TIDMGVP
RNS Number : 1629B
Gabelli Value Plus+ Trust PLC
06 October 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE EU MARKET ABUSE REGULATION 596/2014.
6 October 2020
GABELLI VALUE PLUS(+) TRUST PLC ("the Company")
Legal Entity Identifier: 213800FZFN1SD1GNNZ11
Further Update on Proposals for the Future of the Company
Further to the Company's announcement on 15 September 2020 and
the statement released that day by Associated Capital Group, Inc.
("ACG") in connection with the Company, the Board of Directors of
the Company (the "Board") is making this announcement to update
shareholders as to what options for the future of the Company are
under consideration, in the same spirit of active consultation with
all shareholders with which it has acted leading up to, and since,
the Company's Annual General Meeting held on 30 July 2020 (the
"AGM").
In addition, this announcement is both, as noted below, to
facilitate a further short period of extensive shareholder
consultation on the available options and, regrettably, partly in
response to a letter received by the Board from the general counsel
to ACG on 2 October 2020 indicating that (unspecified) litigation
concerning the Company may be a distinct possibility. The Board is
fully aware of its fiduciary duties to act in the best interests of
shareholders of the Company as a whole and is working to achieve
the best possible outcome for all shareholders, in the specific
context of this Company and the overwhelming shareholder rejection
of the Continuation Resolution at the AGM.
The Board has consulted with ACG, both before and after the AGM,
and, whilst the brief overall proposals put forward by ACG in its
announcement on 15 September 2020 are unacceptable to the majority
of shareholders, as they involve the continuation of the Company
and the retention of Gabelli as investment manager, the Board
encourages ACG to discuss with the Board what it would like to do
with its shareholding should the Company discontinue. Given ACG's
public statements in support of the Company's existing investment
strategy, the Board would be happy to discuss with it options that
the Company could offer as part of a members' voluntary liquidation
of the Company, such as potentially distributing to ACG its pro
rata share of the Company's assets in specie, or, offering the
option of a rollover vehicle with a similar strategy and manager to
the Company for those shareholders not requiring a cash exit.
Background
The prospectus issued by the Company in connection with its
initial public offering in 2015 (the "IPO") contained a provision
to potentially call a continuation vote in 2020, stating that if
after the end of the fifth full financial year of the Company's
existence (being 31 March 2020) (or at the end of any subsequent
fifth financial year), the Company's ordinary shares had traded, on
average, at a discount in excess of 10 per cent. of the Net Asset
Value per Share in that financial year, the Directors would
consider proposing a special resolution at the Company's next
annual general meeting that the Company ceases to continue in its
present form. It was announced by the Company on 31 July 2019 that
it would amend the existing continuation vote provisions and
propose a continuation vote every two years, commencing from the
annual general meeting of the Company to be held in 2020, and that
the continuation vote would be carried out by an ordinary
resolution and not subject to any pre-conditions such as the
average discount.
As noted in the Company's announcement in connection with the
continuation vote and the Board's voting recommendation to
shareholders on 15 June 2020, the Board was particularly concerned
by the poor investment performance of the Company and that
shareholder consultation had highlighted not only the poor
performance of the Company's net asset value since the IPO,
particularly when compared to that of the Russell 3000 Value Index,
but also the persistent discount at which the Company's shares have
traded to their underlying net asset value and the relative lack of
liquidity of the Company's shares, in part due to its size.
As stated in the Company's announcement on 15 September 2020,
the Board, following extensive shareholder consultation, was due to
put forward proposals for the members' voluntary liquidation of the
Company. However, ACG announced on 15 September 2020 that it would
not support proposals for a members' voluntary liquidation and
associated return of cash to shareholders. As ACG holds more than
25% of the voting rights of the Company, and the proposals would
require the approval of not less than 75% of the votes cast by
shareholders at a general meeting pursuant to a special resolution,
the Board therefore announced that it was not putting the proposals
forward to shareholders at that time.
The Board has continued to consult all shareholders, including
ACG, since the announcement made by the Company on 15 September
2020. Both the majority of all shareholders (by percentage of the
Company's issued share capital) and the overwhelming majority of
shareholders other than ACG have continued to indicate that their
preference is for a cash exit.
