Nuveen Investments, a leading global provider of investment services to institutions as well as high-net-worth and affluent investors, today announced that two closed-end funds each has priced a private offering of Variable Rate Demand Preferred (VRDP) shares to be placed with qualified institutional buyers, as defined pursuant to Rule 144A under the Securities Act of 1933. The following amounts of VRDP shares have been issued by each fund:
|Nuveen California Dividend Advantage Municipal Fund (NYSE: NAC)||$136.2 million|
|Nuveen Insured California Dividend Advantage Municipal Fund (AMEX: NKL)||$104.4 million|
The proceeds from each offering will be used to redeem at par all of the funds’ outstanding auction-rate preferred shares (ARPS). The funds’ Board of Trustees has approved each redemption, which total $240.6 million. Each refinancing is expected to lower the relative costs of leverage for the funds over time while also providing liquidity at par for the holders the funds’ ARPS.
VRDP shares include a liquidity feature that allows holders of VRDP to have their shares purchased by a liquidity provider in the event that sell orders have not been matched with purchase orders and successfully settled in a remarketing. The liquidity feature for these funds’ VRDP is being provided by Morgan Stanley Bank, N.A. VRDP terms require the fund to redeem VRDP shares still owned by the liquidity provider if there are six months of continuous, unsuccessful remarketing. The funds’ VRDP shares are considered for tax purposes to be equity issued by the fund, based on an IRS private letter ruling received by Nuveen funds in February 2011. This affords VRDP share dividends the same tax treatment as the income on each fund’s underlying investments.