Market Report: Katherine Garrett-Cox in warning over shake-up

Alliance Trust’s shares closed flat at 523.5p (Getty Images)

Having already seen off two investor revolts during her time as Alliance Trust’s chief executive, Katherine Garrett-Cox was forced to defend herself again yesterday by warning that the latest boardroom shake-up being planned by its largest shareholder “threatens the very existence of the company”.

Elliott Advisors, the UK arm of a New York hedge fund, hopes to appoint three City heavyweights to Alliance Trust’s board at its annual meeting next month to improve performance and cut costs.

Ms Garrett-Cox questioned their suitability and independence. She said: “If they are appointed, we think Elliott will pursue a short-term agenda aimed a facilitating an exit from their shareholding in the company.”

Elliott said it was “surprised and disappointed” by the statement. Alliance Trust responded by vowing not to allow the hedge fund to “mislead our shareholders”.

Alliance Trust’s shares closed flat at 523.5p as the row escalated.

Miner Vedanta Resources was one of the big stories of the day, with its shares tumbling more than 5 per cent before recovering to close up 73.3p at 525p.

The initial fall was put down to the group cutting its planned capital expenditure from $1.9bn (£1.3bn) to $1.5bn next year and from $2bn to $1bn in 2016. However, the shares rallied after Cairn India – in which Vedanta owns a majority stake – said it planned to defend itself against a 204.95bn rupee (£2.2bn) tax demand from the Indian Government.

Elsewhere in the market, Tullow Oil shares rose 10.7p to 320.3p after the company secured a $450m lending boost. The Africa-focused oil producer said the additional cash came from existing lenders.

British Gas’s owner Centrica fell 0.8p to 255.8p as Moody’s downgraded its credit rating from A3 to Baa1.

On AIM, the penny stock Karelian Diamond Resources surged on the back of news of a potential new diamond source in the Kuhmo region of Finland. The find is the first of its kind to be unearthed in the country for 10 years. Karelian’s shares were up 0.575p – or more than 60 per cent – to 1.425p.