Karpus Investment Management has settled its ongoing battle against the former Citigroup closed-end funds. Steps are being taken to close the funds’ discount to net asset value and Karpus is terminating its existing proxies and litigation. Karpus and other dissidents did not want to approve a new advisory agreement with Legg Mason due to the funds trading at a significant discount to its NAV (FD, October 2005).
As a part of the settlement there will be a 10% tender offer at 98% of NAV before June 30 for the Salomon Brothers Inflation Management Fund (IMF) and Salomon Brothers Municipal Partners Fund (MNP) as well as 5% semi-annual tender offers at 98% of NAV in 2007 and 2008 if discounts to the NAV exceed 5% for defined periods. The boards of MNP and Salomon Brothers Municipal Partners Fund II (SBAM) have committed to propose a merger of the funds to shareholders by July 2007.
Prior to the settlement, Karpus was planning to contest two seats on the board of IMF. The firm had proposed to add Brad Orvieto, founder of financial planning and investment advisory firm Horizon Financial Group, and Gerald Hellerman, principal of financial and corporate consulting firm Hellerman Associates. Karpus now says it supports the director nominees indicated on the fund’s annual proxy statement. Last month shareholders re-elected Carol Colman and Daniel Cronin.
IMF is operating under an interim advisory agreement with Legg Mason until April 29, but a special shareholder vote on the new agreement is scheduled for April 3. MNP shareholders approved the new management agreement at the end of last month. Karpus now supports the new management agreement.