DEFC14A: Saba Capital Seeks to Shake Up BlackRock Capital Allocation Term Trust Board, Urges Shareholders to Vote for Nominees and Management Agreement Termination

Saba Capital is soliciting proxies to elect its nominees to the BlackRock Capital Allocation Term Trust board and to terminate the investment management agreement with BlackRock Advisors, LLC, aiming to address the fund's persistent trading discount and governance issues.

Summary

• Saba Capital Management is seeking shareholder support to elect three nominees—Shavar Jeffries, Jennifer Raab, and Alexander Vindman—to the board of BlackRock Capital Allocation Term Trust.
• Saba is also proposing the termination of the investment management agreement between the Fund and BlackRock Advisors, LLC.
• Saba believes the current board needs fresh perspectives to address the Fund's trading discount and corporate governance issues.
• The proxy solicitation is for the upcoming 2024 annual meeting of shareholders.
• Saba and its nominees collectively beneficially own 16,333,600 Common Shares, representing 15.20% of the outstanding Common Shares as of December 31, 2023.
• Saba has retained InvestorCom to provide solicitation and advisory services, with fees not to exceed $20,000.
• The estimated cost of the proxy solicitation is approximately $150,000, borne by Saba.
• Saba is urging shareholders to vote using the GOLD proxy card, emphasizing that only the latest validly executed proxy will be counted.

Sentiment

Score: 7

Explanation: The document is assertive and confident in its stance, advocating for change and highlighting perceived shortcomings in the current management. While the tone is professional, the underlying message is critical of the status quo, suggesting a moderately positive sentiment from Saba's perspective.

Positives

• Saba's nominees bring diverse experience in education, law, senior management, geopolitics, and corporate governance.
• Termination of the management agreement could lead to the appointment of a new manager with potentially more attractive terms.
• Saba is willing to assist the Board in finding a capable manager and may offer its services as an interim or long-term manager.
• Shareholders have the final say on the appointment of any long-term manager.

Negatives

• There is no assurance that any of the Fund's nominees will serve as a trustee if one or more of the Nominees are elected to the Board.
• Abstentions will have the same effect as votes against Proposal 1 and Proposal 2.
• Voting on the Fund's white proxy card will revoke any previous voting instructions submitted on the GOLD proxy card.

Risks

• If a permanent investment management agreement is not approved, the Fund could potentially be required to become internally managed.
• The Fund may incur costs associated with selecting and appointing a new investment manager.
• The Fund's management and Board may resist Saba's efforts, leading to a protracted and costly proxy fight.

Future Outlook

Saba intends to supplement the Proxy Statement with the date, time, and location of the Annual Meeting and the Record Date once the Fund publicly discloses such information.

Management Comments

• We are convinced that NOW is the time to take action to close the Funds discount and we urge shareholders to support the Shareholder Proposal and to elect the Nominees, who we believe, if elected, would serve the best interests of all shareholders.
• We believe that BlackRock and the Funds trustees must be held accountable for the Funds large and persistent trading discount and its anti-shareholder governance practices.

Industry Context

Activist investors like Saba Capital often target closed-end funds trading at a discount to net asset value, seeking to unlock value through board representation or changes in management strategy. This proxy fight reflects a broader trend of increased shareholder activism in the investment management industry.

Comparison to Industry Standards

• Saba's strategy of nominating independent trustees and proposing the termination of the management agreement is a common tactic used by activist investors in similar situations.
• Other examples of activist campaigns in closed-end funds include efforts by Bulldog Investors and Karpus Management to influence fund strategies and governance.
• The success of Saba's campaign will depend on its ability to convince shareholders that its nominees and proposals will lead to improved fund performance and a narrowing of the discount to net asset value.

Stakeholder Impact

• Shareholders could benefit from a narrower discount and improved fund performance if Saba's proposals are successful.
• The Fund's current management and Board could face changes in their roles and responsibilities.
• BlackRock Advisors, LLC could lose its management agreement with the Fund.
• Employees of the Fund and BlackRock Advisors, LLC could be affected by changes in management or strategy.

Next Steps

• Shareholders are urged to sign, date, and return the GOLD proxy card.
• Saba intends to supplement the Proxy Statement with the date, time, and location of the Annual Meeting and the Record Date once the Fund publicly discloses such information.
• Saba will solicit proxies from individuals, brokers, banks, bank nominees and other institutional holders.

Key Dates

Keywords

proxy solicitation, Saba Capital, BlackRock Capital Allocation Term Trust, board of trustees, investment management agreement, shareholder proposal, corporate governance, closed-end fund