Saba presses Gore Street shareholders to back wind-up

Saba Capital is urging Gore Street Energy Storage Fund shareholders to back proposals to wind up the £244m investment trust, according to a report by QuotedData. The US activist hedge fund, which holds around 17% of Gore Street Energy Storage, argues that the recent sale of two Irish battery storage assets did not satisfy concerns about their valuation and sale price.

In an open letter ahead of the trust's AGM, Saba requested the board to disclose the transaction price and share details of the auction process conducted by adviser Alexa Capital. The hedge fund contends that shareholders should not accept the board's assurance that the sale price equaled the assets' most recent net asset values.

Saba also criticized the relevance of the reported NAV comparison, noting that Gore Street has been reducing asset carrying values across its portfolio, leading to a 15% drop in the group NAV in the latest quarter. The activist hedge fund has previously approached the Gore Street board twice, seeking a new investment manager, but received no satisfactory response.

Saba's latest proposal challenges the recovery plan unveiled in March, which involves selling assets and reinvesting the proceeds in existing battery storage projects. The hedge fund argues that this strategy wouldn't be enough to close Gore Street's significant NAV discount. Saba points out that the trust's NAV has fallen by 27% over the past year, while the shares remain 35% below the reduced NAV.

The activist also highlights the low dividend coverage, at just 0.28 times operational earnings, as evidence that shareholders are being asked to endorse a problematic track record by rejecting Saba's wind-up proposals.