NEW YORK, April 19 (Reuters) – Investors owning more than half the assets in Warren Lichtenstein’s largest hedge fund have asked to pull out, resisting a push to convert the fund into a publicly traded partnership, the Wall Street Journal said on Sunday.
Lichtenstein had proposed spinning Steel Partners II into WebFinancial, a public company controlled by his firm Steel Partners that aims to be a holding company for entities such as small banks and insurers, the report said.
In a letter sent to clients last week, the hedge-fund manager wrote that investors representing only 36 percent of the assets in Steel Partners II Master Fund had agreed to support the conversion plan, the report said.
The rest of the investors did not vote or asked to pull out of the fund, the Journal said. A non-vote is equivalent to asking for money back, according to a March letter from Lichtenstein that outlined the options facing investors.
Despite the lack of substantial support, Lichtenstein told clients he would still proceed with the conversion, the report said.
“We would like to take this opportunity to inform you that the name of ‘WebFinancial L.P.’ has been changed to ‘Steel Partners Holdings L.P.,” Lichtenstein wrote in last week’s letter, according to the report.
A spokesman for the fund was not immediately reachable for comment.
Separately, Bank of America Corp (BAC.N) and ACF Industries have sued Steel Partners accusing the activist hedge fund committed fraud by not properly advising investors of its plans to go public, according to court documents filed in January.
The lawsuit charges that the hedge fund was not in compliance with its obligations to investors as it pursued its plan to become a publicly traded partnership because it failed to give ample notice of the plan or an opportunity to vote on the proposal. (Additional reporting by Svea Herbst-Bayliss in Boston) (Reporting by Jui Chakravorty Das; Editing by Muralikumar Anantharaman email@example.com; +1 646 223 6033; Reuters Messaging: firstname.lastname@example.org )