Executing Against its Investment Objective,
the Fund Has Performed Well Against its Peers and its Benchmark
Index Across All Relevant Time Periods
The Fund’s Board is Diverse and Has the
Right Mix of Skills and Experience Needed to Oversee the Fund’s
Creation of Shareholder Value During this Unprecedented
Period
Vote on the WHITE Proxy Card Today “FOR ALL” the Fund’s Highly
Qualified Nominees and “AGAINST” Saba’s Potentially Devastating
Proposal to Terminate the Fund’s Investment Adviser
Pioneer Floating Rate Trust (NYSE: PHD), a registered closed-end
investment fund (the “Fund”), today announced that it has filed
definitive proxy materials with the U.S. Securities and Exchange
Commission (the “SEC”) in connection with its upcoming 2020 Annual
Meeting of Shareholders to be held on Wednesday, September 16,
2020, at 3 p.m. (Eastern). In conjunction with the mailing of its
definitive proxy materials, the Fund also mailed the following
letter to shareholders:
August 4, 2020
Dear Shareholder,
This year’s Annual Meeting, which will be held on Wednesday,
September 16, 2020, will be a critical one for the future of the
Fund and your vote could have a significant impact on your
investment. You will have important decisions to make, deciding
among:
+ VOTE YES
Voting for the three highly qualified and very experienced
nominees - Diane P. Durnin, Benjamin M. Friedman, and Kenneth J.
Taubes – unanimously recommended by the Fund’s Board of
Trustees. All three bring to your Board diverse perspectives,
insights, experiences, and competencies that are central to the
Fund’s investment objective and, as current Board members, are
deeply familiar with the Fund and its investment objective and
strategies, and have proven their ability to make significant
contributions to the Board and oversee the creation of shareholder
value;
— VOTE NO
Voting for three nominees hand-picked by Saba Capital
Management, L.P., an activist investor that has a long,
publicly-disclosed history of targeting closed-end funds to
opportunistically extract for itself the discount between the
fund’s trading price and its net asset value (“NAV”).1 All three
members of Saba’s all-male slate of nominees are unfamiliar with
the Fund and, coming from Saba’s nominee “bullpen,” have a history
of serving as Saba’s nominees in other proxy contests against
closed-end funds. One of Saba’s nominees serves on the boards of
trustees of two of the Fund’s competitors as a result of proxy
contests by Saba; and
— VOTE NO
Voting for Saba’s proposal to terminate
the Fund’s investment advisory agreement with Amundi Pioneer Asset
Management, Inc. (“Amundi Pioneer”), a proposal that your Board
believes is self-serving, irresponsible, and potentially
devastating since it would force the Fund to initiate a costly,
risky, and uncertain process to identify and seek shareholder
approval for a qualified replacement. In addition, your Board
believes that Saba has failed to provide any credible reason why
the investment advisory agreement should be terminated and Saba’s
proposal, made without any replacement adviser being identified,
could result in the Fund being “orphaned.” Your Board believes
Saba’s proposal is a transparent tactic intended to pressure the
Board to accede to Saba’s ultimate objective, to cause a liquidity
event that results in all of Saba’s shares being cashed-out at a
price that approximates NAV.
Your Board unanimously recommends that shareholders vote on the
WHITE proxy card “FOR ALL” the
Fund’s highly qualified and very experienced nominees and “AGAINST”
Saba’s proposal to terminate the Fund’s investment advisory
agreement with Amundi Pioneer.
In making these important voting decisions that could have a
critical impact on the future of the Fund, we urge you to consider
the following:
SABA HAS TARGETED THE WRONG FUND AT THE WRONG TIME
Across all relevant and applicable time periods (5-yr, 3-yr,
1-yr, YTD), as noted below, the Fund has executed against its
stated investment objective to provide investors with a high level
of current income and, its secondary objective, the preservation of
capital to the extent consistent with its investment objective of
high current income.
