15th Aug 2018 13:33
LONDON (Alliance News) - Lazard World Trust Fund on Wednesday recommended its shareholders vote in favour of the resolution to renew's the company's buyback authority at its extraordinary general meeting August 30.
This is despite City of London Investment Group PLC informing Lazard it will oppose the resolution.
Lazard believes passing the resolution is in the "best interests" of shareholders. The company said there is a possibility it will "exhaust" its buyback authority from the 2017 annual general meeting prior to the 2018 annual general meeting on September 20.
The company said: "The board considers that it is in the best interests of shareholders as a whole that it has the requisite authority to continue to actively manage the discount at which the shares trade and would therefore like to retain the flexibility to continue to buy back shares ahead of the 2018 AGM in the event that the buyback authority obtained at the 2017 AGM is fully utilised prior to the 2018 AGM."
Lazard detailed a proposal in the company's circular, published August 9, to renew the company's authority to make market acquisitions of its shares.
This included the implementation of a share buyback programme "in order to actively manage the imbalances between supply and demand of shares, thereby reducing the volatility of the discount".
According to Lazard, since the programme began at the beginning of June, the shares have traded at an average discount of 3.0% to net asset value versus 8.8% for the year ended March.
Lazard has repurchased about 3 million shares, representing 6.5% of the total issued shares in the company, which is in excess of 50% of the limit of the authority given at the 2017 AGM.
City of London Investment informed Lazard on Tuesday it will oppose the renewing of the company's buyback authority .
In a letter sent to the board of Lazard, City of London said: "The emergency general meeting circular gives shareholders no clarity regarding why the board resumed the buyback programme at narrow discounts after a prolonged hiatus during which the discount has been much wider. There are also no clear assurances given regarding how the buyback will operate in future."
The asset management company made it clear to Lazard it is unsure why the emergency general meeting is being held three weeks before the already-delayed annual general meeting.
"We therefore question the need to convene an additional shareholder meeting so close to the delayed 2018 annual general meeting, for the sole purpose of renewing the buyback authority."
In 2010, Lazard "set out a discount management policy" but City of London believes that Lazard has "otherwise shown no discernible commitment to credible discount control until June this year".
If Lazard does not pass the continuation resolution at the 2018 annual general meeting, City of London believes the company should "bring forward proposals fro Lazard's liquidation with a facility for shareholders who so wish to roll into the Lazard Emerging World Fund UCITS".
Shares in Lazard were down 1.5% Wednesday at 378.25 pence each. City of London shares were down 0.7% at 385.43 pence each.