Fund Updates

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Fund Updates

Dated 23/08/23 – Fund Update

Aurora Funds Management Limited (Aurora), in its capacity as responsible entity for the Aurora Absolute Return Fund (ABW), Aurora Dividend Income Trust (ADIT), Aurora Fortitude Absolute Return Fund (AFARF), Aurora Global Income Trust (AIB), Aurora Property Buy-Write Income Trust (AUP) and HHY Fund (HHY) (collectively the Funds) provides the following market update, where applicable, in relation to the Funds’ investments in RNY Property Trust (RNY) and Molopo Energy Limited (Molopo).

This Fund Update is supplementary to, and should be read in conjunction with, the earlier Fund update provided on 23 February 2023.

RNY Property Trust update
RNY Property Trust (RNY) is an Australian unlisted property trust with five (5) commercial property assets located in the tri-state area of New York, USA, with 3 properties located in Long Island and 2 properties located in Westchester County, collectively having 830,000 sq feet of lettable office space. Huntley Management Limited is the responsible entity for RNY and Aurora Funds Management Limited is the investment manager.

In August 2021, RNY’s US lender to RNY Australia Operating Company (US LLC), ACORE Capital (‘the Lender’), advised that it would not extend the Loan facility through to October 2022, as contracted, as the Lender considered that documents relating to the net worth test were not administratively executed to its satisfaction and constituted an event of default. Aurora refutes the position adopted by the Lender and notes that the Lender nonetheless continues to rely upon the documents.

In late 2022, the Lender took steps to enforce its security by seeking to commence foreclosure action, seeking to appoint a receiver, and selling the mezzanine debt in the US properties through a Uniform Commercial Code (UCC) auction process. ACORE also advised that default interest of circa US$11 million was due under the loan, however provided no formal paperwork to support this was claim. The UCC auction process was ultimately cancelled after RNY’s related entity, RAOC, acquired the mezzanine debt and paid the associated fees (circa US$1 million).

In March 2023, the Supreme Court of the State of New York County of Nassau (in Long Island) appointed a Rent Receiver over the five RNY properties, being a party independent of the party nominated by the Lender. The Rent Receiver posted a bond and filed an Oath with the Court around 11 April 2023, thereby formalising his appointment. Notwithstanding this appointment, CBRE continues to manage the RNY properties.

Based on recent discussions with the Rent Receiver:
 The strong leasing activity and Letters of Leasing Intent at Tarrytown prior to the Rent Receivers appointment, as mentioned in the last Fund Update of 23 February 2023, have not materialised and no new leases have been executed since March 2023; and
 The Rent Receiver’s remuneration is based on a % of cash receipts and expenditures (including operating costs and capital expenditure) rather than a time-based arrangement.

Aurora denies that the Group was in breach of the loan obligations and continues to defend the enforcement actions taken by the Lender. In the meantime, the additional expenses associated with the Rent Receiver represent a permanent diminution in value for RNY unitholders.

RNY owns 100% of RNY Australia LPT Corp (Maryland REIT) which in turn owns 75% of RNY Australia Operating Company LC (US LLC), which in turn owns the five RNY properties in separately held subsidiaries. Aurora and parties associated with it, including its Funds, own 79.9% of the units in RNY, with Keybridge Capital Limited (ASX: KBC) holding 17.3% and the remaining unitholders holding 2.8%.

Since the last Fund Update, attempts have been made to resolve the deadlock situation with the Lender. Until this matter is satisfactorily resolved, and a new debt facility can be agreed, there is significant uncertainty regarding the valuation of the subordinated loans and equity interests in RNY.

The Lender has, on several occasions, expressed interest in taking over ownership of the RNY properties, however, has stated that it would only be prepared to offer token consideration.

Based on the uncertainty created by the Lenders actions as outlined above, including unsupported claims for default interest, the Aurora Board considers it appropriate to fully impair to nil the carrying value of its equity investments in RNY and the subordinated loans it has advanced to RAOC, until such time as the impasse with the Lender can be resolved.

The fair value of the RNY equity investments and subordinated loans is based on significant estimates and judgements adopted by the Board of Aurora based on all available information about RNY as at the current date. The Aurora Board is aware of the material impact this decision will have on Aurora and its Funds.

Further, Aurora notes that RNY’s second largest unitholder, Keybridge, has fully impaired the carrying values of its 17.3% equity investment in RNY as well as the subordinated loan it advanced to RAOC (which was used to acquire the mezzanine debt in the US properties). Keybridge has stated that the recoverability of its interests in RNY is dependent upon the prevailing market value of the underlying US properties less the senior debt. Further, given the state of the broader market, expectations on property values and the status of the dispute with RNY’s Lender, Keybridge considers its subjective valuation to be appropriate.

The Aurora Board considered the range of possible values and determined that the fair value of the RNY equity investments and subordinated loans held by Aurora and its Funds should now be valued at nil.

Aurora will continue to pursue its options to resolve the deadlock with the Lender.

Molopo Energy update
In a letter to shareholders, dated 2 May 2023, Molopo Energy Limited (Molopo) advised “the Company has approximately AUD$16.9 million in cash and a debt owing to Molopo from a subsidiary of Renergen Limited of approximately AUD4.2 million which has preconditions to its payment and, from 1 January 2023, now accrues interest.”

Further, it added that “as foreshadowed at last year’s Annual General Meeting the Board’s focus has been concentrated on defending the long running Canadian proceedings against the Company’s subsidiary Molopo Energy Canada Limited (MECL) which were commenced in 2011. Since our meeting last year those proceedings are continuing and have now progressed through the discovery process and interrogation of witnesses which has been both detailed and time consuming.

The proceedings involve the claim for damages by 3105682 Nova Scotia ULC (310) against MECL and Crescent Point Holdings Inc and Crescent Point Energy Corp (Crescent Point) arising from the sale of the Company’s subsidiary’s oil and gas assets in 2011. Crescent Point has cross claimed against MECL in relation to potential losses it may incur. The claims for damages by 310 are significant and complex and are being strongly defended by both MECL and Crescent Point but again at significant expense to shareholders. It was anticipated that a court directed mediation would take place in April this year, however, the mediation has now been scheduled for the 5th and 6th December 2023 in Calgary.

The Board will continue to vigorously defend the proceedings.”

Aurora notes that the value of the Funds (AFARF/ABW and AIB) investment in Molopo was written down to nil during the year ended 30 June 2021. The Funds have not adjusted the carrying value of its investment as it is waiting on the outcome of other litigation matters that Molopo is involved in.

The Funds continue to adopt a carrying value of $nil per Molopo share. Aurora will re-assess the carrying value of its investment in Molopo based on further information being released by Molopo regarding its financial position.

Redemptions

Given the uncertainty created by the abovementioned matters, where applicable, Aurora considerers it prudent to maintain a temporary hold on Redemptions until the outcome of the above two (2) matters is known.

Dated 07/08/23 – Board Changes

Aurora Funds Management Limited (Aurora) is pleased to announce that Mr Jeremy Kriewaldt has been appointed as a Non Executive Director of the Company.

Mr Kriewaldt is a lawyer in private practice, specialising in corporate and commercial law, including mergers and acquisitions, capital raisings and foreign investment, financial product development and securities markets. He started his own practice in 2018 and was previously a partner of Atanaskovic Hartnell (2004 – 2018), Blake Dawson Waldron (now Ashurst) (1990-2003) and served as Counsel to the Takeovers Panel in 2003-2004.

Mr Victor Siciliano who joined the Aurora Board in January 2018 has resigned as a Director of the Company. The Board would like to thank Mr Siciliano for his contribution to the Board during his tenure and wish him all the very best in his future endeavours.

Dated 23/02/23 – Fund Update

RNY Property Trust update

RNY Property Trust (RNY) is an Australian unlisted property trust with five (5) commercial property assets located in the tri-state area of New York, USA, with 3 properties located in Long Island and 2 properties located in Westchester County, collectively having 830,000 sq feet of lettable office space. Huntley Management Limited is the responsible entity for RNY and Aurora Funds Management Limited is the investment manager.

On 6 October 2020, during COVID-19 (which greatly impacted New York city), Aurora closed a Loan Modification with RNY’s US lender, ACORE Capital (Lender) with a larger facility to fund certain planned capital works (as required by the Lender), with the following key terms:

- a three-year term – comprising an initial 6-month term, one six-month extension and two 12-month extension terms following the initial term;
- interest only;
- an existing loan facility of US$76.2 million, with US$64.6 million having been drawn, leaving US$11.6 million available for approved capital expenditures and leasing costs;
- a new mezzanine loan facility of US$15.6 million to fund additional approved leasing costs and capital expenditures; and
- RNY to complete the approved capital expenditure program.

Through the course of 2022, the Lender made various overreaching demands of RNY, including multimillion dollar claims for fees, which Aurora disputes, and demands that all the buildings be sold in an accelerated manner, for total sale consideration that would have amounted to circa US$92 million.

Separately, Aurora worked with an alternate financier (being a Tier 1 financier) to refinance the 3 Long Island properties (representing approximately two thirds of the portfolio’s lettable area), based on a signed Term Sheet for US$60 million of debt finance (before reserves) on those properties at prime lending rates (locked for 10 years in March 2022). The valuations obtained for the three Long Island properties, in an orderly market, to support this alternative financing exceeded US$90 million.

In addition, based on comparable recent sales of properties in the Westchester area, the value of the remaining 2 RNY properties (in Westchester) is in the vicinity of US$30 million, with these buildings having benefited from circa US$7 million of recent capital improvements.

In late 2022, the Lender took steps to enforce its security by seeking to commence foreclosure action, seeking to appoint a receiver, and selling the mezzanine debt in the US properties through a Uniform Commercial Code (UCC) auction process. This UCC process has the result of transferring the equity in the properties to purchaser of the mezzanine finance (which in this case totalled just US$1.7 million). The UCC auction process was ultimately cancelled after RNY’s related entity, RAOC, acquired the mezzanine debt and paid the associated fees (circa US$1 million).

Aurora is actively defending any enforcement actions taken by the Lender, and engaged US Counsel in June 2022 to assist. In addition, Aurora is working to resolve the deadlock situation with the Lender. Until this matter is satisfactorily resolved, and a new debt facility can be agreed, there is significant uncertainty regarding the valuation of the subordinated loans and equity interests in RNY.

RNY Leasing

Following the substantial capital works program, Aurora is encouraged by the current levels of improved leasing velocity. Aurora is however cautious given the current turbulent economic conditions and interest rate environment; and remains optimistic with the short to medium term prospects of the Portfolio. Furthermore, Aurora is pleased with the retention of its current tenants, with minimal reduction in the portfolio occupancy since the on-set of COVID.

Some recent new leasing highlights include:

- Full floor tenant (22,128 sq ft) signed with high-credit tenant on commercial terms at Westchester County property.
- Letter of intent with second full floor tenant (circa 22,000 sq ft) at Westchester County property. Similarly high credit tenant on commercial terms. This lease is expected to be finalised in the short-term.
- Letter of intent with third full floor tenant (circa 23,000 sq ft) at neighbouring Westchester County property. Similarly high credit tenant on commercial terms. This lease is expected to be finalised in the short-term.
- Letter of intent with tenant (circa 10,000 sq ft) at Westchester Country property. Similarly high credit tenant on commercial terms. This lease is expected to be finalised in the short-term.

Aurora is diligently working to convert the above-mentioned leases into executed deals. If completed, these prospective leases should materially enhance the occupancy and financial characteristics of the Portfolio.

Molopo Energy update

On 17 December 2021, Molopo Energy Limited (Molopo) advised (on its website) that it had settled the legal action against the former Molopo directors for A$12 million. This equates to 4.8 cents per Molopo share (based on 249,040,648 shares on issue).

Redemptions

Yours faithfully
Aurora Funds Management Limited

John Patton

Signed Fund Update

Dated 20/12/21 – Valuation of Molopo Energy Limited – Update

Aurora proposes to adjust the carrying value of the Fund’s investment in Molopo when it is made aware of (a) Molopo’s total cash position, (b) the other litigation matters involving the Company and (c) the Drawbridge investment, which is likely to be when the Company releases its financial statements for the year ended 31 December 2021.

Aurora will continue to monitor this situation and will provide further updates as required.

Dated 26/02/21 – Valuation of Molopo Energy Limited – Update

Aurora Funds Management Limited (“Aurora”) provides the following valuation update in respect of the Aurora Fortitude Absolute Return Fund (“AFARF”).

Valuation of Molopo Energy Limited shares

On 1 February 2019, Aurora announced that the fair value of the holding in Molopo had been reduced from 2.6 cents per share to 1.9 cents per share, based on material information which had come to light between 27 September 2018 and 1 February 2019. On 2 September 2019, Aurora announced that the fair value of the holding in Molopo had been further reduced to 1.5 cents. On 30 October 2019, Aurora announced that the fair value had been further reduced to 0.9 cents. On 6 February 2020, Aurora announced that the fair value had been further reduced to 0.5 cents. On 31 August 2020, Aurora announced that the fair value had been further reduced to 0.4 cents.

