BlackRock Advisors, LLC today announced that 44 of its tax-exempt closed-end funds (the “Funds”) received a private letter ruling (“PLR”) from the Internal Revenue Service. The PLR received by the Funds concludes that Variable Rate Demand Preferred Shares (“VRDP”) issued by a Fund, as applicable, would be treated as equity for federal income tax purposes, making it possible for the Funds to designate dividends paid to holders of VRDP as tax-exempt income.
The Funds announcing receipt of a PLR today, taken together with the eleven remaining tax-exempt funds for which the arrangement of VRDP liquidity facilities was announced on January 3, 2011, represent all BlackRock tax-exempt closed-end funds with auction rate preferred shares (“ARPS”) outstanding. To the extent that any Fund announcing receipt of a PLR today issues VRDP, it is anticipated that the proceeds of the offering will be used to redeem all of its outstanding ARPS.
There is no guarantee that all, or a portion, of the Funds will issue VRDP in reliance on the PLR. Should a Fund seek to issue VRDP, the timing of the Fund’s issuance may vary and is subject to various factors, including, but not limited to, approval by the Fund’s Board of Directors/Trustees, the availability of liquidity providers, the willingness of tax-exempt money market funds to invest in VRDP, the ability to obtain necessary ratings for the VRDP and other market conditions.
BlackRock and the Boards of Directors/Trustees of the BlackRock Closed-End Funds (the “Boards”) continue to actively explore potential alternative forms of leverage in order to provide liquidity to ARPS shareholders, including, among other things, additional VRDP issuance, other alternative preferred stock structures and the expanded use of additional forms of leverage such as tender option bonds, as appropriate. The Boards and BlackRock will determine, based on the facts and circumstances applicable to each BlackRock fund with ARPS outstanding, whether such alternative forms of leverage would be appropriate and in the best interest of the respective fund as a whole and its shareholders.
BlackRock will continue to keep market participants and shareholders informed of its closed-end funds’ progress to redeem ARPS via press releases and on BlackRock’s website at www.blackrock.com.
BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At December 31, 2010, BlackRock’s AUM was $3.561 trillion. BlackRock offers products that span the risk spectrum to meet clients’ needs, including active, enhanced and index strategies across markets and asset classes. Products are offered in a variety of structures including separate accounts, mutual funds, iShares® (exchange traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, as of December 31, 2010, the firm has approximately 9,100 employees in 25 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the firm’s website at www.blackrock.com.
This press release, and other statements that BlackRock may make, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to BlackRock’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.
BlackRock cautions 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 BlackRock assumes no duty to and does 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 Funds, 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, the interest rate environment, foreign exchange rates or financial and capital markets, which could result in changes in demand for the Funds or in the Fund’s net asset value; (2) the relative and absolute investment performance of the Funds and their 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 recently approved Dodd-Frank Wall Street Reform and Consumer Protection Act, and regulatory, supervisory or enforcement actions of government agencies relating to the Funds or BlackRock, 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 BlackRock; (9) BlackRock’s ability to attract and retain highly talented professionals; (10) BlackRock’s success in maintaining secondary market support for the Funds; (11) the impact of BlackRock electing to provide support to its products from time to time; (12) the impact of problems at other financial institutions or the failure or negative performance of products at other financial institutions; and (13) the ability of BlackRock to integrate the operations of Barclays Global Investors.
The Annual and Semi-Annual Reports and other regulatory filings of the Funds with the Securities and Exchange Commission (“SEC”) are accessible on the SEC's website at www.sec.govand on BlackRock’s website at www.blackrock.com, and may discuss these or other factors that affect the Funds. The information contained on our website is not a part of this press release.