DEFA14A: BlackRock Receives Broad Support from ISS and Glass Lewis in Proxy Fight Against Saba Capital

BlackRock announced that ISS and Glass Lewis are supporting BlackRock's board nominees and recommending against Saba Capital's proposals to terminate BlackRock as investment advisor for several funds.

Summary

• BlackRock has received support from Institutional Shareholder Services (ISS) and Glass Lewis for its board nominees at several closed-end funds, including BlackRock California Municipal Income Trust (BFZ), BlackRock New York Municipal Income Trust (BNY), and BlackRock MuniYield New York Quality Fund (MYN).
• Both ISS and Glass Lewis recommend voting against Saba Capital Management's proposals to terminate BlackRock as investment advisor for BFZ and BlackRock Science and Technology Term Trust (BSTZ).
• Glass Lewis fully rejected Saba's nominees for BFZ, BNY, and MYN.
• ISS rejected all seven of Saba's nominees for BlackRock MuniYield Pennsylvania Quality Fund (MPA).
• BlackRock has recently announced enhancements across its closed-end fund complex, including discount management programs, distribution increases, and fee waivers, providing $2.9 billion in liquidity.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the support from ISS and Glass Lewis, which strengthens BlackRock's position against Saba Capital. However, the presence of a proxy fight and some disagreement from ISS temper the overall positivity.

Positives

• ISS and Glass Lewis support BlackRock's board nominees, indicating confidence in BlackRock's stewardship.
• Rejection of Saba Capital's proposals suggests that shareholders are likely to maintain the status quo.
• Recent enhancements to BlackRock's closed-end fund complex, including discount management programs and distribution increases, are viewed favorably.
• Glass Lewis noted that the boards recent actions, particularly the distribution rate increase, are more likely to have been the main contributing factor to the recent narrowing of the Funds NAV discount.
• Glass Lewis stated that the unaffected one-, threeand five-year TSRs of BFZ are better than the TSRs of most or all of the funds in the Peer Group.

Negatives

• ISS recommended in favor of Saba's nominees for BFZ and BSTZ, indicating some level of support for Saba's proposals.
• BlackRock respectfully disagrees with ISS's recommendation to vote in favor of Saba's nominees for BFZ and BSTZ.

Risks

• The document mentions forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time.
• Factors such as changes in political, economic, or industry conditions, interest rate environment, and increased competition could affect the funds' performance.
• Legal proceedings, technological changes, and regulatory actions could also impact the funds.

Future Outlook

The document contains forward-looking statements regarding BlackRock's and the funds' future financial or business performance, strategies, or expectations, but cautions that these statements are subject to numerous assumptions, risks, and uncertainties.

Management Comments

• R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, welcomed the support from ISS and Glass Lewis and thanked shareholders for their continued support.
• Hubbard stated that Saba's campaign has never been about governance, performance, or investment mandates.
• Hubbard added that Congress has taken notice of this, as the House of Representatives recently passed, by bipartisan majority, The Increasing Investor Opportunities Act, which removes the loophole allowing activists like Saba to force closed-end funds into harmful liquidity events or radically change their investment strategies.

Industry Context

This announcement highlights the ongoing activist investor activity in the closed-end fund space, with Saba Capital Management frequently challenging established fund managers like BlackRock. The support from ISS and Glass Lewis is crucial for BlackRock in maintaining control and direction of its funds.

Comparison to Industry Standards

• The document mentions that BFZ's total shareholder returns (TSRs) are better than most or all of its peers, according to Glass Lewis.
• ISS noted that MPA's distributions have been on par with peers, the NAV discount has been narrower, and fees have been more competitive.
• ISS stated that MYN and MHN's TSR, NAV discount, distributions, and expenses are all in alignment with peers.

Stakeholder Impact

• Shareholders are directly impacted by the outcome of the proxy vote, which will determine the composition of the board and the future direction of the funds.
• The outcome could affect the funds' investment strategies, distribution policies, and overall performance.

Next Steps

• Shareholders are encouraged to vote FOR ALL Board nominees on the WHITE proxy card.
• Shareholders are advised not to send back any gold proxy card they may receive from Saba.
• Annual meetings of shareholders will be held on June 17, 2024 (BFZ, BNY, MYN) and June 18, 2024 (MHN, MPA, BSTZ).

Key Dates

Keywords

BlackRock, Saba Capital, Proxy Fight, Closed-End Funds, Board Nominees, Investment Advisor, ISS, Glass Lewis, BFZ, BNY, MYN, BSTZ, MPA, MHN