Calamos Announces Refinancing of Certain Auction Rate Preferred Securities
- Calamos to refinance $939 million of closed-end fund auction rate
preferred securities (ARPs)
- Refinancing will redeem approximately 41% of all outstanding ARPs
issued by Calamos closed-end funds
- $880 million used to redeem approximately 81.5% of outstanding ARPs for
Calamos Strategic Total Return Fund (NYSE: CSQ)
- $59 million used to redeem all outstanding ARPs for Calamos Global
Total Return Fund (NYSE: CGO)
- Calamos will host a conference call on April 28, 2008
- Calamos continues to pursue aggressively refinancing solutions for its
remaining funds
NAPERVILLE, Ill., April 23 /PRNewswire-FirstCall/ -- Calamos Investments
announced today that it intends to refinance an aggregate of $939 million of
the outstanding auction rate preferred securities (ARPs) issued by two of its
closed-end funds. The funds are the Calamos Global Total Return Fund
(NYSE: CGO) and the Calamos Strategic Total Return Fund (NYSE: CSQ). "We have
worked very hard to structure a solution that makes sense for each fund and
all shareholders," stated John P. Calamos, Sr., the chairman, chief executive
officer and co-chief investment officer of Calamos Investments. "We continue
to work toward solutions across our entire closed-end fund complex and hope to
have additional announcements in the weeks to come."
Calamos has secured an alternative form of borrowing that will enable,
based on current market conditions, CGO to redeem all of its $59 million of
outstanding ARPs and CSQ to redeem approximately 81.5% or $880 million of its
outstanding ARPs. The aggregate $939 million in refinancing represents
approximately 41% of the total auction rate preferred outstanding in the five
Calamos closed-end funds.
Upon completion of the refinancings, which have been approved by the Board
of Trustees of both CGO and CSQ, the leverage ratio for each of the funds is
not currently expected to materially change and the funds will continue to
meet the asset coverage requirements of the Investment Company Act of 1940.
Since the amount of refinancing for CSQ is less than the total amount
outstanding, this refinancing will take place pro rata by auction series.
Below is a chart showing the shares outstanding per series and the number that
the fund will redeem via this refinancing. It is important to note that the
Depository Trust Company (DTC), the securities' holder of record, will
determine how to allocate this partial redemption of shares among each
participant broker-dealer account. Each participant broker-dealer, as nominee
for underlying beneficial owners (street name shareholders), in turn will
determine how redeemed shares are allocated among its beneficial owners.
Auction Series Shares Outstanding Percent to be Amount to be
Redeemed Redeemed
Monday 7,040 81.5% $143,400,000
Tuesday 7,040 81.5% $143,400,000
Wednesday 7,040 81.5% $143,400,000
Thursday 7,040 81.5% $143,400,000
Friday 7,040 81.5% $143,400,000
A (28-Day) 4,000 81.5% $81,500,000
B (28-Day) 4,000 81.5% $81,500,000
CGO and CSQ expect to begin issuing redemption notices in the next several
days and redemptions will coincide with the completion of the refinancing
transaction.
Calamos acknowledges that there is still much work to be done and intends
to continue aggressively pursuing refinancing solutions across all funds. With
respect to our other three funds, Calamos Convertible Opportunities and Income
Fund (NYSE: CHI), Calamos Convertible and High Income Fund (NYSE: CHY) and
Calamos Global Dynamic Income Fund (NYSE: CHW), not affected by today's
announcement, we are working hard on financing solutions and are in advanced
stages of negotiations with lenders. "We have over 30 years of experience
investing through difficult market environments, but this liquidity crisis has
presented unique challenges. We continue to monitor developments closely. We
maintain a high degree of confidence in the long-term positioning of the
Calamos portfolios, and will seek to capitalize on the opportunities that
volatile markets often bring," said Mr. Calamos.
Calamos Investments will host a conference call at 1:00 p.m., central
time, on April 28, 2008, to discuss the refinancing of the funds' ARPs. Mr.
Calamos noted, "We have scheduled a call to enable us to describe the progress
we have made and allow our shareholders to ask questions related to our
efforts to refinance the outstanding ARPs."
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/closedendfunds/default.aspx.
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.
Calamos Auction Rate Preferred Securities FAQ
Q: Which CGO and CSQ ARPs series are affected by this announcement?
A: The one series of CGO's ARPs and each of the seven series of CSQ's
outstanding (both 7-day and 28-day) will be affected by the redemption
process. CGO currently expects to redeem all of its ARPs, while CSQ
anticipates redeeming 81.5% of the auction rate preferred securities
outstanding. This same percentage will be redeemed out of each series.
Auction Series Shares Outstanding Percent to be Amount to be
Redeemed Redeemed
Monday 7,040 81.5% $143,400,000
Tuesday 7,040 81.5% $143,400,000
Wednesday 7,040 81.5% $143,400,000
Thursday 7,040 81.5% $143,400,000
Friday 7,040 81.5% $143,400,000
A (28-Day) 4,000 81.5% $81,500,000
B (28-Day) 4,000 81.5% $81,500,000
Q: Why are CGO and CSQ the only funds announcing refinancings at this
time?
A: We continue to work with several potential lenders on our other three
closed end funds and hope to secure financing shortly, which would
result in a diversification of leverage sources across all of our
closed-end funds. As stated previously, we intend to continue to
announce refinancing arrangements as soon as agreements on refinancing
with specific lenders have been reached, as we are doing today. At
this point, we are constrained from providing additional information
as due diligence continues on our other refinancing efforts. We are
committed to keeping our valued clients, our key relationships, and
the broader public informed of developments as soon as we are allowed
to publicly disclose specific details.
Q: Why is Calamos not redeeming all of CSQ's auction rate preferred
shares?
A: The Investment Company Act of 1940 limits the amount of debt leverage
to 33% of a fund's size compared to 50% for equity leverage. Since
CSQ was initially leveraged at the debt limit of 33%, we are unable to
redeem fully the outstanding ARPs with debt.
Q: Can I expect Calamos to work on refinancing that portion that was not
announced today?
A: We will continue to seek solutions that will allow us to diversify
each Fund's leverage source structure in accordance with the best
interests of all of the shareholders of our funds.
Q: How are you funding the redemption of this portion of the ARPs?
A: CGO and CSQ will use the new debt borrowing announced today to
refinance the applicable outstanding ARPs.
Q: Can you walk me through the redemption process for CSQ's ARPs?
A: Since CSQ is refinancing only a portion of the ARPs outstanding, the
fund will redeem the ARPS pro rata by auction series. The fund will
put on deposit with the Auction Agent, Bank of New York Mellon (BoNY),
cash to redeem the stated amount of each series. The Depository Trust
Company (DTC), where all street name shares are held, then will
determine the allocation among the broker-dealer DTC participant
record holders of the securities, typically on a random lot basis.
Once this is complete, the broker-dealers will allocate the redemption
proceeds according to their internal procedures.
Q: When can I expect more specific information regarding this
announcement?
A: We expect to begin issuing redemption notices on both CGO and CSQ in
the next several days.
SOURCE Calamos Investments
CONTACT: Ken Fincher, Vice President of Calamos Advisors LLC,
+1-630-245-1076, kfincher@calamos.com
Web site: www.calamos.com