Saba Capital Reaches Agreement With Federated Hermes
Saba Capital Management has reached an agreement with Federated Investment Management Company, the advisor of Federated Hermes Premier Municipal Income Fund (NYSE: FMN). As part of the deal, FMN will conduct a cash tender offer for 32% of its outstanding common shares at 99% of NAV. The tender offer is scheduled to run from September 13 to October 11, 2024, allowing all shareholders to participate.
If oversubscribed, shares will be purchased on a prorated basis. Saba has agreed to comply with certain standstill covenants and vote its shares as recommended by FMN's Board of Trustees. This agreement aims to provide liquidity to shareholders and address potential activist investor concerns.
Saba Capital Management ha raggiunto un accordo con Federated Investment Management Company, il consulente del Federated Hermes Premier Municipal Income Fund (NYSE: FMN). Come parte dell'accordo, FMN effettuera' un offerta di acquisto in contante per il 32% delle sue azioni ordinarie in circolazione al 99% del valore patrimoniale netto (NAV). L'offerta di acquisto è prevista dal 13 settembre all'11 ottobre 2024, permettendo a tutti gli azionisti di partecipare.
Se l'offerta sarà sovrascritta, le azioni saranno acquistate su base proporzionale. Saba ha accettato di rispettare determinati impegni di standstill e di votare le sue azioni come raccomandato dal Consiglio di Amministrazione di FMN. Questo accordo mira a fornire liquidità agli azionisti e a affrontare le potenziali preoccupazioni degli investitori attivisti.
Saba Capital Management ha llegado a un acuerdo con Federated Investment Management Company, el asesor del Federated Hermes Premier Municipal Income Fund (NYSE: FMN). Como parte del acuerdo, FMN llevará a cabo una oferta de compra en efectivo por el 32% de sus acciones ordinarias en circulación al 99% del valor neto de los activos (NAV). La oferta de compra está programada para realizarse desde el 13 de septiembre hasta el 11 de octubre de 2024, permitiendo la participación de todos los accionistas.
Si se supera la suscripción, las acciones se comprarán de manera prorrogada. Saba ha acordado cumplir con ciertos convenios de standstill y votar sus acciones según lo recomendado por la Junta de Fideicomisarios de FMN. Este acuerdo tiene como objetivo proporcionar liquidez a los accionistas y abordar las posibles preocupaciones de los inversores activistas.
Saba Capital Management는 Federated Hermes Premier Municipal Income Fund (NYSE: FMN)의 자문사인 Federated Investment Management Company와 협약을 체결했습니다. 이번 계약의 일환으로 FMN은 자사의 유통 보통주 32%에 대해 NAV의 99%로 현금 공개매수를 실시할 것입니다. 공개매수는 2024년 9월 13일부터 10월 11일까지 진행될 예정이며, 모든 주주가 참여할 수 있습니다.
청약이 초과될 경우, 주식은 비율에 따라 매입됩니다. Saba는 특정 정지약정에 따르기로 동의하고 FMN의 이사회에서 권장하는 대로 주식에 대한 투표를 하기로 했습니다. 이번 협정은 주주에게 유동성을 제공하고 잠재적인 행동주의 투자자의 우려를 다루기 위한 것입니다.
Saba Capital Management a conclu un accord avec Federated Investment Management Company, le conseiller du Federated Hermes Premier Municipal Income Fund (NYSE: FMN). Dans le cadre de l'accord, FMN procédera à une offre publique d'achat en espèces pour 32% de ses actions ordinaires en circulation à 99% de la valeur nette d'inventaire (NAV). L'offre devrait se dérouler du 13 septembre au 11 octobre 2024, permettant à tous les actionnaires de participer.
En cas de forte demande, les actions seront achetées sur une base prorata. Saba a convenu de respecter certaines clauses de standstill et de voter ses actions comme recommandé par le Conseil d'Administration de FMN. Cet accord vise à fournir de la liquidité aux actionnaires et à aborder les préoccupations potentielles des investisseurs activistes.