On 25 February 2021, Molopo released its Quarterly Cash Flow Statement for the quarter ended 31 December 2020. Based on the information contained in this Quarterly Cash Flow Statement, Aurora has reassessed the carrying value of its investment in Molopo and has decided to write the value of its investment down from 0.4 cents to nil. The rationale for this decision is summarised below:

Today, Molopo’s primary assets comprise its cash reserves and its investment in Drawbridge. Molopo has advised that the cash reserves at 31 December 2020 amounted to A$8.368 million. Based on the structure of the Drawbridge investment, whereby Molopo has a 30% holding in a foreign private company with no voting rights and only a limited ability to appoint a director, it is difficult to ascribe any value to this investment – based on the information that has been released to date by Molopo. As such, for the purpose of valuing its investment in Molopo, Aurora continues to place nil value on the Drawbridge investment. Aurora notes that this treatment is consistent with the approach adopted by the current directors of Molopo. The Directors’ Report contained in Molopo’s Financial Report for the half year ended 30 June 2020 states:

“The Current Directors of Molopo … continue to undertake detailed investigations into the Orient Transactions and the Drawbridge Transactions which were entered into by former Directors of Molopo without seeking shareholder approval. The Current Directors maintain these actions were in breach of Directors duties, the ASX Listing Rules, ASX continuous disclosure obligations and provisions of the Corporations Act. This position has been supported by subsequent findings of the Takeovers Panel.

In brief, the combined Orient Transactions and Drawbridge Transactions involved in aggregate a US$35 Million investment by Molopo in Orient FRC Limited, a British Virgin Islands entity which, as a wholly-owned subsidiary of Molopo, Orient ultimately acquired a 30% non-voting A class share interest in Drawbridge.

Sopris Energy Investments Ltd., another British Virgin Islands entity and the majority 70% shareholder of Drawbridge, holds 100% of the voting rights in Drawbridge which it appears to have acquired without contributing any cash or other assets to the transaction.”

Further, the Directors’ Report contained in Molopo’s Financial Report for the half year ended 30 June 2019 states:

“In the year ended 31 December 2018, the Current Directors resolved that they could not identify evidence to support a value for the oil & gas exploration and production assets held by Drawbridge and accordingly Molopo’s investment through Orient was impaired to Nil, as reported in the 31 December 2018 Annual Report.

Although the Current Directors have impaired the investment in full, they continue to vigorously pursue legal proceedings against the Former Directors of the Company responsible for entering into these transactions to hold them accountable for breach of directors’ duties with the objective of recovering as much value as possible for Molopo shareholders.

The Current Directors remain firmly of the view that the litigation proceedings against the Former Directors provides the best opportunity for Molopo shareholders to recover any value from the actions undertaken by Former Directors entering into the Orient Transactions and Drawbridge Transactions.”

In the June 2020 Quarterly Activities Statement, released on 31 July 2020, Molopo advised that:

“Drawbridge Operations

Molopo has received Financial Statements and an Operations Report for 4Qtr-2019 which Drawbridge was required to provide within 60 days of the end of that quarter as ordered by the Court. Molopo has also received Financial Statements and an Operations Report for 1Qtr-2020. The Directors are unable to rely on these Financial Statements and Operations Reports with any confidence as they provide no financial detail and do not disclose any significant update on project operations.

Legal Actions

Drawbridge – the Company’s legal action in the USA against the Drawbridge group was amended to a reduced claim for breach of the Contribution Agreement with the remaining claims discontinued without prejudice, after the Drawbridge parties filed for Summary Judgment in the proceedings. The remaining claim by Orient against Drawbridge for breach of the Contribution Agreement has been set down for hearing on 5 August 2020

Former Directors – … the Company continues to vigorously pursue its claims in the Supreme Court of Victoria against the Former Directors of the Company (which now includes the Estate of the Late Samuel Belzberg) and remains confident that this will result in a successful recovery against the Former Directors”

In the financial statements for the half-year ended 30 June 2020, Molopo continued to recognise a contingent liability in relation to a long-standing legal action in Canada concerning the Company and Molopo Energy Canada Ltd (“MECL”), a wholly owned subsidiary of the Company. In the annual audited financial statements for the year ended 31 December 2018, which were released by Molopo on 7 May 2019, the long-standing provision of C$8.4 million was removed, with the following commentary being provided:

“In March 2011, MECL was served with a statement of claim by a former joint venture partner (3105682 Nova Scotia ULC) “310 ULC”) claiming MECL breached various agreements relating to the relevant joint venture, including breach of fiduciary duties, trust and good faith. 310 ULC has sought declarations, accountings, damages of 25% revenue, C$35.0 (A$35.9) million general damages, C$1.0 (A$1.0) million punitive and aggravated damages, interest, GST and indemnity costs.

Subsequent to the filing of the statement of defence, the Company undertook an extensive examination of the transactions that gave rise to the amounts in dispute. This examination resulted in the Company applying a provision in the accounts in 2012 of a net C$5.0 (A$5.1) million. In early 2013, the JV Partner settled a counterclaim by making a payment of C$3.4 (A$3.5) million to the Company, at which time the Company increased the provision to C$8.4 (A$8.6) million.

During the current reporting period the Directors have reconsidered the circumstances that gave rise to recognition of the provision. A significant amount of time has passed since the provision was brought to account with limited progress on the claim. The Directors have reviewed the current status of the claims as provided by its lawyers and based upon this status update, the time elapsed and the limited progress made in the proceedings, they have taken the view that the amount of the provision can no longer be reliably measured, and therefore no longer meets the recognition criteria for a liability. Based on these findings, the Directors have reversed the provision and fully disclosed the claims as a contingent liability.”

This is consistent with the disclosures made in the financial statements for the financial year ended 31 December 2019.

Molopo currently has 249,040,648 ordinary shares on issue;
Based on the above, Aurora considers the appropriate carrying value of its investment in Molopo to be nil, calculated as follows:
- cash reserves of $8.368 million; less
- litigation provision of A$8.571 million, being the Australian dollar equivalent of $8.4 million Canadian dollars as at 31 December 2020. In the Molopo financial statements for the year ended 31 December 2018 this provision was removed as a liability in the balance sheet and disclosed as a contingent liability. It is still disclosed as a contingent liability in Molopo’s financial statements for the half year ended 3 June 2020. For the purpose of this valuation, Aurora has no reason to believe that this is not a reasonable estimate of the expected liability;
- divided by 249,040,648 ordinary shares on issue; which
- equates to a negative value per share.
As more information is released by Molopo on the Drawbridge investment, including the outcome of the claim against the Former Directors, along with the Canadian litigation, it may be appropriate for Aurora to revisit the carrying value of its Molopo investment.

The fair value of the Molopo Investment is based on significant estimates and judgements adopted by the Board of Aurora based on all available information about Molopo as at the current date.

The Aurora Board considered the range of possible values and determined that the fair value of the Molopo investment held by the Fund should now be valued at nil.

Aurora continues to pursue avenues to recover value that has been lost by the former directors of Molopo.

Dated 30/09/20 – RNY Property Trust revaluation

Aurora Funds Management Limited (Aurora), in its capacity as the responsible entity of the Aurora Property BuyWrite Income Trust, Aurora Fortitude Absolute Return Fund, Aurora Global Income Trust and the Aurora DividendIncome Trust (Fund(s)), provides the following update in relation to the RNY Property Trust (RNY).

RNY has been suspended from trading on the Australian Securities Exchange (ASX) since 1 April 2019, due to delays experienced in finalising its audited financial statements for the year ended 31 December 2018 and half year ended 30 June 2019, followed by the Audit Disclaimer Opinion issued in relation to the year ended 31 December 2019. Aurora understands that RNY is due to release its Audit Reviewed financial statements for the half year ended 30 June 2020. In the event a clear audit review statement is issued, Aurora understands that RNY will then be in a position to apply for recommencement of trading on the ASX.

On 23 September 2019, RNY announced it had completed an independent valuation of its 5 commercial office properties in the New York tri-state area, resulting in a 16% uplift on previous valuations and a material uplift in RNY’s Net Tangible Asset (NTA) backing. Given RNY’s suspension from trading on the ASX, there was no actively traded market available for Aurora to determine the market value for RNY’s securities. As such, the independent valuation obtained by RNY was considered the most appropriate basis on which to determine the carrying value of RNY, with Aurora’s direct investments being carried at a small discount to RNY’s improved NTA.

On 29 June 2020, Keybridge Capital Limited (Keybridge) announced its intention to make an off-market all scrip takeover bid for RNY at an implied offer price of $0.011 per RNY unit1 (Keybridge Offer), with its Bidder’s Statement being dispatched on 28 August 2020. On 28 September 2020, Keybridge issued a substantial holder notice stating it had acquired a relevant interest of 1.01% in RNY (from parties other than Aurora) through acceptances into the Keybridge Offer. Aurora has also elected to accept a portion of its Funds holdings into the Keybridge Offer. Consistent with its previous “truth in takeovers” statement, Aurora has limited its acceptances into the Keybridge Offer at 41,450,000 RNY units.

As a consequence of the acceptances into the Keybridge Offer, the implied offer price of $0.011 per RNY unit is now the most readily observable price for RNY securities. As such, this has resulted in the carrying value of Aurora’s direct investments in RNY being reduced from $0.044 to $0.011 per RNY unit, across its various Funds.

Following the recommencement of trading in RNY securities on the ASX, Aurora will continue to adjust its direct investment in RNY to reflect the last traded market price.

This announcement was authorised for release by Aurora’s Managing Director.

Dated 31/08/20 – Valuation of Molopo Energy Limited – Update

Aurora Funds Management Limited (“Aurora”) provides the following valuation update in respect of the Aurora Fortitude Absolute Return Fund (“AFARF”).

The fair value of the Molopo Investment is based on significant estimates and judgements adopted by the Board of Aurora based on all available information about Molopo as at the current date.
The Aurora Board considered the range of possible values and determined that the fair value of the Molopo investment held by the Fund should now be valued at 0.4 cents.

Aurora continues to pursue avenues to recover value that has been lost by the former directors of Molopo.

Read more here.

Dated 29/06/20 – ADIT Bid Update

Aurora Funds Management Limited (Aurora), in its capacity as responsible entity for the Aurora Dividend Income Trust (ADIT), the HHY Fund (HHY) and the Aurora Fortitude Absolute Return Fund (AFARF), provides the following update in relation to the ADIT takeover bid for the ordinary shares in Keybridge Capital Limited (Keybridge) which closed on Monday, 6 April 2020.

Read more here.

Dated 16/03/20 – Fund Update

Aurora Funds Management Limited (“Aurora”), in its capacity as the responsible entity for the Aurora Fortitude Absolute Return Fund (“AFARF”), provides the following update in relation to AFARF’s investment mandate. Aurora hereby provides notice to unitholders that it will broaden AFARF’s investment mandate to allow investments in listed and unlisted loan and debt instruments including, but not limited to, senior, unsecured, convertible and mezzanine loans.

Dated 06/03/20 – Aurora Dividend Income Trust – Keybridge Capital Limited (ASX: KBC) Bidders Statement UPDATED

Aurora Funds Management Limited as responsible entity for the Aurora Dividend Income Trust (ADIT) is offering to acquire all of your fully paid ordinary shares in Keybridge Capital Limited (ASX: KBC) issued on or before 10 February 2020, through the Bid contained in this Bidder’s Statement.

Read the Bidders Statement here.

Dated 05/03/20 – Aurora Dividend Income Trust – Keybridge Capital Limited (ASX: KBC) Supplementary Bidders Statement

Read the Bidders Statement here.

Dated 03/03/20 – Aurora Dividend Income Trust – Keybridge Capital Limited (ASX: KBC) Takeover Bid Update

Aurora Funds Management Limited (Aurora), as responsible entity for the Aurora Dividend Income Trust (ARSN 151 947 732) (ADIT or Fund), announces that it proposes, if certain conditions (as set out below) are satisfied, to vary its off-market takeover bid for the fully paid ordinary shares in Keybridge Capital Limited (ACN 088 267 190) (KBC)1 , by increasing the cash consideration offered from 6.6 cents (Initial Bid) to 7.0 cents for each fully paid ordinary share (Improved Bid).

Conditional Increase in ADIT’s Bid consideration

ADIT’s Initial Bid is 6.6 cents cash per KBC share. However, ADIT will increase its bid to 7.0 cents cash per KBC share on the condition that Target shareholders are able to withdraw their acceptances from the WAM Active takeover offer dated 3 January 2020. All other conditions in the Initial Bid, as announced on 8 January 2020, remain the same.

ADIT is planning to release its Bidder’s Statement shortly.

Dated 25/02/20 – Aurora Dividend Income Trust – Keybridge Capital Limited (ASX: KBC)

Aurora Funds Management Limited (Aurora), as responsible entity for the Aurora Dividend Income Trust (ARSN 151 947 732) (ADIT or Fund), refers to the announcement by WAM Active
Limited on 24 February 2020, increasing its off-market takeover bid for the fully paid ordinary shares in Keybridge Capital Limited (ACN 088 267 190) (KBC) to 6.9 cents per share and
removing a number of its bid conditions.

Aurora is currently considering the implications of the WAM Active announcement and will provide an update in due course on what impact it has on the ADIT Bid Announcement.

Dated 06/02/20 – Valuation of Molopo Energy Limited – Update

Aurora Funds Management Limited (“Aurora”) provides the following valuation update in respect of the Aurora Fortitude Absolute Return Fund (“AFARF”).

Valuation of Molopo Energy Limited shares

On 3 February 2020, Molopo released its Quarterly Cash Flow Statement for the quarter ended 31 December 2019. Based on the information contained in this Quarterly Cash Flow Statement, Aurora has reassessed the carrying value of its investment in Molopo and has decided to write the value of its investment down from 0.9 cents 0.5 cents. The rationale for this decision is summarised below:

Today, Molopo’s primary assets comprise its cash reserves and its investment in Drawbridge. Molopo has advised that the cash reserves at 31 December 2019 amounted to $10.7 million. Based on the structure of the Drawbridge investment, whereby Molopo has a 30% holding in a foreign private company with no voting rights and only a limited ability to appoint a director, it is difficult to ascribe any value to this investment – based on the information that has been released to date. As such, for the purpose of valuing its investment in Molopo, Aurora continues to place nil value on the Drawbridge investment. Aurora notes that this treatment is consistent with the approach adopted by the current directors of Molopo. The Directors’ Report contained in Molopo’s Financial Report for the half year ended 30 June 2019 states:

The Orient/Drawbridge Transactions were entered into by former Directors of Molopo without seeking shareholder approval which the Current Directors maintain was in breach of ASX Listing Rules, ASX continuous disclosure obligations and provisions of the Corporations Act. This has been supported by the subsequent findings of the Takeovers Panel.

