DEFA14A: Neuberger Berman Municipal Fund Inc. Announces Increased Distribution Rate Amidst Proxy Fight with Saba Capital

Neuberger Berman Municipal Fund Inc. announces a significant increase in its monthly distribution rate and urges stockholders to vote for the current directors amidst a proxy fight with Saba Capital Master Fund.

Summary

• Neuberger Berman Municipal Fund Inc. has increased its monthly distribution rate to $0.05417 per share, resulting in an annualized distribution of $0.65 per share.
• This represents a 43.5% increase from the prior distribution.
• The Board believes this higher distribution rate is in the best interest of the Fund and its stockholders, even if it includes net investment income, capital gains, and return of capital.
• Saba Capital Master Fund Ltd. has nominated a director to the Fund's Board, which the Board opposes, stating Saba is focused on its own interests.
• Stockholders are urged to vote using the WHITE proxy card in support of the current directors and to disregard any GOLD proxy cards sent by Saba.
• EQ Fund Solutions has been retained as the proxy solicitor.
• The Fund emphasizes that not voting will negatively impact the long-term prospects of the Fund.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the increased distribution, but tempered by the ongoing proxy fight and potential risks associated with the distribution's sustainability.

Positives

• The Fund has increased its distribution rate by 43.5%, providing stockholders with a higher return.
• The Board is actively working to enhance the value of stockholders' investments.
• The Fund is committed to sustainable, long-term performance.

Negatives

• The proxy fight with Saba Capital introduces uncertainty and potential disruption.
• The increased distribution may include return of capital, which is not a sustainable source of income.

Risks

• The proxy fight with Saba Capital could lead to changes in the Board and potentially the Fund's strategy.
• Saba's influence may not align with the interests of all stockholders.
• Relying on return of capital for distributions may not be sustainable in the long term.

Future Outlook

The Fund aims to create sustainable, long-term performance, but the outcome of the proxy fight could influence future strategies.

Management Comments

• The Board determined it is in the best interests of the Fund and its stockholders to pay a higher distribution rate.
• The incumbent Board nominees are experienced, knowledgeable, and focused on enhancing the value of your investment.
• The Board of your Fund is committed to creating sustainable, long-term performance in pursuit of your Funds stated investment objective for all stockholders.
• Your Funds Board believes that Saba is focused only on its own interests, not the interests of all stockholders.

Industry Context

This announcement reflects the increasing activism in closed-end funds, where hedge funds like Saba Capital seek to influence fund management for their own benefit. The increase in distribution is likely a tactic to garner shareholder support in the face of the proxy challenge.

Comparison to Industry Standards

• It's difficult to compare the distribution increase without knowing the fund's specific investment strategy and portfolio composition.
• Other municipal bond funds, such as BlackRock Municipal Income Trust (BBF) or Nuveen Municipal Value Fund (NUV), may have different distribution policies and yields based on their investment objectives and risk profiles.
• The 43.5% increase is significant and warrants further investigation into its sustainability and the source of the increased payout.

Stakeholder Impact

• Stockholders will receive a higher distribution, but the long-term sustainability is uncertain.
• The outcome of the proxy fight could impact the Fund's strategy and performance.

Next Steps

• Stockholders need to vote on the director nominees using the WHITE proxy card.
• The outcome of the vote will determine the composition of the Board.

Keywords

proxy fight, distribution rate, Saba Capital, Neuberger Berman, municipal fund, proxy solicitor, stockholders, directors, investment