As previously announced by the Company, at the AGM an ordinary
resolution was put to shareholders in connection with the
continuation of the Company (the "Continuation Resolution"). The
Continuation Resolution required over 50% of all votes cast to be
in favour of continuation for it to be passed. The Board, with one
abstention, recommended that shareholders vote against the
Continuation Resolution.
The number of shares in issue and eligible to vote at the
meeting was 98,282,193 ordinary shares of 1 penny each ("Ordinary
Shares"). The total number of votes cast (i.e. for, against and
withheld) on the Continuation Resolution was 91,612,481 Ordinary
Shares representing a 93.2% turnout. The result was as set out
below:
% (of % (of
votes votes
Votes cast excl. Votes cast excl. Votes
For withheld) Against withheld) Total Withheld
Resolution
12 (Continuation
Resolution) 31,429,010 34.31 60,183,317 65.59 91,612,327 154
----------- ------------ ----------- ------------ ----------- ----------
As announced on 30 July 2020, the Continuation Resolution was
not passed, and the Board is therefore required to put forward to
shareholders plans to wind-up, reorganise or reconstruct the
Company. As a result of the vote, following the AGM, and in
accordance with the terms of the investment management agreement,
the Company served 24 months' protective notice on Gabelli Funds,
LLC, the Company's discretionary investment manager (the
"Investment Manager").
The Investment Manager's ultimate parent company is GAMCO
Investors, Inc. ("GAMCO"), of which Mr. Mario J. Gabelli, is the
Chairman and Chief Executive Officer. Mr Gabelli is one of the
senior portfolio managers responsible for the discretionary
management of the Company and is also the executive chairman of
Associated Capital Group, Inc. a US publicly traded company whose
Class A common stock is admitted to trading on the New York Stock
Exchange. ACG was admitted to trading on 30 November 2015 following
the spin-out of the business from GAMCO.
The Board understands, pursuant to an announcement made on 7 May
2020, that Mr Mario J. Gabelli is interested in 27.8% of the voting
rights of the Company (being 27,326,000 Ordinary Shares), 0.4%
directly and 27.4% indirectly through ACG, the Company's largest
shareholder. ACG announced on 20 July 2020 that it would be voting
in favour of the Continuation Resolution.
ACG also noted in its announcement on 15 September 2020 that it
had formed a subcommittee to evaluate the proposal to liquidate the
Company and that "...the subcommittee welcomes the opportunity to
open a conversation with the GVP board and its shareholders on
other measures that can be taken to enhance value for Trust
shareholders. This may, for example, include share buybacks (akin
to a limited discount policy), establishment of annual distribution
targets, the reduction of the management fee and management
alternatives, possibility of leverage to enhance returns, and any
other strategies that may enhance and improve shareholder
returns."
Potential proposals and further shareholder consultation
Following careful consideration of shareholders' views, the
current size and operational costs of the Company and the Takeover
Code, the Board continues to believe that it would be in the best
interests of the Company and its shareholders as a whole to put
forward proposals for the members' voluntary liquidation of the
Company .
Further, the resounding feedback from an absolute majority of
all shareholders is that they want a liquidation of the Company and
return of their (and their underlying investors') capital as soon
as practicable. Aside from ACG's support for the continuation of
the Company with its current Investment Manager, the result of the
Continuation Resolution demonstrates that there is hardly any other
shareholder backing for this course of action and, therefore, the
counter proposals outlined briefly by ACG in the announcement above
do not form the basis of an acceptable way forward for significant
majority of shareholders in the Company. The Board is in agreement
with the view expressed since 15 September 2020 by many
shareholders that it should explore all available options for the
future of the Company should ACG continue to use its ability to
block a special resolution to liquidate the Company.
Despite having consulted extensively with shareholders in
connection with the Continuation Resolution, before formally
publishing its proposals for the future of the Company the Board
will consult further with shareholders from the publication of this
announcement to the close of business on Wednesday 14 October 2020,
and, actively encourages further dialogue with all shareholders.
Soon after that period ends, the Board intends to announce what
proposals it will put to a general meeting of the Company. Shortly
after that it then intends to publish a circular to convene the
general meeting of the Company at which resolutions will be put to
shareholders pertaining to the future of the Company.
The Board is aware that a number of investment banks, brokers
and market commentators have published a range of suggestions as to
the best course of action for the Company, following its
announcement on 15 September 2020. In addition, many shareholders
in the Company have contacted the Board with their own
suggestions.
