Alliance Trust rejects activist proposal
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Alliance Trust has called on its shareholders to reject a proposal from Laxey, an activist investor, to take a stricter approach to controlling the discount at which the trust’s shares trade.
Laxey, a hedge fund which holds a 1.7 per cent shareholder stake in Alliance, argued the investment trust should adopt a new mechanism to control its discount. It has called for the notion to be recognised at the next general meeting. Laxey is specifically calling for the current discount to be “substantially” narrowed.
Alliance Trust, a member of Britain’s FTSE 100 stockmarket index, has rejected the proposal. It says it will impair the flexibility of its investments, increase investors’ expenses and endanger the trust’s ability to pay a growing dividend in the long term.
In a circulated notice of the annual meeting, the board has concluded that the “proposal would not be in the best interests of your Company and its Shareholders as a whole”.
Lesley Knox, the chairman of Alliance Trust, says “we are focused on managing the Trust in the best interests of these long-term shareholders, not those who are motivated purely to make a short-term gain.”
The issue will be raised for the consideration of shareholders at the next general meeting, scheduled for May 20, 2011.
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