In executing against its investment objective, the Fund has
performed well against its peers, including when measured by market
returns as well as the critical NAV metric, which measures the
total value of a fund’s assets minus the total value of its
liabilities. In addition, the Fund has provided better downside
protection in difficult market environments, making it particularly
well-positioned to deliver attractive, sustainable returns. In
addition, the Fund’s portfolio has achieved a lower default rate
than the broader loan universe due to the highly selective approach
taken by our investment adviser, Amundi Pioneer, to floating rate
investments.
We believe the Fund’s shareholders are well positioned to
potentially earn attractive multi-year returns as the economy
recovers.
The Fund has generated income that is competitive with its
closed-end fund peers and superior to the income available from
various other asset classes and product structures. This has been
achieved, in part, by the Fund’s investment team utilizing a
balanced approach to income generation, seeking to maximize
dividends while protecting against capital erosion to ensure
long-term dividend stability. As a result, the Fund is currently
trading at an 8% discount to its NAV, which is meaningfully lower
than its closed-end fund peers, and over longer time periods its
discount has been in line with its peers.
The Fund has taken a proactive and strategic approach to
mitigating its current discount.
In addition to successfully executing on its investment
objective of delivering high income to investors while preserving
capital, the Fund, under the supervision and guidance of its Board,
has adopted a thoughtful four-layered approach to discount
mitigation:
- The Fund has historically repositioned industry segments, asset
classes, and ratings buckets to create a high level of income
competitive with peers in order to reduce discount variability,
which we believe contributes to a narrower discount.
- Historically, outflows due to negative investor sentiment
follow poor or volatile NAV performance, and can drive closed-end
fund discounts. Accordingly, the Fund placed a greater emphasis on
protecting against downside risk and preventing discount widening
driven by this type of negative sentiment.
- The Fund actively adjusts the portfolio to try to maintain
steady and consistent income which has contributed to the dividend
predictability, which we believe in turn reduces the discount the
Fund trades at.
- Lastly, the Fund’s leverage is tied to the Fund’s NAV, and our
historical avoidance of lower quality loans has improved our
ability to consistently access leverage on economic terms as lower
quality loans can decline more significantly and lead to forced
deleveraging at suboptimal times, which we believe in turn leads to
discount widening.
As indicated below, the Fund’s performance, as measured by
its market returns, has exceeded the market returns of the Fund’s
peer group for the referenced time periods.
The Fund’s Market Returns - as of June
30, 2020
1-Year
3-Year
5-Year
Pioneer Floating Rate Trust
-4.10%
-0.65%
2.97%
Peer Group Average *
-10.99%
-2.34%
2.31%
Peer Group Percentile
13
19
28
Index**
-1.99%
2.07%
2.89%
*Peer group: TLI, FCT, DSU, EFF, FRA, BGT, PPR, EFT, EFR, EVF,
AFT, VVR, JFR, JRO, NSL, FSLF, JQC, VTA, BGB, BGX, JSD, BSL,
HFRO
**S&P/LSTA Leveraged Loan Total Return Index
Source: Morningstar as of June 30, 2020
There is a stark contrast between Saba’s nominees and the
three highly qualified, experienced and valued members of your
Board that Saba is seeking to replace with its proxy
contest.
Our Board’s nominees bring to your Board diverse perspectives,
insights, experiences, and competencies that are central to the
Fund’s investment objective and, as current Board members, have
proven their ability to make significant contributions to the
Board’s deliberations and oversee the creation of value for the
Fund’s shareholders. In stark contrast, you are presented with
Saba’s hand-picked, all-male slate of nominees who your Board
believes would add no relevant skills or competencies that are not
already present on the Board and have no track record overseeing
the creation of value at a closed-end registered investment fund as
complex as the Fund. In addition, it is your Board’s belief that
Saba has not provided any credible arguments as to why its proposed
nominees are more qualified than the three highly qualified,
experienced, and valued members of your Board that Saba is seeking
to replace.
