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 using the WHITE proxy card to support the current board nominees and reject Saba Capital's proposal to terminate BlackRock as the investment advisor.

Summary

• BlackRock is defending the BlackRock Science and Technology Term Trust (BSTZ) against an activist challenge from Saba Capital Management, L.P.
• Saba is attempting to install its own board members and remove BlackRock as the investment advisor.
• BlackRock argues that Saba's self-serving agenda could harm shareholders by leading to loss of income, higher fees, riskier investments, poor performance, and potential liquidation of the fund.
• The current board recommends voting FOR BlackRock's nominees and AGAINST Saba's proposal using the WHITE proxy card.
• BSTZ has delivered an 18% return on market price year-to-date in 2024, outperforming 98% of all closed-end funds.
• BSTZ has repurchased over $41 million of shares, adding over $8.5 million in value since inception.
• In 2031, all shareholders will have an opportunity to receive 100% liquidity at net asset value via fund liquidation or tender offer.

Sentiment

Score: 7

Explanation: The document is primarily defensive, aiming to reassure shareholders and counter the activist's claims. The positive performance data and commitment to shareholder value contribute to a moderately positive sentiment.

Positives

• BSTZ has delivered an 18% return on market price year-to-date in 2024, outperforming 98% of all closed-end funds.
• The fund has repurchased over $41 million of shares, adding over $8.5 million in value since inception.
• Shareholders will have an opportunity to receive 100% liquidity at net asset value in 2031.

Negatives

• Saba Capital Management is attempting to take control of the fund, which BlackRock argues could lead to negative outcomes for shareholders.
• BlackRock warns of potential loss of income, higher fees, riskier investments, poor performance, and potential liquidation if Saba's proposal is successful.

Risks

• The risk of Saba Capital Management successfully implementing its agenda, potentially leading to adverse outcomes for shareholders.
• Potential for increased volatility and poor performance if Saba's investment strategies are implemented.
• Risk of liquidation at fire sale prices, resulting in tax consequences for shareholders.

Future Outlook

BlackRock aims to continue delivering value to shareholders by maintaining its investment strategy and defending against Saba's proposals. In 2031, all shareholders will have an opportunity to receive 100% liquidity at net asset value via fund liquidation or tender offer.

Management Comments

• BlackRock believes that Saba's motives conflict with shareholders' best interests.
• The Board unanimously recommends voting FOR BlackRock's nominees and AGAINST Saba's proposal.

Industry Context

Activist investors targeting closed-end funds is a recurring theme in the investment management industry. Saba Capital Management has been involved in similar campaigns with other funds, seeking to influence fund management and potentially unlock value or generate short-term profits.

Comparison to Industry Standards

• An 18% return on market price year-to-date, outperforming 98% of all closed-end funds, suggests strong relative performance compared to peers.
• Share repurchase programs are a common tool used by closed-end funds to manage discounts to NAV, and BSTZ's $41 million repurchase program is a significant effort to enhance shareholder value.

Stakeholder Impact

• Shareholders face potential changes to the fund's management and investment strategy.
• BlackRock's role as investment advisor is at stake.
• The outcome of the proxy fight could impact the fund's performance, fees, and investment risk.

Next Steps

• Shareholders need to vote on the WHITE proxy card before the Annual Meeting on June 18th.
• BlackRock will continue to advocate for its nominees and against Saba's proposal.

Key Dates

Keywords

BlackRock Science and Technology Term Trust, BSTZ, Saba Capital Management, Activist Investor, Proxy Fight, Shareholder Value, Closed-End Fund, Investment Management, Board Nominees, Share Repurchase