DEFA14A: Glass Lewis Backs BlackRock's Board Nominees, Rejects Saba's Proposals for Closed-End Funds

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

Summary

• Independent proxy advisory firm Glass Lewis has recommended that shareholders vote for BlackRock's board nominees and against Saba Capital Management's proposals to terminate BlackRock as investment adviser for ten closed-end funds.
• The recommendations apply to several BlackRock closed-end funds, including BlackRock Capital Allocation Term Trust, BlackRock California Municipal Income Trust, and BlackRock MuniYield Pennsylvania Quality Fund.
• Glass Lewis believes Saba Capital has failed to make a compelling case for the changes it seeks and that BlackRock's board nominees are more qualified.
• BlackRock recently announced enhancements across its closed-end fund complex, including discount management programs, distribution increases, and fee waivers, providing $2.9 billion in liquidity.
• Shareholders are advised to vote using the WHITE proxy card and disregard any gold proxy cards from Saba Capital.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the support from Glass Lewis and the positive performance metrics highlighted. However, the presence of activist challenges and the need for defensive measures temper the overall sentiment.

Positives

• Glass Lewis's support for BlackRock's board nominees validates the strength of the board members and the quality of the portfolio management team.
• Glass Lewis highlights that the funds have been able to deliver exceptional distribution rates without paying excessive fees and other expenses.
• BlackRock's recent enhancements, including discount management programs and distribution increases, are viewed positively.
• The market return of the Fund (reflecting reinvestment of dividends and/or distributions at actual reinvestment prices) outperformed the benchmark indices over the observed six-month, one-year and five-year periods.

Negatives

• Saba Capital's attempt to terminate BlackRock as investment adviser indicates potential dissatisfaction among some shareholders.
• The need for BlackRock to defend its position suggests underlying concerns about fund performance or management.

Risks

• The outcome of the shareholder votes on June 17, June 18, June 25 and June 26 is uncertain and could impact BlackRock's management of the closed-end funds.
• Potential for continued challenges from activist investors like Saba Capital.
• Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time.

Future Outlook

BlackRock will update performance and certain other data for the funds on a monthly basis on their website in the Closed-end Funds section of www.blackrock.com, as well as certain other material information as necessary from time to time.

Management Comments

• R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, stated, 'We applaud Glass Lewis for backing our incumbent Board nominees and rejecting every Saba proposal to terminate BlackRock as investment manager.'
• He added that the recommendations highlight the strength of the Board members, the quality of the portfolio management team, and BlackRock's continued legacy of delivering for all shareholders.

Industry Context

This announcement reflects the ongoing trend of activist investors challenging established asset managers in the closed-end fund space. Saba Capital's actions are part of a broader strategy to unlock value in these funds, often through strategies like forcing tender offers or liquidations. The support from proxy advisors like Glass Lewis is crucial for BlackRock to maintain control and continue its management strategy.

Comparison to Industry Standards

• BlackRock's closed-end funds are being compared to industry benchmarks in terms of premium/discount to NAV and total shareholder return (TSR).
• The funds' ability to maintain attractive distribution rates and expense ratios is also being assessed against industry peers.
• The document suggests that BlackRock's funds are performing in line with or outperforming peers in these metrics.
• Specific comparable companies or projects are not explicitly named in the document, but the implication is that BlackRock's funds are holding their own against similar investment vehicles.

Stakeholder Impact

• Shareholders are impacted by the recommendations and the outcome of the shareholder votes.
• BlackRock's employees are impacted by the potential changes in management and strategy.
• The funds' performance impacts the financial well-being of investors.

Next Steps

• Shareholders to vote on the WHITE proxy card by the deadlines for each fund's annual meeting.
• BlackRock to continue engaging with shareholders to address any concerns.
• BlackRock will update performance and certain other data for the funds on a monthly basis on their website.

Key Dates

Keywords

BlackRock, Saba Capital, Glass Lewis, Proxy Advisory, Closed-End Funds, Board Nominees, Investment Adviser, Shareholder Vote, Distribution Rate, Discount Management