The board of Edinburgh Worldwide Investment Trust intends giving its shareholders an exit plan as part of its defence against constant attacks from a New York hedge fund.
It is proposing a tender offer for up to 100% of its share capital as the board says it has “exhausted every reasonable and equitable solution with Saba”.
It adds that Saba’s “continued campaign leaves it with no alternative but to propose a Tender Offer to enable eligible shareholders to elect for a significant return of capital.
The offer would enable shareholders to retain potential upside from Elon Musk’ SpaceX.
“This is a key differentiator to Saba’s recent proposal, which would force shareholders to either give up SpaceX or become trapped in a Saba-controlled vehicle,” it says.
Shareholders are urged to support the Tender Offer “to secure a definitive and fair exit opportunity and bring closure to the uncertainty caused by Saba”.
The Tender Offer requires approval from a simple majority of votes cast (50%) and can therefore proceed independent of Saba’s support. A circular detailing the proposal for the Tender Offer will be published in due course.
Jonathan Simpson-Dent, chair of EWIT, commented: “We have reached the end of the road with Saba’s obsession to break the status quo and its continuing disregard for the expressed wishes of other shareholders.
“This regrettable but necessary step is intended to protect shareholders from being trapped by Saba, offering a significant cash exit close to net asset value (NAV), while preserving exposure to SpaceX until a future liquidity event, after which shareholders would receive a further cash payment.
“Shareholders have twice delivered a clear message by rejecting Saba’s attempts to take control of the company.
“Yet within weeks Saba launched a third campaign, proposing board nominees already rejected and a proposal that would effectively force shareholders to choose between remaining in a Saba-controlled vehicle or giving up any future upside from SpaceX.
“We cannot allow the company to remain caught in a cycle of disruption driven by a minority shareholder whose objectives and commercial self-interest are fundamentally misaligned with those of the wider shareholder base.”
Mr Simpson-Dent added: “Frustratingly, the current regulatory framework permits a determined minority shareholder to effectively gain board and managerial control through repeated actions which explicitly oppose the desires of other shareholders.
“While we have galvanised the FCA into action, addressing this systemic problem will take longer than Saba’s repeat smash and grab cycle – regrettably, we believe it is only a matter of time before Saba succeeds.”
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