NEW YORK--(BUSINESS WIRE)-- Saba Capital Management, L.P. (together with certain of its affiliates, “Saba” or “we”) today announced its intention to requisition the Boards of Directors (the “Boards”) of CQS Natural Resources Growth & Income PLC (CYN:LSE), European Smaller Companies Trust PLC (ESCT:LSE), Middlefield Canadian Income PCC (MCT:LSE) and Schroder UK Mid Cap Fund PLC (SCP:LSE) (the “Trusts”) to hold General Meetings for shareholders to vote on a proposal to implement a scheme or process to provide the opportunity to transition to comparable open-ended funds. Saba is convening the General Meetings based on thoughtful feedback received from shareholders over the course of its campaign to deliver value to the U.K. trust sector.¹

In connection with the announcement, Saba today issued the following open letter to its fellow shareholders of the four Trusts. For more information, visit: www.mindthegap-uktrusts.com.

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10 February 2025

Fellow Shareholders,

On behalf of Saba Capital Management, L.P. (together with certain of its affiliates, “Saba” or “we”), I am writing to inform you that today we announced our intention to requisition the Boards of Directors (the “Boards”) of CQS Natural Resources Growth & Income PLC (CYN:LSE), European Smaller Companies Trust PLC (ESCT:LSE), Middlefield Canadian Income PCC (MCT:LSE) and Schroder UK Mid Cap Fund PLC (SCP:LSE) (the “Trusts”) to convene general meetings (the “General Meetings”). We are calling these General Meetings to provide shareholders the opportunity to vote on a proposal to transition each of the Trusts to an open-ended structure and receive long-overdue liquidity at net asset value (“NAV”).

We believe that Saba’s proposal would provide the Trusts’ shareholders with the following benefits:

1. Long-Overdue Liquidity at NAV: A transition to an open-ended structure would eliminate the discount in each of these Trusts and would enable shareholders to achieve liquidity at NAV.
2. Manager & Strategy Continuity: Shareholders would remain invested in the same strategy with the same manager in an open-ended – rather than closed-ended – structure.
3. Tax Efficiency: Expected opportunity for shareholders to roll over their investment into an open-ended fund without triggering capital gains tax.

Responding to Shareholder Feedback: Providing the Option for Liquidity at NAV

During our campaign to deliver value to shareholders of U.K.-listed investment trusts, we received thoughtful feedback from our fellow shareholders that has shaped the request we now plan to put forward at CYN, ESCT, MCT and SCP.² While we acknowledge that shareholders were not ready to fully replace the boards with new directors, it was clear from our conversations that many investors agree with Saba on one crucial point: the importance of the option for liquidity at NAV.

In our experience, shareholder action is often the impetus that some boards and managers need to take control of discount problems and deliver liquidity options for shareholders. For example, several of the U.K.-listed trusts we called for change at have since announced shareholder-friendly initiatives – which we believe would not have occurred had we not directed the industry’s attention to the performance issues at those trusts. Most recently, Henderson Opportunities Trust PLC (HOT:LSE) announced a scheme to allow shareholders to roll their investment into an open-ended fund or to receive their entitlement upon the winding-up of the trust in cash.³ It is encouraging that our campaign has served as a wake-up call for trusts like HOT, but for others – such as CYN and ESCT – there is clearly more work to be done.

Saba’s Proposal: Give Shareholders the Option to Achieve Liquidity in an Open-Ended Fund

It is apparent that shareholders of CYN, ESCT, MCT and SCP have been trapped in closed-end vehicles trading at deep discounts for years. In our view, the necessary solution is to roll or convert these Trusts into open-ended funds, which by definition trade at NAV and are free of the structural issues that plague closed-end funds. As a result, we intend to requisition General Meetings to give you the chance to vote on a proposal for the Trusts to implement a scheme or process that would provide you the opportunity to roll your investment into a better performing open-ended fund with the same strategy and the same manager.

While MCT and SCP were not part of our initial campaign, we believe they have traded at wide discounts for too long and that their shareholders would greatly benefit from an open-ended fund structure. Of the seven trusts targeted in our initial campaign, we have focused on CYN and ESCT because we believe they are best positioned for an open-ended fund conversion and, unlike HOT and KPC, their boards have not shown an intent to take this action on their own.

The Opportunity: Remain Invested in a Fund That Will Never Trade at a Discount to NAV

Our goal is simple: provide you the opportunity to remain invested in the same strategy within an open-ended fund structure that will never trade at a discount to NAV.

The choice is yours to make, and we are excited to offer you the long-overdue liquidity opportunity that you deserve. Saba remains committed to acting as a positive force in the market by putting shareholders’ interests first, delivering enhanced returns for investors and helping rehabilitate the fractured U.K.-listed investment trust sector.

Sincerely,

Boaz Weinstein
Founder & Chief Investment Officer, Saba Capital

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SABA HOLDINGS IN EACH TRUST

As of 6 February 2025, Saba, directly or indirectly, has the following aggregate interest in each of the Trusts (including at least a 5% holding of shares in each Trust):

About Saba

Saba Capital Management, L.P. is a global alternative asset management firm that seeks to deliver superior risk-adjusted returns for a diverse group of clients. Founded in 2009 by Boaz Weinstein, Saba is a pioneer of credit relative value strategies and capital structure arbitrage. Saba has offices in New York City and London. Learn more at www.sabacapital.com.

