Intends to Requisition General Meetings at
Trusts Managed by Janus Henderson Investors, Manulife | CQS
Investment Management, Schroder Unit Trusts Limited and Middlefield
Limited
Plans to Submit Proposal for the Trusts to
Transition to Comparable Open-Ended Funds to Give Shareholders the
Opportunity to Receive Long-Overdue Liquidity at NAV
Visit www.mindthegap-uktrusts.com to Sign Up
for Important Updates
Saba Capital Management, L.P. (together with certain of its
affiliates, “Saba” or “we”) today announced its intention to
requisition the Boards of Directors (the “Boards”) of CQS Natural
Resources Growth & Income PLC (CYN:LSE), European Smaller
Companies Trust PLC (ESCT:LSE), Middlefield Canadian Income PCC
(MCT:LSE) and Schroder UK Mid Cap Fund PLC (SCP:LSE) (the “Trusts”)
to hold General Meetings for shareholders to vote on a proposal to
implement a scheme or process to provide the opportunity to
transition to comparable open-ended funds. Saba is convening the
General Meetings based on thoughtful feedback received from
shareholders over the course of its campaign to deliver value to
the U.K. trust sector.1
In connection with the announcement, Saba today issued the
following open letter to its fellow shareholders of the four
Trusts. For more information, visit:
www.mindthegap-uktrusts.com.
***
10 February 2025
Fellow Shareholders,
On behalf of Saba Capital Management, L.P. (together with
certain of its affiliates, “Saba” or “we”), I am writing to inform
you that today we announced our intention to requisition the Boards
of Directors (the “Boards”) of CQS Natural Resources Growth &
Income PLC (CYN:LSE), European Smaller Companies Trust PLC
(ESCT:LSE), Middlefield Canadian Income PCC (MCT:LSE) and Schroder
UK Mid Cap Fund PLC (SCP:LSE) (the “Trusts”) to convene general
meetings (the “General Meetings”). We are calling these General
Meetings to provide shareholders the opportunity to vote on a
proposal to transition each of the Trusts to an open-ended
structure and receive long-overdue liquidity at net asset value
(“NAV”).
We believe that Saba’s proposal would provide the Trusts’
shareholders with the following benefits:
- Long-Overdue Liquidity at NAV: A transition to an
open-ended structure would eliminate the discount in each of these
Trusts and would enable shareholders to achieve liquidity at
NAV.
- Manager & Strategy Continuity: Shareholders would
remain invested in the same strategy with the same manager in an
open-ended – rather than closed-ended – structure.
- Tax Efficiency: Expected opportunity for shareholders to
roll over their investment into an open-ended fund without
triggering capital gains tax.
Responding to Shareholder Feedback:
Providing the Option for Liquidity at NAV
During our campaign to deliver value to shareholders of
U.K.-listed investment trusts, we received thoughtful feedback from
our fellow shareholders that has shaped the request we now plan to
put forward at CYN, ESCT, MCT and SCP.2 While we acknowledge that
shareholders were not ready to fully replace the boards with new
directors, it was clear from our conversations that many investors
agree with Saba on one crucial point: the importance of the
option for liquidity at NAV.
In our experience, shareholder action is often the impetus that
some boards and managers need to take control of discount problems
and deliver liquidity options for shareholders. For example,
several of the U.K.-listed trusts we called for change at have
since announced shareholder-friendly initiatives – which we believe
would not have occurred had we not directed the industry’s
attention to the performance issues at those trusts. Most recently,
Henderson Opportunities Trust PLC (HOT:LSE) announced a scheme to
allow shareholders to roll their investment into an open-ended fund
or to receive their entitlement upon the winding-up of the trust in
cash.3 It is encouraging that our campaign has served as a wake-up
call for trusts like HOT, but for others – such as CYN and ESCT –
there is clearly more work to be done.
Saba’s Proposal: Give Shareholders the
Option to Achieve Liquidity in an Open-Ended Fund
It is apparent that shareholders of CYN, ESCT, MCT and SCP have
been trapped in closed-end vehicles trading at deep discounts for
years. In our view, the necessary solution is to roll or convert
these Trusts into open-ended funds, which by definition trade at
NAV and are free of the structural issues that plague closed-end
funds. As a result, we intend to requisition General Meetings to
give you the chance to vote on a proposal for the Trusts to
implement a scheme or process that would provide you the
opportunity to roll your investment into a better performing
open-ended fund with the same strategy and the same manager.
