The initial September 22nd deadline for voting against the Nuveen North Carolina Municipal Income fund (ticker: NNC) has been extended. We stand resolute in our dissent on the proposed exchange. If you have not actively voted against the management proposal, we encourage you to call today and register your dissent.
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Last month we published a post here outlining our dissent to the current Nuveen proposal to close their North Carolina Municipal Income Fund and roll the assets and investors into one of the Nuveen nationally focused municipal bond funds (ticker: NEA). In short, it is our opinion that the current proposal does little to resolve or recognize the almost 11% discount to NAV at which NNC is currently trading. In fact, we might argue that the lower credit quality of some of the underlying bonds in NEA subject investors to a slightly worse risk profile.
September Deadline – Come ‘n Gone
The September deadline has come and gone with no formal report from management on the status of the vote. Interestingly, Nuveen is selectively informing investors “that the deadline has been extended” and you can still register your vote on this matter (no new deadline was outlined). We believe this recent effort on the part of Management clearly outlines that the required majority was not acquired to authorize this share exchange – we won a small battle, but the war has yet to play out.
We Shall Not Go Silent into the Good Night
As part of the original voting processes, investors who failed to vote were effectively counted as a “dissent” vote. Nuveen is, and has been, actively reaching out to NNC investors to request concurrence with Management proposal. At the same time, it has been suggested by the Manager that if this initial proposal was not approved, they may try to amend the voting process (no specific details yet). One possibility is that a failure to vote, may not be counted as a dissent vote in an amended process. Silence is no longer golden! We encourage holders of NNC to pick up the phone and register your dissent to the management exchange proposal today.
What’s the End Game?
Our recent post outlined a number of options we proposed to Nuveen for consideration as they effectuate closing down NNC. All of these would work toward realizing some, if not all, of the unrealized value of a stock trading 11% below its intrinsic value. As practiced value investors, we love finding value, but nothing is more frustrating than when Management works against shareholder’s best interests. Ultimately, we expect management to implement a strategy that fulfills their obligation to optimize shareholder value. Join us in proactively sending the message that a discount of ~11% is too much to ignore, and that Nuveen needs to restructure the exchange proposal to compensate for this unrealized value.
If you are an NNC shareholder and have lost voting instructions, or would care to discuss the situation further, please contact us at info@broyhillasset.com
Article by Tim LeRoux, Broyhill Asset Management
