Designed to Prevent Creeping Control and
Protect Long-Term Value for All Shareholders
The Rights Plan Committee (the “Committee”) of the Board of
Directors (the “Board”) of ASA Gold and Precious Metals Limited
(“ASA” or the “Company”) (NYSE: ASA) has unanimously adopted a
limited-duration shareholder rights plan (“Rights Plan”) to protect
the interests of the Company and all of its shareholders. The
current rights plan will expire at the close of business on
December 20, 2024. The terms of the newly adopted Rights Plan are
substantively identical to the terms of the shareholder rights
plans that were adopted by the Board on December 31, 2023, and
April 26, 2024, and by the Committee on August 23, 2024.
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
17.18% of ASA’s outstanding common shares. The Board is currently
composed of two directors who were proposed by Saba and elected at
the Company’s April 26, 2024 shareholder meeting (the “New
Directors”), and two directors who were proposed by the prior Board
and re-elected at the April 26, 2024 shareholder meeting (the
“Legacy Directors”). Saba filed suit in January of 2024 against the
Company, individuals who had previously served on the Board, and
the Legacy Directors for adopting the shareholder rights plans,
seeking a determination that such rights plans are illegal under
the Investment Company Act of 1940. The lawsuit is pending in the
Southern District of New York.
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
Bermuda counsel, and utilized their Board positions to further
Saba’s particular interests rather than protecting the best
interests of the Company and all of its shareholders. See,
generally, ASA’s Form 8-K filing of November 8, 2024. It is the
Committee’s belief that the New Directors are unwilling to
participate in good faith exploration of potential compromise on
governance actions that are necessary for the Company to remain in
ordinary operation and comply with applicable laws. The efforts by
the New Directors appear designed to allow Saba to run its Board
slate as proposed in its Schedule 13D/A filing of September 19,
2024, without alternative candidates and thereby prevent ASA
shareholders as a whole from determining the Company’s future.
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 $0.02 per common share to $0.04 per common share of the
Company.
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 15% or more of ASA’s
outstanding common shares. Any shareholders with beneficial
ownership of 15% or more of ASA’s outstanding common shares
(including Saba) prior to this announcement are grandfathered at
their beneficial ownership levels at the date the Rights Plan was
adopted but are not permitted to acquire additional common shares
representing 0.25% or more of the outstanding common shares without
triggering the Rights Plan.
Pursuant to the Rights Plan, should it be triggered, the
Committee may decide that:
- 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 $1.00 per share, one
ASA common share.
- 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 U.S. Securities
and Exchange Commission.
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 80% of its total
assets must be (i) invested in common shares or securities
convertible into common shares of companies engaged, directly or
indirectly, in the exploration, mining or processing of gold,
silver, platinum, diamonds or other precious minerals, (ii) held as
bullion or other direct forms of gold, silver, platinum or other
precious minerals, (iii) invested in instruments representing
interests in gold, silver, platinum or other precious minerals such
as certificates of deposit therefor, and/or (iv) invested in
securities of investment companies, including exchange-traded
funds, or other securities that seek to replicate the price
movement of gold, silver or platinum bullion.
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 Bermuda and is permitted to
register with the Securities and Exchange Commission as a closed
end investment company under the terms of an exemptive order issued
by the Commission in 1958. ASA is a “passive foreign investment
company” for United States federal income tax purposes. As a
result, United States shareholders holding shares in taxable
accounts are encouraged to consult their tax advisors regarding the
tax consequences of their investment in the Company’s common
shares.
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 U.S. federal securities laws that are intended to be
covered by the safe harbors created thereunder. The Company’s
actual performance or results may differ from its beliefs,
expectations, estimates, goals and projections, and consequently,
investors should not rely on these forward-looking statements as
predictions of future events. Forward-looking statements are not
historical in nature and generally can be identified by words such
as “believe,” “anticipate,” “estimate,” “expect,” “intend,”
“should,” “may,” “will,” “seek,” or similar expressions or their
negative forms, or by references to strategy, plans, goals or
intentions. The absence of these words or references does not mean
that the statements are not forward-looking. The Company’s
performance or results can fluctuate from month to month depending
on a variety of factors, a number of which are beyond the Company’s
control and/or are difficult to predict, including without
limitation: the Company’s investment decisions, the performance of
the securities in its investment portfolio, economic, political,
market and financial factors, and the prices of gold, platinum and
other precious minerals that may fluctuate substantially over short
periods of time. The Company may or may not revise, correct or
update the forward-looking statements as a result of new
information, future events or otherwise.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241219876764/en/
Axel Merk Chief Operating Officer (650)
376-3135 or (800) 432-3378 info@asaltd.com
Grafico Azioni ASA Gold and Precious Me... (NYSE:ASA)
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