Linus Uhlig, Investment Week, 9 January 2025:
The board of Herald investment trust has criticised Saba for its proposed cash exit offer to shareholders should it gain control of the trust’s board.
Earlier today (9 January), Saba said it would “encourage the new board to offer all shareholders a 100% cash exit at 99% of net asset value, if they wish”, which is almost in line with the price at which Herald shares are currently trading.
Saba added that it would “support further changes so this cash exit would be overseen by a fully independent board and would not expect it to occur for at least a year thereafter, ensuring portfolio value is maximised”.
However, Herald hit back at the New York hedge fund, slamming Saba for “not proposing to offer 99% of the value of today’s NAV”.
Instead, by offering shareholders an exit after “at least a year”, the current board argued that “significant value could be lost from the underlying portfolio in anticipation or consequence of Saba’s known selling appetite”.
Herald’s board added that, “as far as the board are aware, none of these shareholders have expressed a wish for Saba to take over the management of the company”, and it once again urged all shareholders to vote against Saba’s resolutions at the 22 January general meeting.
James Carthew, head of investment company research at QuotedData, said: “The basic message from Herald’s board here – that an exit at a 1% discount to today’s NAV is not and could not realistically ever be on the table – is a straightforward one and cannot be argued with.”
Even more concerning, according to Carthew, is “the tortured logic in Saba’s statement in which it claims to know what an independent board would do at some point in the future, clearly implying that it believes that it can direct the board’s actions”.
“We cannot get our heads around how a board consisting of Saba employees, Saba appointees, and persons that these Saba-connected directors later co-opt onto the board could ever be construed as independent,” said the QuotedData head of investment trust research.
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