Gabelli Value Plus+ faces litigation threat as liquidation row rumbles on
Board sets out further consultation period to 14 October
The board of Gabelli Value Plus+ Trust said it received a letter on 2 October from the general counsel to majority shareholder Associated Capital Group (ACG) "indicating that (unspecified) litigation concerning the company [Gabelli Value Plus+] may be a distinct possibility".
In an update today (6 October) the board said it has initiated a further period of shareholder consultation which it said was "regrettably, partly in response" to the letter.
The board stated that it still backs members' voluntary liquidation of Gabelli Value Plus+, in the belief that "it would be in the best interests of the company and its shareholders as a whole".
It said that the "resounding feedback from an absolute majority of all shareholders is that they want a liquidation of the company and return of their (and their underlying investors') capital as soon as practicable".
ACG 'frustrating shareholders' wishes' after blocking Gabelli Value Plus+ liquidation vote
ACG, which is the majority shareholder in Gabelli, has previously blocked a proposed liquidation vote even after two-thirds of shareholders voted against continuation at its July AGM.
The board has said it will consult further with shareholders during a consultation period which runs from today (6 October) to the close of business on 14 October and that while it was open to suggestions during the consultation period, it believed that there are three main options currently under consideration to be put to a general meeting.
It said these are: a members' voluntary liquidation of the company; a significant return of shareholders' capital, most likely by way of a tender offer; or a material change to the company's investment objective and investment policy to reflect realisation of the portfolio and a reinvestment into cash and cash equivalent securities.
In response to the latest developments, James Carthew, head of investment company research at QuotedData in a post on its website today (6 October), stated that while its idea about a dividend has been rejected on tax grounds, "a tender offer achieves much the same result - almost all of the cash comes back to shareholders".
He added: "A large shareholder that doesn't take up the tender might be forced to make a mandatory bid for the whole company, otherwise there might be a rump trust which would most likely ask shareholders for permission to liquidate once again."
But Carthew noted that "we may be getting closer to a resolution, however".
The board of the trust stated that members' voluntary liquidation does require a special resolution to be passed and warned that ACG "may again decide to block it but the board appeals to ACG to take full account of the wishes of the clear majority of shareholders".
It said that a further announcement will be made "as soon as practicable" after the consultation period ends.
Previously, the situation has been described as "rather a mess" by analysts at Stifel, while Numis accused ACG of "seek[ing] to frustrate the board's plans".
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