Herald Investment Trust said it is still trying to reach a deal with activist investor Saba Capital but warned it will press ahead with a full tender offer near NAV if talks fail.
The board confirmed it continues to seek a “mutually agreeable solution” that would give shareholders a choice of outcome. Failing that, it will proceed with a backstop tender offer allowing eligible shareholders to exit up to 100% of their holding at a price close to net asset value.
The Herald Investment Trust proposed a tender offer earlier this year, but Saba blocked it.
But the trust is being forced to explore ways to fight off the constant pressure from Saba Capital, which is attempting to seize control of the £1.1bn investment trust.
Herald, which has delivered a 2,904% total return on NAV since inception, acknowledged that a forced exit would trigger an unwelcome tax event for many long-standing shareholders holding significant capital gains.
It said it is exploring ways to let investors roll into a non-Saba-controlled vehicle in a tax-efficient manner while still offering a meaningful cash exit, though it cautioned there is no certainty this can be achieved as it depends on third-party agreements and regulatory approvals.
In the meantime, Herald has been aggressively raising liquidity. Cash and government bonds have climbed to around 26% of net assets as at 26 March, up from 18.4% at the end of February. The investment manager has been selling down holdings, including less liquid positions, to avoid the value destruction that could come from a fire sale under time pressure.
The board noted that the large majority of non-Saba shareholders have made clear through previous votes that they have no desire to end up in a Saba-controlled vehicle.