Responding to a 30 September communication from AVI, which called for the board of directors to organise an EGM to consider a resolution concerning discount control, TPI refused, adding that it “hopes this will put an end to AVI’s continued attempts to commandeer the apparatus of the company in pursuit of its own agenda, at the expense of all shareholders”.
The two parties have locked horns on this previously, with the initial rejection coming in July 2021 following calls for investors to be allowed to redeem their capital at net asset value (NAV) less costs.
On this occasion, TPI highlighted that it remains “fully focused on a strategy to narrow the NAV discount”, a process it first announced in April 2021. Since then, the discount to NAV has closed from 20% to 10%, before falling back to 15% as of 21 October 2021.
It added the board has convened an EGM for December in order to approve a change in the exchange offer mechanism that it “believes and expects will attract incremental buyers for the company’s shares” and that it has had “extensive feedback from a large cohort of shareholders” regarding discount management strategy.
The December EGM will also “expressly invite” a discussion on discount control and any issues raised by AVI in its campaign, “if shareholders so wish”, although no vote will be held until the 2022 AGM.
TPI said that considering these actions, it found the actions of AVI “disappointing” and added that while the shareholder has “justified its behaviour by arguing that it is only pursuing a so-called ‘advisory vote'” AVI should be aware that an advisory resolution “is flawed in law”.
“Given the obviousness of this ‘first principle’, the board does not intend to engage in a legal argument with AVI and hopes that that it will not be necessary to waste further resources on any court action,” it said.
TPI continued, stating that it understands the campaign by AVI is “a means of drawing attention to itself, albeit through novel legal arguments and an incorrect understanding of how companies work,” and that it “regrets the continued misdirection of resources and attention for the company and the cost to all shareholders of addressing AVI’s campaign”.
“The board further notes that the London-listed investment trust managed by AVI, which trades at a persistent discount, has not itself adopted discount-control mechanisms similar to those AVI advocates for the company.”