The Herzfeld Caribbean Basin Fund, Inc. Announces Final Results of Rights Offering

Rhea-AI Summary

Herzfeld Caribbean Basin Fund, Inc. (NASDAQ: CUBA) announced the final results of its non-transferable rights offering, issuing 9,000,000 new shares of common stock at a final subscription price of $2.31 per share, resulting in expected gross proceeds of approximately $20.8 million.

Positive

• The oversubscription of the offering indicates high investor interest and confidence in the Fund.
• The Fund's objective of seeking long-term capital appreciation through investments in Caribbean Basin countries reflects a strategic focus on potential economic, political, and technological developments in the region.

Negative

• The final subscription price of $2.31 per share is lower than the original estimated price of $2.57 per share, indicating a potential decrease in investor demand or perceived value.
• Investing in companies of Caribbean Basin Countries presents unique risks such as currency fluctuation, political and economic changes, and market risks, which may result in greater share price volatility.

Insights

Financial Analyst

The Herzfeld Caribbean Basin Fund's rights offering completion stands as a significant event for current and potential investors, signaling both the market's valuation of the fund and the investor appetite for its shares. The oversubscription of the offering suggests a robust demand, which could be indicative of investor confidence in the Fund's investment strategy or a speculative play on the economic prospects of the Caribbean Basin region.

The final subscription price being set at $2.31, below the estimated $2.57, could reflect a conservative market sentiment or a strategic pricing decision to incentivize participation. Investors should note the potential for dilution of their holdings, as the issuance of new shares increases the share count but does not immediately increase the value of the fund's underlying assets proportionally.

Long-term implications may include enhanced liquidity and capital for the Fund to invest in its target region. However, the inherent risks associated with investing in the Caribbean Basin, such as political instability and currency fluctuations, remain and should be carefully weighed against the potential for capital appreciation.

Emerging Markets Expert

The Herzfeld Caribbean Basin Fund operates within a niche segment of the investment market, focusing on the Caribbean Basin countries. The oversubscription of its rights offering highlights the interest in emerging markets, particularly in regions that may benefit from economic and political reforms or technological advancements.

Investors should be cognizant of the unique risks associated with the Caribbean Basin investments, such as exposure to volatile economic cycles and less mature financial regulatory environments. The Fund's performance is tied to the fortunes of these countries, which can be affected by factors like natural disasters or shifts in tourism, a significant industry for the region.

While the rights offering could provide the Fund with more resources to capitalize on potential growth opportunities, investors must remain vigilant about the region's economic indicators and geopolitical developments, which could significantly impact the Fund's NAV and share price volatility.

Risk Management Specialist

The rights offering by the Herzfeld Caribbean Basin Fund introduces several risk management considerations. The oversubscription indicates a higher-than-anticipated demand, which could be a positive sign for the Fund's management and their investment thesis. However, managing the increased capital effectively to generate returns without incurring disproportionate risk is crucial.

The Fund's strategy to invest in a diverse set of countries within the Caribbean Basin adds complexity to the risk profile. The political and economic stability of these countries can vary significantly, necessitating a sophisticated approach to risk assessment and mitigation.

Investors should monitor the Fund's ability to deploy the new capital in a manner that aligns with its stated objective of long-term capital appreciation. The Fund's performance post-offering will serve as a barometer for the efficacy of its investment strategy in a volatile and diverse emerging market region.

MIAMI BEACH, Fla., Dec. 18, 2023 (GLOBE NEWSWIRE) -- The Herzfeld Caribbean Basin Fund, Inc. (NASDAQ: CUBA) (the “Fund”) today announced the final results of its non-transferable rights offering (the “Offering”) that expired on December 13, 2023 (the “Expiration Date”). The Fund will issue a total of 9,000,000 new shares of common stock as a result of the Offering.

The Offering’s final subscription price per share was determined to be $2.31. The subscription price was established pursuant to the terms of the Offering and based on a formula equal to 92% of the volume-weighted average closing sales price of a share of common stock on the NASDAQ Capital Market on the Expiration Date of the Offering and the four preceding trading days.

