Report backs Swiss Altin against shareholders’ motion

Altin AG, the Swiss alternative investment company listed on the London and Swiss stock exchanges, will hold an extraordinary general meeting on 18 March, on the request of two shareholders Alpine Select AG and Absolute Invest AG, together holding 32.41% of the company’s capital

Both shareholders are to propose the payout of a dividend of CHF20 per share, paid out of retained earnings and the replacement of Peter Altorfer, Eric Syz and André Pabst of Altin’s board of directors by Thomas Amstutz, Gerhard Niggli and Dieter Dubs.

Altin’s board of directors has already answered it would reject these proposals but has proposed the election of Thomas Amstutz as a new member of the board, acknowledging Alpine Select as an important shareholder of the company.

The Swiss alternative manager notably explained the payment of such a large dividend does not comply with Swiss law since the company does not have sufficient short term liquidity and that it would send “an extremely negative signal to the market”.

On 10 March, Altin said that global corporate adviser Institutional Shareholder Services (ISS), has published a report supporting all of the board’s recommendations against Alpine Select’s proposals.

As for the payment of a CHF 20 special dividend per share, ISS argued that in a contested resolution on income allocation where a shareholder is proposing a higher dividend payout than management, it makes sense to look at the company’s capital allocation history.

“If the company appears to be allocating capital efficiently and the level of additional cash is not excessive, then management’s proposal should be supported, since management is generally in the best position to determine how income should be allocated.

“However, if the company is clearly retaining an excessive level of cash that is not accretive to shareholders, support for the shareholder proposal may be warranted if the proposed payout is reasonable and would not negatively impact on the company’s operations or strategy.

Altin does not appear to be holding excessive cash and has been returning cash to shareholders via share buybacks. Since the end of 2013, Altin has reduced its share capital by 18.8 percent net as a result of buybacks. Given these concerns, as well as the lack of a supporting rationale from the proponent, we do not believe that this proposal merits shareholder approval,” ISS added.

Regarding Alpine’s request for removing Peter Altorfer, Eric Syz, and André Pabst from the board of directors and appointing Thomas Amstutz, Gerhard Niggli, and Dieter Dubs to replace them, ISS observed :

“The shareholder proponent is seeking board control by replacing three of the four board members (all except Roger Rüegg). Alpine Select has proposed Thomas Amstutz and Dieter Dubs, both of whom are Alpine Select board members, as well as Gerhard Niggli. The proponent has not disclosed a business plan, though it is clear from its proposals that part of its aim is to return capital to shareholders.

“Due to the lack of supporting rationale and a detailed business plan, votes against the shareholder nominees Gerhard Niggli and Dieter Dubs are warranted. However, in light of the fact that the Altin board supports the election of Thomas Amstutz, and due to a lack of further concerns, a vote in favor of his election is warranted”.

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