Per Common Share |
Total (1) |
|||||||
Estimated subscription price of Common Shares to shareholders exercising Rights (2) |
$ | 8.77 | $ | 214,544,369 | ||||
Estimated sales load |
None | None | ||||||
Estimated proceeds, before expenses, to the Fund (3) (4) |
$ | 8.77 | $ | 214,544,369 |
(1) | Assumes that all Rights are exercised at the estimated Subscription Price (as described below). All of the Rights may not be exercised, and the estimated Subscription Price may be higher or lower than the actual Subscription Price. |
(2) | The estimated Subscription Price to the public is based upon 95% of the average of the last reported sales price of the Fund’s Common Shares on the NYSE on September 16, 2022 and each of the four (4) preceding trading days. See “Terms of the Rights Offering—Subscription Price.” |
(3) | The Advisor, and not the Fund or its Common Shareholders, will bear all expenses incurred in connection with the Rights offering. Offering expenses borne by the Advisor are estimated to be approximately $132,068 in the aggregate, or $0.001 per Common Share (assuming the Rights are fully exercised). Since the Advisor is bearing such expenses, the per Common Share and total proceeds to the Fund are not estimated to be reduced as a result of such offering expenses. |
(4) | Funds received by check prior to the final due date of the Rights offering will be deposited into a segregated account pending proration and distribution of Common Shares. The Subscription Agent (as defined in this Prospectus Supplement) may receive investment earnings on the funds deposited into such account. |
Page |
||||
R-5 |
||||
R-6 |
||||
R-12 |
||||
R-22 |
||||
R-23 |
||||
R-24 |
||||
R-24 |
||||
R-25 |
||||
R-27 |
||||
R-28 |
||||
R-28 |
||||
R-28 |
Page |
||||
1 | ||||
5 | ||||
7 | ||||
10 | ||||
10 | ||||
10 | ||||
12 | ||||
50 | ||||
55 | ||||
86 | ||||
87 | ||||
89 | ||||
92 | ||||
93 | ||||
93 | ||||
94 | ||||
101 | ||||
101 | ||||
103 | ||||
104 | ||||
104 | ||||
106 | ||||
106 |
Purpose of the Rights Offering |
The Board of Directors (the “Board”) of the BlackRock Corporate High Yield Fund, Inc. (the “Fund,” “we,” “us” or “our”), based on the recommendations and presentations of BlackRock Advisors, LLC (the “Advisor”), the investment adviser to the Fund, has determined that it is in the best interests of the Fund and holders of its Common Shares (as defined below) to conduct this offering of Rights (as defined below), thereby increasing the assets of the Fund available for investment. |
The Advisor and BlackRock International Limited (the “Sub-Advisor” and, together with the Advisor, the “Advisors”) believe that a variety of factors indicate that there may be opportunities to make new, attractive high yield investments. The Advisors expect that the Rights offering will provide an opportunity to increase the assets of the Fund available for investment, thereby better enabling the Fund to take advantage more fully of existing and future investment opportunities that may be or may become available, consistent with the Fund’s primary and secondary investment objectives to provide shareholders with current income and capital appreciation, respectively. The Advisors believe that the Fund may benefit from increased yields, enhanced earnings, tax efficiency and lower expenses. |
The Advisor has an inherent conflict of interest in recommending the Rights offering because the Fund pays fees to the Advisor based on a percentage of the Fund’s Managed Assets (the greater the Managed Assets of the Fund, the greater the compensation paid to the Advisor). “Managed Assets” means the total assets of the Fund (including any assets attributable to money borrowed for investment purposes) minus the sum of the Fund’s accrued liabilities (other than money borrowed for investment purposes). |
The Rights offering seeks to provide an opportunity to existing holders of Common Shares (“Common Shareholders”) to purchase Common Shares at a discount to market price. The distribution to Common Shareholders of transferable Rights (as defined below), which may themselves have intrinsic value, also will afford non-participating Common Shareholders of record on the Record Date (as defined below), the potential of receiving cash payment upon the sale of the Rights, receipt of which may be viewed as partial compensation for dilution of their interests that will occur as a result of the Rights offering. There can be no assurance that a market for the Rights will develop or, if such a market does develop, what the price of the Rights will be. There can be no assurance that the Rights offering (or the investment of the proceeds of the Rights offering) will be successful. See “Description of the Rights Offering—Purpose of the Rights Offering.” |
