Cornerstone CEF Rights Offerings Are Back

2025-04-23 06:01:20 ET

Summary

• Cornerstone Strategic Investment Fund and Cornerstone Total Return Fund announce 1-for-3 rights offerings, allowing shareholders to subscribe for new shares at a premium to NAV.
• The rights offerings are accretive to NAV per share, benefiting existing shareholders, but market prices typically drop during the offering period due to increased selling pressure.
• Investors can either sell shares before the ex-rights date to avoid price drops, or participate in the offering if the premium to NAV is above 12%.

Cornerstone Strategic Investment Fund ( CLM ) (formerly the Cornerstone Strategic Value Fund) and Cornerstone Total Return Fund ( CRF ) have announced ( here and here ) non-transferable 1-for-3 rights offerings, granting stockholders as of the record date, which is also the ex-date of April 21, 2025, the ability to subscribe for new shares. The subscription price will be the greater of 112% of NAV or 80% of the market price on the expiration date, May 16, 2025 . Additionally, the offering includes an over-allotment mechanism, giving the funds the option (but not the obligation) to issue up to 100% of the shares in the primary offering. This could allow the funds to expand their total shares outstanding by up to 66%, compared to 33% without the over-allotment....

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