The Orient Transaction involved a US$14 Million investment by Molopo to acquire all issued shares in Orient FRC Limited. As a wholly owned subsidiary of Molopo, Orient committed to the Drawbridge Transactions and acquired a 30% non-voting A clash share interest in Drawbridge, in consideration for which Molopo transferred the whole of its interest in Orient to Drawbridge and contributed an additional US$18 Million under the Contribution Agreement in February 2018 and incurred a further US$3 Million of associated expenses.

Sopris Energy Investments Ltd., which is the majority 70% shareholder of Drawbridge, holds 100% of the voting rights in Drawbridge which it appears to have acquired without contributing any cash or others assets to the transaction.

In the year ended 31 December 2018, the Current Directors resolved that they could not identify evidence to support a value for the oil & gas exploration and production assets held by Drawbridge and accordingly Molopo’s investment through Orient was impaired to Nil, as reported in the 31 December 2018 Annual Report.

In the December 2019 Quarterly Activities Statement, released on 3 February 2020, Molopo advised that:

Drawbridge Operations

No operations update has been received from Drawbridge for the September or December 2019 quarters. This is in breach of Drawbridge’s obligations under the Contribution Agreement and in contravention of a Court Order obtained in US proceedings.

Legal Actions

Drawbridge – the Company’s legal action in the USA against the Drawbridge group of companies remains on foot. The Drawbridge parties have filed for Summary Judgement in the proceedings and the matter has been listed for possible hearing in the two-week period commencing 17 February 2020.

Former Directors – … the Company continues to vigorously pursue its claims in the Supreme Court of Victoria against the Former Directors of the Company and remains confident that this will result in a successful recovery against the Former Directors

In the financial statements for the half-year ended 30 June 2019, Molopo continued to recognise a contingent liability in relation to a long-standing legal action in Canada concerning the Company and Molopo Energy Canada Ltd (“MECL”), a wholly owned subsidiary of the Company. In the annual audited financial statements for the year ended 31 December 2018, which were released by Molopo on 7 May 2019, the long-standing provision of C$8.4 million was removed, with the following commentary being provided:

Molopo currently has 249,040,648 ordinary shares on issue;
Based on the above, Aurora considers the appropriate carrying value of its investment in Molopo to be 0.5 cents, calculated as follows:
- cash reserves of $10.7 million; less
- litigation provision of A$9.4 million, being the Australian dollar equivalent today of $8.4 million Canadian dollars. In the Molopo financial statements for the year ended 31 December 2018 this provision has been removed as a liability in the balance sheet and disclosed as a contingent liability. For the purpose of this valuation, it assumed that this is a reasonable estimate of the expected liability;
- divided by 249,040,648 ordinary shares on issue; which
- equates to a value of 0.5 cents per share.
As more information is released by Molopo on the Drawbridge investment, including the outcome of the claim against the Former Directors, along with the Canadian litigation, it may be appropriate for Aurora to revisit the carrying value of its Molopo investment.

The fair value of the Molopo Investment is based on significant estimates and judgements adopted by the Board of Aurora based on all available information about Molopo as at the current date.

The Aurora Board considered the range of possible values and determined that the fair value of the Molopo investment held by the Fund should now be valued at 0.5 cents.

Aurora continues to pursue avenues to recover value that has been lost by the former directors of Molopo.

Dated 01/11/19 – Interactive Brokers – Update

Aurora Funds Management Limited (“Aurora”) provides the following update in respect of a material service provider to the Aurora Fortitude Absolute Return Fund (“AFARF”).

Interactive Brokers
Interactive Brokers LLC (“IB LLC”), the prime broker and custodian of AFARF, has advised that it intends to cease operations in Australia. AFARF has executed a Deed of Novation to transfer its account from IB LLC to Interactive Brokers Australia Pty Ltd (“IB Australia”) (ABN 98 166 929 56), which has been set up by Interactive Brokers in order to continue to provide services to its Australian clients.

Dated 30/10/19 – Valuation of Molopo Energy Limited – Update

Aurora Funds Management Limited (“Aurora”) provides the following valuation update in respect of the Aurora Fortitude Absolute Return Fund (“AFARF”).

Valuation of Molopo Energy Limited shares

AFARF holds an investment in the ordinary shares of Molopo Energy Limited (ASX: MPO), which was suspended from trading on the Australian Stock Exchange on 27 July 2017 and remains suspended as at the date of this update.On 1 February 2019, Aurora announced that the fair value of the holding in Molopo had been reduced from 2.6 cents per share to 1.9 cents per share, based on material information which had come to light between 27 September 2018 and 1 February 2019. On 2 September 2019 Aurora announced that the fair value of the holding in Molopo had been further reduced to 1.5 cents.

On 30 October 2019, Molopo released its Quarterly Cash Flow Statement for the quarter ended 30 September 2019. Based on the information contained in this Quarterly Cash Flow Statement, Aurora has reassessed the carrying value of its investment in Molopo and has decided to write the value of its investment down from 1.5 cents to 0.9 cents. The rationale for this decision is summarised below:
 Today, Molopo’s primary assets comprise its cash reserves and its investment in Drawbridge. Molopo has advised that the cash reserves at 30 September 2019 amounted to $11.6 million, however no guidance has been provided as to the carrying value of the Drawbridge Investment. Based on the structure of the Drawbridge investment, whereby Molopo has a 30% holding in a foreign private company with no voting rights and only a limited ability to appoint a director, it is difficult to ascribe any value to this investment – based on the information that has been released to date. As such, for the purpose of valuing its investment in Molopo, Aurora continues to place nil value on the Drawbridge investment. Aurora notes that this treatment is consistent with the approach adopted by the current directors of Molopo. The Directors’ Report contained in Molopo’s Annual Report for the year ended 31 December 2018 states:

The Current Directors have serious concerns ascribing any value to the Company interest in Orient and the 30% non-voting interest in Drawbridge. After undertaking investigations and seeking external advice, as at the date of this report, the Current directors’ assessment of the oil and gas exploration and production assets held by Drawbridge is that their value is less than the value implied by the Orient/Drawbridge Transactions and that there is little chance that they will deliver any meaningful value for Molopo in the near future. As such, the Current Directors have fully impaired the investment in Drawbridge in the amount of US$35M (AU$46M).

With the objective of recovering as much value as possible for Molopo shareholders, the Current Directors are vigorously pursuing legal proceedings against former directors of the Company responsible for entering into these transactions to hold them accountable for breaches of their director’s duties. Molopo and Orient are also pursuing proceedings against Drawbridge seeking amongst other things orders to prevent the dissipation of funds from Drawbridge, all of which were advanced by Molopo, and to obtain reliable financial reports as to the financial position of Drawbridge and its projects as required to be provided under the Contribution Agreement.

Drawbridge Operations

Draft and unaudited financial statements provided by Drawbridge indicated a remaining cash balance as of 30 June 2018 or approximately US$8.5M and subsequent information suggests that as at 31 December 2018 the remaining cash balance is approximately US$1.6M. If these financial statements are accurate, which the Current Directors have been unable to verify given that Drawbridge has not provided any supporting bank statements or other reliable evidence, then Drawbridge has, since February 2018, spent in excess of US$9.5M of the capital contributed by Molopo at 30 June 2018 and in excess of US$16.4M as at 31 December 2018, on acquiring interests in oil and gas projects or properties and operating expenses including management and consulting fees paid to Drawbridge management and their related entities.

 Molopo’s primary liability relates to a long-standing legal action in Canada concerning the Company and Molopo Energy Canada Ltd (“MECL”), a wholly owned subsidiary of the Company. As the financial statements for the half-year ended 30 June 2019 have not yet been released by Molopo, the annual audited financial statements for the year ended 31 December 2018 remain the most recent financial statements released by Molopo, which were released by Molopo on 7 May 2019. In those financial statements, the long-standing provision of A$8.6 million has been removed, with the following commentary being provided:

 Molopo currently has 249,040,648 ordinary shares on issue;
 Based on the above, Aurora considers the appropriate carrying value of its investment in Molopo to be 0.9 cents, calculated as follows:
o cash reserves of $11.6 million; less
o litigation provision of $9.3 million, being the Australian dollar equivalent of $8.4 million Canadian dollars. In the Molopo financial statements for the year ended 31 December 2018 this provision has been removed as a liability in the balance sheet and disclosed as a contingent liability. For the purpose of this valuation it assumed that this liability has been incurred and will be paid;
o divided by 249,040,648 ordinary shares on issue; which
o equates to a value of 0.9 cents per share.
 As more information is released by Molopo on the Drawbridge investment as well as the Canadian litigation, it may be appropriate for Aurora to revisit the carrying value of its Molopo investment.

The fair value of the Molopo Investment is based on significant estimates and judgements adopted by the Board of Aurora based on all available information about Molopo as at the current date.

The Aurora Board considered the range of possible values and determined that the fair value of the Molopo investment held by the Fund should now be valued at 0.9 cents.

Aurora continues to pursue avenues to recover value that has been lost by the former directors of Molopo.

Dated 22/10/19 – Redemption Payment Update

Further to the update provided on 21 August 2019, Aurora Funds Management Limited (“Aurora”) as responsible entity of Aurora Fortitude Absolute Return Fund (“AFARF”) advises that the audit of the Fund’s annual financial statements is now complete. Redemption requests have been processed by the Aurora with its share registry, with payment to made by 25 October 2019. Aurora confirms that AFARF unitholders will receive approximately 47% of their outstanding redemption monies based on total redemptions as at 30 June 2019.

Dated 08/10/19 – Redemption Requests

In light of the recent increase in the Net Asset Value of Aurora Fortitude Absolute Return Fund (“AFARF”), all investors that had previously lodged Redemption Requests will now have the option of withdrawing their Redemption Request. This option remains open for the next 10 days from the date of this announcement. If no withdrawal request is received in this time, Aurora Funds Management Limited (“Aurora”), in its capacity as the responsible entity of AFARF, will process those Redemption Requests in line with previous announcements.

For all Redemption Requests received by Aurora after today, Aurora will process those Redemption Requests pursuant to its Constitution, Product Disclosure Statement and any Fund updates.

Dated 02/09/19 – Fund Update

Aurora Funds Management Limited (“Aurora”), in its capacity as the responsible entity for the Aurora Fortitude Absolute Return Fund (“AFARF”), provides the following important update.

Valuation of Aurora Property Buy-Write Income Trust

Previously, AFARF has valued its investment in the Aurora Property Buy-Write Income Trust (“AUP”) based on the Net Asset Value (“NAV”) of AUP.
With immediate effect, AFARF will now value its investment in AUP based on the most recent selling price in the primary active market in which the securities of AUP are traded.

As at 30 June 2019, the primary active market on which AUP securities are traded is the ASX. The most recent selling price of AUP units at 30 June 2019 on the ASX was $1.75 per unit. This is the valuation that has been adopted in the financial statements of AFARF for the year ended 30 June 2019.

As at Friday 30 August 2019, the most recent selling price of AUP units on the ASX was $2.10 per unit. This is the valuation that will be used in calculating the Net Asset Value of AFARF on Monday 2 September 2019. This represents a decrease of 44.7% in the valuation of AUP that was used in calculating the Net Asset Value of AFARF as at Friday 30 August 2019 of $3.80 per unit.

Valuation of Molopo Energy Limited shares

As at 30 June 2019, AFARF held an investment in the ordinary shares of Molopo Energy Limited (“Molopo”) (ASX: MPO), which was suspended from trading on the Australian Stock Exchange on 27 July 2017 and remains suspended as at the date of this update.

On 24 July 2019, Molopo released its Quarterly Cash Flow Statement for the quarter ended 30 June 2019. Based on the information contained in this Quarterly Cash Flow Statement, Aurora has reassessed the carrying value of its investment in Molopo and has decided to further write the value of its investment down from 1.9 cents to 1.5 cents. The rationale for this decision is summarised below:

Current Directors resolved that they do not consider the oil & gas exploration and production assets held by Drawbridge to have any value and accordingly Molopo’s investment through Orient was impaired to Nil

 Today, Molopo’s primary assets comprise its cash reserves and its investment in Drawbridge. Molopo has advised that its cash reserves at 30 June 2019 amounted to $12.3 million, and its current directors have resolved that they do not consider the oil & gas exploration and production assets held by Drawbridge to have any value and accordingly have impaired Molopo’s investment through Orient to Nil. Given the structure of the Drawbridge investment, whereby Molopo only holds B class shares in a foreign private company with no voting rights and only a limited ability to appoint a director, Aurora concurs that it is difficult to ascribe any value to this investment – based on the information that has been released to date. As such, for the purpose of valuing its investment in Molopo, Aurora continues to place nil value on the Drawbridge investment.

