PORTLAND, Maine - In a move to protect shareholder interests and prevent unilateral control, ASA Gold and Precious Metals Limited (NYSE: ASA), a non-diversified, closed-end fund with a market capitalization of $374 million, has adopted a limited-duration shareholder rights plan. The company, which has demonstrated strong performance with a 29% year-to-date return and maintains a modest P/E ratio of 4.3, faces this situation as Saba Capital Management, LP currently holds approximately 17.18% of ASA's outstanding common shares. According to InvestingPro data, ASA has maintained consistent dividend payments for 18 consecutive years, highlighting its commitment to shareholder value.
The rights plan, set to expire on December 20, 2024, mirrors the terms of previous plans adopted by the company's Board of Directors and a specially formed Rights Plan Committee. The initiative aims to safeguard against any entity, specifically Saba Capital, from gaining control without offering a premium deemed appropriate by the Board or the Committee. For deeper insights into ASA's financial health and valuation metrics, InvestingPro subscribers can access exclusive analysis and additional ProTips that help evaluate the company's strategic position.
Tensions have escalated since Saba's proxy contest in early 2024 to influence the company's Board composition. The current Board includes two directors nominated by Saba, referred to as the New Directors, and two re-elected directors proposed by the prior Board, known as the Legacy Directors. Saba has also initiated legal action against the company and certain directors, challenging the legality of the rights plans under the Investment Company Act of 1940. The case is currently pending in the Southern District of New York.
The Committee, consisting solely of Legacy Directors, alleges that the New Directors have not proposed measures to enhance shareholder value or address the company's trading discount. Instead, they accuse the New Directors of acting in Saba's interests rather than the company's collective shareholder base.
The rights plan will grant one right per ASA common share, exercisable if an individual or group acquires 15% or more of the outstanding shares. Those holding rights can then purchase ASA common shares at $1.00 each or exchange each right for one common share, under certain conditions.
ASA emphasizes that it remains open to constructive engagement with Saba, provided it aligns with the company's investment focus in the precious metals sector. The Committee has also expressed its readiness to work with all Board members and shareholders to forge a positive direction for the company's future.
The details of the rights plan will be outlined in filings with the U.S. Securities and Exchange Commission. This move is based on a press release statement from ASA Gold and Precious Metals Limited.
In other recent news, ASA Gold & Precious Metals Ltd is currently facing a governance dispute among its board members. This information was revealed in a recent SEC filing, highlighting an ongoing issue between two sets of directors: the New Directors and the Legacy Directors, both of whom were elected in April 2024. The dispute has led both groups to engage separate legal counsel and seek reimbursement for their legal expenses as per the company's bye-laws.
Correspondence between the two parties' legal representatives, dating back to October 2024, has been included in the filing, but the specifics of the disagreements remain undisclosed. The company has clarified that the information provided in the filing is furnished and not subject to the liability of certain sections of the Exchange Act or the Securities Act.
Investors and stakeholders are encouraged to keep an eye on the company's filings and announcements for further developments regarding this boardroom disagreement.
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