Baillie Gifford-run trust hits back at hedge fund Saba's overhaul bid

LONDON, Jan 6 (Reuters) - A Baillie Gifford-run investment trust has urged shareholders to reject an attempt by U.S. hedge fund and activist investor Saba Capital Management to vote out several of its board directors and replace them with their nominees.

Saba Capital Management, run by prominent investor Boaz Weinstein, announced last month it was trying to overhaul the boards of seven UK investment trusts over performance it described as ranging from "underwhelming" to "disastrous".

The Baillie Gifford-run trust, Keystone Positive Change, said in a statement on Monday that Saba would effectively take control of the trust if investors do not vote against their proposals at a meeting next month.

"We are appalled by Saba's actions and conduct. We believe its proposed resolutions would be highly detrimental to the interests of all other shareholders," the statement said.

Keystone said it had consulted with investors about alternative proposals for the trust, which could allow shareholders an uncapped cash exit or a transfer to a more liquid fund.

Saba has previously attempted to overhaul the boards of other funds in the United States, including at BlackRock.

Saba did not immediately respond to a request for comment.

(Reporting by Iain Withers; Editing by Dhara Ranasinghe)

((Iain.Withers@thomsonreuters.com;))