Duff & Phelps Closed-End Funds Obtain $1.19 Billion in Credit Facilities to Provide Liquidity for Auction Market and Remarketed
March 09 2009 - 7:00AM
PR Newswire (US)
CHICAGO, March 9 /PRNewswire-FirstCall/ -- Two closed-end funds
advised by Duff & Phelps Investment Management Co. announced
today that they have arranged for credit facilities totaling $1.19
billion to resolve auction market preferred securities (AMPS) and
remarketed preferred securities (RP) liquidity issues arising from
the auction and remarketing failures caused by last year's credit
market dislocations. "We have worked diligently for almost a year
to resolve these very challenging AMPS and RP liquidity issues,"
said Nathan I. Partain, CFA, president and chief investment officer
of Duff & Phelps Investment Management Co. "The disruption of
the auction-rate market clearly affected many shareholders, and the
redemptions financed by these credit facilities should provide a
meaningful solution to a very difficult industry wide problem."
Partain noted that the funds' boards and management sought a
long-term solution that would not disadvantage common shareholders
or restrict the funds' ability to benefit from the use of leverage.
"Throughout this process, the primary concern was always to find a
solution that operated in the best interests of all shareholders.
We believe these credit facilities can achieve that objective." The
credit facilities, arranged with a commercial bank, will finance
redemptions of up to $900 million of preferred shares of DNP Select
Income Fund Inc. (NYSE:DNP) and up to $190 million of preferred
shares of Duff & Phelps Utility and Corporate Bond Trust Inc.
(NYSE:DUC). The credit facility will also enable DNP Select Income
Fund Inc. to replace with debt leverage the $100 million in
leverage formerly represented by the 1,000 shares of its Series B
Remarketed Preferred Stock that the fund redeemed earlier this
month. In the event of any redemption, the applicable fund will
issue a notice specifying the redemption date, the number and
series of shares to be redeemed, and other relevant information.
Although there is no assurance as to the amount or timing of
redemptions, it is anticipated that initial redemptions will occur
during March 2009. All redemptions are dependent upon written
confirmation from each of Moody's Investors Service, Inc. and
Standard & Poor's Rating Services that entering into the credit
facilities would not adversely affect the ratings currently
assigned to the outstanding preferred stock of the funds. In
addition, the funds are currently constrained in their ability to
refinance all of their outstanding preferred stock with debt by the
asset coverage requirements of the Investment Company Act of 1940.
Therefore, the funds have applied to the U.S. Securities and
Exchange Commission for an exemptive order enabling the funds, for
a transitional period, to maintain 200% asset coverage with respect
to debt leverage that is used to redeem preferred stock, rather
than the 300% required by the Act. There is no assurance that such
an exemptive order will be granted. Duff & Phelps Investment
Management Co. has more than 28 years of experience managing
investment portfolios, including institutional separate accounts
and open- and closed-end funds investing in utilities,
infrastructure and real estate investment trusts (REITs). For more
information, visit http://www.dpimc.com/ or call (800) 864-0629.
Duff & Phelps is a subsidiary of Virtus Investment Partners
(NASDAQ: VRTS), an asset management company with $24.4 billion
under management (as of November 30, 2008). Virtus provides
investment management products and services to individuals and
institutions through a multi-manager asset management business,
comprising a number of individual affiliated managers, each with a
distinct investment style, autonomous investment process and
individual brand. Additional information can be found at
http://www.virtus.com/. DNP Select Income Fund Inc. (NYSE:DNP) is a
closed-end diversified investment management company. The Fund's
primary investment objectives are current income and long-term
growth of income. The Fund seeks to achieve these objectives by
investing primarily in a diversified portfolio of equity and fixed
income securities of companies in the public utilities industry.
For more information, visit the Fund's website at
http://www.dnpselectincome.com/ or call the Fund at (800) 864-0629.
DATASOURCE: DNP Select Income Fund Inc. CONTACT: Joseph Curry,
Dianna Wengler, or Timothy Riordan, all of DNP Select Income Fund
Inc., +1-888-878-7845; or Joe Fazzino, Media Relations of Virtus
Investment Partners, +1-860-263-4725 Web Site:
http://www.dnpselectincome.com/
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