Ocean Capital Comments on UBS’ Second Postponement of the Annual Meetings for Certain Closed-End Bond Funds

Rhea-AI Summary

Ocean Capital LLC urges shareholders of Tax-Free Fixed Income Fund IV and Fund V to vote for their nominees on the BLUE card at the September 10 Annual Meetings. The firm criticizes the repeated adjournments of meetings due to lack of quorum, interpreting this as a sign of inadequate support for incumbent directors. Ocean Capital argues that its nominees possess the necessary financial, tax, and legal expertise to enhance shareholder value, contrasting them with the current board's poor stewardship and lack of shareholder engagement.

Positive

• Ocean Capital has nominated a slate of highly qualified independent candidates for the Boards of Funds IV and V.
• The nominees bring extensive financial, tax, and legal expertise to potentially enhance governance.

Negative

• The incumbent directors failed to meet quorum for the Annual Meetings, indicating weak shareholder support.
• Charges of sham entrenchment maneuvers by UBS to avoid change by rejecting Ocean Capital's nominations.
• The funds have used questionable arguments to invalidate nominations, undermining shareholder rights.

Believes Latest Adjournment Due to Lack of Voting Quorum Reflects a Lack of Shareholder Support for Fund IV and Fund V’s Incumbent Directors

Highlights that Ocean Capital’s Diverse Slate of Director Candidates Possesses the Financial, Tax and Legal Expertise Necessary to Produce Superior Value for Shareholders

Urges Shareholders to Vote on the BLUE Card to Elect Ocean Capital’s Nominees at the September 10^th Annual Meetings

SAN JUAN, Puerto Rico--(BUSINESS WIRE)-- Ocean Capital LLC today sent the below letter to shareholders of Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc. and Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc., which are funds managed by an affiliate of UBS Financial Services Incorporated of Puerto Rico.

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Dear Fellow Shareholder,

Ocean Capital LLC and the other participants in its solicitations (collectively, “Ocean Capital” or “we”) hold a significant number of the outstanding shares of Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc. (“Fund IV”) and Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc. (“Fund V”), each of which is managed by an affiliate of UBS Financial Services Incorporated of Puerto Rico (collectively, “UBS”). We have nominated highly-qualified and independent individuals for election to the Boards of Directors (the “Boards”) of Fund IV and Fund V at their Annual Meetings of Shareholders (the “Annual Meetings”), which have now been adjourned twice by UBS. The Annual Meetings are now scheduled to be held on September 10, 2021.

We believe shareholders deserve better boardroom leadership after years of poor stewardship and sustained underperformance. Unfortunately, since submitting our nominations, UBS has initiated a series of what we believe can only be deemed shameless entrenchment maneuvers to try to avert change. We believe the Boards have also demonstrated a clear disregard for shareholder feedback.

UBS’ Repeated Adjournments of the Annual Meetings and Entrenchment Efforts Demonstrate that the Case for Meaningful, Shareholder-Driven Change at Funds IV and V is Needed

We find it telling that UBS has failed to meet quorum for either Annual Meetings originally scheduled for July 29^th and August 26^th. We find the second adjournment of the Annual Meetings to be revealing since it confirms that incumbent directors have again failed to garner requisite support from shareholders.

Rather than accept our nominations and allow shareholders to have a real voice at the upcoming Annual Meetings, the Boards have recently begun to take steps that we believe further cement their control by disenfranchising shareholders. You should know that the Boards are spending shareholders’ capital on defensive initiatives that include the following:

• The funds are using dubious arguments to claim our nominations are invalid. In particular, the funds have acted against their own bylaws in refusing to accept our nominations by claiming a shareholder must be a record holder of the funds’ shares in order to be eligible to submit nominations.
  • We do not see any plain language in the funds’ charters and bylaws or in Puerto Rico law that supports what we believe is a highly anti-shareholder position taken by the funds.
  • This is an anti-shareholder maneuver employed by the funds’ legal counsel, which has a reputation for recommending that its clients reject apparently valid nominations by claiming that they failed to comply with corporate bylaws.

• The funds have made a disingenuous effort to meet a consensual resolution with Ocean Capital, in our view. 20 days after sending our original request to explore consensual resolutions with the Boards on July 30^th, the Boards finally agreed to schedule a private meeting on August 24^th with Ocean Capital. At the meeting, which was confirmed just an hour beforehand and only lasted 15 minutes, the Boards failed to put forward any potential resolution framework to address our concerns.