Whilst open to further suggestions during the above consultation
period, the Board would summarise the main options currently under
consideration to be put to a general meeting as focussed on a
combination of:
-- A members' voluntary liquidation of the Company
-- A significant return of shareholders' capital, most likely by way of a tender offer
-- A material change to the Company's investment objective and
investment policy to reflect realisation of the portfolio and a
reinvestment into cash and cash equivalent securities
The Board intends to continue with its original intention and
put forward proposals for the members' voluntary liquidation of the
Company. This is the most straightforward means to effect
shareholders' clear expressed desire for a discontinuation of the
Company, inter alia from a tax perspective. It does, of course,
require a special resolution to be passed and ACG may again decide
to block it but the Board appeals to ACG to take full account of
the wishes of the clear majority of shareholders, since this
voluntary liquidation represents the best means of effecting
discontinuation for shareholders as a whole.
However, if the Board puts forward the above as a resolution to
a general meeting and should the special resolution not pass at the
general meeting, the Board at the same general meeting is minded to
propose a separate ordinary resolution (requiring not less than 50%
of the votes cast by shareholders) to effect a substantial capital
return to shareholders by way of a tender offer. The Company as at
31 March 2020 had distributable reserves of approximately GBP97m
and the intention would be that the majority of those reserves
would be used to fund any tender offer. The unaudited net assets of
the Company as at 1 October 2020 were approximately GBP122m. The
making of a tender offer would be subject to further consultation
with shareholders but the shareholder feedback received to date by
the Board reflects a widespread desire that if discontinuation of
the Company by way of a voluntary liquidation is blocked in the
near-term, then the majority of shareholders want to have a
material return of capital as an initial step. The Board would note
that its preference is for a voluntary members' liquidation of the
Company and shareholders, including ACG, should appreciate that a
tender offer will not return all shareholders' capital, and, will
likely leave a smaller residual Company that could be uneconomic,
could potentially be delisted if it fails to meet the free float
requirements of the FCA's Listing Rules and may suffer deleterious
tax consequences should it lose its investment trust status, such
as through being delisted. In addition, should any shareholder go
through certain ownership levels of the Company's ordinary shares
as a result of a tender offer by the Company they may have to make
a mandatory offer for the entire Company under the Takeover Code.
The Board also notes the Investment Association's Share Capital
Management Guidance (section 2.1.1), which advises that "Companies
should seek authority to purchase their own shares whether on
market or off market by special resolution and not simply an
ordinary resolution as is allowed by Sections 694 and 701 of the
Companies Act 2006". The Board brings this to shareholders'
attention and notes that it considers it appropriate under the
specific circumstances attaching to the Continuation Resolution to
conduct a tender offer pursuant to an ordinary resolution.
The obvious alternative to a tender offer as a means of
returning a significant amount of shareholder capital would be by
way of dividend, which does not require shareholder approval.
Whilst the Board is open to further shareholder views on this
option, from conversations to date it believes that the tax
consequences for many shareholders would be materially less
favourable than those associated with a tender offer, and, unlike a
tender offer it does not allow shareholders to decide whether or
not to participate.
In addition to the above, the Board will consider proposing an
ordinary resolution, requiring not less than 50% of the votes cast
by shareholders, to change the investment objective of the Company
to be to conduct an orderly realisation of its assets with the
intention of returning cash to Shareholders as soon as reasonably
practicable, and, to change the investment policy so that the
Company will not make any new investments save that realised cash
may be invested in liquid cash-equivalent securities, including
short-dated corporate bonds, government bonds, cash funds or bank
cash deposits pending its return to Shareholders, whilst aiming to
maintain the Company's investment trust status.
The Board will continue to evaluate the options available to the
Company and consult widely with shareholders in coming days. In
addition, the Board encourages ACG to engage directly with its
fellow shareholders to learn their respective views on the future
of the Company. A further announcement will be made as soon as
practicable after the above consultation period ends, with a
circular expected to be published shortly thereafter.
For further information please contact:
Maitland Administration Services Limited
Email: cosec@maitlandgroup.co.uk
Phone: +44 (0) 1245 398950
Peel Hunt LLP
Luke Simpson / Liz Yong
Telephone: +44 (0) 20 7418 8900
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END
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