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Saba Capital Files Lawsuit Against ASA Gold and Precious Metals and its Board of Directors Over Unlawful Shareholder Rights Plan
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Rhea-AI Summary
Saba Capital Management, L.P. has filed a lawsuit against ASA Gold and Precious Metals Limited and its Board of Directors for adopting a discriminatory and unlawful shareholder rights plan, violating the Investment Company Act of 1940. The lawsuit seeks to invalidate the poison pill, targeting the company's entrenchment and fees over complying with the law and respecting shareholders' rights. ASA's behavior violates investor protection regulations, potentially causing severe dilution and economic harm to shareholders.
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ASA’s Adoption of a Discriminatory “Poison Pill” Harms Shareholders and Represents a Violation of the Investment Company Act of 1940
Saba Intends to Hold ASA and its Directors – Mary Joan Hoene, Bruce Hansen, William Donovan, Axel Merk and Anthony Artabane – Accountable for Their Punitive, Anti-Shareholder Behavior
NEW YORK--(BUSINESS WIRE)--
Saba Capital Management, L.P. (“Saba” or “we”), which manages certain investment funds that together beneficially own 16.9% of the outstanding shares of ASA Gold and Precious Metals Limited (“ASA” or the “Company”) (NYSE: ASA), today announced that it has filed a lawsuit in the United States District Court for the Southern District of New York (the “Court”) against ASA and each member of its Board of Directors (Mary Joan Hoene, Bruce Hansen, William Donovan, Axel Merk and Anthony Artabane) regarding their decision to adopt a so-called shareholder rights plan that violates the Investment Company Act of 1940 (the “’40 Act”).
Saba is seeking to invalidate the Company’s discriminatory and unlawful shareholder rights plan, which is also known as a poison pill. The litigation follows similar lawsuits that Saba has recently brought and won against BlackRock, Eaton Vance and Nuveen over the use of control share provisions that were found to violate the ’40 Act.
Michael D’Angelo, Partner and General Counsel of Saba, commented:
“By adopting a poison pill that so clearly disregards the ’40 Act, ASA and its Board of Directors have made it clear that their top priorities are entrenchment and fees – not complying with the law and respecting shareholders’ rights. ASA designed the poison pill in a sly and self-serving manner to guarantee that all shareholders will have the potential to suffer greatly, not just Saba. If the poison pill is executed, there will inevitably be massive casualties across the Company’s shareholder base. Shareholders will not only face severe dilution, but ASA has also ensured that the poison pill will create significant economic harm for those shareholders who do not have the financial means to participate in the rights plans.
Specific to Saba, the poison pill targets our right to acquire additional shares in proportion to our holdings of the Company’s common stock – a right that is available to all other shareholders and that we are legally entitled to. This is precisely the type of anti-shareholder behavior and punitive discrimination that the ’40 Act was designed to prevent and which regulators focused on investor protection vehemently oppose.
Shareholders of ASA, or any product managed by its advisor Merk Investments, need to be on high alert. If ASA, its Board, and Axel Merk are willing to break federal law to avoid being held accountable for the Company’s severe long-term underperformance and persistent trading price discount to net asset value, what will they do next? If ASA’s directors truly cared about creating value for shareholders, they would proactively rescind the poison pill and transition their positions to qualified fiduciaries.”
About Saba Capital
Saba Capital Management, L.P. is a global alternative asset management firm that seeks to deliver superior risk-adjusted returns for a diverse group of clients. Founded in 2009 by Boaz Weinstein, Saba is a pioneer of credit relative value strategies and capital structure arbitrage. Saba is headquartered in New York City. Learn more at www.sabacapital.com.
The lawsuit is about Saba Capital Management, L.P. filing a lawsuit against ASA Gold and Precious Metals Limited and its Board of Directors for adopting a discriminatory and unlawful shareholder rights plan, violating the Investment Company Act of 1940.
What is the purpose of the lawsuit?
The purpose of the lawsuit is to invalidate the poison pill and hold ASA and its directors accountable for their behavior, which prioritizes entrenchment and fees over complying with the law and respecting shareholders' rights.
What are the potential consequences of the poison pill?
The potential consequences of the poison pill include severe dilution and economic harm to shareholders, particularly targeting Saba's right to acquire additional shares in proportion to their holdings of the company's common stock.
What does the lawsuit aim to prevent?
The lawsuit aims to prevent ASA's behavior, which violates investor protection regulations and the Investment Company Act of 1940, potentially causing severe harm to shareholders.
established in 1958, asa gold and precious metals limited (“the company”) is a closed-end precious metals and mining fund registered with the united states securities and exchange commission and domiciled in bermuda. the company is one of the oldest investment management firms focused solely on the precious metals and mining industry. managed by an experienced investment team, asa invests primarily in the securities of companies engaged in the exploration, mining or processing of gold, silver, platinum, diamonds or other precious minerals. investment decisions are supported with thorough bottom-up analysis based on fundamental research, due diligence mine visits and hundreds of meetings with mining executives and specialists each year. the common shares of the company are listed on the new york stock exchange under the ticker symbol “asa”. the company is managed internally by its directors and officers.
