your proposals..., page-2

Overall I'm not a fan of what LRF is doing. I actually sold my LRF a month or so ago, however my thoughts as follows:

* I don't like the fact a couple of large shareholders are getting a privileged position when it comes to selling stock (and note that one of them is guaranteed a 10% discount);

* The LRF manager has no idea at this stage whether they will end up buying back & cancelling LRF units, or on-selling them (ie. the 30% more distribution might be a temporary thing. we have no idea in reality);

* I am not a fan at all of LICs issuing options that are exercised based on trading price (rather than NTA). Lots of the newer ones like doing this. IMO it is dilutuve, and really only helps build up the NTA so the manager gets more fees. Remember the huge drag on the LRF share price before the previous options expired / were exercised?? The only positive of this issue is it is nowhere near as many as a % of shares on issue. It is, however, a pure bribe to try to get investors onside;

* The buy-back might continue for a long time. But then, with such a huge number of shares in LRF2 their ability to (1) continue a buy back of LRF in support of SP, (2) cancel a lot of the LRF2 shares, and (3) maintain a fluid investment flow, would likely be hindered;

Do I have a plan to make them exit without causing havoc to the SP? Not really, but remember this:

The hedge funds also want to get as good return as possible. As such, they would NOT do a huge on-market selldown as the market depth would never support anywhere near the volume of shares they own. They would likely, over time, find other institutions wanting stakes in the company and sell as interest was there.

But hang on, what LRF has done is promise to (1) do the hard legwork of finding investors, and (2) guarantee a minimum return to TWO shareholders. Apart from that, the rest of it is bribes to the smaller unitholder to try to get them onside!!

IMO the fact that it might be very difficult for such funds to do so again without buying up stock up to NTA is not the issue. The issue, to me, is pure and simple the principle of what is happening.

MJS