The ongoing battle between the Gore Street Energy Storage fund and shareholder Saba Capital continued today (26 August), as the activist condemned the trust for its lack of transparency and poor performance.
In a statement released earlier this morning, Saba has urged shareholders to vote for resolutions 16 and 17 at the firm’s upcoming AGM (16 September), which would decide whether the trust remains an investment company and its future reorganisation.
“Saba wrote privately to the board twice this year, first asking it to run a tender for a new manager, then warning that its revised strategy would not fix the discount,” the firm said in an open letter. “Both requests were ignored.”
Since then, despite the board cutting NAV by 27%, shares are still trading at a 35% discount, a damning record for shareholders to endorse, according to the activist.
“Its cherry-picked sale of the Kilmannock and Mucklagh projects was to another fund managed by the company’s own investment manager.
“The same manager stood on both sides of the deal, acting for the seller and the buyer.”
The board has not disclosed the price of these sales, has not said how many parties have bid, or why the process ended with a sale to a fund run by its own manager, the US activist continued.
“The adviser the board calls independent, Alexa Capital, has had commercial dealings involving Gore Street since at least 2020,” the spokesperson argued.
“The board says the sale followed a competitive, independent process,” Saba said. “If that is right, it has nothing to hide, so let it show shareholders the evidence.
“A sale to a fund run by the company’s own manager, at a price shareholders are not allowed to see, cannot be taken on faith.”
The hedge fund also pushed back against the claims that Saba’s resolutions would force a fire sale, arguing that resolution 16 just asks if the trust should continue as an investment company. If the shareholders decide it doesn’t, how and over what period is still for the board to decide, it argued.
“The real risk to value is the status quo, an uncovered dividend funded by disposals at prices shareholders never see.”
Richard Stone, chief executive at the Association of Investment Companies (AIC), remained critical of this proposal.
“Gore Street Energy Storage fund provides one of the few opportunities for retail investors to invest in energy storage assets,” he said. “If Saba’s proposal to wind up the company is passed, that opportunity will disappear.”
He warned platform deadlines are fast approaching, so if investors want to have a say, they need to submit votes by 9 September in some cases.
Matthew Read, senior analyst at QuotedData, said: “There is nothing new in Saba’s statement regarding Gore Street Energy Storage this morning that changes our view on the situation.
“Saba’s attempt to force a wind-down at this point is way too short-term and risks eroding significant value by turning GSF into a forced seller,” he said, consistent with the team’s statements earlier this week.
See also: ‘Saba’s proposals are value-destructive’: Gore Street Energy Storage defends itself from US activist
Responding to the open letter from Saba, Gore Street Energy Storage’s board said: “The new independent board, in undertaking its comprehensive review earlier this year, considered all options for the company’s portfolio, including other potential investment managers and the wind-down Saba suggests.
“It assessed a whole portfolio or accelerated sales to be highly challenging in current market conditions, and therefore not the best route to maximising shareholder value.
“The board is urging shareholders to exercise their rights and vote to protect their investment against the Saba resolutions as they risk value destruction.”
