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Saba Capital Reaches Agreement with Two Invesco Closed-End Funds

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Saba Capital Management announced standstill agreements with Invesco Pennsylvania Value Municipal Income Trust (NYSE: VPV) and Invesco Trust for Investment Grade New York Municipals (NYSE: VTN). Under these agreements, both Invesco Funds will initiate cash tender offers for up to 25% of their outstanding shares at 99% of the net asset value (NAV). These offers will commence between October 31, 2024, and November 8, 2024. Shareholders can tender their shares at a price determined by the NAV on the next trading day after the offer’s expiration or extension. Saba will also withdraw its proposal to nominate candidates for the Invesco Funds’ Boards of Trustees and vote in line with the Boards' recommendations during the standstill period. Additionally, Saba has committed to tendering all its shares in the tender offers.

Positive
  • Invesco Funds will commence cash tender offers for 25% of outstanding shares.
  • Shareholders can tender shares at 99% of NAV, providing liquidity.
  • Tender offers to start between October 31, 2024, and November 8, 2024.
  • Saba Capital agreed to tender all its shares, indicating confidence in liquidity.
  • Saba rescinds proposal to nominate Board candidates, reducing potential governance conflicts.
Negative
  • Tender offers priced at 99% of NAV, slightly below full value.
  • Potential dilution of remaining shares post-tender offer.
  • Saba’s influence on Board matters reduced during standstill.
  • Potential short-term volatility around tender offer dates.

Insights

The announcement of a cash tender offer for 25% of the shares in two Invesco funds is significant for investors. A tender offer is essentially a buyback by the company, typically at a premium to the current market price, in this case, at 99% of the Net Asset Value (NAV). This move can be seen as a way to enhance shareholder value by reducing the number of shares in circulation, which in turn can boost Earnings Per Share (EPS).

However, it's important to consider the implications. While a 99% NAV tender might not seem like a large premium, it reflects the funds' willingness to return capital to shareholders. For retail investors, this tender offer could provide a good opportunity to liquidate their holdings at a favorable price compared to the current market value, which might be trading at a discount to NAV.

In the short term, the announcement is likely to generate interest in VPV and VTN shares, potentially narrowing the discount to NAV as investors anticipate the tender offer. Longer-term, the reduction in outstanding shares could improve the funds' performance metrics and appeal. However, caution is warranted as the tender offer is scheduled for late 2024, meaning it will have a delayed impact on the stock price and market perception.

From a broader perspective, the standstill agreement and Saba's commitment to tender its shares signal a cooperative stance, reducing potential governance conflicts which can be beneficial for fund stability and investor confidence.

Market dynamics will also play a role in the effectiveness and reception of this tender offer. Closed-end funds (CEFs) like VPV and VTN often trade at a discount to their NAV due to various factors, including market sentiment and liquidity. By announcing a tender offer, the funds are addressing this discount directly, which can be a strategic move to enhance market perception and attract more investors.

It's essential to note that tender offers can sometimes be a signal that a company believes its shares are undervalued. This could instill confidence in current and potential investors, suggesting that the management sees strong value in their holdings. However, the timing of the tender offers, set for late 2024, suggests that investors will need to be patient.

Looking at the competitive landscape, other CEFs might follow suit if this strategy results in a significant reduction in the discount to NAV, thereby potentially triggering a trend in the market. For retail investors, this could mean more opportunities for tender offers in similar funds, making this a development worth watching across the sector.

Invesco Pennsylvania Value Municipal Income Trust and Invesco Trust for Investment Grade New York Municipals to Each Commence Cash Tender Offers for 25% of Their Shares at 99% of NAV

NEW YORK--(BUSINESS WIRE)-- Saba Capital Management, L.P. (together with certain of its affiliates, “Saba” or “we”), today announced that it has entered into a standstill agreement with each of the following funds advised by Invesco Advisers, Inc.: Invesco Pennsylvania Value Municipal Income Trust (NYSE: VPV) and Invesco Trust for Investment Grade New York Municipals (NYSE: VTN) (collectively, the “Invesco Funds”).

Under the terms of the agreements, the Invesco Funds will each commence tender offers to purchase a maximum of 25% of their outstanding common shares in cash. The tender offers provide all shareholders the opportunity to tender some or all of their common shares at a price equal to 99% of the Invesco Funds’ net asset value per share as determined as of the close of the regular trading session of the New York Stock Exchange on the next trading day after the expiration or closing date of the tender offers, or, if the tender offers are extended, on the next trading day after the day to which the tender offers are extended. The tender offers shall be commenced no earlier than October 31, 2024, and no later than November 8, 2024.

The terms of the agreements also provide for Saba rescinding its proposal to nominate candidates to serve on the Invesco Funds’ Boards of Trustees (the “Boards”) and voting in accordance with the Boards’ recommendations on matters submitted to shareholders during its standstill period. Pursuant to the agreements, Saba has also agreed to tender all of its common shares of the Invesco Funds in the tender offers.

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 New York City. Learn more at www.sabacapital.com.

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 significance of the agreement between Saba Capital and Invesco Funds?

The agreement results in Invesco Funds commencing tender offers for 25% of their shares at 99% of NAV and Saba rescinding its Board nomination proposal.

When will the tender offers for VPV shares commence?

The tender offers will commence between October 31, 2024, and November 8, 2024.

At what price can shareholders tender their VPV shares?

Shareholders can tender their shares at 99% of the net asset value (NAV).

How many shares can be tendered in the Invesco Funds' offer?

Up to 25% of the outstanding shares can be tendered.

What stance will Saba take during the standstill period?

Saba will vote in accordance with the Invesco Funds’ Boards’ recommendations and withdraw its proposal to nominate Board candidates.

Invesco Pennsylvania Value Municipal Income Trust

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