PIMCO Income Strategy Fund II SC TO-I, filed Aug 15, 2023
PIMCO Income Strategy Fund II (PFN)
As filed with the Securities and Exchange Commission on August 14, 2023
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE TO
Tender Offer Statement Under Section 14(d)(1) or 13(e)(1) of the
Securities Exchange Act Of 1934
PIMCO Income Strategy Fund II
(Name of Subject Company (Issuer))
PIMCO Income Strategy Fund II
(Name of Filing Person (Issuer))
Auction-Rate Preferred Shares, Series, M, Series T, Series W, Series TH, and Series F, Par Value $0.00001
(Title of Class of Securities)
72201J500
72201J203
72201J302
72201J401
72201J609
(CUSIP Number of Class of Securities)
Ryan Leshaw
PIMCO Income Strategy Fund II
1633 Broadway
New York, NY 10019
Telephone: (949) 720-6980
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement)
With a Copy to:
David C. Sullivan
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, MA 02199-3600
Telephone: (617) 951-7362
Calculation of Filing Fee
| Transaction Valuation | Amount of Filing Fee | |
| $82,398,062.50 (a) | $9,080.27 (b) | |
(a) Calculated as the aggregate maximum purchase price to be paid for 87,425,000 shares in the offer, based upon a price of 94.25% of the liquidation preference of $25,000 per share (or $23,562.50 per share).
(b) Calculated at $110.20 per $1,000,000 of the Transaction Valuation.
| ☐ | Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| Amount Previously Paid: | Not Applicable | Filing Party: | Not Applicable | |||
| Form or Registration No.: | Not Applicable | Date Filed: | Not Applicable | |||
| ☐ | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
| ☐ | third party tender offer subject to Rule 14d-1. |
| ☒ | issuer tender offer subject to Rule 13e-4. |
| ☐ | going-private transaction subject to Rule 13e-3. |
| ☐ | amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting the results of the tender offer. ☐
ITEMS 1 THROUGH 9 AND ITEM 11.
This Tender Offer Statement on Schedule TO is filed by PIMCO Income Strategy Fund II, a Massachusetts business trust (the “Fund”). This Schedule TO relates to the Fund’s offer to purchase for cash up to 100% of its outstanding shares of preferred stock, $0.00001 par value and a liquidation preference of $25,000 per share, designated Auction-Rate Preferred Shares, Series M, Series T, Series W, Series TH, and Series F (the “Preferred Stock”), upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 14, 2023 (the “Offer to Purchase”) and in the Fund’s related Letter of Transmittal (the “Letter of Transmittal” which, together with the Offer to Purchase, as each may be amended and supplemented from time to time, constitutes the “Offer”), copies of which are attached hereto as Exhibits (a)(1)(i) and (a)(1)(ii), respectively. The price to be paid for the Preferred Stock is an amount per share, net to the seller in cash, equal to 94.25% of the liquidation preference of $25,000 per share (or $23,562.50 per share) in cash, plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest, and subject to the conditions set forth in the Offer, if properly tendered and not withdrawn prior to the Expiration Date (as defined in the Offer). The information set forth in the Offer is incorporated herein by reference with respect to Items 1 through 9 and Item 11 of this Schedule TO.
ITEM 10.
Not applicable.
ITEM 12. EXHIBITS.
| Exhibit No. | Document | |
| (a)(1)(i) |
Offer to Purchase dated August 14, 2023.* | |
| (a)(1)(ii) |
Form of Letter of Transmittal.* | |
| (a)(1)(iii) |
Form of Notice of Guaranteed Delivery.* | |
| (a)(1)(iv) |
Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* | |
| (a)(1)(v) |
Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* | |
| (a)(1)(vi) |
Form of Notice of Withdrawal.* | |
| (a)(5)(i) |
Press Release issued on August 14, 2023.(1) | |
| (d)(i) |
Tender Offer Agreement, dated August 11, 2023, by and among PIMCO Corporate & Income Opportunity Fund, PIMCO Corporate & Income Strategy Fund, PIMCO High Income Fund, PIMCO Income Strategy Fund, PIMCO Income Strategy Fund II, PIMCO California Municipal Income Fund, PIMCO California Municipal Income Fund II, PIMCO California Municipal Income Fund III, PIMCO Municipal Income Fund, PIMCO Municipal Income Fund II,, PIMCO Municipal Income Fund III, PIMCO New York Municipal Income Fund, PIMCO New York Municipal Income Fund II and PIMCO New York Municipal Income Fund III, Pacific Investment Management Company LLC, and Bank of America, N.A.* | |
| EX-FILINGFEES |
Calculation of Filing Fees Table* | |
|
*Filed herewith. (1) Incorporated by reference to the Fund’s Schedule TO-C, as filed with the Securities and Exchange Commission on August 14, 2023. | ||
| ITEM 13. | |
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| PIMCO Income Strategy Fund II | ||
| By: | /s/ Eric D. Johnson | |
| Name: | Eric D. Johnson | |
| Title: |
President | |
Dated as of: August 14, 2023
EXHIBIT INDEX
| Exhibit No. | Document | |
| (a)(1)(i) |
Offer to Purchase dated August 14, 2023.* | |
| (a)(1)(ii) |
Form of Letter of Transmittal.* | |
| (a)(1)(iii) |
Form of Notice of Guaranteed Delivery.* | |
| (a)(1)(iv) |
Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* | |
| (a)(1)(v) |
Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.* | |
| (a)(1)(vi) |
Form of Notice of Withdrawal.* | |
| (a)(5)(i) |
Press Release issued on August 14, 2023.(1) | |
| (d)(i) |
Tender Offer Agreement, dated August 11, 2023, by and among PIMCO Corporate & Income Opportunity Fund, PIMCO Corporate & Income Strategy Fund, PIMCO High Income Fund, PIMCO Income Strategy Fund, PIMCO Income Strategy Fund II, PIMCO California Municipal Income Fund, PIMCO California Municipal Income Fund II, PIMCO California Municipal Income Fund III, PIMCO Municipal Income Fund, PIMCO Municipal Income Fund II,, PIMCO Municipal Income Fund III, PIMCO New York Municipal Income Fund, PIMCO New York Municipal Income Fund II and PIMCO New York Municipal Income Fund III, Pacific Investment Management Company LLC, and Bank of America, N.A.* | |
| EX-FILINGFEES |
Calculation of Filing Fees Table* | |
|
*Filed herewith. (1) Incorporated by reference to the Fund’s Schedule TO-C, as filed with the Securities and Exchange Commission on August 14, 2023. | ||
Offer by
Each of
PIMCO Corporate & Income Opportunity Fund
PIMCO Corporate & Income Strategy Fund
PIMCO High Income Fund
PIMCO Income Strategy Fund
PIMCO Income Strategy Fund II
PIMCO California Municipal Income Fund
PIMCO California Municipal Income Fund II
PIMCO California Municipal Income Fund III
PIMCO Municipal Income Fund
PIMCO Municipal Income Fund II
PIMCO Municipal Income Fund III
PIMCO New York Municipal Income Fund
PIMCO New York Municipal Income Fund II
PIMCO New York Municipal Income Fund III
(each, a “Fund” and, collectively, the “Funds”)
To Purchase for Cash
Up to 100% of Its Outstanding Preferred Shares
(PIMCO California Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO California Municipal Income Fund III: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO California Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B and Series C)
(PIMCO Corporate & Income Opportunity Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Corporate & Income Strategy Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO High Income Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund II: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund: Auction-Rate Preferred Shares Series T, Series W and Series TH)
(PIMCO Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund III: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO New York Municipal Income Fund II: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO New York Municipal Income Fund III: Auction-Rate Preferred Shares Series A)
(PIMCO New York Municipal Income Fund: Auction-Rate Preferred Shares Series A)
EACH FUND’S OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON SEPTEMBER 18, 2023, UNLESS THE OFFER IS EXTENDED.
Each Fund’s Offer (as defined herein) is not conditioned on any minimum number of shares being tendered but is subject to certain other conditions as outlined in this Offer and in the related letter of transmittal.
If a Fund’s Offer is completed, the Fund will purchase Preferred Shares (as defined herein) at a price per share equal to 96% of the liquidation preference of $25,000 per share with respect to PIMCO Corporate & Income Opportunity
Fund (“PTY”) (i.e., a tender offer of $24,000 per share), 93.25% of the liquidation preference of $25,000 per share with respect to each of PIMCO Corporate & Income Strategy Fund (“PCN”) and PIMCO High Income Fund (“PHK”) (i.e., a tender offer of $23,312.50 per share), 94.25% of the liquidation preference of 25,000 per share with respect to each of Income Strategy Fund (“PFL”) and PIMCO Income Strategy Fund II (“PFN”) (i.e., a tender offer of $23,562.50 per share) and 94.5% of the liquidation preference of $25,000 per share with respect to each of PIMCO California Municipal Income Fund (“PCQ”), PIMCO California Municipal Income Fund II (“PCK”), PIMCO California Municipal Income Fund III (“PZC”), PIMCO Municipal Income Fund (“PMF”), PIMCO Municipal Income Fund II (“PML”), PIMCO Municipal Income Fund III (“PMX”), PIMCO New York Municipal Income Fund (“PNF”), PIMCO New York Municipal Income Fund II (“PNI”) and PIMCO New York Municipal Income Fund III (“PYN”) (i.e., tender offers of $23,625 per share), in cash, plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest, and subject to the conditions set forth in the Offer to Purchase, dated August 14, 2023 (the “Offer to Purchase”) and in the related Letter of Transmittal (the “Letter of Transmittal” which, together with the Offer to Purchase, as each may be amended from time to time, with respect to each Fund, constitutes such Fund’s “Offer” and, collectively, the “Offers”), if properly tendered and not withdrawn prior to the Expiration Date (as defined herein).
Neither the Funds, the Funds’ Boards of Trustees (each, a “Board”) nor Pacific Investment Management Company LLC, the investment manager for each of the Funds (the “Investment Manager” or “PIMCO”), makes any recommendation as to whether to tender or not to tender Preferred Shares in the Offer. No person has been authorized to give any information or to make any representations in connection with the Offer other than those contained in this Offer and in the Letter of Transmittal, and, if given or made, such information or representations may not be relied upon as having been authorized by the Boards or the officers of the Funds or the Investment Manager. The Funds have been advised that no Trustee or executive officer of any Fund intends to tender any Preferred Shares pursuant to the Offer.
You may direct questions and requests for assistance to Equiniti Trust Company, LLC, the tender agent for the Offer (the “Tender Agent”), at its address and telephone number set forth on the back cover of this Offer. Shareholders may obtain additional copies of this Offer, the Letter of Transmittal, the notice of guaranteed delivery, the notice of withdrawal or any other tender materials from the Tender Agent and may also contact their brokers, dealers, banks, trust companies or other nominees for copies of these documents. If you do not wish to tender your Preferred Shares, you need not take any action.
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IMPORTANT PROCEDURES
If you want to tender all or a portion of your Preferred Shares of a Fund, you must do one of the following before the Fund’s Offer expires:
| • | If your Preferred Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, contact the nominee and have the nominee tender your Preferred Shares for you; or |
| • | Deliver your Preferred Shares pursuant to the procedures for book-entry transfers set forth in Section 3 of this Offer to Purchase prior to the Expiration Date (as defined herein) of the Fund’s Offer. |
If you want to tender your Preferred Shares of a Fund and your Preferred Shares are not immediately available, or you cannot comply with the procedures for book-entry transfers described in this Offer on a timely basis, you may tender such Preferred Shares by following the procedures for guaranteed delivery set forth in Section 3 of this Offer to Purchase. A Fund may reject any tender not fully in compliance with these procedures.
To tender your Preferred Shares of a Fund, you must follow the procedures described in this Offer to Purchase, the Letter of Transmittal and the other documents related to the Offer.
THIS OFFER TO PURCHASE AND EACH FUND’S RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION, AND YOU SHOULD CAREFULLY READ BOTH IN THEIR ENTIRETY BEFORE YOU MAKE A DECISION WITH RESPECT TO THE OFFER.
August
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TABLE OF CONTENTS
| PAGE | ||
| SUMMARY TERM SHEET |
5 | |
| INTRODUCTION |
11 | |
| THE OFFER |
14 | |
| 1. Terms of the Offers; Expiration Date |
14 | |
| 2. Extension of Tender Period; Termination; Amendment |
15 | |
| 3. Procedures for Tendering Preferred Shares |
15 | |
| 4. Withdrawal Rights |
17 | |
| 5. Acceptance for Payment and Payment |
18 | |
| 6. Certain Material U.S. Federal Income Tax Consequences |
19 | |
| 7. Price Range of Preferred Shares; Dividends |
22 | |
| 8. Source and Amount of Funds; Effect of the Offers |
22 | |
| 9. Purpose of the Offers |
23 | |
| 10. Information Concerning the Funds |
25 | |
| 11. Interest of the Trustees and Executive Officers; Transactions and Arrangements |
25 | |
| 12. Legal Matters; Regulatory Approvals |
26 | |
| 13. Conditions to the Offers |
26 | |
| 14. Fees and Expenses |
27 | |
| 15. Miscellaneous |
27 |
4
SUMMARY TERM SHEET
| SECURITIES SOUGHT: | Up to 100% of the Auction Rate Preferred Shares (“Preferred Shares”) of each Fund | |
| PRICE OFFERED PER SHARE FOR PIMCO CORPORATE & INCOME OPPORTUNITY FUND: | 96% of the liquidation preference of $25,000 per share (or $24,000 per share) in cash, plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest, and subject to the conditions set forth in this Offer. | |
| PRICE OFFERED PER SHARE FOR PIMCO CORPORATE & INCOME STRATEGY FUND AND PIMCO HIGH INCOME FUND: |
93.25% of the liquidation preference of $25,000 per share (or $23,312.50 per share) in cash, plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest, and subject to the conditions set forth in this Offer. | |
| PRICE OFFERED PER SHARE FOR EACH OF PIMCO INCOME STRATEGY FUND AND PIMCO INCOME STRATEGY FUND II: |
94.25% of the liquidation preference of $25,000 per share (or $23,562.50 per share) in cash, plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest, and subject to the conditions set forth in this Offer. | |
| PRICE OFFERED PER SHARE FOR EACH OF PIMCO CALIFORNIA MUNICIPAL INCOME FUND, PIMCO CALIFORNIA MUNICIPAL INCOME FUND II, PIMCO CALIFORNIA MUNICIPAL INCOME FUND III, PIMCO MUNICIPAL INCOME FUND, PIMCO MUNICIPAL INCOME FUND II, PIMCO MUNICIPAL INCOME FUND III, PIMCO NEW YORK MUNICIPAL INCOME FUND, PIMCO NEW YORK MUNICIPAL INCOME FUND II AND PIMCO NEW YORK MUNICIPAL INCOME FUND III: | 94.5% of the liquidation preference of $25,000 per share (or $23,625 per share) in cash, plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest, and subject to the conditions set forth in this Offer.
| |
| SCHEDULED EXPIRATION DATE: | September 18, 2023 | |
| PURCHASER: | Each of: PIMCO Corporate & Income Opportunity Fund PIMCO Corporate & Income Strategy Fund PIMCO High Income Fund PIMCO Income Strategy Fund PIMCO Income Strategy Fund II PIMCO California Municipal Income Fund PIMCO California Municipal Income Fund II
| |
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| PIMCO California Municipal Income Fund III PIMCO Municipal Income Fund PIMCO Municipal Income Fund II PIMCO Municipal Income Fund III PIMCO New York Municipal Income Fund PIMCO New York Municipal Income Fund II PIMCO New York Municipal Income Fund III
These are each an issuer tender offer. |
The following are some of the questions that you, as a Preferred Shareholder (as defined herein), may have and answers to those questions. You should carefully read this Offer to Purchase (the “Offer to Purchase”) and each Fund’s related Letter of Transmittal (the “Letter of Transmittal” which, together with the Offer to Purchase, as each may be amended from time to time, with respect to each Fund constitutes such Fund’s “Offer” and, collectively the “Offers”) in their entirety because the information in this summary term sheet is not complete and additional important information is contained in the Offer.
WHO IS OFFERING TO BUY MY PREFERRED SHARES?
These are issuer tender offers. Each Fund is offering to purchase Preferred Shares it previously issued. Each Fund is a Massachusetts business trust.
HOW MUCH IS EACH FUND OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
Each Fund is offering to purchase up to 100% of its outstanding Preferred Shares, at a price per share equal to 96% of the liquidation preference of $25,000 per share with respect to PTY (i.e., a tender offer of $24,000 per share), 93.25% of the liquidation preference of $25,000 per share with respect to each of PHK and PCN (i.e., a tender offer of $23,312.50 per share), 94.25% of the liquidation preference of 25,000 per share with respect to PFL and PFN (i.e., a tender offer of $23,562.50 per share) and 94.5% of the liquidation preference of $25,000 per share with respect to each of PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN (i.e., a tender offer of $23,625 per share), in cash, plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest.
When considering whether to tender Preferred Shares, you should be aware that the payment received pursuant to the Offer will be less than the liquidation preference of the Preferred Shares. Under each Fund’s Bylaws, holders of a Fund’s Preferred Shares would receive the full liquidation preference of the Preferred Shares in certain limited circumstances—i.e., in the event of the liquidation of the Fund or a mandatory redemption under the terms of the Preferred Shares as a result of the Fund failing to meet certain asset coverage requirements. Under current market conditions, PIMCO believes the likelihood of a Fund liquidating or being required to redeem Preferred Shares under the terms of its Bylaws is remote.
WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
If you tender your Preferred Shares in the Offer, you will not have to pay brokerage fees, commissions or similar expenses. If you own Preferred Shares through a broker or other nominee holder, and your broker or other nominee holder tenders your Preferred Shares on your behalf, your broker or other nominee holder may charge you a fee for doing so. You should consult your broker or other nominee holder to determine whether any charges will apply.
WHEN WILL THE TENDER OFFER EXPIRE AND MAY THE OFFER BE EXTENDED?
Each Fund’s Offer will expire at 5:00 p.m., New York City time, on September 18, 2023, unless extended. The Offer period may be extended by a Fund issuing a press release or making some other public announcement no later than 9:00 a.m. New York City time on the next business day after the Offer otherwise would have expired. An extension of the Offer by one Fund has no impact on the expiration time of another Fund’s Offer.
If you hold your Preferred Shares directly, you have until the expiration of the Offer to tender your Preferred Shares in the Offer. If you cannot deliver everything required to make a valid tender to the Tender Agent, the depositary for the Offer (the “Depositary”), prior to such time, you may be able to use a guaranteed delivery procedure, which is described in Section 3 of this Offer to Purchase.
6
If your Preferred Shares are registered in the name of your broker or other nominee holder, you may need to tender your Preferred Shares in an Offer before 5:00 p.m., New York City time, on September 18, 2023, in order to allow such nominee holder time to tender your Preferred Shares. You should consult your broker or other nominee holder to determine if there is an earlier deadline by which you must inform such nominee holder of any decision to tender your Preferred Shares and provide to such nominee holder any other required materials.
IS THERE A LIMIT ON THE NUMBER OF PREFERRED SHARES I MAY TENDER?
No, each Fund is offering to purchase up to 100% of its outstanding Preferred Shares.
DOES EACH FUND HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Assuming PTY purchases 100% of its outstanding Preferred Shares at 96% of the liquidation preference of $25,000 per share (or $24,000 per share), each of PCN and PHK purchases 100% of its outstanding Preferred Shares at 93.25% of the liquidation preference of $25,000 per share (or $23,312.50 per share), each of PFL and PFN purchases 100% of its outstanding Preferred Shares at 94.25% of the liquidation preference of $25,000 per share (or $23,562.50 per share), each of PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN purchases 100% of its outstanding Preferred Shares at 94.5% of the liquidation preference of $25,000 per share (or $23,625 per share), the total cost, not including fees and expenses incurred in connection with each Offer, will be approximately $204,144,000 for PTY, $21,937,062.50 for PCN, $54,131,625 for PHK, $42,601,000 for PFL, $82,398,062.50 for PFN, $113,990,625 for PCQ, $121,597,875 for PCK, $92,491,875 for PZC, $157,531,500 for PMF, $281,869,875 for PML, $146,191,500 for PMX, $38,768,625 for PNF, $54,810,000 for PNI and $27,830,250 for PYN plus for each Fund any unpaid dividends accrued through the Expiration Date (as defined herein). Although each Fund may use cash on hand and may sell securities in the Fund’s investment portfolio to pay the purchase price for Preferred Shares tendered, in addition, a Fund may also use additional forms of leverage, including for example through the use of reverse repurchase agreements or other forms of preferred shares, to finance some or all of the costs of its Offer. There are no financing conditions to the Offers. See Section 8 of this Offer to Purchase.
