The Boulder Growth & Income Fund (NYSE:BIF) recently received two unsolicited shareholder proposals to elect alternative directors to the Fund's Board of Directors, terminate its investment co-advisory contracts and continue an "aggressive" level-rate distribution policy. Ralph W. Bradshaw and Ronald G. Olin, the aforementioned shareholders, suspiciously have a history of simultaneously submitting such requests, an issue Boulder plans to bring to the attention of the SEC.
These similar proposals submitted by Ralph W. Bradshaw and Ronald G. Olin to other closed-end funds were conducted in concert with the affiliated Doliver Capital Adviser institutional manager, whose hold currently stands at approximately 17% of the Fund's shares. This association Boulder also finds questionable considering the affiliated group has neglected to meet federal securities laws in filing their status as such.
Moreover, the group proposed the termination of the investment co-advisory contract between the Fund and Boulder Investment Advisers and Stewart Investment Advisers (the "Boulder Advisers"). With this, it is anticipated the group would have proposed Cornerstone Advisors as the replacement adviser based on past behavior. To this, Fund president Steve Miller commented:
It's hard to imagine that someone with Cornerstone's track record would have the audacity to suggest that the Boulder Advisers with their track record be replaced. Maybe they should take care of the cooking in their own kitchen before they recommend a new chef in ours.
Reiterating his position, Miller disclosed:
…. the trailing one-year period ending 10/31/08 CRF's total return on NAV was -40.35% and CLM's was -38.5%. This compares to BIF's return on NAV for the same period of -17.3%. CRF's market price has suffered even more, falling from a lofty 105% premium in July 2008 to about a 10% premium as of last Friday. And CLM was at a 64% premium in May 2008 and as of Friday was at a discount of -1.2%.
As far as the group’s proposal for an "aggressive level-rate distribution policy," the Board perceived this as overlooking the many factors not taken into consideration. These factors include implementing and maintaining a level-rate distribution policy, Including the Fund's previously stated goal of tying its distribution rate to its long-term performance, compliance with certain federal securities laws on maintaining the level-rate distribution policy, the impact of an aggressive policy on the Fund's leverage coverage ratio, the policy's current and long-term efficacy in narrowing the Fund's discount from net asset value, the tax consequences of level-rate distributions and the long-term investment interests of all of the Fund's shareholders.
The Fund intends to pursue very aggressively its claims that this group and their investors are acting in violation of federal securities laws, including referring this matter to the SEC. We are concerned that, given their past tactics and their poor stewardship of the Cornerstone Funds, their proposals would destroy value and not serve the long-term interests of our shareholders. Any proposal such as theirs to destroy the long-term value of one of the better-performing closed-end equity funds must be viewed with great skepticism.
We believe that the shareholder group led by Messrs. Olin and Bradshaw, including Doliver, is known in the closed-end fund industry as a group who acts in concert to gain control over closed-end funds with little regard for federal securities laws. This group tries to take action with respect to its own interests to profit at the expense of the interests of long-term shareholders. This group may posture itself to be an advocate for shareholder rights, but we believe that it acts only for its investors' personal profit, irrespective of whether their proposed actions are detrimental to long-term shareholders who have invested in the Fund. They have targeted the wrong Fund.
Additionally, Boulder plans to refer the group’s excess holdings to the SEC for review and other independent remedies against the group for possible violations of federal securities laws. The Fund is a closed-end management investment company co-managed by Stewart Investment Advisers and Boulder Investment Advisers, LLC.