The Salomon Brothers Fund settled with shareholders who were opposed to Citigroup's $3.7 billion swap with Legg Mason by transforming into a traditional mutual fund from a closed-end fund, Dow Jones reports.
The Salomon Brothers Fund was involved in a proxy dispute with hedge funds Elliot Associates L.P. and Elliot International L.P., which were fighting it on the closed-end issue in order to reduce its discount to its net asset value, and in so doing, the hedge funds said they would not approve the merger of the two companies. But now that the fund is going to convert to a traditional mutual fund, the hedge funds have decided to drop the proxy issue and give a go ahead to the Legg Mason deal.
The conversion of the fund is a very important achievement for the dissident group. In a statement Tuesday, Mark Levine, a portfolio manager at Elliott, said it "is a welcome development that, if consummated, will allow all stockholders to redeem their shares at net asset value."
The Solomon Brothers Fund issued a statement Tuesday saying that its board decided to propose the conversion "in light of stockholder sentiments expressed during the proxy solicitation for approval of the new management agreement."
As for Citigroup's other closed-end funds, they were unable to hold a vote because they do not have enough votes to constitute a quorum.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.