HOW DO I TENDER MY PREFERRED SHARES IN AN OFFER?
To tender Preferred Shares in an Offer, you must deliver the Preferred Shares to the Tender Agent no later than the Expiration Date (as defined below). If your Preferred Shares are held in street name by your broker or other nominee holder, such nominee can tender your Preferred Shares through The Depository Trust Company. See Section 3 of this Offer to Purchase, which describes procedures for tendering your Preferred Shares.
WHEN AND HOW WILL I BE PAID FOR MY TENDERED PREFERRED SHARES?
If accepted for payment, each Fund will pay for all validly tendered and not withdrawn Preferred Shares promptly after 5:00 p.m. New York City time, on September 18, 2023, or such later date to which the Offer is extended (the “Expiration Date”). Each Fund will pay for your validly tendered and not withdrawn Preferred Shares in United States dollars by depositing the purchase price with the Depositary, which will act as your agent for the purpose of receiving payments from us and transmitting such payments to you. In all cases, payment for tendered Preferred Shares will be made only after timely receipt by the Depositary of the Preferred Shares, confirmation of a book-entry transfer of such Preferred Shares, and any other required documents as described in Section 3 of this Offer to Purchase.
HOW DO I WITHDRAW TENDERED PREFERRED SHARES IN AN OFFER?
You can withdraw tendered Preferred Shares at any time until the applicable Offer has expired and, if a Fund has not agreed to accept your Preferred Shares for payment by September 18, 2023, you can withdraw them at any time after such time until the Fund accepts Preferred Shares for payment. See Section 4 of this Offer to Purchase.
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To withdraw tendered Preferred Shares, you must deliver a written notice of withdrawal (a form of which can be provided upon request from the Tender Agent for the Offer or obtained from the website of the Securities and Exchange Commission (“SEC”) at www.sec.gov) with the required information to the Depositary while you have the right to withdraw the tendered Preferred Shares. If your Preferred Shares are registered in the name of your broker or other nominee holder, contact that nominee holder to withdraw your tendered Preferred Shares. You may need to allow such nominee holder additional time to withdraw your tendered Preferred Shares. You should consult your broker or other nominee holder to determine if there is an earlier deadline by which you must inform such nominee holder of any decision to withdraw your tendered Preferred Shares.
Withdrawals of tenders of Preferred Shares may not be rescinded, and any Preferred Shares validly withdrawn will thereafter be deemed not validly tendered for purposes of an Offer. However, withdrawn Preferred Shares may be retendered by following one of the procedures described in Section 3 of this Offer to Purchase at any time prior to the Expiration Date. See Section 4 of this Offer to Purchase.
WHAT ARE THE TAX CONSEQUENCES OF TENDERING PREFERRED SHARES?
Generally, the receipt of cash in connection with tendering Preferred Shares pursuant to the Offer will be a taxable transaction for U.S. federal income tax purposes and may also be a taxable transaction under applicable state, local, foreign and other tax laws. For U.S. federal income tax purposes, the sale of your Preferred Shares for cash generally will be treated either as (1) a sale or exchange of the Preferred Shares, or (2) a distribution with respect to the Preferred Shares that is potentially taxable as a dividend. See Section 6 of this Offer to Purchase.
WHAT IS THE PURPOSE OF EACH OFFER?
Since mid-February of 2008, the periodic auctions for auction-rate securities like the Preferred Shares have not attracted sufficient clearing bids for there to be a successful auction. The Funds believe that such auctions are unlikely to be successful in the future. The Funds also believe that secondary market activity is limited outside the auctions for auction-rate securities and therefore the Preferred Shares are generally illiquid. PIMCO regularly examines leverage alternatives for each Fund and presents related information to each Fund’s Board for the Board’s consideration as part of its ongoing investment responsibilities. Based on PIMCO’s economic and interest rate outlook, PIMCO’s concerns about the rollover and refinancing risks inherent in alternative forms of leverage as a result of the non-permanent terms of such alternative forms of leverage, PIMCO’s examination of the costs, terms, asset coverage requirements and covenants, as applicable, associated with the leverage alternatives available in the marketplace and PIMCO’s view on the viability of conducting a tender offer at an adequately discounted price, PIMCO has to date consistently advised that, unless a Fund could conduct an additional discounted tender offer at a sufficient discount to the Preferred Shares’ liquidation preference and with sufficient participation, maintaining the outstanding Preferred Shares and related leverage has been in the best interests of each Fund under then-current market conditions. These various factors may vary over time and the decision regarding the best form of financing for a Fund is a Fund-specific decision based on the particular dynamics of the Fund’s financing profile and other market factors. For these and related reasons, PIMCO has to date advised against redeeming Preferred Shares of the Funds at their full liquidation preference or pursuant to tender offers that are not at what PIMCO views to be an adequately discounted price to the Preferred Shares’ liquidation preference. However, in this regard, at PIMCO’s recommendation and based on PIMCO’s assessment of the foregoing factors, each Fund has previously conducted a discounted tender offer1 for its Preferred Shares at a price that PIMCO believed to have been adequately discounted so as to be in the best interests of the Funds and their shareholders.
Bank of America, North America and the investment funds and accounts it manages (collectively, “Bank of America”) are substantial beneficial holders of PTY’s, PCN’s, PHK’s, PFL’s, PFN’s, PMF’s, PML’s, PMX’s, PCQ’s, PCK’s, PZC’s, PNF’s, PNI’s and PYN’s Preferred Shares. Oppenheimer & Co., Inc. (“Oppenheimer” and, together with Bank of America, the “Tendering Holders”) is a substantial beneficial holder of PTY’s, PMF’s, PML’s, PMX’s, PNF’s, PNI’s and PYN’s Preferred Shares. PIMCO has engaged in ongoing discussions with representatives from Bank of America regarding the Preferred Shares, including the possibility that the Funds could conduct tender offers for some or all of the outstanding Preferred Shares at prices below the full liquidation preferences of the Preferred Shares. As part of the ongoing discussions between PIMCO and Bank of America, and based on PIMCO’s analysis of current market conditions, PIMCO’s outlook and the costs and terms of leverage
1 PFL and PFN conducted discounted tender offers in 2014. PCN, PHK and PTY conducted discounted tender offers in 2015. PMF, PML, PMX, PCQ, PCK, PZC, PNF, PNI and PYN conducted discounted tender offers in 2018. PHK, PFL, PTY, PCN and PFN conducted discounted tender offers in 2019.
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alternatives available to the Funds in the marketplace, PIMCO determined that a tender price at 96% of the liquidation preference of PTY’s Preferred Shares, 93.25% of the liquidation preference of each of PCN’s and PHK’s Preferred Shares, 94.25% of the liquidation preference of each of PFL’s and PFN’s Preferred Shares and 94.5% of the liquidation preference of each of PMF’s, PML’s, PMX’s, PCQ’s, PCK’s, PZC’s, PNF’s, PNI’s and PYN’s Preferred Shares, represents a fair value to each Fund’s common shareholders and provides a number of benefits to the Funds and the Funds’ shareholders, including, among other things, reduced costs of leverage for the Funds, an economic benefit to common shareholders and liquidity to Preferred Shareholders.
The applicable Funds and PIMCO (the “Fund Parties”) have entered into agreements with the Tendering Holders pursuant to which the Fund Parties agreed to conduct the Offers in accordance with the terms set forth herein and the Tendering Holders agreed to tender their Preferred Shares. See Sections 9 and 11 of this Offer to Purchase for additional information. With the Tendering Holders’ commitments to tender their Preferred Shares, and taking into account that the Tendering Holders collectively own approximately 59% of PTY’s Preferred Shares, 44% of PCN’s Preferred Shares, 24% of PHK’s Preferred Shares, 78% of PFL’s Preferred Shares, 54% of PFN’s Preferred Shares, 4% of PCQ’s Preferred Shares, 9% of PCK’s Preferred Shares, 5% of PZC’s Preferred Shares, 10% of PMF’s Preferred Shares, 11% of PML’s Preferred Shares, 5% of PMX’s Preferred Shares, 16% of PNF’s Preferred Shares, 11% of PNI’s Preferred Shares and 10% of PYN’s Preferred Shares, PIMCO is of the view that the Offers will be viable and will provide a benefit to the common shareholders at this minimum level of possible participation, taking into account the costs associated with conducting the Offers and other factors.
Following PIMCO’s recommendation regarding the tender prices, as discussed above, the Boards met on June 14, 2023 to consider the Offer and, based on the information provided to the Boards and PIMCO’s analysis, approved the Offers for each Fund.
Please bear in mind that neither the Funds, nor the Boards, nor the Investment Manager has made any recommendations as to whether you should tender your Preferred Shares. Preferred Shareholders are urged to consult their own investment and tax advisors and make their own decisions whether to tender any Preferred Shares and, if so, how many Preferred Shares to tender.
ARE THERE ANY CONDITIONS TO EACH OFFER?
Each Offer is subject to certain conditions as described in Section 13 of this Offer to Purchase.
IS THE CLOSING OF ONE FUND’S OFFER CONTINGENT ON THE CLOSING OF ANOTHER FUND’S OFFER?
No. The conditions to each Fund’s Offer are only applicable to such Fund’s Offer. The failure to close one Fund’s Offer because a condition is not satisfied or waived has no bearing on another Fund’s Offer.
IF I DECIDE NOT TO TENDER MY PREFERRED SHARES IN AN OFFER, HOW WILL THE OFFER AFFECT MY PREFERRED SHARES?
If you decide not to tender your Preferred Shares, you will still own the same number of Preferred Shares, and the terms of the Preferred Shares will remain the same. The Preferred Shares are not listed on any securities exchange and there is limited secondary market activity for the Preferred Shares. Since mid-February of 2008, the weekly auctions for the Preferred Shares have not attracted sufficient clearing bids for there to be a successful auction. As a result, holders desiring to sell their Preferred Shares have been, and in the future may be, unable to do so and, even if they can sell their Preferred Shares, may be forced to sell outside of the auction process at a substantial discount to the liquidation preference of the Preferred Shares. If you do not tender your Preferred Shares, the Funds cannot assure you that you will be able to sell your Preferred Shares in the future; you may be forced to hold the Preferred Shares indefinitely or you may have to sell your Preferred Shares at a significant discount to their liquidation preference of $25,000 per share. See Section 8 of this Offer to Purchase.
Each Fund may consider in the future, based upon circumstances existing at such time, what action, if any, to take with respect to any Preferred Shares that remain outstanding after its Offer, including a redemption of such Preferred Shares. No Fund, however, currently intends to redeem any Preferred Shares that remain outstanding after its Offer expires.
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HOW WILL I BE NOTIFIED IF AN OFFER IS EXTENDED?
If a Fund decides to extend its Offer, the Fund will inform the Tender Agent of that fact and will make an announcement of the extension not later than 9:00 a.m. on the next business day after the day on which the applicable Offer was scheduled to expire. See Section 2 of this Offer to Purchase.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT AN OFFER?
If you own Preferred Shares through a broker or other nominee holder, you can call your broker or other nominee holder. You can also contact Equiniti Trust Company, LLC, the Tender Agent, at (718) 921.8200, Monday through Friday, 9 a.m. to 5 p.m., Eastern time, or at 6201 15th Avenue, Brooklyn, NY 11219.
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Dear Preferred Shareholder:
INTRODUCTION
PIMCO Corporate & Income Opportunity Fund (“PTY”), PIMCO Corporate & Income Strategy Fund (“PCN”), PIMCO High Income Fund (“PHK”), PIMCO Income Strategy Fund (“PFL”), PIMCO Income Strategy Fund II (“PFN”), PIMCO California Municipal Income Fund (“PCQ”), PIMCO California Municipal Income Fund II (“PCK”), PIMCO California Municipal Income Fund III (“PZC”), PIMCO Municipal Income Fund (“PMF”), PIMCO Municipal Income Fund II (“PML”), PIMCO Municipal Income Fund III (“PMX”), PIMCO New York Municipal Income Fund (“PNF”), PIMCO New York Municipal Income Fund II (“PNI”) and PIMCO New York Municipal Income Fund III (“PYN”), each a Massachusetts business trust registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end management investment company, each hereby offers to purchase up to 100% of such Fund’s outstanding preferred shares of beneficial interest, $0.00001 par value, and liquidation preference of $25,000 per share, designated Auction-Rate Preferred Shares (with respect to each Fund, the “Preferred Shares”) as follows, upon the terms and subject to the conditions set forth in this Offer to Purchase and in each Fund’s related Letter of Transmittal (which together, with respect to each Fund, constitutes such Fund’s “Offer” and, collectively, the “Offers”):
|
Fund |
Preferred Shares | |||
| PIMCO Corporate & Income Opportunity Fund (PTY) |
|
ARPS Series M ARPS Series T ARPS Series W ARPS Series TH ARPS Series F
| ||
|
PIMCO Corporate & Income Strategy Fund (PCN) |
ARPS Series M ARPS Series T ARPS Series W ARPS Series TH ARPS Series F
| |||
| PIMCO High Income Fund (PHK) | ARPS Series M ARPS Series T ARPS Series W ARPS Series TH ARPS Series F
| |||
|
PIMCO Income Strategy Fund (PFL) |
ARPS Series T ARPS Series W ARPS Series TH
| |||
| PIMCO Income Strategy Fund II (PFN) | ARPS Series M ARPS Series T ARPS Series W ARPS Series TH ARPS Series F
| |||
| PIMCO California Municipal Income Fund (PCQ) | ARPS Series A ARPS Series B ARPS Series C
| |||
| PIMCO California Municipal Income Fund II (PCK) | ARPS Series A ARPS Series B ARPS Series C ARPS Series D ARPS Series E
| |||
| PIMCO California Municipal Income Fund III (PZC) | ARPS Series A ARPS Series B
| |||
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| PIMCO Municipal Income Fund (PMF) |
|
ARPS Series A ARPS Series B ARPS Series C ARPS Series D ARPS Series E
| ||
| PIMCO Municipal Income Fund II (PML) | ARPS Series A ARPS Series B ARPS Series C ARPS Series D ARPS Series E
| |||
| PIMCO Municipal Income Fund III (PMX) | ARPS Series A ARPS Series B ARPS Series C ARPS Series D ARPS Series E
| |||
| PIMCO New York Municipal Income Fund (PNF)
|
ARPS Series A
| |||
| PIMCO New York Municipal Income Fund II (PNI) | ARPS Series A ARPS Series B
| |||
| PIMCO New York Municipal Income Fund III (PYN)
|
ARPS Series A
|
The price to be paid for the Preferred Shares is an amount to the seller, equaling 96% with respect to PTY, 93.25% with respect to each of PCN and PHK, 94.25% with respect to each of PFL and PFN, 94.5% with respect to each of PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN of the liquidation preference of $25,000 per share (or $24,000 per share for PTY, $23,312.50 per share for PCN and PHK, $23,562.50 per share for PFL and PFN and $23,625 per share for PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN) in cash, plus any unpaid dividends accrued through the Expiration Date (as defined herein), less any applicable withholding taxes and without interest (each, a “Per Share Amount”). Each Offer is subject to the terms and conditions set forth in this Offer to Purchase and in the related Letter of Transmittal.
Each Fund’s Offer is open to all holders of Auction Rate Preferred Shares of such Fund (with respect to each Fund, “Preferred Shareholders”) and are not conditioned upon there being a minimum number of Preferred Shares validly tendered and not withdrawn prior to the expiration of such Fund’s Offer, but is subject to other conditions as outlined in this Offer to Purchase. See Section 13 “Conditions to the Offers” of this Offer to Purchase.
None of the Funds, their Boards nor the Investment Manager makes any recommendation as to whether you should tender or not tender Preferred Shares in the Offers. No person has been authorized to give any information or to make any representations in connection with the Offers other than those contained in this Offer to Purchase and in the related Letter of Transmittal, and if given or made, such information or representations should not be relied upon as having been authorized by the Funds, their Boards or the Investment Manager. We have been advised that no Trustee or executive officer of any Fund intends to tender any Preferred Shares pursuant to the Offers.
You will not be obligated to pay brokerage fees or commissions in order to tender your Preferred Shares. However, if you own Preferred Shares through a broker, dealer, commercial bank, trust company or other nominee (“Nominee Holder”), and your broker or other Nominee Holder tenders your Preferred Shares on your behalf, your broker or other Nominee Holder may charge you a fee for doing so. You should consult your broker or other Nominee Holder to determine whether any charges will apply. Each Fund will pay all charges and expenses of Equiniti Trust Company, LLC, the tender agent (the “Tender Agent”), whereby the Tender Agent will fulfill the roll of information agent and depositary (in such capacity, the “Depositary”), incurred in connection with such Fund’s Offer. See Section 14 “Fees and Expenses.” The receipt of cash for Preferred Shares purchased by a Fund pursuant to an Offer generally will be a taxable transaction for federal income tax purposes, and you will be responsible for any tax liabilities you incur as a result of participating in the Offer. In addition, if you fail to complete, sign and return to the Tender Agent a Form W-9 (or a substitute form) (or in the case of certain non-U.S. Preferred Shareholders, an appropriate IRS Form W-8 or substitute form), you may be subject to backup withholding on the gross proceeds payable to you pursuant to an Offer, and certain non-U.S. Preferred Shareholders may be subject to U.S. federal income tax withholding on gross proceeds payable to them pursuant to an Offer. See Section 6 “Certain Material U.S. Federal Income Tax Consequences.”
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THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND YOU SHOULD READ THEM CAREFULLY AND IN THEIR ENTIRETY BEFORE YOU MAKE ANY DECISION WITH RESPECT TO THE OFFER.
If you do not wish to tender your Preferred Shares, you need not take any action.
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THE OFFER
1. TERMS OF THE OFFERS; EXPIRATION DATE
Upon the terms and subject to the conditions set forth in this Offer, each Fund will accept for payment and pay for up to 100% of its outstanding Preferred Shares, validly tendered prior to 5:00 p.m. New York City time, on September 18, 2023, or such later date to which the Offer is extended (the “Expiration Date”), and not withdrawn as permitted by Section 4 of this Offer to Purchase. Each Fund reserves the right to extend its Offer to a later Expiration Date. The Offer period may be extended by a Fund issuing a press release or making some other public announcement no later than 9:00 a.m. New York City time on the next business day after the Offer otherwise would have expired.
If a Fund makes a material change in the terms of its Offer or the information concerning its Offer, or if it waives a material condition of its Offer, such Fund will extend its Offer to the extent required under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). During any such extension, all Preferred Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of any such tendering shareholder to withdraw his, her or its shares.
The price to be paid for the Preferred Shares is an amount per share, net to the seller in cash, equal to 96% of the liquidation preference of $25,000 per share with respect to PTY (i.e., a tender offer of $24,000 per share), 93.25% of the liquidation preference of $25,000 per share with respect to each of PCN and PHK (i.e., a tender offer of $23,312.50 per share), 94.25% of the liquidation preference of 25,000 per share with respect to each of PFL and PFN (i.e., a tender offer of $23,562.50 per share), 94.5% of the liquidation preference of $25,000 per share with respect to each of PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN (i.e., a tender offer of $23,625 per share), plus any unpaid dividends accrued through the Expiration Date, less any applicable withholding taxes and without interest. See Section 7 of this Offer to Purchase. Under no circumstances will interest be paid on the offer price for tendered Preferred Shares, regardless of any extension of or amendment to the Offer or any delay in paying for such Preferred Shares.
