Lazard World Trust Board responds to City of London letter – On 15th August, we reported that City of London Investment Management (CLIG), who run the investment trust City of London (CTY), has written a letter to the Directors of Lazard World Trust Fund (WTR) explaining its intention to oppose renewing the WTR’s buyback authority at the EGM to be held on 30 August, 2018. Click here to see a copy of the text of the letter
In their response, Lazard World Trust Fund clarify the reason for asking shareholders at the EGM to be held on 30 August 2018 to approve the renewal of the company’s buyback authority and how it and the increase in dividend have benefited shareholders in the past by narrowing the discount.
Copy of the response:
“The Board of Lazard World Trust Fund notes the publication of the letter from City of London Investment Management to the Directors dated 14 August 2018 explaining its intention to oppose renewing the Company’s buyback authority at the EGM to be held on 30 August 2018.
The Circular of the Company, published on 9 August 2018, set out details of the proposal to renew the Company’s authority to make market acquisitions of its Shares. In particular, it highlighted the Board’s broader strategy to enhance the demand for Shares and broaden the appeal of the Company to potential new investors. This includes the adoption of an enhanced dividend policy in April and, more recently, the implementation of share buyback programme in order to actively manage the imbalances between supply and demand of the Shares, thereby reducing the volatility of the discount.
Following the implementation of the share buyback programme on 1 June 2018, the Shares have traded at an average discount of 3.0 per cent. to Net Asset Value, with a high of 4.5 per cent. and a low of 1.3 per cent. This compares with an average discount to Net Asset Value of 8.8 per cent. for the year ended 31 March 2018, with a high of 14.2 per cent. and a low of 1.9 per cent.
Since the implementation of the share buyback programme, the Company has repurchased c.3 million shares, representing 6.5 per cent. of the Shares in issue at the date of the 2017 AGM, representing in excess of 50 per cent. of the limit of the authority given at that meeting.
Notwithstanding the 2018 AGM contains the usual resolution for shareholders to renew the buyback authority, based on the recent volumes repurchased by the Company, it is possible that the Company will exhaust its buyback authority from the 2017 AGM prior to the 2018 AGM to be held on 20 September 2018. The Board considers that it is in the best interests of Shareholders as a whole that it has the requisite authority to continue to actively manage the discount at which the Shares trade and would therefore like to retain the flexibility to continue to buy back Shares ahead of the 2018 AGM in the event that the buyback authority obtained at the 2017 AGM is fully utilised prior to the 2018 AGM.
The Board therefore recommends that Shareholders vote in favour of the resolution at the Extraordinary General Meeting (the deadline for the return of Forms of Proxy or Forms of Direction, as required, are 2.00 p.m. (CEST) on 28 August or 24 August, respectively). In addition, the Board confirms that, subject to the passing of the annual continuation vote at the 2018 AGM, the Board intends to continue to utilise the share buyback programme in order to actively manage the imbalances between supply and demand of the Shares.”
WTR : Lazard World Trust Board responses to City of London letter