DALLAS, Feb. 3, 2025: Highland Opportunities and Income Fund Announces Commencement of Tender and Exchange Offer
The Highland Opportunities and Income Fund (NYSE: HFRO), a publicly traded closed-end investment company, recently declared the initiation of a tender and exchange offer (the “Exchange Offer”) for its common shares (the “Shares”). The offer aims to exchange up to $100 million in Shares for newly issued Series B Preferred Shares.
Key Details of the Exchange Offer
The Exchange Offer, initially announced on November 25, 2024, is being conducted pursuant to a prospectus supplement and the accompanying base prospectus, which were filed with the Securities and Exchange Commission (SEC) on January 11, 2025. The last trading day for the Shares to be eligible for the Exchange Offer is expected to be on February 13, 2025.
Why the Exchange Offer?
The Exchange Offer is a strategic move by the Fund to optimize its capital structure by issuing preferred shares. Preferred shares typically provide a fixed dividend rate and have priority over common shares in terms of dividend payments. This restructuring is expected to enhance the Fund’s financial flexibility and potentially increase its ability to generate stable income for its investors.
Impact on Shareholders
Shareholders who tender their Shares in the Exchange Offer will receive the newly issued Series B Preferred Shares in exchange. The Series B Preferred Shares will have a liquidation preference of $25.00 per share, a fixed dividend rate of 6.50% per annum, and will not be entitled to vote on any matter requiring the approval of shareholders. The tender price for the Shares will be calculated based on the average of the volume-weighted average price (VWAP) of the Shares on the New York Stock Exchange for the five trading days prior to the effective date of the prospectus supplement.
Impact on the World
The Exchange Offer is a reflection of the ongoing trend in the investment industry, where companies look to optimize their capital structures to adapt to changing market conditions and investor preferences. This trend has gained momentum in the wake of the COVID-19 pandemic, as companies seek to strengthen their balance sheets and improve their financial flexibility.
Moreover, the Exchange Offer may influence other investment companies in the closed-end fund sector to consider similar restructuring initiatives. This could lead to increased competition and potentially reshape the competitive landscape of the sector.
Conclusion
The Highland Opportunities and Income Fund’s (HFRO) announcement of the Exchange Offer for its common shares in exchange for Series B Preferred Shares represents a strategic move to optimize its capital structure and potentially enhance its financial flexibility. Shareholders have until February 13, 2025, to tender their Shares in the Exchange Offer. The Exchange Offer is expected to have a ripple effect on the investment industry, potentially leading to increased competition and a reshaping of the closed-end fund sector.
- HFRO commences Exchange Offer for up to $100 million in Shares for Series B Preferred Shares
- Shareholders can tender their Shares until February 13, 2025, to participate in the Exchange Offer
- The Exchange Offer aims to optimize HFRO’s capital structure and enhance financial flexibility
- The Exchange Offer is a reflection of ongoing trends in the investment industry
- The Exchange Offer could potentially reshape the competitive landscape of the closed-end fund sector
