Exhibit (a)(16)
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Supplement Dated February 8, 2007
Relating to the Offer to Purchase Dated January 22, 2007
as amended January 30, 2007
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XXXXXXX X. XXXXXXX TRUST
Has Amended Its Offer to Purchase for Cash
All of the Outstanding Shares of Common Stock
of
XXXXXX CALIFORNIA INVESTMENT GRADE MUNICIPAL TRUST
at
$14.16 Net Per Share
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FEBRUARY 16, 2007, UNLESS THE OFFER IS FURTHER EXTENDED.
THE OFFER IS NOT CONDITIONED UPON THE RECEIPT OF FINANCING OR UPON ANY MINIMUM
NUMBER OF SHARES BEING TENDERED. THE OFFER IS SUBJECT TO CERTAIN CONDITIONS,
INCLUDING THE CONDITION THAT TENDERING HOLDERS HOLDING SHARES ON FEBRURARY 15,
2006 MUST PROVIDE A PROXY TO VOTE THE SHARES. SEE "CONDITIONS TO THE OFFER --
SECTION 14."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION OR PASSED UPON THE
MERITS OR FAIRNESS OF THIS TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY
OF THE INFORMATION CONTAINED IN THE OFFER OR THIS SUPPLEMENT. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
IMPORTANT
Any shareholder desiring to tender all or any portion of the shareholder's
shares should either:
|X| Request the shareholder's broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for the
shareholder. A shareholder whose shares are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other
nominee if the shareholder desires to tender such shares; or
|X| Complete and sign the letter of transmittal (or a facsimile thereof)
in accordance with the instructions in the letter of transmittal, have
the shareholder's signature guaranteed if required by Instruction 1 to
the letter of transmittal, mail or deliver the letter of transmittal
(or such facsimile), or, in the case of a transfer effected pursuant
to the book-entry transfer procedures set forth in "THE OFFER --
Section 7," transmit an "agent's message" (as defined in "THE OFFER --
Section 6"), and any other required documents to the depositary and
either deliver the certificates for such shares to the depositary
along with the letter of transmittal (or such facsimile) or deliver
the shares pursuant to the book-entry transfer procedures set forth in
"THE OFFER -- Section 7."
If a shareholder desires to tender shares and the share certificates are not
immediately available, or the procedure for book-entry transfer cannot be
completed on a timely basis, or time will not permit all required documents to
reach the depositary prior to the "expiration date" (as defined herein), then
the tender may be effected by following the procedure for guaranteed delivery
set forth in "THE OFFER -- Section 7."
Questions and requests for assistance may be directed to Xxxxxx & Co., Inc.,
which is acting as the information agent for our offer, at (000) 000-0000 (for
Brokers or Bankers) or (000) 000-0000 (toll-free for shareholders). Additional
copies of this offering document, the letter of transmittal, the notice of
guaranteed delivery and other related materials may be obtained from the
information agent.
The Information Agent for the Offer is:
Xxxxxx & Co., Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Banks and Brokers Call (000) 000-0000
Shareholders Call Toll Free: (000) 000-0000
The following information amends and supplements the Offer to Purchase
dated January 22, 2007 and filed as exhibit (a)(1) to the Schedule TO filed by
the Xxxxxxx X. Xxxxxxx Trust, an irrevocable grantor trust administered in
accordance with Alaska administrative statutes and governed by Alaska trust law
(the "Trust"). It amends and supplements the Tender Offer initially filed with
the Securities and Exchange Commission ("SEC") on January 22, 2007 (the
"Original Schedule TO"), as amended January 30, 2007 pursuant to which Trust is
offering to purchase up to 100% of the outstanding shares of common stock, par
value $0.001 per share (the "shares"), of Xxxxxx California Investment Grade
Municipal Trust, a Massachusetts business trust ("PCA"), at a price of $14.16
per share, net to the seller in cash (subject to applicable withholding of
United States federal, state and local taxes), without interest.
Except as otherwise set forth in this Supplement, the terms and conditions
set forth in the Offer to Purchase and the letter of transmittal are applicable
in all respects to the Offer. The information set forth below should be read in
conjunction with the Original Schedule TO and the letter of transmittal and
terms not defined herein have the meanings ascribed to them in the Original
Schedule TO.
