On 18 December 2024, Henderson Opportunities Trust (HOT) announced that, in light of its performance and forthcoming continuation vote, it had instructed advisers to commence work on putting forward a scheme of reconstruction to give all shareholders a choice between ongoing alternative investment and/or a full cash exit at NAV. HOT has now published a circular that details its proposals which will include the opportunity for shareholders to roll over their investment at residual NAV into the Janus Henderson UK Equity Income & Growth Fund, a sub-fund of the Janus Henderson UK & Europe Funds OEIC, and/or to receive cash in respect of their investment in HOT. HOT’s board is unanimous in recommending shareholders vote for its proposals.

Saba’s proposals are not necessary as HOT scheme provides full liquidity

HOT is one of seven trusts targeted by Saba Capital and as part of its campaign, Saba has publicly stated its aim to deliver substantial liquidity options for shareholders. However, as we have discussed previously, Saba’s proposals are completely unnecessary as HOT’s scheme is designed to deliver full liquidity for its shareholders. However, given Saba’s current interest in 29.10% of HOT’s issued share capital Saba will be able to block the scheme by voting against the scheme resolutions should it decide to do so. This seems to be a foregone conclusion given that it has already said that it wants to take over the management of HOT and roll it into a fund of investment trusts.

HOT’s board therefore reminds shareholders that, in the event that the scheme resolutions are not passed and the scheme does not become effective, the board will need to consider alternative proposals for the future of the company that are in the best interests of shareholders as a whole.

Benefits of the proposals

HOT’s board has set out what it believes are the benefits of its proposals for all shareholders:

• Opportunity for a full unrestricted cash exit: An unlimited cash exit option will give shareholders the option to realise all or part of their holding
• Ability to stay invested in a tax efficient manner: Shareholders who may be subject to UK capital gains tax or corporation tax on chargeable gains should generally be able to roll over their investment at residual NAV into the OEIC sub-fund and thereby continue to receive investment returns without triggering an immediate liability to UK capital gains tax or corporation tax on chargeable gains; and
• Less cost implications: Shareholders electing for the applicable rollover option will not suffer the full dealing costs that would be incurred on the realisation of the company’s entire portfolio in the event of a simple winding-up.