DEFC14A: Saba Capital Seeks to Shake Up BlackRock Science and Technology Term Trust Board, Proposes Termination of Management Agreement

Saba Capital is soliciting proxies to elect its nominees to the BlackRock Science and Technology Term Trust's board and to terminate the investment management agreement with BlackRock Advisors, LLC, aiming to address the fund's persistent trading discount and governance issues.

Summary

• Saba Capital Management is seeking shareholder support to elect three nominees to the board of BlackRock Science and Technology Term Trust.
• The goal is to bring fresh perspectives to address the fund's trading discount and corporate governance.
• Saba is also proposing to terminate the investment management agreement between the fund and BlackRock Advisors, LLC.
• Saba believes the current board and management are not adequately addressing the fund's challenges.
• The proxy statement outlines the qualifications of Saba's nominees: David Locala, Athanassios Diplas, and Alexander Vindman.
• Saba currently owns 6,232,824 Common Shares, representing 8.19% of the outstanding Common Shares.
• The firm is urging shareholders to vote for its nominees and the proposal to terminate the management agreement using the GOLD proxy card.
• The annual meeting will elect three Class II trustees for a three-year term expiring at the Fund's 2027 annual meeting.
• Saba has retained InvestorCom to provide solicitation and advisory services in connection with this solicitation, with fees not to exceed $20,000.
• The estimated cost of the proxy solicitation is approximately $150,000, with Saba's expenses to date around $75,000.

Sentiment

Score: 7

Explanation: The document is assertive and focused on driving change, indicating a moderately positive sentiment towards the potential for improvement in the fund's performance and governance. However, the need for such intervention also suggests underlying issues, preventing a higher score.

Positives

• Saba's nominees bring diverse experience in finance, technology, risk management, and geopolitical strategy.
• Terminating the management agreement could allow the board to seek a manager with more favorable terms.
• Saba is willing to assist the board in finding a capable manager, potentially offering its services or recommending third-party candidates.
• Shareholders have the final say on the appointment of any long-term manager.
• Saba's nominees have agreed to being nominated and have confirmed their willingness to serve on the Board if elected.

Negatives

• There is no guarantee that any of the Fund's nominees will serve as a trustee if one or more of the Nominees are elected to the Board.
• The Nominees, if elected, would constitute three out of ten members, a minority, of the Board.
• If the proposal to terminate the Management Agreement is approved by shareholders, the Board will have the ability to appoint an interim manager and/or long-term manager of its choosing, the latter being subject to shareholder approval.

Risks

• The election of Saba's nominees is not guaranteed.
• Terminating the management agreement could lead to uncertainty during the transition to a new manager.
• The fund may face challenges in finding a suitable replacement manager on attractive terms.
• If a permanent investment management agreement is not approved, the Fund could potentially require the Fund to become internally managed.

Future Outlook

Saba intends to supplement the proxy statement with the date, time, and location of the Annual Meeting and the record date for determining shareholders entitled to vote once the Fund publicly discloses this information. Saba also stands ready to assist the Board in ensuring that a capable manager is installed, and may at such time offer its services to the Board to act as an interim or long-term manager to the Fund and/or recommend to the Board various third-party manager candidates for the Board to consider at its discretion.

Management Comments

• Saba believes that BlackRock and the Funds trustees must be held accountable for the Funds large and persistent trading discount and its anti-shareholder governance practices.
• Saba is convinced that NOW is the time to take action to close the Funds discount and we urge shareholders to support the Shareholder Proposal and to elect the Nominees, who we believe, if elected, would serve the best interests of all shareholders.

Industry Context

Activist investors like Saba Capital often target closed-end funds trading at a discount to net asset value, seeking to unlock value through board representation or changes in management. This proxy fight reflects a broader trend of increased shareholder activism in the investment management industry.

Comparison to Industry Standards

• Saba's strategy of nominating independent trustees and proposing the termination of the management agreement is a common tactic used by activist investors in closed-end funds.
• Similar campaigns have been launched against other BlackRock funds and funds managed by other large asset managers, such as PIMCO and Eaton Vance.
• The success of such campaigns often depends on the size of the discount, the strength of the activist's arguments, and the support they can garner from institutional shareholders.
• Comparable companies that have been targeted by activist investors include: RiverNorth Opportunities Fund, AllianzGI NFJ Dividend, Interest & Premium Strategy Fund, and Templeton Global Income Fund.

Stakeholder Impact

• Shareholders could benefit from a reduced trading discount and improved fund performance.
• The fund's employees and BlackRock Advisors, LLC could be affected by the potential termination of the management agreement.
• The fund's reputation and investor confidence could be impacted by the outcome of the proxy contest.

Next Steps

• Shareholders need to vote using the GOLD proxy card.
• Saba will supplement the proxy statement with the date, time, and location of the Annual Meeting and the record date for determining shareholders entitled to vote once the Fund publicly discloses this information.
• The Board will have the ability to appoint an interim manager and/or long-term manager of its choosing, the latter being subject to shareholder approval, if the proposal to terminate the Management Agreement is approved by shareholders.

Key Dates

Keywords

proxy solicitation, board election, investment management agreement, Saba Capital, BlackRock Science and Technology Term Trust, corporate governance, closed-end fund