The Herzfeld Caribbean Basin Fund, Inc. (NASDAQ: CUBA) (the “Fund”)
today announced its quarterly distribution pursuant to the Fund’s
managed distribution policy (the “MDP”) and reported the results of
its 2019 Annual Meeting of Stockholders.
Quarterly Distribution
The Fund today declared the following
distribution pursuant to the MDP:
Declaration Date |
Ex-Date |
Record Date |
Payment Date |
Per Share |
12/3/2019 |
12/19/2019 |
12/20/2019 |
12/31/2019 |
$ |
0.284625 |
The primary purpose of the MDP is to provide
stockholders with a constant, but not guaranteed, fixed minimum
rate of distribution each quarter (currently set at the annual rate
of 15% of the Fund’s net asset value (“NAV”) as determined on June
30, 2019 and payable in quarterly installments). The Fund cannot
predict what effect, if any, the MDP will have on the market price
of its shares or whether such market price will reflect a greater
or lesser discount to NAV as compared to prior to the adoption of
the MDP. The quarterly distribution for the Fund’s second fiscal
quarter constitutes the second consecutive quarterly distribution
under the MDP. The $0.284625 per share amount announced today
reflects a distribution of 17.60% based upon the market price of
the Fund and 14.77% based upon the net asset value, each as of
October 31, 2019. No conclusions should be drawn about the Fund’s
investment performance from the amount of the Fund’s distributions
or from the terms of the MDP.
Mr. Thomas J. Herzfeld, Chairman of the Fund’s
Board of Directors (the “Board”) commented, “Our commitment to
provide current quarterly distributions to the Fund’s stockholders,
together with our previously announced Tender Offer Policy, is a
key component of our strategy to narrow the Fund’s current discount
to NAV. While Fund performance is up 38% year to date (based on
market price adjusted for distributions for the period January 1,
2019 through October 31, 2019), the Board continues to believe that
efforts to reduce the discount should continue. Historical
data shows that closed-end funds that provide regular distributions
to stockholders throughout the year can be an effective strategy to
reduce a discount.”
See important additional information below with
respect to the MDP.
Results of 2019 Annual
Meeting
In addition, the Fund held its annual
stockholder meeting on November 14, 2019 (“Annual Meeting”).
At the Annual Meeting, the Fund’s stockholders re-elected Ms. Ann
Lieff and Mr. John Gelety, Esq. as Class II Directors for the Fund,
each for a term of three years. Ms. Lieff is President of The Lieff
Company, a management consulting firm, and has been a member of the
Board since 1998. Mr. Gelety is an attorney and Partner at
Greenspoon Marder, LLP and has been a member of the Board since
2011. Mr. Herzfeld commented: “Our Board continues to provide
stable and expert guidance to the Fund and its stockholders. Ms.
Lieff and Mr. Gelety have served our stockholders well and we are
fortunate to have Board members of such high quality and expertise
guiding the Fund through the current complicated investment
environment.”
The Fund’s stockholders also considered a
non-binding stockholder proposal recommending that the Fund be
dissolved. The number of votes cast “For” the proposal constituted
51% of the votes cast at the Annual Meeting and the number of votes
cast “Against” the proposal constituted 49% of the votes cast at
the Annual Meeting. The results of the voting as a percentage of
outstanding shares with respect to the non-binding stockholder
proposal were:
|
As a Percentage of Outstanding Shares* |
For |
28.404 |
% |
Against |
26.904 |
% |
Abstain |
0.458 |
% |
Broker Non-Votes |
26.969 |
% |
Total: |
82.735 |
% |
*Broker Non-Votes and Abstentions are not
considered votes cast.
After the Annual Meeting, the Board met to
consider the results of the stockholder vote on the non-binding
stockholder proposal. Mr. Herzfeld commented: “Consistent
with the results of the vote, the Board considered whether, at this
time, the Fund’s dissolution was in the best interest of all of the
Fund’s stockholders. The Board evaluated a number of factors,
including that less than 29% of the Fund’s outstanding shares voted
for the proposal with almost 27% of the Fund’s outstanding shares
voting against the proposal and approximately 45% of the Fund’s
outstanding shares expressing no view on the proposal. The
Board noted that, with respect to the stockholder proposal, almost
72% of the Fund’s outstanding shares voted against, abstained from
voting or did not vote. The Board also considered the current
year-to-date performance of the Fund, which is up approximately 38%
in price for the period January 1, 2019 through October 31, 2019,
adjusted for distributions, the previously announced three year
plan to address the Fund’s discount, which has yet to fully take
effect, and the upcoming U.S. Presidential election, which may
prove to be an important event impacting both the Fund’s market
price and its discount/premium to NAV. Consistent with the Board’s
obligation to consider the most appropriate course for all
stockholders, the Board determined to take no action to dissolve
the Fund at this time and to allow the three year plan previously
announced and any impact of the upcoming Presidential election to
fully realize before adopting such a draconian course.”
