The Herzfeld Caribbean Basin Fund, Inc. To Conduct a Tender Offer for up to 10% of Outstanding Common Shares
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The announcement by Thomas J. Herzfeld Advisors, Inc. regarding the initiation of a Tender Offer by The Herzfeld Caribbean Basin Fund, Inc. is a strategic move aimed at narrowing the gap between the trading price and the net asset value (NAV) per share of the Fund. This is a significant development for shareholders and potential investors as it directly affects the perceived value and liquidity of the Fund’s shares. The decision to buy back shares at 97.5% of NAV could be seen as an attempt to provide immediate liquidity to shareholders at a price that is closer to the underlying value of the assets than the current market price.
From a financial perspective, the buyback represents a transfer of value from the Fund to the shareholders who choose to tender their shares. This could potentially lead to an increase in the NAV per share for the remaining shareholders, as there would be fewer shares outstanding. However, this also means that the Fund is using its cash reserves to fund the buyback, which could impact its ability to invest in new opportunities. Analyzing the Fund's cash flow statements and balance sheet would provide insight into how this buyback might affect its financial health.
In the context of closed-end funds like The Herzfeld Caribbean Basin Fund, a persistent discount to NAV can be a concern for investors and a signal of market sentiment towards the Fund's management or investment strategy. The self-tender offer is a tool often used by such funds to manage discounts and can sometimes lead to a positive re-rating of the fund's shares if the market perceives the action as accretive to shareholder value. The effectiveness of this tender offer in reducing the discount to NAV will depend on various factors including investor participation rates, market conditions and the Fund’s performance post-tender offer.
It is also important to note that while the tender offer may provide short-term price support, it does not address the underlying reasons for the Fund's discount to NAV. Investors and analysts will be interested in the long-term strategies that the Fund's management will implement to create sustainable value and whether such strategies will align with the interests of shareholders who do not participate in the tender offer.
The tender offer process is highly regulated, with specific requirements set forth by the Securities Exchange Act of 1934 and the Investment Company Act of 1940. The Fund must adhere to these regulations in both the announcement and execution of the tender offer. The formal offer and detailed terms, which are yet to be announced, will be scrutinized for compliance with these acts. It is crucial for the Fund to ensure that the offer to purchase, the related letter of transmittal and other documents are filed with the SEC and disseminated to shareholders in accordance with the law. Any deviation from the regulatory requirements could result in legal challenges or sanctions, which could have adverse effects on the Fund’s reputation and financial standing.
MIAMI BEACH, Fla., Feb. 09, 2024 (GLOBE NEWSWIRE) -- Thomas J. Herzfeld Advisors, Inc., an SEC-registered investment advisor, today announced its intention to commence a Tender Offer by The Herzfeld Caribbean Basin Fund, Inc. (Nasdaq: CUBA) (the “Fund”) on February 20, 2024, in accordance with the Fund’s ongoing plan to address the Fund’s trading price discount to its net asset value (“NAV”) per share that was previously announced on May 31, 2019, and subsequently extended and modified by the Fund’s Board of Directors in November 2023 (the “Plan”).
Under the modified Self-Tender Policy component of the Plan, the Fund has undertaken to commence a tender offer in Q1 2024 for up to
The formal offer and detailed terms of the tender offer will be announced in the coming days.
Tender Offer Statement
The above statements are not intended to constitute an offer to participate in any tender offer. Shareholders will be notified of the terms of the tender offer in accordance with the requirements of the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended, either by publication or mailing or both. The tender offer will be made by an offer to purchase, a related letter of transmittal, and other documents to be filed with the SEC. Shareholders of the Fund should read the offer to purchase and tender offer statement and related exhibits when those documents are filed and become available, as they will contain important information about the tender offer. These and other filed documents will be available to investors for free both at the website of the SEC (www.sec.gov) and from the Fund (www.herzfeld.com/cuba).
About Thomas J. Herzfeld Advisors, Inc.
Thomas J. Herzfeld Advisors, Inc., founded in 1984, is an SEC registered investment advisor, specializing in investment analysis and account management in closed-end funds. The Firm also specializes in investment in the Caribbean Basin. The HERZFELD/CUBA division of Thomas J. Herzfeld Advisors, Inc. serves as the investment advisor to The Herzfeld Caribbean Basin Fund, Inc. a publicly traded closed-end fund (NASDAQ: CUBA).
More information about the advisor can be found at www.herzfeld.com.
Past performance is no guarantee of future performance. An investment in the Fund is subject to certain risks, including market risk. In general, shares of closed-end funds often trade at a discount from their net asset value and at the time of sale may be trading on the exchange at a price which is more or less than the original purchase price or the net asset value. There can be no assurance that any Share repurchases will reduce or eliminate the discount of the Fund’s market price to the Fund’s net asset value per share. An investor should carefully consider the Fund’s investment objective, risks, charges and expenses. Please read the Fund’s disclosure documents before investing.
Forward-Looking Statements
This press release, and other statements that Thomas J. Herzfeld Advisors, Inc. (“TJHA”) or the Fund may make, may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to the Fund’s or TJHA’s future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” or similar expressions. TJHA and the Fund caution that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and TJHA and the Fund assume no duty to and do not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. With respect to the Fund, the following factors, among others, could cause actual events to differ materially from forward-looking statements or historical performance: (1) changes and volatility in political, economic or industry conditions, particularly with respect to Cuba and other Caribbean Basin countries, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for the Fund or in the Fund’s net asset value; (2) the relative and absolute investment performance of the Fund and its investments; (3) the impact of increased competition; (4) the unfavorable resolution of any legal proceedings; (5) the extent and timing of any distributions or share repurchases; (6) the impact, extent and timing of technological changes; (7) the impact of legislative and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, and regulatory, supervisory or enforcement actions of government agencies relating to the Fund or TJHA, as applicable; (8) terrorist activities, international hostilities and natural disasters, which may adversely affect the general economy, domestic and local financial and capital markets, specific industries or TJHA or the Fund; (9) TJHA’s and the Fund’s ability to attract and retain highly talented professionals; (10) the impact of TJHA electing to provide support to its products from time to time; and (11) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions. Annual and Semi-Annual Reports and other regulatory filings of the Fund with the SEC are accessible on the SEC’s website at www.sec.gov and on TJHA’s website at www.herzfeld.com/cuba, and may discuss these or other factors that affect the Fund. The information contained on TJHA’s website is not a part of this press release.
Contact:
Tom Morgan
Chief Compliance Officer
Thomas J. Herzfeld Advisors, Inc.
1-305-777-1660
FAQ
When will the Tender Offer by The Herzfeld Caribbean Basin Fund, Inc. (CUBA) commence?
What percentage of the Fund's outstanding shares will be offered in the Tender Offer?
At what price will the shares be offered in the Tender Offer?
What is the purpose of the Tender Offer by The Herzfeld Caribbean Basin Fund, Inc. (CUBA)?