QUESTIONS AND ANSWERS
How have you amended the Offer?
We are amending our Offer as follows:
1. We are providing you with additional information regarding PCA's
Schedule 14D-9 filing and related documents in which the trustees
of PCA have offered their recommendation statement regarding the
Offer.
2. We have removed one of our conditions to the Offer as discussed
in detail below.
3. We have conditioned the Offer requiring that shares tendered and
accepted for payment from tendering holders who held the shares
on February 15, 2007 must be accompanied by a valid irrevocable
proxy to vote such shares, as discussed in more detail below.
We have not changed the number of shares we are offering to purchase, the
offer price, and the procedures for tendering and withdrawing shares or any
of the other terms of our Offer.
What condition to the Offer have you changed?
In the Original Schedule TO, the "Conditions to the Offer" section states
in #7 that "if the number of shares tendered is less than 25% of the
outstanding shares, we may determine, based on our sole discretion, that
the number of shares tendered as a result of this Offer are insufficient
for us to meet our goals as set forth herein[.]" We are removing this
condition #7 to the Offer; all other conditions to the Offer remain
unchanged. Our Offer is not subject to any minimum number of shares being
tendered.
What condition have you added?
We have reason to believe that PCA has set February 15, 2007 (the "Record
Date") as the record date for a special meeting of shareholders to approve
the terms and conditions of a merger. Because we intend to vote all of our
shares at this meeting, we have added a condition to the offer requiring
that shares tendered and accepted for payment from tendering holders who
held the shares on the Record Date must be accompanied by a valid
irrevocable proxy to vote such shares.
What additional information are you providing in response to PCA's Schedule
14D-9 filing?
You should have received, or will receive soon, materials from the trustees
of PCA concerning our Offer and their recommendations about the Offer. In
principal, the trustees have stated that they believe you should not tender
your shares to us so that you can potentially earn an additional 4.4% and
so that you can continue to keep your assets under management with Xxxxxx,
This is contrary to the trustees' earlier communications to you in which
they stated that they "believe that the continued operation of the fund as
[a] closed-end fund is in the best long-term interests of the fund's
shareholders." Further, the trustees have stated that the "benefits [of PCA
remaining a closed-end fund] include the ability to maintain a stable pool
of assets and remain more fully invested in longer-term, higher-yielding
securities than would be possible if the fund were open-end[ed.]" Finally,
as discussed below, we believe keeping your assets with Xxxxxx does not
make long-term sense for you.
Here are the reasons why we believe you should tender your shares:
1. Our offer is no longer subject to any minimum number of shares
being tendered.(1)
2. You will realize cash on your shares now, and not wait several
months(2) crossing your fingers that the merger happens. There
are two risks in waiting for the merger: First, the risk that the
trustees don't follow through with their promise to merge (or the
merger is voted down by shareholders) and, second, the risk that,
after the merger happens or does not happen, the per-share NAV
will be less than our offer price. Do you really want to take
these risks? If you tender your shares with us, you can walk away
with cash and avoid these risks.
3. The trustees are asking you to risk your investment so they can
merge your shares with those of another Xxxxxx fund managed by
the same investment adviser that manages PCA. Given PCA's abysmal
results and peer group rankings by Xxxxxxxxxxx, we believe the
trustees' recommendation runs contrary to your long-term best
interests and clearly indicates that the trustees are more
concerned with Xxxxxx retaining management of your assets than
maximizing your share value. This is underscored by the fact that
the independent trustees own only a handful of shares of PCA.
Filings with the SEC show that the independent trustees own an
average of less than 140 shares each. This says a lot about what
the independent trustees think about the manager, Xxxxxx
Management, and the future of PCA.
