CHICAGO, Dec. 15, 2011 /PRNewswire/ -- DNP Select
Income Fund Inc. (NYSE: DNP) and Duff & Phelps Utility and
Corporate Bond Trust Inc. (NYSE: DUC), two closed-end registered
investment companies (the "funds") advised by Duff & Phelps
Investment Management Co. (the "Adviser"), have provided an update
on their efforts to provide additional liquidity to holders of
preferred shares in light of the persistent failures in the auction
markets.
To date each fund has retired a portion of its preferred shares
with monies borrowed under a credit facility. However, as
explained in a November 7, 2011 press
release, there are a number of factors that have constrained the
funds from refinancing additional preferred shares with debt.
One of those factors is that the funds cannot incur indebtedness
or enter into reverse repurchase agreements without departing from
the guidelines established by the two principal rating
agencies. The funds' charters permit departures from the
rating agency guidelines, but only if the rating agencies confirm
in writing that the departures would not adversely affect the then
current rating of the preferred shares. In 2009, when the
funds received such confirmation from the rating agencies to permit
them to enter into their existing credit facilities, one of the
rating agencies imposed a limitation that, in order to maintain the
AAA rating on the preferred shares, no more than 60% of the funds'
leverage could be in the form of debt.
On December 12, 2011, the board of
directors of the funds charged the Adviser with formulating a
proposed amendment to the funds' charters that would permit the
funds to negotiate an arrangement with the rating agencies whereby
the funds could accept a lower rating on the preferred shares in
exchange for being allowed to utilize a higher percentage of debt
leverage. The proposed amendment would still require the
funds to ask the rating agencies to state in writing the effect
that any departure from the guidelines would have on their rating
of the preferred shares, and the funds' directors would need to
take that information into account in determining that such
departure was in the best interests of the fund and its
shareholders. Because charter amendments require the approval
of the funds' shareholders, the board directed the Adviser to
present the proposed amendments at the February 2012 board meeting so that they can be
included in the funds' proxy statements for the funds' annual
meetings, currently scheduled to be held in May 2012.
This press release is not a solicitation of proxies for the
funds' annual meetings. Such a solicitation may only be made
by means of a proxy statement meeting the requirements of the
federal securities laws and regulations. Among other things,
such a proxy statement will set forth the precise terms of the
proposed charter amendments, the potential advantages and
disadvantages of the amendments and the votes required to approve
the amendments.
Shareholders should not formulate any view on the proposed
amendments without reading the proxy statement, which will not be
issued until after the board's February
2012 meeting.
There is no assurance that any charter amendment that the board
submits to fund shareholders will be approved by the
shareholders. Moreover, while the board has asked the Adviser
to formulate proposed charter amendments that, if approved by
shareholders, would increase the funds' flexibility to refinance
additional preferred shares with debt leverage, there is no
guarantee that the funds will be successful in utilizing such
increased flexibility to redeem additional preferred shares.
While the funds' goal is to provide additional liquidity to
preferred shareholders, the board of directors and the Adviser
continue to believe that any action taken to provide such liquidity
should not materially disadvantage common shareholders and their
ability to benefit from leverage, should be long-term in nature and
should not encumber the funds' investment process or reduce the
pool of available investment alternatives. Because of all the
foregoing considerations, the amount and timing of any future
preferred share redemptions are uncertain. The funds will announce
any redemption through press releases and postings to their
websites.
DNP Select Income Fund Inc. is a closed-end diversified
investment management company whose primary investment objectives
are current income and long-term growth of income. The fund seeks
to achieve these objectives by investing primarily in a diversified
portfolio of equity and fixed income securities of companies in the
public utilities industries. For more information, visit
www.dnpselectincome.com or call (800) 864-0629.
Duff & Phelps Utility and Corporate Bond Trust Inc. is a
closed-end diversified investment management company whose primary
investment objective is high current income consistent with
investing in securities of investment grade quality with emphasis
on companies in the public utilities industries. For more
information, visit www.ducfund.com or call (800) 338-8214.
Duff & Phelps Investment Management Co. has more than 28
years of experience managing investment portfolios, including
institutional separate accounts and open- and closed-end funds
investing in utilities, infrastructure and real estate investment
trusts (REITs). For more information, visit www.dpimc.com.
Duff & Phelps is a subsidiary of Virtus Investment Partners
(NASDAQ: VRTS), a multi-boutique asset manager with $33.1 billion under management as of September 30, 2011. Virtus provides investment
management products and services to individuals and institutions
through a multi-manager asset management business, comprising a
number of individual affiliated managers, each with a distinct
investment style, autonomous investment process and individual
brand. Additional information can be found at www.virtus.com.
SOURCE DNP Select Income Fund Inc.