While MCT and SCP were not part of our initial campaign, we
believe they have traded at wide discounts for too long and that
their shareholders would greatly benefit from an open-ended fund
structure. Of the seven trusts targeted in our initial campaign, we
have focused on CYN and ESCT because we believe they are best
positioned for an open-ended fund conversion and, unlike HOT and
KPC, their boards have not shown an intent to take this action on
their own.
Trust
Discount
Current
3-Year Average
CQS Natural Resources Growth
& Income PLC
-11.8%
-13.5%
European Smaller Companies
Trust PLC
-7.5%
-13.2%
Middlefield Canadian Income
PCC
-11.7%
-13.1%
Schroder UK Mid Cap Fund
PLC
-10.1%
-12.9%
Total Potential Gain for the
Trusts’ Shareholders
If All Proposals Are
Accepted4
£125.1 million
Source: Bloomberg. Data is in GBP
and as of 6 February 2025.
The Opportunity: Remain Invested in a
Fund That Will Never Trade at a Discount to NAV
Our goal is simple: provide you the opportunity to remain
invested in the same strategy within an open-ended fund structure
that will never trade at a discount to NAV.
The choice is yours to make, and we are excited to offer you the
long-overdue liquidity opportunity that you deserve. Saba remains
committed to acting as a positive force in the market by putting
shareholders’ interests first, delivering enhanced returns for
investors and helping rehabilitate the fractured U.K.-listed
investment trust sector.
Sincerely,
Boaz Weinstein Founder & Chief Investment Officer, Saba
Capital
***
SABA HOLDINGS IN EACH TRUST
As of 6 February 2025, Saba, directly or indirectly, has the
following aggregate interest in each of the Trusts (including at
least a 5% holding of shares in each Trust):
Trust
Manager of Interest
Aggregate Interest
CQS Natural Resources & Growth Income
PLC
Saba Capital Management, L.P.
29.7%
European Smaller Companies Trust PLC
Saba Capital Management, L.P.
29.3%
Middlefield Canadian Income PCC
Saba Capital Management, L.P.
29.3%
Schroder UK Mid Cap Fund PLC
Saba Capital Management, L.P.
11.3%
About Saba
Saba Capital Management, L.P. is a global alternative asset
management firm that seeks to deliver superior risk-adjusted
returns for a diverse group of clients. Founded in 2009 by Boaz
Weinstein, Saba is a pioneer of credit relative value strategies
and capital structure arbitrage. Saba has offices in New York City
and London. Learn more at www.sabacapital.com.
DISCLAIMER
Saba Capital Management, L.P. (“Saba”) is publishing this
announcement solely for the information of other shareholders in
each of CQS Natural Resources Growth & Income PLC (CYN:LSE),
European Smaller Companies Trust PLC (ESCT:LSE), Middlefield
Canadian Income PCC (MCT:LSE) and Schroder UK Mid Cap Fund PLC
(SCP:LSE) (the “Trusts”). This announcement is not intended
to be and does not constitute or contain any investment
recommendation as defined by Regulation (EU) No 596/2014 (as it
forms part of the domestic law in the United Kingdom by virtue of
the European Union (Withdrawal) Act 2018). No information in this
announcement should be construed as recommending or suggesting an
investment strategy. Nothing in this announcement or in any related
materials is a statement of or indicates or implies any specific or
probable value outcome in any particular circumstance. This
announcement is provided merely for general informational purposes
and is not intended to be, nor should it be construed as (1)
investment, financial, tax or legal advice, or (2) a recommendation
to buy, sell or hold any security or other investment, or to pursue
any investment style or strategy. Neither the information nor any
opinion contained in this announcement constitutes an inducement or
offer to purchase or sell or a solicitation of an offer to purchase
or sell any securities or other investments in the Trusts or any
other trust by Saba or any of its affiliates in any jurisdiction.
This announcement does not consider the investment objective,
financial situation, suitability or the particular need or
circumstances of any specific individual who may access or review
this announcement and may not be taken as advice on the merits of
any investment decision. This announcement is not intended to
provide the sole basis for evaluation of, and does not purport to
contain all information that may be required with respect to, any
potential investment in the Trusts. Any person who is in any doubt
about the matters to which this announcement relates should consult
an authorised financial adviser or other person authorised under
the UK Financial Services and Markets Act 2000. To the best of
Saba’s ability and belief, all information contained herein is
accurate and reliable, and has been obtained from public sources
that Saba believes to be accurate and reliable. However, such
information is presented “as is”, without warranty of any kind,
whether express or implied, and Saba has not independently verified
the data contained therein. All expressions of opinion are subject
to change without notice, and Saba does not undertake to update or
supplement any of the information, analysis and opinion contained
herein.
