abrdn Income Credit Strategies Fund Announces Closing Date for Acquisition of Assets From First Trust/abrdn Global Opportunity Income Fund

Rhea-AI Summary

The Board of Trustees of abrdn Income Credit Strategies Fund (NYSE:ACP) has announced that the previously approved reorganization with First Trust/abrdn Global Opportunity Income Fund (NYSE:FAM) is expected to close on September 20, 2024. FAM shares will cease trading on the NYSE at market close on that date, and FAM shareholders will receive newly issued ACP shares based on relative net asset values. The combined fund's net assets are estimated to be approximately $845 million as of August 21, 2024.

This reorganization aims to benefit shareholders by realizing economies of scale, increasing the fund's scale, liquidity, and marketability. The move is expected to ensure the viability of the resulting combined fund and provide greater opportunities for shareholders.

Positive

• Increased fund size to approximately $845 million in combined net assets
• Potential for economies of scale, which could lead to cost savings
• Enhanced liquidity and marketability of the combined fund
• Improved viability of the resulting fund due to increased scale

Negative

• None.

Insights

Financial Analyst

The closing of this $845 million fund merger is a significant event in the closed-end fund space. The consolidation aims to achieve economies of scale, which could potentially lead to lower expense ratios for shareholders. However, it's important to note that the merger is occurring at net asset value (NAV), which means there's no immediate arbitrage opportunity for investors.

The cessation of FAM's trading on September 20, 2024, may cause temporary liquidity issues for its shareholders. Post-merger, ACP's increased size could potentially improve trading liquidity and reduce bid-ask spreads, benefiting investors. However, investors should monitor how the fund's discount/premium to NAV evolves post-merger, as larger funds don't always trade at better valuations.

Market Research Analyst

This merger reflects a broader trend of consolidation in the asset management industry, particularly in the closed-end fund sector. The drive for scale is partly a response to fee pressures and the shift towards passive investing. While the combined fund may offer enhanced liquidity, investors should be aware that larger funds can sometimes struggle to maintain performance due to reduced flexibility in deploying capital.

The merger's impact on yield will be a key factor for income-focused investors to watch. If the combined fund can maintain or improve its distribution rate while reducing expenses, it could attract more investor interest. However, any significant changes in investment strategy or asset allocation post-merger could affect the fund's risk-return profile.

PHILADELPHIA, PA / ACCESSWIRE / August 22, 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/abrdn Global Opportunity Income Fund (NYSE:FAM) ("FAM" 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 September 20, 2024, or as soon as practicable thereafter, subject to the satisfaction of customary closing conditions.

To facilitate the Reorganization, it is expected that all shares of FAM will cease trading on the New York Stock Exchange as of the market close on September 20, 2024, and FAM shareholders will be issued newly issued shares of ACP. The Reorganization will occur based on the relative net asset values of the common shares of FAM, with a value equal to the aggregate net asset value of the shares of FAM held by them. The Reorganization will occur based on the relative net asset values of the common shares of FAM. As of August 21, 2024, the combined net assets of ACP following the Reorganization will be approximately $845 million.

The Reorganization is expected to benefit each fund's shareholders in a number of important ways, 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.

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

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. Each 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 each 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 will the reorganization between ACP and FAM close?

The reorganization between abrdn Income Credit Strategies Fund (ACP) and First Trust/abrdn Global Opportunity Income Fund (FAM) is expected to close at the close of business on September 20, 2024, or as soon as practicable thereafter, subject to customary closing conditions.

What will happen to FAM shares after the reorganization with ACP?

FAM shares will cease trading on the New York Stock Exchange as of the market close on September 20, 2024. FAM shareholders will be issued newly issued shares of ACP based on the relative net asset values of the common shares of FAM.

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

As of August 21, 2024, the combined net assets of ACP following the reorganization are expected to be approximately $845 million.

What are the main benefits of the reorganization between ACP and FAM?

The reorganization is expected to benefit shareholders by realizing economies of scale, increasing the fund's scale, liquidity, and marketability. It aims to ensure the viability of the resulting combined fund and provide greater opportunities for shareholders.