Under-pressure investment house Alliance Trust has received a major boost in its bid to fend off a boardroom challenge from rebel shareholder Elliott Advisors.
The US hedge fund has raised concerns over investment underperformance, costs and corporate governance at the Dundee-based trust and is attempting to force change with an annual general meeting requisition calling for the election of three new independent non-executive directors to the board.
The company and Elliott, the trust’s single largest shareholder with a holding of around 12%, have been at loggerheads in recent weeks as they attempt to persuade shareholders to back their respective positions.
The directors of DC Thomson, the Dundee-based media group which publishes The Courier, have given the trust a boost by publicly declaring they will vote against the Elliott proposal.
The intervention is significant as DC Thomson, which never normally comments on matters relating to its investment portfolio, is the second largest shareholder on the trust’s register with a holding of around 5.5%.
In a statement, the directors said they saw nothing to persuade them to vote in favour of Elliott’s resolutions calling for the election of Peter Chambers, Rory Macnamara and Anthony Brooke to the board.
“DC Thomson has been a shareholder in Alliance Trust (AT) for well over a hundred years; like AT, our investment philosophy is based on long-term value creation,” the directors said.
“Of course, as an investor in the investment trust sector, we are always concerned about issues such as governance, capital growth, dividend and underlying costs. These are all issues on which we have challenged and will continue to challenge the management of all of our investments, including AT.
“We are satisfied that the board of AT continues to address such issues and this is, in some degree, borne out by recent performance.
“The Elliott proposals offer board and governance change but, while we welcome open debate, we see nothing in their proposals to persuade us, as long-term investors, to give them our backing and we intend to vote against their resolutions to nominate new directors.”
The situation will be decided when shareholders gather for the trust’s annual meeting at the Gardyne Theatre in Dundee on April 29.