SOURCE: Franklin Templeton

Franklin Templeton

April 20, 2016 17:43 ET

Franklin Limited Duration Income Trust Announces Share Repurchase Program and Tender Offer Measurement Period

SAN MATEO, CA--(Marketwired - Apr 20, 2016) - Franklin Limited Duration Income Trust (NYSE MKT: FTF), a closed-end investment company managed by Franklin Advisers, Inc., announced today that the Board has approved an open-market share repurchase program to authorize the Fund to purchase, from time to time, up to 10% of the Fund's common shares in open-market transactions, at the discretion of management.

In addition, the Board announced today a nine-month discount measurement period that will commence on June 1, 2016 and end on March 31, 2017, whereby if the Fund's shares trade at an average market price discount from net asset value ("NAV") of 10% or more during the last 90 days of the measurement period, the Board would: (1) authorize a tender offer for a portion of the Fund's outstanding shares; or (2) submit to shareholders a proposal to reorganize the Fund with either an open-end or closed-end investment company; or (3) submit to shareholders a proposal to convert the Fund to an open-end investment company. The Board may determine to take more than one of these actions.

Share Repurchase Program

Subject to the 10% limitation, the timing and amount of repurchases would be in the discretion of the investment manager. In exercising its discretion consistent with its portfolio management responsibilities, the investment manager will take into account various other factors, including, but not limited to, the level of the discount, the Fund's performance, portfolio holdings, dividend history, market conditions, cash on hand, the availability of other attractive investments and whether the sale of certain portfolio securities would be undesirable because of liquidity concerns or because the sale might subject the Fund to adverse tax consequences. Any repurchases would be made on a national securities exchange at the prevailing market price, subject to exchange requirements, Federal securities laws and rules that restrict repurchases, and the terms of any outstanding leverage or borrowing of the Fund.

If and when the Fund's 10% threshold is reached, no further repurchases could be completed unless authorized by the Board. Until the 10% threshold is reached, Fund management will have the flexibility to rapidly commence share repurchases if and when it is determined to be appropriate in light of prevailing circumstances. The share repurchase program is intended to benefit shareholders by enabling the Fund to repurchase shares at a discount to net asset value, thereby increasing the proportionate interest of each remaining shareholder in the Fund.

Tender Offer Measurement Period

In an effort to address the Fund's discount, the Board of the Fund has established a nine month measurement period for evaluating the discount of the market value of the Fund's shares from their NAV. The Measurement Period will begin on June 1, 2016 and end on March 31, 2017. If the Fund's shares have traded at an average discount from net asset value of 10% or more during the last 90 days of the Measurement Period (based on the closing price of every trading day during those 90 days), then the Board will take one of three potential actions. The Board, as soon as reasonably practicable, but no later than 180 days from the last day of the Measurement Period, will: (1) commence a tender offer for a portion of the Fund's outstanding shares ("Tender Offer Alternative"); or (2) submit to shareholders a proposal to reorganize the Fund with either an open-end or closed-end investment company ("Merger Alternative"); or (3) submit to shareholders a proposal to convert the Fund to an open-end investment company ("Open-End Alternative"). The Board may determine to take more than one of these actions.

In connection with the Tender Offer Alternative, shareholders would have the ability to tender some or all of their Fund common shares and receive for those shares accepted for tender an amount per share calculated at a discount to NAV as of the tender offer pricing date. In connection with the Merger Alternative, if shareholders vote to reorganize the Fund with an open-end investment company, shares of the reorganized fund would be continuously offered for sale and redeemable at the option of the shareholder (except under limited circumstances permitted under the federal securities laws) at their NAV less any redemption charge that the Board of the reorganized fund might put into effect, and would be payable by shareholders upon redemption. In connection with the Open-End Alternative, if the shareholders vote to open-end the Fund, the Fund will begin to continuously offer its shares for sale following the effectiveness of a registration statement filed with the U.S. Securities and Exchange Commission relating to the Fund's open-end shares. Shares would be redeemable at the option of the shareholder (except under limited circumstances permitted under the federal securities laws) at their net asset value less any redemption charge that the Board of the reorganized fund might put into effect and would be payable by shareholders upon redemption.

Other Information

You may request a copy of the Fund's current Report to Shareholders by contacting Franklin Templeton's Fund Information Department at 1-800/DIAL BEN® (1-800-342-5236) or by visiting franklintempleton.com. All investments involve risks, including possible loss of principal. Interest rate movements and mortgage prepayments will affect the Fund's share price and yield. Bond prices generally move in the opposite direction of interest rates. As the prices of bonds in a fund adjust to a rise in interest rates, the fund's share price may decline. Investments in lower-rated bonds include higher risk of default and loss of principal. The Fund is actively managed but there is no guarantee that the manager's investment decisions will produce the desired results. For portfolio management discussions, including information regarding the Fund's investment strategies, please view the most recent Annual or Semi-Annual Report to Shareholders which can be found at franklintempleton.com or sec.gov.

Franklin Resources, Inc. (NYSE: BEN) is a global investment management organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management to retail, institutional and sovereign wealth clients in over 180 countries. Through specialized teams, the company has expertise across all asset classes -- including equity, fixed income, alternative and custom solutions. The company's more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With offices in 35 countries, the California-based company has more than 65 years of investment experience and over $742 billion in assets under management as of March 31, 2016. For more information, please visit franklintempleton.com.

Contact Information

  • Contact:
    Franklin Advisers, Inc.
    Franklin Templeton Fund Information: (800) 342-5236