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CEF Update: A Gabelli Fund Approves a Transferable Rights Offering

Cara Esser

The start of summer didn't keep funds from announcing rights and tender offers, changing distribution payments, and updating leverage.

In a recent article, we highlighted different ways shareholders can take full advantage of a fund's rights offerings. This week, three funds announced rights offerings

The board of Gabelli Healthcare & Wellness(GRX) approved a transferable rights offering. Each shareholder will receive one right for every share owned as of June 3, 2014. Three rights plus $9 will be required to purchase one additional common share. The rights will trade on the New York Stock Exchange on May 29 and will expire in July 8.

H&Q Life Sciences Investors(HQL) and H&Q Healthcare Investors(HQH) announced non-transferable rights offerings. Each shareholder of record as of May 30 can purchase one new share of common stock with three rights between June 6 and June 23.

Distribution Changes
Global High Income Fund(GHI) reduced its annual distribution rate to 6% of net asset value from 7%.

Strategic Global Income(SGL) lowered its annual distribution rate to 5% from 6% of net asset value.

Several Western Asset funds changed their distributions this week. Of note, Western Asset Mortgage Defined Opportunity(DMO) raised its monthly distribution by 7% to $0.16 from $0.15 per share; Western Asset Global Partners(GDF) lowered its monthly distribution by 6.5% to $0.0725 from $0.0775 per share; and Western Asset High Yield Defined Opportunity(HYI) lowered its monthly distribution by 8% to $0.11 from $0.12 per share.

Tender Offer
The board of directors of Delaware Investment Dividend and Income(DDF) authorized a tender offer to purchase up to 5% of outstanding shares at 98% of net asset value one business day after the offer expires. If more shares are tendered, the fund will purchase shares on a pro-rated basis. The offer begins on June 2 and expires on June 27.

Leverage Changes
Several BlackRock municipal funds announced full or partial redemption of outstanding auction rate preferred shares (ARPS). BlackRock Municipal 2020 Term Trust(BKK), BlackRock New York Municipal 2018 Term Trust(BLH), BlackRock Municipal 2018 Term Trust(BPK), and BlackRock Florida Municipal 2020 Term Trust(BFO) will redeem of a portion outstanding ARPS, while BlackRock California Municipal 2018 Term Trust(BJZ) will redeem all of its outstanding ARPS. Including these redemptions, BlackRock's ARPS redemptions total 98.7% of its outstanding preferred shares as of February 2008.

Three Nuveen municipal funds announced an optional redemption price for outstanding MuniFund Term Preferred Shares. Nuveen Georgia Dividend Advantage Municipal 2(NKG), Nuveen Maryland Premium Income Municipal(NMY), and Nuveen Pennsylvania Investment Quality Municipal(NQP) will redeem all outstanding preferred shares on May 30 at a liquidation price of $10 per share plus unpaid dividends and distributions. These funds also announced the issuance of Variable Rate MuniFund Term Preferred Shares, each with a redemption date of June 1, 2017.

Click here for data and commentary on individual closed-end funds.

Cara Esser does not own shares in any of the securities mentioned above.