• The funds have utilized what we believe are entrenchment maneuvers so that long-tenured directors are positioned to retain their seats. In Fund V’s definitive proxy statement, it discloses that each of the four directors up for re-election this year had previously resigned or retired from the Board, but were subsequently reappointed this year:

“We note that while Messrs. Pellot and Nido were previously elected as Class III directors at the 2020 annual meeting of shareholders, both subsequently resigned from the Board of Directors and were reappointed by the Board of Directors… We note that Vicente León and José J. Villamil both previously retired from the Board of Directors and were subsequently reappointed by the Board of Directors.”¹

It is important to stress that you should not be deterred or discouraged by the seemingly anti-shareholder conduct being sanctioned by the Boards of Fund IV and Fund V. In our view, the best thing you can do is stand up to the funds and UBS by voting to elect each of our director candidates who have the experience and independence necessary to improve performance and governance at the funds.

Ocean Capital’s Diverse Slate of San Juan-Based Financial, Tax and Legal Experts is Aligned with Shareholders and Fully Focused on Unlocking Value at Funds IV and V

Although the funds boast they have nominees with “a long-standing commitment […] to the Fund’s investment objectives and its shareholders,” recent evidence suggests the Boards are most skilled and experienced in presiding over significant value destruction.² In stark contrast to the incumbents, our slate of independent director candidates has the business and financial acumen, public company board experience and ownership perspectives that are sorely required in the boardroom:

Ocean Capital’s Candidates

Fund IV and V’s Incumbent Directors up for Re-Election

Roxana Cruz-Rivera San Juan-based financial and legal expert with over 20 years’ experience handling federal and on-island tax issues Tax Director of the Tax Advisory Services Division of RSM Puerto Rico, LLC, an on-island consulting firm Former Deputy Secretary of the Treasury of the Puerto Rico Treasury Department, where she assisted the Secretary of the Treasury in the supervision and direction of the Department Holds a Juris Doctorate from the University of Puerto Rico School of Law and a Master of Law degree in taxation from New York University School of Law William Heath Hawk San Juan-based financial and capital markets expert with over 25 years of experience in municipal bond sales and trading One of the largest shareholders of Funds IV and V Holds FINRA Series 4, 7, 9, 10, 24, 50, 53, 63 and 65 licenses José R. Izquierdo II San Juan-based attorney with intimate knowledge of the Commonwealth's debt issuances and over a decade of leadership experience in the island's public and private sectors Former member of the Governor of Puerto Rico’s fiscal transition team, member of the Government of Puerto Rico’s Economic Development Council, Assistant Secretary of Economic Development Significant public company board experience Holds a Juris Doctorate from the University of Puerto Rico School of Law Brent D. Rosenthal, CPA* Financial expert with significant capital markets and corporate governance experience having served on many public company boards Currently Chairman of the Board of Directors of comScore, Inc. (NASDAQ: SCOR) and Lead Independent Director of the Board of Directors of RiceBran Technologies (NASDAQ: RIBT) Founder of Mountain Hawk Capital Partners, LLC, an investment fund focused on small and microcap equities in the technology, media, and telecom industries Holds an M.B.A from the S.C. Johnson Graduate School of Management at Cornell University and is a Certified Public Accountant

Carlos Nido De minimis stock ownership, despite serving on the Boards for 14 years No prior public company board experience Lack of capital markets experience  Previously resigned from the Board of Fund V before being reappointed Vicente León De minimis stock ownership, despite his long tenure serving on the Boards  No prior public company board experience  Lack of capital markets experience  Previously retired from the Board of Fund V before being reappointed Luis M. Pellot De minimis stock ownership, despite serving on the Boards for 16 years  No prior public company board experience  Lack of capital markets experience  Previously resigned from the Board of Fund V before being reappointed Carlos V. Ubiñas Interested director (NOT independent)  De minimis stock ownership, despite serving on the Boards for 16 years  30+ year history working for UBS  No prior public company board experience José J. Villamil De minimis stock ownership, despite his long tenure serving on the Boards  Previously retired from the Board of Fund V before being reappointed

*Mr. Rosenthal is not a nominee for Fund IV, only Fund V.

In our view, it is essential for you to take action to ensure your vote is counted ahead of the September 10^th Annual Meetings. We urge you to not be fooled by the incumbent directors who are asking you to support the funds’ purported “positive momentum.” We believe shareholders cannot roll the dice on the incumbents and expect the funds to perform significantly better without fundamental change in the boardroom.

