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Trust urges rejection of shake-up

Accusations fly in battle for control of Dundee trust

Karin Forseke(Updated): Hostilities in the battle between Alliance Trust and rebel shareholder Elliott Advisers intensified today as both sides accused each other of misrepresenting their respective positions.

Trust chairman Karin Forseke described a move by Elliott to install three directors to the board as “completely unacceptable” and urged other investors to reject its proposal.

The Dundee trust said it believed Elliott may seek undue influence on the board to seek an exit that would be to its own benefit.

Elliott Advisors, an affiliate of a US-based activist hedge fund manager, is proposing that Anthony Brooke, Peter Chambers and Rory Macnamara be elected as directors of the company at next month’s annual meeting.

In a response to Alliance’s statement this morning Elliott expressed surprise and disappointment that the company did not think it would benefit from the “experience, integrity and independent thinking” of its three nominees.

“We believe that this decision is indicative of a board that is out of touch with the concerns of its shareholders, and which needs fresh perspectives,” it said.

However, Ms Forseke insisted that the three nominees are not independent, adding:  “As a board we will not lie down and allow one shareholder to dictate the future of Alliance Trust.”

Elliott accused the company of resorting to “questioning the independence of three individuals with impeccable credentials and integrity, when the candidates have been identified by a leading external search firm and are wholly independent of Elliott, who had never met any of the candidates previously, and of Alliance Trust.”

Alliance said it has maintained a regular dialogue with Elliott since it declared it was a shareholder in the company in March 2011 but was concerned that under the current proposals Elliott would pursue “a short-term agenda” aimed at facilitating an exit from its shareholding in the company.”

This, given the size of its position, would involve”disruptive actions which are not in the long-term interests of our shareholders”

It said Elliott has repeatedly proposed that Alliance Trust should launch a tender offer for 40% of its outstanding shares at a very narrow discount, which would require a significant liquidation of the company’s assets.

“The board considers that this type of action potentially threatens the very existence of the company, and rides roughshod over our long-term shareholders, our customers and our over 250 employees.”

Elliott said it was “factually incorrect” that it aimed to reduce Alliance Trust’s persistent discount, and refuted speculative assertions as to Elliott’s intentions.

But in a second statement issued today in response to Elliott’s comments, Alliance said it will “refute their [Elliott’s] ill-founded criticisms” in a circular to shareholders.

It also rejected Elliott’s claims that its statement about Elliott wanting a tender offer was factually incorrect. Alliance said it had minutes of meetings with Elliott, where Elliott repeatedly suggested that Alliance Trust undertake a tender offer for 40% of the company’s shares at a discount of 5% or less.

“In one of these meetings Elliott also showed a presentation they had prepared to the company which detailed their proposal for a tender offer.”

It said Elliott’s criticisms of the company and its comments on “factually incorrect assertions” are misleading. “We are determined that they will not mislead our shareholders”, it said.

But this latest statement from Alliance prompted a second retort from Elliott taking issue with assertions.

“The company’s statement selectively quotes from recent correspondence, but omits to mention that the letter was referring to a conversation in 2011, in the context of another shareholder (not Elliott) having put forward resolutions aimed at reducing the Company’s discount,” it said.

“In light of the company’s decision to publish private correspondence out of context, Elliott has no choice but to publish the letter exchange with the Chairman in their entirety.  They will be available onwww.ImproveAllianceTrust.com.

“For the record, unlike the requisitions which were put forward by other shareholders in previous years, Elliott has never formally proposed that the company takes any particular course of action.  Elliott’s requisition to add three new independent non-executive directors to the board aims to improve corporate governance, and ultimately performance, for the benefit of all shareholders.  The enlarged board, if elected, would form their own view, independently of Elliott, of the future direction of our Alliance Trust.”

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