Saba to oppose EHI’s advisory agreement with Legg Mason

Saba Capital Management has asked fellow shareholders in Western Asset Global High Income Fund (EHI) to vote against the fund’s management agreement with Legg Mason. The move comes several months after the closed-end fund won a proxy fight with Saba, which only won support for its board declassification proposal.

Saba, which owns 19% in EHI, argued shareholders should not rubber-stamp the fund’s management and sub-advisory agreements, given its “perpetually wide discounts.” Saba noted that EHI has been trading at an average 11% discount to net asset value (NAV) over the past three years, with the figure standing at 15% as of April 1.

Moreover, the target’s total return for 2020 thus far is negative 23%, and “as a result shareholders have made no gains owning this fund (including dividends and distributions), going all the way back to the start of 2017,” according to Saba.

Instead of continuing the relationship with its existing managers, which is subject to a renewal vote, EHI should consider authorizing a self-tender at or close to NAV, Saba argued. The activist advanced the same liquidation proposal earlier this year at Western Asset High Income Opportunity Fund, using the same arguments. However, it failed to persuade both proxy advisers and shareholders and was ultimately rejected in late March.

Last fall, Boaz Weinstein’s activist fund unsuccessfully pushed for two board seats at EHI. Still, shareholders approved Saba’s non-binding board declassification resolution.

Saba is not the only activist to go after funds managed by Legg Mason. Bulldog Investors plans to oppose Legg Mason’s new advisory agreements with Western Asset Corporate Loan Fund and BrandywineGlobal – Global Income Opportunities Fund. As part of its sale to Franklin Resources, Legg Mason needs to approve new advisory agreements with 23 closed-end funds.

Shares in EHI traded up 3% at 9:45 a.m. EDT on Monday amid a broader market rally.