The Herzfeld Caribbean Basin Fund, Inc. Announces Final Tender Offer Results
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Insights
The completion of the tender offer by The Herzfeld Caribbean Basin Fund represents a strategic maneuver to optimize its capital structure. By repurchasing 10% of its outstanding shares at a slight discount to NAV, the Fund effectively returns capital to shareholders, potentially leading to an increase in the NAV per remaining share. This could be viewed favorably by investors as it reflects a proactive approach to managing shareholder value.
It's also worth noting the significant oversubscription, as evidenced by the pro-ration factor of 13.615645%, which indicates a high level of shareholder participation. This could imply that investors found the offer attractive or that there was a desire for liquidity among shareholders. The repurchase at a discount can be a double-edged sword; while it is accretive to the NAV for remaining shareholders, it also suggests that the Fund's shares were trading at a discount to their NAV, which might raise questions about market perception and underlying asset valuation.
The financial implications of this tender offer are multifaceted. For one, the repurchase of shares at 97.5% of NAV is a common tactic used by funds to manage discounts to NAV. The Fund's ability to conduct such an offer and the subsequent reduction in the number of outstanding shares can lead to a more concentrated ownership and potentially enhance earnings per share for remaining investors.
However, the tender offer's impact on the Fund's liquidity should also be considered. The cash outflow required to purchase the tendered shares might reduce the Fund's cash reserves, which could affect its ability to take advantage of future investment opportunities or weather market volatility. Investors should monitor the Fund's subsequent performance and management's strategy to ensure that the reduced share count translates into tangible benefits such as improved financial ratios or performance metrics.
From a regulatory standpoint, the tender offer process is governed by the SEC and must adhere to strict disclosure and procedural requirements. The Fund's compliance with these regulations, as indicated by the involvement of EQ Fund Solutions, LLC as the information agent, is essential to ensure the integrity of the transaction. Investors should be aware that such offers are subject to legal review to protect their interests.
Furthermore, the pro-rata basis for share repurchase is a standard legal mechanism to ensure fairness among shareholders when the offer is oversubscribed. It prevents selective repurchase and ensures that all participating shareholders are treated equitably. The exclusion of fractional shares is also a common practice to simplify the transaction process.
MIAMI BEACH, Fla., March 25, 2024 (GLOBE NEWSWIRE) -- Thomas J. Herzfeld Advisors, Inc., an SEC-registered investment adviser, and The Herzfeld Caribbean Basin Fund, Inc. (Nasdaq: CUBA) (the “Fund”) today announced the final results of the Fund’s cash tender offer to purchase up to
The table below shows the final results for the Fund:
| Tender Offer Amount | Shares Properly Tendered | Shares to be Purchased | Pro-Ration Factor* | Purchase Price of Properly Tendered Shares** | Number of Outstanding Common Shares after Giving Effect to Tender Offer |
| Up to 1,681,477 shares | 12,349,659 | 1,681,477 | 15,133,299 |
* The number of common shares to be purchased divided by the number of common shares properly tendered. The pro-ration factor is subject to rounding adjustment to avoid the purchase of fractional shares.
** Equal to
Under the terms and conditions of the Fund’s Tender Offer, if the number of common shares properly tendered exceeds the number of common shares offered to purchase, the Fund will purchase common shares properly tendered on a pro-rata basis (disregarding fractional shares). As indicated above, the Fund will purchase
EQ Fund Solutions, LLC is the information agent for the Offer. Shareholders with questions may call EQ Fund Solutions, LLC at (877) 297-1738.
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. There can be no assurance that any Share repurchases will reduce or eliminate the discount of the Fund’s market price to the Fund’s net asset value per share. An investor should carefully consider the Fund’s investment objective, risks, charges and expenses. Please read the Fund’s disclosure documents before investing.
Forward-Looking Statements
This press release, and other statements that Thomas J. Herzfeld Advisors, Inc. (“TJHA”) or the Fund may make, may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to the Fund’s or TJHA’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions. TJHA and the Fund caution that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and TJHA and the Fund assume no duty to and do not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. With respect to the Fund, the following factors, among others, could cause actual events to differ materially from forward-looking statements or historical performance: (1) changes and volatility in political, economic or industry conditions, particularly with respect to Cuba and other Caribbean Basin countries, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for the Fund or in the Fund’s net asset value; (2) the relative and absolute investment performance of the Fund and its investments; (3) the impact of increased competition; (4) the unfavorable resolution of any legal proceedings; (5) the extent and timing of any distributions or share repurchases; (6) the impact, extent and timing of technological changes; (7) the impact of legislative and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and regulatory, supervisory or enforcement actions of government agencies relating to the Fund or TJHA, as applicable; (8) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or TJHA or the Fund; (9) TJHA’s and the Fund’s ability to attract and retain highly talented professionals; (10) the impact of TJHA electing to provide support to its products from time to time; and (11) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions; and (12) the effects of an epidemic, pandemic or public health emergency, including without limitation, COVID-19. Annual and Semi-Annual Reports and other regulatory filings of the Fund with the SEC are accessible on the SEC’s website at www.sec.gov and on TJHA’s website at www.herzfeld.com/cuba, and may discuss these or other factors that affect the Fund. The information contained on TJHA’s website is not a part of this press release.
Contact:
Tom Morgan
Chief Compliance Officer
Thomas J. Herzfeld Advisors, Inc.
1-305-777-1660
FAQ
What was the purchase price of properly tendered shares in the tender offer?
What percentage of common shares will the Fund purchase?
Who is the information agent for the Offer?
How can shareholders with questions contact the information agent?
