ASX 200 (XJO) flat, Magellan (ASX:MFG) shares lower

The ASX 200 (ASX: XJO) is currently flat after initially being down. COVID-19 impacts continue to make the news.

Victoria is now entering stage 4 restrictions. Victorians will have to abide by a curfew and later today we’ll learn which businesses will be allowed to continue to operate and which ones will have to reduce their trading or even shut. NSW reported another COVID-19 case which had no links to other cases.

Magellan (ASX: MFG) announces funds restructuring

Magellan announced it’s going to merge its unlisted open-ended Magellan Global Fund, its listed open-ended Magellan Global Equities Fund (ASX: MGE) and its listed closed-ended Magellan Global Trust (ASX: MGG).

The new fund will be a single fund with two unit classes – an open class and closed class. It’s inteded for both classes of units to be listed on the ASX.

After the restructure, the enlarged Magellan Global Fund – with funds under management of around $15 billion – will undertake a 1 for 4 entitlement offer to its shareholders to subscribe for new closed class units with an attached bonus three year option. People will be able to buy new units at their net asset value (NAV) and receive 7.5% more shares. The option price will be a 7.5% discount to the NAV at the time of exercise.

Magellan also proposes to issue a bonus option to closed class unitholders on the basis of one option for every two closed class units held with each option exercisable into one closed class unit at an exercise price at a 7.5% discount to the NAV.

Magellan will pay the full costs of implementing this restructuring using existing financial resources, including undrawn debt.

Hamish Douglass, Chairman of Magellan, said: “We believe that combining Magellan’s three core global equities into a single, unified trust with a listed open class unit, which can also be transacted off-market, and a listed closed class unit is a ground-breaking innovation. We expect it will lead to simplification and efficiencies for unitholders and importantly should improve the trading price of closed class units.”

The Magellan share price is down 0.4%.

SEEK (ASX: SEK) cancels FY20 dividend

This morning, SEEK became the latest company that’s decided not to pay a final dividend in FY20. It recently paid a 13 cents per share interim dividend last month, which was down 46% compared to the interim dividend paid in FY19.

According to the ASX release, SEEK has made this decision in order to preserve capital in the current uncertain environment. The funds will instead be used to support the company’s long-term growth strategy.

This comes after SEEK recently increased its funding flexibility through the issuance of $75 million of subordinated notes. It has now also secured an extension of its debt maturity profile to November 2022.

The company assured investors it is operating within its debt covenants and as at 30 June 2020, had borrower group cash and undrawn facilities of around $593 million.

The SEEK share price is down 2%.

Tabcorp (ASX: TAH) FY20 profit fall

The gambling business announced that it expects FY20 EBITDA before significant items (click here to learn what EBITDA means) will be in the range of $990 million to $1 billion, compared to $1.12 billion in FY19.

Net profit after tax before significant items is expected to be in the range of $267 million to $273 million.

Tabcorp has been reviewing the value of its assets on its balance sheet and has announced that it expects to incur impairment charges of between $1 billion to $1.1 billion in FY20.

The impairment relates to the Wagering & Media and Gaming Services businesses. It relates to the COVID-19 impacts on the business, consumers and economy, and the amount of competition and structural change in the Wagering & Media business’ digital market.

Tabcorp Managing Director and CEO David Attenborough said: “COVID-19 has materially impacted our Wagering & Media and Gaming Services businesses. We are facing into a challenging and uncertain environment, and the current operating conditions and those expected into the future are relevant factors in assessing the value of the goodwill in those businesses at this time.”

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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