them out.
Continuing was NOT an option for me. There was nowhere reasonable to relist in LTC and relisting in BTC wouldn't be valid under the contract. Plus it's hard to relist ANYTHING right now - Havelock aren't taking new listing at all and Ukyo's not in a rush to take much. Running it off an exchange was also not an option I'd consider.
Whilst I'm sorry if people bought high, expecting me to run for a long time (which WAS the intention) I can't take responsibility for what people do on the market. The NAV/U was clearly defined every report - and reinforced by the huge bid-wall from the fund. I've NEVER placed bids to try to drive it up - but have placed Asks to try to stop it getting too silly (generally selling half my management fee so as to keep my portion of units at a bit over 50%).
I took on the likely losses on current holdings personally to try to reduce the losses for anyone who bought in recently - not because I believed any of them very profitable (of about 12 different securities we held there's 1 that will probably make a reasonable profit and 2 that may make a small one: the others will - or already have - break even or worse.
What I did was the ONLY real option after the closure announcement. There was NO viable way to continue running as we were. I had no more information about the closure than anyone else - and only began to suspect it as being likely shortly after making the BMF deal (rather obviously I wouldn't have done the deal had I known closure was likely - as the deal was always very unlikely to make a profit if BMF took heavy losses very shortly after the deal).
I don't know what the closure cost you. It's cost me, so far, probably 25-30 BTC and still rising : plus I have a bunch of securities from LTC-ATF that, overall, are unlikely to make any profit so are tieing up cash with no benefit. So don't assume I made out like a bandit on this - you're nowhere near the truth. If I DO come out well from this it'll have nothing to do with anything LTC-ATF would have been doing.
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