If you have any questions about how to vote on the BLUE proxy card or BLUE voting instruction form to elect our nominees at the September 10^th Annual Meetings, please contact our proxy solicitor at ocean@investor.morrowsodali.com. You can also visit www.ImproveUBSPRFunds.com to learn about our campaigns and the Coalition of Concerned UBS Closed-End Bond Fund Investors.

Sincerely,

W. Heath Hawk
Ocean Capital, LLC

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VOTE “FOR” OCEAN CAPITAL’S HIGHLY-QUALIFIED DIRECTOR CANDIDATES ON THE BLUE PROXY CARD TODAY.

IF YOU ARE A FUND ADVISOR WITH CLIENTS WHO WISH TO EXERCISE THEIR RIGHT FOR CHANGE BY VOTING A BLUE PROXY CARD, PLEASE CONTACT OUR PROXY SOLICITOR, MORROW SODALI, AT (203) 658-9400 OR (800) 662-5200, OR VIA E-MAIL AT OCEAN@INVESTOR.MORROWSODALI.COM.

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CERTAIN INFORMATION CONCERNING THE PARTICIPANTS

To the Shareholders of Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.:

Ocean Capital LLC, William Heath Hawk, José R. Izquierdo II and Roxana Cruz-Rivera (all of the foregoing, the “Fund IV Participants”) have filed a definitive proxy statement and accompanying form of BLUE proxy card with the Securities and Exchange Commission (“SEC”) to be used in connection with the solicitation of proxies from the shareholders of Fund IV. All shareholders of Fund IV are advised to read the definitive proxy statement and other documents related to the solicitation of proxies by the Fund IV Participants filed with the SEC, as they contain important information, including additional information relating to the Fund IV Participants. Shareholders can obtain the definitive proxy statement and accompanying BLUE proxy card, any amendments or supplements to the definitive proxy statement and other relevant documents filed by the Fund IV Participants with the SEC at no charge on the SEC’s website at http://www.sec.gov.

To the Shareholders of Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.:

Ocean Capital LLC, William Heath Hawk, José R. Izquierdo II, Roxana Cruz-Rivera and Brent D. Rosenthal (all of the foregoing, the “Fund V Participants”) have filed a definitive proxy statement and accompanying form of BLUE proxy card with the Securities and Exchange Commission (“SEC”) to be used in connection with the solicitation of proxies from the shareholders of Fund V. All shareholders of Fund V are advised to read the definitive proxy statement and other documents related to the solicitation of proxies by the Fund V Participants filed with the SEC, as they contain important information, including additional information relating to the Fund V Participants. Shareholders can obtain the definitive proxy statement and accompanying BLUE proxy card, any amendments or supplements to the definitive proxy statement and other relevant documents filed by the Fund V Participants with the SEC at no charge on the SEC’s website at http://www.sec.gov.

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¹ Tax-Free Fixed Income Fund V For Puerto Rico Residents, Inc., Definitive Proxy Statement (July 23, 2021).
² Market returns included in UBS Asset Managers of Puerto Rico Closed-End Funds Quarterly Report, Fourth Quarter 2020.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210826005784/en/

For Investors:

Morrow Sodali

Mike Verrechia / Bill Dooley, 800-662-5200

ocean@investor.morrowsodali.com



For Media:

MKA

Charlotte Kiaie / Ashley Areopagita, 646-386-0091

ckiaie@mkacomms.com / aareopagita@mkacomms.com

Source: Ocean Capital LLC

FAQ

What actions is Ocean Capital advocating for regarding Funds IV and V?

Ocean Capital is urging shareholders to vote for its nominees on the BLUE card at the September 10 Annual Meetings.

Why were the Annual Meetings of Funds IV and V adjourned?

The Annual Meetings were adjourned due to a lack of voting quorum, suggesting low support for the incumbent directors.

What is Ocean Capital's stance on the current board of Funds IV and V?

Ocean Capital believes the current board has displayed poor stewardship and is calling for a change in leadership.

What expertise do Ocean Capital's nominees have?

The nominees offer extensive financial, tax, and legal expertise, aimed at unlocking shareholder value.

When are the Annual Meetings for Funds IV and V scheduled?

The Annual Meetings are now scheduled for September 10.