When considering whether to tender Preferred Shares, you should be aware that the payment received pursuant to each Fund’s Offer will be less than the liquidation preference of the Preferred Shares. Under each Fund’s Bylaws, holders of a Fund’s Preferred Shares would receive the full liquidation preference of the Preferred Shares in certain limited circumstances—i.e., in the event of the liquidation of the Fund or a mandatory redemption under the terms of the Preferred Shares as a result of the Fund failing to meet certain asset coverage requirements. Under current market conditions, PIMCO believes the likelihood of a Fund liquidating or being required to redeem Preferred Shares under the terms of its Bylaws is remote.
Each Fund’s Offer is being made to all of such Fund’s Preferred Shareholders. Each Offer is subject to certain conditions as described in Section 13. No Fund’s Offer is contingent on the consummation of any other Fund’s Offer.
Subject to the terms and conditions of its Offer, each Fund will pay the consideration offered or return the tendered securities promptly after the termination or withdrawal of its Offer. The amount of any stock or share transfer taxes imposed in respect of Preferred Shares tendered in connection with the Offer, including, without limitation, such taxes imposed for a reason other than the sale or transfer of Preferred Shares to the Fund pursuant to its Offer, whether such taxes are imposed on the registered holder(s), any other person to whom shares are to be returned or the purchase price is to be paid, or otherwise, including any such taxes due in respect of (a) shares tendered but not purchased, including such shares that are to be returned in the name of a person other than the registered holder(s), or (b) shares the purchase price for which is paid to a person other than the registered holder(s), will be for the Preferred Shareholder’s account and will not be borne by the Fund. Preferred Shareholders should consult their own tax advisors concerning the tax consequences of participating in the Offers in light of their particular situations.
As of the date of these Offers, there were 8,506 Preferred Shares outstanding for PTY, 941 Preferred Shares outstanding for PCN, 2,322 Preferred Shares outstanding for PHK, 1,808 Preferred Shares outstanding for PFL, 3,497 Preferred Shares outstanding for PFN, 4,825 Preferred Shares outstanding for PCQ, 5,147 Preferred Shares outstanding for PCK, 3,915 Preferred Shares outstanding for PZC, 6,668 Preferred Shares outstanding for PMF, 11,931 Preferred Shares outstanding for PML, 6,188 Preferred Shares outstanding for PMX, 1,641 Preferred Shares
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outstanding for PNF, 2,320 Preferred Shares outstanding for PNI and 1,178 Preferred Shares outstanding for PYN. As of the date of these Offers, the Trustees and executive officers of each Fund did not beneficially own any Preferred Shares.
2. EXTENSION OF TENDER PERIOD, TERMINATION; AMENDMENT
Each Fund expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the period of time during which its Offer is pending by making a public announcement thereof. During any such extension, all Preferred Shares previously tendered and not purchased or withdrawn will remain subject to the applicable Offer. Each Fund also reserves the right, at any time and from time to time up to and including the Expiration Date, to amend its Offer in any respect by making a public announcement thereof. Such public announcement will be issued no later than 9:00 a.m. New York City time on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which a Fund may choose to make a public announcement of extension, termination or amendment, except as provided by applicable law, the Fund shall have no obligation to publish, advertise or otherwise communicate any such public announcement.
If a Fund materially changes the terms of its Offer or the information concerning its Offer, or if it waives a material condition of its Offer, that Fund will extend its Offer to the extent required by rules promulgated under the Exchange Act. These rules require that the minimum period during which a tender offer must remain open following material changes in the terms of the offer or information concerning the offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information. If (i) a Fund increases or decreases the price to be paid for Preferred Shares, or the Fund decreases the number of Preferred Shares being sought and (ii) its Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that notice of such increase or decrease is first published, sent or given, its Offer will be extended at least until the expiration of such period of ten business days.
3. PROCEDURES FOR TENDERING PREFERRED SHARES
To tender Preferred Shares pursuant to an Offer, either (i) you must comply with The Depository Trust Company’s Automated Tender Offer Program (“ATOP”) procedures in which the Depositary must receive delivery of such Preferred Shares pursuant to the procedures for book-entry transfer described below (and a timely confirmation of such delivery into its account at The Depository Trust Company through ATOP along with an Agent’s Message (as defined below)) by the Expiration Date, or (ii) the guaranteed delivery procedures described below must be complied with.
Preferred Shareholders whose Preferred Shares are registered in the name of a broker or other Nominee Holder should contact such Nominee Holder if they desire to tender their Preferred Shares. Such Preferred Shareholders may need to inform their brokers or other Nominee Holders of any decision to tender Preferred Shares, and deliver any required materials, before 5:00 p.m., New York City time, on the Expiration Date. You should consult your broker or other Nominee Holder to determine when you would need to inform such Nominee Holder of any decision to tender Preferred Shares and to deliver any required materials to them in order to tender your Preferred Shares.
Participants in the ATOP program must electronically transmit their acceptance of the exchange by causing The Depository Trust Company to transfer the Preferred Shares to the Depositary in accordance with ATOP procedures for transfer. The Depository Trust Company will then send an Agent’s Message to the Depositary.
Book-Entry Delivery. The Depositary will make a request to establish an account with respect to the Preferred Shares at The Depository Trust Company (the “Book-Entry Transfer Facility”) for purposes of each Offer promptly after the date of such Offer, and any financial institution that is a participant in the system of the Book-Entry Transfer Facility may make book-entry delivery of Preferred Shares by causing the Book-Entry Transfer Facility to transfer such Preferred Shares into the Depositary’s account at the Book-Entry Transfer Facility in accordance with the procedures of the Book-Entry Transfer Facility. However, although delivery of Preferred Shares may be effected through book-entry transfer, an Agent’s Message (as defined below) and any other required documents must, in any case, be received by the Depositary at its address set forth on the back cover of this Offer to Purchase by the Expiration Date, or the guaranteed delivery procedure described below must be complied with. Delivery of any other required documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. “Agent’s Message” means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the
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Depositary and forming a part of a book-entry confirmation which states that (1) the Book-Entry Transfer Facility has received an express acknowledgment from the participant in its ATOP that is tendering the Preferred Shares that are the subject of such book-entry confirmation, (2) the participant has received, and agrees to be bound by, the terms of the Offers and (3) a Fund may enforce such agreement against such participant. Delivery of an Agent’s Message will also constitute an acknowledgment from the tendering participant that the representations described in the applicable Offer are true and correct.
Guaranteed Delivery. If you wish to tender Preferred Shares pursuant to the Offer of a Fund and cannot deliver such Preferred Shares and all other required documents to the Depositary by the Expiration Date, or cannot complete the procedure for delivery by book-entry transfer on a timely basis, you may nevertheless tender such Preferred Shares if all of the following conditions are met:
(i) for Preferred Shares held in street name, such tender is made by or through an Eligible Institution (a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program, the Stock Exchange Medallion Program or any other “eligible guarantor institution” (as defined in Rule 17Ad-15 under the Exchange Act) (each of the foregoing, an “Eligible Institution”));
(ii) a properly completed and duly executed Notice of Guaranteed Delivery in the form provided by the Fund is received by the Depositary (as provided below) by the Expiration Date; and
(iii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee or an Agent’s Message and any other documents required by the Letter of Transmittal and, for Preferred Shares held in street name, confirmation of a book-entry transfer of such Preferred Shares into the Depositary’s account at the Book-Entry Transfer Facility, are received by the Depositary within three New York Stock Exchange (“NYSE”) trading days after the date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice. The method of delivery of Preferred Shares and all other required documents, including through the Book-Entry Transfer Facility, is at your option and risk and the delivery will be deemed made only when actually received by the Depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.
U.S. Federal Tax Withholding. Under U.S. federal income tax law, the gross proceeds otherwise payable to an individual or certain non-corporate Preferred Shareholders pursuant to an Offer may be subject to a backup withholding tax unless the Preferred Shareholder provides the information described in Section 6 of this Offer to Purchase. In addition, under certain circumstances, a withholding rate of 30% (or a lower applicable treaty rate) may be applied to the gross payments payable to a Non-U.S. Preferred Shareholder, as described in Section 6 of this Offer to Purchase.
Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation to Give Notice of Defects. Each Fund will determine, in its sole discretion, all questions as to the number of Preferred Shares to be accepted, and the validity, form, eligibility, including time of receipt, and acceptance for payment of any tender of Preferred Shares. Each Fund’s determination will be final and binding on all parties. Each Fund reserves the absolute right to reject any or all tenders it determines not to be in proper form or the acceptance of or payment for which it determines may be unlawful. Each Fund also reserves the absolute right to waive any of the conditions of its Offer and any defect or irregularity in the tender of any particular Preferred Shares or any particular Preferred Shareholder. No tender of Preferred Shares of a Fund will be deemed to be properly made until all defects or irregularities have been cured by the tendering Preferred Shareholder or waived by the Fund. None of the Funds, the Tender Agent, or any other person will be under any duty to give notice of any defects or irregularities in any tender, or incur any liability for failure to give any such notice. A Fund’s interpretation of the terms of and conditions to its Offer, including the Letter of Transmittal and the instructions thereto, will be final and binding. By tendering Preferred Shares to a Fund, you agree to accept all decisions that Fund makes concerning these matters and waive any right you might otherwise have to challenge those decisions.
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Your Representation and Warranty; Our Acceptance Constitutes an Agreement. A tender of Preferred Shares of a Fund under any of the procedures described above will constitute your acceptance of the terms and conditions of the Fund’s Offer, as well as your representation and warranty to such Fund that:
| • | you have the full power and authority to tender, sell, assign and transfer the Preferred Shares tendered, as specified in the Letter of Transmittal or otherwise. |
Each Fund’s acceptance for payment of Preferred Shares tendered under the Fund’s Offer will constitute a binding agreement between you and that Fund with respect to such Preferred Shares, upon the terms and conditions of its Offer described in this and related documents.
By making the book-entry transfer of Preferred Shares as described above, subject to, and effective upon, acceptance for payment of the Preferred Shares tendered in accordance with the terms and subject to the conditions of a Fund’s Offer, in consideration of the acceptance for payment of such Preferred Shares in accordance with the terms of the Offer, the tendering Preferred Shareholder shall be deemed to sell, assign and transfer to, or upon the order of, the Fund all right, title and interest in and to all the Preferred Shares that are being tendered and that are being accepted for purchase pursuant to the Offer (and any and all dividends, distributions, other shares or other securities or rights declared or issuable in respect of such Preferred Shares after the Expiration Date) and irrevocably constitute and appoint the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Preferred Shares (and any such dividends, distributions, other shares or securities or rights), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) transfer ownership of such Preferred Shares (and any such other dividends, distributions, other shares or securities or rights), together with all accompanying evidences of transfer and authenticity to or upon the order of the Fund, upon receipt by the Depositary, as the agent of the tendering Preferred Shareholder, of the purchase price; (b) present such Preferred Shares (and any such other dividends, distributions, other shares or securities or rights) for transfer on the books of the Fund; and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Preferred Shares (and any such other dividends, distributions, other shares or securities or rights), all in accordance with the terms of the Offer. Upon such acceptance for payment, all prior powers of attorney given by the tendering Preferred Shareholder with respect to such Preferred Shares (and any such other dividends, distributions, other shares or securities or rights) will, without further action, be revoked and no subsequent powers of attorney may be given by the tendering Preferred Shareholder (and, if given, will not be effective).
By making the book-entry transfer of Preferred Shares as described above, and in accordance with the terms and conditions of a Fund’s Offer, the tendering Preferred Shareholder also shall be deemed to represent and warrant that: (a) the tendering Preferred Shareholder has full power and authority to tender, sell, assign and transfer the tendered Preferred Shares (and any such other dividends, distributions, other shares or securities or rights declared or issuable in respect of such Preferred Shares after the Expiration Date); (b) when and to the extent the Fund accepts the Preferred Shares for purchase, the Fund will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, proxies, encumbrances or other obligations relating to their sale or transfer, and not subject to any adverse claim; (c) on request, the tendering Preferred Shareholder will execute and deliver any additional documents deemed by the Depositary or the Fund to be necessary or desirable to complete the sale, assignment and transfer of the tendered Preferred Shares (and any such other dividends, distributions, other shares or securities or rights declared or issuable in respect of such Preferred Shares after the Expiration Date); and (d) the tendering Preferred Shareholder has read the Offer Documents and agreed to all of the terms of the Fund’s Offer.
4. WITHDRAWAL RIGHTS
Preferred Shares tendered pursuant to a Fund’s Offer may be withdrawn pursuant to the procedures set forth below at any time prior to the Expiration Date, and unless already accepted for payment pursuant to the Offer, at any time after 5:00 p.m., New York City time on September 18, 2023. If your Preferred Shares are registered in the name of your broker or other Nominee Holder, you may need to allow such Nominee Holder additional time to withdraw your tendered Preferred Shares. You should consult your broker or other Nominee Holder to determine if there is an earlier deadline by which you must inform such Nominee Holder of any decision to withdraw your tendered Preferred Shares. After the Expiration Date, Preferred Shares may not be withdrawn except as otherwise provided in this section.
For a withdrawal to be effective, a written notice of withdrawal must be timely received by the Depositary at its address set forth on the back cover of a Fund’s Offer and must specify the name of the person having tendered the
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Preferred Shares to be withdrawn, the number of Preferred Shares to be withdrawn and the name of the registered holder of the Preferred Shares to be withdrawn, if different from the name of the person who tendered the Preferred Shares. If the Preferred Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Preferred Shares tendered by an Eligible Institution) signatures guaranteed by an Eligible Institution must be submitted prior to the release of such Preferred Shares. In addition, such notice must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Preferred Shares. Withdrawals may not be rescinded, and any Preferred Shares validly withdrawn will thereafter be deemed not validly tendered for purposes of an Offer. However, withdrawn Preferred Shares may be retendered by again following one of the procedures described in Section 3 of this Offer to Purchase at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by a Fund in its sole discretion, which determination will be final and binding. None of the Funds, the Tender Agent, or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification.
The method of delivery of any documents related to a withdrawal is at the risk of the withdrawing Preferred Shareholder. Any documents related to a withdrawal will be deemed delivered only when actually received by the Depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.
5. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of its Offer, each Fund will accept for payment, and will pay cash for, Preferred Shares validly tendered on or before the Expiration Date, and not properly withdrawn in accordance with Section 4 of this Offer to Purchase, promptly after the Expiration Date of such Fund’s Offer. Each Fund expressly reserves the right, in its sole discretion, to delay the acceptance for payment of, or payment for, Preferred Shares, in order to comply, in whole or in part, with any applicable law.
For purposes of its Offer, each Fund will be deemed to have accepted for payment Preferred Shares validly tendered and not withdrawn as, if and when it gives or causes to be given oral or written notice to the Depositary of its acceptance for payment such Preferred Shares pursuant to the Offer. Payment for Preferred Shares accepted for payment pursuant to a Fund’s Offer will be made by deposit of the aggregate purchase price therefore with the Depositary, which will act as agent for the tendering Preferred Shareholders for purpose of receiving payments from the Fund and transmitting such payments to the tendering Preferred Shareholders. In all cases, payment for Preferred Shares accepted for payment pursuant to an Offer will be made only after timely receipt by the Depositary of a confirmation of a book-entry transfer of such Preferred Shares into the Depositary’s account at the Book-Entry Transfer Facility, a properly completed Agent’s Message and any other required documents. Accordingly, payment may be made to tendering Preferred Shareholders at different times if delivery of the Preferred Shares and other required documents occurs at different times. For a description of the procedure for tendering Preferred Shares pursuant to an Offer, see Section 3 of this Offer to Purchase. Under no circumstances will interest on the purchase price for Preferred Shares be paid, regardless of any delay in making such payment. Although none of the Funds has any current intention to do so, if a Fund increases the consideration to be paid for Preferred Shares pursuant to its Offer, that Fund will pay such increased consideration for all Preferred Shares purchased pursuant to its Offer.
If any tendered Preferred Shares are not accepted for payment pursuant to the terms and conditions of a Fund’s Offer for any reason, or are not accepted because of an invalid tender, such unpurchased or untendered Preferred Shares will be returned via credit to an account maintained at the Book-Entry Transfer Facility (as defined below), without expense to you, or to other persons at your discretion, as promptly as practicable following the expiration or termination of that Offer.
The purchase price of the Preferred Shares will equal 96% of the liquidation preference of $25,000 per share with respect to PTY (i.e., a tender offer of $24,000 per share), 93.25% of the liquidation preference of $25,000 per share with respect to each of PCN and PHK (i.e., a tender offer of $23,312.50 per share), 94.25% of the liquidation preference of 25,000 per share with respect to each of PFL and PFN (i.e., a tender offer of $23,562.50 per share), 94.5% of the liquidation preference of $25,000 per share with respect to each of PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN (i.e., a tender offer of $23,625 per share), plus any unpaid dividends accrued through the
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Expiration Date, less any applicable withholding taxes and without interest. If you own Preferred Shares through a broker or other Nominee Holder, and your broker or other Nominee Holder tenders your Preferred Shares on your behalf, your broker or other Nominee Holder may charge you a fee for doing so. You should consult your broker or other Nominee Holder to determine whether any charges will apply.
6. CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary of certain U.S. federal income tax consequences of the sale of Preferred Shares pursuant to an Offer by a Fund is for general information purposes only. Unless otherwise noted, this discussion deals only with shares held as capital assets and does not deal with special situations or particular types of Preferred Shareholders subject to special treatment under U.S. federal income tax laws (including financial institutions or dealers in securities or commodities, regulated investment companies, traders in securities that elect to mark their holdings to market, insurance companies, Preferred Shareholders subject to the federal alternative minimum tax, or Preferred Shareholders whose functional currency is not the U.S. dollar). This discussion is not tax advice and does not address all aspects of taxation (including other federal (non-income) taxes, state, local, or foreign taxes, estate taxes, or the Medicare tax on unearned income) that may be relevant to particular Preferred Shareholders in light of their own investment or tax circumstances. Furthermore, this discussion assumes that no Preferred Shareholder actually or, pursuant to certain constructive ownership rules in Section 318 of the Internal Revenue Code of 1986, as amended (the “Code”), constructively holds common shares or other shares of beneficial interest in the relevant Fund. A Preferred Shareholder who actually or constructively holds common shares or other shares of beneficial interest in the relevant Fund may have different tax considerations and consequences from those described below and should consult its tax advisor about the special tax considerations and consequences that may apply or arise.
The discussion below is based upon the provisions of the Code and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified, possibly on a retroactive basis, so as to result in U.S. federal income tax consequences different from those discussed below.
Preferred Shareholders should consult their own tax advisors concerning the U.S. federal income tax consequences of participating in the Offers in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction.
As used herein, a “U.S. Preferred Shareholder” means a Preferred Shareholder that is (i) a citizen or resident of the U.S., (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes), partnership or other entity created or organized in or under the laws of the U.S., any State or any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of the source of the income, or (iv) a trust if it (x) is subject to the supervision of a court within the U.S. and one or more U.S. persons has the authority to control all substantial decisions of the trust or (y) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. A “Non-U.S. Preferred Shareholder” is a Preferred Shareholder that is not a U.S. Preferred Shareholder.
A sale of Preferred Shares of a Fund for cash in an Offer generally will be a taxable transaction for U.S. federal income tax purposes. Depending on a Preferred Shareholder’s particular circumstances, the sale of Preferred Shares pursuant to a Fund’s Offer generally will be treated either (i) as a “sale or exchange” producing gain or loss or (ii) as the receipt of a distribution from the Fund that is potentially taxable to the Preferred Shareholder as a dividend. For the avoidance of doubt, any taxes imposed on or in respect of a Preferred Shareholder in connection with its sale of Preferred Shares pursuant to a Fund’s Offer, including any applicable share transfer taxes, as discussed in Section 1 above, and any applicable withholding taxes, as discussed below, will be for the Preferred Shareholder’s account and will not be borne by the Fund.
