Following the receipt of a requisition request from Saba Capital Management, L.P. (click here to see our original coverage of this) The European Smaller Companies Trust (ESCT)  has published a notice for the requisitioned general meeting alongside a unanimous board recommendation to vote against all of the requisitioned resolutions, which ESCT describes as being “self-serving”.

James Williams, chairman of The European Smaller Companies Trust PLC, said:

 “The European Smaller Companies Trust is a well-managed investment company whose strategy has delivered long-term outperformance.

“Saba is attempting to take control of your company by removing a highly qualified, independent board that acts in all shareholders’ interests. It’s clear that Saba’s motives are self-serving. It would like to install directors who would not be independent of the company’s largest shareholder and has indicated that it may appoint itself as investment manager. This could endanger shareholder protections, radically alter the company’s investment risk profile and deny investors the opportunity to benefit from the proven European small cap investment strategy.

The board is therefore recommending that shareholders VOTE AGAINST ALL resolutions proposed. Saba is counting on a high proportion of shareholders not voting. Investor participation is key and will determine the company’s future.”

The independent board and investment manager, Janus Henderson Investors, highlight that ESCT have delivered both long-term NAV and share price total returns, outperforming both the company’s peer group and its benchmark, the MSCI Europe (ex UK) Small Cap Index.

Additionally, the company notes:

• Saba’s claim that ESCT has underperformed is factually inaccurate and is not supported by Saba’s own statement which notes that ESCT’s total shareholder return has outperformed its benchmark by 11.0 per cent. over three years.
• The company has a highly successful, proven investment strategy investing in European small caps. It is an exciting time for the sector, with European small caps trading at the widest discount to European large caps over the last 15 years. The sector is attractively valued and the board believes it is the wrong time to divest from this theme.
• Saba’s proposals for the future of the company lack detail but indicate that they will not continue to invest in the European small cap sector. Any new investment strategy could radically alter your exposure away from European small cap equities and materially change your investment risk profile in a way that may not meet your investment objectives.

ESCT: The European Smaller Companies Trust adds to chorus against “self-serving” Saba