4 Nuveen Taxable Closed-End Funds Announce Refinancing of Auction-Rate Securities
First Phase to Redeem $714 Million in ARS, Update Also Provided on Other Funds, Conference Call Scheduled for April 3
CHICAGO-- April 01, 2008 --Four taxable closed-end funds sponsored by Nuveen Investments today announced the refinancing of $714 million of their auction-rate securities (ARS), including auction-rate preferred shares (ARPS) and auction-rate notes (ARN). The four funds are Nuveen Multi-Strategy Income and Growth Fund (NYSE: JPC); Nuveen Real Estate Income Fund (AMEX: JRS); Nuveen Tax-Advantaged Total Return Strategy Fund (NYSE: JTA); and Nuveen Tax-Advantaged Dividend Growth Fund (NYSE: JTD). Each fund's Board of Trustees has approved the refinancing, which is expected to lower the relative costs of leverage for each fund over time while also providing liquidity at par for the holders of at least some of each fund's ARS.
As part of the refinancing, all or a significant portion of each fund's outstanding ARS will be redeemed as follows: $450 million of $708 million ARPS in JPC (approximately 64%); $150 million of $222 million ARPS in JRS (approximately 68%); $78 million of $123 million ARS in JTA (approximately 63%); and the entire $36 million of ARPS in JTD. Funds redeeming less than all of their outstanding ARPS will redeem securities on a pro rata basis by series. Depository Trust Company (DTC), the securities' holder of record, determines how a partial series redemption will be allocated among each participant broker-dealer account. Each participant broker-dealer, as nominee for underlying beneficial owners (street name shareholders), in turn determines how redeemed shares are allocated among its underlying beneficial owners. The procedures used by different broker-dealers to allocate redeemed shares among beneficial owners may differ from each other as well as from the procedures used by DTC.
"This marks the initial implementation of our plan to seek to refinance all the ARS issued by our taxable closed-end funds, which we announced several weeks ago," said Bill Adams, Executive Vice President, Nuveen Investments, Inc. "We expect to make similar announcements regarding our other taxable funds in coming weeks."
The four funds identified above expect to begin issuing redemption notices in the next several days. Redemptions will be funded with new borrowings. Due to legal requirements, JRS and JPC will need to complete the announced partial redemptions in two stages. The funds anticipate that the refinancings for JTA (partial) and JTD (full) will be completed by the end of April and that the partial refinancings for JRS and JPC will be completed by the end of May.
Progress On Other Restructuring Alternatives for ARS
Nuveen Investments is continuing to explore various alternatives for refinancing the remaining portion of these funds' ARS and remains committed to restructuring the leverage of all Nuveen closed-end funds that have issued ARS.
In addition to the refinancings announced above, Nuveen is continuing to arrange debt financing for the remaining taxable funds, and to work on a new form of preferred stock - Variable Rate Demand Preferred ("VRDP") - which could replace the ARPS issued by municipal and taxable closed-end funds. VRDP would have a put feature designed to enable VRDP to appeal to a broader investor audience, especially money market funds. The existing ARPS issued by Nuveen closed-end funds are not eligible for purchase by money market funds. Nuveen still seeks to complete the refinancing of all the taxable funds' ARS within four to six months and begin refinancing some of the municipal fund ARPS within two to three months. Due to highly challenging financial market conditions and other regulatory, market and economic factors, Nuveen cannot be certain that it will be able to refinance all its funds' ARS, that VDRP will be successfully and cost-effectively issued, or that it will be able to take all the necessary actions within the specified time frames.
"We continue to make progress in arranging debt financing for our taxable funds and on the development of VRDP as a potential solution for our municipal and taxable funds," Adams said. "We are well aware of the importance of addressing the auction rate securities challenge as effectively and quickly as possible, and in that effort serving the interests of both the common and preferred shareholders of the funds. We are committed to providing our shareholders periodic updates on our progress."