4. PCA's 1-year return on NAV as of 12/31/06 was 6.03%,
outperforming its benchmark(3) by 1.19%. The trustees want to
merge your shares of PCA into the open-end Xxxxxx California Tax
Exempt Income Fund. This fund performed worse than the same
benchmark for 6 out of the past 7 calendar years and
underperformed PCA for 5 of the last 7 years. In contrast, the
closed-end funds controlled and managed by the Xxxxxxx family(4)
outperformed their respective indices for 6 out of the past 7
years (BTF) and 3 out of the past 4 years (BIF)(5). BIF's 1-year
return on NAV was 26.4% for the period ending 12/31/06, beating
the S&P 500 index by 10.6% for the same period. BTF's 1-year
return on NAV was 19.9%, beating the S&P 500 Index by 4.1% for
the same period. Of course, past performance is no guarantee of
future results, and we caution you that BIF and BTF have had
substantially different investment objectives than PCA and the
Xxxxxx open-end fund and, consequently, investment returns are
not directly comparable.
Although no one can predict with any certainty whether
investments will appreciate or decline in value going forward,
PCA's trustees think that you are better served by owning shares
in a fund which has fared even more poorly than PCA! We are
offering you approximately 96% of the net asset value of your
shares now or a chance at a new direction in fund management.
5. As discussed above, the trustees have already considered and
rejected a proposal very similar to their latest recommendation.
Their flip-flop adoption of a proposal they said was a bad idea
just several months ago should raise questions; we believe our
offer makes more sense for you.
6. Under PCA's declaration of trust and under the Federal laws
governing PCA, it is apt to be very difficult and time-consuming
to merge PCA into an open-end fund. We believe the trustees'
proposal to merge PCA will fail for lack of shareholder support
and thus the 4.4% gain down the road the trustees talk about may
be illusory. The Trust will not vote in favor of the proposed
merger. The true purpose of the trustees, we believe, is to keep
your money under their management. We think the trustees'
proposal is solely a response to our tender offer. If our tender
offer fails, we think, based on the trustees' recent
flip-flopping, there is a very real risk that they will drop the
merger proposal or allow it to fail, and as a result PCA's market
price and discount will sink back to the level prior to our
tender.
7. The trustees recommend that PCA be kept under Xxxxxx'x
management. Xxxxxx has been accused of excessive short-term
trading and will pay a total of at least $193.5 million in
penalties and restitution for these open-end fund abuses. As
recently as January 9, 2007, Xxxxxx was forced to agree to a
settlement on charges of breach of fiduciary duty to you. Do you
really want the people with this track record looking after your
money?
8. In the three year period through October 2006, Xxxxxx'x U.S.
stock funds returned less than those of 18 of the 20 largest fund
firms, according to a ranking by Xxxxxx Xxxxxx, a Morningstar
analyst. Xxxxxx'x investors have redeemed more than $159 billion
during that period. The shareholders in those open-end funds had
a chance to escape. Again, we are giving shareholders the
opportunity to get out of PCA now at a fair price relative to the
fund's NAV. As of November 2006, Xxxxxx dropped from the
fourth-largest mutual fund company to the 21st by assets among
fund managers, according to the Investment Company Institute.
According to their own documents, they anticipate additional
withdrawals in 2007 of $900 million. We believe our offer gives
you an opportunity to redeem your shares at a fair price close to
NAV and move PCA in a new direction.
We intend to acquire control of PCA so that we may take PCA in a new
direction with investment advisers solely dedicated to the management of
closed-end funds. One of the changes we will propose to implement if we
acquire control of PCA is to change PCA's investment policies to permit PCA
to invest in securities other than California municipal bonds. This change
is likely to result in NONE OF PCA's DIVIDENDS being exempt from either
federal or California income taxes.
If I already tendered my shares in the Offer, do I have to do anything now?
No. Shareholders who validly tendered their shares previously and have not
withdrawn them do not have to take any further action. If the Offer is
completed, these shares will be accepted for payment and the tendering
shareholders will receive the offer price of $14.16 per share in cash,
without interest, less any required withholding taxes. See "THE OFFER --
Section 5."
Can I withdraw my previously tendered shares?
You may withdraw all or a portion of your tendered shares at any time prior
to the time the shares are accepted for payment, after which they cannot be
withdrawn. See "THE OFFER -- Section 8."
How do I withdraw previously tendered shares?
