NEW YORK, March 31, 2020 /PRNewswire/ -- Neuberger Berman MLP and Energy Income Fund Inc. (NYSE American: NML) (the "Fund") announced today that it has amended its leverage financing facility (the "Facility") to bring the amount of available debt financing in line with the Fund's current asset level. This reduction in leverage follows a period of extreme volatility and price depreciation in the market for master limited partnerships ("MLPs") and other energy companies, which has affected the Fund's net asset value ("NAV") and caused the Fund to reduce the amount of its outstanding borrowings.
The Fund also announced today a reduction in its monthly distribution rate and declared a distribution of $0.0117 per share of common stock. The distribution announced today is payable on April 30, 2020, has a record date of April 15, 2020 and has an ex-date of April 14, 2020.
Amendment to Facility and Reduction in Leverage
As noted above, the Fund reduced the amount of leverage employed in response to adverse market conditions for MLPs and other energy companies, the effect of such market conditions on the value of the Fund's investments and its ability to comply with certain terms of the Facility and the asset coverage requirements of the Investment Company Act of 1940, as amended.
Under the amended terms of the Facility, the lender's total commitment decreased to a $50 million revolving credit facility. As part of this amendment, the Fund has repaid each of its two outstanding $50 million fixed-rate term loans that were due April 2020 and April 2022, respectively, and incurred certain costs associated therewith.
Reduction in Distribution Rate
After management and the Board considered the challenges experienced in the market for MLPs and other energy companies as well as other factors, including the amount of distributable cash flow expected to be received from the Fund's investments, the amount of leverage the Fund is expected to employ in the near term, the expected cost of leverage and the level of other Fund expenses, a reduction in the distribution rate from $0.055 per share, or $0.66 per share annually, to $0.0117 per share, or $0.1404 per share annually was approved for the distribution to be paid on April 30, 2020. This represents a reduction of the Fund's distribution rate of approximately 79% and results in a distribution rate of 5.83% and 7.43%, of the NAV and market price, respectively, as of March 31, 2020.
Due to the ongoing extreme market volatility and the associated changes that have and may continue to occur with MLPs and other energy companies, as well as the impact that these changes continue to have on closed-end funds that invest in MLPs, the Fund has declared one monthly distribution payment rather than three and will continue to evaluate the stability and appropriateness of its distribution rate in the months ahead. The Fund currently intends to make regular monthly cash distributions to holders of its common stock at a fixed rate per share, to be determined based on the projected net rate of return of the Fund's investments as well as other factors, subject to ongoing review and adjustment from time to time. The Fund currently intends to pay its regular monthly distributions out of its distributable cash flow, which generally consists of (1) cash and paid-in-kind distributions from MLPs or their affiliates, dividends from common stocks, interest from debt instruments and income from other investments held by the Fund less (2) current or accrued operating expenses, including leverage costs, if any, and taxes on its taxable income.
The Fund expects that a portion of its distributions to stockholders will constitute a non-taxable return of capital. A "return of capital" is a distribution by the Fund that exceeds the Fund's current and accumulated earnings and profits and which represents a return of a common stockholder's original investment, and should not be confused with a dividend. To the extent the Fund pays a return of capital, a common stockholder's basis in Fund shares will be reduced, which will increase a capital gain or reduce a capital loss upon sale of those shares. There is no assurance that the Fund will always be able to pay distributions of a particular size, or that a distribution will consist solely of the Fund's current and accumulated earnings and profits.
In compliance with Section 19 of the Investment Company Act of 1940, as amended, a notice would be provided for any distribution that does not consist solely of income. The notice would be for informational purposes and not for tax reporting purposes, and would disclose, among other things, estimated portions of the distribution, if any, consisting of net investment income, capital gains and return of capital. The final determination of the source and tax characteristics of all distributions paid in 2020 will be made after the end of the year.
The Fund is subject to federal income tax on its taxable income, unlike most investment companies. Any taxes paid by the Fund will reduce the amount available to pay distributions to stockholders, and therefore investors in the Fund will likely receive lower distributions than if they invested directly in MLPs.
About Neuberger Berman
Neuberger Berman, founded in 1939, is a private, independent, employee-owned investment manager. The firm manages a range of strategies—including equity, fixed income, quantitative and multi-asset class, private equity, real estate and hedge funds—on behalf of institutions, advisors and individual investors globally. With offices in 23 countries, Neuberger Berman's diverse team has 2,200 professionals. For six consecutive years, the company has been named first or second in Pensions & Investments Best Places to Work in Money Management survey (among those with 1,000 employees or more). The firm was awarded an A+ in every category in the latest 2019 PRI report for our approach to ESG integration across asset classes. The firm manages $356 billion in client assets as of December 31, 2019. For more information, please visit our website at www.nb.com.
Statements made in this release that look forward in time involve risks and uncertainties. Such risks and uncertainties include, without limitation, the adverse effect from a decline in the securities markets or a decline in the Fund's performance, a general downturn in the economy, competition from other closed end investment companies, changes in government policy or regulation, inability of the Fund's investment adviser to attract or retain key employees, inability of the Fund to implement its investment strategy, inability of the Fund to manage rapid expansion and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations.
Neuberger Berman Investment Advisers LLC
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