First Trust Advisors L.P. (“FTA”) announced today that the
Boards of Trustees of First Trust Strategic High Income Fund (NYSE:
FHI), First Trust Strategic High Income Fund II (NYSE: FHY) and
First Trust Strategic High Income Fund III (NYSE: FHO), closed-end
funds (each a “Fund”) managed by FTA, approved the reorganization
of each of FHI and FHO, with FHY. FHY will be being the surviving
Fund.
Under the terms of the proposed reorganizations, which are
expected to be tax-free, the assets of FHI and FHO will be
transferred to, and the liabilities of FHI and FHO will be assumed
by, FHY in exchange for shares of FHY. The FHY shares would then be
distributed to FHI and FHO shareholders and the separate existence
of FHI and FHO would cease. The reorganizations are subject to
certain conditions, including that each reorganization be approved
by the shareholders of FHI and FHO, respectively, and that the
shareholders of FHY approve the issuance of additional FHY shares
in connection with the reorganizations. The consummation of the
reorganizations of each of FHI and FHO are not conditioned on the
approval of the shareholders of the other Fund. If a reorganization
occurs, each transaction would occur based on the relative net
asset values of FHI, FHO and FHY.
FTA also announced today that the Board of Trustees of FHY
approved a 1-for-3 reverse stock split, which is expected to be
completed upon the consummation of one or both of the
reorganizations, as applicable. FHY’s shares would trade on a
split-adjusted basis under a new CUSIP number at that time. The
reverse stock split will result in every three outstanding shares
being converted into one share, thereby reducing the number of FHY
shares outstanding prior to the reorganizations. Fractional shares
will be issued in the reverse stock split. Once the reverse stock
split is complete, each FHY shareholder’s account will reflect
fewer shares with a higher net asset value and market price per
share.
It is currently expected that the reorganizations will be
concluded in the third quarter of 2011, subject to requisite
shareholder approvals and all regulatory requirements and customary
closing conditions being satisfied. More information on the
proposed reorganizations will be contained in proxy materials that
the Funds anticipate filing in the coming weeks.
Each Fund is a diversified, closed-end management investment
company that seeks to provide a high level of current income. As a
secondary objective, each Fund seeks to provide capital growth.
Each Fund pursues these investment objectives by investing up to
100% of its managed assets in a diversified portfolio of high
income producing securities that the investment sub-advisor
believes offer attractive yield and capital appreciation
potential.
FTA, the investment advisor for each Fund, along with its
affiliate First Trust Portfolios L.P., are privately-held companies
which provide a variety of investment services, including asset
management, financial advisory services, and municipal and
corporate investment banking, with collective assets under
management or supervision of approximately $48 billion as of March
31, 2011 through closed-end funds, unit investment trusts, mutual
funds, separate managed accounts and exchange-traded funds.
Brookfield Investment Management Inc., the investment
sub-advisor for each Fund, is a global investment advisor focused
on specialized equity and fixed income securities investments. The
firm is a subsidiary of Brookfield Asset Management Inc., a leading
global asset manager with over $100 billion in assets under
management as of March 31, 2011 and over 100 years of experience in
the property, power and infrastructure industries. Brookfield
Investment Management Inc. is an SEC registered investment advisor,
and with its affiliates had approximately $23 billion in assets
under management as of March 31, 2011. Headquartered in New York,
the firm maintains offices and investment teams in Chicago, Boston,
London, Hong Kong, Sydney and Toronto.
Additional Information about the Proposed Reorganizations and
Where to Find It
This press release is not intended to, and shall not, constitute
an offer to purchase or sell shares of any of the Funds; nor is
this press release intended to solicit a proxy from any shareholder
of any of the Funds. The solicitation of the purchase or sale of
securities or of proxies to effect each reorganization may only be
made by a final, effective Registration Statement, which includes a
definitive Joint Proxy Statement/Prospectus, after the Registration
Statement is declared effective by the Securities and Exchange
Commission (“SEC”).
This press release references a Registration Statement, which
includes a Joint Proxy Statement/Prospectus, to be filed by the
Funds. That Registration Statement has yet to be filed with the
SEC. After the Registration Statement is filed with the SEC, it may
be amended or withdrawn and the Joint Proxy Statement/Prospectus
will not be distributed to shareholders of the Funds unless and
until the Registration Statement is declared effective by the
SEC.
The Funds, FTA, FTP and their respective directors, trustees,
officers and employees, and other persons may be deemed to be
participants in the solicitation of proxies with respect to these
proposed reorganizations. Investors and shareholders may obtain
more detailed information regarding the direct and indirect
interests of the Funds’, FTA’s and FTP’s respective directors,
trustees, officers and employees by reading the Joint Proxy
Statement/Prospectus regarding the proposed reorganizations when it
is filed with the SEC.
Investors and security holders of the Funds are urged to read
the Joint Proxy Statement/Prospectus and other documents filed with
the SEC carefully in their entirety when they become available
because they will contain important information about the proposed
reorganizations. Investors should consider the investment
objectives, risks, charges and expenses of the Funds carefully.
The Joint Proxy Statement/Prospectus will contain information
with respect to the investment objectives, risks, charges and
expenses of the funds and other important information about the
Funds. The Joint Proxy Statement/Prospectus will constitute
neither an offer to sell securities, nor will it constitute a
solicitation of an offer to buy securities, in any state where such
offer or sale is not permitted.
Investors may obtain free copies of the Registration Statement
and Joint Proxy Statement/Prospectus and other documents (when they
become available) filed with the SEC at the SEC’s web site at
www.sec.gov. In addition, free copies of the Joint Proxy
Statement/Prospectus and other documents filed with the SEC may
also be obtained after the Registration Statement becomes effective
by calling FTA toll-free at (800) 621-1675.
FORWARD LOOKING STATEMENTS
Certain statements made in this news release that are not
historical facts are referred to as “forward-looking statements”
under the U.S. federal securities laws. Actual future results or
occurrences may differ significantly from those anticipated in any
forward-looking statements due to numerous factors. Generally, the
words “believe,” “expect,” “intend,” “estimate,” “anticipate,”
“project,” “will” and similar expressions identify forward-looking
statements, which generally are not historical in nature.
Forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ from the
historical experience of FTA and the Funds managed by FTA and its
present expectations or projections. You should not place undue
reliance on forward-looking statements, which speak only as of the
date they are made. FTA and the Funds managed by FTA undertake no
responsibility to update publicly or revise any forward-looking
statements.
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