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Western Asset Emerging Markets Floating Rate Fund Inc. Announces Intent to Proceed With Solicitation of Shareholders for Approv


Published on 2009-02-10 14:31:04, Last Modified on 2009-02-10 14:33:00 - Market Wire
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NEW YORK--([ BUSINESS WIRE ])--Western Asset Emerging Markets Floating Rate Fund Inc. (NYSE: EFL) announced today that it will proceed with its plan to solicit the approval of Fund shareholders to merge the Fund with and into Western Asset Emerging Markets Debt Fund Inc. (NYSE: ESD) under a proposed plan of reorganization previously approved by the Boards of Directors of both Funds as announced on February 15, 2008. A meeting of shareholders of Western Asset Emerging Markets Floating Rate Fund will be held at 620 Eighth Avenue, 49th Floor, New York, New York, on Thursday, June 25, 2009 at 3:30 p.m. Eastern Standard Time for the purposes of considering and voting upon the merger and other matters.

At the time of the Boards' initial approval of the proposed merger, both Funds' common shares traded at approximately the same level of discount to net asset value (NAV) per share. Subsequent to that approval but prior to Western Asset Emerging Markets Floating Rate Fund's ability to solicit shareholder approval, the Fund's market price rose to a premium to its NAV per share that was sustained over a period of several months while the common shares of Western Asset Emerging Markets Debt Fund continued to trade at a discount to NAV. This was significant because, pursuant to the terms of the proposed merger, each common share of Western Asset Emerging Markets Floating Rate Fund will convert into an equivalent dollar amount (to the nearest $0.001) of common shares of Western Asset Emerging Markets Debt Fund, based on the NAV per share of each Fund calculated at 4:00 p.m. on the business day preceding the closing date of the merger. Shareholders of Western Asset Emerging Markets Floating Rate Fund would have received an equivalent dollar amount of their shares' NAV in a merger with Western Asset Emerging Markets Debt Fund. However, since Western Asset Emerging Markets Floating Rate Fund's common shares were trading at a significant premium to NAV and common shares of Western Asset Emerging Markets Debt Fund were trading at a discount to NAV, seeking a merger under those conditions would not have been advantageous to shareholders of Western Asset Emerging Markets Floating Rate Fund. Accordingly, the Boards of Directors approved a recommendation by the Fund's investment manager and sub-adviser, Legg Mason Partners Fund Advisor, LLC, ("LMPFA") and Western Asset Management Company ("WAM"), to delay the solicitation of shareholders of the Fund to seek their approval of the merger until such time as shares of the Funds were trading at a similar premium or discount to their NAV per share. This decision was announced by press release on May 27, 2008.

The Boards of Directors, LMPFA and WAM have continued to monitor the market prices and discounts of the Funds' shares and, since December 2008, the discounts of the two Funds have become realigned. As of January 30, 2009, Western Asset Emerging Markets Floating Rate Fund's discount to NAV was approximately 19.76% and Western Asset Emerging Markets Debt Fund's discount to NAV was approximately 16.39%. Based on a recommendation by LMPFA and WAM, the Boards of Directors of the Funds approved the plan to proceed with the solicitation of shareholders of Western Asset Emerging Markets Floating Rate Fund to seek approval to merge the Fund with and into Western Asset Emerging Markets Debt Fund. The shareholders of Western Asset Emerging Markets Debt Fund are not required to approve the merger because of the comparative sizes of the two Funds. The merger is anticipated to occur as soon as practicable after obtaining shareholder approval.

As a primary investment objective, Western Asset Emerging Markets Floating Rate Fund seeks to maintain a high level of current income by investing at least 80% of its net assets plus any borrowings for investment purposes in floating rate debt securities of emerging market sovereign and corporate issuers, including fixed rate securities with respect to which the Fund has entered into interest rate swaps to effectively convert the fixed rate interest payments received into floating rate interest payments. As a secondary objective, Western Asset Emerging Markets Floating Rate Fund seeks capital appreciation.

In recommending the merger to each Board, LMPFA and WAM, respectively, cited the changing nature of emerging market debt issuance which has made it increasingly difficult to secure floating rate emerging market debt securities. The Board and management continue to believe that since Western Asset Emerging Markets Debt Fund invests in a much broader range of emerging market debt securities, a merger would benefit Western Asset Emerging Markets Floating Rate Fund shareholders by allowing them to continue to have exposure to emerging markets through a fund with more viable investment strategies. In addition, the Board of Western Asset Emerging Markets Floating Rate Fund continues to believe that combining the two Funds could benefit Western Asset Emerging Markets Floating Rate Fund shareholders by providing a lower operating expense ratio, enhanced market liquidity due to the increased number of shares outstanding of the combined fund and the potential for economies of scale. Shareholders of Western Asset Emerging Markets Debt Fund may also benefit from an increase in assets and potential economies of scale. Western Asset Emerging Markets Debt Fund's primary investment objective is total return and its secondary investment objective is high current income.

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In connection with the proposal to merge Western Asset Emerging Markets Floating Rate Fund with and into Western Asset Emerging Markets Debt Fund, Western Asset Emerging Markets Floating Rate Fund intends to file a definitive proxy statement with the Securities and Exchange Commission ("SEC"). Investors and stockholders are advised to read the proxy statement when it becomes available, because it will contain important information. When filed with the SEC, the proxy statement and other documents filed by Western Asset Emerging Markets Floating Rate Fund will be available for free at the SEC's website, [ http://www.sec.gov ]. Stockholders can also obtain copies of these documents, when available, for free by calling the Fund at 1-888-777-0102 or by visiting Western Asset Emerging Markets Floating Rate Fund's website at [ www.leggmason.com/cef ].

Western Asset Emerging Markets Floating Rate Fund, its directors and executive officers and other members of its management and employees may be deemed to be participants in the Fund's solicitation of proxies from its stockholders in connection with the proposed merger. Information concerning the interests of the participants in the solicitation is set forth in the Fund's proxy statements and stockholder reports on Form N-CSR, previously filed with the SEC.

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Western Asset Emerging Markets Floating Rate Fund Inc. had assets of approximately $41 million as of December 31, 2008. Western Asset Emerging Markets Debt Fund Inc. had assets of approximately $419 million as of December 31, 2008. Each Fund is a non-diversified closed-end management investment company managed by Legg Mason Partners Fund Advisor, LLC, a wholly owned subsidiary of Legg Mason, Inc., and are sub-advised by Western Asset Management Company, an affiliate of the investment manager.

For more information on the Funds, please contact our Investor Relations Group at 1-888-777-0102 or consult the Funds' web site at [ www.leggmason.com/cef ].

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