Activist shareholder Asset Value Investors (AVI) is urging shareholders to oust a director from billionaire Dan Loeb’s UK feeder fund in retaliation for the board’s refusal to put its discount control mechanism to a shareholder vote.
Third Point Investors Limited (TPIL) is the UK-listed version of Loeb’s New York-based hedge fund, Third Point.
AVI, which owns 10% of TPIL, has been pushing to allow shareholders to sell shares back at price reflecting the underlying assets instead of the share price, which carries a 15% discount.
The board has rebuffed AVI’s multiple attempts to put the matter to a shareholder vote at the trust’s upcoming EGM on 1 December, with Loeb accusing the activist investor of attempting to “commandeer the apparatus of the company in pursuit of its own agenda”.
AVI slams board’s ‘intransigence and disregard for good corporate governance’
In response, AVI and three other shareholders, representing over 18% of TPIL’s ordinary shares, have requisitioned a resolution to remove director Joshua Targoff. Targoff is a partner, COO and general counsel at Third Point and also sits on the trust’s board.
“The board’s intransigence and disregard for good corporate governance in their continued refusal to put our discount-control related resolution to shareholders has led us to propose this resolution instead as a proxy,” AVI executive director Tom Treanor said.
“Shareholders wishing to express their support for our original resolution should vote for the resolution to remove Mr Targoff.”
Board says attempts to remove director are ‘wholly without merit’
In an RNS filing on Wednesday, the board slammed the resolution as being “wholly without merit” and expressed its “unanimous support” for Targoff.
It denied claims his position on the board represents a conflict of interest, noting that, “among other things,” he does not attend meetings of board committees where matters concerning the trust’s relationship with Third Point are discussed.
“He [Targoff] is fully focused on the measures introduced to reduce the discount and the other directors have found it beneficial to work alongside a representative of Third Point LLC who owes all of the usual director duties to the company.”
Even before AVI put forward the resolution, Targoff’s position on the board appeared precarious. At the investment company’s AGM in July, more than 20% of shareholders voted against his reappointment.
The board said it regretted “further time and company resources are being expended in responding to the attempts of AVI and the other requisitionists to disrupt the company’s efforts to enhance shareholder value”.
‘If our proposal was not backed by a majority of shareholders we would move on’
AVI said that contrary to the board’s assertions, it has “no interest in prolonging this dispute” over the discount control mechanism.
“If our proposal was not backed by a majority of independent shareholders, we would quite happily move on,” Treanor said.
“All we have ever sought is a transparent vote to assess shareholders’ views. The board’s rationale for not adopting the measures we have called for – despite such measures reflecting the underlying redemption terms offered by the master fund – seems to be that too many shareholders will want an exit. This demonstrates an alarming lack of confidence in natural demand for TPIL’s investment proposition.”
