Hunter Hall has changed their Dividend Reinvestment Plan (DRP) for The Hunter Hall Global Value Fund (listed on the ASX: HHV), and are now charging customers a PREMIUM to market price for dividend reinvestment.

I thought I would bring this to your attention, as I think it is terrible corporate behaviour on behalf of Hunter Hall. I think this should be publicised for people to BEWARE.

The Hunter Hall Global Value Fund , previously suspended their DRP, which historically had offered a 5% discount to the market price.

Recently they amended the rules of their dividend reinvestment plan as follows:

The Board of Hunter Hall Global Value Limited advises that the Company Dividend Reinvestment Plan (DRP) has been amended such that the subscription price for shares allotted under the DRP *is the higher of*:
• the weighted average sale price of all Shares in the Company sold on the ASX during the five trading days immediately prior to the relevant Record Date rounded to the nearest full cent; and
• the after tax net tangible assets of the Company expressed as an amount per Share as notified to ASX for the month ended immediately prior to the relevant Record Date.

A copy of the revised Plan is attached and a Summary of the Plan rules will be posted to all

Note the emphasis I have added to “is the higher of”. Essentially, given the shares are usually trading at a discount to post tax NTA, they are now operating a Dividend Reinvestment plan, where shareholders are paying a PREMIUM to the market price for additional shares.

Luckily, I had the time to cancel my DRP election, but it appears that a number of shareholders have not had that opportunity.

In the Appendix 3 B for the DRP (14 April 2008) HHV noted that 934,708 shares were alloted at $1.0354 each on the 14th of April. For the 30 days previous to the Dividend Payment, the HIGHEST market price was only 95c, resulting in these unlucky shareholders paying a 10 percent premium to the market price. So the fund just made 79,000 out of unsuspecting shareholders.

Hunter Hall should be pressured to cancel their DRP, or change it’s terms to be more equitable, and also pressured to refund monies to the shareholders who have been gouged by this most recent DRP, either because they passive, forgotten their DRP election, or failed to change their election in time.