DEFA14A: BlackRock Funds Receive Support from Glass Lewis and ISS in Proxy Battle Against Saba Capital

BlackRock is urging shareholders to vote for its board nominees after receiving recommendations from Glass Lewis and ISS, while Saba Capital Management pushes for changes at several BlackRock closed-end funds.

Summary

• BlackRock announced that Glass Lewis and ISS are supporting BlackRock's board nominees and opposing Saba Capital's proposals to terminate BlackRock as investment adviser for certain funds.
• Glass Lewis recommends shareholders vote for all BlackRock board nominees at BFZ, BNY, and MYN and against the proposal to terminate BlackRock as investment adviser of BFZ.
• ISS recommends shareholders vote for all board nominees of BNY and MPA, for Arthur Steinmetz at MHN and MYN, and against the proposal to terminate BlackRock as investment adviser of BFZ and BSTZ.
• Glass Lewis rejected the nominees put forth by Saba Capital Management, L.P. (Saba) at BFZ, BNY and MYN.
• ISS rejected the nominees put forth by Saba Capital Management, L.P. (Saba) at BNY, MPA, MYN and MHN, and Saba's termination proposals at BFZ and BSTZ.
• BlackRock highlights recent enhancements across its closed-end fund complex, including discount management programs, distribution increases, and fee waivers, providing $2.9 billion in liquidity.
• Shareholders are urged to vote for BlackRock's nominees using the WHITE proxy card and disregard any gold proxy cards from Saba.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the support from Glass Lewis and ISS, which reinforces confidence in BlackRock's management. However, the ongoing challenge from Saba Capital introduces some uncertainty.

Positives

• Glass Lewis and ISS support BlackRock's board nominees, indicating confidence in their stewardship.
• BlackRock's recent enhancements, including discount management programs and distribution increases, aim to benefit shareholders.
• 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.
• MPA has at times traded at a premium to NAV.
• BFZ has effectively maintained a stable state of affairs over the past year.
• The overall performance picture nonetheless supports the view that the departure from past underperformance may be sustainable.

Negatives

• ISS recommends voting in favor of Saba's nominees for BFZ and BSTZ, indicating some disagreement with BlackRock's management.
• Saba Capital is actively challenging BlackRock's management, creating uncertainty for the funds.

Risks

• The outcome of the proxy vote is uncertain and could lead to changes in fund management or investment strategies.
• Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time.
• Changes and volatility in political, economic or industry conditions, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for the funds or in the funds net asset value.
• The relative and absolute investment performance of the funds and their investments.
• The impact of increased competition.
• The unfavorable resolution of any legal proceedings.
• The extent and timing of any distributions or share repurchases.
• The impact, extent and timing of technological changes.
• The impact of legislative and regulatory actions and reforms, and regulatory, supervisory or enforcement actions of government agencies relating to the funds or BlackRock, as applicable.
• Terrorist activities, international hostilities, health epidemics and/or pandemics and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock.
• BlackRock's ability to attract and retain highly talented professionals.
• The impact of BlackRock electing to provide support to its products from time to time.
• The impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions.

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 risks and uncertainties.

Management Comments

• R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, welcomes Glass Lewis's and ISS's support for BlackRock's nominees and their rejection of the termination proposals at BFZ and BSTZ.
• Hubbard believes 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 challenging BlackRock's management of several funds. The outcome of the proxy vote could have implications for the broader closed-end fund industry.

Comparison to Industry Standards

• The document mentions 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.
• Distributions of MPA have been on par with peers, the NAV discount has been narrower, and fees have been more competitive.
• The funds TSR, NAV discount, distributions, and expenses of MYN and MHN are all in alignment with peers.

Stakeholder Impact

• The outcome of the proxy vote will directly impact shareholders, influencing the management and investment strategy of the funds.
• The ongoing proxy battle creates uncertainty for shareholders.
• BlackRock's recent enhancements, including discount management programs and distribution increases, aim to benefit shareholders.

Next Steps

• Shareholders are urged to vote using the WHITE proxy card.
• Annual meetings of shareholders will be held on June 17 and June 18, 2024.

Key Dates

Keywords

BlackRock, Saba Capital, proxy vote, board nominees, closed-end funds, investment adviser, Glass Lewis, ISS, BFZ, BNY, MYN, MPA, MHN, BSTZ