DEFA14A: ISS Rejects Saba's Proposals to Terminate BlackRock as Investment Adviser for Multiple Closed-End Funds

Institutional Shareholder Services (ISS) recommends shareholders vote against Saba Capital Management's proposals to terminate BlackRock as investment adviser for several closed-end funds and supports BlackRock's board nominees.

Summary

• Institutional Shareholder Services (ISS), a leading independent proxy advisory firm, has issued reports recommending shareholders vote against Saba Capital Management's proposals to terminate BlackRock as investment adviser for several closed-end funds.
• ISS supports BlackRock's board nominees at BCAT, BMEZ, BNY, and MPA.
• The funds in question include BlackRock Capital Allocation Term Trust (BCAT), BlackRock California Municipal Income Trust (BFZ), BlackRock Innovation and Growth Term Trust (BIGZ), BlackRock Health Sciences Term Trust (BMEZ), BlackRock Science and Technology Term Trust (BSTZ), and BlackRock ESG Capital Allocation Term Trust (ECAT).
• ISS also recommends voting for Board nominee Arthur Steinmetz at both BlackRock MuniHoldings New York Quality Fund, Inc. (MHN) and BlackRock MuniYield New York Quality Fund, Inc. (MYN).
• ISS rejected the nominees put forth by Saba at the majority of the funds.
• BlackRock has recently announced enhancements across its closed-end fund complex, including discount management programs, distribution increases, and fee waivers, providing $2.9 billion in liquidity.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook for BlackRock, with ISS support against activist proposals and recent enhancements to the closed-end fund complex. However, the ongoing activist pressure and the fact that ISS did not support BlackRock's nominees at BIGZ and ECAT temper the overall sentiment.

Positives

• ISS support for BlackRock's management and board nominees validates BlackRock's investment experience and stewardship.
• ISS recognizes the Board's track record of commitment to the best interests of all shareholders.
• BlackRock's enhancements across its closed-end fund complex, including discount management programs, distribution increases, and fee waivers, provide $2.9 billion in liquidity.

Negatives

• ISS did not support BlackRock's nominees at BIGZ and ECAT.
• Saba Capital Management is actively seeking to terminate BlackRock's investment management agreements and replace board members.

Risks

• Changes and volatility in political, economic, or industry conditions could impact the funds' net asset value.
• Increased competition could affect the funds' performance.
• Unfavorable resolution of legal proceedings could negatively impact the funds.
• Technological changes could have an impact on the funds.
• Legislative and regulatory actions could affect the funds.
• Terrorist activities, international hostilities, health epidemics, and natural disasters could adversely affect the general economy and financial markets.
• Problems at other financial institutions could negatively impact the funds.

Future Outlook

BlackRock will update performance and certain other data for the funds on a monthly basis on their website in the Closed-end Funds section of www.blackrock.com, as well as certain other material information as necessary from time to time.

Management Comments

• R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, stated that the ISS recommendations speak to BlackRock's depth of investment experience and the Boards' track record of stewardship.
• Hubbard added that BlackRock believes its nominees are the right stewards to represent all shareholders.

Industry Context

This announcement reflects the ongoing activist investor activity in the closed-end fund space, where firms like Saba Capital Management seek to influence fund management and governance.

Comparison to Industry Standards

• The document mentions Liberty All-Star Growth Fund, Inc. (ASG) as a comparable fund to BIGZ, noting that BIGZ's distribution rate has exceeded that of ASG over the past two calendar years.
• The document states that BCAT has improved returns and now trades at a narrower discount to NAV than peers.
• ECAT has improved returns, such that TSR since inception is now better than peers, and has narrowed the NAV discount, bringing the measure in line with peers.

Stakeholder Impact

• Shareholders are encouraged to vote on the proposals.
• The outcome of the vote will impact the management and governance of the closed-end funds.

Next Steps

• Shareholders are encouraged to vote using the WHITE proxy card.
• Shareholders are advised to check BlackRock's website for updated performance information and the release of other material information about the funds.

Key Dates

Keywords

BlackRock, Saba Capital Management, ISS, proxy, closed-end funds, investment adviser, board nominees, BCAT, BFZ, BIGZ, BMEZ, BSTZ, ECAT, BNY, MPA, MHN, MYN