DISCLAIMER

Saba Capital Management, L.P. (“Saba”) is publishing this announcement solely for the information of other shareholders in each of CQS Natural Resources Growth & Income PLC (CYN:LSE), European Smaller Companies Trust PLC (ESCT:LSE), Middlefield Canadian Income PCC (MCT:LSE) and Schroder UK Mid Cap Fund PLC (SCP:LSE) (the “Trusts”). This announcement is not intended to be and does not constitute or contain any investment recommendation as defined by Regulation (EU) No 596/2014 (as it forms part of the domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018). No information in this announcement should be construed as recommending or suggesting an investment strategy. Nothing in this announcement or in any related materials is a statement of or indicates or implies any specific or probable value outcome in any particular circumstance. This announcement is provided merely for general informational purposes and is not intended to be, nor should it be construed as (1) investment, financial, tax or legal advice, or (2) a recommendation to buy, sell or hold any security or other investment, or to pursue any investment style or strategy. Neither the information nor any opinion contained in this announcement constitutes an inducement or offer to purchase or sell or a solicitation of an offer to purchase or sell any securities or other investments in the Trusts or any other trust by Saba or any of its affiliates in any jurisdiction. This announcement does not consider the investment objective, financial situation, suitability or the particular need or circumstances of any specific individual who may access or review this announcement and may not be taken as advice on the merits of any investment decision. This announcement is not intended to provide the sole basis for evaluation of, and does not purport to contain all information that may be required with respect to, any potential investment in the Trusts. Any person who is in any doubt about the matters to which this announcement relates should consult an authorised financial adviser or other person authorised under the UK Financial Services and Markets Act 2000. To the best of Saba’s ability and belief, all information contained herein is accurate and reliable, and has been obtained from public sources that Saba believes to be accurate and reliable. However, such information is presented “as is”, without warranty of any kind, whether express or implied, and Saba has not independently verified the data contained therein. All expressions of opinion are subject to change without notice, and Saba does not undertake to update or supplement any of the information, analysis and opinion contained herein.

Saba may continue transacting in the shares and securities of the Trusts, and/or derivatives referenced to them (which may include those providing long and short economic exposure) for an indefinite period following the date of this announcement and may increase or decrease its interests in such shares, securities and/or derivatives at any time.

FORWARD LOOKING STATEMENTS

This announcement contains certain forward-looking statements and information that are based on Saba’s beliefs, as well as assumptions made by, and information currently available to, Saba. These statements include, but are not limited to, statements about strategies, plans, objectives, expectations, intentions, expenditures and assumptions and other statements that are not historical facts. When used herein, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “project” and similar expressions (or their negative) are intended to identify forward-looking statements. These statements reflect Saba’s current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual results, performance or achievements may vary materially and adversely from those described herein. There is no assurance or guarantee with respect to the prices at which any securities of the Trusts or any other trust will trade, and such securities may not trade at prices that may be implied herein. Any estimates, projections or potential impact of the opportunities identified by Saba herein are based on assumptions that Saba believes to be reasonable as of the date hereof, but there can be no assurance or guarantee that actual results or performance will not differ, and such differences may be material and adverse. No representation or warranty, express or implied, is given by Saba or any of its officers, employees or agents as to the achievement or reasonableness of, and no reliance should be placed on, any projections, estimates, forecasts, targets, prospects or returns contained herein. Neither Saba nor any of its directors, officers, employees, advisers or representatives shall have any liability whatsoever (for negligence or misrepresentation or in tort or under contract or otherwise) for any loss howsoever arising from any use of information presented in this announcement or otherwise arising in connection with this announcement. Any historical financial information, projections, estimates, forecasts, targets, prospects or returns contained herein are not necessarily a reliable indicator of future performance. Nothing in this announcement should be relied upon as a promise or representation as to the future. Nothing in this announcement should be considered as a profit forecast.

PERMITTED RECIPIENTS

In relation to the United Kingdom, this announcement is being issued only to, and is directed only at, (i) investment professionals specified in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the “Order”), (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order and (iii) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities of the Trusts or any member of their respective groups may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “Permitted Recipients”). Persons who are not Permitted Recipients must not act or rely on the information contained in this announcement.

DISTRIBUTION

Not for release, publication or distribution, in whole or in part, directly or indirectly, in, into or from any jurisdiction where to do so would constitute a violation of the relevant laws of that jurisdiction. The distribution of this announcement in certain countries may be restricted by law and persons who access it are required to inform themselves and to comply with any such restrictions. Saba disclaims all responsibility where persons access this announcement in breach of any law or regulation in the country of which that person is a citizen or in which that person is residing or is domiciled.

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1} Saba previously requisitioned general meetings at Baillie Gifford US Growth Trust PLC (USA:LSE), CQS Natural Resources Growth & Income PLC (CYN:LSE), Edinburgh Worldwide Investment Trust PLC (EWI:LSE), European Smaller Companies Trust PLC (ESCT:LSE), Henderson Opportunities Trust PLC (HOT:LSE), Herald Investment Trust PLC (HRI:LSE) and Keystone Positive Change Investment Trust PLC (KPC:LSE).
² Ibid.
³ HOT circular dated 3 February 2025. Link.
⁴ The amount of capital trapped in the Trusts due to their discounts, which is also the amount of capital that shareholders could gain across the Trusts if they had an opportunity to exit at NAV.

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