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Friday, 07/02/2021 12:10:14 PM

Friday, July 02, 2021 12:10:14 PM

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Highland Income Fund Announces Proposal to Convert Fund to Diversified Holding Company (6/14/21/)

Business Change Intended to Increase Shareholder Value, Provide Potential to Reduce Discount to NAVFund’s Board and Independent Trustees Unanimously Approve Proposal, Recommend Shareholders Vote “FOR” Business Change

DALLAS, June 14, 2021 (GLOBE NEWSWIRE) -- The Highland Income Fund (NYSE: HFRO) (“HFRO” or the “Fund”), a closed-end fund managed by Highland Capital Management Fund Advisors, L.P. (the “Adviser”), today announced the filing of a preliminary proxy statement with the Securities and Exchange Commission (the “SEC”) for a special meeting of shareholders (“Special Meeting”) in connection with its proposal to convert the Fund from a registered investment company to a diversified holding company (the “Holding Company”).

The proposal to change the Fund’s business from a registered investment company to a diversified holding company and to amend certain fundamental investment restrictions (the “Business Change Proposal”) aims to increase shareholder value and better position HFRO in the current and future market environment.

The Holding Company would primarily pursue controlling interests—and, to a lesser extent, minority interests—in companies and other assets in four core sectors/focus areas where the Adviser has relevant expertise.1

At the Special Meeting, shareholders are being asked to vote upon the Business Change Proposal and, if approved, to approve the amendment and restatement of the Fund’s Agreement and Declaration of Trust (the “Amendment Proposal” and, together with the Business Change Proposal, the “Proposals”).

Information on the Proposals can be found at www.hfroconversion.com.

The Fund’s Board of Trustees (the “Board”), a majority of the members of which are not interested persons of the Fund (the “Independent Trustees”), reviewed the Proposals at length, and believes they are in the best interest of shareholders.

Adoption of the Business Change Proposal is expected to provide several benefits, including the following:

Potential to provide investors with a superior risk adjusted return compared to public equity, fixed income, and distressed debt markets2;
Better positioning for HFRO in the current and future environment, enabling HFRO to transition to assets away from credit, where high yield spreads are at all-time lows, into those with better growth potential and thus better potential for shareholder returns; and
Potential for HFRO to trade at a premium to book value in line with comparable diversified holding companies, which historically have traded at a premium, while closed-end funds have historically traded at a discount to net asset value (“NAV”).
Additionally, the Business Change Proposal would expand access to the Adviser’s platform, enabling HFRO to pursue opportunities where the Adviser has unique expertise and resources that it can apply to unlock potential value.

As part of the Business Change Proposal, HFRO has committed to a formulaic buyback program supplemented by additional share purchases from management to support the conversion process. HFRO and management will only purchase shares under the buyback programs if the Proposals are approved, subject to certain terms and conditions. Accordingly, there can be no assurance that HFRO or management will purchase any shares under the buyback programs or with respect to the timing or size of such purchases, if any.3

HFRO also intends to maintain the current dividend for common shares through January 31, 2022.

Given the Adviser’s relevant expertise in the proposed Holding Company strategy and the potential for the Business Change Proposal to increase shareholder value, the Board, including the Independent Trustees, unanimously recommends that shareholders vote “FOR” the Proposals. Additional information on the potential benefits of the Business Change Proposal, as well as related risks, and the Adviser’s relevant capabilities is available in the preliminary proxy statement.

Proxy Statement

A copy of the preliminary proxy statement is available free of charge on the SEC’s website at www.sec.gov. The preliminary proxy statement is not complete and is subject to review by the SEC staff and other changes. The Fund expects to file a definitive proxy statement which will then be available free of charge at www.hfroconversion.com or at the SEC website, www.sec.gov. Shareholders should read the preliminary proxy statement and the definitive proxy statement, when it becomes available, carefully because they both contain or will contain important information. Shareholders should make no decision about the Proposals until reviewing the definitive proxy statement sent to them.

HFRO and its trustees and officers, the Adviser’s and its affiliates’ respective members, trustees, directors, shareholders, officers and employees, Di Costa Partners LLC and other persons may be deemed to be participants in the solicitation of proxies with respect to the Proposals. Shareholders may obtain more detailed information regarding the direct and indirect interests of the foregoing persons by reading the preliminary proxy statement filed with the SEC, and the definitive proxy statement to be filed with the SEC, regarding the Proposals.

About the Highland Income Fund

The Highland Income Fund (NYSE:HFRO) is a closed-end fund managed by Highland Capital Management Fund Advisors, L.P. For more information visit www.highlandfunds.com/income-fund/

About Highland Capital Management Fund Advisors, L.P.

Highland Capital Management Fund Advisors, L.P. is an SEC-registered investment adviser. It is the adviser to a suite of registered funds, including open-end mutual funds, closed-end funds, and an exchange-traded fund. For more information visit www.highlandfunds.com.

https://www.globenewswire.com/news-release/2021/06/14/2246871/0/en/Highland-Income-Fund-Announces-Proposal-to-Convert-Fund-to-Diversified-Holding-Company.html

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