DEFA14A: BlackRock Urges Shareholders to Vote Against Saba's Proposal to Replace Fund Manager

BlackRock is actively campaigning against Saba Capital Management's attempt to replace BlackRock as the fund manager of BlackRock California Municipal Income Trust (BFZ) and install their own board nominees.

Summary

• BlackRock is urging shareholders of BlackRock California Municipal Income Trust (BFZ) to vote against a proposal by Saba Capital Management to terminate BlackRock's investment management agreement.
• Saba is attempting to install its own hand-picked board nominees, which BlackRock argues would prioritize Saba's interests over those of the shareholders.
• BlackRock highlights the fund's strong performance, including being the #1 best performing municipal closed-end fund in 2023 with a total market price return of 10.6%.
• The fund has also demonstrated outperformance against its benchmark by 7.1% and past year distribution growth of 51.3% compared to peers at 17.0%.
• BlackRock emphasizes that its nominees have extensive experience and a history of protecting shareholder interests, while Saba's nominees lack closed-end fund experience and risk management expertise.
• The fund's discount to NAV has narrowed from 12/31/2022 to 5/24/2024.
• Shareholders are instructed to vote using the WHITE proxy card provided by BlackRock and to disregard any gold cards received from Saba.

Sentiment

Score: 7

Explanation: The document conveys a positive sentiment regarding the fund's past performance and the board's actions, but there is an underlying negative sentiment due to the ongoing proxy fight with Saba Capital. The overall tone is defensive and persuasive, aiming to reassure shareholders.

Positives

• The fund achieved the #1 best performing municipal closed-end fund in 2023.
• The fund has demonstrated strong outperformance against its benchmark.
• The fund has shown significant distribution growth compared to its peers.
• The discount to NAV has narrowed.

Negatives

• Saba Capital Management is attempting to replace BlackRock as the fund manager, creating uncertainty.

Risks

• Saba's nominees may prioritize Saba's interests over those of the shareholders if they are successful in their attempt to take over the board.
• The potential disruption caused by a change in fund management could negatively impact the fund's performance.

Future Outlook

The document focuses on the immediate proxy vote and does not provide specific forward-looking statements about the fund's future performance beyond the current proxy contest.

Management Comments

• Your Board is focused on protecting YOUR investment and advancing YOUR interests.
• Saba is only focused on Saba.
• BlackRock puts YOU first, and the decisive actions taken by YOUR Board and management team have had a meaningful, positive impact, creating value for all shareholders.

Industry Context

Activist investors like Saba Capital often target closed-end funds to unlock value by narrowing the discount to NAV or changing the fund's investment strategy. This proxy fight is part of a broader trend of increased shareholder activism in the investment management industry.

Comparison to Industry Standards

• The document compares BFZ's performance to a peer set including MUC, EVM, CEV, VCV, NKX, NAC, PCQ, PCK, and PZC.
• BFZ's 10.6% total market price return in 2023 is highlighted as the best among its peers.
• The fund's 51.3% past year distribution growth significantly exceeds the peer average of 17.0%.

Stakeholder Impact

• The outcome of the proxy vote will directly impact shareholders, as it will determine who manages the fund and sets its investment strategy.
• Employees of BlackRock could be affected if Saba's proposal is successful and BlackRock is replaced as the fund manager.

Next Steps

• Shareholders are urged to vote FOR BlackRock's board nominees and AGAINST Saba's proposal.

Keywords

BlackRock, Saba Capital, BFZ, proxy fight, fund manager, municipal bond, closed-end fund, shareholders, investment management agreement, board nominees