Under Section 302(b) of the Code, a sale of Preferred Shares of a Fund pursuant to an Offer generally will be treated as a sale or exchange of those Preferred Shares if the receipt of cash by the shareholder: (a) results in a complete termination of the Preferred Shareholder’s interest in the Fund, (b) results in a “substantially disproportionate” redemption with respect to the Preferred Shareholder based on certain numerical safe harbors with respect to percentage voting interest and reduction in ownership of the Fund following the completion of the Offer, or (c) is “not essentially equivalent to a dividend” with respect to the Preferred Shareholder. Generally, for this purpose, a redemption is “not essentially equivalent to a dividend” if it results in a “meaningful reduction” of a Preferred Shareholder’s percentage interest in the Fund. Whether a reduction is “meaningful” depends on a Preferred Shareholder’s particular facts and circumstances; in general, the smaller a Preferred Shareholder’s percentage interest in the Fund, the more likely that any reduction therein will be treated as “meaningful.”
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In determining whether any of these tests has been met, Preferred Shares of a Fund actually owned, as well as Preferred Shares of the Fund considered to be owned by the Preferred Shareholder by reason of certain constructive ownership rules set forth in Section 318 of the Code, generally must be taken into account. Further, contemporaneous dispositions or acquisitions of the Fund’s stock by a Preferred Shareholder or a related party may be deemed to be part of a single integrated transaction for purposes of determining whether any of the three tests have been satisfied. Preferred Shareholders participating in an Offer should consult with their tax advisers regarding the applicability of one or more of these tests to their particular situations.
If any of these three tests for sale or exchange treatment under Section 302(b) is met, a Preferred Shareholder will recognize gain or loss equal to the difference between (i) the price paid by a Fund for the Preferred Shares purchased in its Offer, minus any amounts treated as a dividend, as explained below, and (ii) the Preferred Shareholder’s adjusted basis in such Preferred Shares. If the Preferred Shareholder holds such Preferred Shares as a capital asset, the gain or loss will be capital gain or loss, which generally will be long-term capital gain if the Preferred Shareholder has owned such Preferred Shares (or is deemed to have owned such Preferred Shares) for more than one year, and otherwise as short-term capital gain or loss. The deductibility of capital losses is subject to certain limitations.
To the extent that a Preferred Shareholder receives, as part of its gross proceeds on the tender of its Preferred Shares of a Fund, accumulated and unpaid dividends, the portion of the gross proceeds representing such dividend amounts generally will be treated as exempt-interest dividends, ordinary income dividends or capital gain dividends in the hands of the Preferred Shareholder, as reported by the Fund, to the extent such dividends have been previously declared by the Fund. The tax treatment of each such type of dividend for Preferred Shareholders is explained in the next paragraph.
If, in the case of a Preferred Shareholder’s sale of Preferred Shares pursuant to an Offer, the requirements of Section 302(b) of the Code for sale or exchange treatment are not met, amounts received by a Preferred Shareholder in exchange for its Preferred Shares pursuant to a Fund’s Offer will be taxable to the Preferred Shareholder as a dividend to the extent of such Preferred Shareholder’s allocable share of the Fund’s current and accumulated earnings and profits. In this case, a Preferred Shareholder will not be permitted to recognize any loss in connection with its sale of its Preferred Shares pursuant to the Offer. Any such dividend will constitute an exempt-interest dividend, an ordinary income dividend or capital gain dividend. The portion of any such dividend properly reported as an exempt-interest dividend is not generally taxable to Preferred Shareholders for regular U.S. federal income tax purposes but may be subject to state and local taxes. An ordinary income dividend is generally taxable at ordinary income tax rates, and a dividend properly reported as a capital gain dividend is generally taxable at long-term capital gain rates. No portion of any amount a Preferred Shareholder receives from a Fund in connection with an Offer that is treated as an ordinary income dividend is expected to qualify for the corporate dividends-received deduction (for corporate Preferred Shareholders) or as “qualified dividend income” (for certain non-corporate Preferred Shareholders). To the extent that amounts received in connection with an Offer exceed a Preferred Shareholder’s allocable share of the Fund’s current and accumulated earnings and profits for a taxable year, those excess amounts will first be treated as a non-taxable return of capital, causing a reduction in the adjusted basis of such Preferred Shareholder’s Preferred Shares, thus reducing any loss or increasing any gain on a subsequent taxable disposition by the Preferred Shareholder of its Preferred Shares; any amounts in excess of the Preferred Shareholder’s adjusted basis in its Preferred Shares will constitute taxable gain. Any remaining adjusted basis in the Preferred Shares tendered to the Fund (after reduction by the non-taxable return of capital amount) will be transferred to any remaining Preferred Shares held by such Preferred Shareholder following an Offer. In addition, in the case of a corporate Preferred Shareholder, if the requirements of Section 302(b) of the Code are not met and the Preferred Shareholder is treated as receiving a dividend from the Fund, in certain cases the dividend could constitute an “extraordinary dividend” under Section 1059 of the Code, potentially resulting in special basis adjustments for any remaining Preferred Shares held by such Preferred Shareholder following the Offer and the recognition of gain. Corporate Preferred Shareholders should consult their tax advisers for the possible applicability of this special rule to them.
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In the event that a tendering Preferred Shareholder is deemed to receive a dividend as a result of tendering its Preferred Shares, it is possible that shareholders of a Fund whose percentage ownership of the Fund increases as a result of the tender will be deemed to receive a constructive distribution from the Fund, whether or not such shareholders tender Preferred Shares in connection with the Offer. Any such constructive distribution will be treated as a dividend, whether an exempt-interest dividend, an ordinary income dividend or capital gain dividend, as applicable, to the extent of a Fund’s current and accumulated earnings and profits. Such treatment will not apply, however, if the purchase is treated as an “isolated redemption” within the meaning of the Treasury regulations.
Backup Federal Income Tax Withholding. Backup withholding tax may be imposed on the gross proceeds paid to a tendering U.S. Preferred Shareholder unless the U.S. Preferred Shareholder provides to the applicable withholding agent, generally on an IRS Form W-9 or substitute form, its taxpayer identification number (employer identification number or social security number), certifies as to no loss of exemption from backup withholding, complies with applicable requirements of the backup withholding rules or is otherwise exempt from backup withholding. In order for a Non-U.S. Preferred Shareholder to qualify as an exempt recipient not subject to backup withholding, such Non-U.S. Preferred Shareholder must certify as to their non-U.S. status to the applicable withholding agent, generally on the applicable IRS Form W-8 or substitute form. Backup withholding is not an additional federal income tax. Any amounts withheld may be credited against the shareholder’s U.S. federal income tax liability and, if withholding results in an overpayment of taxes, a refund may be obtained, provided the appropriate information is furnished to the Internal Revenue Service. Tendering Preferred Shareholders are urged to consult their own tax advisors and the applicable withholding agent, such as their broker or other Nominee Holder about the requirements.
Withholding for Non-U.S. Preferred Shareholders. In certain circumstances, a U.S. federal income tax equal to 30% (or a lower applicable treaty rate) may be withheld from the gross payments payable to a Non-U.S. Preferred Shareholder or his or her agent. In order to obtain a reduced rate of withholding pursuant to a tax treaty, in general, a Non-U.S. Preferred Shareholder generally must deliver to the applicable withholding agent before the payment a properly completed and executed IRS Form W-8BEN, IRS Form W-8BEN-E or applicable substitute form. In order to obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the U.S., a Non-U.S. Preferred Shareholder must deliver to the applicable withholding agent a properly completed and executed IRS Form W-8ECI or substitute form. If this withholding tax is applied, but no or fewer income taxes are due (e.g., because the gross proceeds constitute “sale or exchange” proceeds under Section 302(b), as described above) a Non-U.S. Shareholder may be eligible to obtain a refund of all or a portion of any tax withheld. Backup withholding generally will not apply to amounts subject to the 30% or a treaty-reduced rate of withholding. Non-U.S. Preferred Shareholders are urged to consult their own tax advisors and the applicable withholding agent, such as their broker or other Nominee Holder, regarding the application of U.S. federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the refund procedure, if applicable.
FATCA Withholding. Sections 1471-1474 of the Code and the U.S. Treasury and IRS guidance issued thereunder (collectively, “FATCA”) generally require a Fund to obtain information sufficient to identify the status of each of its shareholders under FATCA or under an applicable intergovernmental agreement (an “IGA”) between the United States and a foreign government. If a Preferred Shareholder fails to provide the requested information or otherwise fails to comply with FATCA or an IGA, a Fund may be required to withhold under FATCA with respect to that Preferred Shareholder at a rate of 30% on ordinary dividends it pays. The IRS and the Department of Treasury have issued proposed regulations providing that these withholding rules will not be applicable to the gross proceeds of share redemptions or capital gain dividends a Fund pays. If a payment by a Fund is subject to FATCA withholding, the Fund is required to withhold without reference to any other withholding exemption.
As a Fund may not be able to determine whether a payment made pursuant to the Offer will properly be characterized as an “exchange” or a “dividend” for U.S. tax purposes at the time of such payment, any payment to a tendering stockholder that is a foreign financial institution (“FFI”) or non-financial foreign entity (“NFFE”) may be subject to a 30% withholding tax unless (a) in the case of an FFI, the FFI reports certain direct and indirect ownership of foreign financial accounts held by U.S. persons with the FFI and (b) in the case of an NFFE, the NFFE (i) reports information relating to its “substantial U.S. owners” (within the meaning of FATCA), if any, or (ii) certifies that it has no “substantial U.S. owners.”
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Certain Non-U.S. Preferred Shareholders may fall into certain exempt, excepted or deemed-compliant categories as established by U.S. Treasury regulations, IGAs, and other guidance regarding FATCA. In order to qualify for any such exception, a Non-U.S. Preferred Shareholder generally must provide a Fund with the applicable IRS Form W-8 (W-8BEN-E, W-8ECI, W-8EXP or W-8IMY) properly certifying the Preferred Shareholder’s status under FATCA.
Preferred Shareholders are urged to consult their own tax advisers regarding the application of U.S. federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the applicable refund procedure, if any.
7. PRICE RANGE OF PREFERRED SHARES; DIVIDENDS
The Preferred Shares are not listed and do not trade on any securities exchange. Although the Preferred Shares may be purchased and sold through privately-negotiated transactions, limited secondary market activity for the Preferred Shares exists today and no public trading market for the Preferred Shares has been established outside the auction process. Accordingly, no reliable price history is available. In addition, since mid-February of 2008, the weekly auctions for the Preferred Shares have failed.
The terms of each Offer provide that Preferred Shareholders tendering Preferred Shares are entitled to receive all dividends accrued on the Preferred Shares on or before the Expiration Date, but not yet paid. Prior to the Expiration Date, dividends will be paid on the regularly scheduled dividend payment dates for the Preferred Shares. The amount and frequency of dividends in the future will be set at auction according to the terms of the Preferred Shares or, if an auction fails, at the maximum rate described below or as otherwise provided pursuant to the terms of the Preferred Shares.
8. SOURCE AND AMOUNT OF FUNDS; EFFECT OF THE OFFERS
If 100% of the outstanding Preferred Shares are purchased pursuant to a Fund’s Offer, the estimated cost to the Fund, not including fees and expenses incurred in connection with each Offer, will be approximately $204,144,000 for PTY, $21,937,062.50 for PCN, $54,131,625 for PHK, $42,601,000 for PFL, $82,398,062.50 for PFN, $113,990,625 for PCQ, $121,597,875 for PCK, $92,491,875 for PZC, $157,531,500 for PMF, $281,869,875 for PML, $146,191,500 for PMX, $38,768,625 for PNF, $54,810,000 for PNI and $27,830,250 for PYN, plus for each Fund any unpaid dividends accrued through the Expiration Date.
Although each Fund may use cash on hand and may sell securities in the Fund’s investment portfolio to pay the purchase price for Preferred Shares tendered, a Fund may also use additional forms of leverage, including for example through reverse repurchase agreements or other forms of preferred shares, to finance the costs of its Offer. There are no financing conditions to the Offers.
Purchase Price in each Offer is Less than Liquidation Preference. The Per Share Amount reflects a discounted price of 96% with respect to PTY, 93.25% with respect to each PCN and PHK, 94.25% with respect to each PFL and PFN and 94.5% with respect to each PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN, of the liquidation preference of $25,000 per share of each Fund’s Preferred Shares. Under each Fund’s Bylaws, holders of a Fund’s Preferred Shares would receive the full liquidation preference of the Preferred Shares in certain limited circumstances—i.e., in the event of the liquidation of the Fund or a mandatory redemption under the terms of the Preferred Shares as a result of the Fund failing to meet certain asset coverage requirements. Under current market conditions, PIMCO believes the likelihood of a Fund liquidating or being required to redeem Preferred Shares under the terms of its Bylaws is remote. Each Fund may consider in the future, based upon circumstances existing at such time, what action, if any, to take with respect to any Preferred Shares that remain outstanding after its Offer, including a redemption of such Preferred Shares. None of the Funds, however, currently intends to redeem any Preferred Shares that remain outstanding after its Offer expires.
Effect on Net Asset Value of Common Shares. Preferred Shareholders should note that each Offer is expected to result in accretion to the net asset value of the common shares of beneficial interest of each Fund (“Common Shares”) following its Offer, due to the fact that the tender price would represent a discounted price of 96% with respect to PTY, 93.25% with respect to each PCN and PHK, 94.25% with respect to each PFL and PFN and 94.5% with respect to each PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN to the liquidation preference of each Fund’s Preferred Shares. The price to be paid in each Offer represents a discount to the liquidation preference of $25,000 for each Preferred Share, which is the amount a Preferred Shareholder would receive, after payment of a
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Fund’s liabilities, in the event of a liquidation of the Fund (to the extent assets are available) or in the event of a mandatory redemption under the terms of the Preferred Shares as a result of the Fund failing to meet certain asset coverage requirements.
A Fund is required by law to pay for tendered Preferred Shares it accepts for payment promptly after the Expiration Date of its Offer. Because each Fund will not know the number of Preferred Shares tendered until the Expiration Date, the Fund will not know until the Expiration Date the amount of cash required to pay for such Preferred Shares. If on, or prior to, the Expiration Date a Fund does not have, or believes it is unlikely to have, sufficient cash to pay for all Preferred Shares tendered, it may extend its Offer to allow additional time to raise sufficient cash.
Lack of Market for Preferred Shares. The actual number of Preferred Shares outstanding subsequent to completion of an Offer will depend on the number of Preferred Shares tendered and purchased in the Offer. Any Preferred Shares not tendered pursuant to an Offer will remain issued and outstanding until repurchased or redeemed by a Fund. As noted above, under each Fund’s Bylaws, holders of a Fund’s Preferred Shares would receive the full liquidation preference of the Preferred Shares in certain limited circumstances—i.e., in the event of the liquidation of the Fund or a mandatory redemption under the terms of the Preferred Shares as a result of the Fund failing to meet certain asset coverage requirements. Under current market conditions, PIMCO believes the likelihood of a Fund liquidating or being required to redeem Preferred Shares under the terms of its Bylaws is remote. As described below, there have not been sufficient clearing bids in auctions since mid-February of 2008 to effect transfers of the Preferred Shares and there can be no assurance that there will be future liquidity for the Preferred Shares. PIMCO regularly examines leverage alternatives for each Fund and presents related information to each Fund’s Board for the Board’s consideration as part of its ongoing investment responsibilities. In examining such alternatives, PIMCO considers its economic and interest rate outlook, the rollover and refinancing risks inherent in alternative forms of leverage as a result of the non-permanent terms of such alternative forms of leverage, the costs, terms, asset coverage requirements and covenants, as applicable, associated with the leverage alternatives available in the marketplace and the viability of conducting a tender offer at an adequately discounted price. In considering any recommendation by PIMCO and making any decision as to whether to effect a redemption of any of a Fund’s Preferred Shares remaining outstanding following the consummation of its Offer, each Fund will take into account what is in the best interests of the Fund’s shareholders and the particular facts and circumstances that may then exist, which may include some or all of the factors noted in the immediately preceding sentence and any other factors as the Fund deems relevant.
The Preferred Shares a Fund acquires pursuant to its Offer will be canceled and returned to the status of authorized but unissued shares and will be available for the Fund to issue without further action by the shareholders of the Fund (except as required by applicable law or the rules of the NYSE or any other securities exchanges on which the common shares may then be listed) for purposes including, without limitation, the raising of additional capital for use in the Fund’s business.
Tax Consequences of Purchase to Preferred Shareholders. Each Fund’s purchase of tendered Preferred Shares pursuant to its Offer will have tax consequences for tendering Preferred Shareholders and may have tax consequences for non-tendering Preferred Shareholders. See Section 6 “Certain Material U.S. Federal Income Tax Consequences” of the Offer to Purchase.
9. PURPOSE OF THE OFFERS
Each Fund issued the Preferred Shares for purposes of adding leverage to its portfolio for investment purposes. Through the use of leverage, each Fund, similar to other closed-end funds, has sought to enhance the distributions and investment return available over time to the common shareholders by earning a rate of portfolio return (which includes the return related to investment made with the proceeds from leverage) that exceeds the leverage cost, typically over the long term.
Under market conditions as they existed prior to mid-February of 2008, distribution rates on the Preferred Shares for each weekly rate period generally were set at the market clearing rate determined through an auction process maintained and administered by unaffiliated broker-dealers that brought together bidders, who sought to buy Preferred Shares, and holders of Preferred Shares, who sought to sell their Preferred Shares. Since mid-February 2008, holders of the Preferred Shares have been directly impacted by lack of liquidity, which has similarly affected holders of similar auction rate preferred securities issued by many of the nation’s closed-end funds. Since then,
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regularly scheduled auctions for the Preferred Shares have consistently “failed” because of insufficient demand (bids to buy shares) to meet the supply (shares offered for sale) at each auction. In a failed auction, Preferred Shareholders cannot sell all, and may not be able to sell any, of their Preferred Shares tendered for sale. While repeated auction failures have affected the liquidity for the Preferred Shares, the failure of the auctions does not constitute a default or automatically alter the credit quality of the Preferred Shares, and Preferred Shareholders have continued to receive dividends at the defined “maximum rate”, which is currently calculated as (i) for PHK and PCN, the applicable 7-day “AA” Financial Composite Commercial Paper Rate multiplied by 160%; (ii) for PTY, the applicable 7-day “AA” Financial Composite Commercial Paper Rate multiplied by 200%; (iii) for PFL and PFN, the higher of the LIBOR Replacement Rate multiplied by 200% and the LIBOR Replacement Rate plus 2.00%; and (iv) for PML, PMF, PMX, PCQ, PCK, PZC, PNF, PNI and PYN, 110% (or 150% if all or part of the dividend consists of taxable income or capital gain) multiplied by the higher of the applicable 30-day “AA” Financial Composite Commercial Paper Rate or the taxable equivalent of the short-term municipal obligation rate. Such maximum rate is a function of short-term interest rates and typically higher than the rate that would have otherwise been set through a successful auction.
As discussed above, since mid-February of 2008, the periodic auctions for auction-rate securities like the Preferred Shares have not attracted sufficient clearing bids for there to be a successful auction. The Funds believe that such auctions are unlikely to be successful in the future. The Funds also believe that secondary market activity is limited outside the auctions for auction-rate securities and therefore the Preferred Shares are generally illiquid. PIMCO regularly examines leverage alternatives for each Fund and presents related information to each Fund’s Board for the Board’s consideration as part of its ongoing investment responsibilities. Based on PIMCO’s economic and interest rate outlook, PIMCO’s concerns about the rollover and refinancing risks inherent in alternative forms of leverage as a result of the non-permanent terms of such alternative forms of leverage, PIMCO’s examination of the costs, terms, asset coverage requirements and covenants, as applicable, associated with the leverage alternatives available in the marketplace and PIMCO’s view on the viability of conducting a tender offer at an adequately discounted price, PIMCO has to date consistently advised that, unless a Fund could conduct an additional discounted tender offer at a sufficient discount to the Preferred Shares’ liquidation preference and with sufficient participation, maintaining the outstanding Preferred Shares and related leverage has been in the best interests of each Fund under then-current market conditions. These various factors may vary over time and the decision regarding the best form of financing for a Fund is a Fund-specific decision based on the particular dynamics of the Fund’s financing profile and other market factors. For these and related reasons, PIMCO has to date advised against redeeming Preferred Shares of the Funds at their full liquidation preference or pursuant to tender offers that are not at what PIMCO views to be an adequately discounted price to the Preferred Shares’ liquidation preference. However, in this regard, at PIMCO’s recommendation and based on PIMCO’s assessment of the foregoing factors, each Fund has previously conducted a discounted tender offer2 for its Preferred Shares at a price that PIMCO believed to have been adequately discounted so as to be in the best interests of the Funds and their shareholders.
