BlackRock Enhanced Government Fund (EGF) – Odd Lot Tender Offer – $25 return

Current Price – $13.41

Offer Price – $13.69

Upside – 2% or $25 for odd lot holders

Expiration Date – 21st of November, 2017

SEC Filling

This idea was offered by James.

 

EGF is trading at 4% discount to NAV and is offering to purchase up to 10% of shares at 98% of NAV. This is a recurring tender and similar tenders have taken place on previous years. Spread is small and tender will most likely be oversubscribed, thus this trade is probably only for odd-lots.

NAV has stayed in a narrow range around $14/share is unlikely to deviate significantly before tender expiration (majority of portfolio is in government bonds).

Tender document also says that “the Fund may accept all Shares tendered by stockholders who own, beneficially or of record, an aggregate of not more than 99 Shares”. Last year had the same ‘may’, but odd-lots were not prorated.

As there is no mention of guaranteed delivery, shares might need to settle before the tender offer expiration. Therefore position might need to be established 3 days in advance. Brokers might also have earlier deadlines for submitting shares.

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