The board of Alliance Trust has unanimously recommended that shareholders in the investment company vote against resolutions put forward by US-based activist hedge fund manager Elliott Advisors at the annual general meeting next month.
In a statement to the stock exchange Alliance Trust said the criticisms put forward by Elliott Advisors in their requisition notice earlier this month were “misguided” and that “we are fully aware of a company’s need to address its shareholders’ concerns, and we absolutely refute the suggestion that we have not provided meaningful responses to Elliott on the matters it has raised”.
The hedge fund wants to appoint three new directors to the board but Alliance Trust argues that the proposed directors “cannot be judged to be independent” and is “concerned that Elliott may seek to exert undue influence” as it seeks to pursue a short-term agenda aimed at selling its holding in the company.
Alliance Trust stated: “Given the size of its position, this would involve disruptive actions which are not in the long term interests of our shareholders.” It argued that some of the activist investor’s other proposals such as tendering for 40 per cent of the company’s outstanding shares at a very narrow discount, which would require a significant liquidation of assets, “potentially threatens the very existence of the Company”.
The investment trust added that it had a clear strategy in place and had already planned to start a search for a new “truly independent” non-executive director in the summer.
Karin Forseke, chair of Alliance Trust added: “Elliott’s proposed resolutions are completely unacceptable. The Board believes that they are a pre-cursor for further disruptive actions from Elliott which are likely to focus solely on engineering an exit from their shareholding and would not be in the interests of all of our shareholders.
“We do not consider their proposed directors to be independent and believe that Alliance Trust’s current Board is diverse, dynamic and more than fit for purpose. We pride ourselves on our transparency and honesty with all our shareholders, and as a Board we will not lie down and allow one shareholder to dictate the future of Alliance Trust.”
Katherine Garrett-Cox, chief executive of Alliance Trust, claimed that the changes made to the investment team in 2014 have already had a strong positive impact, “with encouraging performance versus our peers”.
“The Company is performing well and we believe our strategy of responsible investment is creating long term value for our shareholders,” she added.
