NEW YORK, Nov. 7, 2008 (GLOBE NEWSWIRE) -- Nicholas-Applegate Convertible & Income Fund (NYSE:NCV) and Nicholas-Applegate Convertible & Income Fund II (NYSE:NCZ) (collectively, the "Funds") today announced an additional redemption, at par, of a portion of the Funds' auction rate preferred shares ("ARPS"), beginning November 24, 2008 and concluding on Friday, November 28, 2008. The Boards of Trustees of the Funds approved the redemptions.
These pending redemptions of the Funds' ARPS follow the previous redemption announced on October 9, 2008 of $25 million and $105 million for NCV and NCZ, respectively. NCV and NCZ will each redeem an additional $60 million of ARPS. Specifically, $20 million of NCV's redemption is mandatory under the Fund's By-laws due to its failure to maintain asset coverage as required by the rating agency that rates the Fund's ARPS. The remaining $40 million of NCV's redemption and the full $60 million of NCZ's redemption are being made at the recommendation of Fund management to further reduce leverage and increase the asset coverage of the Funds' ARPS in the current volatile market environment.
Since the initial redemption announcement on October 9, 2008, the markets have continued to weaken. For example, the high-yield and convertible bond markets in which the Funds primarily invest, as represented by the Merrill Lynch High Yield Master II and Merrill Lynch All Convertible All Quality Indexes, have declined by 16% and 18%, respectively, during the month of October 2008.
Each Fund intends to redeem the following amounts of ARPS at their full liquidation preference of $25,000 per share plus accumulated but unpaid dividends, pro rata across each Fund's five Series of ARPS, on their respective dates of redemption listed below:
Nicholas-Applegate Convertible & Income Fund
Total
Redemption
Amount as a %
of Outstanding
Series Redemption Total ARPS in that
Date Redemption Amount Series
---------------------------------------------------------------------
Series A Nov. 24, $4,000,000
(CUSIP: 65370F200) 2008 (160 shares x $25,000)
Nov. 25, $8,000,000 Approx. 20.0%
2008 (320 shares x $25,000)
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Series B Nov. 24, $4,000,000
(CUSIP: 65370F309) 2008 (160 shares x $25,000)
Nov. 26, $8,000,000 Approx. 20.0%
2008 (320 shares x $25,000)
---------------------------------------------------------------------
Series C Nov. 24, $4,000,000
(CUSIP: 65370F408) 2008 (160 shares x $25,000)
Nov. 28, $8,000,000 Approx. 20.0%
2008 (320 shares x $25,000)
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Series D
(CUSIP: 65370F507) Nov. 24, $4,000,000
2008 (160 shares x $25,000)
Nov. 28, $8,000,000 Approx. 20.0%
2008 (320 shares x $25,000)
---------------------------------------------------------------------
Series E Nov. 24, $12,000,000 Approx. 20.0%
(CUSIP: 65370F606) 2008 (480 shares x $25,000)
---------------------------------------------------------------------
Total $60,000,000
(2,400 shares x $25,000)
---------------------------------------------------------------------
Nicholas-Applegate Convertible & Income Fund II
Total
Redemption
Amount as a %
of Outstanding
Series Redemption Total ARPS in that
Date Redemption Amount Series
---------------------------------------------------------------------
Series A Nov. 25, $12,000,000 Approx. 20.0%
(CUSIP: 65370G208) 2008 (480 shares x $25,000)
---------------------------------------------------------------------
Series B Nov. 26, $12,000,000 Approx. 20.0%
(CUSIP: 65370G307) 2008 (480 shares x $25,000)
---------------------------------------------------------------------
Series C Nov. 28, $12,000,000 Approx. 20.0%
(CUSIP: 65370G406) 2008 (480 shares x $25,000)
---------------------------------------------------------------------
Series D Nov. 28, $12,000,000 Approx. 20.0%
(CUSIP: 65370G505) 2008 (480 shares x $25,000)
---------------------------------------------------------------------
Series E Nov. 24, $12,000,000 Approx. 20.0%
(CUSIP: 65370G604) 2008 (480 shares x $25,000)
---------------------------------------------------------------------
Total $60,000,000
(2,400 shares x $25,000)
---------------------------------------------------------------------
The Funds are partially redeeming their ARPS on a pro rata basis by series. The Depositary Trust Company (DTC), holder of record of the ARPS, determines how the redemption will be allocated among each participant broker-dealer account that holds ARPS and each participant broker-dealer determines how to allocate each redemption among the beneficial holders of the ARPS held by it. The procedures used by participant broker-dealers to allocate redeemed ARPS among their clients may differ from each other and from the procedures used by DTC.
As previously announced on November 3, 2008, NCV and NCZ have postponed the payment and scheduled declaration of dividends on the Funds' common shares due to the failure to maintain asset coverage tests under the Funds' By-laws. Taking into account the ARPS redemptions announced today and future market conditions, the Funds intend to pay the common share dividends previously declared and declare previously scheduled dividends if and when the Funds have adequate asset coverage and have satisfied other requirements of the Funds' By-laws, including the completion of the mandatory portion of the ARPS redemption for NCV. The Funds will make a subsequent public announcement as to the payment of common share dividends and the declaration of future dividends.
The Funds' investment objective is to provide total return through a combination of capital appreciation and high current income. There can be no assurance that the Funds will achieve their stated objective.
Allianz Global Investors Fund Management LLC, an indirect, wholly-owned subsidiary of Allianz Global Investors of America L.P., serves as the Funds' investment manager and is a member of Munich-based Allianz Group (NYSE:AZ). Nicholas-Applegate Capital Management LLC, an Allianz Global Investors Fund Management affiliate, serves as the Funds' sub-adviser.
The Funds' daily New York Stock Exchange closing prices and net asset values per share are available by calling the Funds' shareholder servicing agent at (800) 331-1710. This information, as well as updated portfolio statistics and performance, is available at http://www.allianzinvestors.com.
Statements made in this release that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such risks and uncertainties include, without limitation, the adverse effect from further declines in the securities markets and in the Funds' performance, a general downturn in the economy, competition from other companies, changes in government policy or regulation, inability to attract or retain key employees, inability to implement its operating strategy and/or acquisition strategy, and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations. A Fund's ability to maintain leverage and to declare and pay dividends to common shareholders is subject to the restrictions in its registration statement, By-laws and other governing documents.