Wentworth cautioned on Thorney deal

Billionaire Alex Waislitz has gathered around his new publicly listed activist fund a coterie of directors likely to put the fear into any underperforming company.

Veteran corporate raider Gary Weiss, Ashok Jacob - a former adviser to Kerry Packer - and a leading corporate lawyer, Henry Lanzer, have signed on to join Mr Waislitz's boardroom.

But before that can happen the Waislitz dream team will need to win a battle with its own co-investors to support their recapitalisation plan for Wentworth Holdings and backdoor listing, with an independent expert's report concluding the deal was "not fair" to other shareholders but was "reasonable".

The independent expert warns Wentworth shareholders will not have control of the recapitalised vehicle and will only be minority shareholders.

Thorney Opportunities, through which billionaire investor Mr Waislitz and his Thorney Investment Group will manage public money for the first time, will seek shareholder approval next month on the Australian Securities Exchange through a backdoor listing and with up to $66 million in its back pocket from a share offer to sophisticated and retail investors.

The fund is then expected to plough the money into a small group of listed companies, acting as an activist investor to exploit lazy companies and balance sheets to unlock value for itself and other investors.

But an independent expert's report published to help guide current Wentworth shareholders has labelled the backdoor float and recapitalisation as "not fair".

Prepared by Lawler Corporate Finance, the independent report also questions performance fees to be paid to Mr Waislitz's funds management team, Thorney Management, that will invest on behalf of Thorney Opportunities.

It said the 10-year management agreement between Thorney Opportunities and Thorney Management, which comes with a seven-year extension option, was very favourable to Mr Waislitz's private investment vehicle and not in line with similar agreements in the funds management industry.

A base fee of 1.5 per cent was in the range of general industry practice, but the hurdle linked to a bonus performance fee of 20 per cent of the annual growth in the net assets of the fund was too low. A management termination fee was high compared with other deals in the sector, the independent expert advised.

But the directors should be well placed both to win this fight and lock horns with any other listed company on the market.

Mr Weiss, a lawyer turned corporate raider, spent decades with veteran raider Sir Ron Brierley tearing apart companies across the globe to generate hundreds of millions of dollars in profits for themselves and other shareholders. He is a close friend of retail billionaire Solomon Lew and sits on the board of his Premier Investments group.

Mr Jacob, up for re-election to the Thorney Opportunities board next month, is the chairman and investment officer for Ellerston Capital as well as a director of James Packer's Crown casino company. Mr Lanzer is a managing partner of leading law firm Arnold Bloch Leibler.

Shareholders in Wentworth Holdings will vote on the recapitalisation and corporate strategy plan from Mr Waislitz on November 21. It will be accompanied by a retail offer priced at 50¢ a share to raise up to $56.2 million and an offer to sophisticated investors at the same price to raise another $10 million.