The Salomon Brothers Fund Inc Announces Proposal to Convert to Open-End Fund and Settlement of Proxy Contest
16 November 2005 - 12:00AM
Business Wire
The Salomon Brothers Fund Inc (NYSE: SBF) (the "Fund") announced
today that its Board of Directors has unanimously approved a
proposal to convert the Fund from a closed-end investment company
to an open-end investment company, subject to stockholder approval.
The proposal to open-end the Fund is also conditioned on
stockholder approval of a new Management Agreement between the Fund
and its current investment adviser, Salomon Brothers Asset
Management Inc ("SBAM"), at a special meeting of stockholders
currently scheduled to be held later today. The special meeting is
expected to be adjourned to November 29, 2005 to give stockholders
the opportunity to consider this new development. The new
Management Agreement would take effect upon the closing of the sale
by Citigroup Inc. of its asset management business, which includes
SBAM, to Legg Mason, Inc. This transaction is expected to close on
December 1, 2005. The Board is proposing the Fund's conversion to
an open-end fund in light of stockholder sentiments expressed
during the proxy solicitation for approval of the new Management
Agreement. The Board of Directors of the Fund has determined that
converting to an open-end fund would accomplish the goal of
allowing all stockholders an opportunity to obtain near net asset
value for their shares in a manner that is most consistent with the
interests of all stockholders of the Fund. R. Jay Gerken, Chairman
and President of the Fund said, "The open-end structure was the
best option among several we considered in seeking to be responsive
to stockholders of The Salomon Brothers Fund. While the closed-end
fund structure offers many benefits, we believe that the particular
investment objective and strategies of this specific fund may also
be pursued in an open-end format." The Fund is also announcing that
Elliott Associates, L.P. and Elliott International, L.P.
(collectively, "Elliott") and the Fund have entered into a
settlement agreement pursuant to which Elliott has agreed to
terminate its opposition to the approval of the Fund's new
Management Agreement, and support the Board's recommendation that
stockholders vote to approve the new Management Agreement.
Stockholders who executed blue cards can assure their votes will be
counted by executing and returning a WHITE proxy card or by calling
1-888-293-6728. Terms of New Open-End Fund. As an open-end fund,
the Fund's shares would be redeemable at net asset value. During
the first year after converting to an open-end fund, redemptions
would be subject to a 0.75% redemption fee of the aggregate net
asset value of the stockholder's shares being redeemed. This fee
would be paid to the Fund to cover, among other things,
administrative, trading and other costs relating to redemption,
which costs would otherwise be borne by the Fund's remaining
stockholders. If conversion to an open-end fund is approved by
stockholders, the Fund would delist its shares from the New York
Stock Exchange and begin continuously offering its shares to the
public, initially as part of the Salomon Brothers fund family,
following the effective date of a registration statement to be
filed with the U.S. Securities and Exchange Commission ("SEC").
Shares acquired while the Fund operated as a closed-end fund would
be converted into shares that would not be subject to any
distribution-related fees. Requirements for Conversion. Conversion
to an open-end fund is subject to approval by the affirmative vote
of the holders of at least two-thirds of the Fund's outstanding
shares and conditioned upon stockholder approval of the new
Management Agreement. If the new Management Agreement is approved,
stockholders of the Fund will be asked to vote on a proposal to
convert to an open-end fund, and certain related proposals, at a
special meeting of stockholders expected to be held in the first
quarter of 2006. No record or meeting date has yet been set for
these votes. Settlement of Proxy Contest. Under the settlement
agreement between the Fund and Elliott, Elliott has agreed to
support the Board's recommendation that stockholders vote to
approve the new Management Agreement. Elliott will also cease
soliciting proxies from stockholders for the Special Meeting
relating to the new Management Agreement and will not vote any
proxies it previously received. Elliott has also agreed to support
the Board's proposal to open-end the Fund. In addition, Elliott has
agreed not to sell or transfer the rights to vote its shares of the
Fund prior to the record date for the stockholder meeting at which
conversion of the Fund to an open-end fund will be considered.
Elliott has also entered into a separate settlement agreement with
SBAM containing certain agreements with respect to other closed-end
funds and Elliott's agreement to support stockholder approval of
the new Management Agreement. The summary of the settlements
reached by Elliott, the Fund and SBAM included in this press
release is qualified in its entirety by reference to the full text
of the settlement agreements reached by Elliott, the Fund and SBAM,
which will be filed by the Fund with the SEC and will be available
for free on the SEC's website, http://www.sec.gov. Elliott, the
Fund and SBAM have agreed not to make any additional public
statements relating to the settlements. In connection with the
proposal to open-end the fund, the Fund intends to file a proxy
statement with the SEC. INVESTORS AND STOCKHOLDERS ARE ADVISED TO
READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION. When filed with the SEC, the proxy
statement and other documents filed by the Fund will be available
for free at the SEC's website, http://www.sec.gov. Stockholders can
also obtain a copy of these documents, when available, for free by
calling the Fund at 1-866-718-0017. The Fund, its directors and
executive officers and other members of its management and
employees may be deemed to be participants in the Fund's
solicitation of proxies from its stockholders in connection with
the proposal to open-end the fund. Information concerning the
interests of the Fund's participants in the solicitation is set
forth in the Fund's proxy statements and stockholder reports on
Form N-CSR, previously filed with the SEC, and in the 2005 joint
proxy statement relating to the proposal to approve the new
Management Agreement. The Salomon Brothers Fund Inc, a diversified
investment management company, is managed by Salomon Brothers Asset
Management Inc, an indirect wholly owned subsidiary of Citigroup
Inc. For more information, call 1-888-777-0102, or consult the
Fund's web site at www.sbam.com.
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