We call to your attention the extremely impressive backgrounds
and qualifications of our three nominees:
- Diane P. Durnin: an experienced asset management
executive, who previously served as vice chair of one of the
world’s largest asset management organization, with extensive
knowledge of investment product strategy and development. While Ms.
Durnin is also the newest member of the Board, having joined the
Board in 2020, she has already made a significant contribution to
the Board’s deliberations and its oversight over the Fund,
particularly during the period following the onset of the COVID-19
pandemic.
- Benjamin M. Friedman: an internationally renowned
economist who has led the Economics Department at Harvard
University and served as an adviser to the Congressional Budget
Office and the Federal Reserve Bank of New York, he brings to the
Board extensive knowledge of global financial markets and insights
relating to how economic and monetary matters, including interest
rates, may impact investment products that are directly relevant to
the Board’s oversight of the Fund’s investment strategy and
performance.
- Kenneth J. Taubes: currently serves as Executive Vice
President and Chief Investment Officer of Amundi Pioneer where he
oversees an investment staff of over 90 professionals and, as of
June 30, 2020, approximately $85 billion in assets under
management. Mr. Taubes bring to the Board 40+ years of asset
management industry experience, a deep understanding of fixed
income markets and a strong performance record as a portfolio
manager executing fixed income strategies both at Amundi Pioneer
and previously at another asset management firm.
In addition to effectively overseeing the Fund’s overall
investment strategy and performance, our Board monitors the Fund’s
discount to NAV and takes an active approach to considering
initiatives to deliver value to shareholders and potentially narrow
the Fund’s discount, while also considering how such measures may
impact the Fund’s ability to achieve its investment objective.
Saba has a long and very public history of being
opportunistic and exploiting closed-end funds for a short-term gain
at the expense of long-term investors.
We believe that, ultimately, Saba’s past history targeting
closed-end funds makes clear that it has no regard for the
investment objective of a fund’s long-term investors as it seeks to
extract short-term gains at the expense of those investors. Since
2016, Saba has participated in 40 publicly disclosed campaigns
against registered closed-end funds and extracting a fund’s
discount to its NAV was a frequent area of focus for Saba.2 In
addition, since 2016, Saba entered into at least 17
publicly-disclosed settlement agreements with closed-end funds that
it had targeted. The common element in each of these settlements
was that the fund was made to agree to a liquidity event that
benefitted Saba, either a tender offer or a termination of the
fund, that resulted in Saba’s equity interest in the fund being
cashed out at close to NAV. 3
Saba’s proxy contest against the Fund is no different and, in
this case, Saba is attempting to use a temporary discount widening,
driven by an unprecedented humanitarian and public health crisis to
do just that, and has even said it sees the recent downturn related
to the COVID-19 pandemic as an opportunity to be exploited as they
believe it “will change investor behavior in terms of voting.”
Saba’s proposal to terminate the Fund’s investment advisory
agreement could result in significant harm to the Fund, including
causing it to be “orphaned” with no investment adviser or viable
future.
Among the numerous ways that Saba’s proposal could cause the
Fund to suffer significant harm, termination of the investment
advisory agreement would be an event of default under the Fund’s
credit agreement, which is how the Fund employs leverage. As
potential consequences of such an event of default, the Fund could
(i) lose the benefit of leverage resulting in a lower current
yield, (ii) incur transaction costs associated with the substantial
sale of portfolio holdings made necessary by paying back all
outstanding loans, and (iii) be forced to sell such portfolio
holdings on “fire sale” terms.
Saba, which has not proposed a new investment adviser for the
Fund, has significantly understated the risk that its proposed
termination of the Fund’s investment advisory agreement with Amundi
Pioneer could leave the Fund “orphaned” without an investment
adviser or access to any portfolio management professionals. If the
Fund’s investment advisory agreement was to be terminated, it would
be difficult and costly to identify and retain, and solicit
shareholder approval for, a qualified replacement adviser. This
means the Fund and its investors would be exposed to substantial
risk and expense and prolonged uncertainty, thereby potentially
harming investors.
