The Highland Income Fund (NYSE: HFRO) (“HFRO” or the “Fund”), a
closed-end fund managed by Highland Capital Management Fund
Advisors, L.P. (the “Adviser”), today announced that it received
unanimous approval from the Fund’s Board of Trustees (the “Board”)
to conduct a tender offer as a part of its proposal to convert the
Fund to a diversified holding company. Under the terms of the
tender offer, the Fund will purchase for cash up to $50 million in
aggregate value of Common Shares at a price equal to 95% of the net
asset value per Common Share as of the close of business on the
business day before the tender offer expires (the “Tender
Offer”).
The Tender Offer is contingent upon the Fund obtaining
shareholder approval of the Proposals (as defined below) at the
special meeting of shareholders to be held on August 20, 2021, at
8:30 a.m. CDT (the “Special Meeting”). At the Special Meeting,
shareholders are being asked to vote on the proposal to convert the
Fund from a registered investment company to a diversified holding
company and to amend certain fundamental investment restrictions
(collectively, the “Business Change Proposal”), and if the Business
Change Proposal is approved, to approve the amendment and
restatement of the Fund’s Agreement and Declaration of Trust
(together with the Business Change Proposal, the “Proposals”).
Information on the Tender Offer
The Tender Offer aims to provide additional shareholder
liquidity during the conversion process, augmenting the existing
shareholder support features, including a formulaic 10b5-1 buyback
program (the “Company Buyback Program”) and share purchases from
management (the “Management Purchase Plan”), among others, which
were included in the definitive proxy statement filed on July 9,
2021.
The Tender Offer will be separate from and carried out in
addition to the Company Buyback Program and the Management Purchase
Plan.
If the Proposals are approved by shareholders at the Special
Meeting, the Tender Offer is expected to commence as soon as
practicable after the date of shareholder approval of the
Proposals, but in any event not later than 60 days after such
date.
An amendment to the definitive proxy statement was filed with
the Securities Exchange Commission (“SEC”) to reflect the addition
of the Tender Offer. Additional information on the Tender Offer can
be found on the HFRO conversion website at www.hfroconversion.com,
as well as in the proxy amendment and the Tender Offer Statement,
which was also filed with the SEC.
This press release is neither an offer to purchase nor a
solicitation of an offer to sell any securities of the Fund. Upon
commencement of the Tender Offer, the Fund will file with the SEC a
Schedule TO containing an offer to purchase, forms of letters of
transmittal and related exhibits. These documents will contain
important information about the Tender Offer and Shareholders are
urged to read them carefully when they become available.
Shareholders may obtain free copies of the Tender Offer Statement
and other documents (when they become available) filed with the SEC
at the SEC’s web site at www.sec.gov. In addition, free copies of
the Tender Offer Statement and other documents filed with the SEC
may also be obtained after the commencement of the Tender Offer by
directing a request to the Fund.
Additional Information on the Conversion Proposal
The Proposals aim to increase shareholder value and better
position HFRO in the current and future market environment. The
Board, a majority of the members of which are not interested
persons of the Fund, reviewed the Proposals at length, and believes
they are in the best interest of shareholders.
As such, the Board, prior to the Tender Offer announcement,
unanimously recommended that shareholders vote “FOR” the Proposals.
The Tender Offer further enhances the Proposals and adds to the
benefits that the Proposals are expected to provide to
shareholders, which were outlined in the July 9 proxy statement and
accompanying press release.
The Adviser is pleased with the feedback it has received about
the Proposals and the recognition from shareholders of the
conversion’s potential to add value and drive long-term growth. The
Adviser expects the Tender Offer to garner further support from
HFRO shareholders.
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Proxy Statement
A copy of the definitive proxy statement is available free of
charge at www.hfroconversion.com or at the SEC
website, www.sec.gov. Shareholders should read the proxy
statement carefully because it contains important information.
Shareholders should make no decision about the Proposals until
reviewing the definitive proxy statement sent to them.
HFRO and its trustees and officers, the Adviser’s and its
affiliates’ respective members, trustees, directors, shareholders,
officers and employees, Di Costa Partners LLC and other persons may
be deemed to be participants in the solicitation of proxies with
respect to the Proposals. Shareholders may obtain more
detailed information regarding the direct and indirect interests of
the foregoing persons by reading the definitive proxy statement
filed with the SEC regarding the Proposals.
