Alliance Trust fights back against rebel Laxey

By Daily Mail Reporter
Updated: 10:51 EDT, 12 April 2011

Investment company Alliance Trust is rallying support against an impending shareholder revolt with a staunch defence of its record and latest annual results.

Katherine Garrett-Cox: Defending Alliance's record

The 123-year-old trust reported a 16% rise in net asset value to 439p per share at January 31 compared with the year before.

It also hiked its full-year dividend by 3% to 8.395p.

Chief executive Katherine Garrett-Cox hailed the 'good progress' in uncertain times, and added she was optimistic on the prospects for global equities and wanted to exploit the volatility to build long-term positions.

Dundee-based Alliance Trust is 'strongly' urging shareholders to vote against two resolutions by activist investor Laxey Partners at an AGM on May 20.

The hedge fund is calling for the introduction of an automatic share buyback when the price is less than 90% of the value of the underlying investments.

It also wants to change the voting structure of the shares which it believes gives Alliance too much clout when pushing its own views.

In the past week, it has stepped up its attack by claiming Alliance is fighting the changes because it is terrified of exposing soaring expenses racked up by subsidiaries. And it has accused Alliance of keeping important information from shareholders during the trust's continued pedestrian performance.

Laxey has based its claims on the fact that Alliance Trust investors have had to put up with a negative return in two of the last five years, while Garrett-Cox's salary and benefits have risen 110% over the same period.

Alliance chairman Lesley Knox has issued a detailed rebuttal of Laxey's two resolutions ahead of the AGM.

The trust is understood to be willing to amend its voting mechanism, but it still wants shareholders to vote against the resolution because of its wording.

'Through regular engagement with our shareholders, we believe that we have a good understanding of their long-term investment priorities,' said Knox. 'We are focused on managing the Trust in the best interests of these long-term shareholders, not those who are motivated purely to make a short-term gain.

'The Board therefore strongly recommends that shareholders vote against these requisitioned resolutions.'

Shares in Alliance were down 0.9p at 374.2p today.

It is the largest generalist UK investment trust by market value listed on the London stock exchange. At 31 July 2010, it managed assets of over £2.6bn.

Chief Garrett-Cox, who became chief executive in 2008, was dubbed 'Katherine the Great' for her ability to pick shares while in former jobs at Aberdeen Asset Management and Morley Fund Management.