Business Context and Reporting Period
This Form 8-K, dated August 29, 2011, reports a corporate governance agreement entered into by Advent Claymore Convertible Securities and Income Fund (the "Fund"), Advent Capital Management, LLC, and Karpus Management, Inc. ("Karpus"). The filing addresses the resolution of a shareholder dispute regarding the Fund's auction market preferred shares ("AMPS") and board representation.
Key Financial Metrics
The filing text does not provide specific financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. This report focuses exclusively on a legal agreement and corporate governance matters.
Material Changes and Agreement Terms
- Withdrawal of Proposal: Karpus agreed to withdraw its trustee nomination notice and shareholder proposal previously submitted to the Fund.
- Conditional Board Representation: If the Fund has not commenced a tender offer at par, redeemed all AMPS, or provided an irrevocable notice of redemption for all AMPS two weeks prior to mailing proxy materials for the 2012 Annual Meeting, Karpus is entitled to designate a director for election by preferred shareholders.
- Exception to Designation: Karpus loses the right to designate a director if the Fund commences a tender offer at a price less than par and Karpus tenders substantially all of its AMPS.
- Voting Commitment: Karpus agreed to vote all Fund securities it holds in accordance with the Board's recommendation at the 2011 annual meeting.
- Standstill Agreement: Karpus agreed to a standstill until after the 2014 annual meeting, prohibiting shareholder proposals, proxy solicitations, or attempts to control management. This restriction expires early if the Fund fails to address the AMPS issue by the 2012 Annual Meeting and Karpus retains its holdings.
- Non-Disparagement: The parties agreed to a mutual non-disparagement provision.
Guidance, Outlook, and Risks
The filing does not contain financial guidance or outlook. The primary contingency identified is the potential redemption or tender offer of AMPS. The Fund retains discretion to determine if a tender offer or redemption is in the best interests of all shareholders. The agreement mitigates the risk of a contested proxy fight for the 2011 and 2012 annual meetings, provided the conditions regarding AMPS are met.
Investor Verification Checklist
- Verify the Fund's current status regarding the redemption or tender offer of AMPS to determine if Karpus retains the right to nominate a director for the 2012 Annual Meeting.
- Review the full text of the Agreement (Exhibit 99.1) for specific definitions of "substantially all" AMPS and precise timing deadlines.
- Monitor the Fund's proxy materials for the 2012 Annual Meeting to confirm if a Karpus-designated director is included.
- Confirm whether the standstill restrictions remain in effect or have expired based on the Fund's actions regarding AMPS prior to the 2012 Annual Meeting.