DALLAS--(BUSINESS WIRE)--NexPoint Credit Strategies Fund (NYSE: NHF) announced today that its Board of Trustees has approved the separation of its business into two separate and independent publicly traded companies:
- NexPoint Credit Strategies Fund (“NHF”), which will continue to operate as a non-diversified, closed-end investment company; and
- NexPoint Residential Trust, Inc. (“NXRT”), which will acquire, own, operate and selectively develop multifamily properties.
The Board of Trustees has approved, and NHF plans to effect the separation through, a spin-off in which NHF will distribute all of the outstanding shares of NXRT common stock to NHF’s shareholders on a pro rata basis. The distribution will be made to NHF shareholders of record as of the close of business on March 23, 2015, the record date for the distribution. The shares are expected to be distributed on March 31, 2015.
In the distribution, shareholders of NHF will receive one share of NXRT common stock for every three NHF common shares held as of the close of business on the record date. No fractional shares will be distributed in connection with the spin-off. A cash payment will be made in lieu of any fractional shares.
Following the spin-off, NXRT will be a separate publicly traded company distinct from NHF, and NHF will not retain any NXRT common stock. NHF will continue to be listed on the New York Stock Exchange (“NYSE”) under the symbol "NHF," while NXRT expects to list its common stock on NYSE under the symbol "NXRT."
NXRT will be externally managed by NexPoint Real Estate Advisors, L.P., an affiliate of NexPoint Advisors, L.P., the advisor for NHF, and an affiliate of Highland Capital Management, L.P., a leading global alternative asset manager and an SEC-registered investment advisor that, together with its affiliates, has approximately $20.2 billion in assets under management as of December 31, 2014. NexPoint Real Estate Advisors, L.P. will conduct substantially all of NXRT’s operations and manage NXRT’s real estate investments. The members of the management team of NexPoint Real Estate Advisors, L.P. are expected to be James Dondero, Brian Mitts, Matt McGraner, Matthew Goetz, and Scott Ellington. The management team has significant experience across real estate investing, private lending, and private equity.
It is expected that, beginning on or shortly before March 23, 2015 through March 31, 2015, there will be two markets in NHF shares:
- a "regular-way" market in which NHF shares will trade with an entitlement to receive shares of NXRT common stock on the distribution date; and
- an "ex-distribution" market in which NHF shares will trade without an entitlement to receive shares of NXRT common stock on the distribution date.
During this time period, it is also expected that shares of NXRT common stock will begin trading on a "when-issued" basis. On the first trading day following the distribution date, all NHF shares and shares of NXRT common stock will be traded only on a "regular-way" market.
No action is required by NHF shareholders in order to receive shares of NXRT common stock in the distribution. An information statement containing details of the spin-off and information about NXRT will be mailed to NHF shareholders prior to the distribution date.
The spin-off is conditioned on NXRT's registration statement being declared effective by the SEC and NYSE’s authorization to list NXRT’s shares on NYSE and other conditions described in the registration statement. NHF also reserves the right to withdraw and cancel the distribution if, at any time prior to the distribution date, the Board of Trustees of NHF determines that the spin-off is not in the best interests of NHF and its shareholders, or that market conditions or other circumstances are such that the spin-off is no longer advisable. If NHF’s Board of Trustees abandons the spin-off, NHF will be responsible for all the expenses and other costs associated with the spin-off.
The distribution will not qualify for tax-free treatment. NHF shareholders are urged to consult their financial advisers and tax advisers regarding the particular consequences of the distribution in their situation, including, without limitation, the specific implications of selling NHF shares on or prior to the distribution date and the applicability and effect of any U.S. federal, state, local and foreign tax laws.
About NexPoint Credit Strategies Fund
NexPoint Credit Strategies Fund is a closed-end fund managed by NexPoint Advisors, L.P. NHF’s investment objectives are to provide both current income and capital appreciation. NHF is invested primarily in below investment grade debt and equity securities and has the ability to hedge risk. The manager attempts to exceed the return of the Dow Jones Credit Suisse Hedge Fund Index and the HFR Global Hedge Fund Indexes in a transparent, registered fund format with monthly dividends. An investment in NHF is not appropriate for all investors. No assurance can be given that NHF will achieve its investment objectives.
Shares of closed-end investment companies frequently trade at a discount to net asset value. The price of NHF’s shares is determined by a number of factors, several of which are beyond the control of NHF. Therefore, NHF cannot predict whether its shares will trade at, below or above net asset value. Past performance does not guarantee future results. More information about NexPoint Credit Strategies Fund is available at www.nexpointadvisors.com.
Cautionary Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements that are based on management's current expectations, assumptions and beliefs about the spin-off. Forward-looking statements can often be identified by words such as “plans,” “expects,” “will,” similar expressions, and variations or negatives of these words. These forward-looking statements include, but are not limited to, statements regarding the anticipated timing of the spin-off and the listing and trading of NXRT common stock. They are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statement.
The spin-off is contingent upon the satisfaction of a number of conditions, including the effectiveness of the Form 10 that has been filed with the SEC. Additional risks and uncertainties related to the proposed spin-off include the ability of NHF and NXRT to obtain all necessary consents and approvals and satisfy all other conditions to the spin-off. Readers should not place undue reliance on any forward-looking statements and are encouraged to review NXRT’s Form 10 registration statement, including its preliminary information statement, filed with the SEC, for a more complete discussion of the risks and other factors that could affect any forward-looking statements. Except as required by the federal securities laws, NHF does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changing circumstances or any other reason after the date of this press release.