The Offering was oversubscribed and the over-subscription requests exceeded the primary subscription shares available (i.e., 7,150,673 shares). The Board of Directors of the Fund determined to issue an additional 25.86% of the number of shares issued in the primary subscription, or 1,849,327 additional shares, for a total issuance of 9,000,000 new shares of common stock. The shares issued as part of the over-subscription privilege of the Offering will be allocated pro rata among record date stockholders who submitted over-subscription requests based on the number of rights originally issued to them by the Fund. Gross proceeds from the Offering, before any expenses of the Offering, are expected to total approximately $20.8 million.

The final subscription price is lower than the original estimated subscription price of $2.57 per share. Accordingly, any excess payments will be returned to subscribing rights holders as soon as practicable, in accordance with the prospectus supplement and accompanying prospectus, filed with the Securities and Exchange Commission on November 22, 2023.

This press release shall not constitute an offer to sell or constitute a solicitation of an offer to buy.

For additional information on the Fund, please contact the Fund at 800-TJH-FUND or visit us on the web at www.herzfeld.com/cuba.

The Fund is a non-diversified, closed-end fund managed by HERZFELD/CUBA, a division of Thomas J. Herzfeld Advisors, Inc. (based in Miami Beach). The Fund seeks long-term capital appreciation. To achieve its objective the Fund invests in issuers that are likely, in the Advisor’s view, to benefit from economic, political, structural and technological developments in countries in the Caribbean Basin, which the Fund considers to consist of Cuba, Jamaica, Trinidad and Tobago, the Bahamas, the Dominican Republic, Barbados, Aruba, Haiti, the Netherlands Antilles, the Commonwealth of Puerto Rico, Mexico, Honduras, Guatemala, Belize, Costa Rica, Panama, Colombia, Venezuela, Guyana and the United States (Caribbean Basin Countries).

Investments in the Fund involve risks. Investing in companies of Caribbean Basin Countries may present certain unique risks not associated with domestic investments, such as currency fluctuation, political and economic changes and market risks. These factors may result in greater share price volatility.

Shares of closed-end funds frequently trade at a discount to their net asset value (NAV). The price of the Fund’s shares is determined by a number of factors, several of which are beyond the control of the Fund. Therefore, the Fund cannot predict whether its shares will trade at, below or above NAV. 

Before investing in the Fund, investors should carefully consider the investment objective, risks, and charges and expenses of the Fund. This information can be found in the Fund’s prospectus on file with the Securities and Exchange Commission. An investor should carefully read the Fund’s prospectus before investing.

About Thomas J. Herzfeld Advisors, Inc.

Thomas J. Herzfeld Advisors, Inc., founded in 1984, is an SEC-registered investment advisor, specializing in investment analysis and account management in closed-end funds. The Firm also specializes in investment in the Caribbean Basin. The HERZFELD/CUBA division of Thomas J. Herzfeld Advisors, Inc. serves as the investment advisor to The Herzfeld Caribbean Basin Fund, Inc. a publicly traded closed-end fund (NASDAQ: CUBA).

More information about the advisor can be found at www.herzfeld.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.

NASDAQ Capital Market: CUBA
CUSIP: 42804T106

Contact Information:

For further information contact:
Tom Morgan
305.777.1660

Thomas J. Herzfeld Advisors, Inc.
119 Washington Avenue, Suite 504
Miami Beach, FL 33139
www.herzfeld.com

FAQ

What are the final results of Herzfeld Caribbean Basin Fund, Inc.'s non-transferable rights offering?

The Fund issued 9,000,000 new shares of common stock at a final subscription price of $2.31 per share, with expected gross proceeds of approximately $20.8 million.

What is the ticker symbol for Herzfeld Caribbean Basin Fund, Inc.?

The ticker symbol for Herzfeld Caribbean Basin Fund, Inc. is CUBA.

What are the risks associated with investing in Caribbean Basin countries through Herzfeld Caribbean Basin Fund, Inc.?

Investing in companies of Caribbean Basin Countries may present unique risks such as currency fluctuation, political and economic changes, and market risks, resulting in greater share price volatility.

What is the objective of Herzfeld Caribbean Basin Fund, Inc.?

The Fund seeks long-term capital appreciation through investments in issuers likely to benefit from economic, political, structural, and technological developments in Caribbean Basin countries.