TIDMGVP
RNS Number : 9184E
Gabelli Value Plus+ Trust PLC
11 November 2020
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, AUSTRALIA,
CANADA, JAPAN, NEW ZEALAND AND THE REPUBLIC OF SOUTH AFRICA OR ANY
OTHER JURISDICTION WHERE TO DO SO MAY RESULT IN THE CONTRAVENTION
OF ANY REGISTRATION OR OTHER LEGAL REQUIREMENT OF SUCH
JURISDICTION
11 November 2020
GABELLI VALUE PLUS(+) TRUST PLC ("the Company")
Legal Entity Identifier: 213800FZFN1SD1GNNZ11
Publication of General Meeting Circular
Further to the announcement made by the Company on 23 October
2020, the Board of Directors of the Company (the "Board") announces
that it has today published a circular (the "Circular") in
connection with the notice requisitioning a general meeting of the
Company from Associated Capital Group Inc. ("ACG").
A copy of the Circular will be submitted to the National Storage
Mechanism and will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM. The Circular will also be available
on the Company's website
(www.gabelli.co.uk/the-gabelli-value-plus-trust/) and at the
registered office of the Company (64 St. James's Street, London
SW1A 1NF).
Introduction
On 22 October 2020, the Company received a notice requisitioning
a general meeting of the Company from ACG. Under section 303 of the
Companies Act, ACG as a holder of Shares representing at least 5
per cent. of the paid up capital of the Company (which carries the
right of voting at a general meeting) is entitled to require the
Company to call a general meeting to propose resolutions. The
resolutions proposed by ACG (the "Requisitioned Resolutions") are
set out in the Notice of General Meeting in the Circular.
The purpose of the Circular is to convene the General Meeting to
propose the Requisitioned Resolutions in accordance with the
requirements imposed by section 304 of the Companies Act and to
explain why the Board recommends shareholders vote AGAINST the
Requisitioned Resolutions at the General Meeting.
Background and reasons for rejecting the Requisitioned
Resolutions
At the annual general meeting held by the Company on 30 July
2020 (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 per
cent. of all votes cast to be in favour of continuation for it to
be passed. The number of shares in issue and eligible to vote at
the meeting was 98,282,193 Shares and the total number of votes
cast (i.e. for, against and withheld) on the Continuation
Resolution was 91,612,481 Shares, representing a 93.2 per cent.
turnout. The result was that approximately 65.6 per cent. of total
votes cast (excluding those withheld) were against continuation.
The Board considers that this represents both an exceptionally high
level of Shareholder votes cast with a clear majority of
Shareholders against the continuation of the Company, particularly
when the number of Shares held by ACG that were voted in favour of
continuation are taken into account.
As a result of the vote, following the AGM, in accordance with
the terms of the investment management agreement, the Company
served 24 months' protective notice on Gabelli Funds, the Company's
discretionary investment manager.
As noted in the announcement published by the Company on 6
October 2020, and following that date, the Board has consulted
widely with Shareholders. The resultant feedback continues to
indicate that a clear majority of all Shareholders (by percentage
of the Company's issued share capital) and the overwhelming
majority of Shareholders other than ACG support discontinuation of
the Company and the return of their (and their underlying
investors') capital as soon as practicable, ideally by way of a
members' voluntary liquidation of the Company.
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
support for this course of action. Therefore, the Board considers
that the Requisitioned Resolutions put forward by ACG, as a whole,
do not form the basis of an acceptable way forward for a
significant majority of Shareholders in the Company. The letter
from ACG, dated 22 October 2020, containing the Requisitioned
Resolutions also noted that: "If the proposals set out above are
approved by shareholders and implemented by the Board of the
Company, we agree that if the majority of shareholders vote against
continuation of the Company at the annual general meeting of the
Company to be held no earlier than July 2022 we will not vote
against the subsequent liquidation of the Company". The Board has
been informed that a clear majority of Shareholders do not wish the
Company to continue in existence for that length of time.
Turning to the individual resolutions within the Requisitioned
Resolutions.
In terms of resolution 1 ("That the Directors re-introduce an
active buy-back programme with the aim of acquiring 10 per cent. of
the Company's issued share capital."), the Board already has the
ability to repurchase up to approximately 15 per cent. of the
Company's total issued share capital pursuant to the authority
passed at the AGM. It will continue to evaluate the appropriateness
of the Company repurchasing its Shares pursuant to this authority.