Terms of the Rights Offering |
One transferable subscription right (a “Right”) will be issued for each common share of the Fund (each, a “Common Share,” and collectively, the “Common Shares”) held on the Record Date (as defined below). Rights are expected to trade on the New York Stock Exchange (the “NYSE”) under the symbol “HYT RT.” The Rights will allow Common Shareholders to subscribe for new Common Shares of the Fund. 122,317,200 Common Shares of the Fund are outstanding as of September 19, 2022. Five Rights will be required to purchase one Common Share (1 for 5); however, any Record Date Shareholder (as defined below) who owns fewer than five Common Shares as of the close of business on the Record Date may subscribe for one full Common Share. Shares of the Fund, as a closed-end fund, can trade at a discount to net asset value (“NAV”). Upon exercise of the Rights offering, Fund shares will be issued at a price below NAV per Common Share. An over-subscription privilege will be offered, subject to the right of the Board to eliminate the over-subscription privilege. Approximately 24,463,440 Common Shares of the Fund will be issued if all Rights are exercised. See “Terms of the Rights Offering.” |
The Fund has declared monthly distributions payable on September 30, 2022 and October 31, 2022 with record dates of September 15, 2022 and October 5, 2022, respectively. Any Common Shares issued after such record dates as a result of the Rights offering will not be record date shares for the Fund’s monthly distributions to be paid on September 30, 2022 and October 31, 2022 and will not be entitled to receive such distributions. |
The exercise of Rights by a Rights holder is irrevocable. |
Title |
Subscription Price |
The final subscription price per Common Share (the “Subscription Price”) will be determined based upon a formula equal to 95% of the average of the last reported sales price of the Fund’s Common Shares on the NYSE on the Expiration Date (as defined below) and each of the four (4) preceding trading days, provided that, if such price is equal to or above NAV per Common Share at the close of trading on the NYSE on the Expiration Date, the Subscription Price shall be reduced to $0.01 below NAV per Common Share at the close of trading on the NYSE on the Expiration Date (the “Formula Price”). If, however, the Formula Price is less than 90% of the NAV per Common Share of the Fund’s Common Shares at the close of trading on the NYSE on the Expiration Date, then the Subscription Price will be 90% of the Fund’s NAV per Common Share at the close of trading on the NYSE on that day. See “Terms of the Rights Offering.” |
Record Date |
Rights will be issued to Common Shareholders of record as of the close of business on September 20, 2022 (the “Record Date”). See “Terms of the Rights Offering.” |
Number of Rights Issued |
One Right will be issued in respect of each Common Share of the Fund outstanding as of the close of business on the Record Date. See “Terms of the Rights Offering.” |
Number of Rights Required to Purchase One Common Share |
A holder of Rights may purchase one Common Share of the Fund for every five Rights exercised (1 for 5); however, any Record Date Shareholder (as defined below) who owns fewer than five Common Shares as of the close of business on the Record Date may subscribe for one full Common Share. See “Terms of the Rights Offering.” |
Over-Subscription Privilege |
Common Shareholders as of the close of business on the Record Date (“Record Date Shareholders”) who fully exercise all Rights initially issued to them (other than those Rights that cannot be exercised because they represent the right to acquire less than one Common Share) generally are entitled, subject to the limitations described herein, to buy those Common Shares, referred to as “over-subscription shares,” that were not purchased by other Rights holders at the same Subscription Price (the “over-subscription privilege”). If enough over-subscription shares are available, all such requests will be honored in full. If the requests for over-subscription shares exceed the over-subscription shares available, the available over-subscription shares will be allocated pro rata among those fully exercising Record Date Shareholders who over-subscribe based on the number of Rights originally issued to them by the Fund. Common Shares acquired pursuant to the over-subscription privilege are subject to allotment. Holders of Rights acquired in the secondary market may not participate in the over-subscription privilege. |
