Board of BlackRock Municipal Income Fund, Inc. (MUI) Approves Conversion to Unlisted Closed-End Interval Fund Structure
BlackRock Advisors announced that the Board of Directors of BlackRock Municipal Income Fund (NYSE: MUI) has approved converting the fund from an exchange-listed, closed-end fund to an unlisted closed-end fund. This conversion involves periodic share repurchases under Rule 23c-3. A tender offer to repurchase 50% of the outstanding common shares at 98% of the fund's net asset value is planned, subject to shareholder approval and other conditions. These changes are expected in the second half of 2024. Shareholders are urged to review all materials related to the tender offer and conversion when made available.
- Fund conversion approved by Board of Directors.
- Tender offer to repurchase 50% of outstanding shares at 98% NAV.
- Conversion aims for better share repurchase frequency under Rule 23c-3.
- Potential for increased liquidity and shareholder value through periodic repurchases.
- Conversion and tender offer subject to shareholder approval and other conditions.
- Tender offer might result in shareholders receiving less than full NAV.
- Fund will no longer be exchange-listed, potentially reducing visibility and market accessibility.
- Shareholders must wait until the second half of 2024 for the changes to take effect.
Insights
The conversion of the BlackRock Municipal Income Fund from an exchange-listed closed-end fund to an unlisted closed-end interval fund carries significant implications for investors. This move means that the fund will no longer be traded on public exchanges, which can impact liquidity. Investors will only be able to sell shares back to the fund during designated repurchase periods. While this structure can reduce price volatility and enhance investment stability, it may also limit investors' ability to quickly exit their positions.
The tender offer to repurchase 50% of the Fund’s common shares at 98% of NAV also warrants attention. The offer price, slightly below the net asset value, presents an opportunity for investors to exit at near-market value but may also be seen as a slight discount, possibly reflecting the fund’s underlying asset liquidity or market sentiment.
Moreover, converting to an unlisted interval fund structure might align the fund’s strategy more with long-term investment goals, potentially benefiting shareholders through focused management. However, investors must weigh this against the potential drawbacks of reduced liquidity and flexibility.
From a financial perspective, this change could stabilize the fund's performance and align it more closely with its investment strategy. Yet, investors seeking liquidity might find this move less attractive.
The conversion process of the BlackRock Municipal Income Fund will likely impact its market perception. The switch to an unlisted interval fund structure is often viewed as a move towards a more stable, albeit less flexible, investment product. This may appeal to investors with a long-term horizon who prioritize stability over liquidity. However, the limited ability to trade shares freely on the open market could deter short-term investors or those requiring quick access to capital.
It's essential to consider how similar funds have performed after such conversions. Historically, funds converting to interval structures have experienced reduced price volatility and potentially higher long-term returns due to less frequent trading and a longer investment horizon.
Market research indicates that interval funds can attract a different investor demographic, typically those seeking lower volatility and more predictable returns. However, this could also result in a narrower investor base, affecting overall fund dynamics and market interest.
From a legal perspective, the conversion and subsequent tender offer will be subject to numerous regulatory requirements and shareholder approvals. Under Rule 23c-3 of the Investment Company Act of 1940, the Fund must adhere to specific guidelines regarding periodic repurchases. These regulations are designed to protect shareholders, ensuring transparency and fairness throughout the conversion process.
Shareholder approval is critical and the proxy statement will contain detailed information about the conversion, the fund's objectives, risk factors and operational changes. Investors should pay close attention to this document to fully understand the implications of the conversion.
Additionally, the tender offer, which proposes to repurchase shares at 98% of NAV, must comply with SEC regulations to ensure that it is conducted fairly and equitably. Legal scrutiny will ensure that shareholders are well-informed and that the process remains transparent.
One potential legal concern is ensuring that all disclosures are comprehensive and clear, avoiding any ambiguity that could result in misunderstandings among investors.
The Tender Offer and the Conversion are currently expected to occur in the second half of 2024, subject to, among other things: obtaining the requisite approvals from the Fund’s shareholders and the redemption of the Fund’s preferred shares.
