Shares in beleaguered, Brisbane-based fund manager Blue Sky Alternative Investments tumbled 15 per cent on Tuesday after it completed a long awaited review of its operations, and revealed it expects a $59.4 million hit to its bottom line for the full year.
The company also announced decisions to terminate business lines and individual real estate projects, and revealed it has burned through significant amounts of cash over the past three months.
"The review has resulted in a restructure to allow the company to focus on managing alternative asset classes that are scalable, profitable, institutional grade and demonstrate competitive advantage," chief executive Kim Morrison said in a statement to the ASX.
“Blue Sky will close its domestic hedge fund business, and will progressively exit its property management rights businesses and regional real estate development projects."
Blue Sky has been under attack from US activist short selling firm Glaucus for months over disclosure issues. In an explosive report released in March, Glaucus claimed the company was "wildly exaggerating" the amount of fee-earning funds it manages, and charging its investors "extortionate" fees.
Blue Sky initially rejected Glaucus' claims and called on the firm to be investigated by the corporate regulator. In April, the company's CEO Rob Shand resigned, and the company subsequently agreed to provide more transparency about its business in a bid regain the faith of sharemarket investors.
Shares in the company have plummeted 87 per cent since December.
On Tuesday, Blue Sky said it would terminate three retirement living projects after changes to planning regulations. It also terminated one student accommodation project, deferred another, and placed one under strategic review.
The company, which raised $100 million from investors in March, said it is forecasting a net cash position of just $32.3 million for the end of the financial year.
The $59.4 million hit to profits will be comprised of valuation adjustements, balance sheet write downs including loan impairements, costs relating to the termination and defferal of real estate projects and general restructuring.
“In reshaping our business and making some tough decisions we believe that we are establishing the best platform to deliver growth for our shareholders and investors over the medium and long term,” Mr Morison said.