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

BlackRock is urging shareholders of the BlackRock Science and Technology Term Trust (BSTZ) to vote against Saba Capital's proposal to replace the board and terminate BlackRock as the fund's manager.

Summary

• BlackRock is campaigning against Saba Capital Management's attempt to install its own board nominees and remove BlackRock as the manager of the BlackRock Science and Technology Term Trust (BSTZ).
• BlackRock highlights BSTZ's attractive income, strong returns (18.1% in Q1 2024 and 18.7% in 2023), and outperformance compared to other closed-end funds (98% in Q1 2024).
• A significant portion of BSTZ's net asset value (33% in 2023) comes from private investments, offering access to smalland mid-sized science & tech companies.
• BlackRock emphasizes its discount management program, including $42 million in share repurchases and $8.5 million in shareholder profit since inception.
• BlackRock warns that Saba's funds have experienced wider discounts, higher fees, and riskier investment strategies after Saba took over.
• Shareholders are urged to vote using the WHITE proxy card to support BlackRock's nominees and reject Saba's proposal.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive, as BlackRock is presenting a strong defense of its management and highlighting the fund's positive performance. However, the presence of an activist investor and the potential for negative outcomes temper the overall sentiment.

Positives

• BSTZ has delivered attractive income and strong returns.
• The fund has significant exposure to private equity, offering unique investment opportunities.
• BlackRock actively manages the discount to NAV through share repurchases.
• BSTZ has outperformed many of its peers.

Negatives

• Saba Capital is attempting to take control of the fund, which BlackRock argues could be detrimental to shareholders.
• BlackRock claims that Saba's funds have experienced wider discounts, higher fees, and riskier strategies after Saba took over.

Risks

• The primary risk is the potential for Saba Capital to succeed in its attempt to replace the board and terminate BlackRock as the fund's manager.
• BlackRock warns that supporting Saba could lead to wider discounts, higher fees, and riskier investment strategies.
• The value of the fund's shares can fluctuate with market conditions.
• Closed-end funds may trade at a premium or discount to NAV.

Future Outlook

BlackRock expects its momentum to continue, aided by the strong growth potential of private equity as conditions improve.

Management Comments

• BlackRock is fighting for YOU.
• YOUR Board puts YOU first.
• BSTZ is an innovative investment product that provides unique, differentiated access to private equity and growth investment opportunities.
• BSTZ continues to gain momentum.
• BlackRock expects its momentum to continue, aided by the strong growth potential of private equity as conditions improve.

Industry Context

This announcement highlights the increasing prevalence of activist investors targeting closed-end funds. Saba Capital's actions are part of a broader trend of activists seeking to unlock value or influence fund strategies. The outcome of this proxy fight could set a precedent for future activist campaigns 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.
• BSTZ outperformed 98% of all closed-end funds in Q1 2024, according to Morningstar data.
• The document suggests that Saba-controlled funds have underperformed relative to their potential, implying a negative comparison.

Stakeholder Impact

• Shareholders are directly impacted by the outcome of the proxy vote, as it will determine the fund's management and investment strategy.
• BlackRock employees and management are impacted by the potential loss of the fund's management contract.

Next Steps

• Shareholders need to vote on the WHITE proxy card before the annual meeting on June 18.
• BlackRock will likely continue to communicate with shareholders to advocate for its position.

Key Dates

Keywords

BlackRock, Saba Capital, BSTZ, proxy fight, closed-end fund, investment management, private equity, shareholder value, activist investor