Notwithstanding the above, the Board has the right in its absolute discretion to eliminate the over-subscription privilege if it considers it to be in the best interest of the Fund to do so. The Board may make that determination at any time, without prior notice to Rights holders or others, up to and including the fifth day following the Expiration Date (as defined below). See “Over-Subscription Privilege.” |
Any Common Shares issued pursuant to the over-subscription privilege will be shares registered under the Prospectus. |
Transfer of Rights |
The Rights will be transferable. See “Terms of the Rights Offering,” “Sale of Rights” and “Method of Transferring Rights.” |
Subscription Period |
The Rights may be exercised at any time after issuance and prior to expiration of the Rights (the “Subscription Period”), which will be 5:00 PM Eastern Time on |
direct the Subscription Agent (defined below) to return, without interest, all subscription proceeds received to such shareholders who had elected to purchase Common Shares. |
Offering Expenses |
The expenses of the Rights offering are expected to be approximately $132,068 and will be borne by the Advisor, and not the Fund or Common Shareholders. See “Use of Proceeds.” |
Sale of Rights |
The Rights are transferable until the completion of the Subscription Period and will be admitted for trading on the NYSE under the symbol “HYT RT”. Although no assurance can be given that a market for the Rights will develop, trading in the Rights on the NYSE is expected to begin two Business Days prior to the Record Date and may be conducted until the close of trading on the last NYSE trading day prior to the Expiration Date. For purposes of this Prospectus Supplement, a “Business Day” shall mean any day on which trading is conducted on the NYSE. |
The value of the Rights, if any, will be reflected by their market price on the NYSE. Rights may be sold by individual holders through their broker or financial advisor or may be submitted to the Subscription Agent (defined below) for sale. Any Rights submitted to the Subscription Agent for sale must be received by the Subscription Agent prior to 5:00 PM, Eastern Time, on or before October 6, 2022, five Business Days prior to the Expiration Date (or, if the Subscription Period is extended, prior to 5:00 PM, Eastern Time, on the fifth Business Day prior to the extended Expiration Date). |
Rights that are sold will not confer any right to acquire any Common Shares in any over-subscription, and any Record Date Shareholder who sells any Rights will not be eligible to participate in the over-subscription privilege, if any. |
Trading of the Rights on the NYSE will be conducted on a when-issued basis until and including the date on which the Subscription Certificates (as defined below) are mailed to Record Date Shareholders of record and thereafter will be conducted on a regular-way basis until and including the last NYSE trading day prior to the completion of the Subscription Period. The shares are expected to begin trading ex-Rights one Business Day prior to the Record Date. |
If the Subscription Agent receives Rights for sale in a timely manner, the Subscription Agent will use its best efforts to sell the Rights on the NYSE. The Subscription Agent will also attempt to sell any Rights attributable to shareholders of record whose addresses are outside the United States, or who have an APO or FPO address. See “Foreign Restrictions.” The Subscription Agent will attempt to sell such Rights on the NYSE. |
Any commissions will be paid by the selling Rights holders. Neither the Fund nor the Subscription Agent will be responsible if Rights cannot be sold and neither has guaranteed any minimum sales price for the Rights. If the Rights can be sold, sales of these Rights will be deemed to have been effected at the weighted average price received by the Subscription Agent on the day such Rights are sold, less any applicable brokerage commissions, taxes and other expenses ( i.e. |
Shareholders are urged to obtain a recent trading price for the Rights on the NYSE from their broker, bank, financial advisor or the financial press. |
Banks, broker-dealers and trust companies that hold shares for the accounts of others are advised to notify those persons that purchase Rights in the secondary market that such Rights will not participate in any over-subscription privilege. See “Terms of the Rights Offering.” |
Use of Proceeds |
The Fund estimates the net proceeds of the Rights offering to be approximately $ |
The Advisors anticipate that investment of the proceeds will be made in accordance with the Fund’s investment objectives and policies as appropriate investment opportunities are identified, which is expected to be substantially completed in approximately three months; however, the identification of appropriate investment opportunities pursuant to the Fund’s investment style or changes in market conditions may cause the investment period to extend as long as six months. Pending such investment, the proceeds will be held in short-term, tax-exempt or taxable investment grade securities or in high quality, short-term money market instruments. |