PIMCO has engaged in ongoing discussions with representatives from Bank of America regarding the Preferred Shares, including the possibility that the Funds could conduct tender offers for some or all of the outstanding Preferred Shares at prices below the full liquidation preferences of the Preferred Shares. As part of the ongoing discussions between PIMCO and Bank of America, and based on PIMCO’s analysis of current market conditions, PIMCO’s outlook and the costs and terms of leverage alternatives available to the Funds in the marketplace, PIMCO determined that a tender price at 96% of the liquidation preference of PTY’s Preferred Shares, 93.25% of the liquidation preference of each of PCN’s and PHK’s Preferred Shares, 94.25% of the liquidation preference of each of PFL’s and PFN’s Preferred Shares and 94.5% of the liquidation preference of each of PMF’s, PML’s, PMX’s, PCQ’s, PCK’s, PZC’s, PNF’s, PNI’s and PYN’s Preferred Shares, represents a fair value to each Fund’s common shareholders and provides a number of benefits to the Funds and the Funds’ shareholders, including, among other things, reduced costs of leverage for the Funds, an economic benefit to common shareholders and liquidity to Preferred Shareholders.
2 PFL and PFN conducted discounted tender offers in 2014. PCN, PHK and PTY conducted discounted tender offers in 2015. PMF, PML, PMX, PCQ, PCK, PZC, PNF, PNI and PYN conducted discounted tender offers in 2018. PHK, PFL, PTY, PCN and PFN conducted discounted tender offers in 2019.
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The Funds and PIMCO (the “Fund Parties”) have entered into agreements with Bank of America (the “Bank of America Agreement”) and Oppenheimer (the “Oppenheimer Agreement”), pursuant to which the Fund Parties agreed to conduct the Offers in accordance with the terms set forth herein and the Tendering Holders agreed to tender their Preferred Shares. See Sections 9 and 11 of this Offer to Purchase for additional information. With the Tendering Holders’ commitments to tender 100% of their Preferred Shares, and taking into account that the Tendering Holders collectively own approximately 59% of PTY’s Preferred Shares, 44% of PCN’s Preferred Shares, 24% of PHK’s Preferred Shares, 78% of PFL’s Preferred Shares, 54% of PFN’s Preferred Shares, 4% of PCQ’s Preferred Shares, 9% of PCK’s Preferred Shares, 5% of PZC’s Preferred Shares, 10% of PMF’s Preferred Shares, 11% of PML’s Preferred Shares, 5% of PMX’s Preferred Shares, 16% of PNF’s Preferred Shares, 11% of PNI’s Preferred Shares and 10% of PYN’s Preferred Shares, PIMCO is of the view that the Offers will be viable and will provide a benefit to the common shareholders at this minimum level of possible participation, taking into account the costs associated with conducting the Offers and other factors.
Following PIMCO’s recommendation regarding the tender price, as discussed above, the Board met on June 14, 2023 to consider the Offers and, based on the information provided to the Board and PIMCO’s analysis, approved each Fund’s Offer.
Please bear in mind that neither the Funds, nor the Funds’ Boards, nor the Investment Manager has made any recommendations as to whether you should tender your Preferred Shares. Preferred Shareholders are urged to consult their own investment and tax advisors and make their own decisions whether to tender any Preferred Shares and, if so, how many Preferred Shares to tender.
10. INFORMATION CONCERNING THE FUNDS
Each Fund is a closed-end management investment company organized as a Massachusetts business trust, whose principal executive offices are located at 1633 Broadway, New York, NY 10019, telephone: (844) 33-PIMCO or (844) 337-4626.
Available Information about the Funds. Each Fund is subject to the informational requirements of the 1940 Act, and in accordance therewith files annual reports, proxy statement and other information with the SEC relating to its business, financial condition and other matters. Each Fund is required to disclose in such proxy statements certain information, as of particular dates, concerning the Fund’s Trustees and executive officers, their remuneration, the principal holders of the Fund’s securities and any material interest of such persons in transactions with the Fund. Each Fund has also filed an Issuer Tender Offer Statement on Schedule TO with the SEC. Such reports and other information may be inspected at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies may be obtained, by mail, upon payment of the SEC’s customary charges, by writing to its principal office at 100 F. Street, N.E., Washington, D.C. 20549. Such reports and other information are also available on the SEC’s web site (http://www.sec.gov).
Agreements Involving the Funds. PIMCO acts as the investment manager for each Fund pursuant to an investment management agreement.
Each Fund also is a party to certain other service agreements. Equiniti Trust Company, LLC serves as each Fund’s transfer agent, registrar and dividend disbursing agent and shareholder servicing agent for the Funds’ common shares. Equiniti Trust Company, LLC serves as each Fund’s Tender Agent for its Preferred Shares and the Depositary for each Offer. State Street Bank and Trust Company serves as the custodian for each Fund.
Each of PTY, PCN, PHK, PFL and PFN is a party to a Sales Agreement with JonesTrading Institutional Services LLC (“JonesTrading”) pursuant to which the Fund may offer and sell up to a certain number of its common shares, from time to time through JonesTrading as its agent for the offer and sale of the common shares.
11. INTEREST OF THE TRUSTEES AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS
The business address of the Trustees and executive officers of each Fund is 1633 Broadway, New York, NY 10019. As of the date of this Offer to Purchase, the Trustees and executive officers of each Fund did not beneficially own any Preferred Shares.
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Based on each Fund’s records and upon information provided to the Fund by its Trustees and executive officers, none of the Funds, nor, to the best of each Fund’s knowledge, any of the Trustees or executive officers of any Fund, have effected any transactions in the Preferred Shares during the sixty-day period prior to the date hereof.
To the best of each Fund’s knowledge, none of the Fund’s executive officers, Trustees, or affiliates currently intends to tender Preferred Shares held of record or beneficially by such person, if any, for purchase pursuant to the Fund’s Offer.
Except as set forth in this Offer to Purchase (including the Agreements, as discussed below and in Section 9), to the best of each Fund’s knowledge, each Fund knows of no agreement, arrangement or understanding, contingent or otherwise or whether or not legally enforceable, between (a) the Fund, any of the Fund’s executive officers or Trustees, any person controlling the Fund or any executive officer, trustee or director of any corporation or other person ultimately in control of the Fund and (b) any person with respect to any securities issued by the Fund (including, but not limited to, any agreement, arrangement or understanding concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss, or the giving or withholding of proxies, consents or authorizations).
On August 11, 2023, the Fund Parties and Bank of America entered into the Bank of America Agreement. On August 11, 2023, the Fund Parties and Oppenheimer entered into the Oppenheimer Agreement. Pursuant to both agreements, the Fund Parties agreed to conduct the Offers, subject to the approval of each Fund’s Board (which has been obtained), and the Tendering Holders agreed, with respect to each Fund, that if an Offer is conducted by the Fund, each Tendering Holder shall tender its holdings in Preferred Shares of the Fund.
Additionally, pursuant to the Agreements, the Fund Parties agreed with respect to each Tendering Holder, and each Tendering Holder agreed with respect to the Fund Parties, to (i) fully release and forever discharge such other parties of and from any and all claims, demands, debts, liens, obligations, fees and expenses, harm, injuries, liabilities, cause or causes of action, whether known or unknown, claimed or alleged, asserted or unasserted, either at law or in equity, whether statutory, in contract or in tort, of any kind or character which it has, or owns, or may now or in the future have or own for any claims arising out of or relating in any way to the negotiations of the Offers, the Offers or a Tendering Holder’s acquisition of, transactions in, ownership of or holdings in a Fund’s Preferred Shares and (ii) each of the Fund Parties and the Tendering Holders acknowledged and agreed that they will not now or in the future bring any claim, action, lawsuit, arbitration proceeding or other form of action against any released party, directly or indirectly, arising out of or in any way connected with any claim or potential claim released under the Agreement, and that the Agreement is a bar to any such claim, action, lawsuit, proceeding or other form of action.
12. LEGAL MATTERS; REGULATORY APPROVALS
Except as described in this Offer, the Funds are not aware of any license or regulatory permit that appears to be material to the Funds’ businesses that might be adversely affected by the Funds’ acquisition of Preferred Shares as contemplated by the Offers or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the Funds’ acquisition or ownership of Preferred Shares as contemplated by the Offers. Should any such approval or other action be required, the Funds currently contemplate that they will seek approval or such other action. The Funds cannot predict whether they may determine that they are required to delay the acceptance for payment of, or payment for, Preferred Shares tendered in response to the Offers, pending the outcome of any such matters. There can be no assurance that any approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that the failure to obtain any approval or other action might not result in adverse consequences to our business. The Funds’ obligation to accept for payment and pay for shares under the offer is subject to various conditions. See Section 13 of this Offer to Purchase.
13. CONDITIONS TO THE OFFERS
Notwithstanding any other provision of each Offer, it is the announced policy of each Board, which may be changed by the Trustees, and a condition to each Offer that a Fund cannot accept tenders or effect repurchases, unless otherwise determined by the Fund’s Board, if: (1) such transactions, if consummated, would (a) result in delisting of the Fund’s common shares from the NYSE; (b) impair the Fund’s eligibility for treatment as a regulated investment company under the Code (which would make the Fund subject to federal income tax on all of its net income and
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gains in addition to the taxation of shareholders who receive distributions from the Fund); or (c) result in a failure of the Fund to comply with any applicable asset coverage requirements in the event any senior securities are issued and outstanding; (2) there shall be instituted or pending before any governmental entity or court any action, proceeding, application or claim, or any judgment, order or injunction sought, or any other action taken by any person or entity, which (a) restrains, prohibits or materially delays the making or consummation of the tender offer; (b) challenges the acquisition by the Fund of Preferred Shares pursuant to the tender offer or the Board’s fulfillment of its fiduciary obligations in connection with the tender offer; (c) seeks to obtain any material amount of damages in connection with the tender offer; or (d) otherwise directly or indirectly materially adversely affects the tender offer or the Fund; or (3) there is any (a) suspension of or limitation on prices for trading securities generally on the NYSE or other national securities exchange(s); (b) declaration of a banking moratorium by Federal or state authorities or any suspension of payment by banks in the United States or New York State; or (c) limitation affecting the Fund or the issuers of its portfolio securities imposed by federal or state authorities on the extension of credit by lending institutions.
In order to facilitate each Offer, if you own Preferred Shares through a broker or other Nominee Holder, when your broker or other Nominee Holder tenders your Preferred Shares on your behalf, your broker or other Nominee Holder will be required to provide the Depositary additional contact information for its Auction Department, or whoever at your broker or other Nominee Holder submits auction instructions for the Preferred Shares on its behalf. If your broker or other Nominee Holder is unable to provide this contact information, each Fund, in its sole discretion, may waive this requirement with respect to each Fund.
Each Fund reserves the right, at any time during the pendency of its Offer, to terminate, extend or amend its Offer in any respect. In the event any of the foregoing conditions are modified or waived in whole or in part at any time by a Fund, the Fund will promptly make a public announcement of such waiver and may, depending on the materiality of the modification or waiver, extend its Offer period as provided in Section 2 “Extension of Tender Period; Termination; Amendment” of this Offer to Purchase.
The foregoing conditions are for the sole benefit of each Fund and may be asserted by a Fund regardless of the circumstances (including any action or inaction by the Fund) giving rise to any of these conditions, and may be waived by the Fund, in whole or in part, at any time and from time to time, on or before the Expiration Date, in its sole discretion. A Fund’s failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any of these rights, and each of these rights shall be deemed an ongoing right that may be asserted at any time and from time to time. Any determination or judgment by a Fund concerning the events described above will be final and binding on all parties.
14. FEES AND EXPENSES
Each Fund has retained Equiniti Trust Company, LLC as the Tender Agent. The Tender Agent may contact holders of Preferred Shares by mail, telephone, telex, email, telegraph and personal interviews and may request brokers and other Nominee Holders to forward materials relating to the Offers to beneficial owners. The Tender Agent will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities in connection therewith, including certain liabilities under the federal securities laws.
None of the Funds will pay any fees or commissions to any broker, any other Nominee Holder, or any other person (other than the Tender Agent) for soliciting tenders of Preferred Shares pursuant to its Offer. Brokers and other Nominee Holders will, upon request, be reimbursed by the applicable Fund(s) for reasonable and necessary costs and expenses incurred by them in forwarding materials to their customers. No such broker or other Nominee Holder has been authorized to act as the agent of the Funds or the Tender Agent for purposes of the Offers.
Each Fund will also bear any printing and mailing costs, SEC filing fees and legal fees associated with the Fund’s Offer.
15. MISCELLANEOUS
The Offers are not being made to (nor will tenders be accepted from or on behalf of) holders of Preferred Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the
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laws of such jurisdiction. We are not aware of any jurisdiction where the making of the Offer is not in compliance with applicable law. If we become aware of any jurisdiction where the making of the Offer is not in compliance with any applicable law, we will make a good faith effort to comply with the applicable law.
In accordance with Rule 13e-4 under the Exchange Act, each Fund has filed with the SEC a Tender Offer Statement on Schedule TO that contains additional information with respect to its Offer. The Schedule TO, including the exhibits and any amendments thereto, may be examined, and copies may be obtained, at the places and in the manner set forth in Section 10 of this Offer to Purchase.
The Funds have not authorized any person to make any recommendation on their behalf regarding whether you should tender or refrain from tendering your Preferred Shares in the Offer. The Funds have not authorized any person to provide any information or make any representation in connection with the Offers, other than those contained in this Offer to Purchase or in the related Letter of Transmittal. You should not rely upon any recommendation, information or representation that is given or made to you as having been authorized by the Funds, the Boards, the officers of the Funds, the Investment Manager, the Funds’ transfer agent or the Tender Agent.
PIMCO Corporate & Income Opportunity Fund
PIMCO Corporate & Income Strategy Fund
PIMCO High Income Fund
PIMCO Income Strategy Fund
PIMCO Income Strategy Fund II
PIMCO California Municipal Income Fund
PIMCO California Municipal Income Fund II
PIMCO California Municipal Income Fund III
PIMCO Municipal Income Fund
PIMCO Municipal Income Fund II
PIMCO Municipal Income Fund III
PIMCO New York Municipal Income Fund
PIMCO New York Municipal Income Fund II
PIMCO New York Municipal Income Fund III
August 14, 2023
The Letter of Transmittal, certificates for shares and any other required documents should be sent or delivered by each Fund shareholder or the shareholder’s broker, dealer, commercial bank, trust company or nominee to the depositary as follows:
Equiniti Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
Attn: Corporate Action
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Any questions, requests for assistance or requests for additional copies of this Offer to Purchase, the Letter of Transmittal or the notice of guaranteed delivery may be directed to the Information Agent at the telephone number or address set forth below. You may also contact your broker, dealer, commercial bank, trust company or nominee for assistance concerning the offer. To confirm delivery of shares, shareholders are directed to contact the Depositary.
EQ Fund Solutions
6201 15th Avenue
Brooklyn, New York 11219
1-877-478-5044
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Should you have any questions about these Offers, please contact Equiniti Trust Company, LLC at (718) 921.8200 Monday through Friday 9 a.m. to 5 p.m. Eastern time.
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LETTER OF TRANSMITTAL
To Tender Preferred Shares (Designated Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH, and/or Series F)
of
PIMCO Income Strategy Fund II
Pursuant to the Offer to Purchase
Dated August 14, 2023
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON September 18, 2023, UNLESS THE OFFER IS EXTENDED.
The Tender Agent for the Offer is:
Equiniti Trust Company, LLC
Delivery by First Class Mail, By Registered, Certified or Express Mail, By Overnight Courier, or By Hand should be directed to:
Equiniti Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
Attn: Corporate Actions
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal relates to the offer by PIMCO Income Strategy Fund II (the “Fund”), a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, to purchase for cash up to 100% of its outstanding preferred shares of beneficial interest, par value $0.00001 per share and liquidation preference of $25,000 per share, designated Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH, and/or Series F (the “Preferred Shares”) upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 14, 2023 (the “Offer to Purchase”), receipt of which is hereby acknowledged, and in this Letter of Transmittal, which, together with the Offer to Purchase, each as amended or supplemented from time to time, together constitute the “Offer.”
| DESCRIPTION OF PREFERRED SHARES TENDERED
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Name(s) and Address(es) of |
Series Series M, Series T, Tendered* List if Necessary)
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| * Unless otherwise indicated, it will be assumed that all (and not partial) Series M, Series T, Series W, Series TH, and/or Series F Shares are being tendered. See Instruction 3.
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If you wish to tender all or any portion of your Series M, Series T, Series W, Series TH, and/or Series F Preferred Shares of the Fund, you should either:
| • | tender your Series M, Series T, Series W, Series TH, and/or Series F Preferred Shares pursuant to the procedure for book-entry tender set forth in Section 3 of the Offer to Purchase; or |
| • | request a broker, dealer, commercial bank, trust company or other nominee to effect the transaction for you. If your Preferred Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you should contact such person if you desire to tender your Preferred Shares. |
If you desire to tender Series M, Series T, Series W, Series TH, and/or Series F Preferred Shares and such Series M, Series T, Series W, Series TH, and/or Series F Preferred Shares cannot be delivered to the Tender Agent or you cannot comply with the procedure for book-entry transfer or your other required documents cannot be delivered to the Tender Agent, in any case, by the expiration of the Offer, you must tender such Series M, Series T, Series W, Series TH, and/or Series F Preferred Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Questions and requests for assistance or for additional copies of this Letter of Transmittal, the Offer to Purchase or the Notice of Guaranteed Delivery or the Notice of Withdrawal may be directed to American Stock Transfer & Trust Company, LLC (“Tender Agent”), whereby the Tender Agent will fulfill the role of information agent, depositary, and rights agent, at its address or telephone number set forth on the first page of this Letter of Transmittal.
ADDITIONAL INFORMATION REGARDING TENDERED PREFERRED SHARES
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY.
| Name of Tendering Institution
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| Account Number
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| Contact Person in Auction Department of Tendering Institution*
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| Email Address of Contact Person in Auction Department*
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| Broker- Dealer who submits auction instructions to the Auction Agent on your behalf
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| ☐ CHECK HERE IF TENDERED PREFERRED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT OR CONCURRENTLY BEING SENT TO THE TENDER AGENT AND COMPLETE THE FOLLOWING:
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| Name(s) of Tendering Holder(s) of
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| Date of Execution of Notice of Guaranteed Delivery
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| Name of Institution which Guaranteed
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* If there is no established Auction Department, please include contact information for the party that submits auction instructions for Preferred Shares.
Ladies and Gentlemen:
The undersigned hereby tenders to PIMCO Income Strategy Fund II, a Massachusetts business trust (the “Fund”), the above-described preferred shares of beneficial interest, par value $0.00001 per share and liquidation preference of $25,000 per share, designated Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH, and/or Series F, pursuant to the Fund’s offer to purchase up to 100% of its outstanding Preferred Shares, upon the terms and subject to the conditions set forth in the Fund’s Offer to Purchase dated August 14, 2023 (the “Offer to Purchase”), receipt of which is hereby acknowledged, and this Letter of Transmittal (the “Letter of Transmittal”) which, together with the Offer to Purchase, each as amended or supplemented from time to time, constitutes the “Offer.” The price to be paid for the Preferred Shares is an amount per share, net to the seller in cash, equal to 94.25% of the liquidation preference of $25,000 per share (or $23,562.50 per share, the “Closing Amount”), plus any unpaid dividends accrued through the Expiration Date (as defined in the Offer to Purchase), less any applicable withholding taxes and without interest, and subject to the conditions set forth in the Offer, if properly tendered and not withdrawn prior to the Expiration Date. The Offer by the Fund is not conditioned on any minimum number of Preferred Shares being validly tendered and not withdrawn prior to the expiration of the Fund’s offer. The Offer is also subject to certain other conditions as outlined in the Offer and in the related Letter of Transmittal.
