Neuberger Berman Income Opportunity Fund Inc. Announces Change of Investment Strategy and Objective
February 18 2010 - 6:34PM
Business Wire
Neuberger Berman Income Opportunity Fund Inc. (“NOX” or “Fund”)
(NYSEAmex: NOX) has announced a change in its investment strategy
and objective. Additionally, NOX and Neuberger Berman High Yield
Strategies Fund (“NHS” or “Fund” and together with NOX, the
“Funds”) (NYSE: NHS) have each announced that its Board of
Directors/Trustees approved a proposal to reorganize each Fund into
a newly formed closed-end fund (the “New Fund”) pursuant to an
Agreement and Plan of Reorganization, pending shareholder
approval.
Change in Investment Strategy and
Objective
Under NOX’s new investment strategy it will invest primarily in
high-yield debt securities of U.S. and foreign issuers. Previously,
NOX employed an investment strategy whereby at least 80% of its
total assets would be invested in a combination of: (1) high-yield
corporate debt securities; and (2) income-producing equity
securities issued by real estate companies, including real estate
investment trusts (REITs). Under its new investment strategy NOX is
no longer required to invest at least 20% of its total assets in
the securities of real estate companies. NOX’s Board also modified
the Fund’s investment objective so that it will seek high total
return (income plus capital appreciation). Its prior investment
objectives were to seek high current income with capital
appreciation as a secondary objective.
In determining to change NOX’s investment strategy and
objective, NOX’s Board considered challenges associated with the
Fund’s unique hybrid investment strategy, the performance record of
the high-yield debt portion of the Fund’s portfolio and the
discount at which the Fund’s market price has historically traded
to its net asset value (“NAV”). The Board also considered that the
Fund would still pursue a similar investment objective under its
new investment strategy.
Proposed
Reorganization
The Funds’ Boards also approved a proposal to reorganize each
Fund into the New Fund, which is currently expected to be organized
as a Maryland corporation and to employ an investment strategy that
is substantially the same as NHS’ strategy. Approval by both Funds’
shareholders is required to complete the proposed reorganization.
It is expected that both Funds’ shareholders will vote on the
proposal at their 2010 annual shareholder meetings, which will both
be held on June 1, 2010. The record date for determining
shareholders eligible to vote at the annual meetings is April 1,
2010.
In determining to approve the proposed reorganization of the
Funds, the Boards considered the potential benefits that each
Fund’s shareholders will derive from the larger combined fund,
including a lower total expense ratio and enhanced liquidity.
Tender Offer Program
As previously announced, each Fund has implemented a tender
offer program consisting of up to four tender offers over a
two-year period. Under each Fund’s tender offer program, if a
Fund’s common stock trades at an average daily discount to NAV of
greater than 10% during a 12-week measurement period, the Fund
would conduct a tender offer for between 5% and 20% of its
outstanding common stock at a price equal to 98% of its NAV
determined on the day the tender offer expires. Each Fund has
already conducted one of the four measurement periods under its
respective tender offer program.
As a result of the proposed reorganization, each Fund will delay
commencing the next measurement period under its tender offer
program. If the Funds’ shareholders do not approve the proposed
reorganization, each Fund will announce the dates for its second
measurement period under its respective tender offer program. If
the Funds’ shareholders do approve the proposed reorganization, the
New Fund will adopt its own tender offer program, with
substantially the same terms as the Funds’ tender offer programs,
and conduct three measurement periods.
Neuberger Berman Group LLC is one of the world’s leading
independent, employee-controlled asset management companies. As of
December 31, 2009, assets under management were approximately $173
billion. Established in 1939, Neuberger Berman is a leader in a
broad range of global investment solutions—equity, fixed income and
alternatives—to institutions and individuals through customized
separately managed accounts, mutual funds and alternative
investment products. For more information please visit our website
at www.nb.com.
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 a Fund’s performance, a general downturn in the economy,
competition from other closed-end investment companies, changes in
government policy or regulation, inability of a Fund’s investment
adviser to attract or retain key employees, inability of a Fund to
implement its investment strategy, inability of a Fund to manage
rapid expansion and unforeseen costs and other effects related to
legal proceedings or investigations of governmental and
self-regulatory organizations.
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