Saba Capital Management hat eine Vereinbarung mit der Federated Investment Management Company, dem Berater des Federated Hermes Premier Municipal Income Fund (NYSE: FMN), getroffen. Im Rahmen des Deals wird FMN ein Barübernahmeangebot für 32% seiner ausgegebenen Stammaktien zu 99% des NAV durchführen. Das Übernahmeangebot ist vom 13. September bis 11. Oktober 2024 geplant und ermöglicht allen Aktionären die Teilnahme.
Wenn das Angebot überzeichnet wird, werden die Aktien anteilig erworben. Saba hat zugestimmt, bestimmten Standstill-Vereinbarungen nachzukommen und seine Stimmen entsprechend den Empfehlungen des Vorstands von FMN abzugeben. Dieses Abkommen zielt darauf ab, den Aktionären Liquidität zu bieten und mögliche Bedenken von aktivistischen Investoren auszuräumen.
- Tender offer provides liquidity opportunity for shareholders
- Tender price set at 99% of NAV, close to full value
- Large portion (32%) of outstanding shares included in the offer
- Agreement with Saba Capital may reduce activist investor pressure
- Potential reduction in fund size if tender offer is fully subscribed
- Possible increased expense ratio due to reduced asset base
- Proration may limit some shareholders' ability to exit their full position
Insights
The agreement between Saba Capital and Federated Hermes represents a significant development for shareholders of the Federated Hermes Premier Municipal Income Fund (FMN). The 32% tender offer at 99% of NAV is a substantial liquidity event, potentially reducing the fund's discount to NAV and benefiting remaining shareholders. This move could be seen as a proactive step by management to address activist pressure and enhance shareholder value.
However, investors should consider the implications of a reduced asset base post-tender, which may impact the fund's expense ratio and investment flexibility. The standstill agreement with Saba Capital suggests a temporary truce in activist involvement, potentially providing management with breathing room to implement strategies. Overall, this development appears positive for short-term shareholders seeking liquidity, but the long-term impact on the fund's performance and structure remains to be seen.
The standstill agreement between Saba Capital and Federated Hermes is a strategic legal maneuver with significant implications. By agreeing to voting restrictions and standstill covenants, Saba Capital effectively limits its ability to challenge management decisions in the near term. This quid pro quo arrangement, where Saba gains a liquidity event in exchange for reduced activism, is a common tactic in shareholder disputes.
The tender offer's structure, particularly the pro-rata mechanism if oversubscribed, ensures equitable treatment of shareholders. However, the delayed implementation until September 2024 raises questions about the motivations behind this timeline. Shareholders should scrutinize the full terms of the standstill agreement when disclosed to understand any potential limitations on future corporate governance actions.
This agreement signals a shift in the closed-end fund (CEF) landscape, potentially setting a precedent for other activist-targeted funds. The 32% tender offer is notably large for the CEF market, reflecting the growing influence of activist investors in this space. This move could trigger a ripple effect, prompting other CEFs to proactively address discounts to NAV to avoid similar activist pressures.
Investors should monitor how this impacts FMN's trading dynamics. Historically, announcements of significant tender offers have led to narrowing of discounts across the CEF sector. However, the delayed implementation to September 2024 may mute immediate market reactions. This event underscores the importance of activist investors in shaping CEF strategies and highlights the need for fund managers to be proactive in addressing persistent discounts to NAV.
Federated Hermes Premier Municipal Income Fund Will Conduct a Cash Tender Offer for
In connection with the agreement, the Fund will conduct a tender offer to purchase up to
If greater than
Pursuant to the terms of the agreement, Saba has also agreed to comply with certain standstill covenants and to vote its shares in accordance with the recommendations of the Fund’s Board of Trustees.
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 is headquartered in
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Longacre Square Partners
Charlotte Kiaie / Kate Sylvester, 646-386-0091
ckiaie@longacresquare.com / ksylvester@longacresquare.com
Source: Saba Capital Management, L.P.
FAQ
What is the tender offer price for Federated Hermes Premier Municipal Income Fund (FMN) shares?
When will the tender offer for Federated Hermes Premier Municipal Income Fund (FMN) take place?
What percentage of Federated Hermes Premier Municipal Income Fund (FMN) shares will be included in the tender offer?
What happens if more than 32% of Federated Hermes Premier Municipal Income Fund (FMN) shares are tendered?
