Saba Capital Reaches Agreements with Two BlackRock Closed-End Funds

Rhea-AI Summary

Saba Capital Management has reached standstill agreements with BlackRock Advisors regarding two closed-end funds. The BlackRock Innovation and Growth Term Trust (BIGZ) will conduct a cash tender offer for 50% of its outstanding shares, while the BlackRock Health Sciences Term Trust (BMEZ) will tender 40% of its shares. Both offers will be priced at 99.5% of NAV.

The tender offers will commence on different dates: BMEZ on March 21, 2025, and BIGZ on June 9, 2025. Both offers will expire 20 business days after commencement, with payment occurring within seven business days after expiration. As part of the agreement, Saba will tender all its shares in both funds and withdraw its shareholder proposals, agreeing to standstill covenants through the 2027 proxy season.

Positive

• Large-scale tender offers at near-NAV (99.5%) providing shareholders significant liquidity opportunity
• Clear timeline for tender offer execution with specific dates
• Resolution of potential proxy contest through constructive negotiation

Negative

• Tender offers priced slightly below NAV (0.5% discount)
• Extended timeline with offers not commencing until 2025
• Potential for significant fund size reduction affecting future operations

Insights

Investment Fund Analyst

This tender offer agreement marks a significant strategic shift for BIGZ and BMEZ, effectively addressing the persistent discount to NAV issue that's common in closed-end funds. The tender offers at 99.5% of NAV represent a substantial arbitrage opportunity, particularly given that both funds have been trading at significant discounts.

For BIGZ shareholders, the 50% tender offer is particularly notable - it allows investors to exit half their position at nearly NAV, while potentially maintaining exposure to the fund's innovation and growth strategy with the remaining shares. The staggered implementation timing (June 2025 for BIGZ) provides market participants with clear arbitrage windows.

The deal with Saba Capital, a known activist investor in the closed-end fund space, demonstrates BlackRock's willingness to address shareholder concerns about persistent NAV discounts. The three-year standstill agreement through 2027 provides operational stability for fund management while offering immediate value realization for current shareholders.

Corporate Governance Expert

This agreement represents a strategic victory for shareholder activism in the closed-end fund space. Saba Capital's successful negotiation demonstrates the growing influence of activist investors in pushing for shareholder-friendly actions. The structure of the deal - combining significant tender offers with a three-year standstill agreement - creates a balanced outcome that serves both immediate shareholder interests and long-term fund stability.

The withdrawal of shareholder proposals in exchange for concrete tender offer commitments shows effective corporate governance in action. The 99.5% NAV pricing structure is particularly shareholder-friendly, offering near-full value realization while maintaining minimal friction costs. This could set a precedent for similar activist engagements in the closed-end fund sector, potentially influencing how other fund managers approach discount management.

BlackRock Innovation and Growth Term Trust and BlackRock Health Sciences Term Trust Will Conduct Cash Tender Offers for 50% of Shares and 40% of Shares, Respectively, at 99.5% of NAV

NEW YORK--(BUSINESS WIRE)-- Saba Capital Management, L.P. (together with certain of its affiliates, “Saba”) today announced that it has entered into standstill agreements (the “Agreements”) with BlackRock Advisors, LLC, which is the investment advisor of the BlackRock Innovation and Growth Term Trust (NYSE: BIGZ) and the BlackRock Health Sciences Term Trust (NYSE: BMEZ) (the “Funds”), following constructive negotiations. Under the terms of the Agreements, BIGZ will conduct a tender offer to purchase for cash 50% of its outstanding common shares and BMEZ will conduct a tender offer to purchase for cash 40% of its outstanding common shares (the “Tender Offers”). The Tender Offers will provide all shareholders the opportunity to tender some or all of their common shares at a price equal to 99.5% of the Funds’ net asset value per share (“NAV”) as determined as of the close of the regular trading session of the New York Stock Exchange (the “NYSE”) on the trading day after the expiration or closing date of the Tender Offers.

The Tender Offers are expected to commence on March 21, 2025, in the case of BMEZ, and on June 9, 2025, in the case of BIGZ, and will expire or close on the 20^th business day after their commencement and the Funds will pay for any Common Shares tendered no later than the seventh business day after the expiration or closing of the Tender Offers.

The terms of the Agreements also provide for Saba to tender all of its Common Shares of the Funds and withdraw the shareholder proposals it submitted to the Funds, in addition to complying with certain standstill covenants for a period of three years, encompassing the 2027 proxy season.

The full Agreements will be filed with the Securities and Exchange Commission.

About Saba Capital

Saba Capital Management, L.P. is a global alternative asset management firm that seeks to deliver superior risk-adjusted returns for a diverse group of clients. Founded in 2009 by Boaz Weinstein, Saba is a pioneer of credit relative value strategies and capital structure arbitrage. Saba has offices in New York City and London. Learn more at www.sabacapital.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250121439547/en/

Longacre Square Partners

Charlotte Kiaie / Kate Sylvester, 646-386-0091

ckiaie@longacresquare.com / ksylvester@longacresquare.com

Source: Saba Capital Management, L.P.

FAQ

What percentage of shares will BIGZ purchase in its 2025 tender offer?

BIGZ will purchase 50% of its outstanding common shares at 99.5% of NAV in its tender offer.

When will the BIGZ tender offer commence in 2025?

The BIGZ tender offer will commence on June 9, 2025.

What is the pricing of BIGZ's tender offer relative to NAV?

The tender offer will be priced at 99.5% of BIGZ's net asset value per share.

How long will shareholders have to participate in the BIGZ tender offer?

Shareholders will have 20 business days from the commencement date to participate in the tender offer.

What are the key terms of Saba Capital's standstill agreement with BIGZ?

Saba agreed to tender all its shares, withdraw shareholder proposals, and comply with standstill covenants through the 2027 proxy season.