(Alliance News) - Edinburgh Worldwide Investment Trust PLC on Monday responded to criticism from its largest shareholder, activist hedge fund Saba Capital Management LP.
Earlier the same day, Saba had noted that fellow EWIT shareholders had rejected EWIT's tender offer.
EWIT shareholders on Friday voted against the Edinburgh-based investment firm's tender proposal, which it said was intended for shareholders to realise value "while retaining exposure to SpaceX".
Shareholders representing 68.4% of EWIT's issued share capital voted on the proposal. Of the votes cast, 46.2% were in favour of the offer, with 53.8% against. EWIT said the votes against were made "almost entirely by Saba and two other institutions." Saba has a majority stake of about 30% in EWIT.
As a result, EWIT on Friday said it is "making plans to implement the alternative tender offers that Saba has publicly stated it would recommend and which will at least give shareholders the choice of exiting at close to NAV or remaining invested." EWIT has called this the "further tender offer".
Whilst Saba on Monday welcomed the fact that EWIT's own tender offer had failed, it also it would not support any further proposals from EWIT's board ahead of the company's April 30 annual general meeting.
According to EWIT, this is a "striking" contradiction. EWIT is arguing that, by refusing to support any further proposals by EWIT's current board, Saba "has now chosen to block its own proposal which it claims it is still endorsing".
Saba's proposal gives EWIT shareholders three options, contingent on the election of a new Saba-nominated board. EWIT investors can tender their shares immediately and exit at net asset value less costs. Alternatively, they can tender following a potential SpaceX initial public offering or liquidity event - but prior to any potential change in investment mandate - at NAV less costs. The final option is for investors to retain their EWIT holdings.
Saba has proposed to elect Gabriel Gliksberg, Jassen Trenkow and Michael Joseph to EWIT's board. Gliksberg is the founder of ATG Capital Management, Joseph is a chartered accountant and deputy chief investment officer of Stansberry Asset Management and Trenkow is a former staffer of Barclays PLC and Goldman Sachs Group Inc.
EWIT shareholders will vote on Saba's "enhanced liquidity proposal" and board nominees at the AGM on April 30. EWIT Chair Jonathon Simpson-Dent has urged shareholders to "vote for the board's resolutions and vote decisively against Saba's attempt to take control of your company."
In effect, that would suggest voting against the election of Saba's nominees.
Saba has backed its nominees, whilst criticising Simpson-Dent and his fellow directors for being "out of touch with their own shareholders".
Simpson-Dent on Monday responded: "Saba has never taken the time to engage with retail shareholders or the majority of institutional shareholders, despite repeated invitations. A significant number of shareholders have once again expressed their desire not to be in a Saba-controlled vehicle.
Simpson-Dent previously has argued that Saba is trying to take control of the company. Saba in March conceded that, "in the event the new [EWIT] board elects to run a process to change the company’s manager, we do intend to submit for consideration as part of the process".
Back in January, 93% of EWIT shareholders, excluding Saba's voting rights, rejected Saba's proposals to replace the EWIT board. Saba had attempted a similar crusade a year earlier, which also failed.
Saba on Monday argued that EWIT's directors have failed to address what Saba sees as underperformance in recent years, prioritising "self-interests at the expense of shareholders' financial interests".
EWIT shares traded 2.8% lower at 221.25 pence on Monday morning in London, having risen 46% over the past 12 months but fallen 39% in the past 5 years.
"The new directors put forth by Saba for election at the upcoming AGM possess the investment management and board experience necessary to administer [Saba's] proposal, which would offer shareholders greater optionality, more effective management of any tax consequences and the ability to see the SpaceX position through to IPO," Saba stressed on Monday.
Commenting on the ongoing tussle, Association of Investment Companies Chief Executive Richard Stone on Friday said "Saba's vote against the board's exit tender proposal has deprived other shareholders of an opportunity to exit their investment at close to net asset value while retaining the potential future value from SpaceX."
Stone added that AOIC has put forward suggestions to the UK Financial Conduct Authority "to address gaps in the listing rules that have been exposed by Saba's actions."
By Holly Munks, Alliance News reporter
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