Alliance Trust has announced that it has entered into an agreement with its largest shareholder, Elliott International, L.P., The Liverpool Limited Partnership and Elliott Associates L.P. (collectively Elliott), to repurchase all ordinary shares in the Company in respect of which Elliott has a disclosable interest – this being 19.75% of Alliance Trust’s issued share capital. The repurchase requires shareholder approval but, assuming that this is received, Alliance Trust says that the repurchases will be undertaken shortly after its forthcoming General Meeting and will be conducted in five equal tranches, each at a 4.75% discount to the then prevailing NAV.
Alliance Trust’s board says that it believes that the proposed repurchase is in the best interests of the Company and its shareholders as a whole; it will provide an NAV uplift of approximately 1% to remaining shareholders. The board also says that this will allow the company to move forward with its multi-manager proposal against the backdrop of a share register that is settled and supportive for the longer term. Reducing the size of the fund in this way tends to increase ongoing charges as a trust’s fixed costs are spread over a smaller asset base. However, the board says that, “the targeted annual costs of the ongoing Company will remain competitive, amounting to no more than 65 bps”. Whilst the current proposals do not appear to give other shareholders the opportunity to exit at this time, the board has said that, going forward, it is prepared to repurchase shares at or around the same 4.75% discount level.
Alliance Trust to repurchase Elliott Advisors’ 20% stake : ATST