Saba may continue transacting in the shares and securities of
the Trusts, and/or derivatives referenced to them (which may
include those providing long and short economic exposure) for an
indefinite period following the date of this announcement and may
increase or decrease its interests in such shares, securities
and/or derivatives at any time.
FORWARD LOOKING STATEMENTS
This announcement contains certain forward-looking statements
and information that are based on Saba’s beliefs, as well as
assumptions made by, and information currently available to, Saba.
These statements include, but are not limited to, statements about
strategies, plans, objectives, expectations, intentions,
expenditures and assumptions and other statements that are not
historical facts. When used herein, words such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “plan” and “project” and
similar expressions (or their negative) are intended to identify
forward-looking statements. These statements reflect Saba’s current
views with respect to future events, are not guarantees of future
performance and involve risks and uncertainties that are difficult
to predict. Further, certain forward-looking statements are based
upon assumptions as to future events that may not prove to be
accurate. Actual results, performance or achievements may vary
materially and adversely from those described herein. There is no
assurance or guarantee with respect to the prices at which any
securities of the Trusts or any other trust will trade, and such
securities may not trade at prices that may be implied herein. Any
estimates, projections or potential impact of the opportunities
identified by Saba herein are based on assumptions that Saba
believes to be reasonable as of the date hereof, but there can be
no assurance or guarantee that actual results or performance will
not differ, and such differences may be material and adverse. No
representation or warranty, express or implied, is given by Saba or
any of its officers, employees or agents as to the achievement or
reasonableness of, and no reliance should be placed on, any
projections, estimates, forecasts, targets, prospects or returns
contained herein. Neither Saba nor any of its directors, officers,
employees, advisers or representatives shall have any liability
whatsoever (for negligence or misrepresentation or in tort or under
contract or otherwise) for any loss howsoever arising from any use
of information presented in this announcement or otherwise arising
in connection with this announcement. Any historical financial
information, projections, estimates, forecasts, targets, prospects
or returns contained herein are not necessarily a reliable
indicator of future performance. Nothing in this announcement
should be relied upon as a promise or representation as to the
future. Nothing in this announcement should be considered as a
profit forecast.
PERMITTED RECIPIENTS
In relation to the United Kingdom, this announcement is being
issued only to, and is directed only at, (i) investment
professionals specified in Article 19(5) of the Financial Services
and Markets Act 2000 (Financial Promotion) Order 2005 as amended
(the “Order”), (ii) high net worth entities, and other
persons to whom it may lawfully be communicated, falling within
Article 49(2)(a) to (d) of the Order and (iii) persons to whom an
invitation or inducement to engage in investment activity (within
the meaning of section 21 of the Financial Services and Markets Act
2000) in connection with the issue or sale of any securities of the
Trusts or any member of their respective groups may otherwise
lawfully be communicated or caused to be communicated (all such
persons together being referred to as “Permitted
Recipients”). Persons who are not Permitted Recipients must not
act or rely on the information contained in this announcement.
DISTRIBUTION
Not for release, publication or distribution, in whole or in
part, directly or indirectly, in, into or from any jurisdiction
where to do so would constitute a violation of the relevant laws of
that jurisdiction. The distribution of this announcement in certain
countries may be restricted by law and persons who access it are
required to inform themselves and to comply with any such
restrictions. Saba disclaims all responsibility where persons
access this announcement in breach of any law or regulation in the
country of which that person is a citizen or in which that person
is residing or is domiciled.
_________________________________ 1 Saba previously
requisitioned general meetings at Baillie Gifford US Growth Trust
PLC (USA:LSE), CQS Natural Resources Growth & Income PLC
(CYN:LSE), Edinburgh Worldwide Investment Trust PLC (EWI:LSE),
European Smaller Companies Trust PLC (ESCT:LSE), Henderson
Opportunities Trust PLC (HOT:LSE), Herald Investment Trust PLC
(HRI:LSE) and Keystone Positive Change Investment Trust PLC
(KPC:LSE). 2 Ibid. 3 HOT circular dated 3 February 2025. Link. 4
The amount of capital trapped in the Trusts due to their discounts,
which is also the amount of capital that shareholders could gain
across the Trusts if they had an opportunity to exit at NAV.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250210893814/en/
Investor Contact Alliance
Advisors Timothy Marshall / Adam Riches, 0800-102-6570
saba@allianceadvisors.com
Media Contact Longacre
Square Partners Charlotte Kiaie / Kate Sylvester, +1-646-386-0091
ckiaie@longacresquare.com / ksylvester@longacresquare.com
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