The board of Acorn Income is proposing the flailing £70.6m trust be wound-up.
In a stunning reversal last month, the board dropped plans to have BMO Gam come on board as the trust’s manager and helm a radical transformation, which would have seen it swap its UK smaller companies focus to become a global sustainable income vehicle.
Explaining its decision, the board said it had received “further interest from managers regarding the future of the company” and concluded that an “alternative proposal” to BMO’s may represent a better outcome for shareholders.
In an update on Wednesday, the board said it now felt the “voluntary liquidation” of the investment company was “in the best interest of shareholders as a whole”.
“Given a combination of factors, including the existing dual portfolio structure, likely future cut in dividends, historic discount to net asset value (NAV) and size of the company, the board does not believe that the company can viably continue in its existing form,” it said in an RNS filing.
Acorn Income’s share price soared following the stock announcement, closing out the day up 14.8%. Despite this it was still trading at an 18.5% discount, according to data from the Association of Investment Companies.
Shareholders will be able to withdraw their cash at a price close to the prevailing NAV per share.
Alternatively, they can opt for part or all their holding to be rolled into the open-ended Unicorn UK Income fund.
Managers Simon Moon and Fraser Mackersie (pictured) were responsible for Acorn Income’s smaller companies exposure, while Premier Miton oversaw the remainder of the trust’s portfolio. As such, the board said the £527m Oeic follows the same long-term approach with a 67% crossover in portfolio holdings.
Unicorn has agreed to waive management fees for 12 months and the entry charge for shareholders who decide to transfer into the UK Income fund.
The proposals are subject to shareholder and regulatory approval.
See also: BMO Gam loses out on Acorn Income mandate as board makes eleventh hour reversal
