Madison Strategic Sector Premium Fund and Madison Covered Call & Equity Strategy Fund Announce Intention to Merge followed b...
June 29 2018 - 4:37PM
Madison Strategic Sector Premium Fund (NYSE:MSP) and Madison
Covered Call & Equity Strategy Fund (NYSE:MCN) today announced
that the Boards of Trustees of MSP and MCN (collectively, the
“Funds”) approved the merger of MSP with and into MCN (the
“Surviving Fund”), subject to the satisfaction of applicable legal
and regulatory requirements (the “Merger”). The two Funds
have identical investment objectives and investment
strategies. In addition, both Funds are managed by the same
portfolio management team at Madison Asset Management, LLC
(“Madison”), the investment adviser to the Funds. The Merger,
which requires approval by shareholders of both Funds, is expected
to be a tax-free transaction completed during the third quarter of
2018.
The Boards of Trustees have also approved conducting a tender
offer for up to 25% of the outstanding shares of the Surviving Fund
at a price equal to 99.5% of net asset value at the close of
trading on the date the tender offer expires (the “Tender
Offer”). The Tender Offer would be completed following
consummation of the Merger. The specific dates for the Tender Offer
will be announced separately, but it is currently anticipated that
the Tender Offer will commence in October 2018 and end in November
2018. Additional terms and conditions of the Tender Offer will be
set forth in offering materials, which will be distributed to
shareholders.
The Funds also announced that they have reached a settlement
with Karpus Management, Inc. (“Karpus”), the largest shareholder of
both MSP and MCN, pursuant to which Karpus has agreed to support
the Merger and withdraw the shareholder proposals and trustee
nomination it had previously submitted to MSP and/or MCN (the
“Settlement Agreement”). Karpus has also agreed to certain
customary standstill provisions. The Settlement Agreement,
which is qualified in its entirety by reference to the full text of
the Agreement, will be filed by the Funds with the Securities and
Exchange Commission (the “SEC”) and will be available free of
charge at the SEC’s website, http://www.sec.gov.
The Boards believe the Merger and subsequent Tender Offer are in
the best interests of the Funds and their shareholders. The
Merger will permit MSP shareholders to pursue the same investment
strategy in a larger fund, while the Tender Offer may help to
reduce the trading discount.
CONTACT: Madison Asset Management, LLC Greg Hoppe, Treasurer
gregh@madisonadv.com 800-368-3195
This press release is not a recommendation, an offer to purchase
or a solicitation of an offer to sell shares of the Funds.
This press release describes a Merger, which will be conducted
pursuant to an agreement and plan of reorganization that will be
included in a Form N-14 registration statement, to be filed by MCN
(the “Registration Statement”). This Registration Statement has yet
to be filed with the SEC. After the Registration Statement is filed
with the SEC, it may be amended or withdrawn until the Registration
Statement is declared effective by the SEC. A joint proxy
statement/prospectus to be included in the Registration Statement
will not be distributed to shareholders of the Funds unless and
until the Registration Statement is declared effective by the SEC.
The joint proxy statement/prospectus will contain information with
respect to the investment objectives, risks, charges and expenses
of the Funds and other important information about MSP and MCN. The
joint proxy statement/prospectus will constitute neither an offer
to sell securities, nor will it constitute a solicitation of an
offer to buy securities, in any state where such offer or sale is
not permitted. When filed with the SEC, the Registration Statement,
including the joint proxy statement/prospectus included therein,
will be available free of charge at the SEC’s website,
http://www.sec.gov. This press release also describes a Tender
Offer, which has not yet commenced. Any Tender Offer will be made
only pursuant to an offer to purchase, a related letter of
transmittal and other documents that will be filed with the SEC as
exhibits to a tender offer statement on Schedule TO and will be
available free of charge at the SEC’s website,
http://www.sec.gov. Shareholders can also obtain copies of
the documents described above, when available, for free by calling
1-800-767-0300.
Shareholders should read (i) any Registration Statement and
joint proxy statement/prospectus and (ii) any offer to
purchase and tender offer statement on Schedule TO and related
exhibits, if and when those documents are filed and become
available, as they would contain important information about the
Merger and the Tender Offer, respectively. Investors should
consider the investment objectives, risks, charges and expenses of
MSP and MCN carefully.
Certain statements made in this press release, such as those
related to the Merger and the Tender Offer, are forward-looking
statements. Actual future results or occurrences may differ
significantly from those anticipated in any forward-looking
statements due to numerous factors. These include, but are not
limited to: market developments; legal and regulatory developments;
and other additional risks and uncertainties. As a result, none of
Madison, the Fund or any other person assumes responsibility for
the accuracy and completeness of such statements in the future.
Each Fund is a diversified, closed-end management investment
company registered under the Investment Company Act of 1940, as
amended. Each Fund has the same investment objective – to provide a
high level of current income and current gains, with a secondary
objective of long-term capital appreciation. Each Fund pursues its
investment objectives by investing primarily in large and
mid-capitalization common stocks that are, in the view of Madison,
selling at a reasonable price in relation to their long-term
earnings growth rates. Under normal market conditions, each Fund
seeks to generate current earnings from option premiums by writing
(selling) covered call options on a substantial portion of its
portfolio securities. Madison is a wholly owned subsidiary of
Madison Investment Holdings, Inc.
The Funds, their trustees and officers, as well as Madison,
members of its management and employees, may be deemed to be
participants in the Funds’ solicitation of proxies from
shareholders in connection with the Merger. Information concerning
the interests of the participants in the solicitation will be set
forth in the Registration Statement to be filed with the
SEC.
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