 Molopo’s primary liability relates to a long-standing legal action in Canada concerning the Company and Molopo Energy Canada Ltd (“MECL”), a wholly owned subsidiary of the Company. As the financial statements for the half-year ended 30 June 2019 have not yet been released by Molopo, the annual audited financial statements for the year ended 31 December 2018 remain the most recent financial statements released by Molopo, which were released by Molopo on 7 May 2019. In those financial statements, the long standing provision of A$8.6 million has been removed, with the following commentary being provided:

In March 2011, MECL was served with a statement of claim by a former joint venture partner (3105682 Nova Scotia ULC) “310 ULC”) claiming MECL breached various agreements relating to the relevant joint venture, including breach of fiduciary duties, trust and good faith. 310 ULC has sought declarations, accountings, damages of 25% revenue, C$35.0 (A$35.9) million general damages, C$1.0 (A$1.0) million punitive and aggravated damages, interest, GST and indemnity costs.
Subsequent to the filing of the statement of defence, the Company undertook an extensive examination of the transactions that gave rise to the amounts in dispute. This examination resulted in the Company applying a provision in the accounts in 2012 of a net C$5.0 (A$5.1) million. In early 2013, the JV Partner settled a counterclaim by making a payment of C$3.4 (A$3.5) million to the Company, at which time the Company increased the provision to C$8.4 (A$8.6) million.
During the current reporting period the Directors have reconsidered the circumstances that gave rise to recognition of the provision. A significant amount of time has passed since the provision was brought to account with limited progress on the claim. The Directors have reviewed the current status of the claims as provided by its lawyers and based upon this status update, the time elapsed and the limited progress made in the proceedings, they have taken the view that the amount of the provision can no longer be reliably measured, and therefore no longer meets the recognition criteria for a liability. Based on these findings, the Directors have reversed the provision and fully disclosed the claims as a contingent liability.

 Molopo currently has 249,040,648 ordinary shares on issue;

 Based on the above, Aurora considers the appropriate carrying value of its investment in Molopo to be 1.5 cents, calculated as follows:
o cash reserves of $12.3 million; less
o litigation liability of $8.6 million. In the Molopo financial statements for the year ended 31 December 2018 the legal provision has been removed as a liability in the balance sheet and disclosed as a contingent liability. For the purpose of this valuation, Aurora has used the previous estimate as a proxy for the liability;
o divided by 249,040,648 ordinary shares on issue; which
o equates to a value of 1.5 cents per share.

 As more information is released by Molopo on the Drawbridge investment as well as the Canadian litigation, it may be appropriate for Aurora to revisit the carrying value of its Molopo investment.

The fair value of the Molopo Investment is based on significant estimates and judgements adopted by the Board of Aurora based on all available information about Molopo as at the current date.

The Aurora Board considered the range of possible values and determined that the fair value of the Molopo investment held by the Fund should now be valued at 1.5 cents.

Aurora continues to pursue avenues to recover value that has been lost by the former directors of Molopo.

Redemption Requests

In light of the decision to write down the value of the investments in Molopo and AUP, all investors that had previously lodged Redemption Requests will now have the option of withdrawing their Redemption Request. This option remains open for the next 10 days from the date of this announcement. If no withdrawal request is received in this time, Aurora will process those Redemption Requests in line with previous announcements.

For all Redemption Requests received by Aurora after today, Aurora will process those Redemption Requests pursuant to its Constitution, Product Disclosure Statement and any Fund updates.

Dated 21/08/19 – Outstanding Redemption Requests Update

Aurora Funds Management Limited (“Aurora”), in its capacity as the responsible entity of the Aurora Fortitude Absolute Return Fund (“Fund” or “AFARF”), advises that it is currently finalising the audit of the Fund’s annual financial statements for the year ended 30 June 2019. Once this process is concluded, which is anticipated to be 31 August 2019, Aurora will then provide an update in relation to the payment of the outstanding redemption requests.

Dated 03/05/19 – Distribution Policy Update

Aurora Funds Management Limited (“Aurora”), in its capacity as responsible entity for the Aurora Absolute Return Fund (“ABW”) and the Aurora Fortitude Absolute Return Fund (“AFARF” or “Master Fund”), provides the following update in the relation to AFARF’s distribution policy.

AFARF currently pays quarterly distributions to unitholders, being the greater of 0.5% of its Net Asset Value (NAV) per quarter (2.0% per annum) or its distributable taxable income. Aurora hereby provides notice that it has elected to adjust the distribution policy for the Master Fund, such that the Master Fund will pay out its distributable taxable income on a semi-annual basis (in respect of the periods ended 30 June and 31 December each year) up to 1.0% of NAV per period (2.0% per annum). This change in distribution policy will take place following the 30 June 2019 quarterly distribution.

Dated 01/02/19 – Valuation of Molopo Energy Limited Update

Aurora Funds Management Limited (“Aurora”) provides the following valuation update in respect of the Aurora Fortitude Absolute Return Fund (“AFARF”).

Valuation of Molopo Energy Limited shares

As at 31 December 2018, AFARF held an investment in the ordinary shares of Molopo Energy Limited (ASX: MPO), which was suspended from trading on the Australian Stock Exchange on 27 July 2017 and remains suspended as at the date of this update.

On 27 September 2018, Aurora announced that the fair value of the holding in Molopo had been reduced from 3.6 cents per share to 2.6 cents per share, based on material information which had come to light between 31 August 2018 and 27 September 2018.

On 31 January 2019, Molopo released its Quarterly Cash Flow Statement for the quarter ended 31 December 2018. Based on the information contained in this Quarterly Cash Flow Statement, Aurora has reassessed the carrying value of its investment in Molopo and has decided to write the value of its investment down from 2.6 cents to 1.9 cents. The rationale for this decision is summarised below:

▪ Today, Molopo’s primary assets comprise its cash reserves and its investment in Drawbridge. Molopo has advised that the cash reserves at 31 December 2018 amounted to $13.3 million, however no guidance has been provided as to the carrying value of the Drawbridge Investment. Based on the structure of the Drawbridge investment, whereby Molopo has a 30% holding in a foreign private company with no voting rights and only a limited ability to appoint a director, it is difficult to ascribe any value to this investment – based on the information that has been released to date. As such, for the purpose of valuing its investment in Molopo, Aurora continues to placed nil value on the Drawbridge investment;

▪ Molopo’s primary liability relates to a long-standing legal action in Canada concerning the Company and Molopo Energy Canada Ltd (“MECL”), a wholly owned subsidiary of the Company. As the financial statements for the half-year ended 30 June 2018 have not yet been released by Molopo, the annual audited financial statements for the year ended 31 December 2017 remain the most recent financial statements released by Molopo, which were released by Molopo on 8 May 2018. In those financial statements, there was no change to the long standing provision of A$8.6 million, with the following commentary being provided:

In March 2011, MECL was served with a statement of claim by a former joint venture partner (3105682 Nova Scotia ULC) “310 ULC”) claiming MECL breached various agreements relating to the relevant joint venture, including breach of fiduciary duties, trust and good faith. 310 ULC has sought declarations, accountings, damages of 25% revenue, C$35.0 (A$35.9) million general damages, C$1.0 (A$1.0) million punitive and aggravated damages, interest, GST and indemnity costs. Subsequent to the filing of the statement of defence, the Company undertook an extensive examination of the transactions that gave rise to the amounts in dispute. This examination resulted in the Company applying a provision in the accounts in 2012 of a net C$5.0 (A$5.1) million. In early 2013, the JV Partner settled a counterclaim by making a payment of C$3.4 (A$3.5) million to the Company, at which time the Company increased the provision to C$8.4 (A$8.6) million.
The matter is continuing in the ordinary course with the Court. No court date has yet been set and the standard preparatory litigation processes are being undertaken.
The movement in the past two years in the provision for legal claim arises solely from fluctuations in foreign exchange rates in the period. The Board is satisfied that the progress of the litigation process has not provided evidence to suggest the C$8.4 (A$8.6) million provision is inappropriate. The Board therefore considers the provision to be appropriate.

▪ Molopo currently has 249,040,648 ordinary shares on issue;
▪ Based on the above, Aurora considers the appropriate carrying value of its investment in Molopo to be 1.9 cents, calculated as follows:

o cash reserves of $13.3 million; less
o litigation provision of $8.6 million;
o divided by 249,040,648 ordinary shares on issue; which
o equates to a value of 1.9 cents per share.

▪ As more information is released by Molopo on the Drawbridge investment as well as the Canadian litigation, it may be appropriate for Aurora to revisit the carrying value of its Molopo investment.

The fair value of the Molopo Investment is based on significant estimates and judgements adopted by the Board of Aurora based on all available information about Molopo as at the current date.

The Aurora Board considered the range of possible values and determined that the fair value of the Molopo investment held by the Fund should now be valued at 1.9 cents.

Aurora continues to pursue avenues to recover value that has been lost by the former directors of Molopo.

Dated 14/08/18 – Valuation of Molopo Energy Limited & Off-market Redemptions Update

Aurora Funds Management Limited (“Aurora”) provides the following update in respect of the Aurora Fortitude Absolute Return Fund (“AFARF”).

Valuation of Molopo Energy Limited shares
As at 30 June 2018, AFARF held an investment in the ordinary shares of Molopo Energy Limited (ASX: MPO), which was suspended from trading on the Australian Stock Exchange on 27 July 2017 and remains suspended as at the date of this update.

On 12 September 2017, AFARF announced an off-market takeover bid for 100% of the shares in Molopo at a price of $0.135 (13.5 cents) per share through a combination of cash (capped at $5 million) and units in AFARF.

On 8 May 2018, Molopo disclosed a number of transactions which were in excess of the ‘no material transaction or series of transactions of more than $2 million’ defeating condition of AFARF’s bid, specifically:

▪ “On 30 January 2018, Orient redeemed all of the JV Partner’s shares in Orient for a redemption amount of USD$7 million (Orient Redemption), resulting in the shares of the JV Partner in Orient being cancelled and Orient becoming a wholly-owned subsidiary of Molopo”;

▪ “Following completion of the Orient Redemption, Molopo has sole funded the remaining amounts required by the Orient Project, in accordance with its current budget for the project, in an aggregate amount of USD$21 million (Orient Funding)”;

▪ “On 21 February 2018, Orient entered into a contribution agreement with Drawbridge Energy Holdings Ltd (Drawbridge) pursuant to which it agreed to (i) transfer its 100% interest in Orient FRC (US) LLC (Orient US), a wholly owned subsidiary of Orient; and (ii) assign Orient’s interest in the Orient Project to Orient US at completion, in consideration for a 30% interest in Drawbridge (Combination Transaction)”; and

▪ USD$21 million was funded by way of intercompany loan from Orient to Orient US. Following completion of the Combination Transaction on or about 7 March 2018, the loan from Orient to Orient US was extinguished.
Following completion of the Combination Transaction, Molopo reported that it had $16.904 million of cash as at 31 March 2018.

On 11 May 2018, Aurora submitted an application to the Takeovers Panel in relation to the affairs of Molopo seeking a Declaration of Unacceptable Circumstances in relation to the Orient / Drawbridge Transactions. Amongst other things, Aurora submitted:
1. that:
(a) the transactions and events described in the 8 May 2018 ASX announcement constituted frustrating actions and should have been subject to shareholder approval;

(b) there were disclosure deficiencies in Molopo’s Target Statement and Supplementary Target Statements;

(d) the conduct of Molopo’s (now former) directors in relation to, and the nature of, the transactions, and other circumstances, gave rise to serious concerns regarding the transactions.

2. the cumulative effect of the transactions and events was to inhibit the acquisition of control over voting shares in Molopo taking place in an efficient, competitive and informed market.

3. it appeared that Molopo had misled the Takeovers Panel in prior Takeover Panel proceedings regarding the urgency and use of the US$4.5 million shareholder loan to Orient.

4. in relation to the Orient / Drawbridge Transactions, that certain circumstances “point to the transaction being a sham”, including the uncommercial structure of the transaction, the speed at which and the secrecy with which it had been consummated, the lack of oil and gas experience of the Former Directors and the disregard for the ASX Listing Rules.

5. it sought an order that all transactions that are capable of being unwound be unwound. If that order was not made (or complied with) and Aurora withdrew its bid due to the frustrating actions, it sought an order for costs associated with its bid.

On 8 June 2018, the Takeovers Panel made a Declaration of Unacceptable Circumstances in relation to the Orient / Drawbridge Transactions and subsequently ordered Molopo to pay a portion of the costs necessarily, properly and reasonably incurred by Aurora, however did not order that the Drawbridge /Orient transaction be unwound.

On 1 August 2018, the new Molopo Board, who were elected at the Company’s Annual General Meeting on 31 May 2018, made the following comments in the recent Quarterly Activities Report released by Molopo:

“Following a detailed review of the Orient/Drawbridge Transactions, the current Directors of Molopo cannot see any logical or commercial reason for entering into these transactions.

The Transactions resulted in the Company’s cash reserves being depleted from A$66.2 million at 30 June 2017 to A$15 million as at 30 June 2018.

The Former Directors proceeded with these transactions without seeking shareholder approval, resulting in a breach of ASX Listing Rules, as well as breaching ASX continuous disclosure obligations and the Corporations Act.”

On 10 August 2018, Aurora made an ASX Announcement advising of its decision to not declare AFARF’s takeover bid free from its defeating conditions and therefore to withdraw the AFARF takeover bid.

In light of the above, Aurora considers that the actions of the former Molopo directors have substantially and adversely affected the value of Molopo’s assets. As such, Aurora has considered the carrying value of its investment in Molopo and has decided to write the value of its investment down from 13.5 cents to 3.6 cents. The rationale for this decision is summarised below:

▪ Today, Molopo’s primary assets comprise its cash reserves (A$15 million as at 30 June 2018) and its shareholding in Drawbridge. Molopo’s shareholding in Drawbridge, being a 30% shareholding with no voting rights and limited rights to appoint a representative director, was reported to have gross cash of US$14.07 million, investment and other assets of US$4.41 million, current liabilities of US$0.29 million and net assets of US$18.2 million (A$24.06 million) as at 31 March 2018; against which the projected cash outflows for the 6 month period between April and September 2018 was estimated to be US$6.61 million (gross) or US$1.1 million (A$1.46 million) per month. Molopo’s 30% share of the net balance equates to A$5.235 million.

