Impax Environmental Markets publishes exit tender offer amid Saba fall-out
Impax Environmental Markets (IEM) has published its exit tender offer following a fall-out with US hedge fund firm Saba Capital.
Last month, IEM’s board published a continuation tender offer, whereby investors would have been able to take a cash exit at close to the trust’s net asset value. However, Saba – which owns more than 20% of shares in IEM – refused to tender its shares, which prevented the offer’s conditions from being met.
In an open letter published on 27 February, Saba said: “Saba was prepared to tender our shares, with one condition that the board was aware of for several weeks: the company’s manager, Impax Asset Management, must first agree to pay the full tender costs for all shareholders who wish to exit.”
IEM’s chair Glen Suarez explained the board “failed to see” how Saba’s proposal “could ever be in the interests of any of its shareholders aside from Saba”.
“[Saba’s] insistence that Impax Asset Management cover all the costs of the transaction, including stamp duty, is unreasonable, not workable and has never been done before,” he said.
See also: Saba Capital proposes 100% cash exit for EWI shareholders
Now, IEM has published a circular outlining plans for an exit tender offer, which will allow shareholders to sell up to 100% of their ordinary shares for cash at tender price. This will be determined based on the final asset value of the tender pool.
However, the exit tender offer can only go ahead if it receives more than 50% approval from its shareholders. All of the trust’s directors intend to vote in favour and to tender their shares under the current offer. If this tender offer completes, the trust’s directors will “consider their ongoing position within the company”.
In an RNS update published today (17 March), IEM’s board warned: “Unless shareholders actively take steps to participate in the exit tender offer (in accordance with the procedures set out in the circular) their investment in the company will continue.
“Shareholders remaining invested in the company post the exit tender offer will be in a significantly smaller company where the board believes there is a significant risk that Saba will hold a controlling interest.
“Shareholders should carefully review the risk factors set out in part five of the circular.”
See also: Herald investment trust cancels tender offer after Saba opposition
The exit tender offer is open from today, with the trust’s publication of accounts expected near the end of the month. The latest time and date to receive yellow tender forms – returnable documents – is 1pm on 17 April.
Results of the exit tender offer elections are expected to be on or around 21 April, while the calculation date for the tender offer will be close-of-play on 19 April.
Commenting on the revised tender offer, chair Suarez said: “Having exhausted every reasonable alternative and having received no guidance from Saba as to its voting or tendering position, the board has been forced to act to protect non-Saba shareholders from the possibility of becoming trapped in a Saba-controlled company where Saba could have the power to change the strategy, objectives, and even the mandate.
“Consequently, the board is unanimously recommending that shareholders vote in favour of the exit tender offer which offers all shareholders an exit from the company at close to NAV.”
He added: “We urge all shareholders to vote in favour of the exit tender offer at the forthcoming general meeting. The directors will be tendering all of their own shares, underscoring our conviction that this is the right outcome for IEM’s shareholders.”
‘The end of a unique trust’
James Carthew, head of investment companies at QuotedData, said the current situation at Impax Environmental Markets is “identical” to that with the Edinburgh Worldwide investment trust.
“Saba, through its intransigence and determination to ride roughshod over the wishes of other shareholders, has brought about the end of a unique trust. In my view, IEM shareholders should vote in favour of the tender and tender all their shares.
“The likely alternative is Saba seizing control, appointing itself manager (probably on a higher fee if the charges on its ETF are anything to go by), and changing the mandate. There is no obvious listed fund to switch into. So, in this case, the best solution for those that believe in IEM’s strategy, might be to take a look at Impax’s open-ended fund.”