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LOS ANGELES - Source Capital (NYSE: SOR), managed by First Pacific Advisors, LP, has announced that its Discount Management Program (DMP) resulted in the fund’s shares trading at an average discount to net asset value (NAV) of less than 10% for the period from January 1, 2024, through December 31, 2024. Notably, the discount narrowed to less than 1% on the final day of the year, marking the smallest discount since 2008. Consequently, the planned tender offer for 2024 under the DMP will not take place.
The Board of Trustees has also approved a similar contingent tender offer for the calendar year 2026, extending the DMP through December 31, 2026. According to the terms, a tender offer for 10% of the fund’s outstanding shares at 98% of NAV per share will be conducted if the shares trade at an average discount to NAV of over 10% during 2026. If triggered, the offer would close by June 30, 2027. The Board may consider further extensions beyond 2026.
Additionally, Source Capital’s portfolio managers, officers, and Board have indicated they do not intend to tender their shares if a tender is triggered for 2025 or 2026.
The fund will maintain its Stock Repurchase Program, aimed at repurchasing stock at value-enhancing prices for shareholders. Source Capital has also been progressively increasing its allocation to private credit investments. As of January 14, 2025, private credit investments constituted approximately 15.5% of the fund’s NAV, with invested and committed capital to private credit reaching around 23.4% of NAV.
An investor call is scheduled for February 25, 2025, to further discuss these developments, with details to be provided on the company’s website.
Source Capital is a closed-end investment company that seeks maximum total return for shareholders through capital appreciation and investment income, consistent with the protection of invested capital. The fund’s investment strategy includes the potential for longer duration assets and illiquid investments like private loans, suited for investors with a long-term horizon.
This information is based on a press release statement from Source Capital and is intended for informational purposes. Investors should consider the fund’s investment objectives, risks, charges, and expenses before investing.
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