▪ Given the uncertainty around the recoverability of the money invested in Drawbridge, coupled with the lack of available audited information at this time, Aurora has taken 50% of A$5.235 million for the purpose of ascribing a value for Molopo’s shareholding in Drawbridge, being A$2.62 million. This estimate may change as more information regarding Drawbridge’s financial position is made available over the coming months.

▪ Molopo’s primary liability relates to a long-standing legal action in Canada concerning the Company and Molopo Energy Canada Ltd (“MECL”), a wholly owned subsidiary of the Company. According to the most recent financial statements released by Molopo, being the annual audited financial statements for the year ended 31 December 2017, which were released by Molopo on 8 May 2018, there was no change to the long standing provision of A$8.6 million, with the following commentary being provided:

The movement in the past two years in the provision for legal claim arises solely from fluctuations in foreign exchange rates in the period. The Board is satisfied that the progress of the litigation process has not provided evidence to suggest the C$8.4 (A$8.6) million provision is inappropriate. The Board therefore considers the provision to be appropriate. ▪

Molopo currently has 249,040,648 ordinary shares on issue;

▪ Based on the above, Aurora considers the appropriate carrying value of its investment in Molopo to be calculated as follows:

- cash reserves of $15 million; plus
- 50% of Molopo’s 30% of Drawbridge estimated value $2.62 million; less
- litigation provision of $8.6 million;
- divided by 249,040,648 ordinary shares on issue;
- the total estimated value equates to a value of 3.6 cents per share

▪ As more information is released by Molopo on the Drawbridge shareholding as well as the Canadian litigation, it may be appropriate for Aurora to revisit the carrying value of its Molopo investment.

The fair value of Aurora’s investment in Molopo is based on significant estimates and judgements adopted by management of Aurora based on all available information about Molopo as at the date of the 30 June 2018 financial report.

In addition to the application made by Aurora to the Takeovers Panel, Aurora is pursuing other avenues to recover value that has been lost by the former directors of Molopo.

Update on Redemption Requests

In light of the decision to write down the value of the Molopo investment to 3.6 cents, all investors that had previously lodged Redemption Requests will now have the option of withdrawing their Redemption Request. This option remains open until 31 August 2018. If no withdrawal request is received by 31 August 2018, Aurora will process those Redemption Requests in line with previous announcements.

For all Redemption Requests received by Aurora after the 31 August 2018, Aurora will process those Redemption Requests pursuant to its Constitution, Product Disclosure Statement and any Fund updates.

Dated 01/06/18 – Distribution Update

Aurora Funds Management Limited (“Aurora”) as responsible entity of Aurora Absolute Return Fund (“ABW”) and Aurora Fortitude Absolute Return Fund (“AFARF” or “Master Fund”) would like to provide the following update regarding the relation to the AFARF’s Distribution Policy.

AFARF currently pays a quarterly distribution to unitholders of 1% of Net Asset Value (NAV), or, 4% per annum. Effective 30 June 2018, the quarterly distribution rate for the Fund will be adjusted to the greater of 0.5% of NAV (2% per annum) or distributable taxable income.

Dated 9/5/18 Takeover bid update

Aurora Funds Management Limited ACN 092 626 885 (Aurora), in its capacity as responsible entity for the Aurora Fortitude Absolute Return Fund (AFARF), notes the disclosures made by Molopo Energy Limited (Molopo) in its annual financial statements, Progress Report and Quarterly Cashflow Report, released on the ASX on 8 May 2018. In particular, Aurora notes the transfer of the majority of Molopo’s assets into a newly incorporated company in the British Virgin Islands in exchange for a minority 30% non-voting interest, with limited rights. These transfers have occurred without shareholder approval, and appears to be in contravention of Listing Rule 11.1, and in breach of the conditions imposed by the AFARF Takeover Bid. Aurora is very concerned by the nature, timing and disclosures of these activities undertaken by Molopo, in circumstances that are contrary to the defeating conditions in the AFARF Takeover Bid. Aurora has communicated its significant concerns to the ASX and the Australian Securities and Investments Commission. Aurora is considering the impact to the AFARF Takeover Bid and will provide an update in due course.

Dated 22/3/18 – Liquidity Management Update

Aurora Funds Management Limited (“Aurora”), as responsible entity of the Aurora Fortitude Absolute Return Fund (“Fund”), provides an important update in relation to the redemption facility, effective with respect to redemption requests made for processing during the quarter ending 31 March 2018.

Read more here.

Dated 02/03/2018 – Director Appointment

Aurora Funds Management Limited (“Aurora”) is an Australian-based alternative asset manager specialising in absolute-return investment strategies.

Aurora’s current ownership group purchased the business on 30 June 2016. At the time of purchase, Aurora’s business was in distress, primarily due to a significant investment made by the former managers in an ASX-listed convertible note that had run into financial difficulty, which had ultimately caused it to freeze certain fund liquidity. Having inherited this illiquid position, the incoming Group worked diligently to restore liquidity for the funds, allowing circa $50 million of redemptions to be processed shortly after its purchase.

The incoming Group was led by John Patton. John had been a partner with Ernst and Young and prior to that, was Chief Financial Officer of a gas transmission business owned by the Hastings Diversified Utilities Fund.

The Group has sought to keep Aurora’s business independent. However, an impression has apparently been formed in some parts of the market that the business is associated with, in particular, its former owner Keybridge. Despite Keybridge retaining the management rights of one of Aurora’s funds (HHY Fund), and Aurora complying with its obligations under that arrangement, that impression is not correct.

This unfortunate impression was entrenched by recent findings in the Takeovers Panel where share acquisitions in an ASX company, Molopo Energy Limited, by each of Aurora and Keybridge had to be unwound. That position has been vigorously denied by Aurora, with the legality of the decision currently subject to judicial review in the Federal Court (NSW).

The Group has also had to deal with challenges associated with a financial theft, that resulted in the immediate termination of its long standing Chief Financial Officer (Ms Betty Poon), replacement of its auditor (Deloitte) and a review of its share registry service provider (Registry Direct).

The Group has continued its focus on rebuilding Aurora and becoming a sustainable funds management business. The key areas of focus for the Group include improving investor returns and correcting public perception, particularly around corporate governance. Aurora management recognises that it needs increased focus in these areas if it is to be seen by investors and the wider market, as what it believes it is – a truly independent, professional and proficient funds management business.

An important step in this direction is to appoint a new independent director to the Aurora Board. Mr Tony Hartnell AM has accepted our invitation to join the Board and to participate in working on the development of transparency, professionalism and independence.

Mr Tony Hartnell AM, who was previously the inaugural Chairman of what is today known as the Australian Securities and Investment Commission (ASIC), is a very welcome addition to the Aurora Board.

A copy of Mr Hartnell’s CV is below.

ANTHONY GEOFFREY HARTNELL, AM

Legal Practice

- A Founding Partner – Atanaskovic Hartnell, January 1994 to date
- Formerly a Partner of Allen Allen & Hemsley, July 1980 – June 1990 & January 1993 – December 1993
- Deputy Secretary, Department of Business & Consumer Affairs 1976-1979
- Senior Assistant Secretary, Australian Attorney-Generals Department, 1974-1975

Other Experience

- Chairman, Australian Securities Commission 1989-1992 (Inaugural)
- Chairman, National Companies & Securities Commission 1990-1991
- Member, Companies & Securities Advisory Committee 1990-1992
- Member, Trade Development Council 1987-89
- Director, Australian Film Finance Corporation Pty Ltd 1988-1990
- Special Legal Adviser, Australian Government Inquiry into Telecommunications 1985
- Member, Trade Practices Act Review Committee 1976 (Swanson Committee)
- Visiting Professor of Law, University of Newcastle
- Visiting lecturer, Sydney University Law School, LLM course
- Chief Legal Counsel – Bankers Trust Australia Group 1997
- Member, Australian Law Reform Commission Advisory Committee on the Adversarial System of Litigation
- Contributor to Butterworths Corporations Law Service
- Chairman NSW Thoroughbred Racing Board 2000-2004

Current Public Directorships

- Allegra Orthopaedics Limited

Major Areas of Specialisation

Corporate and Commercial Law, particularly, regulatory issues, corporate financing, takeovers, trade practices and collective investments, with more recent emphasis on investigations and enforcement actions.

University Qualifications

B Ec (ANU), LLB (Hons)(ANU), LLM (Highest Hons) (Geo. Washington Uni)

Honours

- Order of Australia (AM)
- Centenary Medal 2003

Other

Proprietor of Meringo Stud, Moruya NSW

Dated 02/02/2018 – Notification of change in scheme and compliance plan auditor

The directors of Aurora Funds Management Limited (Responsible Entity) have resolved to appoint Grant Thornton Audit Pty Ltd as auditor of Aurora Fortitude Absolute Return Fund.

Deloitte Touche Tohmatsu have applied for, and received, ASIC consent to resign as the auditor of AFARF.

Dated 15/01/2018 – Liquidity Update

On 17 October 2017, Aurora provided an update regarding the Master Fund’s off-market redemption facility whereby Aurora stated that it intended to increase the redemption ceiling applying to redemptions to 10% (from 5%) of the total FUM for the quarter ending 31 December 2017.

Aurora is pleased to announce it expects Master Fund unitholders will receive approximately 27% of their outstanding redemption monies based on total redemptions as at 31 December 2017.

Aurora notes that redemption payments will be finalised once the audited half year accounts have been approved by Directors. The half year accounts will be signed no later than 28 February 2018.

Dated 12/01/2018 – Notice of variation of Aurora’s takeover bid for Molopo to extend offer period and announcement of conditional increase in bid consideration

This notice relates to the off-market takeover bid (Bid) made by Aurora Funds Management Limited ABN 69 092 626 885 (Aurora) as responsible entity of the Aurora Fortitude Absolute Return Fund ARSN 145 894 800 (AFARF) to acquire the ordinary shares (Molopo Shares) in Molopo Energy Limited ABN 79 003 152 154 (Molopo) under the bidder’s statement (Bidder’s Statement) dated 26 October 2017. Unless the context otherwise requires, a defined term in the Bidder’s Statement has the same meaning in this document.

Read more here.

Dated 11/12/2017 – Notice

Aurora recently became aware of the misappropriation of approximately $1 million of funds from the Aurora Property Buy-Write Income Trust (AUP). This matter has been reported to ASIC and the Victorian Police and is currently being investigated. Aurora confirms that it has appropriate insurance cover in place and is taking recovery action against the alleged perpetrator. The former Chief Financial Officer of Aurora was terminated effectively immediately. Aurora is currently investigating whether the alleged perpetrator’s actions have impacted any other Funds, however it currently understands that the misappropriation is largely limited to AUP.

There is an indirect impact of this event on AFARF, as AFARF holds approximately 21% of the units in AUP. Given the insurance and recovery actions, this is not currently expected to impact financially on AFARF. Current and potential AFARF unitholders should however consider this event when making their investment decisions.

Dated 26/10/17 – Change to registry service provider for the Aurora Fortitude Absolute Return Fund

Aurora Funds Management Limited (Aurora) advises that the registry service provider for the Aurora Fortitude Absolute Return Fund has changed to Registry Direct Limited.

After this change, Registry Direct Limited will be registry service provider for all funds managed by Aurora.

Registry Direct Limited can be contacted on 1300 556 635 or registry@registrydirect.com.au

Dated 17/10/17 – Liquidity Management & Enhanced Redemption Guidelines – Update – December 2017 quarter

Aurora Funds Management Limited (“Aurora”), as responsible entity of the Aurora Fortitude Absolute Return Fund (“Fund”), provides an important update in relation to the off-market redemption facility, effective with respect to redemption requests to be processed during the quarter ending 31 December 2017.

As disclosed in the fund update of 17 February 2017, redemption requests received since 1 January 2017 have exceeded the provisions contained in the Fund’s Constitution (“Announcement”). In that Announcement, Aurora advised that redemption requests submitted by AFARF unit holders will be subject to redemption guidelines (“Redemption Guidelines”) including the application of a redemption ceiling of 5% of the total funds under management (“FUM”) to requests for redemptions in any given quarter.

In accordance with Aurora’s duties under Corporations Act 2001 (Cth) (“Act”), Aurora continues to actively manage the liquidity requirements of the Fund to ensure satisfaction of the Fund’s investment mandates and objectives, whilst also ensuring that Aurora is able to manage the redemption process in an orderly manner.

This requires Aurora to achieve an outcome that is fair to unit holders as a whole, including balancing the interests of those unit holders that wish to redeem their investment in the Fund with those unit holders who wish to remain invested in the Fund.

Redemptions during the quarter ending 31 December 2017 (to be paid in January 2018)

Based on information currently available to it, Aurora intends to increase the redemption ceiling applying to redemptions to 10% of the total FUM for the quarter ending 31 December 2017.
Based on the currently level of unsatisfied redemption requests, this would result in a payment in excess of 25% of each unitholders’ outstanding redemption request during that quarter. The final amount payable to each unitholder will however depend on any additional redemption requests received or withdrawn during the quarter which is uncertain.

This increase will apply to the 31 December 2017 quarter only, however Aurora will continue to monitor the available liquidity in the Fund and is targeting improvements above the 5% redemption ceiling to apply in the 31 March 2018 and subsequent quarters.