Conference Call (final details TBD)
Nuveen Investments will host a conference call at 10:00 a.m. Central time on Thursday, April 3, 2008, to discuss the refinancing of the funds' ARS. Nuveen anticipates high call volume and encourages attendees to access the call via the live streaming audio link to facilitate the registration process. Online participants will be able to submit questions. Attendees can access the teleconference on Nuveen's Web site, www.nuveen.com, or at http://w.on24.com/r.htm?e=105775&s=1&k=68694868A5B290FE248355A2D480F2A 3. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)
Attendees who prefer to participate by phone can access the call by dialing (866) 311-5247 or (212) 729-5043 and referencing conference ID number 41908989.
A replay of the call will be available beginning shortly following the call through April 17, 2008. To access the replay, please dial (800) 642-1687 or (706) 645-9291, conference ID number 41908989, or visit the closed-end fund section of the company's website at www.nuveen.com/cef. Call information and updates will be posted on Nuveen's new auction-rate preferred resource center at www.nuveen.com/arps.
Nuveen Investments provides high quality investment services designed to help secure the long-term goals of institutions and high net worth investors as well as the consultants and financial advisors who serve them. Nuveen Investments markets its growing range of specialized investment solutions under the high-quality brands of NWQ, Santa Barbara, Tradewinds, Rittenhouse, Symphony and Nuveen, including the Nuveen HydePark Group. In total, the Company managed $164 billion in assets as of December 31, 2007.
No VRDP shares have been registered under the Securities Act of 1933 (the Securities Act) or any state securities laws. Unless so registered, any VRDP shares may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. This press release is neither an offer to sell nor a solicitation of an offer to buy any of these securities.
FORWARD LOOKING STATEMENTS
Certain statements made in this release 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: the ability of the four Nuveen funds announcing refinancing plans to implement those plans on a timely basis and, for those three funds partially redeeming ARS, to develop and finalize proposals to address the remaining ARS issued by those funds; the ability of the leveraged Nuveen funds not announcing a refinancing plan today to develop and finalize fund-by-fund specific proposals to restructure the leverage of such funds; the need for the leveraged Nuveen funds not announcing a refinancing plan today to obtain formal fund-by-fund board approval of specific proposals as they are developed and finalized; the ability of the leveraged Nuveen funds not announcing a refinancing plan today to negotiate and obtain from third parties the necessary debt facilities and other commitments and agreements necessary for those Nuveen funds to refinance all or a portion their leverage on terms and conditions acceptable to the funds and in a timely manner; with respect to the three Nuveen funds announcing a partial redemption of their ARS, obtaining fund-by-fund board approval to address the remaining outstanding ARS issued by those funds; the ability of the leveraged Nuveen funds to negotiate and obtain from broker-dealers or other financial institutions the unconditional put commitments necessary for the issuance of VRDP on terms acceptable to the funds and in a timely manner; the acceptance by the market, and demand for, VRDP in amounts sufficient for any Nuveen funds to refinance all or a portion of its leverage; the need to obtain any necessary regulatory approvals for the issuance of VRDP or the implementation of the Nuveen funds' plans to restructure their leverage; other legal and regulatory developments; and other additional risks and uncertainties. Nuveen and the closed-end funds managed by Nuveen and its affiliates undertake no responsibility to update publicly or revise any forward-looking statements.
