SCHEDULE 13D/A: BlackRock Science & Technology Trust Enters Standstill Agreement with Activist Investor Saba Capital

BlackRock Science & Technology Term Trust has reached a standstill agreement with Saba Capital Management, L.P., a significant shareholder, resolving a prior shareholder proposal and outlining future engagement terms.

Summary

• Saba Capital Management, L.P., along with Saba Capital Management GP, LLC and Boaz R. Weinstein, collectively known as the Reporting Persons, beneficially own 6,420,083 common shares of BlackRock Science & Technology Term Trust, representing 8.66% of the outstanding shares.
• The percentage of ownership is calculated based on 74,168,909 common shares outstanding as of October 10, 2024.
• On January 20, 2025, Saba Capital Management, L.P. entered into a standstill agreement with the Issuer (BlackRock Science & Technology Term Trust) and BlackRock Advisors, LLC.
• The standstill agreement includes customary provisions and will remain in effect until the day following the completion of the Issuer's 2027 annual meeting of shareholders or August 31, 2027, whichever is earlier.
• In connection with the agreement, Saba Capital withdrew a shareholder proposal it had previously submitted to the Issuer on October 9, 2024.
• The total amount paid by Saba Capital to acquire the reported common shares is approximately $110,369,446.
• Saba Capital's transactions in the past sixty days include sales of 3,968 shares at $21.46, 19,503 shares at $21.93, 13,967 shares at $21.68, and 12,769 shares at $21.53 in November 2024, and purchases of 65,048 shares at $21.86 on December 4, 2024, 14,174 shares at $20.77 on January 2, 2025, and 13,210 shares at $21.44 on January 7, 2025.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While it doesn't indicate direct financial gains, the resolution of potential shareholder activism through a standstill agreement typically reduces uncertainty and conflict, which is generally viewed favorably for corporate stability. However, it also limits a major shareholder's ability to push for changes, which could be seen as a neutral or slightly negative for those hoping for activist-driven value creation.

Positives

• The execution of a standstill agreement with a significant activist investor like Saba Capital Management, L.P. typically reduces uncertainty and potential for disruptive proxy contests, fostering a more stable corporate environment.
• Saba Capital withdrew its previously submitted shareholder proposal, indicating a resolution of immediate shareholder activism concerns.
• The agreement includes a non-disparagement clause, which aims to prevent public negative commentary between the parties, contributing to a more constructive relationship.

Negatives

• The standstill agreement restricts Saba Capital's ability to actively influence the Fund's management, policies, or corporate structure, potentially limiting a major shareholder's capacity to advocate for changes they deem beneficial.
• Saba Capital is obligated to vote its shares in favor of the Board's trustee nominees and in accordance with the Board's recommendations on most matters, which could reduce independent shareholder oversight.

Risks

• The agreement explicitly carves out ongoing or future litigation related to 'ECAT Litigation' and 'ECAT/MUI Litigation' (including FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., et al, No. 24-345 (U.S. Supreme Court)), indicating potential continued legal disputes with other BlackRock-advised funds.
• While the standstill agreement reduces immediate activist pressure, it does not eliminate all potential for future disagreements, especially after the Effective Period ends in 2027.

Future Outlook

The standstill agreement sets a framework for the relationship between Saba Capital and BlackRock Science & Technology Term Trust until at least the Fund's 2027 annual meeting or August 31, 2027. This period is expected to be free from activist proxy solicitations and public challenges from Saba Capital, allowing the Fund's management to operate with reduced external pressure from this specific shareholder.

Management Comments

• The agreement was signed by John Perlowski as President and Chief Executive Officer for BlackRock Science and Technology Term Trust and as Managing Director for BlackRock Advisors, LLC.
• Michael D'Angelo signed on behalf of Saba Capital Management, L.P. as General Counsel, and as Authorized Signatory/Attorney-in-fact for Boaz R. Weinstein and Saba Capital Management GP, LLC.

Industry Context

This filing reflects a common dynamic in the closed-end fund industry where activist investors like Saba Capital often target funds trading at a discount to net asset value (NAV) to push for changes such as tender offers, liquidations, or open-ending. A standstill agreement typically signals a temporary truce or a negotiated resolution, allowing the fund to avoid a costly and distracting proxy fight. This particular agreement suggests a period of stability for BlackRock Science & Technology Term Trust, contrasting with ongoing litigation Saba Capital has with other BlackRock-advised funds (ECAT and MUI).

Comparison to Industry Standards

• Standstill agreements are a standard tool in corporate governance to manage activist shareholder engagement, similar to those seen with other closed-end funds facing activist pressure, such as those involving Bulldog Investors or Western Asset Management funds.
• The terms, including restrictions on proxy solicitations, group formation, and voting commitments, are typical for such agreements, aiming to provide management with operational stability in exchange for certain concessions or simply to avoid a public battle.
• The non-disparagement clauses are also common, reflecting an attempt to maintain a professional relationship between the parties, even amidst past or ongoing disputes with related entities like BlackRock ESG Capital Allocation Term Trust (ECAT) and BlackRock Municipal Income Fund, Inc. (MUI).

Corporate Governance

Legal Proceedings

• The standstill agreement includes exceptions for ongoing or future litigation between Saba and its affiliates, on one hand, and BlackRock ESG Capital Allocation Term Trust (ECAT) and ECAT's trustees (ECAT Litigation).
• It also includes exceptions for litigation involving ECAT and BlackRock Municipal Income Fund, Inc. (MUI) and their respective trustees/directors, if one or both funds elect to participate in the proceedings captioned FS Credit Opportunities Corp. v. Saba Capital Master Fund, Ltd., et al, No. 24-345 (U.S. Supreme Court) (ECAT/MUI Litigation).

Stakeholder Impact

• **Shareholders**: The agreement provides a period of stability by reducing the likelihood of a proxy contest or public activist campaign from Saba Capital, which could be positive for long-term investors seeking stability. However, it also limits the potential for activist-driven changes that some shareholders might desire.
• **Management/Board**: The agreement provides management and the Board with a defined period free from direct activist pressure from Saba Capital, allowing them to focus on the Fund's operations and strategy without immediate external challenges from this specific shareholder.

Next Steps

• The Fund will file a current report on Form 8-K disclosing the entry into this Agreement no later than one business day following January 20, 2025.
• Saba Capital will promptly prepare and file an amendment to its Schedule 13D reporting the entry into this Agreement and file a copy of the Agreement as an exhibit.
• The standstill agreement will remain in effect until the day following the completion of the Fund's 2027 annual meeting of shareholders or August 31, 2027, whichever is earlier.

Key Dates

Keywords

Standstill Agreement, Saba Capital Management, BlackRock Science & Technology Term Trust, SEC Filing, Schedule 13D, Shareholder Activism, Corporate Governance, Investment Fund, Closed-End Fund, Proxy Voting