Redemptions during the quarter ending 30 September 2017 (to be paid in October 2017)

Redemptions for the quarter ended 30 September 2017 are subject to the existing 5% of FUM ceiling and are currently being calculated for payment.

This amendment to the Redemption Guidelines, as detailed above, is based on information presently available to Aurora and Aurora will continue to provide fund updates with respect to the Fund’s redemption facility, including the Redemption Guidelines, should they be the subject of further updates as the relevant circumstances and factors change.

Unit holders are recommended to regularly monitor the Fund’s updates to ensure they are aware of all relevant information prior to making a decision with respect to their investment in the Fund.

Dated 11/09/17 – Appeal of Takeovers Panel Orders

On 10 July 2017 Aurora Funds Management Limited (Aurora) as responsible entity for AFARF and AIB made an announcement in relation to the Orders made by the Australian Government Takeovers Panel (Takeovers Panel). Reasons for the orders were subsequently provided by the Takeovers Panel on 22 August 2017 (Reasons). Aurora has carefully considered the Reasons for the orders, and on 8 September 2017 Aurora applied to the Federal Court for a judicial review of the Takeovers Panel decision.

Aurora has consistently denied that it has acted in concert with Keybridge Capital Limited, or anyone else, in relation to the affairs of Molopo.

ABW is solely invested in AFARF so is also impacted by this application.

Dated 03/08/17 – Liquidity Management

In the announcement by Aurora Funds Management Limited (Aurora) as responsible entity of the Aurora Fortitude Absolute Return Fund (AFARF) made on 27 July 2017 about AFARF’s proposed takeover bid for Molopo Energy Limited (Molopo), AFARF stated that Molopo shareholders who accept the takeover offer and elect to receive AFARF units will be able to request redemption of the units off-market at the prevailing net asset value based redemption price in accordance with AFARF’s constitution and fund updates.

In that regard, Aurora notes that redemption guidelines are currently in place to manage the liquidity requirements of AFARF. In summary, redemption requests are considered and processed on a quarterly basis and, as a general principle, AFARF will provide unit holders with access to liquidity by redemptions of up to 5% of the total funds under management in any given quarter (with applications being scaled back proportionately if aggregate redemption requests for a quarter exceed that threshold). Full details of the redemption guidelines are set out in the ‘Liquidity Management’ fund update dated 17 February 2017 available from Aurora’s website (http://www.aurorafunds.com.au/investment-funds/afarf-unlisted-managed-fund/fundupdates/).

The liquidity management of AFARF and redemption guidelines are subject to change, and the board of Aurora intends to review the guidelines in the course of finalising AFARF’s bidder’s statement for its proposed takeover of Molopo. Any updates in relation to this matter will be uploaded to Aurora’s website, and the bidder’s statement will include an explanation of any applicable redemption guidelines.

Dated 31/07/17 – Takeover Bid for Molopo Energy Limited Correction

Further to the announcement made by Aurora Funds Management Limited (“Aurora”) on 27 July 2017 in relation to the Aurora Fortitude Absolute Return Fund (“AFARF”) announcing a cash and/or scrip takeover bid for Molopo Energy Limited, Aurora advises of a correction as follows:

The statement that identified: “Those who elect to receive AFARF units will become part of an enlarged listed management investment scheme” should read: “those who elect to receive AFARF units will become part of an enlarged unlisted managed investment scheme”.

Dated 27/07/17 – Strategic Investment by Molopo Enery Limited

Following the proposed takeover bid announced this morning by Aurora Funds Management Limited (Aurora), as responsible entity of the Aurora Fortitude Absolute Return Fund (AFARF), for Molopo Energy Limited (Molopo), Molopo announced it had completed a ‘strategic investment’ and requested a suspension of trading in its shares until 31 July 2017 while it finalises its ‘technical announcement’.

AFARF and the Aurora Global Income Trust both have investments in Molopo. Molopo has been a ‘cashbox’ for more than 4 years, and since November 2015 has made repeated public statements that it would obtain shareholder approval before making a material investment. Further, under chapter 11 of the ASX Listing Rules, Molopo is required to obtain shareholder approval for any proposed transaction that would result in a significant change to the nature or scale of its activities.

Entering into a ‘strategic’ investment without shareholder approval may trigger a defeating condition under Aurora’s proposed takeover bid, potentially denying Molopo shareholders the opportunity to participate in the significant premium to Molopo’s recent market price afforded by the takeover bid.

Aurora looks forward to Molopo’s ‘technical’ announcement and will carefully consider all of its options if the Board of Molopo proceeds with the investment without shareholder approval.

Dated 27/07/17 – Takeover Proposal for Molopo Energy Limited

Aurora Funds Management Limited (Aurora) as responsible entity of the Aurora Fortitude Absolute Return Fund ARSN 145 894 800 (AFARF) is intending to make an off-market takeover bid under chapter 6 of the Corporations Act 2001 (Cth) for all the issued fully paid ordinary shares in Molopo at a bid price of $0.18 each.

The bid price is 33.8% above the 30 day volume weighted average price (VWAP), 27.5% above the 60 day VWAP and 14.9% above the 90 day VWAP, of Molopo shares ending on 26 July 2017, as well as a 28.6% premium to the closing sale price of Molopo shares on that day. The directors of Aurora believe that the proposed bid will provide an attractive alternative to the current uncertainty and lack of strategic direction at Molopo.

If Aurora is able to gain control of Molopo, it intends to seek to return a material amount of capital to Molopo shareholders, subject to a careful review of the company’s liabilities. Remaining cash assets would then be prudently invested until the resolution of Molopo’s litigation, at which point further capital returns would be considered.

Payment of the bid consideration to those accepting Molopo shareholders who elect to receive AFARF units1 would be satisfied by the issue of the units with a unit value equal to the bid consideration. Unit value would be determined in accordance with the constitution of AFARF, which provides for an objective valuation methodology as required by section 601GA(1)(a) of the Corporations Act. Payment of the bid consideration in cash would be subject to a cap of $5 million in total. Acceptances for cash consideration that in aggregate exceed $5 million would be scaled back, with the balance of the bid consideration satisfied by the issue of AFARF units.

Read the full announcement here.

Dated 07/07/17 – Molopo Energy Limited

Further to the Fund Update made by Aurora Funds Management Limited (Aurora) on 3 July 2017 in relation to the declaration published by the Takeovers Panel (Panel) regarding the applications made by Keybridge Capital Limited (Keybridge) and Molopo Energy Limited (Molopo) for a review of the findings of the initial Panel, the review Panel has now made orders.

In summary, the Panel’s orders include the following:

39,540,910 Molopo shares held by Aurora (being the number of Molopo shares acquired by Aurora since 10 August 2016) are to be vested in ASIC to sell (using an investment bank or stock broker) over a period of six months and return the proceeds of sale (net of costs) to Aurora;
Aurora and its associates may not acquire any further Molopo shares during the next six months; and
Aurora must make disclosure to ASX of its relevant interests in Molopo shares and its association with Keybridge (as declared by the Panel).

As previously announced, the board is currently considering the review Panel’s declaration (and now these orders) and any action it may take in response.

Unitholders should note the 3 July 2017 Fund Update explaining the inherent uncertainty in the calculation of the NAV of the Fund due to the inability of Aurora to calculate accurately the value of Molopo exposure as we are unable to determine the outcome of the sale process under the Panel’s orders.

Dated 03/07/17 – Molopo Energy Limited

Further to the Fund Update made by Aurora Funds Management Limited (Aurora) on 20 May 2017 in relation to the proceedings before the Takeovers Panel (Panel) concerning the acquisition of shares in Molopo Energy Limited (Molopo) by Keybridge Capital Limited (Keybridge) and Aurora and the applications to review of the findings of the initial Panel, the review Panel has now published a declaration.

The review Panel has agreed with the initial Panel that certain actions in relation to Keybridge and Aurora gave rise to unacceptable circumstances in relation to the affairs of Molopo. The review Panel also considered Keybridge and Aurora were associates in relation to Molopo and have contravened section 606 of the Corporations Act 2001 and the substantial holder notice provisions.

The Panel states in its declaration that it considered the board of directors of Aurora was aware of a strategy orchestrated by Mr Nicholas Bolton to control Molopo and agreed to or acquiesced in that strategy.

The review Panel’s reasons for making its declaration have not been published, and without the benefit of those reasons, Aurora is not yet able to respond fully to the declaration.

Based upon the sworn evidence and the submissions which were provided to the Panel, members of the Aurora board fundamentally disagree with the finding of association between the company and Keybridge.

Managing Director of Aurora Funds Management, Mr John Patton, also provided sworn evidence to the Panel. The Board and Mr Patton are currently considering the declaration and any action they may take in response.

Separately, the review Panel is now considering the question of orders to make, and Aurora will make a further announcement in due course. A copy of the declaration has been published by the review Panel.

Aurora currently owns approximately 12.8% of Molopo on behalf of Aurora Fortitude Absolute Return Fund (and approximately 5.1% on behalf of Aurora Global Income Trust).Unitholders should note there is currently an inherent uncertainty in the calculation of the NAV of the Fund, due to the inability of Aurora to calculate accurately the value of Molopo exposure until proceedings before the Panel are resolved.

Dated 20/05/17 – Molopo Energy Limited

Aurora Fortitude Absolute Return Fund (“the Fund”) has an exposure to Molopo Energy Limited (MPO). MPO has been in a trading halt since 29 May 2017 pending the announcement of a strategic investment, and as a result its securities are currently suspended from quotation. The Fund has valued its exposure to MPO at its last trading price of $0.145 in accordance with the Fund’s Valuation and Unit Pricing policy. At that valuation it currently represents approximately 32% of the value of the assets of the Fund.

Additionally, unit holders should note that the Takeovers Panel (Panel) made orders on 14 June 2017 for the MPO shares held by the Fund to be vested in the Commonwealth and sold by a broker appointed by the Australian Securities and Investments Commission within 6 months. These orders are currently stayed due to applications to review the underlying decision of the Panel on which the orders are based. In addition, Aurora Funds Management Limited (Aurora) applied on 14 June 2017 for a review of the orders.

The Panel has announced on 16 June 2017 that it received Aurora’s application, but that a review Panel is yet to be appointed and no decision about whether to conduct proceedings has been made at this stage.

Unit holders should note these facts and understand there is currently an inherent uncertainty in the calculation of the NAV of the Fund, due to the inability of Aurora to accurately calculate the value of the MPO exposure until such time as MPO’s securities are once again quoted on the ASX, and the proceedings before the Panel are resolved.

Dated 26/04/17 – Appointment of Chief Operating Officer

Aurora Funds Management Limited is pleased to announce it has expanded its management team with the appointment of Mr Ben Norman to the role of Chief Operating Officer, effective 26 April 2017.

Ben is a qualified Chartered Accountant, with over 16 years of professional and industry experience. Prior to joining Aurora, Ben was a Director in Ernst & Young’s Transaction Advisory Services division, where he spent over 9 years working on numerous due diligence, performance improvement, restructuring, turnaround, financial modelling and transaction integration engagements with clients in all industry sectors. While working with Ernst & Young, Ben also performed extended secondments with global financier GE Capital in a senior risk and compliance role and with ASX listed Origin Energy Limited as a finance manager in Origin’s upstream business.

Prior to joining Ernst & Young, Ben held a senior finance position with gas transmission business Epic Energy (which was owned by the ASX listed Hastings Diversified Utilities Fund, backed by Westpac Banking Corporation) where he was responsible for overall financial control and compliance.

Managing Director, John Patton, commented, “we are delighted to have secured the services of a very senior and experienced industry professional to Aurora’s management team. Ben Norman’s extensive professional and industry experience will be a valuable addition to Aurora’s capabilities”.

Operational Update

In light of the changes that have taken place within the business, Aurora has decided to update and refresh its Product Disclosure Statement (PDS). Pending this review being finalized, Aurora has withdrawn its PDS for new retail applications, however all existing terms will continue to apply save as varied in accordance with the terms of the PDS. Upon the lodgment of an updated PDS, the fund will then accept applications from new retail investors.

Dated 18/04/17 – Takeovers Panel update

Further to the announcement made by Aurora Funds Management Limited (“Aurora”) on 12 April 2017 in relation to applications made by the Australian Securities and Investments Commission (“ASIC”) and Molopo Energy Limited (“Molopo”) to the Takeovers Panel seeking declarations of unacceptable circumstances in relation to Aurora’s acquisitions of shares in Molopo on the basis of an alleged ‘association’ with Keybridge Capital Limited, Aurora notes that:

1. the members of the Panel who will consider the applications have been appointed;

2. the Panel has not yet decided whether to conduct proceedings on either application; and

3. if proceedings are conducted, one of the orders sought by ASIC is that approximately 39.5 million Molopo shares held by Aurora be sold within a period of 3 months (with the net proceeds of sale being paid to Aurora). If such an order were to be made, the effect that the sale of such a large number of shares in a relatively short timeframe would have on the trading price of Molopo shares is unknown (and could be adverse, having regard to the illiquid nature of trading in Molopo shares).

Aurora also notes that in the separate application made by Molopo, a divestment order is also sought on the basis that Aurora not receive any profit on the sale of the shares.

The Molopo shares owned by Aurora on behalf of Aurora Fortitude Absolute Return Fund and Aurora Global Income Trust currently represent approximately 30.4% and 39.5% respectively of the value of the assets of those funds.

As stated in its announcement on 12 April 2017, Aurora intends to vigorously oppose the applications.