But, in view of the expressed desire of the majority of
Shareholders for a liquidation of the Company, the Board believes
it wholly inappropriate to commit to a repurchase of up to 10 per
cent. of the Company's issued share capital.
The Board is fully aware of the arguments for and against the
proposal embodied in resolution 2 ("That, conditional on the
passing of resolution 1 above, the Directors implement a
distribution programme targeting distributions equivalent to 6 per
cent. of the Company's net asset value per annum paid
semi-annually."). Effectively this is a dividend paid almost
entirely from capital, which, amongst other things, would have
negative tax implications for some shareholders, and, is not
considered an appropriate policy for the Company. The Board
believes that a majority of Shareholders would not be in favour and
that any potential benefits to the Company's discount to net asset
value may be transient. Long-term performance is the key objective
for Shareholders and such a policy reduces that objective, and,
alongside resolution 1, it could result in a material reduction in
the size of the Company over the medium-term.
In relation to resolution 3 ("That, conditional on the passing
of resolutions 1 and 2 above, the Directors enter into negotiations
with Gabelli Funds, LLC, the Company's investment manager, to
reduce the fee paid under the investment management agreement to 50
bps per annum (calculated on the basis of the Company's net asset
value)."). Given that protective notice has been served on Gabelli
Funds the Board does not feel it appropriate to recommend
Shareholders vote in favour. However, the Board would welcome
Gabelli Funds reducing its fee terms for the remainder of its 24
month notice period.
Following careful consideration of Shareholders' views, the
current size and operational costs of the Company and Takeover Code
considerations, the Board continues to believe that it would be in
the best interests of the Company and Shareholders as a whole to
put forward further proposals for the members' voluntary
liquidation of the Company. A circular to convene a general meeting
to put forward proposals for the members' voluntary liquidation of
the Company will be published shortly. This is the most
straightforward and cost effective means to effect the clear
expressed desire of the majority of Shareholders' 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. The Board (again) requests that
ACG take full account of the wishes of the clear majority of
Shareholders, since a members' voluntary liquidation represents the
most effective means of effecting discontinuation for Shareholders
as a whole. However, as noted in its announcement on 6 October
2020, if the Board puts forward the above as a resolution to a
general meeting and should the special resolution not pass at that
general meeting, the Board at the same general meeting intends,
subject to obtaining any necessary regulatory and Shareholder
approvals, to propose a separate ordinary resolution to effect a
substantial capital return to Shareholders likely by way of a
tender offer.
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 the special resolution needed to effect proposals for a
members' voluntary liquidation and associated return of capital to
Shareholders. As ACG holds more than 25 per cent. of the voting
rights of the Company, and the proposals would require the approval
of not less than 75 per cent. 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.
As previously announced, the Board has consulted with ACG, both
before and after the AGM, and, the Board believes that the
Requisitioned Resolutions put forward by ACG will be unacceptable
to the majority of Shareholders, as they involve the continuation
of the Company and the retention of Gabelli Funds as investment
manager. However, the Board continues to encourage 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.
The Board is surprised that, given ACG's relationship with
Gabelli Funds, and its stated support for the investment strategy
currently followed by the Company, it cannot discuss with Gabelli
Funds a way to continue its exposure to that strategy using another
means and not through holding Shares in the Company.
The ultimate parent company of Gabelli Funds 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 ACG, 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 per cent. of
the voting rights of the Company (being 27,326,000 Shares), 0.4 per
cent. directly and 27.4 per cent. indirectly through ACG, the
Company's largest shareholder.
It is worth noting that in the original prospectus issued by the
Company in connection with its initial public offering in 2015 (the
"IPO"), GAMCO Investors, Inc. undertook to the Company that it, or
one of its affiliated entities, would subscribe, pursuant to the
relevant subscription agreement, for such number of Shares as would
equal 10 per cent. of the total number of shares allotted in the
IPO. However, since the Company fell short of raising the minimum
gross proceeds required to proceed with the IPO of GBP100 million,
the ACG shareholding as a per cent. of total issued share capital
became materially larger.
General Meeting
The Requisitioned Resolutions will be put to Shareholders at the
General Meeting in accordance with the requirements of section 304
of the Companies Act. A notice convening the General Meeting which
is to be held at the Company's registered office 64 St. James's
Street, London, SW1A 1NF on 7 December 2020 at 4.00 p.m. is set out
at the end of the Circular.
