The Herzfeld Caribbean Basin Fund, Inc. (NASDAQ: CUBA) (the “Fund”)
today announced that the Board of Directors of the Fund has
authorized the extension of the Fund’s Managed Distribution Policy
and Self-Tender Policy (together, the “Plan”) for an additional one
year period. The Plan was originally adopted by the Fund in May,
2019 as part of a three-year plan intended to address the Fund’s
trading discount to its net asset value (“NAV”) per share.
In recommending the additional one year extension of the Plan to
the Board of Directors of the Fund, the Fund’s investment advisor,
Thomas J. Herzfeld Advisors, Inc. (“TJHA”) noted that the Fund’s
discount has narrowed since the adoption of the Plan in 2019,
despite the economic conditions created by the COVID-19 pandemic in
the Caribbean Basin region. TJHA has determined that it is in the
best interest of all stockholders to continue measures intended to
directly address the Fund’s discount to NAV while the region seeks
to emerge economically from the two-year effects of the pandemic.
The Plan is to be extended over an additional one-year period
(beginning July 1, 2022 and ending June 30, 2023) and is subject to
the conditions described below.
In addition, TJHA has agreed to waive its
management fee by ten (10) basis points (from 1.45% to 1.35%) if
the Fund’s average discount to NAV during the fiscal year ending
June 30, 2022 is greater than 5%.
Mr. Thomas J. Herzfeld, Chairman of the Fund’s
Board of Directors (the “Board”) commented, “Our commitment to
extend the plan to provide quarterly distributions to the Fund’s
stockholders, together with the extension of our Tender Offer
Policy, is a key component of our ongoing strategy to narrow the
Fund’s discount to NAV. The Board continues to believe that efforts
to reduce the discount should continue.”
Managed Distribution Policy:
The primary purpose of the Managed Distribution
Policy (“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, 2022 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 extension of the MDP.
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. If sufficient investment income is not
available on a quarterly basis, the Fund will distribute long-term
capital gains and/or return capital to its stockholders in order to
maintain its managed distribution level. The Fund expects that
distributions under the MDP may exceed investment income and
capital gain and thus expects that such distributions may likely
include return of capital for the foreseeable future. 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 Fund’s MDP. The amount distributed per share is subject to
change at the discretion of the Fund’s Board of Directors. The MDP
will be subject to ongoing review by the Board of Directors to
determine whether the MDP should be continued, modified or
terminated. The Board of Directors may amend the terms of the MDP
or suspend 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. A return of capital occurs when some or
all of the money that stockholders invested in the Fund is paid
back to them. A return of capital does not 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 make the level of
distributions called for under the MDP, the Fund may have to sell
portfolio securities at a less than opportune time. 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.
Self-Tender Policy:
The Board of Directors also approved an
extension of the Fund’s Self-Tender Policy for an additional one
year period. Under the Self-Tender Policy, if the average discount
to the Fund’s NAV is in excess of 10% for the fiscal year ending
June 30, 2022, the Fund will commence a tender offer by October 31,
2022 to purchase up to 5% of then-outstanding shares at 97.5% of
NAV.
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 TJHA or the Fund
may make regarding management’s future expectations, beliefs,
intentions, goals, strategies, plans or prospects, including
statements relating to: management’s beliefs that the cash and
stock distribution will allow the Fund to strengthen its balance
sheet and to be in a position to capitalize on potential future
investment opportunities, when there can be no assurance either
will occur; the tax consequences of the distributions to
stockholders; and other factors 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; (11) the impact of problems at
other financial institutions or the failure or negative performance
of products at other financial institutions; and (12) the effects
of an epidemic, pandemic or public health emergency, including
without limitation, COVID-19. 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 TJHA’s website at
www.herzfeld.com/cuba, and may discuss these or other factors that
affect the Fund. The information contained on TJHA’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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