ASA Gold and Precious Metals Fund Adopts Limited-Duration Shareholder Rights Plan
Designed to Prevent Creeping Control and Protect Long-Term Value for All Shareholders
The initial and subsequent plans were adopted in response to the rapid and significant accumulation of ASA shares by Saba Capital Management, LP (“Saba”) that occurred in late 2023, which was followed by Saba’s proxy contest during the first quarter of 2024 to seek to gain control of the Company’s Board. Based on public filings, Saba’s current position in ASA represents approximately
The Committee was established by the prior Board on April 26, 2024, to review, consider, make determinations and approve or otherwise cause the Company to take actions with respect to any matters relating to a shareholder rights plan. The Legacy Directors are currently the sole members of the Committee. At the same time, the prior Board determined that it was advisable and in the best interests of the Company and its shareholders to authorize the creation of a Litigation Committee to act on matters related to the lawsuit filed by Saba in January of 2024 and any other dispute or disagreement with Saba or its representatives. The Legacy Directors are currently the sole members of the Litigation Committee.
The limited-duration Rights Plan was adopted after concerted efforts by the Legacy Directors to engage with the New Directors on the latter’s views about the Company. Notwithstanding the statements made by Saba in its proxy statements earlier this year that Saba’s nominees “will bring fresh ideas and perspectives to address the Fund’s deep trading discount,” neither Saba nor its nominated New Directors have offered any ideas regarding the discount, made any recommendations to improve shareholder value or manager performance, or provided thoughts as to alternative investment advisers, despite repeated requests from the Legacy Directors to do so. Instead, the New Directors have retained separate legal counsel, made unfounded allegations of purported “misconduct” by the Legacy Directors, sought without basis or effect to disband the Committee and the Litigation Committee, taken steps to prevent the Company from receiving legal advice from its
Accordingly, the Rights Plan is intended to prevent Saba’s unilateral attempt to obtain creeping control of the Company, which the Committee believes would be detrimental to ASA and its shareholders as a whole. The Rights Plan is designed to enable ASA’s shareholders to realize the long-term value of their investment, provide an opportunity for shareholders to receive fair and equal treatment in the event of any proposed takeover of ASA and guard against tactics to gain control of ASA without paying shareholders what the Board or the Committee considers to be an appropriate premium for that control or recompense for the costs incurred by the Company in its efforts to protect shareholder interests. In addition, the Rights Plan is intended to allow for all shareholders to determine the Company’s future, as for example, by providing an opportunity for shareholders to communicate their wishes for the Company by nominating directors, approve a new investment agreement with the Company, and/or approve any fundamental changes Saba or the New Directors propose be made to the stated investment objectives of ASA. The Rights Plan is not intended to deter offers or preclude the Board or the Committee from taking action that it believes is in the best interest of the Company and its shareholders.
The Committee recognizes that Saba has a large share position and affiliated status with the Company and welcomes engagement with Saba that is consistent with the Company’s status as a non-diversified, equity closed-end fund that seeks long-term capital appreciation through investing in the precious metals sector of the global capital markets. The Committee believes that the previous shareholder rights plans have been successful in deterring Saba from accumulating additional shares of the Company and thus achieving creeping control of the Company without paying an appropriate control premium to the Company’s shareholders. If Saba were to gain control, and based upon interaction with the New Directors, the Committee believes it is highly likely that Saba would seek to dramatically modify the Company’s core identity and strategy, including but not limited to using its large ownership stake to either become the Company’s investment adviser (notwithstanding Saba’s lack of experience in precious metals equities) and/or change the stated investment objectives and fundamental nature of ASA. Accordingly, the Committee believes that the interests of the Company and its shareholders would be adversely affected if Saba were to gain control of the Company.
With the new Rights Plan, the Committee seeks to deter Saba from its efforts to take control of the Company by purchasing more shares. The Committee members remain willing to engage with the full Board, Saba and other shareholders to develop constructive ideas for the future of the Company. However, at this point the Committee can only conclude that Saba intends to pursue its goals indirectly through the New Directors and by running its board slate for election at the next annual general meeting, without telling the Legacy Directors or shareholders what it intends to do if it achieves full control of the Board. The Legacy Directors have been clear with shareholders about their commitment to maintaining and protecting the Company in its stated form and as purchased by shareholders, and has honored that commitment, including by approving previous and the current Rights Plans, adopting a discount management program in April 2024 through a stock repurchase plan, and doubling the shareholder distribution rate from
ASA will issue one right for each ASA common share outstanding as of the close of business on January 9, 2025. All shareholders, including Saba, will receive one right for each share owned. The rights will initially trade with ASA’s common shares and will become exercisable only if a person acquires
Pursuant to the Rights Plan, should it be triggered, the Committee may decide that:
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Each holder of a right (other than the acquiring person, whose rights will have become void and will not be exercisable) will be entitled to purchase, for a purchase price of
per share, one ASA common share.$1.00 - Alternatively, (on a cashless basis) each outstanding right (other than the rights held by the acquiring person, whose rights will have become void) will be exchanged for one common share.
Further details about the Rights Plan will be contained in a Form 8-K and Form 8-A to be filed by ASA with the
About ASA
ASA is a non-diversified, closed-end fund that seeks long-term capital appreciation primarily through investing in companies engaged in the exploration for, development of projects in, or mining precious metals and minerals.
It is a fundamental policy of ASA that at least
ASA employs bottom-up fundamental analysis and relies on detailed primary research, including meetings with company executives, site visits to key operating assets, and proprietary financial analysis in investment decisions. Investors are encouraged to visit the ASA’s website http://www.asaltd.com/ for additional information, including historical and current share prices, news releases, financial statements, tax, and supplemental information.
ASA is organized under the laws of
About Merk
Merk Investments LLC, an SEC-registered investment adviser, provides investment advice on liquid global markets, including domestic and international equities, fixed income, commodities, and currencies. For more information on Merk, please visit www.merkinvestments.com. Merk Investments was approved as ASA’s investment adviser on April 12, 2019 by a vote of ASA shareholders.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of
The Company concentrates its investments in the gold and precious minerals sector. This sector may be more volatile than other industries and may be affected by movements in commodity prices triggered by international monetary and political developments. The Company is a non-diversified fund and, as such, may invest in fewer investments than that of a diversified portfolio. The Company may invest in smaller-sized companies that may be more volatile and less liquid than larger more established companies. Investments in foreign securities, especially those in the emerging markets, may involve increased risk as well as exposure to currency fluctuations. Shares of closed-end funds frequently trade at a discount to net asset value. All performance information reflects past performance and is presented on a total return basis. Past performance is no guarantee of future results. Current performance may differ from the performance shown.
This press release does not constitute an offer to sell or solicitation of an offer to buy any securities.
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Axel Merk
Chief Operating Officer
(650) 376-3135 or (800) 432-3378
info@asaltd.com
Source: ASA Gold and Precious Metals Limited