Fellow HC CTN ers here is my response from co. At least it was...

Fellow HC CTN ers here is my response from co. At least it was quick ... do not have time to digest at this time ... quick read means I will be taking up offer to ask more "follow up points". In particular cashing in and returning SSSS to us does not even seem to rate a mention? Any thoughts from others?

"Graeme, thank you for your email.



1.CTN has traded at both discount and premium since its inception. Through the more normal markets of '04, '05 '06 it sold at a 10-15% discount to after tax NTA. Given that the securities underlying the company are more illiquid than the ASX leaders you would expect a modestly higher discount than leader LIC's which have a normal range of 8% discount to 5% premium. You will note that I use after tax numbers as I personally consider these to be more realistic despite the comments by the older LIC's.

I think that currently the discount is exaggerated by the GFC and will normalise as markets normalise. At CTN we have a strong belief in the performance potential of micro cap companies which makes CTN unique in the listed space and therefore gives the company a strong on going reason for being.

We consider that for long term investors in relatively illiquid assets a closed end fund structure is by far the best. Whilst our discount has blown out from 10-15% to 30% if an investor really needs the money and accepts current market they can gain liquidity, via a closed end fund and importantly this transaction does not disadvantage other shareholders. In other structures for less liquid assets such as mortgage funds, hedge funds, private equity funds and infrastructure many of these are frozen and unit holders cannot get liquidity. And if they have remained open the pressure on their liquidity has meant they have sold their best assets and have not been able to benefit from the recovery in markets.



2. As we have spent all of the precautionary cash we held in '08 on heavily discounted , accretive issues by micro cap company's over the last 9 months. And as we continue to believe that markets will recover we are giving loyal shareholders an opportunity to buy shares at a discount similar to that which we can achieve from the companies we will invest into. We think this will achieve excellent returns for shareholders. We specifically set the books close date prior to the announcement of the SPP so that non shareholders could not participate in the SPP.

With the SPP we are asking the shareholders for $0.87 and they will receive assets worth between $1.30 and $1.40 depending on take up. This is a strong benefit to shareholders.



3. The quoted returns relate to the investment portfolio of the Company and are what are referred to as time-weighted return calculations. This is the standard methodology most commonly used to evaluate the performance of fund managers. Time-weighted returns do not take account of how much money was invested over specific periods - that is, it ignores the effect of cashflows such as dividends, tax, and capital raisings.





Graeme. Again thank you for your questions, if you have any follow points please do not hesitate to respond.







Regards



David Stevens



Chairman Contango MicroCap Ltd"