The Korea Fund, Inc. Announces Commencement of Tender Offer

Rhea-AI Summary

The Korea Fund, Inc. (NYSE: KF) has announced the commencement of a tender offer to purchase up to 12.5% of its issued and outstanding common stock. The offer will begin on August 16, 2024, and expire on September 16, 2024, unless extended. Shareholders can sell their shares at 98.5% of the net asset value per share, determined on the expiration date.

The Fund has temporarily suspended its share repurchase program until ten business days after the tender offer expires. Stockholders are advised to read the official Offer to Purchase and related documents filed with the SEC for complete information. EQ Fund Solutions is serving as the Information Agent for the tender offer.

Positive

• Tender offer allows shareholders to sell up to 12.5% of outstanding shares
• Purchase price set at 98.5% of net asset value, potentially above market price
• Tender offer may help reduce any discount to NAV at which shares trade

Negative

• Temporary suspension of share repurchase program
• Potential reduction in fund size and liquidity after tender offer
• Possible increase in expense ratio due to reduced asset base

Insights

Financial Analyst

The Korea Fund's announcement of a tender offer for up to 12.5% of its outstanding shares at 98.5% of NAV is a significant development. This move typically aims to reduce the fund's discount to NAV and potentially boost shareholder value. However, the effectiveness depends on market conditions and investor participation.

The temporary suspension of the share repurchase program until after the tender offer expiration is a standard practice to ensure fairness. Investors should note that while tender offers can provide short-term benefits, they may also reduce the fund's assets under management, potentially impacting its long-term performance and expense ratio.

Given the fund's focus on Korean equities, investors should consider the broader economic context, including US-Korea relations and global trade dynamics, when evaluating this opportunity.

Market Research Analyst

The Korea Fund's tender offer reflects a broader trend among closed-end funds to address persistent NAV discounts. This strategy can be particularly relevant for funds focused on emerging markets, which often face higher volatility and wider discounts.

Investors should consider the fund's historical discount levels and trading patterns. If the fund has consistently traded at a significant discount, this tender offer could provide an attractive exit opportunity for some shareholders. However, it's important to weigh this against the potential for future appreciation in Korean equities.

The 98.5% of NAV offer price is relatively attractive, as many tender offers are priced at larger discounts. This suggests the fund's management is making a concerted effort to provide value to shareholders, which could positively impact investor sentiment towards the fund.

NEW YORK--(BUSINESS WIRE)-- The Korea Fund, Inc. (the “Fund”) (NYSE: KF) announced today that the tender offer (the “Tender Offer”) to purchase for cash up to 12.5% of the Fund’s issued and outstanding common stock, at a price per share equal to 98.5% of the net asset value per share, determined on the date the tender offer expires, will commence on Friday, August 16, 2024 and expire, unless otherwise extended, at 5:00 p.m., New York City Time, on Monday, September 16, 2024.

The Fund’s Board of Directors previously announced its intention to conduct a Tender Offer in a press release dated July 10, 2024.

The terms and conditions of the Tender Offer are set forth in the Issuer Tender Offer Statements and related Letters of Transmittal that have been filed with the Securities and Exchange Commission (SEC).

In connection with the Tender Offer, the Fund temporarily suspended its share repurchase program as of July 10, 2024 until ten business days after the expiration of the Tender Offer.

This announcement is not a recommendation, an offer to purchase, nor a solicitation of an offer to sell shares of the Fund. The Tender Offer is being made only by an Offer to Purchase, a related Letter of Transmittal and other documents, which have been filed with the SEC. Common stockholders of the Fund should read the Offer to Purchase and related exhibits, as they contain important information about the Tender Offer. These and other filed documents are available to investors free of charge both at the website of the SEC at www.sec.gov, and from the Fund. Common stockholders may obtain further information regarding the Tender Offer from EQ Fund Solutions, the Fund’s Information Agent for the Tender Offer, by calling (877) 361-7964.

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The Korea Fund, Inc. is a non-diversified, closed-end investment company. The Fund seeks long-term capital appreciation through investing primarily in equity securities trading on the Korean stock exchanges. Its shares are listed on the New York Stock Exchange under the symbol “KF.”

JPMorgan Asset Management (Asia Pacific) Ltd is the Fund's Investment Adviser. Investment in closed-end funds involves risks. Additional risks are associated with international investing, such as currency fluctuation, government regulations, economic changes and differences in liquidity, which may increase the volatility of an investment in the Fund. Foreign securities markets generally exhibit greater price volatility and are less liquid than the U.S. market. Additionally, this Fund focuses its investments in certain geographical regions, thereby increasing its vulnerability to developments in that region. All of these factors potentially subject the Fund's shares to greater price volatility. The NAV of the Fund will fluctuate with the value of the underlying securities. Closed-end funds trade on their market value, not NAV, and closed-end funds often trade at a discount to their NAV.

The Fund’s daily New York Stock Exchange closing market price and NAV, as well as other information, including updated portfolio statistics and performance are available at www.thekoreafund.com or by calling the Fund’s stockholder servicing agent at (866) 706 0510.

Statements made in this release that look forward in time involve risks and uncertainties and are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such risks and uncertainties include, without limitation, the adverse effect from a decline in the securities markets or a decline in the Fund's performance, a general downturn in the economy, competition from other companies, changes in government policy or regulation, inability to attract or retain key employees, inability to implement its operating strategy and/or acquisition strategy, and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations.

This announcement is not an offer to purchase or the solicitation of an offer to sell shares of the Fund or a prospectus, circular or representation intended for use in the purchase or sale of Fund shares.

Fund shares are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank. Fund shares involve investment risk, including possible loss of principal.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240816394742/en/

Contacts

Julian Reid (Chairman of the Board): +44 7768 068 200

Stockholder Servicing Agent: 866 706 0510

The Korea Fund, Inc. www.thekoreafund.com

Source: The Korea Fund, Inc.

FAQ

When does The Korea Fund's (KF) tender offer begin and end?

The Korea Fund's (KF) tender offer begins on August 16, 2024, and is set to expire on September 16, 2024, at 5:00 p.m., New York City Time, unless extended.

What percentage of The Korea Fund's (KF) shares are being offered in the tender?

The Korea Fund (KF) is offering to purchase up to 12.5% of its issued and outstanding common stock in the tender offer.

At what price will The Korea Fund (KF) purchase shares in the tender offer?

The Korea Fund (KF) will purchase shares at 98.5% of the net asset value per share, determined on the date the tender offer expires.

Has The Korea Fund (KF) suspended its share repurchase program due to the tender offer?

Yes, The Korea Fund (KF) has temporarily suspended its share repurchase program as of July 10, 2024, until ten business days after the expiration of the tender offer.