Cornerstone Strategic Investment Fund, Inc. Announces Rights Offering

Rhea-AI Summary

Cornerstone Strategic Investment Fund (NYSE American: CLM) has announced a 1-for-3 rights offering, allowing stockholders to purchase additional shares. The Record Date is set for April 21, 2025, with stockholders receiving one non-transferable right per share held.

For every three rights, stockholders can purchase one new share at a subscription price of either 112% of NAV or 80% of market price at closing (whichever is greater) on the expiration date of May 16, 2025. The offering includes up to 84,252,329 shares, with a 100% over-allotment option for oversubscribing stockholders.

Shares will be issued within 15 days following the Fund's May 2025 monthly distribution record date. Notably, stockholders exercising their rights won't receive this distribution for newly purchased shares.

Positive

• 100% over-allotment option available for oversubscribing stockholders
• Existing shareholders have priority access to new shares

Negative

• Potential dilution of existing shareholders' value
• New shares won't receive May 2025 distribution
• Subscription price at premium to NAV (112%) could be unfavorable

Insights

Financial Analyst

Cornerstone Strategic Investment Fund's rights offering represents a significant capital-raising event with complex implications for existing shareholders. The 1-for-3 offering will allow CLM to issue up to 84,252,329 new shares, potentially increasing the fund's total shares outstanding by approximately 33% if fully subscribed.

The unusual pricing structure merits close attention. Unlike typical rights offerings with straightforward discounts, CLM's formula sets the subscription price at the greater of 112% of NAV or 80% of market price at expiration. This effectively limits the potential discount and could actually represent a premium to NAV, which is rare in rights offerings.

From a dilution perspective, non-participating shareholders will experience meaningful ownership dilution. While the over-allotment feature benefits those willing to commit additional capital, it amplifies dilution for those unable to participate.

For closed-end funds trading at discounts to NAV (as many do), rights offerings are often viewed skeptically as they increase share count without necessarily enhancing per-share value. The pricing mechanism appears designed to minimize NAV dilution while still providing some incentive for participation.

Shareholders must carefully evaluate their position before the May 16 expiration, as those exercising rights will miss the May distribution on their new shares—an additional consideration when calculating the true economic impact of participation versus non-participation.

NEW YORK, April 10, 2025 (GLOBE NEWSWIRE) -- Cornerstone Strategic Investment Fund, Inc. (NYSE American: CLM) (CUSIP: 21924B302) (the “Fund”) announced today that, contingent upon final approval from the U.S. Securities and Exchange Commission (“SEC”), it has set the close of business on April 21, 2025 as the record date (the “Record Date”) for determination of stockholders entitled to participate in the Fund’s 1-for-3 rights offering. The Fund is issuing to its stockholders non-transferable rights entitling the holders to subscribe for an aggregate of 84,252,329 shares of common stock. Each stockholder will receive one non-transferable right for each share of the Fund held as of the Record Date.  Fractional shares will not be issued upon the exercise of the rights. Accordingly, the number of rights to be issued to a stockholder on the Record Date will be rounded up to the nearest whole number of rights evenly divisible by three. For every three rights a stockholder receives, he or she will be entitled (but not required) to purchase one new share of the Fund at a subscription price equal to the greater of (i) 112% of net asset value per share as calculated at the close of trading on the expiration date of the offering or (ii) 80% of the market price per share at such time.  Fractional shares will not be issued.  In addition to the shares offered in the primary subscription, the Fund may offer a 100% over-allotment to oversubscribing stockholders.  Stockholders who fully subscribe in the primary offering will have the option to oversubscribe for additional shares, to the extent available.

The subscription period will commence shortly after the Record Date, and will expire at 5:00 p.m., EDT, on Friday, May 16, 2025, (the “Expiration Date”) unless extended. The actual subscription price per share will be determined on the Expiration Date.

Shares will be issued within the 15-day period immediately following the record date of the Fund’s May 2025 monthly distribution to stockholders. Stockholders exercising their rights to purchase shares pursuant to the offering will not be entitled to receive such distribution with respect to the shares issued pursuant to such exercise.

This press release is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities in any jurisdiction, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. The offering is subject to an effective registration statement covering the rights and shares to be issued and to other customary regulatory filings and approvals.  Any rights offering conducted by the Fund will be made only by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Cornerstone Strategic Investment Fund, Inc. is a closed-end, diversified management investment company and is registered with the SEC under the Investment Company Act of 1940, as amended.

Cornerstone Strategic Investment Fund, Inc. is traded on the NYSE American LLC under the trading symbol “CLM”. The Fund’s investment adviser is Cornerstone Advisors, LLC, which also serves as the investment adviser to another closed-end fund, Cornerstone Total Return Fund, Inc. (NYSE American: CRF). For more information regarding Cornerstone Strategic Investment Fund, Inc. or Cornerstone Total Return Fund, Inc. please visit www.cornerstonestrategicinvestmentfund.com, and www.cornerstonetotalreturnfund.com.

Past performance is no guarantee of future performance. An investment in the Fund is subject to certain risks, including market risk. In general, shares of closed-end funds often trade at a discount from their net asset value and at the time of sale may be trading on the exchange at a price which is more or less than the original purchase price or the net asset value. An investor should carefully consider the Fund’s investment objective, risks, charges and expenses. Please read the Fund’s disclosure documents before investing.

In addition to historical information, this release contains forward-looking statements, which may concern, among other things, domestic and foreign markets, industry and economic trends and developments and government regulation and their potential impact on the Fund’s investment portfolio. These statements are subject to risks and uncertainties, including the factors set forth in the Fund’s disclosure documents, filed with the U.S. Securities and Exchange Commission, and actual trends, developments and regulations in the future, and their impact on the Fund could be materially different from those projected, anticipated or implied. The Fund has no obligation to update or revise forward-looking statements.

Contact: (866) 668-6558

FAQ

When is the Record Date for CLM's rights offering in 2025?

The Record Date is set for April 21, 2025, at the close of business.

How many shares can CLM stockholders purchase in the 2025 rights offering?

Stockholders can purchase one new share for every three rights received, with a total offering of 84,252,329 shares.

What is the subscription price for CLM's 2025 rights offering?

The price will be the greater of 112% of NAV or 80% of market price per share at closing on May 16, 2025.

When does CLM's 2025 rights offering expire?

The offering expires at 5:00 p.m. EDT on Friday, May 16, 2025, unless extended.

Will new shares from CLM's rights offering receive the May 2025 distribution?

No, shares purchased through the rights offering will not be eligible for the May 2025 distribution.