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Calamos Investments Announces Receipt of SEC Exemptive Relief relating to asset coverage in Closed-End Funds; cautions additional challenges ahead
February 13, 2009
- Funds' Board to review refinancing options; approval must be in best interest of all shareholders
- Any refinancing dependent upon current availability of viable financing options and upon ARPS-related costs
- Calamos still has conviction in each portfolio and sees unprecedented valuations across equities, convertibles and high yield bonds
On February 10, 2009, Calamos received from the Securities and Exchange Commission an order providing exemptive relief from the asset coverage requirements under the Investment Company Act of 1940 relating to debt-based financing for purposes of refinancing outstanding ARPS. This relief, provided on a temporary basis through October 31, 2010, provides the Funds (Calamos Convertible Opportunities and Income Fund, Calamos Convertible and High Income Fund, Calamos Strategic Total Return Fund and Calamos Global Dynamic Income Fund) with greater flexibility in seeking debt-based financing to refinance the ARPS which remain outstanding. Each Fund's ability to redeem the remainder of their ARPS outstanding using debt-based financing is also dependent upon available credit, the comparative costs and flexibility of debt financing with ARPS, and the review and approval of any refinancing options by each Fund's board, which must be in the best interest of all fund shareholders. Calamos is a leader in addressing the liquidity issue resulting from the collapse of the ARPS market, having redeemed approximately 81% of outstanding ARPS ($1.87 billion) across the 5 Calamos closed-end funds, more than a majority of our industry peers since this issue began back in February, 2008. The table below provides a status of the Funds' redeemed and outstanding ARPS holdings as of December 31, 2008:
| |
| Calamos Closed-End Fund |
$ Amount of ARPS Issued |
$ Amount of ARPS Redeemed/% of Issued |
$ Amount of ARPS Outstanding |
| Convertible Opportunities and Income (CHI) |
$384,000,000 |
72.9% |
$104,000,000 |
| Convertible and High Income (CHY) |
$430,000,000 |
81.4% |
$80,000,000 |
| Strategic Total Return (CSQ) |
$1,080,000,000 |
81.5% |
$200,000,000 |
| Global Dynamic Income (CHW) |
$350,000,000 |
85.7% |
$50,000,000 |
| Global Total Return (CGO) |
$59,000,000 |
100% |
$0 |
| Total |
$2,303,000,000 |
81.2% |
$434,000,000 |
For additional information on the Calamos Closed-End Funds, click here.
Calamos sought exemptive relief last year, to obtain flexibility to seek a broader range of refinancing options for our shareholders. Because of the asset coverage requirement difference between equity-based leverage (200%) and debt-based leverage (300%) as defined by the Investment Company Act of 1940, we were unable to take full advantage of certain refinancing solutions that were implemented at that time. Since then, the financial landscape and liquidity have changed dramatically - debt leverage is difficult to obtain, as the credit markets continue to be tight and the success of the government's bank rescue plan remains unclear. At the present time, where current financing is available, it has been either cost-prohibitive (and not competitive with current ARPS costs) or lenders are not providing the flexibility needed to successfully implement the solution (e.g., some lenders would still require the Fund's to maintain a 300% asset coverage ratio for debt refinancing, despite the SEC exemptive relief). We continue to monitor the situation and actively look for alternatives.
While the market losses have been daunting, we continue to see potential for long-term investors in higher quality growth equities, higher quality high-yield debt and in convertibles (which we believe are still at unprecedented valuations).
We share and understand the frustration of our shareholders and are making every effort to seek refinancing solutions that take into account the best interests of all shareholders. Please check back on our web site, www.calamos.com, for additional updates. For more information on our closed-end fund products, contact 800.582.6959. Thank you for your patience and ongoing business.
Important Notes About Performance and Risk
Past performance is no guarantee of future results. As with other investments, market price will fluctuate with the market and upon sale, your shares may have a market price that is above or below net asset value and may be worth more or less than your original investment.
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.
About Calamos
Calamos Investments is a diversified investment firm offering equity, fixed-income, convertible and alternative investment strategies, among others. The firm serves institutions and individuals via separately managed accounts and a family of open-end and closed-end funds, providing a risk-managed approach to capital appreciation and income-producing strategies. For more information, visit www.calamos.com.
CEFARPS 7878 0209O R
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