The Board believes Amundi Pioneer is the best choice to manage
the Fund’s assets and that shareholders benefit from its resources
and services and those of its parent, Amundi, one of the world’s
largest asset managers with, as of June 30, 2020, approximately
$1.7 trillion in assets under management (including the Pioneer
Funds).
Saba may seek to force the Fund to pursue a liquidity event
that could result in the Fund no longer being a viable vehicle for
investors seeking high current income.
To date, Saba’s activist investor playbook has been relatively
consistent and it has a well-documented history of forcing a
closed-end fund to agree to a liquidity event as a condition to
Saba withdrawing its threatened activist campaign against the fund.
Almost every publicly-disclosed settlement agreement that Saba has
entered into with a closed-end fund since 2016 contemplated some
form of liquidity event such as a tender offer or a liquidation of
the fund that resulted in Saba getting its shares cashed-out at a
price approximating NAV.4
We expect that Saba will again take a page from its activist
investor playbook and try to force the Fund to pursue a liquidity
event such as a tender offer or a liquidation of the Fund. This
could have deleterious effects for investors as it could cause the
Fund to sell its holdings, many of which are in “odd lots” that
would entail higher transaction costs, at an inopportune time and
into a dislocated market, crystallizing losses for long-term
investors.
In addition to exposing the Fund’s shareholders to uncertain and
potentially meaningful expenses, we believe any attempt to
liquidate the Fund would also deny shareholders a leveraged vehicle
to benefit from a potential market recovery and destroy the Fund as
a viable vehicle for investors seeking high current income while at
the same time preserving capital.
If Saba was successful in its proxy contest and the Fund was
forced to implement a near-term liquidity event, shareholders could
see reduced monthly distributions due to higher Fund expenses and a
decline in value in their current investment.
Don’t let Saba mislead you into believing that its proxy
contest is intended to benefit the Fund’s long-term
investors.
We believe strongly that Saba’s decision to launch a proxy
contest against the Fund is completely self-interested and is not
one intended to benefit the Fund’s long-term investors. Don’t be
fooled by Saba and its attempt to have you believe it wants to
improve the Fund and its returns. We believe that, ultimately, Saba
would like to “hijack” your fund and your future returns, perhaps
even see it completely liquidated, in order for it to
opportunistically take advantage of the temporary discount widening
that occurred in response to financial markets’ heightened concerns
about the ongoing COVID-19 pandemic.
We also believe that supporting Saba’s proxy contest could have
a devastating impact on the viability of the Fund as a vehicle for
those investors seeking high current income while preserving
capital.
As this critical annual meeting draws closer, we will continue
to keep you updated with relevant information regarding Saba’s
history as an opportunistic, activist investor that seeks to profit
at the expense of long-term investors in closed-end investment
funds. We are confident that when Saba’s history of targeting other
closed-end funds is taken into account, alongside the impressive
qualifications and track records of our nominees and the strong
stewardship provided by our Fund’s investment adviser, Amundi
Pioneer, it will be quickly apparent why supporting Saba is not in
the best interests of anyone except Saba.
Your vote is important, no matter how many shares you
own. Your Board unanimously recommends that shareholders vote
on the WHITE proxy card “FOR
ALL” the Fund’s highly qualified and very experienced nominees, and
“AGAINST” Saba’s proposal to terminate the Fund’s investment
advisory agreement with Amundi Pioneer. You may also vote by phone
or Internet by following the instructions on the enclosed
WHITE proxy card. Your Board
encourages you to vote each WHITE proxy card you receive. If you have any
questions or need assistance in voting your WHITE proxy card, we encourage you to contact
our proxy solicitor, Okapi Partners LLC, at +1 877- 566-1922 (Toll
Free).
