Blue Sky in discussions to receive lifeline from US investment firm
Written on the 27 July 2018 by David Simmons
Embattled investment company Blue Sky Alternative Investments (ASX: BLA) has confirmed rumours that it is in discussions with a US based investment firm that could potentially save the company.
Following a report on Thursday by The Australian Financial Review, Blue Sky has confirmed rumours that it is in talks with Los Angeles-based investment firm Oaktree Capital Management.
In a release to the ASX, Blue Sky confirmed that is "in discussions" with Oaktree in relation to a possible investment by Oaktree in Blue Sky's business.
"These discussions are subject to negotiation and agreement as to investment structure and due diligence and there is no certainty that they will result in a transaction," says Blue Sky.
The discussions with Oaktree are part of a strategic review, announced by Blue Sky in May, to ensure each of its business units remains competitive.
On Thursday, the AFR reported that Oaktree is working on a debt investment that would support the balance sheet of Blue Sky and its underlying investments.
An investment by Oaktree could not come at a better time for Blue Sky, which has been under siege from investors following a damning report by US-based short seller Glaucus.
According to the AFR, the deal would give Blue Sky a significant enough amount of funds to demonstrate to investors that is has sufficient liquidity.
Following the AFR report, Blue Sky gained 9.9 per cent to land at $1.84 per share.
However, the investment firm's shares plummeted earlier this year after Glaucus said the business overstated its fee assets under management while charging expensive fees to investors.
When the Glaucus report was released, BLA shares were trading at around the $11.50 mark, and have since slumped to $1.50.
The fallout from the Glaucus report led to two board purges and the resignations of managing director Robert Shand, followed by chairman John Kain, along with board members Elaine Stead and Nicholas Dignam.
Shares in Blue Sky closed 9.25 per cent up to $1.83 per share on Thursday afternoon.
Author: David Simmons