Upon the terms and subject to the conditions of the Offer and effective upon acceptance for payment of and payment for the Preferred Shares tendered herewith, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Fund all right, title and interest in and to all the Preferred Shares that is being tendered hereby and appoints the Tender Agent as the true and lawful agent and attorney-in-fact of the undersigned with respect to such Preferred Shares, with full knowledge that the Tender Agent also acts as the agent of the Fund, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to:
| (i) | transfer ownership of such Preferred Shares on the account books maintained by the Book-Entry Transfer Facility (as defined in the Offer to Purchase), as applicable, together, in any such case, with all accompanying evidences of transfer and authenticity, to or upon the order of the Fund; |
| (ii) | present such Preferred Shares for transfer on the books of the Fund; and |
| (iii) | receive all benefits and otherwise exercise all rights of beneficial ownership of such Preferred Shares, subject to the next paragraph, all in accordance with the terms and subject to the conditions of the Offer. |
The undersigned hereby covenants, represents and warrants to the Fund that:
| (i) | the undersigned has full power and authority to tender, sell, assign and transfer the Preferred Shares tendered hereby and that when and to the extent the same are accepted for payment by the Fund, the Fund will acquire good, marketable and unencumbered title thereto, free and clear of all security interest, liens, restrictions, charges, encumbrances, conditional sales agreements or other obligations relating to the sale or transfer of the Preferred Shares and not subject to any adverse claims; |
| (ii) | the undersigned understands that tenders of Preferred Shares pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the instructions to this Letter of Transmittal will constitute the undersigned’s acceptance of the terms and conditions of the Offer; |
| (iii) | the undersigned will, upon request, execute and deliver any additional documents deemed by the Tender Agent or the Fund to be necessary or desirable to complete the sale, assignment and transfer of the Preferred Shares tendered hereby; and |
| (iv) | the undersigned has read, understands and agrees to all the terms of the Offer. |
All authority herein conferred or agreed to be conferred by this Letter of Transmittal shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and legal representatives of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable.
The purchase price of each Preferred Share will equal 94.25% of the liquidation preference of $25,000 per share (or $23,562.50 per share), plus any unpaid dividends accrued through the Expiration Date, less any applicable withholding taxes and without interest. All Preferred Shares validly tendered on or before the Expiration Date of the Offer and not properly withdrawn will be purchased, subject to the terms and conditions of the Offer. If any tendered Preferred Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, such Preferred Shares will be returned without expense to the holder of Preferred Shares (“Preferred Shareholder”) in accordance with Section 5 of the Offer to Purchase.
The undersigned understands that tenders of Preferred Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and the Fund upon the terms and subject to the conditions of the Offer. The undersigned acknowledges that under no circumstances will the Fund pay interest on the purchase price, including, without limitation, by reason of any delay in making payment.
The undersigned recognizes that, under the circumstances set forth in the Offer to Purchase, the Fund may terminate or amend the Offer; may postpone the acceptance for payment of, or the payment for, Preferred Shares tendered; or may accept for payment fewer than all of the Preferred Shares tendered.
Checks for the Closing Amount will be issued and mailed and any Certificate(s) not tendered or not accepted for payment will be issued or returned in the name(s) of the registered holder(s) appearing under “Description of Preferred Shares Tendered.” Any Shares tendered herewith by book-entry transfer that are not accepted for payment will be credited back to the account at the Book-Entry Transfer Facility designated above.
SIGN HERE
(Please complete and return the Form W-9 attached)*
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(Please Print)
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Address: |
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(Include Zip Code)
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Area Code and Telephone Number: |
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(Must be signed by registered holder(s) exactly as name(s) appear(s) on a security position listing or by person(s) authorized to become registered holder(s) by certificate(s) and documents transmitted herewith. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, please set forth full title and location of signing and see Instruction 5.)
| Guarantee Of Signature(s) | ||||||
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| Authorized Signature: |
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* A non-U.S. Preferred Shareholder should NOT complete and return the attached Form W-9, but should instead contact the Tender Agent or its broker, dealer, commercial bank, trust company or other nominee for the appropriate certification (e.g., W-8BEN, W-8BEN-E, W-8ECI or W-8EXP). A non-U.S. Preferred Shareholder is any shareholder other than (i) a citizen or resident of the U.S., (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes), partnership or other entity created or organized in or under the laws of the U.S., any State or any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of the source of the income, or (iv) a trust if it (x) is subject to the supervision of a court within the U.S. and one or more U.S. persons has the authority to control all substantial decisions of the trust or (y) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a member of a recognized Medallion Program approved by The Securities Transfer Association, Inc., including the Securities Transfer Agents Medallion Program (STAMP), or any other “eligible guarantor institution” (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended) (each an “Eligible Institution”). Signatures on this Letter of Transmittal need not be guaranteed if such Preferred Shares are tendered for the account of an Eligible Institution. See Instruction 5.
2. Delivery of Preferred Shares. Delivery of Preferred Shares is to be made by book-entry delivery pursuant to the procedures set forth in Section 3 of the Offer to Purchase; an Agent’s Message (as defined in the Offer to Purchase) should be utilized. A confirmation of a book-entry transfer into the Depositary’s account at the Book-Entry Transfer Facility of all Preferred Shares delivered electronically, as well as an Agent’s Message, and any other documents required by this Letter of Transmittal, must be received by the Depositary at its address set forth on the front page of this Letter of Transmittal by the Expiration Date (as defined in the Offer to Purchase). Preferred Shareholders who cannot deliver their Preferred Shares and all other required documents to the Depositary by the Expiration Date must tender their Preferred Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution, (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Fund must be received by the Depositary by the Expiration Date and (iii) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee or an Agent’s Message and any other documents required by the Letter of Transmittal and, for Preferred Shares held in street name, confirmation of a book-entry transfer of such Preferred Shares into the Depositary’s account at the Book-Entry Transfer Facility, must be received by the Depositary within three NYSE trading days after the date of execution of the Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
The method of delivery of any documents is at the option and risk of the tendering Preferred Shareholder. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.
No alternative, conditional or contingent tenders will be accepted, and no fractional Preferred Shares will be purchased. By executing this Letter of Transmittal, the tendering Preferred Shareholder waives any right to receive any notice of the acceptance for payment of the Preferred Shares.
3. Partial Tenders. If any tendered Preferred Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, or if any tendered Preferred Shares are not accepted because of an invalid tender, or if any tendered Preferred Shares are properly withdrawn, Preferred Shares will be returned to the appropriate account at the Book-Entry Transfer Facility without charge by the Fund to the tendering Preferred Shareholder, as soon as practicable following expiration or termination of the Offer or the proper withdrawal of the Preferred Shares.
4. Stock Transfer Taxes. The amount of any stock or share transfer taxes imposed in respect of Preferred Shares tendered in connection with the Offer, including, without limitation, such taxes imposed for a reason other than the sale or transfer of Preferred Shares to the Fund pursuant to its Offer, whether such taxes are imposed on the registered holder(s), any other person to whom shares are to be returned or the purchase price is to be paid, or otherwise, including any such taxes due in respect of (a) shares tendered but not purchased, including such shares that are to be returned in the name of a person other than the registered holder(s), or (b) shares the purchase price for which is paid to a person other than the registered holder(s), will be for the Preferred Shareholder’s account and will not be borne by the Fund.
5. Substitute Form W-9. Under U.S. federal income tax law, a backup withholding tax may be imposed on the gross proceeds otherwise payable to certain Preferred Shareholders pursuant to the Offer. In order to avoid such backup withholding, each tendering Preferred Shareholder must provide the applicable withholding agent with such Preferred Shareholder’s correct taxpayer identification number and certify that such Preferred Shareholder is not subject to such backup withholding by completing the Substitute Form W-9 set forth above (or, in the case of a
foreign Preferred Shareholder, an appropriate IRS Form W-8 or Substitute Form W-8). In general, if a Preferred Shareholder is an individual, the taxpayer identification number is the Social Security number of such individual. If the applicable withholding agent is not provided with the correct taxpayer identification number, the Preferred Shareholder or payee will be subject to a $50 penalty imposed by the Internal Revenue Service unless the failure to provide the correct number is due to reasonable cause and not willful neglect. A false statement made on the Substitute Form W-9 without any reasonable basis that results in no backup withholding will be subject to a $500 penalty, and the willful falsification of certifications or affirmations may be subject to criminal penalties, including fines and/or imprisonment. Certain Preferred Shareholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. However, such Preferred Shareholders should complete the Substitute Form W-9 (or, in the case of a foreign Preferred Shareholders, an appropriate IRS Form W-8 or Substitute Form W-8) to avoid erroneous backup withholding. For further information concerning backup withholding and instructions for completing the Substitute Form W-9 (including how to obtain a taxpayer identification number if you do not have one and how to complete the Substitute Form W-9 if Preferred Shares is held in more than one name), consult the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.
Foreign persons should not complete a Substitute Form W-9. Instead, in order to establish that a foreign person qualifies as an exempt recipient for which backup withholding is not required, such person should submit an appropriate IRS Form W-8 or Substitute Form W-8, attesting to its status. These forms can be obtained from the Depositary or from the relevant broker, dealer, commercial bank, trust company or other nominee.
Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is furnished to the Internal Revenue Service. NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 (OR AN APPROPRIATE IRS FORM W-8 OR SUBSTITUTE FORM W-8) MAY RESULT IN PENALTIES AND BACKUP WITHHOLDING ON ANY AMOUNTS OTHERWISE PAYABLE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
6. Waiver of Conditions. Subject to the Offer to Purchase, the conditions of the Offer may be waived, in whole or in part, by the Fund, at any time and from time to time, in the case of any Preferred Shares tendered.
7. Irregularities. The Fund will determine, in its sole discretion, all questions as to the number of Preferred Shares to be accepted, and the validity, form, eligibility, including time of receipt, and acceptance for payment of any tender of Preferred Shares. The Fund’s determination will be final and binding on all parties. The Fund reserves the absolute right to reject any or all tenders it determines not to be in proper form or the acceptance of or payment for which it determines may be unlawful. The Fund also reserves the absolute right to waive any defect or irregularity in the tender of any particular Preferred Shares or any particular Preferred Shareholder. No tender of Preferred Shares will be deemed to be properly made until all defects or irregularities have been cured by the tendering Preferred Shareholder or waived by the Fund. None of the Fund, the Depositary, the Tender Agent, or any other person will be under any duty to give notice of any defects or irregularities in any tender, or incur any liability for failure to give any such notice. The Fund’s interpretation of the terms of and conditions to the Offer, including this Letter of Transmittal and the instructions thereto, will be final and binding. By tendering Preferred Shares to the Fund, you agree to accept all decisions the Fund makes concerning these matters and waive any right you might otherwise have to challenge those decisions.
8. Acceptance of Tendered Shares. If a Preferred Shareholder tenders all of his or her Preferred Shares, all such Preferred Shares credited to such Preferred Shareholder’s account(s) will be tendered unless the Preferred Shareholder otherwise specifies.
9. Contact Information. In order to facilitate the Offer and any auctions for Preferred Shares that may remain outstanding after the Offer is completed, each broker or other Nominee Holder must provide additional contact information for its auction department, or whoever at the broker or other Nominee Holder submits auction instructions for the Preferred Shares on its behalf, and/or the broker-dealer, if a different party, that submits those auction instructions to the Auction Agent. If you are unable to provide this contact information, the Fund, in its sole discretion, may waive this requirement.
* * * * *
Any questions and requests for assistance may be directed to the Tender Agent at its address and telephone number set forth on the first page of this Letter of Transmittal. Additional copies of the Offer to Purchase, the Letter of Transmittal and Notice of Guaranteed Delivery may be obtained from the Tender Agent at its address and telephone number set forth on the first page of this Letter of Transmittal. Preferred Shareholders may also contact their broker, dealer, commercial bank or trust company or other nominee for assistance concerning the Offer.
NOTICE OF GUARANTEED DELIVERY
To Tender Auction-Rate Preferred Shares
Of
PIMCO Corporate & Income Opportunity Fund
PIMCO Corporate & Income Strategy Fund
PIMCO High Income Fund
PIMCO Income Strategy Fund
PIMCO Income Strategy Fund II
PIMCO California Municipal Income Fund
PIMCO California Municipal Income Fund II
PIMCO California Municipal Income Fund III
PIMCO Municipal Income Fund
PIMCO Municipal Income Fund II
PIMCO Municipal Income Fund III
PIMCO New York Municipal Income Fund
PIMCO New York Municipal Income Fund II
PIMCO New York Municipal Income Fund III
(each, a “Fund” and, collectively, the “Funds”)
Pursuant to the Offer to Purchase
Dated August 14, 2023
This form, or a form substantially equivalent to this form, must be used to accept the Offer (as defined in the Letter of Transmittal), upon the terms and subject to the conditions set forth in the Offer Documents (as defined below), if the preferred shares of beneficial interest, par value $0.00001 per share, and liquidation preference of $25,000 per share, designated Auction-Rate Preferred Shares (with respect to a Fund, the “Preferred Shares”), of a Fund, and/or all other documents required by the Fund’s Letter of Transmittal, cannot be delivered to the Tender Agent (as defined in the Offer to Purchase, dated August 14, 2023 (the “Offer to Purchase”)) on or before 5:00 p.m., New York City time, September 18, 2023, or such later date to which the Offer is extended (the “Expiration Date”). Such form may be delivered by hand or mailed to the Tender Agent, and must be received by the Tender Agent on or before the Expiration Date. See Section 3, Procedures for Tendering Preferred Shares, of the Offer to Purchase.
The Tender Agent for the Offer is:
Equiniti Trust Company, LLC
Toll Free
(877) 248-6417 or (718) 921-8317
By First Class Mail, By Overnight Courier, By Hand:
Equiniti Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
Attn: Corporate Actions
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee signatures. If a signature on a Fund’s Letter of Transmittal is required to be guaranteed by an “eligible guarantor institution” under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to the Fund named below, upon the terms and subject to the conditions set forth in its Offer to Purchase dated August 14, 2023 and the related Letter of Transmittal (which together, with respect to a Fund, constitute the “Offer Documents”), receipt of which is hereby acknowledged, Preferred Shares, pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
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☐ check here if the shares will be tendered by book-entry transfer |
Name(s) of Tendering Institution | |
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Number of Preferred Shares tendered |
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DRS Transaction Advice Numbers (if applicable) |
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GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of a recognized Medallion Program approved by The Securities Transfer Association, Inc., including the Securities Transfer Agents Medallion Program, or any other “Eligible Guarantor Institution” (as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended), hereby (a) represents that the above named person(s) “own(s)” the Preferred Shares tendered hereby and (b) guarantees to deliver to the Tender Agent (as defined in the Offer to Purchase) the Preferred Shares tendered hereby, together with a properly completed and duly executed Letter of Transmittal or, in the case of a book-entry delivery, an Agent’s Message (as defined in the Offer to Purchase), and any other required documents, all within three trading days of the New York Stock Exchange after the date hereof.
The eligible institution that completes this Notice of Guaranteed Delivery must communicate the guarantee to the Tender Agent (as defined in the Offer to Purchase) and must deliver all required documents to the Tender Agent within the time period set forth in the Offer to Purchase. Failure to do so could result in a financial loss to the eligible institution.
(Name of Firm)
(Authorized Signature)
(Name)
(Address)
(Zip Code)
(Area Code and Telephone Number)
Dated: , 2023
Offer by
Each of
PIMCO California Municipal Income Fund
PIMCO California Municipal Income Fund II
PIMCO California Municipal Income Fund III
PIMCO Corporate & Income Opportunity Fund
PIMCO Corporate & Income Strategy Fund
PIMCO High Income Fund
PIMCO Income Strategy Fund
PIMCO Income Strategy Fund II
PIMCO Municipal Income Fund
PIMCO Municipal Income Fund II
PIMCO Municipal Income Fund III
PIMCO New York Municipal Income Fund
PIMCO New York Municipal Income Fund II
PIMCO New York Municipal Income Fund III
(each, a “Fund” and, collectively the “Funds”)
to Purchase for Cash
Up To 100% of Its Outstanding Auction-Rate Preferred Shares
(PIMCO California Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO California Municipal Income Fund III: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO California Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B, and Series C)
(PIMCO Corporate & Income Opportunity Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Corporate & Income Strategy Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO High Income Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund II: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund: Auction-Rate Preferred Shares Series T, Series W and Series TH)
(PIMCO Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund III: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO New York Municipal Income Fund II: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO New York Municipal Income Fund III: Auction-Rate Preferred Shares Series A)
(PIMCO New York Municipal Income Fund: Auction-Rate Preferred Shares Series A)
August 14, 2023
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed to act as Tender Agent (as defined in the Offer to Purchase) in connection with an offer by each of the Funds, each a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, to purchase for cash up to 100% of its outstanding preferred shares of beneficial interest, $0.00001 par value and liquidation preference of $25,000 per share, designated Auction-Rate Preferred Shares (with respect to each Fund, the “Preferred Shares”), upon the terms and subject to the conditions set forth in the offer to purchase dated August 14, 2023 (the “Offer to Purchase”) and each Fund’s related letter of transmittal (the “Letter of Transmittal,” which, together with the Offer to Purchase, each as amended or supplemented from time to time,
with respect to each Fund constitutes such Fund’s “Offer” and, collectively, the “Offers”). The price to be paid for each Fund’s Preferred Shares is an amount to the seller, equating to 94.5%, with respect to PIMCO California Municipal Income Fund (“PCQ”), PIMCO California Municipal Income Fund II (“PCK”), PIMCO California Municipal Income Fund III (“PZC”), PIMCO Municipal Income Fund (“PMF”), PIMCO Municipal Income Fund II (“PML”), PIMCO Municipal Income Fund III (“PMX”), PIMCO New York Municipal Income Fund (“PNF”), PIMCO New York Municipal Income Fund II (“PNI”) and PIMCO New York Municipal Income Fund III (“PYN”); 96%, with respect to PIMCO Corporate & Income Opportunity Fund (“PTY”); 93.25%, with respect to PIMCO Corporate & Income Strategy Fund (“PCN”) and PIMCO High Income Fund (“PHK”); and 94.25%, with respect to PIMCO Income Strategy Fund (“PFL”) and PIMCO Income Strategy Fund II (“PFN”); of the liquidation preference of $25,000 per share (or $23,625 per share for PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI, and PYN, $24,000 per share for PTY, $23,312.50 per share for PCN and PHK and $23,562.50 per share for PFL and PFN) in cash, plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest, and subject to the conditions set forth in the Offer, if properly tendered and not withdrawn prior to the Expiration Date (as defined in the Offer to Purchase).
We are asking you to contact your clients for whom you hold a Fund’s Preferred Shares registered in your name (or in the name of your nominee) or who hold a Fund’s Preferred Shares registered in their own names. Please bring the Offer(s) to their attention as promptly as possible.
For your information and for forwarding to your clients, we are enclosing the following documents:
1. The Offer to Purchase dated August 14, 2023;
2. Letter(s) of Transmittal for your use and for the information of your clients, including Form W-9, which provides information relating to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept an Offer if the Preferred Shares and all other required documents cannot be delivered to the Tender Agent (as defined in the Offer to Purchase) by the Expiration Date (as defined in the Offer to Purchase);
4. Notice of Withdrawal to be used to withdraw previously tendered Preferred Shares; and
5. A form of letter which may be sent to your clients for whose accounts you hold a Fund’s Preferred Shares registered in your name (or in the name of your nominee), with space provided for obtaining such clients’ instructions with regard to the Offer(s).
Your prompt action is requested. We urge you to contact your clients as promptly as possible. EACH FUND’S OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00P.M., NEW YORK CITY TIME, ON SEPTEMBER 18, 2023, UNLESS THE APPLICABLE OFFER IS EXTENDED.
Each Offer is not being made to, nor will a Fund accept tenders from, holders of Preferred Shares in any jurisdiction in which the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction.
