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abrdn Income Credit Strategies Fund Announces Closing Date for Acquisition of Assets From First Trust High Income Long/Short Fund and Announces Distribution Payment Details

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The abrdn Income Credit Strategies Fund (NYSE:ACP) has announced the closing date for its acquisition of assets from the First Trust High Income Long/Short Fund (NYSE:FSD). The reorganization, approved by FSD shareholders, will finalize on July 19, 2024, assuming all customary conditions are met. This reorganization will result in the cessation of FSD shares trading on the NYSE after the market closes on July 19, 2024. FSD shareholders will receive ACP shares equivalent to the net asset value of their FSD holdings.

Post-reorganization, ACP's combined net assets are projected to be approximately $765.3 million. The merger aims to provide shareholders with benefits such as economies of scale, increased liquidity, and marketability. Additionally, ACP announced a distribution payment of $0.10 per share, payable on July 31, 2024, to shareholders of record as of July 19, 2024.

Positive
  • Expected combined net assets of $765.3 million post-reorganization
  • Potential economies of scale and larger fund size
  • Increase in liquidity and marketability of the combined fund
  • Distribution payment of $0.10 per share on July 31, 2024
Negative
  • Shares of FSD will cease trading on the NYSE, potentially affecting liquidity for FSD investors
  • Reorganization contingent on the satisfaction of customary closing conditions

The announcement of the acquisition of assets from First Trust High Income Long/Short Fund (FSD) by abrdn Income Credit Strategies Fund (ACP) is significant for several reasons. First, the increased scale of the combined fund, with net assets expected to reach approximately $765.3 million, can offer shareholders economies of scale. Larger funds often benefit from lower expense ratios as fixed costs are spread over a larger asset base, potentially leading to better returns for investors.

Additionally, the reorganization is expected to enhance liquidity and marketability of the fund. This could make it easier for investors to buy and sell shares without significantly affecting the price. Enhanced liquidity can also be attractive to larger institutional investors, who often prefer funds where they can enter and exit positions without causing price volatility.

One important aspect to consider is the cease of trading of FSD shares as of market close on July 19, 2024. Investors holding FSD shares will be issued new shares of ACP based on the net asset value of the shares they hold. It's important for investors to be aware of this transition period and the implications it might have on their investment strategy.

For retail investors, the announced distribution of $0.10 per share on July 31, 2024, adds to the attractiveness of holding ACP shares. However, it's important to note that distribution amount should not be misunderstood as an indicator of the fund's investment performance.

From a market research perspective, the reorganization and the subsequent increase in the size of ACP could influence the competitive landscape of closed-end funds in the income and credit strategies space. A larger fund with enhanced liquidity and marketability can attract more investors, possibly leading to tighter spreads between the fund's market price and its net asset value. This could improve the overall valuation of ACP shares.

Furthermore, the combined fund's larger asset base may enhance its bargaining power when negotiating terms with counterparties or when seeking investment opportunities. This could provide ACP with better access to favorable credit investments, translating into potential higher yields for shareholders.

However, it's important to monitor how the integration of the two funds will be managed. Effective integration is important to realizing the anticipated benefits, such as economies of scale and enhanced liquidity. Any operational hiccups could temporarily impact the fund's performance and investor sentiment.

Lastly, the announcement of the distribution payment offers some immediate cash flow to investors, which can be appealing in the current economic environment where income-generating investments are in demand. Nevertheless, investors should remain cautious and not equate distribution announcements with long-term performance guarantees.

PHILADELPHIA, PA / ACCESSWIRE / July 9, 2024 / The Board of Trustees of abrdn Income Credit Strategies Fund (NYSE:ACP) ("ACP" or the "Acquiring Fund") previously announced that shareholders of First Trust High Income Long/Short Fund (NYSE:FSD) ("FSD" or the "Acquired Fund"), advised by First Trust Advisors L.P., have approved the proposed reorganization into ACP ("Reorganization") and today announces that the Reorganization is expected to close at the close of business on July 19, 2024, subject to the satisfaction of customary closing conditions.

To facilitate the Reorganization, it is expected that all shares of FSD will cease trading on the New York Stock Exchange as of market close on Friday, July 19, 2024, and FSD shareholders will be issued new newly issued common shares of ACP with a value equal to the aggregate net asset value of the shares of FSD held by them. The Reorganization will occur based on the relative net asset values of the common shares of FSD. As of July 8, 2024, the combined net assets of ACP following the Reorganization will be approximately $765.3 million.

The Reorganization is expected to benefit each fund's shareholders in several important ways, including providing greater opportunities to realize economies of scale by combining the funds' assets resulting in a larger fund. Additionally, the Reorganization is expected to help ensure the viability of the resulting combined fund by increasing scale, liquidity, and marketability of the fund.

Additionally, ACP also announced that the Fund will pay a distribution of US $0.10 per share on July 31, 2024, to all shareholders of record as of July 19, 2024 (ex-dividend date July 19, 2024).

At the end of each calendar year, a Form 1099-DIV will be sent to shareholders, which will state the amount and composition of ACP's distributions and provide information with respect to their appropriate tax treatment for the prior calendar year.

You should not draw any conclusions about ACP's investment performance from the amount of the distributions.

Important Information

In the United States, abrdn is the marketing name for the following affiliated, registered investment advisers: abrdn Inc., abrdn Investments Limited, abrdn Asia Limited, and abrdn ETFs Advisors LLC.

The information in this press release is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or the solicitation of any vote or approval in any jurisdiction pursuant to or in connection with the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Closed-end funds are traded on the secondary market through one of the stock exchanges. The Acquiring Fund's investment return and principal value will fluctuate so that an investor's shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value (NAV) of the fund's portfolio. There is no assurance that the Acquiring Fund will achieve its investment objective. Past performance does not guarantee future results.

If you wish to receive this information electronically, please contact Investor.Relations@abrdn.com

abrdnacp.com

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For More Information Contact:

abrdn U.S. Closed-End Funds
Investor Relations
1-800-522-5465
Investor.Relations@abrdn.com

SOURCE: abrdn Income Credit Strategies Fund



View the original press release on accesswire.com

FAQ

When is the closing date for ACP's acquisition of assets from FSD?

The acquisition is expected to close at the end of business on July 19, 2024, subject to customary closing conditions.

What happens to FSD shares after the reorganization?

FSD shares will cease trading on the NYSE after market close on July 19, 2024, and shareholders will receive ACP shares equivalent to the net asset value of their FSD holdings.

What are the benefits of the reorganization for ACP shareholders?

The reorganization is expected to provide economies of scale, increased liquidity, and improved marketability for the combined fund.

What is the expected net asset value of ACP after the reorganization?

The combined net assets of ACP are projected to be approximately $765.3 million post-reorganization.

When will ACP pay the announced distribution?

ACP will pay a distribution of $0.10 per share on July 31, 2024, to shareholders of record as of July 19, 2024.

Abrdn Income Credit Strategies Fund

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