Nuveen Taxable Closed-End Fund Refinancing Q&A Attached Below
Nuveen Taxable Closed-End Fund Refinancing Q&A
1. Q: What is being announced?
A: Four taxable closed-end funds sponsored by Nuveen Investments have announced the refinancing of $714 million of their auction-rate securities (ARS), including auction-rate preferred shares (ARPS) and auction-rate notes (ARN). This first step involves the following funds and amounts refinanced:
JPC: $450 million of $708 million in outstanding auction-rate preferreds (64%)
JRS: $150 million of $222 million (68%)
JTA: $78 million of $123 million (63%)
JTD: $36 million of $36 million (100%)
2. Q: How were these funds selected?
A: Taxable funds can readily employ conventional debt leverage, and several of our funds including JRS and JTA already do. (Debt leverage is generally less advantageous for tax-exempt funds since interest on debt leverage is taxable while dividends on the funds' ARPs is tax-exempt.) The specific funds chosen and the amounts refinanced are the result of an overall evaluation of many different factors, including lender preferences for particular asset classes, lending capacity and terms offered, regulatory asset coverage requirements and the amount and composition of existing leverage.
3. Q: Why are some funds only redeeming a portion of their ARS?
A: Debt leverage has higher regulatory asset coverage requirements than equity (FundPreferred) leverage, which limit the maximum amount of debt leverage to 33% compared with 50% for equity leverage. Because our funds generally have leverage ratios close to or above the 33% maximum for debt leverage, refinancing less than all of their ARS with debt leverage ensures that the funds are able to maintain a prudent level of regulatory asset coverage. In the case of JTD launched in June 2007, the fund's target leverage ratio of 25% enabled the fund to refinance its outstanding FundPreferred, as well as complete its planned leveraging which had been deferred in response to market events, while also ensuring an appropriate level of asset coverage. Redemptions of less than all of a fund's outstanding FundPreferred are made on a pro rata basis by tranche in order to treat each tranche equitably.
4. Q: How are the redemptions of ARS being funded?
A: Redemptions are being funded with new debt borrowings. Information regarding the funds' borrowing arrangements regularly can be found in the funds' shareholder reports.
5. Q: How will partial redemptions actually work?
A: When a fund is refinancing less than all of its outstanding FundPreferred, the fund will redeem FundPreferred shares on a pro rata basis by tranche, i.e. the same aggregate proportion of each tranche's outstanding shares will be redeemed. The Depository Trust Company (DTC), the securities depository where FundPreferred street name positions are held, determines how these pro rata redemptions are allocated among the separate broker-dealer accounts in which FundPreferred shares are held in street name. Broker-dealers, according to their own procedures, then allocate the FundPreferred shares redeemed through DTC from their street name account among their customers who are the underlying beneficial owners. FundPreferred shareholders should contact their financial advisor for more specifics regarding their firm's allocation procedures.
Although a fund will redeem FundPreferred shares on a pro rata basis by tranche, DTC's "by lot" allocation process may not result in a pro rata redemption of the shares held in each broker-dealer's street name account, so that an underlying beneficial owner in turn may not receive a pro rata redemption of the FundPreferred shares they own. DTC's allocation process begins by determining the proportion of a tranche's shares scheduled for redemption (i.e. 1 out of x shares). DTC then assigns each FundPreferred share held in every broker-dealer's account a sequential number between 1 and the tranche's total number of outstanding FundPreferred shares. DTC randomly selects a starting share number to begin the redemption process, and then continues redeeming every xth share until it has redeemed the required total number of shares.
6. Q: When will more specific information regarding redemptions become available?
A: Nuveen expects the funds to begin issuing redemption notices in the coming days. Due to legal requirements, JRS and JPC will need to complete their redemptions in two stages approximately two to four weeks apart.
7. Q: When will Nuveen announce refinancing for other funds?
A: We hope to make similar announcements for our other taxable funds in the coming weeks. Nuveen is continuing to make progress in arranging debt financing and on the development of a new form of preferred stock - Variable Rate Demand Preferred (VRDP) -- as a potential solution for our municipal and taxable funds.
Contacts
Nuveen Investments
Media Contact:
Chris Allen
(312) 917-8331
christopher.allen@nuveen.com
or
Kathleen Cardoza
(312) 917-7813
kathleen.cardoza@nuveen.com
or
Investors Contact:
(877) 622-7530
Labels: auction rate securities, bond fraud, bonds, securities fraud
