NEW YORK--(BUSINESS WIRE)--ClearBridge Energy MLP Fund Inc., which is traded on the New York Stock Exchange under the symbol “CEM”, declared today its initial quarterly distribution of $0.3500 per common share payable August 20, 2010. Based on the Fund’s offering price of $20.00 per share, this equates to an annualized distribution rate of 7.00%.
The distribution schedule appears below:
It is currently anticipated that substantially all of this distribution will be treated for tax purposes as a return of capital. The final determination of such amount will be made in early 2011 when the Fund can determine its earnings and profits. The final tax status of the distribution may differ substantially from this preliminary information.
This press release is not for tax reporting purposes but is being provided to announce the amount of the Fund’s distributions that have been declared by the Board of Directors. In early 2011, after definitive information is available, the Fund will send stockholders a Form 1099-DIV, if applicable, specifying how the distributions paid by the Fund during the prior calendar year should be characterized for purposes of reporting the distributions on a stockholder’s tax return (e.g., ordinary income, long-term capital gain or return of capital).
This distribution is the first declared by the Fund following its successful initial public offering that raised approximately $1.3 billion in assets, assuming full exercise of the underwriters’ overallotment option, which may or may not occur. The Fund anticipates declaring and paying its distributions quarterly based on its November 30th fiscal year.
The Fund’s investment objective is to provide a high level of total return with an emphasis on cash distributions. There can be no assurance the Fund will achieve its investment objective.
The Fund seeks to achieve its objective by investing primarily in master limited partnerships (“MLPs”) in the energy sector. The Fund considers MLPs to be in the energy sector if they derive at least 50% of their revenues from the businesses of exploring, developing, producing, gathering, transporting, processing, storing, refining, distributing, mining or marketing natural gas, natural gas liquids (including propane), crude oil, refined petroleum products or coal. When a company is organized as a MLP, it benefits from a structure that combines the tax benefits associated with limited partnerships with the liquidity of publicly traded securities.
The types of MLPs in which the Fund intends to invest historically have made cash distributions to limited partners or members that exceed the amount of taxable income allocable to limited partners or members, due to a variety of factors, including significant non-cash deductions, such as depreciation and depletion. If the cash distributions exceed the taxable income reported in a particular tax year, the excess cash distributions would not be taxed as income to the Fund in that tax year but rather would be treated as a return of capital for federal income tax purposes to the extent of the Fund’s basis in its MLP units. Similarly, the Fund expects to distribute cash in excess of its earnings and profits to holders of Common Stock (the “Common Stockholders”) which may be treated as a return of capital to the extent of the Common Stockholders’ bases in the Fund’s Common Stock. As a result, the Fund’s Common Stockholders should expect to receive distributions that are generally tax-deferred and represent a return of capital although no assurance can be given in this regard. This will result in a reduction in basis in their shares, which may increase the capital gain, or reduce capital loss, realized upon sale of such shares.
ClearBridge Energy MLP Fund Inc. is a non-diversified, closed-end management investment company which is advised by Legg Mason Partners Fund Advisor, LLC (“LMPFA”) and subadvised by ClearBridge Advisors, LLC (“ClearBridge”). LMPFA and ClearBridge are wholly owned subsidiaries of Legg Mason, Inc. (“Legg Mason”).
For more information, please contact the Fund at 1-888-777-0102 or visit the Fund's web site at www.leggmason.com/cef.
Data and commentary provided in this press release are for informational purposes only. Legg Mason and its affiliates do not engage in selling shares of the Fund.