Dated 12/04/17 – Takeovers Panel

Aurora Funds Management Limited (“Aurora”) has received applications by Australian Securities and Investments Commission and Molopo Energy Limited (“Molopo”) to the Takeovers Panel seeking declarations of unacceptable circumstances in relation to Aurora’s acquisitions of shares in Molopo on the basis of an alleged ‘association’ with Keybridge Capital Limited (“Keybridge”) in relation to Molopo. No date for the panel hearing has been fixed at this stage.

Aurora has consistently denied that it is acting in concert with Keybridge (or anyone else) in relation to the affairs of Molopo and expects to vigorously oppose the applications following its review of the extensive materials submitted with the applications. Aurora has engaged commercial lawyers Norton Gledhill to assist it in this regard.

Aurora currently owns approximately 12.79% of Molopo on behalf of Aurora Fortitude Absolute Return Fund and approximately 5.10% on behalf of Aurora Global Income Trust.

Dated 17/02/17 – Liquidity Management

Aurora Funds Management Limited (“Aurora” or the “Responsible Entity”) provides an important update detailing the manner in which redemption requests in the Aurora Fortitude Absolute Return Fund (the “Fund”) will be handled, effective immediately.

As you may be aware, from 31 August 2016 Aurora reinstated liquidity to the Fund, providing an extraordinary liquidity solution, superior to the requirements of the Fund’s Constitution. On 7 November 2016, Aurora further advised that the Withdrawal Fee that was introduced as part of this extraordinary liquidity solution, would be reduced to nil, effective from 1 January 2017.

Since 1 January 2017, the level of redemption requests exceed the provisions contained in the Fund Constitution. The Responsible Entity has given careful consideration to these requests, its power to permit redemptions and its obligation to act in the best interests of all unit holders. The Responsible Entity has resolved that it intends to exercise its discretion to accept these requests, and any future redemption requests, subject to the redemption guidelines and process set out below.

Redemption Guidelines

Aurora continues to actively manage the liquidity requirements of the Fund to ensure that the Fund is able to achieve its investment objectives whilst also providing unitholders with the ability to access their investment as and when they may wish to do so. It is important to achieve an equitable balance between the competing interests of those unitholders seeking to redeem their investment and those unitholders who wish to remain invested in the Fund.

Aurora has decided to adopt the following redemption guidelines to ensure that the manner in which it considers redemption requests is equitable to all unit holders and ensures that the investment objectives of the Fund can be achieved:
 Redemption requests will be considered and processed on a quarterly basis with the next redemption date scheduled for 31 March 2017 .
 As a general principle, the Fund will provide unitholder access to liquidity, in the form of redemptions, of up to 5% of the total funds under management (“FUM”) in any given quarter . The Responsible Entity has reviewed Fund inflows / outflows and market peers and believes that a 5% benchmark is adequate for a Fund of this size.
 If aggregate redemptions exceed 5% of the total Fund FUM in the relevant quarter, then redemption requests will be deemed to be for a proportionately scaled back amount according to the redemption price as at the date the redemption request is received by the Responsible Entity.
 Any unsatisfied portion of a redemption request will be carried over to the next redemption quarter. Unitholders will not be required to lodge a new redemption request form as the Responsible Entity will maintain a record of all redemption requests received in the prior quarter.

Aurora believes that these general redemption guidelines will ensure that the Fund does not return to a state where redemptions are ‘suspended’, subject to the occurrence of any extraordinary circumstances. The Responsible Entity will continue to exercise its discretion in respect of any redemption requests on a case-by-case basis, but will do so with the above guidelines in mind.

How are the redemption proceeds calculated?

Under clause 7 of Fund’s Constitution, the redemption price per unit is calculated as the net asset value per unit less transaction costs which have been estimated at 0.02%. The net asset value is calculated as the total assets less the total liabilities.

When the Responsible Entity exercises its discretion to accept a redemption request, the redemption proceeds owing to the unitholder will, in the normal course, be calculated on the last business day of each quarter. If, during any quarter, the aggregate redemptions exceed 5% of the total Fund FUM, any residual balance (of units) will automatically be carried forward to the next quarter and will rank equally with any other redemption requests received in that quarter. Any redemption request(s) that is carried into the next quarter will receive the prevailing net asset value at the end of that quarter. This process will continue until all redemption requests are satisfied.

Payment of redemption proceeds

Unitholders will be paid their redemption proceeds within 10 days of each quarterly redemption date. All proceeds will be paid via your nominated payment method.

Confirmation of redemption

Once redemption requests have been processed, unitholders who have redeemed will be issued with a transaction statement advising of the number of units withdrawn and value of redemption proceeds.

Dated 08/02/17 – Update in relation to the Investment Strategy

Aurora Funds Management Limited (“Aurora”) provides the following update in relation to the investment strategy for the Aurora Fortitude Absolute Return Fund.

- Historically, Aurora has typically targeted a large number of positions in highly liquid investments. Whilst this still forms the basis of the investment strategy, Aurora is also prepared to take more concentrated and/or substantial positions where there is an opportunity to take an active role in creating a catalyst to unlock underlying value. Aurora believes the pursuit of these opportunities will enable the Fund to generate higher investment returns over the longer term whilst potentially increasing volatility.
- The current Product Disclosure Statement (“PDS”) contemplates 90% of the Fund’s assets being able to be liquidated within 10 business days. The Fund will revert to the liquidity requirements contained in its Constitution, which is consistent with the Corporations Act.
- All investments continue to be managed within the Investment Mandate as outlined in the current Product Disclosure Statement’s and Fund Updates.

Dated 19/01/17 – Appointment and Resignation of Compliance committee member of the responsible entity

Aurora Funds Management Limited, as Responsible Entity for Aurora Fortitude Absolute Return Fund is pleased to announce the Board has appointed Mr Jim Hallam as an external member of the Responsible Entity’s Compliance Committee to replace Mr David Lewis who has resigned. Jim’s appointment will take effect immediately.

Jim is currently a Non‐Executive Director of Aurora Funds Management Limited.

Jim was appointed as Non‐Executive Director of Aurora Funds Management Limited on 30 June 2016. Jim has over 20 years’ finance and operational experience in Australian funds and investment management experience. Focused on building strong strategically important processes to create and support funds management, Jim’s expertise in finance includes his role as CFO at Hastings Funds Management Limited from 1997 to 2006. Whilst at Hastings, funds under management grew from A$500 million to A$3,600 million, with investments being made in Australia, UK and the US for listed and unlisted funds. His experience spans a diverse range of businesses including toll roads, airports, electricity and gas transmission networks, water utilities, timber plantations, telecommunications, ports and stadiums.

The Board wish to thank Mr Lewis for his considerable contribution since his appointment.

Dated 30/11/16 – AFARF meeting

Aurora Funds Management Limited, the responsible entity of the Aurora Fortitude Absolute Return Fund (AFARF), advises that the extraordinary resolutions put to unitholders were not approved by AFARF unitholders earlier today.

Resolution 1 (Removal of Aurora as the current Responsible Entity) was not passed.
Resolution 2 (Appointment of Millinium as the new Responsible Entity) was not passed.
Resolution 3 (Winding up the Fund) was not passed.

Accordingly, Aurora will remain the responsible entity of AFARF and will continue to act as the responsible entity of AFARF and seek to accomplish the investment objective and strategy of AFARF.

Dated 07/11/16 – Withdrawal Fee Update

On 25 July 2016, Aurora announced a withdrawal fee of 1.85% (in accordance with the current PDS dated 14 February 2016 and the Consolidated Constitution of the Fund).

As previously disclosed, Antares Energy Convertible Notes were suspended from trading on the ASX and were considered illiquid, therefore causing uncertainty in the valuation. As a result, effective 25 February 2016, Aurora temporarily froze off market applications and redemptions in the Fund.

On 31 August 2016, Aurora announced it had developed an extraordinary liquidity solution allowing the unfreezing of the redemptions requests. As part of developing, implementing and facilitating the extraordinary liquidity solution, Aurora elected to impose a Withdrawal Fee as a temporary measure.

After careful consideration, the Board of Aurora has decided to reduce the Withdrawal Fee to nil, effective from 1 January 2017.

Dated 26/09/16 – AFARF Meeting

A meeting of the members of the Aurora Fortitude Absolute Return Fund was held at 11.00am on 26 September 2016 in accordance with the Notice of Meeting issued on 18 August 2016.

The independent Chairman, Mr John Malon, opened the meeting and noted that there had been some recent developments in relation to the subject matter of the meeting. In particular, the Chairman noted that Aurora had informed him that:

(a) It wished to retire as Responsible Entity under section 601FL of the Corporations Act and clause 17.1 of the Fund’s constitution;

(b) It considered it in the best interests of members of the Fund that they have a choice of responsible entities to replace it as responsible entity of the Fund; and

(c) It requested that the meeting be adjourned to allow unitholders the opportunity to consider the alternatives and to receive additional information in relation to them.

The Chairman indicated that it was appropriate to adjourn the meeting to enable additional options to be put before the members of the Fund and for the relevant additional information to be provided to them.

It was indicated that notices of the meetings and additional information would be despatched as soon as possible, expected to be within the next 3 weeks.

The Chairman noted that Aurora was not yet in a position to confirm the date on which the meetings will be held, partly due to uncertainty surrounding the Chairman’s availability for the meeting. However, it was stated that the objective was for the meetings to be held in early November.

The Chairman declared the meeting of the Fund adjourned to the place and time specified in a notice of adjourned meeting to be issued by Aurora and thanked unitholders for their attendance.

Dated 23/09/16 – Chairman Notification

John Malon, principal of Hive Legal, has been appointed by Aurora as Chairman of the Meeting for the Aurora Fortitude Absolute Return Fund Members meeting to be held on Monday 26 September 2016.

Dated 09/08/16 – Explanatory Memorandum

In relation to members’ resolutions to be voted on by eligible unitholders of the Aurora Fortitude Absolute Return Fund at a meeting to be held on 26 September 2016.

The directors of the responsible entity unanimously recommend that you vote AGAINST all of the resolutions.

Read the Explanatory Memorandum here.

Dated 08/09/16 – Daily applications and redemptions reinstated

Aurora Funds Management Limited (“Aurora”) is pleased to announce that daily applications and redemptions will be reinstated for the Aurora Fortitude Absolute Return Fund. The daily application and redemption facility is available from 8 September 2016.

Withdrawal window of redemption request closed

On 31 August 2016, Aurora announced that investors who had lodged redemption requests after 25 July 2016 but before 31 August 2016, had the option of withdrawing their redemption request.

Aurora advises that the window to withdraw their redemption request has now closed.

Dated 31/08/16 – Reinstatement of Liquidity & Antares Convertible Note Update

Aurora Funds Management Limited (“Aurora”) provides the following update in respect of the Aurora Fortitude Absolute Return Fund (the “Fund”).

Antares Convertible Note Update

As at 30 June 2016, the Fund held investments in Antares Energy Limited Convertible Notes (ASX: AZZG), which had been suspended from trading on the Australian Stock Exchange on 15 September 2015 and remain suspended as at the date of this update.

In February 2016, Aurora made the decision to freeze applications and redemptions in the Fund, on the basis that it could not accurately determine a value for the AZZG Notes.

For the purposes of the June 2016 year-end financial statements, and after careful consideration of all of the available information, Aurora has formed the view that the AZZG Notes should be recognised at a nil value. In forming this view, Aurora has relied on the following information:

 On 8 April 2016, Antares Energy Limited (“Antares”) issued a notice of resumed meeting of noteholders (to be held on 29 April 2016) to, amongst other things, extend the reset date of the AZZG Notes to 31 March 2017 and amend the next interest payment date to 30 April 2017. This meeting did not proceed.

 On 29 April 2016, Antares appointed Bryan Kevin Hughes and Daniel Johannes Bredenkamp of Pitcher Partners as Joint and Several Administrators.

 On 10 May 2016, following a resolution passed at the first meeting of creditors, Quentin James Olde and Michael Joseph Ryan of FTI Consulting replaced Bryan Kevin Hughes and Daniel Johannes Bredenkamp of Pitcher Partners as Joint and Several Administrators of Antares.

 As part of the 30 June 2016 year-end audit procedures, Aurora engaged an external independent valuer in the US, South Texas Reservoir Alliance LLC (STXRA), to perform an independent valuation of the underlying assets of Antares, being Northern Star and Big Star (STXRA conducted a similar valuation for the purposes of Aurora’s 31 December 2015 financial statements). In summarising the STXRA valuation, the following observations are relevant:

o STXRA reviewed, in the course of its analysis, both recent market transactions and public land records to provide both a liquidation and transactional evaluation of the assets;

o The Administrator of Antares, FTI Consulting, made an ASX Announcement on 30 August 2016 calling for Expressions of Interest. In that Announcement, the Administrator advised that circa 5,000 acres of leased land had expired, leaving circa 15,900 acres;

o STXRA indicated that “there is a trend in the E&P industry right now to only focus on core acreage and this leasehold is not considered core in the Midland basin so the number of potential purchasers for this asset are pretty limited”;

o STXRA provided a valuation range of between USD$985,000 (representing 2X the lower end of the Liquidation value) to USD$12,312,500 (representing 5X the upper end of the Liquidation
value) (being AUD$1,279,055 to AUD$15,988,183). The face value of the AZZG Notes is AUD$47.5 million;

o STXRA concluded that Antares, “given its financial situation and inaction on its leases, would probably tend more towards lower end of liquidation pricing”;

o STXRA also noted that “due to Antares lease position falling apart and the recent lower price per acre metrics, it appears that this asset will tend to the lower values”;

o The STXRA valuation range excludes any other liabilities and costs that need to be satisfied by the Administrator;

o The Funds holds circa 12.0% of the AZZG Notes;

o Antares has been trying to sell the asset for a number of years, with no sale forthcoming; and

o The external valuation is based on the value of the acreage, so any costs of administration would need to be paid first.

