DEFA14A: BlackRock Science and Technology Term Trust Faces Activist Challenge from Saba Capital

Saba Capital Management is attempting to replace BlackRock as the fund manager of BlackRock Science and Technology Term Trust (BSTZ), prompting BlackRock to urge shareholders to vote in favor of its board nominees.

Summary

• BlackRock is urging shareholders of BlackRock Science and Technology Term Trust (BSTZ) to vote for its board nominees.
• Saba Capital Management is attempting to replace BlackRock as the fund manager and install its own board nominees.
• BlackRock argues that Saba's nominees lack closed-end fund experience and are loyal to Saba's interests, not shareholders'.
• BlackRock highlights its board's experience, track record of protecting distributions, and value creation through NAV accretion and discount narrowing.
• The fund's yield on NAV is 11.5% as of May 20, 2024.
• The fund generated $8.5 million in NAV accretion through a share repurchase program.
• The fund's total market price return is 28.2% compared to peers at 31.6% as of May 24, 2024.
• The discount to NAV has narrowed from December 31, 2022, to May 24, 2024.
• BlackRock encourages shareholders to vote using the WHITE proxy card and against Saba's proposal.

Sentiment

Score: 6

Explanation: The document is primarily a defense against an activist investor, so it presents a mixed sentiment. While highlighting positive aspects of the fund's performance, it also acknowledges the challenge posed by Saba Capital.

Positives

• BlackRock highlights the experience and leadership of its board nominees.
• The fund has a strong yield on NAV of 11.5%.
• The share repurchase program has generated $8.5 million in NAV accretion.
• The fund has demonstrated a narrowing of the discount to NAV.
• The fund has outperformed its benchmark, the MSCI Custom ACWI SMID Growth IT Call Overwrite Index.

Negatives

• Saba Capital Management is attempting to replace BlackRock as the fund manager, creating uncertainty.
• Saba's nominees are portrayed as lacking relevant experience and being loyal to Saba's interests.
• The fund's total market price return of 28.2% is less than the peer average of 31.6%.

Risks

• The potential for disruption and uncertainty if Saba's nominees are elected.
• The risk that Saba's interests may not align with those of all shareholders.
• Market conditions can cause fluctuations in the fund's dividend yield, market price, and NAV.
• Closed-end funds may trade at a discount to NAV.

Future Outlook

The document focuses on the upcoming shareholder vote and does not provide specific forward-looking statements about the fund's future performance.

Management Comments

• BlackRock states that its board is focused on protecting shareholder investments and advancing their interests.
• BlackRock asserts that Saba is focused on maximizing its own returns, potentially to the detriment of other shareholders.
• BlackRock emphasizes that the actions taken by the board and management team have had a meaningful, positive impact, creating value for all shareholders.

Industry Context

Activist investors targeting closed-end funds is a recurring theme in the financial industry, as these funds often trade at discounts to NAV, creating opportunities for activists to unlock value. Saba Capital is a well-known activist investor in the closed-end fund space.

Comparison to Industry Standards

• The document compares BSTZ's performance to a peer set including BST, STK, NBXG, and AIO.
• The fund's total market price return of 28.2% is less than the peer average of 31.6%.
• The document highlights the fund's outperformance against its benchmark, the MSCI Custom ACWI SMID Growth IT Call Overwrite Index.

Stakeholder Impact

• The outcome of the proxy vote will directly impact shareholders, determining who manages the fund and how it is managed.
• Employees of BlackRock could be affected if Saba succeeds in replacing BlackRock as the fund manager.

Next Steps

• Shareholders are urged to vote on the enclosed WHITE proxy card.
• Shareholders are advised to vote FOR BlackRock's board nominees and AGAINST Saba's proposal.
• Shareholders are instructed to disregard any gold cards sent by Saba.

Key Dates

Keywords

BlackRock, BSTZ, Saba Capital, Proxy Fight, Fund Management, Closed-End Fund, Shareholder Vote, Activist Investor, Board Nominees, NAV, Discount, Yield