Keystone Positive Change (KPC ) has postponed its plan to offer shareholders a cash exit next month as the ‘frustrated’ board says activist investor Saba Capital has made it clear it will vote the scheme down.

The Baillie Gifford-run trust, one of seven requisitioned by New York-based Saba just before Christmas, has delayed its plans to offer investors a 100% cash exit or a rollover into the ‘more liquid’ Baillie Gifford Positive Change fund.

The latter is a £1.8bn open-ended version of the £158m Keystone portfolio of global stocks making a positive social impact and run by the same management team of Kate Fox and Lee Qian. 

The board unveiled the scheme in September in response to Saba’s call for a cash exit, before the activist firm, led by Boaz Weinstein, changed its mind, according to Keystone. Saba not only said it would vote against the scheme but also requisitioned a general meeting to oust the board, which would potentially give it the power to install itself as fund manager.

Given the size of Saba’s shareholding – around 28% – it would have meant the group could likely block the cash return.

‘Disingenuous’ Saba

The Keystone board, chaired by Karen Brade, said it was ‘frustrated to announce’ that it was adjourning the vote on the scheme until after the requisitioned general meeting on 3 February’.

Brade criticised Saba for shooting down the capital return scheme, which the trust put time and money into preparing, after initially requesting it.

Furthermore, Brade said Saba waited until 18 December to requisition a general meeting ‘to remove your independent board and formally inform us that it intends to vote against the scheme, which would guarantee its failure’.

‘This destructive behaviour highlights just how disingenuous Saba has been and demonstrates its desire to take control of your company,’ she said.

In previous announcements, Keystone has suggested that Saba had used the trust’s 2.6% weighting to private companies – which complicates the wind-up process – as an ‘excuse to oppose the scheme’, which could have gone into effect in early February. 

Brade asked shareholders to now focus on the requisitioned meeting and vote against Saba’s resolutions.

Conversations with shareholders have been ‘unanimously supportive’ of the capital return scheme and ‘highly critical’ of Saba’s proposals, said Brade, who said shareholders must vote by midday on 3 February to save the company, with investment platforms allowing voting from 23 January.

If Keystone is successful in fighting off Saba, the board will ‘immediately refocus its efforts on delivering a full cash exit and will schedule a date for shareholders to vote on the scheme as soon as practicable’, the chair added. 

The trust industry has been thrown into disarray by Saba’s entry and the ongoing war of words between the hedge fund and the trusts it has requisitioned.

The other six targets are Keystone stablemates Baillie Gifford US Growth, Edinburgh Worldwide (EWI ), Janus Henderson-run Henderson Opportunities (HOT ) and European Smaller Companies (ESCT ), Herald (HRI ), and lastly CQS Natural Resources Growth & Income (CYN ).