LMP Capital and Income Fund Inc. Announces Changes to Managed Distribution Policy
19 November 2008 - 9:00AM
Business Wire
LMP Capital and Income Fund Inc., which is listed on the New York
Stock Exchange under the symbol "SCD," today announced changes to
its managed distribution policy that will take effect beginning in
2009. The Fund, which had declared previously monthly distributions
of $0.1400 per common share payable in the months of November and
December 2008, will pay distributions quarterly beginning with the
quarter ended March 2009. In addition, the Fund will change the
methodology it uses to determine its distribution rate. The Fund,
which previously had declared a set monthly distribution rate, will
begin setting its quarterly distribution rate based on a percentage
of the Fund�s net asset value per share on December 31, 2008. The
Board of Directors of the Fund has approved an annual distribution
rate, for the 2009 calendar year, of a minimum of approximately 5%
of the net asset value of the Fund as of the close of trading on
December 31, 2008. The Fund may make additional distributions as
necessary to meet certain tax requirements. Fund management
believes that this will provide the investment manager with greater
flexibility in managing the Fund�s assets, and that payment of
quarterly distributions will better match the cash flows (quarterly
dividends for common equities and semi-annual interest payments
from fixed income investments) of securities held in the Fund�s
portfolio. Additionally, the Fund believes it will realize
incremental cost savings from providing investors with required
shareholder notices (�Section 19 Notices�) on the source of
distributions quarterly rather than monthly as is its current
practice. In announcing the changes to its managed distribution
policy, the Fund cited the deteriorating economic environment and
the decline in equity and fixed income valuations during the past
year, which accelerated beginning in the second half of 2008. These
declines have led to a reduction in the level of capital gains and
income available from the Fund�s equity and fixed income
investments. Whereas the Fund�s distribution strategy previously
encompassed a combination of net investment income and potential
short-term and long-term capital gains, the current environment
makes it more likely that future distributions will rely less
heavily on a capital gains component and more on net investment
income generated by the portfolio. The Fund also utilizes a line of
credit to enhance portfolio returns; this line of credit provides
the Fund with the ability to moderate its use as market conditions
and opportunities change. As a result of the manager�s investment
outlook and the need to maintain asset coverage requirements, the
Fund has reduced its use of leverage to $145 million as of October
31, 2008. This is down from $170 million as reported in the Fund's
semi-annual report dated April 30, 2008. These changes are intended
to help improve the overall, long-term performance of the Fund. It
is anticipated that these actions will, over time, allow the Fund
to rebuild its asset base through the capital appreciation of the
underlying investments and will allow the investment manager to
focus on longer-term performance that could ultimately result in
increased distributions should the Fund�s net asset value increase.
There can be no assurance, however, that the investment manager
will be able to achieve these goals. Under the terms of the Fund's
revised managed distribution policy, the Fund will seek to maintain
a consistent quarterly distribution level stated as a fixed
percentage of its December 31, 2008 net asset value per share, that
may be paid in part or in full from net investment income and
realized capital gains, or a combination thereof. Shareholders
should note, however, that if the Fund's aggregate net investment
income and net realized capital gains are less than the amount of
the quarterly distribution level, the difference will be
distributed from the Fund's assets and will constitute a return of
the shareholder's capital. A return of capital is not taxable as a
dividend; rather it reduces a shareholder's tax basis in his or her
shares of the Fund with any balance in excess of the tax basis
treated as a capital gain. The Board of Directors may reduce the
Fund's quarterly distribution rate in the future or terminate or
suspend the managed distribution policy at any time. Any such
reduction in the quarterly distribution rate, termination or
suspension could have an adverse effect on the market price of the
Fund's shares. On November 19, 2008 at 4:15 p.m. the Fund will host
a conference call featuring Robert Gendelman, Managing Director of
ClearBridge Advisors and the Fund's portfolio manager. Mr.
Gendelman will provide an overview of the Fund, a discussion of
current market conditions and his investment outlook. Conference
Call: � Date: November 19, 2008 Time: 4:15 p.m. (Eastern) Dial-in
Number: USA Toll Free Number: 1-888-995-9715 USA Toll Number
1-630-395-0450 Passcode: Closed End Questions will be accepted in
advance of the call at cef@leggmason.com. Shortly after the call, a
replay will be available. The replay dial-in number is Dial-In
Number: � USA Toll Free Number: 1-800-388-4991 USA Toll Number
1-203-369-3668 The replay will also be available on the Fund�s web
site at www.leggmason.com/cef. LMP Capital and Income Fund Inc. is
a non-diversified, closed-end management investment company. Legg
Mason Partners Fund Advisor, LLC, a wholly-owned subsidiary of Legg
Mason, Inc., serves as the Fund's investment manager and is
sub-advised by ClearBridge Advisors, LLC, and Western Asset
Management Company and Western Asset Management Company Limited,
affiliates of the investment manager. Contact the Fund at
1-888-777-0102 for additional information, or consult the Fund�s
web site at www.leggmason.com/cef.
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