RiverNorth Capital and Income Fund, Inc. Announces Final Results of Repurchase Offer
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The recent repurchase of shares by RiverNorth Capital and Income Fund is a strategic financial decision that can have implications for shareholder value and the company's capital structure. Repurchase programs often signal management's belief that the stock is undervalued, providing a positive signal to the market. By buying back shares at the net asset value (NAV) of $16.97, the Fund is effectively returning capital to shareholders who choose to participate, which could result in an increased NAV per share for remaining investors. However, this also means the Fund is utilizing cash resources that could have been otherwise deployed for investment opportunities or saved for liquidity purposes.
Furthermore, the pro-rata basis of the repurchase could be indicative of a high demand for liquidity among shareholders or a desire to exit the investment, which might raise questions about investor confidence in the Fund's future performance. The decision to repurchase shares and its subsequent execution should be closely monitored by investors for its impact on the Fund's performance, especially in terms of earnings per share (EPS) and return on equity (ROE), which could be affected by the reduction in the number of shares outstanding.
From a market perspective, closed-end funds like RiverNorth Capital and Income Fund operate in a niche segment where the repurchase of shares can have a different impact compared to open-end funds or stocks of operating companies. Closed-end funds trade in the market like stocks and their market price can deviate significantly from their NAV. The repurchase offer at NAV can therefore act as a mechanism to narrow the discount at which the Fund's shares might be trading. This has the potential to make the Fund more attractive to new investors, as it demonstrates a commitment to managing the discount and can lead to a more favorable perception of the Fund's management.
However, the repurchase also reduces the number of shares available for trading, which might lead to decreased liquidity in the market for the Fund's shares. This could have a dual effect: it might make the shares less attractive to some investors who prefer more liquid investments, while potentially increasing the volatility of the share price due to the lower volume of shares.
An economist might consider the macroeconomic context in which this repurchase offer takes place. Share repurchase programs can be influenced by broader economic factors such as interest rates, inflation and overall market sentiment. In a low-interest-rate environment, firms tend to favor buybacks as a way to utilize excess cash, assuming that the return on repurchased equity exceeds the cost of borrowing, if any. Conversely, during periods of high-interest rates or economic uncertainty, firms might be more cautious with their cash reserves.
It's also worth considering the economic cycle and the Fund's investment focus. If the Fund's portfolio is composed of assets that are cyclical in nature, the timing of the repurchase could reflect an attempt to optimize capital allocation ahead of expected economic changes. Additionally, repurchasing shares during a market downturn can be advantageous as it allows the Fund to buy back shares at lower prices, potentially leading to higher long-term returns for remaining shareholders.
Based on information provided by DST Systems, Inc., the depositary for the repurchase offer, a total of 1,605,138 shares were submitted for redemption and 246,374 shares were repurchased. In accordance with the terms and conditions of the repurchase offer, because the number of shares submitted for redemption exceeds the number of shares offered to purchase, the Fund will purchase shares from tendering shareholders on a pro-rata basis (disregarding fractional shares). The purchase price of repurchased shares is equal to the Fund's net asset value per share calculated as of the close of regular trading on the New York Stock Exchange (NYSE) on April 3, 2024, which is equal to
The information agent for the repurchase offer is DST Systems, Inc. Any questions with regard to the tender offer may be directed to the information agent toll-free at 844-569-4750.
About RiverNorth
RiverNorth Capital Management, LLC is an investment management firm founded in 2000. With
See the Prospectus for a more detailed description of Fund risks. Investing involves risk.
Principal loss is possible.
The profitability of specialty finance and other financial companies is largely dependent upon the availability and cost of capital funds and may fluctuate significantly in response to changes in interest rates, as well as changes in general economic conditions. If the borrower of Alternative Credit (as defined below) in which the Fund invests is unable to make its payments on a loan, the Fund may be greatly limited in its ability to recover any outstanding principal and interest under such loan, as (among other reasons) the Fund may not have direct recourse against the borrower or may otherwise be limited in its ability to directly enforce its rights under the loan, whether through the borrower or the platform through which such loan was originated, the loan may be unsecured or under collateralized, and/or it may be impracticable to commence a legal proceeding against the defaulting borrower. Substantially all of the Alternative Credit in which the Fund invests will not be guaranteed or insured by a third party. In addition, the Alternative Credit Instruments in which the Fund may invest will not be backed by any governmental authority. Prospective borrowers supply a variety of information regarding the purpose of the loan, income, occupation and employment status (as applicable) to the lending platforms. As a general matter, platforms do not verify the majority of this information, which may be incomplete, inaccurate, false or misleading. Prospective borrowers may misrepresent any of the information they provide to the platforms, including their intentions for the use of the loan proceeds. Alternative Credit Instruments are generally not rated by the nationally recognized statistical rating organizations (“NRSROs”). Such unrated instruments, however, are considered to be comparable in quality to securities falling into any of the ratings categories used by such NRSROs to classify "junk" bonds (i.e., below investment grade securities). Accordingly, the Fund’s unrated Alternative Credit Instrument investments constitute highly risky and speculative investments similar to investments in “junk” bonds, notwithstanding that the Fund is not permitted to invest in loans that are of subprime quality at the time of investment. Although the Fund is not permitted to invest in loans that are of subprime quality at the time of investment, an investment in the Fund’s Shares should be considered speculative and involving a high degree of risk, including the risk of loss of investment. There can be no assurance that payments due on underlying loans, including Alternative Credit, will be made.
Diversification does not ensure a profit or a guarantee against loss.
The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The Fund’s prospectus and most recent periodic reports contain this and other important information about the investment company and may be obtained by visiting rivernorth.com/literature or by calling 844.569.4750. Read the Prospectus carefully before investing.
1 Firm AUM reflects Managed Assets, which includes assets attributable to leverage and investments in affiliated funds.
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Not FDIC Insured | May Lose Value | No Bank Guarantee
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RiverNorth CEF Investor Relations
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CEF@rivernorth.com
Source: RiverNorth Capital Management, LLC
FAQ
What is the ticker symbol for RiverNorth Capital and Income Fund, Inc. mentioned in the press release?
How many shares were submitted for redemption in the repurchase offer?
How many shares were repurchased by RiverNorth Capital and Income Fund, Inc.?
What was the purchase price of the repurchased shares?
Who is the information agent for the repurchase offer?