No Fund will pay any fees or commissions to any broker, dealer or other person (other than the Tender Agent as described in the Offer to Purchase) for soliciting tenders of Preferred Shares pursuant to an Offer. Each Fund will, however, upon request, reimburse you for reasonable and necessary costs and expenses incurred by you in forwarding any of the enclosed materials to your clients. Preferred Shareholders of a Fund will be responsible for paying all stock transfer taxes in connection with the Offer, except as otherwise provided in the Offer to Purchase. In addition, backup withholding may be required unless either an exemption is proved or the required taxpayer identification information and certifications are provided. See Section 3, “Procedures for Tendering Preferred Shares,” of the Offer to Purchase.
In order to accept an Offer, an Agent’s Message (as defined in the Offer to Purchase), and any other required documents, should be sent to the Tender Agent (as defined in the Offer to Purchase) by 5:00p.m., New York City time, on September 18, 2023.
-2-
In order to facilitate an Offer and any auctions for Preferred Shares that may remain outstanding after the Offer is completed, when you tender Preferred Shares on behalf of your clients you will need to provide additional contact information for your Auction Department and/or the Broker-Dealer who submits auction instructions for the Preferred Shares on your behalf. Should you be unable to provide this contact information, each Fund, in its sole discretion, may waive this requirement. Please contact EQ Fund Solutions, the Information Agent for the Offer, at (877) 478-5044 with any questions.
None of the Funds, their Boards of Trustees nor Pacific Investment Management Company LLC, the Funds’ investment manager, make any recommendation to any holder of Preferred Shares as to whether to tender all or any Preferred Shares.
Any inquiries you may have with respect to an Offer should be addressed to, and additional copies of the enclosed materials may be obtained from, the Tender Agent at the addresses and telephone number set forth on the back cover of the Offer to Purchase.
Very truly yours,
Equiniti Trust Company, LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU THE AGENT OF ANY FUND, THE TENDER AGENT, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH EITHER OFFER OTHER THAN THE MATERIALS ENCLOSED HEREWITH AND THE STATEMENTS SPECIFICALLY SET FORTH IN SUCH MATERIALS.
-3-
Offer by
Each of
PIMCO Corporate & Income Opportunity Fund (“PTY”)
PIMCO Corporate & Income Strategy Fund (“PCN”)
PIMCO High Income Fund (“PHK”)
PIMCO Income Strategy Fund (“PFL”)
PIMCO Income Strategy Fund II (“PFN”)
PIMCO California Municipal Income Fund (“PCQ”)
PIMCO California Municipal Income Fund II (“PCK”)
PIMCO California Municipal Income Fund III (“PZC”)
PIMCO Municipal Income Fund (“PMF”)
PIMCO Municipal Income Fund II (“PML”)
PIMCO Municipal Income Fund III (“PMX”)
PIMCO New York Municipal Income Fund (“PNF”)
PIMCO New York Municipal Income Fund II (“PNI”)
PIMCO New York Municipal Income Fund III (“PYN”)
(each, a “Fund” and, collectively, the “Funds”)
to Purchase for Cash
Up To 100% of Its Outstanding Auction-Rate Preferred Shares
(PIMCO California Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO California Municipal Income Fund III: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO California Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B, and Series C)
(PIMCO Corporate & Income Opportunity Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Corporate & Income Strategy Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO High Income Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund II: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund: Auction-Rate Preferred Shares Series T, Series W and Series TH)
(PIMCO Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund III: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO New York Municipal Income Fund II: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO New York Municipal Income Fund III: Auction-Rate Preferred Shares Series A)
(PIMCO New York Municipal Income Fund: Auction-Rate Preferred Shares Series A)
August 14, 2023
To Our Clients:
Enclosed for your consideration is the offer to purchase dated August 14, 2023 (the “Offer to Purchase”) in connection with an offer by each of the Funds, each a Massachusetts business trust registered under the Investment Company Act of 1940, as amended, to purchase for cash up to 100% of its outstanding preferred shares of beneficial interest, $0.00001 par value and liquidation preference of $25,000 per share, designated Auction-Rate Preferred Shares (with respect to each Fund, the “Preferred Shares”), upon the terms and subject to the conditions set forth in the offer to purchase dated August 14, 2023 (the “Offer to Purchase”) and each Fund’s related letter of transmittal (the “Letter of Transmittal,” which, together with the Offer to Purchase, each as amended or supplemented from time to time, with respect to each Fund constitutes such Fund’s “Offer” and, collectively, the “Offers”). The price to be paid for each Fund’s Preferred Shares is an amount to the seller, equating to equaling 96% with respect to PTY,
93.25% with respect to each of PCN and PHK, 94.25% with respect to each of PFL and PFN, 94.5% with respect to each of PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN of the liquidation preference of $25,000 per share (or $24,000 per share for PTY, $23,312.50 per share for PCN and PHK, $23,562.50 per share for PFL and PFN, and $23,625 per share for PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN) in cash, plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest, and subject to the conditions set forth in the Offer, if properly tendered and not withdrawn prior to the Expiration Date (as defined in the Offer to Purchase). Each Fund’s Offer is not conditioned on any minimum number of shares being tendered but is subject to certain other conditions as outlined in the Offer and in the related Letter of Transmittal.
We are the registered holder of record of Preferred Shares held for your account. A tender of such Preferred Shares can be made only by us as the registered holder of record and only pursuant to your instructions. The Offer to Purchase is being furnished to you for your information only and cannot be used by you to tender Preferred Shares held by us for your account.
We request instructions as to whether you wish us to tender all or any Preferred Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer(s).
Your attention is invited to the following:
| 1. | The purchase price to be paid for a Fund’s Preferred Shares is an amount per share, net to the seller in cash, equal to 96% with respect to PTY, 93.25% with respect to each of PCN and PHK, 94.25% with respect to each of PFL and PFN, 94.5% with respect to each of PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN of the liquidation preference of $25,000 per share (or $24,000 per share for PTY, $23,312.50 per share for PCN and PHK, $23,562.50 per share for PFL and PFN, and $23,625 per share for PCQ, PCK, PZC, PMF, PML, PMX, PNF, PNI and PYN), plus any unpaid dividends accrued through September 18, 2023, or such later date to which the Offer is extended, less any applicable withholding taxes and without interest, and subject to the conditions set forth in the Offer. When considering whether to tender Preferred Shares, you should be aware that the payment received pursuant to the Offer will be less than the liquidation preference of the Preferred Shares. Under each Fund’s Bylaws, holders of a Fund’s Preferred Shares would receive the full liquidation preference of the Preferred Shares in certain limited circumstances — i.e., in the event of the liquidation of the Fund or a mandatory redemption under the terms of the Preferred Shares as a result of the Fund failing to meet certain asset coverage requirements. Under current market conditions, Pacific Investment Management Company LLC (“PIMCO”), the Funds’ investment manager, believes the likelihood of a Fund liquidating or being required to redeem Preferred Shares under the terms of its Bylaws is remote. |
| 2. | Each Fund’s Offer and withdrawal rights expire at 5:00 p.m., New York City time, on September 18, 2023, unless the Offer is extended. |
| 3. | Each Fund’s Offer is not conditioned on any minimum number of shares being tendered but is subject to certain other conditions as outlined in the Offer and in the related Letter of Transmittal. |
| 4. | Upon the terms and subject to the conditions of a Fund’s Offer, such Fund will purchase all Preferred Shares validly tendered (and not withdrawn) on or prior to the Expiration Date (as defined in the Offer to Purchase). |
| 5. | Any stock transfer taxes applicable to the sale of Preferred Shares to a Fund pursuant to that Fund’s Offer will be paid by the Preferred Shareholders, except as otherwise provided in the Offer to Purchase. |
| 6. | No fees or commissions will be payable to any Fund in connection with the Offers. However, brokers and other nominees who tender Preferred Shares pursuant to your instructions may charge you a fee for doing so. |
| 7. | Your instructions to us should be forwarded in ample time before the Expiration Date to permit us to submit a tender on your behalf. |
| 8 | In order to facilitate auctions for any Preferred Shares that may remain outstanding after the Offers are completed, please provide, if known, the contact information for the auction department at your broker or other nominee, or the broker-dealer (if a different party) that submits auction instructions to the Auction Agent on your behalf. |
If you wish to have us tender all or any of your Preferred Shares, please so instruct us by completing, executing, detaching and returning to us the instruction form on the detachable part hereof. If you authorize the tender of your Preferred Shares, all such Preferred Shares will be tendered unless otherwise specified on the detachable part hereof. Your instructions to us should be forwarded as promptly as possible in order to permit us to submit a tender on your behalf in accordance with the terms and conditions of an Offer.
Each Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Preferred Shares in any jurisdiction in which the making of an Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction.
None of the Funds, their Boards of Trustees (each, a “Board”) nor PIMCO are making any recommendation to any holder of Preferred Shares as to whether to tender or refrain from tendering Preferred Shares in an Offer. Each holder of Preferred Shares is urged to read the Offer to Purchase and the Letter of Transmittal and accompanying materials carefully in evaluating an Offer. No person has been authorized to give any information or to make any representations in connection with an Offer other than the materials enclosed herewith and the statements specifically set forth in such materials, and, if given or made, such information or representations may not be relied upon as having been authorized by a Fund or its Board.
Payment for Preferred Shares purchased pursuant to an Offer will in all cases be made only after timely receipt by Equiniti Trust Company, LLC (the “Tender Agent”) of (a) timely confirmation of the book-entry transfer of such Preferred Shares into the account maintained by the Tender Agent at the Tender Agent (the “Book-Entry Transfer Facility”), pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (b) an Agent’s Message (as defined in the Offer to Purchase), in connection with a book-entry delivery, and (c) any other documents required by the applicable Letter of Transmittal. Accordingly, payment may not be made to all tendering holders of Preferred Shares at the same time depending upon when confirmations of book-entry transfer of such Preferred Shares into the Tender Agent’s account at the Book-Entry Transfer Facility are actually received by the Tender Agent.
Instructions with Respect to Offer by each of
PIMCO Corporate & Income Opportunity Fund
PIMCO Corporate & Income Strategy Fund
PIMCO High Income Fund
PIMCO Income Strategy Fund
PIMCO Income Strategy Fund II
PIMCO California Municipal Income Fund
PIMCO California Municipal Income Fund II
PIMCO California Municipal Income Fund III
PIMCO Municipal Income Fund
PIMCO Municipal Income Fund II
PIMCO Municipal Income Fund III
PIMCO New York Municipal Income Fund
PIMCO New York Municipal Income Fund II
PIMCO New York Municipal Income Fund III
(each, a “Fund” and, collectively, the “Funds”)
to Purchase for Cash
Up To 100% of Its Outstanding Auction-Rate Preferred Shares
(PIMCO California Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO California Municipal Income Fund III: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO California Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B, and Series C)
(PIMCO Corporate & Income Opportunity Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Corporate & Income Strategy Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO High Income Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund II: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund: Auction-Rate Preferred Shares Series T, Series W and Series TH)
(PIMCO Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund III: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO New York Municipal Income Fund II: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO New York Municipal Income Fund III: Auction-Rate Preferred Shares Series A)
(PIMCO New York Municipal Income Fund: Auction-Rate Preferred Shares Series A)
The undersigned acknowledge(s) receipt of the enclosed letter and the Offer to Purchase dated August 14, 2023 (the “Offer to Purchase”) and related Letter of Transmittal in connection with an offer by each of the Funds, each a Massachusetts business trust registered under the Investment Company Act of 1940, to purchase for cash up to 100% of its outstanding preferred shares of beneficial interest, $0.00001 par value and liquidation preference of $25,000 per share, designated Auction-Rate Preferred Shares (with respect to each Fund, the “Preferred Shares”).
This will instruct you to tender the number of Preferred Shares as indicated below (or if no number is indicated below, all the Preferred Shares) held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and related letter of transmittal.
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Auction Desk Contact Information: |
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PLEASE RETURN THIS FORM TO THE BROKERAGE
FIRM MAINTAINING YOUR ACCOUNT
The method of delivery of this form is at the option and risk of the tendering holder of Preferred Shares. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.
| * | Unless otherwise indicated, it will be assumed that all Preferred Shares held by us for your account are to be tendered. Specify series if more than one series is tendered and not all Preferred Shares held by us for your account are to be tendered. |
Instructions for Withdrawal
of
Previously Tendered Auction-Rate Preferred Shares
of
PIMCO California Municipal Income Fund,
PIMCO California Municipal Income Fund II,
PIMCO California Municipal Income Fund III,
PIMCO Corporate & Income Opportunity Fund,
PIMCO Corporate & Income Strategy Fund,
PIMCO High Income Fund,
PIMCO Income Strategy Fund,
PIMCO Income Strategy Fund II,
PIMCO Municipal Income Fund,
PIMCO Municipal Income Fund II,
PIMCO Municipal Income Fund III,
PIMCO New York Municipal Income Fund,
PIMCO New York Municipal Income Fund II, or
PIMCO New York Municipal Income Fund III
(each, a “Fund” and, collectively, the “Funds”)
If you tendered to any of the Funds, each a Massachusetts business trust registered under the Investment Company Act of 1940, in connection with the offer by each Fund to purchase for cash up to 100% of its outstanding preferred shares of beneficial interest, par value $0.00001 per share and liquidation preference of $25,000 per share, designated Auction-Rate Preferred Shares (with respect to each Fund, the “Preferred Shares”), upon the terms and subject to the conditions set forth in the offer to purchase dated August 14, 2023 (the “Offer to Purchase”) and each Fund’s related letter of transmittal (the “Letter of Transmittal,” which, together with the Offer to Purchase, each as amended or supplemented from time to time, constitutes such Fund’s “Offer” and, collectively, the “Offers”), and you wish to withdraw all or any of your Preferred Shares, please fill out the attached Notice of Withdrawal. If your Preferred Shares are registered in the name of your broker, dealer, commercial bank, trust company or other nominee (“Nominee Holder”), contact that Nominee Holder to withdraw your tendered Preferred Shares.
1. Withdrawal. If you have tendered your Preferred Shares pursuant to an Offer, you may withdraw your Preferred Shares previously tendered by completing, executing and sending the attached “Notice of Withdrawal” to the address set forth on the first page of the Notice of Withdrawal. If your Preferred Shares are registered in the name of your broker or other Nominee Holder, contact that Nominee Holder to withdraw your tendered Preferred Shares.
2. Delivery of Notice of Withdrawal. Equiniti Trust Company, LLC (the “Tender Agent”) must receive the Notice of Withdrawal prior to 5:00p.m., New York City time, on September 18, 2023 (the “Expiration Date”), unless the Offer is extended. The method of delivery of any documents related to a withdrawal is at the option and risk of the withdrawing holder of Preferred Shares. Any documents related to a withdrawal will be deemed delivered only when actually received by the Tender Agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. If your Preferred Shares are registered in the name of your broker or other Nominee Holder, you may need to allow such Nominee Holder additional time to withdraw your tendered Preferred Shares. You should consult your broker or other Nominee Holder to determine if there is an earlier deadline by which you must inform such Nominee Holder of any decision to withdraw your tendered Preferred Shares.
3. Procedures and Signature Guarantee. The Notice of Withdrawal must specify the name of the Fund, name of the person who tendered the Preferred Shares to be withdrawn, the number of Preferred Shares to be withdrawn and the name of the registered holder of Preferred Shares, if different from that of the person who tendered such Preferred Shares. If the Preferred Shares to be withdrawn have been delivered to the Tender Agent, a signed notice of withdrawal or an Agent’s Message (as defined in the Offer to Purchase) with (except in the case of Preferred Shares tendered by an Eligible Institution (as defined below)) signatures guaranteed by an Eligible Institution must be submitted prior to the withdrawal of such Preferred Shares. In addition, such notice must specify the name and number of the account at The Depository Trust Company (the “Book-Entry Transfer Facility”) to be credited with the withdrawn Preferred Shares. An “Eligible Institution” is a financial institution (including most banks, savings and loan associations and brokerage houses) that is a member of a recognized Medallion Program approved by The Securities Transfer Association Inc., including the Securities Transfer Agents Medallion Program (STAMP). If this Notice of Withdrawal is signed by trustees, executors, administrators, guardians, agents, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, should indicate location of signing and must submit proper evidence satisfactory to a Fund of their authority to so act.
NOTICE OF WITHDRAWAL
of Auction-Rate Preferred Shares
of
PIMCO California Municipal Income Fund
PIMCO California Municipal Income Fund II
PIMCO California Municipal Income Fund III
PIMCO Corporate & Income Opportunity Fund
PIMCO Corporate & Income Strategy Fund
PIMCO High Income Fund
PIMCO Income Strategy Fund
PIMCO Income Strategy Fund II
PIMCO Municipal Income Fund
PIMCO Municipal Income Fund II
PIMCO Municipal Income Fund III
PIMCO New York Municipal Income Fund
PIMCO New York Municipal Income Fund II
PIMCO New York Municipal Income Fund III
(each, a “Fund” and, collectively, the “Funds”)
(PIMCO California Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO California Municipal Income Fund III: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO California Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B, and Series C)
(PIMCO Corporate & Income Opportunity Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Corporate & Income Strategy Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO High Income Fund: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund II: Auction-Rate Preferred Shares Series M, Series T, Series W, Series TH and Series F)
(PIMCO Income Strategy Fund: Auction-Rate Preferred Shares Series T, Series W and Series TH)
(PIMCO Municipal Income Fund II: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund III: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO Municipal Income Fund: Auction-Rate Preferred Shares Series A, Series B, Series C, Series D and Series E)
(PIMCO New York Municipal Income Fund II: Auction-Rate Preferred Shares Series A and Series B)
(PIMCO New York Municipal Income Fund III: Auction-Rate Preferred Shares Series A)
(PIMCO New York Municipal Income Fund: Auction-Rate Preferred Shares Series A)
Previously Tendered
Pursuant to the Offer to Purchase Dated August 14, 2023
THE WITHDRAWAL DEADLINE IS 5:00P.M., NEW YORK CITY TIME, ON SEPTEMBER 18, 2023,
UNLESS THE OFFER IS EXTENDED
This Notice of Withdrawal is Submitted to:
Equiniti Trust Company, LLC
By First Class Mail, By Overnight Courier, By Hand:
Equiniti Trust Company, LLC
6201 15th Avenue
Brooklyn, New York 11219
Attn: Corporate Actions
If you have any questions regarding this Notice of Withdrawal, please contact Equiniti Trust Company, LLC, at
(877) 248-6417 or (718) 921-8317.
| DESCRIPTION OF PREFERRED SHARES WITHDRAWN
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Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank) |
Preferred Shares Withdrawn* | |||
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1 ☐ All 2 ☐ Partial: | ||||
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*Unless otherwise indicated, it will be assumed that all Preferred Shares are being withdrawn.
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This Notice of Withdrawal is to be completed if you tendered Preferred Shares of a Fund in connection with an Offer by any of the Funds and wish to withdraw shares tendered.
☐ CHECK HERE IF YOUR PREFERRED SHARES WERE TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE TENDER AGENT AND COMPLETE THE FOLLOWING. PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
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Signatures are required on the next page.
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
NOTICE OF WITHDRAWAL CAREFULLY.
| Name of Fund: |
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| Signature(s) of Owner(s): |
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| Date: , 2023 | ||
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| Capacity and Location Signed: |
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Guarantee of Signature(s)
(Required if Preferred Shares have been delivered to the Tender Agent)
[For use by financial institutions only. Place medallion guarantee in space below.]
Conformed Version
TENDER OFFER AGREEMENT
This Agreement (“Agreement”) is made and entered into as of the 11th day of August, 2023, by and among PIMCO Corporate & Income Strategy Fund (“PCN”), PIMCO Income Strategy Fund (“PFL”), PIMCO Income Strategy Fund II (“PFN”), PIMCO High Income Fund (“PHK”), PIMCO Corporate & Income Opportunity Fund (“PTY”), PIMCO Municipal Income Fund (“PMF”), PIMCO Municipal Income Fund II (“PML”), PIMCO Municipal Income Fund III (“PMX”), PIMCO California Municipal Income Fund (“PCQ”), PIMCO California Municipal Income Fund II (“PCK”), PIMCO California Municipal Income Fund III (“PZC”), PIMCO New York Municipal Income Fund (“PNF”), PIMCO New York Municipal Income Fund II (“PNI”) and PIMCO New York Municipal Income Fund III (“PYN” and, together with PCN, PFL, PFN, PHK, PTY, PMF, PML, PMX, PCQ, PCK, PZC, PNF and PNI each, a “Fund” and, collectively, the “Funds”), Pacific Investment Management Company LLC (“PIMCO” and, together with the Funds, the “Fund Parties”) and Bank of America, N.A. (“BANA”).