Details regarding the Managed
Distribution Policy:
Under the MDP, the Fund will distribute all
available investment income to its stockholders, consistent with
its investment objective and as required by the Internal Revenue
Code of 1986, as amended (the “Code”). The amount
distributed per share is subject to change at the
discretion of the Board. If sufficient investment
income is not available on a quarterly basis, the Fund will
distribute long-term capital gains and/or return of capital to its
stockholders in order to maintain its managed distribution level.
The Fund is currently not relying on any exemptive relief from
Section 19(b) of the Investment Company Act of 1940, as amended
(the “1940 Act”). The Fund may make additional distributions from
time to time, including additional capital gain distributions at
the end of the taxable year, if required to meet requirements
imposed by the Code and/or the 1940 Act. Please note that for
stockholders enrolled in the Fund’s Dividend Distribution
Reinvestment Plan (“DRIP”), the distribution will be reinvested in
additional shares of the Fund as described in the DRIP.
The Fund expects that distributions under the
MDP will exceed investment income and available capital gains and
thus expects that distributions under the MDP will likely include
returns of capital for the foreseeable future. A return of capital
may occur, for example, when some or all of a stockholder’s
investment is paid back to the stockholder. A return of capital
distribution does not necessarily reflect the Fund’s investment
performance and should not be confused with ‘yield’ or ‘income.’
Any such returns of capital will decrease the Fund’s total assets
and, therefore, could have the effect of increasing the Fund’s
expense ratio. In addition, in order to maintain the level of
distributions called for under its MDP, the Fund may have to sell
portfolio securities at a less than opportune time.
The following table sets forth the estimated
amounts of the current quarterly distribution and the cumulative
distributions paid this fiscal year to date from the following
sources: net investment income, net realized capital gains and
return of capital. All amounts are expressed per common share.
|
Current Distribution |
% Breakdown of the Current Distribution |
Total Cumulative Distributions for the Fiscal Year to Date |
% Breakdown of the Total Cumulative Distributions for the Fiscal
Year to Date |
Net Investment Income |
$ |
0.00 |
0 |
% |
$ |
0.00 |
0 |
% |
Net Realized Short-Term Capital Gains |
$ |
0.00 |
0 |
% |
$ |
0.00 |
0 |
% |
Net Realized Long-Term Capital Gains |
$ |
0.107599 |
37.80 |
% |
$ |
0.107599 |
18.90 |
% |
Return of Capital |
$ |
0.177026 |
62.20 |
% |
$ |
0.461651 |
81.10 |
% |
Total (per common share) |
$ |
0.284625 |
100 |
% |
$ |
0.569250 |
100 |
% |
Average annual total return (in relation to NAV) for the 5-year
period ending on October 31, 2019 |
0.93 |
% |
Annualized current distribution rate expressed as a percentage of
NAV as of October 31, 2019 |
14.77 |
% |
Annualized current distribution rate expressed as a percentage of
PRICE as of October 31, 2019 |
17.60 |
% |
Cumulative total return (in relation to NAV) for the fiscal year
through October 31, 2019 |
5.40 |
% |
Cumulative fiscal year distributions as a percentage of NAV as of
October 31, 2019 |
3.69 |
% |
No conclusions should be drawn about the
Fund’s investment performance from the amount of the Fund’s
distributions or from the terms of the MDP.
The amount distributed per share is
subject to change at the discretion of the Board.
The MDP is subject to ongoing review by the Board to determine
whether it should be continued, modified or terminated. The Board
may amend the terms of the MDP, suspend the MDP, or terminate the
MDP at any time without prior notice to the Fund’s stockholders if
it deems such actions to be in the best interest of the Fund or its
stockholders. The amendment or termination of the MDP could have an
adverse effect on the market price of the Fund's shares.
