An activist hedge fund named Ocean Capital recently acquired a position in the Fund and at the last minute launched a proxy fight.\u00a0 They never contacted the Fund’s Board before launching their campaign.<\/p>\n
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\u00bfQui\u00e9n es Ocean Capital?<\/strong><\/p>\n Ocean Capital es un veh\u00edculo de inversi\u00f3n controlado por ejecutivos de First Southern, LLC, una empresa de servicios financieros con sede en Georgia y Puerto Rico, que se especializa en estrategias como la \u201cinversi\u00f3n en bonos en dificultades\u201d (\"distressed bond investing<\/i>\"). First Southern y sus afiliadas han estado involucrados en la liquidaci\u00f3n de m\u00faltiples fondos de bonos de Puerto Rico[1]<\/a>, incluyendo los de Santander. Notablemente, los ejecutivos principales asociados tanto con Ocean Capital como con First Southern, como lo es Ben Eiler, parecen haberse mudado a Puerto Rico para evitar pagar impuestos sobre las ganancias de capital, de conformidad con la Ley 22-2012 de Puerto Rico, seg\u00fan lo inform\u00f3 Associated Press y m\u00faltiples medios informativos.[2]<\/a><\/p>\n <\/p>\n Is Ocean Capital’s election contest lawful?<\/strong><\/p>\n No.\u00a0 The Board has determined, upon the advice of outside counsel, that Ocean Capital failed to comply with the advance notice provisions set forth in the Fund’s organizational documents for director nominations and shareholder proposals.\u00a0 As a result, the only director candidates eligible for election at the Fund’s meeting are the Board’s director nominees.<\/p>\n <\/p>\n How could Ocean Capital and their nominees harm me and the Fund’s other shareholders?<\/strong><\/p>\n Ocean Capital’s proxy contest is unlawful because its director nominations failed to comply with the Fund’s organizational documents.\u00a0 Moreover, Ocean Capital has provided no concrete plan but, based on their prior statements and actions and First Southern’s business, they and their nominees may intend to liquidate the Fund to generate short-term gains and\/or take over management of the Fund to generate higher fees.\u00a0 While good for Ocean Capital, both potential scenarios could be highly detrimental to the Fund’s other shareholders.<\/p>\n <\/p>\n \u00bfC\u00f3mo se desempe\u00f1a el Fondo bajo la Junta actual?<\/strong><\/p>\n Desde su creaci\u00f3n, el Fondo IV ha distribuido a sus accionistas $8.92 por acci\u00f3n en dividendos cumulativos, en l\u00ednea con sus objetivos de inversi\u00f3n, a pesar de la ca\u00edda del mercado de bonos cayeran en la isla municipales de Puerto Rico, lo cual hizo que los precios de los bonos cayeran en la isla. El Fondo IV ofrece una tasa de rendimiento muy atractiva y con ventaja contributiva de 5.3%, lo cual ser\u00eda dif\u00edcil encontrar en otra inversi\u00f3n con un perfil de riesgo similar.[3]<\/a><\/p>\n Fund IV performed strongly from inception until the Puerto Rico municipal bond market crash in 2013 and has performed positively since the end of 2015, as it has continued to provide its shareholders with consistent monthly income.\u00a0 While the crash of Puerto Rico’s municipal bond market affected all investors in these markets, under the Board’s leadership, the Fund continued to deliver monthly tax-advantaged income; something direct investors in Puerto Rico bonds have not seen in years.<\/p>\n <\/p>\n What is the Fund’s Board doing to protect my investment and generate monthly income?<\/strong><\/p>\n The Board believes the outlook for the Fund is positive.\u00a0 As the Puerto Rico bond market emerges from the PROMESA process, both the income and liquidity of the Fund are expected to improve. \u00a0The Board is keenly aware of the need for liquidity in the Fund’s shares and will continue to make achieving this a strategic priority.<\/p>\n At the current Board’s direction, the Fund continues to work tirelessly to maximize shareholder returns.\u00a0 This includes registering the Fund with the U.S. Securities and Exchange Commission under the Investment Company Act of 1940, which may contribute to increased liquidity and reduced market discount to NAV, paving the way for further positive returns.<\/p>\n <\/p>\n Why should I support the Board’s nominees by voting on the WHITE proxy card?<\/strong><\/p>\n The Board’s director nominees are highly qualified and respected financial professionals with deep roots in Puerto Rico and a long-standing commitment to the Fund and its shareholders.\u00a0 All nominees have strong corporate management credentials, experience overseeing Puerto Rico bond funds and a deep understanding of Puerto Rico’s financial markets.<\/p>\n Due to Ocean Capital’s failure to comply with the Fund’s organizational documents, any votes cast for Ocean Capital’s director nominees will be disregarded.<\/p>\n <\/p>\n \u00bfC\u00f3mo emito el voto en el Proxy Card<\/i> BLANCO?<\/strong><\/p>\n Usted tiene tres opciones para ejercer su voto, pero le recomendamos que use el internet para asegurarse que su voto sea contabilizado en la reuni\u00f3n.<\/p>\n <\/p>\n Por Internet<\/u><\/p>\n <\/p>\n Por Correo<\/u><\/p>\n En la Reuni\u00f3n Virtual<\/u><\/p>\n <\/p>\n \u00bfA qui\u00e9n puedo llamar si tengo preguntas?<\/strong><\/p>\n Llame al n\u00famero gratuito de Okapi Partners para obtener m\u00e1s informaci\u00f3n al 877-566-1922<\/strong>. Los agentes est\u00e1n disponibles para responder preguntas de lunes a viernes de 9:00 a.m. a 7:00 p.m., ET. Presione 1 para hablar con un representante en espa\u00f1ol. Presione 2 para hablar con un representante en ingl\u00e9s.<\/p>\n <\/a><\/p>\n\t [1] First Southern, LLC, First Puerto Rico Family of Funds<\/em>, https:\/\/fssec.com\/first-puerto-rico-family-of-funds\/<\/a>.<\/p>\n\t\n
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