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 has filed a
supplement to the definitive proxy statement for the Company’s
special meeting of shareholders (the “Special Meeting”) and has
adjourned the Special Meeting to provide shareholders with
additional time to consider the changes included in the supplement.
The Special Meeting will reconvene on October 15, 2021 at 1:30 p.m.
CDT at 300 Crescent Court, Suite 700, Dallas, Texas 75201.
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 (the “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”).
The Adviser has made additional updates to the Proposals that it
believes will further benefit shareholders. Those updates are
discussed in further detail in the supplement to the proxy
statement (as supplemented, the “Proxy Statement”) that was filed
with the Securities and Exchange Commission (the “SEC”) on
September 23, 2021.
The following highlights the updates to the Proposals and other
information contained in the supplement. Terms used, but not
otherwise defined herein, have the meanings assigned to them in the
Proxy Statement.
- Extension of the Total Expense Cap from 12 to 24
months
The Adviser has agreed to extend the expiration of the Total
Expense Cap from 12 months following HFRO’s receipt of the
Deregistration Order to 24 months following the HFRO’s receipt of
the Deregistration Order.
- Removal of the control share acquisition provision
The Fund’s Board of Trustees (the “Board”) determined that the
proposed A&R Declaration of Trust should be amended such that
the control share acquisition provisions contained in Article V
thereof will be null and void upon HFRO’s receipt of the
Deregistration Order.
- Additional detail on the Board composition of the Holding
Company
The following provides additional detail with respect to the
corporate governance aspects of HFRO’s transition plan to a
diversified holding company. The current Board was selected in part
for its experience and expertise in overseeing investment companies
and other pooled investment vehicles. As part of the implementation
of the Proposals, the Board has determined that, over time, its
composition in whole will transition to individuals with robust
technical ability and expertise relevant to the oversight of public
operating companies or public holding companies that operate one or
more lines of business through operating subsidiaries. In
particular, the Board expects that its composition will include
members with experience in the types of businesses the Holding
Company acquires and their applicable industries and industry
sectors. While it is anticipated that the current Trustees will
remain on the Board at the time of HFRO’s conversion and following
receipt of the Deregistration Order in order to oversee the
conversion and to provide continuity while facilitating the
transition of the Board, the Board expects that the current
Trustees will not stand for reelection beyond the expiration of
such Trustee’s term expiring after HFRO’s receipt of the
Deregistration Order and may resign prior to that time, as
appropriate, as new trustees are added to the Board.
Since announcing the conversion, the Adviser has continuously
collected feedback from investors, which it has used to refine the
Proposals, adding features, such as those reflected in the
supplement, intended to deliver additional benefits to
shareholders. Other changes include the addition of a tender offer,
which was announced on August 13, 2021. 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.
The Proposals aim to increase shareholder value and better
position HFRO in the current and future market environment. The
Board reviewed the Proposals at length and believes they are in the
best interest of shareholders. As such the Board unanimously
recommended that shareholders vote “FOR” the Proposals. The updates
to the Proposals have been well received, and the Adviser expects
the latest changes to garner further support from HFRO
shareholders.
The adjournment of the Special Meeting provides additional time
for shareholders to consider the updates made to the Proposals and
review all recent materials before submitting their vote.
Voting information, recent materials, and other shareholder
resources can be found on the HFRO conversion website at
www.hfroconversion.com/resources.
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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.
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.
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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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