Under-pressure investment house Alliance Trust came out fighting yesterday as its war of words with rebel investor Elliott intensified.
The two sides are locked in a bitter battle over the future management of the Dundee-based Trust after Elliott called on fellow shareholders to back its proposal for the appointment of three new independent non-executive directors to the board.
The hedge fund holds more than 12% of the issued capital of the Trust and is its single largest shareholder.
It has called for change after voicing concerns about the Trust’s long-term under-performance, cost base and corporate governance under chief executive Katherine Garrett-Cox and chairman Karin Forseke.
On Wednesday, Elliott issued a critical response to the Trust’s circular to shareholders last week in which they urged investors to vote down the change proposal.
The Trust yesterday fought back with a new statement to the market of its own.
The company said they did not intend restating all of their reasoning for urging shareholders to vote against the Elliott requisition, but had a “responsibility to correct and clarify some of the more misleading assertions” in Elliott’s most recent public missive.
The Trust’s statement focused on four topics: investment performance, costs and corporate governance.
On the first point, the Trust said total shareholder return the measure it believes is the most relevant performance metric for the majority of its shareholders was in the top half of its peer group “for the majority of time periods most commonly referred to by investment professionals”.
On costs, Alliance again refuted Elliott’s allegation that its true cost base was higher than reported, and said its track record of dividend income was “important” to its shareholder base.
On the latter point, the Trust again stated its belief that the nominees named in Elliott’s proposal for election to the board could not be judged as independent.
However, it will begin a search for a new independent non-exec this summer.
Individual shareholder society ShareSoc, which has previously sided with Elliott, weighed back into the debate yesterday saying the Trust’s rejection of the proposals “seemed unwise” and said requisitioning resolutions was “simple democracy”.
It added: “We would have preferred to see a more considered and less hectoring response from Alliance.”