In addition to the STXRA valuation, Aurora management had regard to confidential information and reports provided by the Administrators.
The fair value of the AZZG Notes is based on significant estimates and judgements adopted by management of Aurora based on the prevailing market conditions and all available information about Antares as at the date of the 30 June 2016 financial report.

Aurora management considered the range of possible values and determined that the fair value of the AZZG Notes held by the Fund should be nil as at 30 June 2016.

As part of the year-end audit procedures, the external auditors (Deloitte) reviewed the analysis prepared by Aurora management along with the associated reports and concurred with the position taken.

Reinstatement of Liquidity

On 25 July 2016, Aurora announced a proposed liquidity solution that, amongst other things, involved the creation of two (2) notional pools, being the Aurora Fortitude Absolute Return Fund General Pool (“General Pool”) and the Aurora Fortitude Absolute Return Fund Note Pool (“Note Pool”). Under this proposal, it was contemplated that the illiquid investment, AZZG Notes, would be transferred to the Note Pool along with some cash to fund the Administration, with the remaining liquid investments being held in the General Pool. All existing investors would then have proportional exposure to both Pools.

In light of the decision above to write down the carrying value of the AZZG Notes to nil as at 30 June 2016:

 the commercial rationale supporting the creation of two (2) notional pools no longer exists, as the associated costs are likely to outweigh the potential benefits; and

 the Fund becomes unfrozen.

As a result, Aurora will no longer create two (2) notional pools but rather will now process all Redemption Requests pursuant to its Constitution, Product Disclosure Statement and any Fund updates.

Update on Redemption Requests

Prior to the announcement on 25 July 2016, Aurora had received a number of Redemption Requests which would have been processed had it not been for the uncertainty around the AZZG Note valuation. For those requests received prior to 25 July 2016, no withdrawal fee will be charged.

In light of the decision not to proceed with the creation of two (2) notional pools, all investors that had lodged Redemption Requests after 25 July 2016 but before 31 August 2016, will now have the option of withdrawing their Redemption Request. This option remains open for seven (7) days. If no withdrawal request is received by 7 September 2016, Aurora will process those Redemption Requests pursuant to its Constitution, Product Disclosure Statement and any Fund updates.

For all Redemption Requests received by Aurora after the 31 August 2016, Aurora will process those Redemption Requests pursuant to its Constitution, Product Disclosure Statement and any Fund updates.

Read more here.

Dated 19/8/16 – Update of Investment in Antares Energy Limited Convertible Notes

Aurora Funds Management Limited (“Aurora”) as responsible entity of the Aurora Fortitude Absolute Return Fund (the “Fund”), provides the following update to investors.

As part of the annual preparation for financial reporting, Aurora advises that it expects to recognise a non-cash impairment charge against the carrying value of the Antares Energy Limited Convertible Notes (ASX Code: AZZG) (“Antares Notes”) held by the Fund as at 30 June 2016.

The impairment charge reflects information that has become available through the audit process and which leads Aurora to believe there is a possibility that the value of the Antares Notes is substantially less than the current carrying value of $1.82 per note.

The exact amount of the impairment charge is subject to finalisation of the Fund’s full year audited financial statements, which will be released on or around 31 August 2016.

We will continue to monitor the situation and provide additional information on any material changes in due course through ASX announcements.

AFARF – Liquidity Solution

Redemption requests can now be submitted immediately, with redemptions to be processed on the last business day of each calendar month, pursuant to the Fund’s Constitution. Due to financial year-end, the next redemption day will be Wednesday 31 August 2016, with proceeds from a redemption request likely to be received within 14 business days thereafter.

How the liquidity solution will work

The Fund will notionally create two (2) pools, being the Aurora Fortitude Absolute Return Fund General Pool (“General Pool”) and the Aurora Fortitude Absolute Return Fund Note Pool (“Note Pool”). The illiquid investment, AZZG, will be transferred to the Note Pool along with some cash to fund the Administration, with the remaining liquid investments being held in the General Pool. All existing investors will have proportional exposure to both Pools.

Investors wishing to withdraw their investment will have redemptions satisfied by a combination of cash from the General Pool (circa 90%, based on the Fund’s current portfolio) and an entitlement to the Note Pool (circa 10%).

The Note Pool will continue to be managed by the Fund and realised over time, which is expected to be in the vicinity of 12 months (although Aurora cannot guarantee this timeframe – a significant timing issue for the Fund is the timing of reports from the Administrator of Antares to creditors, including the Fund). The Fund’s priority is to maximise returns for all investors from the AZZG position.

It is currently contemplated that Aurora will, in due course, establish a separate Special Purpose Vehicle (“SPV”), managed by Aurora, to enable the assets in the Note Pool to be transferred across to the SPV. The SPV would also be able to hold any AZZG Notes currently held by other Aurora Funds. Simultaneously, ownership of the SPV would be transferred in-specie to all unitholders, in proportion to their original investment. This would then enable each of the Aurora funds (impacted by the AZZG Notes) to be unfrozen.

This mechanism will also enable the distribution reinvestment plan to be reintroduced.

Currently, clause 7.7 of the Fund Constitution requires the Responsible Entity to cancel those Units that have been redeemed. Given the creation of two (2) Pools, the Responsible Entity has determined that the rights of unitholders would not be adversely impacted if the Constitution were to be amended to enable units in the General Pool to be cancelled, whilst units in the Note Pool remain on foot.

The current Product Disclosure Statement (“PDS”) contemplates 90% of the Fund’s assets being able to be liquidated within 10 business days. To facilitate the normal functioning of the Fund, whilst the Note Pool is in place, the Fund will revert to the liquidity requirements contained in its Constitution, which is consistent with the Corporations Act.

The PDS will also be amended to make it clear to all new unitholders that any new investment will only have an entitlement to the General Pool.

The Responsible Entity is of the opinion that the creation of two (2) Pools, and establishment of the SPV in due course, will enable existing unitholders to ultimately maximise their investment returns. To facilitate this change to the Fund structure, the Responsible Entity has decided to exercise its power under the Fund’s Constitution to introduce a withdrawal fee equal to 1.85%, excluding any GST, of the redemption amount.

The team at Aurora welcome the resolution of the liquidity situation. With this impediment now removed, we look forward to continuing our strong track record of generating risk-adjusted returns for our investors.

For the full announcement, read here.

AFARF – Letter to Unit Holders

Suspension of applications and redemptions

From 25th February 2016, applications, redemptions and dividend reinvestments for the Aurora Fortitude Absolute Return Fund (Fund) are temporarily suspended. This means you will not be able to apply for or redeem your units in the Fund until further notice.

Background

The Aurora Fortitude Absolute Return Fund holds Antares Energy Limited Convertible Notes (ASX Code: AZZG) (Antares Notes), which have been suspended from trading and are, consequently, currently illiquid. The note is due to be repaid on 31st March 2016, but information has become available to us which leads us to believe there is a possibility that repayment will not occur on this date, and therefore we are unable to accurately determine a value for the Antares Notes. This uncertainty means we do not believe it is the best interest of unit holders to continue to accept applications and redemptions. The Antares Notes currently comprise 8.03% of the net asset value of the Fund, but this percentage may change as the value of the Antares Notes, and the value of the Fund’s other assets change.

Acting in the best interests of Investors

Aurora has determined that, in these circumstances, it is in the best interest of investors in the Fund as a whole to temporarily suspend applications and redemptions to ensure all investors are treated equally so there is fair treatment between investors who choose to remain invested in the Fund and investors who choose to exit the Fund in the short to medium term.

What this means for you

The Fund has ceased accepting any applications for units or processing redemption requests effective from 25th February 2016. Any application funds received will be returned to you. The temporary suspension does not affect the distributions paid by the Fund. As more information becomes available to us, we will be in better to position to advise when liquidity is likely to be restored.

If you currently have a Distribution Reinvestment Plan in place, your future distributions will only be paid via direct credit into your nominated account and cannot be reinvested in the Fund until further notice. You will need to provide your bank account details by contacting our security registrar, One Registry Services on +61 2 8188 1510.

Further information

If you have any queries or concerns, please contact us.

Telephone: 02 9080 2377 or 1300 553 431 (within Australia) or 0800 447 637 (within New Zealand)
Email: enquiries@aurorafunds.com.au
Post: PO Box R1695, Royal Exchange NSW 1225
Dated 18/9/2015 – Annual Reporting and Fund Disclosure as at 30th June 2015

Asset Allocation: 100% Equities

Liquidity Profile: 90% within 2 weeks, additional 10% of special situations due to settle within 4 months.

Note 1 – The fund uses leverage through its Prime Broker facility with UBS AG. A maturity profile cannot be disclosed as the term of the borrowing is dependent upon portfolio construction (subject to the Prime Brokerage Agreement
remaining in place).

Leverage: 55.15%

Derivative Counterparties: UBS AG.

Investment Returns: +1.74% for the 2014/15 financial year.

ICR to 30 June 2015: 1.56%

Key Service Providers: No change.

Dated 31/3/2015 – Distribution Update

The Directors of Aurora Funds Management Limited, as Responsible Entity for Aurora Fortitude Absolute Return Fund have announced a change to its quarterly distribution rate, down from 1.5% per quarter to 1% per quarter. The change in the distribution rate takes into account the condition of financial markets, forecast distribution income from the Fund’s investments and the balance sheet position of the Fund. It is anticipated franking credits will be distributed at the end of the financial year.

Dated 22/8/2014 – Annual Reporting and Fund Disclosure as at 30th June 2014

Asset Allocation: 100% Equities

Net Equities Exposure: 8.36% long

Liquidity Profile: 70% within 2 weeks, additional 11.4% of special situations due to settle within 4 months

Maturity profile of the Fund’s liabilities:

Leverage: 29%

Derivative Counterparties: UBS AG.

Investment Returns: 4.55% for the 2013/14 financial year

ICR to 30 June 2014: 1.93%

Key Service Providers: No change.

Dated 14/2/2014 – Amendment to Fees and Expenses

We wish to give notice of our intention to reintroduce an expense recovery for the Fund. This has been in place since March 2012 and was removed in error in the recently issued PDS.

Effective from 18 March 2014 the Fund will reintroduce a normal expense recovery.

Dated 18/9/2012 – Distribution Update

We advise that effective for the 3-months ended 31 December 2012 (and quarterly thereafter) the minimum distribution payable by the Trust will reduce from 2.0% of NAV per Unit per quarter to 1.5% of NAV per Unit per quarter , plus franking credits.

This reduction reflects the fact that the official cash rate of the Reserve Bank has reduced by 1.50% since November 2011.

The final distribution will be the higher of 1.5% of NAV or the excess net income and realised capital gains generated during the year over the interim distributions paid and Fund expenses.

Dated 2/7/2012 – GST Update

On 29 May 2012, amendments to the GST financial services regulations were released, including wide ranging new regulations relating to the reduced input tax credit treatment of supplies acquired by managed investment schemes and superannuation funds. The new rules apply from 1 July 2012.

The amendment regulations introduce a new item 32 of GST regulation 70-5.02(2) under which supplies acquired by a ‘recognised trust scheme’ on or after 1 July 2012 will be eligible for a 55% reduced input tax credit (RITC). Certain specified services will remain eligible for the 75% RITC.

Dated 30/6/12 – Change of Administrator

Please be advised that from 1 July 2012 the Administrator for all applications and redemptions for the Aurora Fortitude Absolute Return Fund (APIR Code: AFM0005AU) will change to Unity Administration Pty Ltd. New email contact: aurora@unityadmin.com.au

Dated 11/4/2012 – Franking Credits

The Fund seeks to achieve a high rate of return, comprising both income and capital growth (and preserve the capital of the Fund) over both rising and falling equity markets through using many different investment strategies that allow the Fund to have very little correlation to the Australian stock market. These strategies may include: long/short strategies, convergence trading, merger and acquisition trading, arbitrage opportunities, derivative strategies.

Within the implementation of this strategy, the Investment Manager believes that the Australian equity market presents franking credit opportunities that are being ignored and/or mispriced by the market. As such, the Fund intends to seek to take advantage of these opportunities as they arise.

Accordingly, from 14 May 2012, the value of the franking credits earned by the Fund will be included in the performance returns of the Fund – including within the calculation of Application/Redemption prices and management/performance fees.

Dated 23/3/2012 – Amendment to Fees and Expenses

We wish to give notice of our intention to implement an expense recovery for the Fund, whilst being partially offset by a reduction in the overall management fee.

Effective from 1 May 2012:

- the management fee will be reduced by 0.05% per annum. Accordingly, the management fee will fall to 1.48625% (including GST) per annum; and
- the Fund will introduce a normal expense recovery. This allows for the recovery of expenses incurred in relation to the proper performance of our duties. Since inception, and over the growth phase of the Fund, we have borne these expenses internally. Now that the Fund is of a more mature size, we feel that it is reasonable that they be borne by the Fund – particularly noting that its already small impact will continue to reduce as the Fund grows further in size.
Dated 1/1/2012 – Minimum Investment Amount Reduced to $10,000

Please be advised that the Minimum Investment amount referred to in the PDS dated 7 October 2010 has been reduced from $100,000 to $10,000, with additional investment amounts reduced from $50,000 to $5,000. The minimum redemption amount has also been reduced to $5,000 or balance of holdings.

Dated 7/6/2011 – Buy-Sell Spread Reduced

Please be advised that the buy-sell spread for the Fund has been reduced from 0.20% to 0.02% from 7^th June 2011.

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