8-K: Ellsworth Growth and Income Fund Ltd. Amends Preferences for Series B Cumulative Preferred Shares

Ellsworth Growth and Income Fund Ltd. has amended the statement of preferences for its Series B Cumulative Preferred Shares, adding additional holder put dates.

Summary

• Ellsworth Growth and Income Fund Ltd. adopted Amendment No. 2 to the Statement of Preferences of Series B Cumulative Preferred Shares on May 14, 2025.
• The amendment establishes and fixes the rights and preferences of the Fund's Series B Preferred Shares.
• It adds holder put dates, allowing holders to sell their Series B Preferred Shares to the Fund during the 60-day period prior to September 26, 2026, and June 26, 2027.
• The Board of Trustees approved the designation, issuance, and sale of up to $30,000,000 in liquidation preference of Series B Cumulative Preferred Shares on May 23, 2022.
• The Pricing Committee approved the issuance and sale of up to 3,000,000 shares of Series B Cumulative Preferred Shares on July 1, 2022.
• The dividend rate on the Series B Preferred Shares was increased effective April 17, 2023.

Sentiment

Score: 7

Explanation: The announcement is neutral to slightly positive. The amendment provides additional flexibility for preferred shareholders, which is generally viewed favorably. There are no indications of financial distress or negative impacts.

Positives

• The amendment provides additional liquidity options for holders of Series B Preferred Shares through the added put dates.
• The increased dividend rate on the Series B Preferred Shares effective April 17, 2023, enhances the attractiveness of these shares to investors.

Future Outlook

The amendment provides clarity on the redemption rights of Series B Preferred Shares holders, potentially influencing future trading activity.

Industry Context

Closed-end funds often use preferred shares as part of their capital structure; amendments to these shares' terms are relatively common and reflect adjustments to market conditions or investor preferences.

Comparison to Industry Standards

• Other closed-end funds, such as BlackRock Enhanced Equity Dividend Trust (BDJ) and Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG), also utilize preferred shares.
• The put options granted to Series B preferred shareholders are similar to those found in other preferred share offerings, providing investors with a degree of liquidity and downside protection.
• The dividend rate increase is in line with industry trends, as companies adjust dividend rates to remain competitive and attract investors.

Stakeholder Impact

• Shareholders of Series B Preferred Shares benefit from the added put dates, providing increased liquidity.
• The Fund may need to allocate capital to redeem shares if holders exercise their put options.

Key Dates

Keywords

Series B Preferred Shares, Preferred Shares, Holder Put Options, Ellsworth Growth and Income Fund, Amendment, Dividends