The Board has been advised that, as the Requisitioned
Resolutions are seeking to direct the Board in the exercise of its
powers of management in relation to the Company, pursuant to
Article 108 of the Articles of Association, the Requisitioned
Resolutions need to be proposed as special resolutions.
In order to be passed, each of the Requisitioned Resolutions
will, therefore, require the approval of Shareholders representing
at least 75 per cent. of the votes cast at the General Meeting.
It should be noted that resolution 2 to be proposed at the
General Meeting is conditional on the passing of resolution 1 at
the General Meeting. In the event that resolution 1 is not passed
at the General Meeting, resolution 2 will not become unconditional
and will consequently not be presented to the General Meeting.
In addition, it should be noted that resolution 3 to be proposed
at the General Meeting is conditional on the passing of both
resolutions 1 and 2 at the General Meeting. In the event that
either resolution 1 or 2 is not passed at the General Meeting,
resolution 3 will not become unconditional and will consequently
not be presented to the General Meeting.
The Articles of Association provide that at the General Meeting
each Shareholder present in person or by proxy or who (being a
corporation) is present by a representative shall, on a show of
hands, have one vote and on a poll, shall have one vote for each
Share of which he/she is a holder.
The quorum for the General Meeting shall be two persons entitled
to attend and to vote, each being a Shareholder or a proxy of a
Shareholder or a duly authorised representative of a corporation
which is a Shareholder.
Given the risks posed by the spread of COVID 19 and in
accordance with the provisions of the Company's articles of
association, the Corporate Insolvency and Governance Act 2020 and
Government guidance, the Directors will impose entry restrictions
on attendance at the General Meeting in order to ensure the health,
wellbeing and safety of the Company's shareholders and officers as
well as compliance with the venue's security requirements. It
should be noted that, in the light of these current circumstances,
it is anticipated that only the Directors, advisers and
representatives of Gabelli Funds will be present in person to
ensure that the quorum requirement under the Company's articles of
association is met. However, Shareholders may and are strongly
encouraged to participate in the business of the General Meeting by
exercising their votes in advance of the General Meeting by
completing and returning the Form of Proxy.
Shareholders are requested to complete and return the Form of
Proxy accompanying the Circular, in accordance with the
instructions printed thereon so as to be received by the Registrars
as soon as possible but in any event by no later than 4.00 p.m. on
3 December 2020. The completion and return of the Form of Proxy
will ensure shareholder votes are registered despite shareholders
being precluded from attending the General Meeting and voting in
person.
Requisitioned Resolutions
1. THAT the Directors re-introduce an active buy-back programme
with the aim of acquiring 10 per cent. of the Company's issued
share capital.
2. THAT, conditional on the passing of resolution 1 above, the
Directors implement a distribution programme targeting
distributions equivalent to 6 per cent. of the Company's net asset
value per annum paid semi-annually.
3. THAT, conditional on the passing of resolutions 1 and 2
above, the Directors enter into negotiations with Gabelli Funds,
LLC, the Company's investment manager, to reduce the fee paid under
the investment management agreement to 50 bps per annum (calculated
on the basis of the Company's net asset value).
Timetable
Date of this document 11 November 2020
Latest time and date for receipt 4.00 p.m. on 3 December 2020
of Forms of Proxy or transmission
of CREST Proxy Instructions
for the General Meeting
General Meeting 4.00 p.m. on 7 December 2020
Notes
1. References to times in this document are to London time.
2. The dates set out in the expected timetable may be adjusted
by the Company, in which event details of the new dates will be
notified to Shareholders by an announcement made by the Company
through a Regulatory Information Service.
Recommendation
For the reasons outlined above, the Board does not consider that
the package of measures represented by the Requisitioned
Resolutions represents a solution to the clearly expressed wishes
of the significant majority of Shareholders to see the Company make
a substantial return of capital. The proposals put forward by the
Requisitioned Resolutions would also see the Company continue with
its current investment strategy under the management of Gabelli
Funds, something which has been roundly rejected by the substantial
majority of Shareholders.
Accordingly, for these reasons, the Board unanimously recommends
that Shareholders vote AGAINST the Requisitioned Resolutions to be
proposed at the General Meeting. As mentioned, above, the Board
will be shortly presenting to Shareholders its own proposals for
the future of the Company.
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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