Blackrock Enhanced Government Fund (EGF) – Odd Lot Tender – $45 Opportunity

Current Price – $12.75

Tender Price – $13.22

Upside – 3.7% (or $45 for odd-lots)

Expiration Date – November 26th, 2018

Potentially no proration for odd lot holders.

SEC Filling

 

This is recurring tender offer by the fund. A number of these have already been posted on the site (here and here). Shares are trading at 5% discount to NAV and is offering to buy 10% of the outstanding at 2% discount to NAV.

Tender participants are exposed to NAV risks, however monthly fluctuations are quite small due to underlying portfolio being mostly comprised of mid term US government bonds. Nevertheless buying closer to tender expiration might make more sense.

Re odd-lots, filling 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 and who tender all of their Shares”. Same wording was include in previous tenders and odd-lot provision was honored. As this is tiny opportunity from odd-lot perspective (only $45), I would expect the same to happen this year (still beware of BLBD fiasco).

Company does not report how oversubscribed the previous tenders have been, but judging by the change in outstanding shares these have at the very least full 10% participated. Still, EGF share price does not seem to be effected much by the announcement or expiration of these tenders and therefore it might be possible to tender larger amounts than odd-lots and then liquidate non-accepted position at break-even. If anyone has tried this with previous EGF tenders and knows proration factors, please share.

9 COMMENTS

    1. na

      almost every broker I have an account with charges no re-org fee or will soon charge no re-org fee.

  1. Jonathan

    oh wow, I have accounts with 4 different brokerages and they all charge re org fees, even on one share of a mandatory action

  2. Neo

    Here are the results of the past 3 TO:

    Results of the 2017 Offer:
    As previously announced on November 21, 2017, the expiration date of the Repurchase Offer, Computershare Trust Company, N.A., the Fund’s depositary agent, indicated that 4,639,800 Shares (approximately 71% of the Fund’s Shares outstanding as of November 21, 2017) were validly submitted for tender and not withdrawn. Since more than 10% of the Fund’s outstanding Shares were validly submitted for tender, the Fund repurchased validly tendered Shares on a pro rata basis.

    However, the Fund accepted all Shares validly submitted for tender by stockholders who owned, beneficially or of record, an aggregate of not more than 99 Shares and who validly tendered all of their Shares, before pro rating Shares validly tendered by other stockholders. Consequently, approximately 14% of Shares validly submitted for tender were accepted for repurchase.

    Results of the 2016 Offer:
    As previously announced on November 22, 2016, the expiration date of the Repurchase Offer, Computershare Trust Company, N.A., the Fund’s depositary agent, indicated that 4,997,098 Shares (approximately 69% of the Fund’s Shares outstanding as of November 22, 2016) were validly submitted for tender and not withdrawn. Since more than 10% of the Fund’s outstanding Shares were validly submitted for tender, the Fund repurchased validly tendered Shares on a pro rata basis.

    However, the Fund accepted all Shares validly submitted for tender by stockholders who owned, beneficially or of record, an aggregate of not more than 99 Shares and who validly tendered all of their Shares, before pro rating Shares validly tendered by others. Consequently, approximately 14.44% of Shares validly submitted for tender were accepted for repurchase.

    Results of the 2015 Offer:
    As previously announced on November 17, 2015, the expiration date of the Repurchase Offer, Computershare Trust Company, N.A., the Fund’s depositary agent, indicated that 5,291,704 Shares (approximately 65.99% of the Fund’s Shares outstanding as of November 17, 2015) were validly tendered and not withdrawn. Since more than 10% of the Fund’s outstanding Shares were tendered, the Fund repurchased tendered Shares on a pro rata basis.

    However, the Fund accepted all Shares tendered by shareholders who owned, beneficially or of record, an aggregate of not more than 99 Shares and who tendered all of their Shares, before pro rating Shares tendered by others. Consequently, approximately 15.15% of Shares tendered were accepted for repurchase.

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