To withdraw shares, you must deliver a written notice of withdrawal with
the required information to the depositary while you still have the right
to withdraw the shares. If you have tendered your shares by giving
instructions to a bank, broker, dealer, trust company or other nominee, you
must instruct them to arrange for the withdrawal of your shares. See "THE
OFFER -- Section 8."
How many shares have been tendered in response to your Offer?
As of the close of business on February 8, 2007, 20,860 shares have been
tendered for sale to us in response to our Offer.
Who can I contact if I have additional questions about the Offer?
If you have questions or you need assistance, you should contact Xxxxxx &
Co., Inc., which is acting as the information agent for our Offer, at (203)
658-9400 (for Brokers or Bankers) or (000) 000-0000 (toll-free for
shareholders).
MISCELLANEOUS
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not comply with the laws of that
jurisdiction. We are not aware of any jurisdiction in which the making of the
Offer or the tender of shares in connection therewith would not be in compliance
with the laws of such jurisdiction. If we become aware of any state law
prohibiting the making of the Offer or the acceptance of shares pursuant thereto
in such state, we will make a good faith effort to comply with any such state
statute or seek to have such state statute declared inapplicable to the Offer.
If, after such good faith effort, we cannot comply with any such state statute,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of shares in such jurisdiction. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the Trust by
one or more registered brokers or dealers which are licensed under the laws of
such jurisdiction.
No person has been authorized to give any information or to make any
representation on our behalf not contained in the Offer and, if given or made,
that information or representation must not be relied on as having been
authorized.
We filed with the SEC a Schedule TO dated January 22, 2007 and an Amendment
No. 1 to Schedule TO dated January 30, 2007, under Exchange Act Rule 14d-3,
together with exhibits, furnishing additional information with respect to the
Offer, and may file additional amendments thereto. That schedule and any
amendments thereto, including exhibits, may be examined and copies may be
obtained from the offices of the SEC in the same manner as discussed in "THE
OFFER -- Section 12" with respect to information concerning PCA.
XXXXXXX X. XXXXXXX TRUST
February 8, 2007
FOOTNOTES:
(1) Our original offer contained the condition that "if the number of
shares tendered is less than 25% of the outstanding shares, we may determine,
based on our sole discretion, that the number of shares tendered as a result of
this Offer are insufficient for us to meet our goals as set forth herein[.]" We
have removed this condition and thus our offer is not subject to any minimum
number of shares being tendered.
(2) In a recent press release, PCA indicated that the merger would be
completed in June 2007.
(3) The Xxxxxx Municipal Bond Index.
(4) Boulder Growth & Income Fund, Inc. (NYSE:BIF) and Boulder Total Return
Fund, Inc. (NYSE:BTF).
(5) The Xxxxxxx family trusts gained control of BIF in 2002.
[INTENTIONALLY LEFT BLANK]
[INTENTIONALLY LEFT BLANK]
Facsimile copies of the letter of transmittal, properly completed and duly
executed, will be accepted. The letter of transmittal, certificates for shares
and any other required documents should be sent or delivered by each shareholder
of PCA or his or her broker, dealer, commercial bank, trust company or other
nominee to the depositary at one of its addresses set forth below:
The Depositary for the Offer is:
The Colbent Corporation
By Mail: By Overnight Courier: By Hand:
The Colbent Corporation The Colbent Corporation The Colbent Corporation
Attn: Corporate Actions Attn: Corporate Actions Attn: Corporate Actions
POB 859208 000 Xxx Xxxxx Xxxxx 000 Xxx Xxxxx Xxxxx
Xxxxxxxxx XX 00000-0000 Xxxxxxxxx XX 00000 Xxxxxxxxx XX 00000
By Xxxxxxxxx:
(781-380-3388)
Confirm Facsimile Transmission:
(000-000-0000 Ext. 200)
Questions and requests for assistance may be directed to the information
agent at its address and telephone numbers listed below. Additional copies of
this Supplement, the Offer to Purchase, the letter of transmittal and other
tender offer materials may be obtained from the information agent, and will be
furnished promptly at our expense. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
Xxxxxx & Co., Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Banks and Brokers Call (000) 000-0000
Shareholders Call Toll Free: (000) 000-0000
