EWIT urges shareholders to reject latest Saba tilt

(Sharecast News) - Edinburgh Worldwide Investment Trust has urged shareholders to reject the latest approach from Saba Capital, accusing the US hedge fund of deliberately seeking to "mislead". The investment trust has been targeted by Saba, its biggest investor with a stake of around 30%, several times over the last year. Most recently it has called on shareholders to vote against the re-election of the current board.

In response, earlier this month EWIT launched a tender offer to wind itself up. It told shareholders the offer "gives you a choice. Do you want to realise value from your investment before a likely change of control, or do you want to remain invested and see how the company evolves under Saba's influence and control?"

Under the terms of the tender offer, all shareholders will be given the opportunity to tender their shares in return for the value of the liquid portfolio, representing around 81% of total assets.

Cash from that sale will be returned in early May, while trust manager Baillie Gifford will sell EWIT's shares in SpaceX whenever possible. Of EWIT's £728m of assets under management, SpaceX accounts for 16.3%.

However, in an open letter sent late on Monday, Saba said it would offer an "enhanced liquidity proposal" if a new independent board was elected. The proposal would give shareholders three options, it said: tender immediately and exit at net asset value less costs; tender following a potential SpaceX IPO; or retain their investment in the company.

Saba argued that its offer was "significantly superior in structure and governance" to EWIT's, and gave shareholders a "clear exit, on their own terms, at a time of their own choosing, with no complex instruments and no illiquid securities".

It also hit out at EWIT's chair, Jonathan Simpson-Dent, accusing him of "describing EWIT as a cherished British institution and a national treasure, rather than defending its track record of awful performance. This is because its track record is indefensible."

However, in response EWIT said Saba's letter appeared designed "in both tone and style...to confuse and mislead" shareholders.

Simpson-Dent continued: "Shareholders should not be fooled, we have been here before. Saba continues to seek control despite shareholders having expressly rejected its proposals twice as they continue to benefit from strong results over the last two years.

"If Saba wants to offer superior value, it should follow established market practice and make a formal takeover offer to all shareholders.

"Instead shareholders are being presented with proposals that introduce uncertainty, and which Saba itself does not have the ability to deliver. Shareholders should be not misled or distracted."

Investors have until 8 April to vote either for or against EWIT's tender offer.