With each distribution that does not consist
solely of net investment income, the Fund will issue a notice to
stockholders and an accompanying press release that will provide
detailed information regarding the amount and composition of the
distribution and other related information. The amounts and sources
of distributions reported in the notice to stockholders are only
estimates and are not being provided for tax reporting purposes.
The actual amounts and sources of the amounts for tax reporting
purposes will depend upon the Fund’s investment experience during
its full fiscal year and may be subject to changes based on tax
regulations. The Fund will send stockholders a Form 1099-DIV for
the respective calendar year that will tell them how to report
these distributions for federal income tax purposes.
Stockholders should consult their tax
advisor for proper tax treatment of the Fund’s
distributions.
About Thomas J. Herzfeld Advisors,
Inc.Thomas J. Herzfeld Advisors, Inc., founded in 1984, is
an SEC registered investment advisor, specializing in investment
analysis and account management in closed-end funds. The Firm also
specializes in investment in the Caribbean Basin. The HERZFELD/CUBA
division of Thomas J.Herzfeld Advisors, Inc. serves as the
investment advisor to The Herzfeld Caribbean Basin Fund,Inc. a
publicly traded closed-end fund (NASDAQ: CUBA).
More information about the advisor can be found
at www.herzfeld.com.
Past performance is no guarantee of future
performance. An investment in the Fund is subject to certain risks,
including market risk. In general, shares of closed-end funds often
trade at a discount from their net asset value and at the time of
sale may be trading on the exchange at a price which is more or
less than the original purchase price or the net asset value. An
investor should carefully consider the Fund’s investment objective,
risks, charges and expenses. Please read the Fund’s disclosure
documents before investing.
Forward-Looking Statements
This press release, and other statements that
Thomas J. Herzfeld Advisors, Inc. (“TJHA”) or the Fund may make,
may contain forward looking statements within the meaning of the
Private Securities Litigation Reform Act, with respect to the
Fund’s or TJHA’s future financial or business performance,
strategies or expectations. Forward-looking statements are
typically identified by words or phrases such as “trend,”
“potential,” “opportunity,” “pipeline,” “believe,” “comfortable,”
“expect,” “anticipate,” “current,” “intention,” “estimate,”
“position,” “assume,” “outlook,” “continue,” “remain,” “maintain,”
“sustain,” “seek,” “achieve,” and similar expressions, or future or
conditional verbs such as “will,” “would,” “should,” “could,” “may”
or similar expressions. TJHA and the Fund caution that
forward-looking statements are subject to numerous assumptions,
risks and uncertainties, which change over time. Forward-looking
statements speak only as of the date they are made, and TJHA and
the Fund assume no duty to and do not undertake to update
forward-looking statements. Actual results could differ materially
from those anticipated in forward-looking statements and future
results could differ materially from historical performance. With
respect to the Fund, the following factors, among others, could
cause actual events to differ materially from forward-looking
statements or historical performance: (1) changes and volatility in
political, economic or industry conditions, particularly with
respect to Cuba and other Caribbean Basin countries, the interest
rate environment, foreign exchange rates or financial and capital
markets, which could result in changes in demand for the Fund or in
the Fund’s net asset value; (2) the relative and absolute
investment performance of the Fund and its investments; (3) the
impact of increased competition; (4) the unfavorable resolution of
any legal proceedings; (5) the extent and timing of any
distributions or share repurchases; (6) the impact, extent and
timing of technological changes; (7) the impact of legislative and
regulatory actions and reforms, including the Dodd-Frank Wall
Street Reform and Consumer Protection Act, and regulatory,
supervisory or enforcement actions of government agencies relating
to the Fund or TJHA, as applicable; (8) terrorist activities,
international hostilities and natural disasters, which may
adversely affect the general economy, domestic and local financial
and capital markets, specific industries or TJHA or the Fund; (9)
TJHA’s and the Fund’s ability to attract and retain highly talented
professionals; (10) the impact of TJHA electing to provide support
to its products from time to time; and (11) the impact of problems
at other financial institutions or the failure or negative
performance of products at other financial institutions. Annual and
Semi-Annual Reports and other regulatory filings of the Fund with
the SEC are accessible on the SEC’s website at www.sec.gov and
on the Fund’s website at www.herzfeld.com/cuba, and may discuss
these or other factors that affect the Fund. The information
contained on TJHA’s or the Fund’s website is not a part of this
press release.
Contact:Tom MorganChief Compliance OfficerThomas
J. Herzfeld Advisors, Inc.1-305-777-1660
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