Edinburgh Worldwide revelation on New York hedge fund Saba saga

And the company flagged the part of US investors in the outcome.

It was the third attempt Edinburgh Worldwide Investment Trust, which has Elon Musk’s SpaceX as its single largest holding and had total assets of £864.71 million at March 31, had faced to oust its board by US hedge fund manager Boaz Weinstein’s Saba Capital Management.

Non-Saba shareholders voted overwhelmingly against the previous two attempts by the US hedge fund to oust the trust's board and install directors chosen by Saba.

Jonathan Simpson-Dent, chairman of Edinburgh Worldwide, noted in January that Saba had a stake of “just over” 30% in the trust, which is managed by investment house Baillie Gifford.

And Edinburgh Worldwide revealed this morning: “In addition, a further US investment fund with a material holding has voted against the board.

"This brings the number of US investment fund shareholders not supporting the board to four, including Saba, collectively representing more than 40% of the company's issued share capital.”

Edinburgh Worldwide, which held its annual meeting at noon today in the Scottish capital, said this morning in a statement to the stock market: “The final results of the voting on all resolutions proposed at the AGM will be announced via the regulatory news service later today, following verification by an independent assessor.

“Based on the latest voting information it is expected that there will be insufficient votes in favour of the resolutions relating to the re-appointment of the five independent directors standing for re-election. Mungo Wilson did not stand for re-election, as his nine-year tenure has concluded. It is also expected that the resolutions to appoint Saba Capital Management L.P.'s three nominees to the board will be approved by the requisite majority.

“Accordingly, subject to confirmation of these results later today, Jonathan Simpson-Dent, Mary Gunn, Jane McCracken, Caroline Roxburgh, Gregory Eckersley and Mungo Wilson will cease to be directors of the company with effect from the end of the AGM. At the same time, subject to confirmation of the results, Gabriel Gliksberg, Jassen Trenkow and Michael Joseph will be appointed as directors of the company.”

The regulatory announcement this afternoon confirmed that there were insufficient votes for the re-election of the five directors of Edinburgh Worldwide who were standing. Shareholders owning about 39% of the voted shares supported the resolutions to re-elect these directors, with around 61% opposition.

The election of the three Saba nominees was backed by investors owning nearly 63% of the voted shares, with slightly more than 37% opposition.

For the votes on all of the resolutions, the turnout was about 62%.

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Trailing the outcome this morning, Edinburgh Worldwide said that “this outcome primarily reflects a material reduction in ownership by private wealth and retail shareholders facing the reality of Saba's likely effective control of the company”.

It added: “Notably, the recent selling from these groups has largely come from previously engaged shareholders who had historically voted in support of the board. As a result, voting in favour of the board from private wealth and retail holders has declined since Saba's previous requisitions both in absolute terms and as a proportion of their remaining shareholdings."

Mr Simpson-Dent said this morning: “This is a disappointing day for our long-standing shareholders who are set to lose exposure to this exciting mandate focused on next-generation technology, seemingly in favour of Saba's plan to invest in other UK investment trusts.

“Retail and private wealth shareholders have been ground down by Saba's repeated attacks. A significant number have already chosen to exit the company, replaced by institutions seeking to capture the upside potential in EWIT's substantial SpaceX exposure. I expect many more retail and private wealth shareholders to follow. This should represent a wake-up call for the investment trust sector and its regulators.”

He added: “Throughout the period since the implementation of our path to growth strategy 18 months ago, the board has maintained its focus on governance and performance, delivering strong NAV (net asset value) returns of 44% and a 21% outperformance relative to its benchmark.

“I would like to thank shareholders for their engagement and support, as well as my fellow board members and the many other stakeholders, including the media, who have worked to highlight the risks associated with Saba's proposals and to encourage retail shareholder participation."

Richard Stone, chief executive of the Association of Investment Companies industry body, said in the wake of Edinburgh Worldwide's stock market statement this morning: “Thousands of shareholders will be disappointed by this announcement, having twice rejected directors nominated by Saba only to see them appointed to the board at the third attempt.

“The new board of Edinburgh Worldwide has important legal and regulatory responsibilities to act independently and in the interests of all shareholders. There will be intense scrutiny of their actions and we expect them to follow a proper process if seeking to change the manager or the mandate."

He added: "The new directors will need to bear in mind that non-Saba shareholders have resoundingly supported the existing mandate, turning out in record numbers to back the board on two previous occasions. Before any changes of manager or mandate are even considered, shareholders should be given opportunities to exit, both before and after a potential SpaceX IPO (initial public offering).

 “Saba has made various proposals about what should happen if its nominated directors are appointed. However, these are matters for the board. We call on the new board to make clear their intentions and plans as soon as possible so that all shareholders can have confidence in their approach."