Daily News: August 28, 2014

Western Asset Middle Market Income Fund Raises $327MM for IPO

Western Asset Middle Market Income Fund announced that pricing was completed for its initial public offering. The fund raised gross proceeds of approximately $327 million in its common stock offering.

The fund is a newly organized, non-diversified, non-traded limited-term, closed-end investment management company and is advised by Legg Mason Partners Fund Advisor, and subadvised by Western Asset Management Company, both of which are wholly owned subsidiaries of Legg Mason. BofA Merrill Lynch and Morgan Stanley acted as dealers in connection with the fund’s initial public offering.

“We believe middle market debt packaged in this structure presents a timely and potentially compelling income opportunity for investors. We greatly appreciate the partnership with both Merrill Lynch and Morgan Stanley and look forward to utilizing the breadth and depth of our credit resources to manage the Fund,” concluded Mike Buchanan, head of global credit at Western Asset.

The fund’s primary investment objective is to provide high income. As a secondary investment objective, the fund will seek capital appreciation. There can be no assurance the fund will achieve its investment objectives.

Western Asset will employ an opportunistic strategy that invests in fixed income securities issued by middle market companies. Under normal market conditions, at least 80% of the fund’s managed assets will consist of securities, including loans, issued by middle market companies. For investment purposes, middle market refers to companies with annual revenues of between $100 million and $1 billion at the time of investment by the fund.

The fund will not be publicly traded but, beginning in 2016, intends, but is not obligated, to conduct quarterly tender offers for up to 2.5% of its common stock then outstanding in the sole discretion of its board of directors. The fund does not expect to make a tender offer for its common stock during its first 18 months of operations. It is anticipated that the fund will terminate on December 30, 2022.

“Western Asset is committed to bringing innovative investment strategies to the market that provide compelling opportunities to our clients. The Fund enables investors to participate in a long-term, high-yielding investment that was previously unavailable. We will continue to work with our partners to identify new investment solutions and make them available to our clients,” stated Jim Hirschmann, CEO of Western Asset.

“The development and launch of the Fund has been a true collaborative effort between our largest fixed income affiliate and our longstanding partnerships with Merrill Lynch and Morgan Stanley. Our previous success with Western Asset on the Western Asset Middle Market Debt Fund and continued interest in higher yielding securities led to the development of this innovative structure which clearly resonated with our clients,” said Fran Cashman, co-head of Sales for Legg Mason.