WHEREAS, BANA is a substantial holder of auction rate preferred shares issued by PCN, PFL, PFN, PHK, PTY, PMF, PML, PMX, PCQ, PCK, PZC, PNF, PNI and PYN, each a closed-end investment company registered under the Investment Company Act of 1940, as amended, for which PIMCO serves as investment manager (“ARPS”);
WHEREAS, BANA has engaged in discussions with the Fund Parties regarding a proposal that each Fund conduct an issuer tender offer for its ARPS (the “Discussions”), and in that connection BANA entered into a letter agreement with the Fund Parties regarding confidentiality obligations with respect to the discussions (the “Confidentiality Letter Agreement”).
NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Tender Offers. With respect to each Fund, subject to satisfaction of Section 2 below, the Fund Parties (each Fund with respect to itself only) agree to conduct a tender offer by PTY for 100% of its issued and outstanding ARPS at a price equal to 96% of the $25,000 per share liquidation preference of the ARPS (i.e., a tender offer of $24,000 per ARPS share), a tender offer by each of PCN and PHK for 100% of its issued and outstanding ARPS at a price equal to 93.25% of the $25,000 per share liquidation preference of the ARPS (i.e., a tender offer price of $23,312.50 per share), a tender offer by each of PFL and PFN for 100% of its issued and outstanding ARPS at a price equal to 94.25% of the $25,000 per share liquidation preference of the ARPS (i.e., a tender offer price of $23,562.50 per share) and a tender offer by each of PMF, PML, PMX, PCQ, PCK, PZC, PNF, PNI and PYN for 100% of its issued and outstanding ARPS at a price equal to 94.5% of the $25,000 per share liquidation preference of the ARPS (i.e., a tender offer of $23,625 per ARPS share), scheduled to expire as of 5:00 p.m., New York City time, on September 18, 2023 (such date, as it may be extended in accordance with the terms of the Tender Offers and with the consent of BANA, the “Expiration Date”), subject only to substantially the same conditions as are set forth in Appendix A hereto (each, a “Tender Offer” and, collectively, the “Tender Offers”), which conditions do not include any minimum level of participation in the Tender Offer by ARPS holders of the Fund. Each Fund (with respect to itself
only) hereby agrees that if, as of the Expiration Date of its Tender Offer, all of such conditions are satisfied, it shall accept for payment all ARPS properly tendered pursuant to its Tender Offer, payment for which shall be effected promptly after the Expiration Date. Payment for Preferred Shares accepted for payment pursuant to a Fund’s Tender Offer will be made by deposit of the aggregate purchase price with the Depositary, as further described in and subject to the Fund’s Offer to Purchase; provided, that each Fund will deposit the aggregate purchase price with the Depositary within five calendar days of the Expiration Date.
2. Agreements and Obligations of BANA. BANA hereby agrees and undertakes that, with respect to each Fund, upon such Fund’s conducting of a Tender Offer, BANA shall tender one-hundred percent (100%) of the ARPS listed Appendix C hereto, such that BANA would no longer own any of such ARPS listed on Appendix C following completion of the Fund’s Tender Offer, provided that, BANA retains its right to sell or transfer in its sole discretion any of the ARPS (subject to any applicable transfer provisions applicable to the ARPS) between the date hereof and the date on which any Tender Offer commences.
For the avoidance of doubt, the parties confirm that the tendering of any ARPS in connection with the Tender Offer will not affect the accrual of or obligation to pay dividends on such ARPS for the period through the Expiration Date.
3. Release of Any Claims; Covenants Not to Sue.
(a) Subject to, and effective upon, the acceptance for purchase of, and payment for, the offer price of ARPS of each Fund tendered in accordance with the terms and subject to the conditions of each such Tender Offer and payment of any dividends accrued on such ARPS through the Expiration Date, BANA, on behalf of itself, its heirs, beneficiaries, administrators, personal representatives, successors, assigns, parents, subsidiaries, shareholders, affiliates, and predecessors, as applicable, in exchange for the agreements and other consideration in this Agreement, (i) does hereby compromise, settle, and absolutely, unconditionally, and fully release and forever discharge each of the Fund Parties and their current and former respective successors, subsidiaries, affiliates, employees, officers, directors, trustees, managers, investors and shareholders, and each of their respective attorneys, administrators, personal representatives, insurers and assigns (together, the “Released Fund Parties”) of and from any and all claims, demands, debts, liens, obligations, fees and expenses, harm, injuries, liabilities, cause or causes of action, whether known or unknown, claimed or alleged, asserted or unasserted, either at law or in equity, whether statutory, in contract or in tort, of any kind or character which it has, or owns, or may now or in the future have or own for any claims arising out of or relating in any way to the Discussions, the Tender Offer or BANA’s acquisition of transactions in, ownership of or holdings in the Funds’ ARPS and (ii) acknowledges and agrees that it will not now or in the future bring any claim, action, lawsuit, arbitration proceeding or other form of action against any of the Released Fund Parties, directly or indirectly, arising out of or in any way connected with any claim or potential claim released under this Agreement as referenced in sub-paragraph 3(a)(i) above, and that this Agreement is a bar to any such claim, action, lawsuit, proceeding or other form of action.
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(b) Subject to and upon completion of the Tender Offers, each of the Fund Parties, on behalf of itself, its heirs, beneficiaries, administrators, personal representatives, successors, assigns, parents, subsidiaries, shareholders, affiliates, and predecessors, as applicable, in exchange for the agreements and other consideration in this Agreement, (i) does hereby compromise, settle, and absolutely, unconditionally, and fully release and forever discharge BANA and its current and former respective successors, subsidiaries, affiliates, employees, officers, directors, trustees, managers, investors and shareholders, and each of their respective attorneys, administrators, personal representatives, insurers and assigns (together, the “Released BANA Parties”) of and from any and all claims, demands, debts, liens, obligations, fees and expenses, harm, injuries, liabilities, cause or causes of action, whether known or unknown, claimed or alleged, asserted or unasserted, either at law or in equity, whether statutory, in contract or in tort, of any kind or character which it has, or owns, or may now or in the future have or own for any claims arising out of or relating in any way to the Discussions, the Tender Offers or BANA’s acquisition of, transactions in, ownership of or holdings in the Funds’ ARPS and (ii) acknowledges and agrees that it will not now or in the future bring any claim, action, lawsuit, arbitration proceeding or other form of action against any of the Released BANA Parties, directly or indirectly, arising out of or in any way connected with any claim or potential claim released under this Agreement as referenced in sub-paragraph 3(b)(i) above, and that this Agreement is a bar to any such claim, action, lawsuit, proceeding or other form of action.
(c) BANA and the Fund Parties acknowledge and agree that the releases and covenants provided in this Section 3 are in no way an admission or acknowledgment of any liabilities, claims or causes of action that one party may have against the other.
(d) The provisions of Section 3(a) and Section 3(b) shall not be deemed to preclude any claim by any party hereto alleging a breach of the terms of this Agreement.
4. Injunctive Relief. Each party acknowledges that a breach of its obligations under this Agreement may result in irreparable harm to the other party for which monetary damages may not be sufficient. Each party hereto agrees that, in the event of a breach or threatened breach by the other party of its obligations under this Agreement, the non-breaching party shall be entitled, in addition to its other rights and remedies hereunder or at law, to seek injunctive or other equitable relief, and such further relief as may be proper from a court of competent jurisdiction, including specific performance of the obligations set forth in Section 2 of this Agreement.
5. Confidentiality. BANA and the Fund Parties hereby agree to and do hereby extend the terms of the Confidentiality Letter Agreement and their respective obligations thereunder in accordance with Section 6 hereof; provided that the Fund Parties may disclose the subject matter of the Tender Offers to third parties, including to other holders of the Funds’ ARPS and to service providers and agents who may be engaged to assist in conducting the Tender Offers, before the Tender Offers are publicly announced. For the avoidance of doubt, (i) BANA acknowledges that each Fund will be required to file a copy of this Agreement with its Form TO filings in connection with its Tender Offer and (ii) the Funds acknowledge that BANA may file a copy of this Agreement with any filings that are to be made pursuant to Section 13 or Section 16 of the Securities Exchange Act of 1934, provided that any such filing by BANA will not be made before the earlier of (i) the filing by a Fund of a copy of this Agreement with its Form TO filing in connection with its tender offer and (ii) the date that is two business days following the date of this Agreement.
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6. Term. This Agreement shall terminate on the earlier of (i) the close of the New York Stock Exchange on the business day next following the Expiration Date, if the Funds have not accepted validly tendered ARPS for purchase pursuant to the Tender Offers by such time and (ii) the date of completion of the Tender Offers. In the case of termination of this Agreement pursuant to Section 6(i), all provisions of this Agreement shall terminate and have no further force or effect upon such termination, except that the confidentiality obligations of the parties under Section 5 hereof and the Confidentiality Letter Agreement shall survive the termination of this Agreement for the survival period provided in the Confidentiality Letter Agreement. In the case of termination of this Agreement pursuant to Section 6(ii), the obligations of the parties under Sections 3, 4 and 5 hereof shall survive the termination of this Agreement, provided that with respect to Section 5, such obligations shall survive for the survival period provided in the Confidentiality Letter Agreement.
7. Miscellaneous.
(a) Notices. Any notices or other communications required or permitted hereunder will be deemed to have been properly given and delivered if in writing by such party or its legal representative and delivered personally or sent by facsimile, e-mail or other electronic communication, or by a nationally recognized overnight courier service guaranteeing overnight delivery, addressed as follows:
If to BANA: Bank of America, N.A.
One Bryant Park
1111 Avenue of the Americas, 3rd Floor
New York, New York 10036
Attention: Michael Jentis
Lisa Irizarry
Thomas Visone
E-mail: michael.jentis@bofa.com
lisa.m.irizarry@bofa.com
thomas.visone@bofa.com
If to PIMCO: Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
Attn: Ryan Leshaw
E-mail: ryan.leshaw@pimco.com
Facsimile: 949-719-3136
If to a Fund: [Fund name]
c/o Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
Attn: Ryan Leshaw
E-mail: ryan.leshaw@pimco.com
Facsimile: 949-719-3136
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(b) No Assignment; Binding Effect. No Party shall assign this Agreement or its rights hereunder without the express written consent of the other parties. This Agreement is binding upon and inures to the benefit of the Parties hereto and their respective heirs, legal representatives, executors, administrators, successors and assigns.
(c) Agreement Separable. If any provision hereof is for any reason unenforceable or inapplicable, the other provisions hereof will remain in full force and effect in the same manner as if such unenforceable or inapplicable provision had never been contained herein. This Agreement has been approved on behalf of each Fund by action of its Board of Trustees (the “Board”) which approval was recommended by PIMCO in its capacity as investment manager for each Fund.
(d) Counterparts. This Agreement may be executed in any number of counterparts, each of which will, for all purposes, be deemed to be an original. Facsimile or electronic signatures shall have the same force and effect as executed originals.
(e) Governing Law. This Agreement is governed by the laws of the State of New York, without regard to the principles of conflicts of laws or choice of laws of any state or commonwealth. Each party submits to the exclusive jurisdiction of, and acknowledges the propriety of venue in the United States District Court for the Southern District of New York sitting in New York County, New York, and its appellate courts, as well as any Courts of the State of New York sitting in New York County, New York, and the appellate courts thereof.
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS SECTION 7(E) WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT BETWEEN THE PARTIES EACH IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT, WHICH WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
(f) Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the matters set forth herein, and there are no other covenants, agreements, promises, terms and provisions, conditions, undertakings or understandings, either oral or written, between them other than those herein set forth. No subsequent alteration, amendment, change, deletion or addition to this Agreement shall be binding upon the parties unless in writing and signed by the parties.
(g) Further Assurances. Each party covenants, on behalf of itself and its successors and assigns, to take all actions and do all things, and to promptly and duly execute, acknowledge and deliver any and all such further instruments and documents necessary or proper to achieve the purposes and objectives of this Agreement.
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(h) Massachusetts Business Trust Matters. A copy of the Agreement and Declaration of Trust of each Fund is on file with the Secretary of State of The Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of each Fund as Trustees and not individually and that the obligations of each Fund under this instrument are not binding upon any of the Trustees, officers or shareholders of the Fund individually, but are binding only upon the assets and property of the Fund.
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6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above, and each party represents and acknowledges that it possesses the requisite authority to execute this Agreement.
Each Fund Listed on Appendix B hereto
(with respect to each Fund, severally and neither jointly
nor jointly and severally with any other Fund)
| By: | /s/ Eric D. Johnson | |
| Title: | President | |
| Date: | August 11, 2023 | |
Pacific Investment Management Company LLC
| By: | /s/ Peter G. Strewlow | |
| Title: |
Managing Director, Co-Chief Operating Officer | |
| Date: | August 11, 2023 | |
Bank of America, N.A.
| By: | /s/ Michael Jentis | |
| Title: | Managing Director | |
| Date: | August 11, 2023 | |
APPENDIX A
TENDER OFFER CONDITIONS:
It is a condition to each Fund’s tender offer that each Fund cannot accept tenders or effect repurchases, unless otherwise determined by the Fund’s Board, if (1) such transactions, if consummated, would (a) result in delisting of the Fund’s common shares from the New York Stock Exchange; (b) impair the Fund’s status as a regulated investment company under the Internal Revenue Code of 1986 (which would make the Fund subject to federal income tax on all of its net income and gains in addition to the taxation of shareholders who receive distributions from the Fund); or (c) result in a failure of the Fund to comply with any applicable asset coverage requirements in the event any senior securities are issued and outstanding; (2) there shall be instituted or pending before any governmental entity or court any action, proceeding, application or claim, or any judgment, order or injunction sought, or any other action taken by any person or entity, which (a) restrains, prohibits or materially delays the making or consummation of the tender offer; (b) challenges the acquisition by the Fund of ARPS pursuant to the tender offer or the Board’s fulfillment of its fiduciary obligations in connection with the tender offer; (c) seeks to obtain any material amount of damages in connection with the tender offer; or (d) otherwise directly or indirectly materially adversely affects the tender offer or the Fund; or (3) there is any (a) suspension of or limitation on prices for trading securities generally on the New York Stock Exchange or other national securities exchange(s); (b) declaration of a banking moratorium by Federal or state authorities or any suspension of payment by banks in the United States or New York State; or (c) limitation affecting the Fund imposed by federal or state authorities on the extension of credit by lending institutions.
APPENDIX B
PIMCO Corporate & Income Strategy Fund
PIMCO Income Strategy Fund
PIMCO Income Strategy Fund II
PIMCO High Income Fund
PIMCO Corporate & Income Opportunity Fund
PIMCO Municipal Income Fund
PIMCO Municipal Income Fund II
PIMCO Municipal Income Fund III
PIMCO California Municipal Income Fund
PIMCO California Municipal Income Fund II
PIMCO California Municipal Income Fund III
PIMCO New York Municipal Income Fund
PIMCO New York Municipal Income Fund II
PIMCO New York Municipal Income Fund III
APPENDIX C
| Issuer | Symbol | CUSIP | Position | |||
| PIMCO Corporate & Income Opportunity Fund | PTY | 72201B408 | 989 | |||
| PIMCO Corporate & Income Opportunity Fund | PTY | 72201B200 | 1,144 | |||
| PIMCO Corporate & Income Opportunity Fund | PTY | 72201B309 | 796 | |||
| PIMCO Corporate & Income Opportunity Fund | PTY | 72201B507 | 1,081 | |||
| PIMCO Corporate & Income Opportunity Fund | PTY | 72201B606 | 1,028 | |||
| PIMCO High Income Fund | PHK | 722014206 | 111 | |||
| PIMCO High Income Fund | PHK | 722014305 | 144 | |||
| PIMCO High Income Fund | PHK | 722014404 | 90 | |||
| PIMCO High Income Fund | PHK | 722014503 | 104 | |||
| PIMCO High Income Fund | PHK | 722014602 | 116 | |||
| PIMCO Income Strategy Fund | PFL | 72201H207 | 588 | |||
| PIMCO Income Strategy Fund | PFL | 72201H306 | 464 | |||
| PIMCO Income Strategy Fund | PFL | 72201H405 | 351 | |||
| PIMCO Municipal Income Fund III | PMX | 72201A202 | 148 | |||
| PIMCO Municipal Income Fund III | PMX | 72201A301 | 63 | |||
| PIMCO Municipal Income Fund III | PMX | 72201A400 | 8 | |||
| PIMCO Municipal Income Fund III | PMX | 72201A509 | 37 | |||
| PIMCO Municipal Income Fund III | PMX | 72201A608 | 35 | |||
| PIMCO California Municipal Income Fund III | PZC | 72201C208 | 133 | |||
| PIMCO California Municipal Income Fund III | PZC | 72201C307 | 68 | |||
| PIMCO New York Municipal Income Fund III | PYN | 72201E204 | 107 | |||
| PIMCO California Municipal Income Fund | PCQ | 72200N205 | 85 | |||
| PIMCO California Municipal Income Fund | PCQ | 72200N304 | 91 | |||
| PIMCO California Municipal Income Fund | PCQ | 72200N403 | 29 | |||
| PIMCO Municipal Income Fund | PMF | 72200R206 | 47 | |||
| PIMCO Municipal Income Fund | PMF | 72200R305 | 11 | |||
| PIMCO Municipal Income Fund | PMF | 72200R404 | 31 | |||
| PIMCO Municipal Income Fund | PMF | 72200R503 | 57 | |||
| PIMCO Municipal Income Fund | PMF | 72200R602 | 39 | |||
| PIMCO New York Municipal Income Fund | PNF | 72200T301 | 251 | |||
| PIMCO Corporate & Income Strategy Fund | PCN | 72200U209 | 102 | |||
| PIMCO Corporate & Income Strategy Fund | PCN | 72200U308 | 67 | |||
| PIMCO Corporate & Income Strategy Fund | PCN | 72200U407 | 123 | |||
| PIMCO Corporate & Income Strategy Fund | PCN | 72200U506 | 51 | |||
| PIMCO Corporate & Income Strategy Fund | PCN | 72200U605 | 74 | |||
| PIMCO Municipal Income Fund II | PML | 72200W205 | 55 | |||
| PIMCO Municipal Income Fund II | PML | 72200W304 | 274 | |||
| PIMCO Municipal Income Fund II | PML | 72200W403 | 69 | |||
| PIMCO Municipal Income Fund II | PML | 72200W502 | 94 | |||
| PIMCO Municipal Income Fund II | PML | 72200W601 | 54 | |||
| PIMCO California Municipal Income Fund II | PCK | 72200M207 | 158 | |||
| PIMCO California Municipal Income Fund II | PCK | 72200M306 | 85 | |||
|
PIMCO California Municipal Income Fund II |
PCK | 72200M405 | 93 | |||
|
PIMCO California Municipal Income Fund II |
PCK | 72200M504 | 60 |
| Issuer | Symbol | CUSIP | Position | |||
|
PIMCO California Municipal Income Fund II |
PCK | 72200M603 | 76 | |||
|
PIMCO New York Municipal Income Fund II |
PNI | 72200Y201 | 99 | |||
|
PIMCO New York Municipal Income Fund II |
PNI | 72200Y300 | 137 | |||
|
PIMCO Income Strategy Fund II |
PFN | 72201J500 | 453 | |||
|
PIMCO Income Strategy Fund II |
PFN | 72201J203 | 458 | |||
|
PIMCO Income Strategy Fund II |
PFN | 72201J302 | 355 | |||
|
PIMCO Income Strategy Fund II |
PFN | 72201J401 | 318 | |||
|
PIMCO Income Strategy Fund II |
PFN | 72201J609 | 316 |