Work Continues
On March 19, 2008, Calamos Investments announced that we were actively pursuing specific refinancing options for our outstanding auction rate preferred securities. In fact, since this crisis surfaced in early February, we have been working with many of our traditional financial service partners, as well as some non-traditional lenders, including non-U.S. banks and insurance companies in an effort to refinance our auction rate preferred securities. As part of our work, we have examined numerous options including bank lines, commercial paper, perpetual preferred and a variety of note structures.
The reason for our announcement in mid-March and follow-up conference call was that the funds' Board of Trustees had approved seeking alternative forms of financing, and we felt we were far enough along in discussions with several firms that we considered it important to update both financial advisers and their clients. Following the call, we received several inquires asking when refinancing will be completed and which funds' auction rate securities would be refinanced. At this point, we are constrained from providing additional information as due diligence continues. We want to assure our valued clients, however, that we intend to keep you and the broader public informed of developments as soon as we can publicly disclose specifics.
We will be announcing refinancing agreements as we reach agreement with specific lenders. These announcements will come based on our lenders' ability to complete their due diligence work and Calamos taking the appropriate steps to ensure that all our shareholders are well served by the terms of these agreements. For as we work through the due diligence process, we continue to consider the best interests of both our preferred and common shareholders. In recent public comments, certain regulatory agency staff members have emphasized a fund's obligation to consider all shareholders' interests before entering into refinancing transactions. Our commitment, while we understand the critical nature of the situation the preferred shareholders are in, is to pursue refinancing that provides liquidity to preferred shareholders while preserving the benefits of leverage to common shareholders.
Recent Industry Developments
Nearly every business day we are made aware of developments that affect our efforts to bring an end to the market's illiquidity.
A few firms have announced and begun to refinance their auction rate preferred shares, including Eaton Vance and Aberdeen. On April 1, Nuveen Investments announced a planned redemption for four of their funds' auction rate preferreds, with the actual redemptions to take place in late-April and May. These announcements in and of themselves are a step in the right direction and we applaud these firms and their lenders for taking the first steps.
Late last week, UBS announced that they would begin marking down the value of auction rate securities held by their clients. The impact of this decision will be felt as investors who had previously seen these securities appear in the "cash alternative" portion of their statement now see it appear in the fixed income section. It is important to note that while the move by UBS is significant, Calamos reiterates that our auction rate preferred securities are still "dollar good" and remain a highly rated investment.
Summary
We would like to close by saying we understand the gravity of the situation we face, and that we are working diligently to provide a resolution that will take into consideration the interests of all shareholders of our closed-end funds. At Calamos we are exploring all options currently at our disposal as well as those that are still in development. We would remind you that this is a liquidity event and should not be viewed as a reflection as to the value of any one of the five underlying portfolios. We thank you for your patience, and we expect to continue to communicate frequently as refinancing options are completed.