Important Update on Calamos Auction Rate Preferred Refinancing
July 2008
Since we announced in March 2008 our intent to take constructive steps in response to the liquidity crisis that affected the market for auction-rate preferred shares, our goal has been to secure solutions that work for all Calamos closed-end fund shareholders. The following is an update on the progress we have made toward refinancing auction-rate preferred shares of our closed-end funds.
We have redeemed about $1.87 billion, or 81%, of the preferred shares with proceeds from bank lines, commercial paper and notes from various financial institutions. For additional information on the terms of the refinancing, please see the links to each fund's recently filed semi-annual report at the end of this update.
We also have secured access to an additional amount of financing, which would allow us to redeem a significant amount of the remaining $434 million in preferred shares. We have not to date made use of these funds because of constraints imposed by the Investment Company Act of 1940. The Act requires coverage of 300% for debt leverage and 200% for equity leverage (preferred shares). Redeeming additional preferred shares with debt would put the funds too close to or over the debt limit and we do not consider that to be in the best interest of the fund or its shareholders.
Continuing Effort
We recognize that there is still more work to be completed, as four of our five Calamos closed-end funds have outstanding auction rate preferred shares. We are working with our advisers to provide a solution for the remaining holders of our auction rate preferred shares, and we are monitoring industry developments related to bond funds in an effort to determine how they may be applicable to our more equity oriented funds.
Calamos appreciates the patience investors have shown throughout this crisis and our goal, as always, is to seek resolutions that are best for the funds and their shareholders.
Should you have any questions regarding this release or questions regarding the work we have done so far to refinancing our auction rate preferred securities please contact us at calamosarps@calamos.com or toll free at
1-800-582.6959.
Semi-Annual Report Links
Convertible Opportunities and Income Fund (CHI)
Convertible and High Income Fund (CHY)
Global Dynamic Income Fund (CHW)
Strategic Total Return Fund (CSQ)
Global Total Return Fund (CGO)
The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein should not be considered investment advice.
From time to time, information or statements provided by us, including those within this news release, may contain certain forward-looking statements relating to future events, future transactions, future financial performance, future potential costs, expectations, the competitive and regulatory environment and future market conditions. Forward-looking statements are based on information available at the time those statements are made and/or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Such risks and uncertainties include, but are not limited to: catastrophic or unpredictable events, changing costs of leverage, strategy implementation obstacles, fluctuations in the financial markets and the competitive conditions in the fund, asset management and broader financial services sectors and other risks inherent in the financial and trading markets, including liquidity issues.
Important Fund Information
There are certain risks associated with an investment in a convertible bond such as default risk—that the company issuing a convertible security may be unable to repay principal and interest—and interest rate risk—that the convertible may decrease in value if interest rates increase.
Investments by the Fund in lower-rated securities involve substantial risk of loss and present greater risks than investments in higher-rated securities, including less liquidity and increased price sensitivity to changing interest rates and to a deteriorating economic environment.
Fixed-income securities are subject to interest rate risk; as interest rates go up, the value of debt securities in the Fund's portfolio generally will decline.
Complete information on all Calamos Fund products can be found on our website at www.calamos.com.
Calamos Advisors, LLC.
7596 0708
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