DEFA14A: BlackRock Science and Technology Term Trust Faces Proxy Fight from Saba Capital

BlackRock is urging shareholders of the BlackRock Science and Technology Term Trust (BSTZ) to vote against a proposal by Saba Capital Management to terminate BlackRock's investment management agreement.

Summary

• BlackRock is soliciting votes against a proposal by Saba Capital Management to terminate BlackRock's investment management agreement with the BlackRock Science and Technology Term Trust (BSTZ).
• BlackRock highlights BSTZ's performance, including an 11.3% yield on NAV and 18.7% total shareholder returns in 2023.
• BSTZ's discount to NAV has narrowed due to actions taken by the Board and BlackRock's share repurchase program, with $42 million in shares repurchased, resulting in $8.5 million in NAV accretion.
• BlackRock criticizes Saba's track record, claiming Saba's actions are for quick profit at the expense of CEF shareholders and that funds taken over by Saba have underperformed.
• The Trust has a managed distribution plan, with a recent increase to an annual rate of 12% of the Fund's 12-month rolling average daily net asset value, effective May 20, 2024.
• The estimated sources of the May 31, 2024 distribution and the fiscal year through May 31, 2024, are entirely return of capital.
• BlackRock urges shareholders to vote FOR the BlackRock nominees and AGAINST Saba's proposal using the WHITE proxy card.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While highlighting positive performance metrics and defending against activist pressure, the reliance on return of capital for distributions and the ongoing proxy fight introduce uncertainty.

Positives

• BSTZ has delivered a high yield on NAV (11.3%) and strong total shareholder returns (18.7%) in 2023.
• The discount to NAV has narrowed significantly, enhancing the value of the investment.
• Share repurchases have driven meaningful gains in NAV for shareholders.
• The managed distribution plan supports a monthly distribution, with a recent increase to an annual rate of 12%.

Negatives

• The estimated sources of the May 31, 2024 distribution and the fiscal year through May 31, 2024, are entirely return of capital, which does not necessarily reflect the Trust's investment performance.
• Saba Capital Management is attempting to terminate BlackRock's investment management agreement, creating uncertainty.

Risks

• Saba Capital's proxy fight could lead to changes in the fund's management and investment strategy.
• The distribution rate is subject to change at the discretion of the Board, and the Plan can be amended or terminated without prior notice.
• Amendment or termination of the Plan could have an adverse effect on the market price of the Trust's shares.
• Distributions exceeding total return performance will reduce the Trust's net asset value per share.

Future Outlook

The distribution rate under the Plan is subject to change at the discretion of the Board, and the Plan will be subject to ongoing review. The Board may amend the terms of the Plan or suspend or terminate the Plan at any time without prior notice.

Management Comments

• BlackRock is fighting for you.
• Defend your fund, save your income.
• BlackRock is delivering real value.
• This is no time for taking chances.
• We need all shareholders to vote on the enclosed WHITE proxy card today to preserve YOUR Fund.

Industry Context

This proxy fight highlights the increasing activism in closed-end funds, where hedge funds like Saba Capital seek to influence fund management for short-term gains. BlackRock is positioning itself as a stable, long-term value provider in contrast to Saba's approach.

Comparison to Industry Standards

• The document compares BSTZ's performance to a peer set including BST, STK, NBXG, and AIO.
• It also compares BRW's total shareholder return since Saba's takeover to the BlackRock Bank Loans Funds Median.
• BlackRock claims that at the funds Saba has taken over (BRW, SABA), shareholders are now exposed to riskier strategies, leaving them with a fund that no longer serves their original goals, as well as higher management fees.

Stakeholder Impact

• Shareholders are directly impacted by the outcome of the proxy vote and the future management of the fund.
• The managed distribution plan affects the income received by shareholders.
• Changes to the investment strategy could impact the fund's performance and the value of shareholders' investments.

Next Steps

• Shareholders need to vote on the proposals presented in the proxy statement.
• The Board will continue to review the managed distribution plan and may amend or terminate it.
• The Trust will send a Form 1099-DIV for the calendar year to report distributions for federal income tax purposes.

Key Dates

Keywords

BlackRock, BSTZ, Saba Capital, proxy fight, investment management agreement, closed-end fund, NAV, share repurchase, managed distribution plan, return of capital