DEFA14A: BlackRock Wins Key ISS Support Against Saba's Activist Proposals at Multiple Closed-End Funds

ISS recommends shareholders vote against Saba Capital's proposals to terminate BlackRock as investment adviser for several closed-end funds and supports BlackRock's board nominees.

Summary

• Institutional Shareholder Services (ISS) has recommended that shareholders vote against Saba Capital Management's proposals to terminate BlackRock as the investment adviser for multiple closed-end funds.
• ISS supports BlackRock's board nominees at BCAT, BMEZ, BNY, and MPA.
• The recommendation covers funds including BlackRock Capital Allocation Term Trust (BCAT), BlackRock California Municipal Income Trust (BFZ), BlackRock Innovation and Growth Term Trust (BIGZ), BlackRock Health Sciences Term Trust (BMEZ), BlackRock Science and Technology Term Trust (BSTZ), and BlackRock ESG Capital Allocation Term Trust (ECAT).
• ISS also recommends voting for BlackRock's nominees at BlackRock New York Municipal Income Trust (BNY) and BlackRock MuniYield Pennsylvania Quality Fund (MPA).
• BlackRock highlights 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 document presents a positive outlook due to ISS's support for BlackRock and the implemented enhancements. However, the ongoing activist pressure from Saba and the acknowledgment of potential risks temper the overall sentiment.

Positives

• ISS support validates BlackRock's management of the funds and the board's stewardship.
• ISS recognizes the potential risks associated with Saba's nominees.
• BlackRock has taken steps to narrow the discount and improve total shareholder return (TSR) for funds like ECAT.
• BlackRock's enhancements provide $2.9 billion in liquidity across the funds.

Negatives

• ISS did not support BlackRock's nominees at BIGZ and ECAT.
• Saba Capital Management is actively challenging BlackRock's management through proxy battles.

Risks

• Changes and volatility in market conditions could impact the funds' net asset value.
• Increased competition could affect the funds' performance.
• Unfavorable resolution of legal proceedings could negatively impact the funds.
• Technological changes could pose challenges.
• Legislative and regulatory actions could affect the funds or BlackRock.

Future Outlook

BlackRock will update performance and other data for the funds on a monthly basis on their website.

Management Comments

• R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, stated that the ISS recommendations speak to BlackRock's depth of investment experience and the Boards track record of stewardship.
• Hubbard added that BlackRock believes its nominees are the right stewards to represent all shareholders.

Industry Context

Activist investors like Saba Capital Management are increasingly targeting closed-end funds to unlock value through various strategies, including terminating existing investment management agreements.

Comparison to Industry Standards

• The document mentions Liberty All-Star Growth Fund, Inc. (ASG) as a comparable fund to BIGZ, noting that BIGZ's distribution rate has exceeded ASG's.
• The document compares ECAT's TSR since inception and NAV discount to peers, indicating that ECAT has improved and is now in line with industry standards.

Stakeholder Impact

• Shareholders are encouraged to vote using the WHITE proxy card to support BlackRock's nominees and proposals.
• The outcome of the proxy votes will determine the future management and direction of the funds.

Next Steps

• Shareholders will vote on the proposals at the upcoming annual meetings.
• BlackRock will continue to update performance data on its website.

Key Dates

Keywords

BlackRock, Saba Capital, ISS, proxy, closed-end funds, investment adviser, board nominees, BCAT, BMEZ, BNY, MPA, BIGZ, ECAT, BFZ, BSTZ