The nearest parallel might be the heavyweight fights between Muhammad Ali and Joe Frazier, which for those who aren’t old enough took place in the early 1970s.

The first two fights were held in New York, and the third in Manila; two were for the world title. All were brutal affairs, with both pugilists ending up in a near death situation after the Thrilla in Manila. Frazier won the first fight (on points) while Ali won the next two (on points and a TKO.)

Closer to home, a couple of parties — both of whom also aren’t fondly disposed to each other — are set for their second, winner take-all-battle.

Last time out it was Sprott Asset Management — through its Physical Gold Trust — versus Central Gold Trust. Both entities provided a passive investment in gold bullion, though the Sprott fund trades much closer to its true value, in part because it offers more attractive redemption features.

When that battle — which started in June 2015 and involved proxy fights, court challenges and hearings before the regulator  — ended nine months later, Sprott came out on top, winning  overwhelming support from Central’s unit holders and expanding its asset base by about $1 billion.

(Just like Ali/Frazier there were lots of damage, with Central on the hook for almost $3 million of costs.)

More importantly, unit holders in Central’s Gold Trust, who vended in their units, owned an investment that traded very close to its net asset value — rather than at a healthy discount.

Now, 14 months after Sprott emerged as the winner, the two parties are preparing for Battle No 2. On Wednesday, Sprott filed an application with the Court of Queen’s Bench of Alberta, to have the shareholders of Central Fund of Canada Ltd. exchange their shares for units of the newly created Sprott Physical Gold and Silver Trust.

Central Fund of Canada Ltd., formed in 1997, is a similar type of entity to Central Gold Trust, formed in 2003, and both were created and originally controlled by the Spicer family.

In effect, under a plan of arrangement, the new Trust wants to purchase the gold and silver assets of Central Fund — and pay for that purchase by issuing units. For Central Fund shareholders, the exchange would be on a tax-free basis.

If the court agrees with that request, then Sprott will presumably requisition a shareholder meeting at which its proposal will be put forward.

In a release Sprott said it has the support of a number of key Central Fund shareholders. Central Fund is a dual class of share company: 40,000 common shares (with a book value of $19,458) and 252.1 million Class A non-voting shares (with a book value of $2.398 billion.)

At last count (Jan. 31 2017) Central Fund had $3.344 billion of assets — though the market cap is about 10 per cent less.

But the Central shares, which can’t be redeemed for physical bullion (though they can be redeemed, at a discount, for cash) trade at a discount to NAV. In other words there are almost no good outcomes for a Central shareholder who wants out.

While the overall objective of that court application is the same as what Sprott wanted last time — to provide shareholders of Central Fund with an investment that trades very near to net asset value and which offers more attractive redemption features, including physical redemption — the approach is a little different.

Last time Sprott, initially, wanted to replace the administrator of the Central Gold Trust, an agreement that was about to expire. As the battle developed — and despite Central Trust winning the first few rounds — unit holders, when finally given a choice, signed up for Sprott’s offer.

As with the first stoush, Sprott has much of the same back-up crew as last time. Most notable is that its retained Stikeman Elliott.

Financial Post

bcritchley@postmedia.com