Evergreen Seeks Alternatives to Auctions

BOSTON—With auction rate securities in question, Evergreen Investments’ equity managers are now earnestly looking for alternate sources of liquidity, the firm announced in a conference call late yesterday.

Auction-rate market preferred securities—a little-known asset class that has become one of the latest safe havens of institutional investment managers, mutual funds included, in the past month—have provided reliable liquidity for 20 years.

Since Feb. 13, however, all the auctions have failed, said Scott Couto, head of global product management for Evergreen.

“Obviously, what we’re experiencing is unprecedented and very challenging on a global scale,” Couto said.

Evergreen continues in its mission to seek long-term solutions to enable shareholders to earn consistent yields, added Karen McColl, managing director of Evergreen Investment Product Management.

One possible solution, which still requires approval from Evergreen’s board, would refinance part of the proceeds from commercial paper conduit borrowing, Couto said.

“We have taken this issue very seriously, and we are working very diligently toward resolution,” McColl said. “We’re not likely to see successful auctions anytime soon or ever. Our priority is the protection of investor assets.”

A subsidiary of Wachovia Corp., Evergreen manages approximately $274 billion in assets.