If you hold shares through a broker, bank, or other custodian,
you will receive voting materials from that firm. You can complete
the WHITE voting instruction
form by internet, telephone, or mail. The voting instruction form
will contain instructions on how to access and utilize those voting
methods. Since this is a contested proxy solicitation, if you do
not give voting instructions to your broker, bank, or other
custodian, pursuant to the rules of the New York Stock Exchange,
your broker, bank, or other custodian will not be able to vote your
shares with respect to the election of trustees or Saba’s proposal
to terminate the Fund’s investment advisory agreement. We urge you
to instruct your broker, bank, or other custodian to vote your
shares on the WHITE proxy
card.
Please do not return or otherwise vote any other proxy card
or voting instruction form sent to you by Saba—even as a protest
vote against Saba as this may cancel your prior vote for your
Board’s nominees and your vote against Saba’s proposal to terminate
the Fund’s investment advisory agreement. If you have
previously returned a proxy card sent to you by Saba, you can
change your vote (i) by signing, dating and returning the enclosed
WHITE proxy card in the
postage-paid envelope provided herewith; (ii) by recording your
voting instructions via telephone or the internet following the
instructions on the enclosed WHITE proxy card; or (iii) by voting at the
Annual Meeting. Only your latest-dated proxy card will
count.
On behalf of your Board, we thank you for your continued
support. We look forward to communicating further with you in the
coming weeks.
Sincerely,
Thomas J. Perna Chairman of the Board of Trustees
1 Source: Factset Research, Inc. as of July 31, 2020 2 Source:
Factset Research, Inc. as of July 31, 2020. 3 Source: Factset
Research, Inc. as of July 31, 2020. 4 Source: Factset Research,
Inc. as of July 31, 2020.
If you have any questions, or need assistance
voting your WHITE proxy card, please contact: OKAPI Partners 1212
Avenue of the Americas, 24th Floor New York, NY 10036 Telephone for
Banks, Brokers, and International Shareholders: +1 212-297-0720
Shareholders may call toll-free (from the U.S. and Canada): +1
877-566-1922 Email: info@okapipartners.com
About Pioneer Floating Rate Trust
Pioneer Floating Rate Trust is an NYSE listed closed-end fund
that seeks a high level of current income. It also seeks capital
preservation as a secondary objective to the extent consistent with
its primary objective.
About Amundi Pioneer Asset Management
Amundi Pioneer is the U.S. business of Amundi, Europe’s largest
asset manager by assets under management and ranked among the ten
largest globally[1]. Boston is one of Amundi’s six main global
investment hubs and offers a broad range of fixed-income, equity,
and multi-asset investment solutions in close partnership with
wealth management firms, distribution platforms, and institutional
investors across the Americas, Europe, and Asia-Pacific. Our long
history of proprietary research, robust risk management,
disciplined investment processes, and strong client relationships
has made Amundi Pioneer an investment adviser of choice among
leading institutional and individual investors worldwide. Amundi
Pioneer had approximately $85 billion in assets under management as
of June 30, 2020.
[1]
Source IPE “Top 400 asset managers”
published in June 2020 and based on AUM as of December 31,
2019.
