Apparently, Saba published a press release this morning in which it said:

“If shareholders support Saba’s resolutions to reconstitute the HRI [Herald] board, Saba would encourage the new board to offer all shareholders a 100% cash exit at 99% of the trust’s NAV. As a result, Saba expects that shareholders will have the opportunity to sell their entire position at 99% of NAV, if they wish. In addition, Saba would support further changes so this cash exit would be overseen by a fully independent board.”

In response, Herald says:

“The board notes that Saba is not proposing to offer 99% of the value of today’s net asset value. Instead Saba is proposing an exit after “at least a year” during which open-ended time period significant value could be lost from the underlying portfolio in anticipation or consequence of Saba’s known selling appetite.”

[QD comment (James Carthew) : The basic message from Herald’s board here – that an exit at a 1% discount to today’s NAV is not and could not realistically ever be on the table – is a straightforward one and cannot be argued with. More worrying to us is the tortured logic in Saba’s statement in which it claims to know what an independent board would do at some point in the future, clearly implying that it believes that it can direct the board’s actions. We cannot get our heads around how a board consisting of Saba employees, Saba appointees, and persons that these Saba-connected directors later co-opt onto the board could ever be construed as independent. We iterate our belief that investors should not surrender control of these trusts to this vulture investor. Furthermore, if Saba does seize control and seek to impose its particular investment approach on the portfolio, investors should be given an exit at NAV, not at a 1% discount (another blatant attempt to extract more value at other investors’ expense).]

HRI : Herald questions Saba’s cash exit claims