About the Highland Income Fund
The Highland Income Fund (NYSE:HFRO) is a closed-end fund
managed by Highland Capital Management Fund Advisors, L.P. For more
information visit www.highlandfunds.com/income-fund/
About Highland Capital Management Fund Advisors, L.P.
Highland Capital Management Fund Advisors, L.P. is an
SEC-registered investment adviser. It is the adviser to a suite of
registered funds, including open-end mutual funds, closed-end
funds, and an exchange-traded fund. For more information visit
www.highlandfunds.com.
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Disclosures
Investors should consider the investment objectives, risks,
charges and expenses of the Highland Income Fund carefully before
investing. This and other information can be found in the Fund's
prospectus, which may be obtained by calling 1-800-357-9167 or
visiting www.highlandfunds.com. Please read the
prospectus carefully before you invest.
No assurance can be given that the Fund will achieve its
investment objectives.
This press release contains forward-looking statements. These
statements reflect the current views of management with respect to
future events and financial performance. Forward-looking statements
can be identified by words such as “anticipate”, “expect”, “could,”
“may”, “potential”, “will”, “ability,” “targets,” “believe,”
“likely,” “assumes,” “ensuring,” “available,” “optionality,”
“viability,” “maintain,” “consistent,” “pace,” “should,”
“emerging,” “driving,” “looking to,” and similar statements of a
future or forward-looking nature. Forward-looking statements
address matters that involve risks and uncertainties. Past
performance does not guarantee future results. Performance during
time periods shown is limited and may not reflect the performance
in difference economic and market cycles. There can be no assurance
that similar performance will be experienced.
The proposed conversion of HFRO to a diversified holding company
is contingent upon an affirmative shareholder vote, regulatory
approval, and the ability to reconfigure HFRO’s portfolio such that
it is no longer an investment company for purposes of the
Investment Company Act of 1940 (the “1940 Act”). The conversion
process could take approximately 24 months; and there can be no
assurance that conversion of HFRO to a diversified holding company
will be completed, improve HFRO’s performance or reduce the common
share discount to net asset value (“NAV”).
In addition, actions taken in connection with the proposed
conversion may adversely affect the financial condition, yield on
investment, results of operations, cash flow, per share trading
price of our securities, ability to satisfy debt service
obligations, if any, and to make cash distributions to
shareholders. Whether HFRO remains a registered investment company
or converts to a diversified holding company, an investment in
HFRO’s securities, like an investment in any other public company,
is subject to investment risk, including the possible loss of
investment. For a discussion of certain other risks relating to our
conversion to a holding company, see “Implementation of the
Business Change Proposal and Related Risks” and “Appendix B: Risks
Associated with the Business Change Proposal” in the proxy
statement.
If the Proposals are approved by shareholders, HFRO will apply
to the SEC for a Deregistration Order, but the timing for receiving
the Deregistration Order is uncertain. Until the SEC issues a
Deregistration Order, HFRO will continue to be registered as an
investment company and will continue to be regulated under the 1940
Act. Pending the SEC’s issuance of the Deregistration Order, the
Adviser intends to begin realigning HFRO’s portfolio consistent
with its new business as a diversified holding company. The
implementation period may last approximately two years, with full
implementation not projected until approximately the middle of
2023. The foregoing time period is an estimate and may vary
depending upon the length of the deregistration process with the
SEC, tax considerations and the pace at which we will be able to
transition certain of the Company’s assets such that we will no
longer be deemed an investment company under the 1940 Act. Any
delay in receiving the Deregistration Order beyond the projected
two-year implementation period may delay HFRO’s ability to operate
like a typical diversified holding company not subject to the 1940
Act and would delay the ability to realize the benefits the
Adviser’s anticipate to realize from becoming a diversified holding
company.
For additional risks and disclosures, please visit
www.hfroconversion.com/disclosures.
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CONTACTS Investor Contacts Shareholders: (800) 357-9167
Financial Professionals: (833) 697-7253 Email Media Contact
Lucy Bannon (214) 550-4572 Email
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