Forward Looking Statements
This press release is not an offer to purchase nor a
solicitation of an offer to sell shares of the Fund. This press
release may contain statements regarding plans and expectations for
the future that constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
(the “PSLRA”), and such statements are intended to qualify for the
safe harbors from liability established by the PSLRA. All
statements other than statements of historical fact are
forward-looking and can sometimes be identified as such by the
context of the statements, including words such as “believe,”
“expect,” “anticipate,” “plan,” “may,” “will,” “would,” “should,”
“intend,” “possible,” “continue” “project,” “estimate,” “guidance”
and other similar terms and phrases, whether in the negative or
affirmative, although not all forward-looking statements include
these words. Similarly, statements that describe the objectives,
plans, or goals of the Fund or its investment adviser are
forward-looking. Such forward-looking statements include, but are
not limited to, statements regarding the anticipated proxy contest
by Saba and the other participants in its solicitation, the
potential impact to the Fund if Saba’s three proposed nominees are
elected to the Fund’s Board of Trustees in lieu of the three
incumbent trustees recommended for re-election by the Fund’s Board
of Trustees, the potential impact to the Fund if Saba is successful
in having its proposal to terminate the Fund’s investment adviser
terminated and the Fund is left without a replacement investment
adviser, the Fund’s efforts to drive investment returns and
continue to create shareholder value, the ability of the Fund to
continue to perform well against it peers and its benchmark index,
the impact of the Fund’s efforts to narrow the gap between its net
asset value per share and the Fund’s per share trading price, the
potential impact to the Fund if it pursues a liquidity event as a
result of Saba’s proxy contest, the viability of the Fund as an
investment vehicle if it was to pursue a liquidity event as a
result of Saba’s proxy contest, the ability of the Fund to generate
attractive multi-year returns as the economy recovers, and the
ability of the Fund to continue to execute against its stated
investment objective. These forward-looking statements are based on
current plans, expectations, estimates, forecasts, and projections
and management’s current beliefs and assumptions and are subject to
various risks and uncertainties that could cause actual results,
performance, and events to differ materially from those described
in the Fund’s forward-looking statements. Additionally, past
performance is no guarantee of future results. Additional
information concerning such risks and uncertainties are or will be
contained in the Fund’s filings with the SEC, including the Fund’s
Annual Report to Shareholders on Form N-CSR for the fiscal year
ended November 30, 2019, and its subsequent filings with the SEC.
These factors should be considered carefully and readers are
cautioned not to place undue reliance on such forward-looking
statements. Except as required by applicable law, the Fund
undertakes no obligation to revise these statements, whether to
reflect new information or the occurrence of unanticipated events
or otherwise, following the date of this press release.
Important Additional Information And Where To Find It
The Fund’s trustees, executive officers, and certain persons
associated with the Fund’s investment adviser and its parent
company are deemed participants in the solicitation of proxies from
the Fund’s shareholders in connection with the matters to be
considered at the 2020 Annual Meeting of Shareholders. On August 3,
2020, the Fund filed a definitive proxy statement and an
accompanying definitive WHITE
proxy card with the SEC in connection with the solicitation of
proxies from the Fund’s shareholders in connection with the matters
to be considered at the Fund’s 2020 Annual Meeting of Shareholders.
Information regarding the names of the Fund’s trustees, executive
officers, and certain persons associated with the Fund’s investment
adviser and its parent company and their respective direct or
indirect interests in the Fund by security holdings or otherwise
can be found in such definitive proxy statement, including the
schedules and appendices thereto. INVESTORS AND SHAREHOLDERS ARE
STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT AND THE
ACCOMPANYING WHITE PROXY CARD AND
OTHER DOCUMENTS FILED BY THE FUND WITH THE SEC CAREFULLY AND IN
THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN
IMPORTANT INFORMATION. Shareholders may obtain the definitive
proxy statement, any amendments or supplements to the proxy
statement, the accompanying WHITE proxy card, and other documents filed by
the Fund with the SEC for no charge at the SEC’s website at
www.sec.gov. Copies will also be available free of charge at the
Fund’s website at https://www.amundipioneer.com/us, by writing to
the Fund’s Secretary at Pioneer Floating Rate Trust, 60 State
Street, Boston, Massachusetts 02109, or by contacting the Fund’s
investor relations department at 1.800.859.8508.
Disclaimer
The Fund has neither sought nor obtained the consent from any
third party to use any statements or information contained in this
press release that have been obtained or derived from statements
made or information published by any such third party. Any such
statements or information should not be viewed as indicating the
support of any such third party for the views expressed herein.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200804005610/en/
Prosek Partners
Brian Schaffer (646) 818-9229 bschaffer@prosek.com
Josh Clarkson (646) 818-9259 jclarkson@prosek.com
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