Virtus Total Return Fund Inc. Announces Commencement of Tender Offer

Rhea-AI Summary

Virtus Total Return Fund Inc. (NYSE: ZTR) has initiated a tender offer to acquire up to 10% of its outstanding shares at 98% of the Fund's net asset value. The offer expires on May 1, 2024, with a pricing date of May 2, 2024, unless extended. If oversubscribed, shares will be purchased on a pro rata basis. The offer is subject to SEC conditions.

Market Research Analyst

The initiation of a tender offer by Virtus Total Return Fund Inc. to acquire up to 10% of its outstanding shares for cash at a price slightly below the net asset value (NAV) is a strategic move that can be interpreted in multiple ways. On one hand, this could signify that the management believes the shares are undervalued and is therefore looking to provide liquidity to shareholders at a near-NAV rate, which could potentially increase the earnings per share (EPS) for remaining shareholders if executed below intrinsic value. On the other hand, it might indicate a desire to return capital to shareholders in a period where the Fund might not have better investment opportunities.

From a market perspective, such tender offers often lead to a short-term uptick in the stock price as they provide a floor price for the shares. However, investors should be aware that purchasing shares at 98% of NAV could also be seen as a signal that the Fund's assets are not expected to appreciate significantly in the near term. This action can affect investor sentiment and could lead to a reevaluation of the Fund's long-term growth prospects.

Financial Analyst

When analyzing the financial implications of the tender offer, it is important to consider the impact on the Fund's capital structure and shareholder value. By reducing the number of outstanding shares, the offer could improve return metrics such as return on equity (ROE) and could be accretive to the NAV per share for the remaining shareholders. However, it is critical to evaluate the Fund's balance sheet strength and liquidity position, as the cash outlay for this tender offer will reduce the cash reserves of the Fund.

Additionally, the offer price being set at 98% of NAV might be attractive to shareholders looking for immediate liquidity, but it also represents a discount to the NAV, which might not be appealing to all investors. Those who perceive the Fund's long-term value to be higher might refrain from tendering their shares, leading to a potential self-selection bias in the tendering process.

HARTFORD, Conn.--(BUSINESS WIRE)-- Virtus Total Return Fund Inc. (NYSE: ZTR) (“the Fund”) today announced that it has commenced a tender offer (“Tender Offer”) to acquire up to 10% of the Fund’s outstanding shares in exchange for cash at a price equal to 98% of the Fund’s net asset value (NAV) as of the close of regular trading on the business day immediately following the day the Tender Offer expires.

The Tender Offer will expire at 5 p.m. (Eastern) on May 1, 2024 and the pricing date will be May 2, 2024, unless the Tender Offer is extended. If more than 10% of the Fund’s outstanding shares are tendered, the Fund will purchase its shares from all tendering shareholders on a pro rata basis, based on the number of tendered shares at a price equal to 98% of the Fund’s NAV.

The Tender Offer is being made on the terms and subject to the conditions set forth in the Issuer Tender Offer Statement and related Letter of Transmittal that have been filed with the Securities and Exchange Commission (“SEC”).

About the Fund

Virtus Total Return Fund Inc. is a diversified closed-end fund whose investment objective is capital appreciation, with income as a secondary objective. Virtus Investment Advisers, Inc. is the investment adviser and Duff & Phelps Investment Management Co. and Newfleet Asset Management are the subadvisers to the Fund. For more information on the Fund, contact shareholder services at (866) 270-7788, by email at closedendfunds@virtus.com, or through the Closed-End Funds section of virtus.com.

Fund Risks

An investment in a fund is subject to risk, including the risk of possible loss of principal. A fund’s shares may be worth less upon their sale than what an investor paid for them. Shares of closed-end funds may trade at a premium or discount to their NAV. For more information about the Fund’s investment objective and risks, please see the Fund’s annual report. A copy of the Fund’s most recent annual report may be obtained free of charge by contacting “Shareholder Services” as set forth at the bottom of this press release.

The Tender Offer will only be made pursuant to a tender offer statement on Schedule TO containing an offer to purchase, a related letter of transmittal and other documents filed with the SEC as exhibits to the tender offer statement on Schedule TO (collectively, the “Tender Offer Materials”), with all such documents made available on the SEC’s website at sec.gov. The Fund will also make available to shareholders, without charge, the offer to purchase, the letter of transmittal, and other necessary documents related to the Tender Offer. Shareholders should read any Tender Offer Materials carefully and, in their entirety, when and if they become available, as well as any amendments or supplements thereto, as they would contain important information about the Tender Offer.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful under the securities laws of any such state.

Investing involves risk and it is possible to lose money on any investment in the Fund.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240402436310/en/

For Further Information:

Shareholder Services

(866) 270-7788

closedendfunds@virtus.com

Source: Virtus Total Return Fund Inc.

FAQ

What is the ticker symbol for Virtus Total Return Fund Inc.?

The ticker symbol for Virtus Total Return Fund Inc. is ZTR.

What is the purpose of the tender offer by Virtus Total Return Fund Inc.?

The purpose of the tender offer by Virtus Total Return Fund Inc. is to acquire up to 10% of its outstanding shares at 98% of the Fund's net asset value.

When does the Tender Offer expire?

The Tender Offer by Virtus Total Return Fund Inc. expires at 5 p.m. (Eastern) on May 1, 2024.

What happens if more than 10% of the Fund's outstanding shares are tendered?

If more than 10% of the Fund's outstanding shares are tendered, the Fund will purchase its shares from all tendering shareholders on a pro rata basis.

What conditions is the Tender Offer subject to?

The Tender Offer by Virtus Total Return Fund Inc. is subject to the conditions set forth in the Issuer Tender Offer Statement and related Letter of Transmittal filed with the SEC.