The Herzfeld Caribbean Basin Fund, Inc. (NASDAQ: CUBA) (the “Fund”)
today announced the following, each of which is discussed in detail
below:
- An extension of the expiration date
for the non-transferable rights offering;
- The reinstatement of the Fund’s
quarterly distributions;
- A revision to the Fund’s
Self-Tender Policy;
- An extension of the investment
advisor’s management fee waiver; and
- The results of the 2023 Annual
Meeting of Stockholders.
Extension of Rights Offering Expiration Date
The Fund announced that it has extended the
expiration date of its previously announced non-transferable rights
offering to purchase shares of common stock of the Fund (the
“Rights Offer”) to December 13, 2023. As a result of this
extension, set forth below are important dates to remember relating
to the Rights Offer:
Important Dates for the Offer |
|
|
Record Date |
|
November 3, 2023 |
Subscription Period |
|
November 8, 2023 to December
13, 2023 |
Expiration Date |
|
December 13, 2023 |
Pricing Date |
|
December 13, 2023 |
Subscription Certificate
and |
|
|
Payment for Shares Due* |
|
December 13, 2023 |
Notice of Guaranteed Delivery
Due* |
|
December 15, 2023 |
Final Payment for Shares (if
any) Due** |
|
December 19, 2023 |
Confirmation Mailed to
Participants |
|
December 21, 2023 |
* Record Date Stockholders exercising Rights
must deliver to the Subscription Agent by the Expiration Date
either (i) the Subscription Certificate together with the estimated
payment or (ii) a Notice of Guaranteed Delivery.
** Additional amounts may be due at settlement
for additional shares purchased upon exercising Rights because the
Estimated Subscription Price may be less than the actual
Subscription Price. See “The Offering – Payment for Shares.”
The Rights Offer will expire at 5:00 p.m., Eastern Time, on
December 13, 2023, the Expiration Date.
Reinstatement of Quarterly Distribution
In addition, the Board of Directors (“Board”) of
the Fund has reinstated its quarterly distribution under the Fund’s
Managed Distribution Policy (“MDP”) by lifting the suspension of
the MDP announced in August 2023.
The Fund’s Board suspended the MDP in connection
with the Fund’s filing of a registration statement with the
Securities and Exchange Commission (“SEC”) for the Rights Offer.
The Board has determined to lift the suspension of the MDP
effective immediately and intends to declare a quarterly
distribution in December 2023 after the close of the Rights
Offer.
In addition to reinstating the quarterly
distribution, the Fund revised the MDP to set quarterly
distributions at the annual rate of 15% of the Fund’s NAV as
determined on a date after the conclusion of the Rights Offer.
Details with respect to record date, payment date and other terms
of the Q4 2023 quarterly distribution will be provided at a later
date.
The primary purpose of the MDP is to provide
stockholders with a constant, but not guaranteed, fixed minimum
rate of distribution each quarter. 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 net asset value as compared to prior to the adoption 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 (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 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.
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. 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 Plan. 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.
Revisions to Self-Tender Policy
The Board also approved preliminary terms for
the next tender offer to be conducted under the Fund’s Self-Tender
Policy. As previously announced, the Fund intends to conduct a
tender offer for its shares within a reasonable amount of time
after the closing of the Rights Offer.
Under the Self-Tender Policy, the Fund has
undertaken to commence a tender offer of up to 5% of outstanding
shares of the Fund at 97.5% of NAV if the average discount was
greater than 10% for the fiscal year just ended. As the average
discount for the fiscal year ending June 30, 2023 exceeded 10%, the
Fund has undertaken to commence a tender offer in the first
calendar quarter of 2024 (Q1) (the “Tender Offer”) and that such
Tender Offer will be for between 10% and 20% of the Fund’s
outstanding shares, rather than 5% of outstanding shares under the
prior Self-Tender Policy. The determination of the percentage of
shares to be repurchased under the Tender Offer will be made after
the conclusion of the Rights Offer.
The formal offer and detailed terms of the
Tender Offer will be announced in Q1 2024.
Extension of Management Fee Waiver
HERZFELD/CUBA, a division of Thomas J. Herzfeld
Advisors, Inc. (“TJHA”), the investment advisor for the Fund,
previously agreed to waive its management fee by ten (10) basis
points (from 1.45% to 1.35%) for any fiscal year if the Fund’s
average discount to NAV during the preceding fiscal year is greater
than 5%. TJHA has extended that fee waiver through June 30, 2024
and has further agreed to waive its management fee on the Fund’s
net assets in excess of $30 million by an additional ten (10) basis
points. Accordingly, effective immediately TJHA’s management fee
after the voluntary waiver will be (i) 1.35% of the Fund’s assets
up to and including $30 million and (ii) 1.25% of the Fund’s assets
in excess of $30 million.
Results of 2023 Annual Meeting of
Stockholders
In addition, the Fund held its annual
stockholder meeting on November 16, 2023 (“Annual Meeting”). At the
Annual Meeting, the Fund’s stockholders re-elected Mr. Thomas J.
Herzfeld as Class III Director for the Fund for a term of three
years. Mr. Herzfeld commented: “Our Board continues to provide
stable and expert guidance to the Fund and its stockholders. The
independent Board members 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. I am very pleased to be able to serve on
the Board with these accomplished professionals. Our decisions
announced today reflect the Board’s commitment to the interests of
the Fund’s long-term shareholders.”
Tender Offer Statement
The above statements are not intended to
constitute an offer to participate in any tender offer.
Shareholders will be notified of the terms of the tender offer in
accordance with the requirements of the Securities Exchange Act of
1934, as amended, and the Investment Company Act of 1940, as
amended, either by publication or mailing or both. The tender offer
will be made by an offer to purchase, a related letter of
transmittal, and other documents to be filed with the SEC.
Shareholders of the Fund should read the offer to purchase and
tender offer statement and related exhibits when those documents
are filed and become available, as they will contain important
information about the tender offer. These and other filed documents
will be available to investors for free both at the website of the
SEC (www.sec.gov) and from the Fund (www.herzfeld.com/cuba).
The Fund’s investment advisor is HERZFELD/CUBA,
a division of Thomas J. Herzfeld Advisors, Inc. and the Fund’s
shares trade on the NASDAQ Capital Market under the symbol
“CUBA.” Thomas J. Herzfeld Advisors, Inc. specializes in the
field of closed-end funds. Information about the investment
advisor and the Fund can be found
at www.herzfeld.com.This announcement is not an offer
to sell securities and the Fund is not soliciting an offer to buy
securities in any state where the offer or sale is not
permitted. The Rights Offer is made only by means of
the Prospectus dated November 7, 2023, as
supplemented.
NASDAQ Capital Market: CUBACUSIP: 42804T106
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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