IMPORTANT NOTICE
This press release is for informational purposes only and shall not constitute an offer or a solicitation to buy any common shares. Any offer to purchase Fund common shares will be made pursuant to an offer on Schedule TO. IF THE TENDER OFFER IS CONDUCTED, COMMON SHAREHOLDERS ARE URGED TO READ THE TENDER OFFER MATERIALS, INCLUDING THE OFFER TO PURCHASE AND ANY SOLICITATION/RECOMMENDATION STATEMENT REGARDING THE TENDER OFFER, AS THEY MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, WHEN THEY ARE FILED AND BECOME AVAILABLE, BECAUSE THEY CONTAIN IMPORTANT INFORMATION THAT HOLDERS OF COMMON SHARES SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SHARES. Common shareholders may obtain a free copy of any of these statements and other documents filed with the
Additional Information about the Conversion and Where to Find It
This press release is not intended to, and does not solicit a proxy from any shareholder of the Fund. The solicitation of proxies to effect the Conversion will only be made by a definitive Proxy Statement.
This press release references a Proxy Statement, to be filed by the Fund. The Proxy Statement has yet to be filed with the SEC. After the Proxy Statement is filed with the SEC, it may be amended or withdrawn.
The Fund and its directors, officers and employees, and BlackRock, and its shareholders, officers and employees and other persons may be deemed to be participants in the solicitation of proxies with respect to the Conversion. Investors and shareholders may obtain more detailed information regarding the direct and indirect interests of the Fund's directors, officers and employees, and BlackRock and its shareholders, officers and employees and other persons by reading the Proxy Statement when it is filed with the SEC.
INVESTORS AND SECURITY HOLDERS OF THE FUND ARE URGED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE CONVERSION. INVESTORS SHOULD CONSIDER THE INVESTMENT OBJECTIVE, RISKS, CHARGES AND EXPENSES OF THE FUND CAREFULLY. THE PROXY STATEMENT WILL CONTAIN INFORMATION WITH RESPECT TO THE INVESTMENT OBJECTIVE, RISKS, CHARGES AND EXPENSES OF THE FUND.
The Proxy Statement will not constitute an offer to buy or sell securities, in any state where such offer or sale is not permitted.
Security holders may obtain free copies (when they become available) of the Proxy Statement and other documents filed with the SEC at the SEC's web site at www.sec.gov. In addition, free copies (when they become available) of the Proxy Statement and other documents filed with the SEC may also be obtained by directing a request to BlackRock at (800) 882-0052.
About BlackRock
BlackRock’s purpose is to help more and more people experience financial well-being. As a fiduciary to investors and a leading provider of financial technology, we help millions of people build savings that serve them throughout their lives by making investing easier and more affordable. For additional information on BlackRock, please visit www.blackrock.com/corporate
Availability of Fund Updates
BlackRock will update performance and certain other data for the Fund on a monthly basis on its website in the “Closed-end Funds” section of www.blackrock.com as well as certain other material information as necessary from time to time. Investors and others are advised to check the website for updated performance information and the release of other material information about the Fund. This reference to BlackRock’s website is intended to allow investors public access to information regarding the Fund and does not, and is not intended to, incorporate BlackRock’s website in this release.
Forward-Looking Statements
This press release, and other statements that BlackRock 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 BlackRock’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.
BlackRock cautions 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 BlackRock assumes no duty to and does 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, 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, and regulatory, supervisory or enforcement actions of government agencies relating to the Fund or BlackRock, as applicable; (8) terrorist activities, international hostilities, health epidemics and/or pandemics and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or BlackRock; (9) BlackRock’s ability to attract and retain highly talented professionals; (10) the impact of BlackRock 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.
Annual and Semi-Annual Reports and other regulatory filings of the Fund with the Securities and Exchange Commission (“SEC”) are accessible on the SEC's website at www.sec.gov and on BlackRock’s website at www.blackrock.com, and may discuss these or other factors that affect the Fund. The information contained on BlackRock’s website is not a part of this press release.
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Source: BlackRock Closed-End Funds
FAQ
What is the expected timeline for BlackRock Municipal Income Fund's conversion?
What percentage of shares will be repurchased in the tender offer for MUI?
At what price will the shares be repurchased in the tender offer?
Will BlackRock Municipal Income Fund remain exchange-listed after the conversion?
What is Rule 23c-3 that MUI will follow post-conversion?
