SCHEDULE: Virtus Fund and Saba Capital Reach 25% Tender Agreement

Virtus Dividend, Interest & Premium Strategy Fund has agreed to a significant 25% tender offer at 99% of NAV to resolve a proxy contest with Saba Capital.

Summary

• The Fund will launch a cash tender offer for up to 25% of its outstanding common shares.
• The purchase price is set at 99% of the Net Asset Value (NAV) as of the expiration date.
• Saba Capital, which holds a 10.99% stake, has agreed to a standstill period through the 2028 annual meeting or July 15, 2028.
• Saba Capital has officially withdrawn its notice to nominate an independent trustee for the 2026 annual meeting.
• The tender offer is scheduled to be completed no later than October 14, 2026.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong positive for current shareholders, as it guarantees a high-value exit for a quarter of the fund's shares and ends a costly proxy battle.

Positives

• Shareholders are offered a liquidity event at 99% of NAV, which is typically higher than the market trading price for closed-end funds.
• The 25% size of the tender offer is substantial, allowing a significant portion of the investor base to exit at near-NAV.
• Resolution of the proxy contest eliminates the costs and distractions of a contested board election.
• The agreement prevents Saba from purchasing additional shares or launching new proxy fights until at least 2028.

Negatives

• A 25% reduction in the Fund's assets may lead to a higher expense ratio for remaining shareholders due to a smaller asset base.
• The tender offer is subject to proration if more than 25% of shares are tendered, meaning investors may not be able to sell their entire position.
• The Fund is restricted from engaging in mergers or rights offerings until the tender offer is completed.

Risks

• Market volatility could negatively impact the NAV between now and the tender expiration, affecting the final payout price.
• The Fund may delay the tender offer if legal or regulatory hurdles arise, though it must provide a reasonable explanation.
• Reduced fund size could potentially impact the secondary market liquidity of the remaining shares.

Future Outlook

The Fund is committed to executing a significant capital return to shareholders by mid-October 2026. Following the tender, the Fund will operate with a reduced asset base but with a stabilized board and governance structure through mid-2028, as Saba is required to vote in favor of board recommendations during this period.

Management Comments

• The Fund shall commence a cash self-tender offer... to purchase 25% of the then outstanding Shares.
• Saba and the Saba Funds shall vote... in accordance with the recommendations of the Fund's board of trustees.

Industry Context

StockSavvy.ai notes that this settlement is a common outcome in the closed-end fund sector when facing pressure from activist investors like Saba Capital. By offering a large tender at near-NAV, the fund management effectively 'buys' several years of peace and prevents a hostile board takeover, while providing a liquidity exit for arbitrage-focused investors.

Comparison to Industry Standards

• The 25% tender size is significantly more aggressive than the 5-10% offers typically seen in standard fund repurchases.
• A 99% of NAV price is highly competitive, as many similar settlements in the industry are executed at 98% of NAV.
• The multi-year standstill (through 2028) is a standard duration for settlements involving high-profile activist firms like Saba.

Corporate Governance

Legal Proceedings

• Saba Capital has withdrawn its shareholder proposal and trustee nominations for the 2026 annual meeting.

Stakeholder Impact

• Shareholders: Can realize 99% of NAV for up to 25% of their holdings.
• Management: Gains a multi-year period of cooperation from its largest activist shareholder.
• Remaining Shareholders: May see a slight increase in the expense ratio as fixed costs are spread over a smaller asset base.

Next Steps

• Formal commencement of the cash tender offer.
• Expiration of the tender offer by October 2026.
• Payment to shareholders within seven business days of the offer's expiration.

Key Dates

Recommendation

The agreement to tender 25% of shares at 99% of NAV creates a clear arbitrage opportunity if the shares are currently trading at a discount to NAV. Investors can capture the spread between the current market price and the 99% NAV payout.

Keywords

Saba Capital, Virtus Investment, Tender Offer, Standstill Agreement, Boaz Weinstein, Closed-End Fund, Proxy Contest, NAV, Share Repurchase