Depending on market conditions and operations, a portion of the cash held by the Fund, including any proceeds raised from the offering, may be used to pay distributions in accordance with the Fund’s distribution policy and may be a return of capital. A return of capital is a return to investors of a portion of their original investment in the Fund. In general terms, a return of capital would involve a situation in which a Fund distribution (or a portion thereof) represents a return of a portion of a shareholder’s investment in the Fund, rather than making a distribution that is funded from the Fund’s earned income or other profits. Although return of capital distributions may not be currently taxable, such distributions would decrease the basis of a shareholder’s shares, and therefore, may increase a shareholder’s tax |
liability for capital gains upon a sale of shares, even if sold at a loss to the shareholder’s original investments. See “Use of Proceeds.” |
Taxation/ERISA |
See “Taxation” and “Employee Benefit Plan and IRA Considerations.” |
Subscription Agent |
Computershare Trust Company, N.A. and Computershare Inc. See “Subscription Agent.” |
Information Agent |
Georgeson LLC. See “Information Agent.” |
Event |
Date | |
Record Date |
September 20, 2022 | |
Subscription Period |
September 20, 2022 through October 13, 2022† | |
Final Day Rights Will Trade |
October 12, 2022† | |
Expiration Date* |
October 13, 2022† | |
Payment for Common Shares and Subscription Certificate or Notice of Guaranteed Delivery Due* |
October 13, 2022† | |
Issuance Date |
October 20, 2022† | |
Confirmation Date |
October 24, 2022† |
* | A shareholder exercising Rights must deliver to the Subscription Agent by 5:00 PM Eastern Time on October 13, 2022 (unless the Rights offering is extended) either (a) a Subscription Certificate and payment for Common Shares or (b) a notice of guaranteed delivery and payment for Common Shares. |
† | Unless the Rights offering is extended. |
Shareholder’s Record Date Position |
X | Excess Shares Remaining | ||
Total Record Date Position of All Over-Subscribers |
(1) | A holder of Rights can send the Subscription Certificate, together with payment in the form of a check (which must include the name of the shareholder on the check) for the Common Shares subscribed for in the Rights offering and, if eligible, for any additional Common Shares subscribed for pursuant to the over-subscription privilege, to the Subscription Agent based on the Subscription Price. To be accepted, the payment, together with the executed Subscription Certificate, must be received by the Subscription Agent at one of the addresses noted above prior to 5:00 PM Eastern Time on the Expiration Date. The Subscription Agent will deposit all share purchase checks received by it prior to the final due date into a segregated account pending proration and distribution of Common Shares. The Subscription Agent will not accept cash as a means of payment for Common Shares. |
(2) | Alternatively, a subscription will be accepted by the Subscription Agent if, prior to 5:00 PM Eastern Time on the Expiration Date, the Subscription Agent has received a written notice of guaranteed delivery by mail or email from a bank, trust company, or a NYSE member, guaranteeing delivery of a properly completed and executed Subscription Certificate. In order for the notice of guarantee to be valid, full payment for the Common Shares at the Subscription Price must be received with the notice. The Subscription Agent will not honor a notice of guaranteed delivery unless a properly completed and executed Subscription Certificate is received by the Subscription Agent by the close of business on the second Business Day after the Expiration Date. The notice of guaranteed delivery must be emailed to the Subscription Agent at canoticeofguarantee@computershare.com or delivered to the Subscription Agent at one of the addresses noted above. |
Shareholder Transaction Expenses |
||||
Sales load ( (1) |
||||
Offering expenses borne by the Fund ( (1) |
||||
Dividend reinvestment plan fees |
$ |
purchases of common shares (2) |
| |
Estimated Annual Expenses |
||||
Management fees (3) (4) |
||||
Other Expenses (5) |
||||
Miscellaneous Other Expenses |
% | |||
Interest Expense (6) |
% | |||
Total Annual Fund Operating Expenses |
||||
Fee Waivers and/or Expense Reimbursements (4) |
||||
Total Annual Fund Operating Expenses after Fee Waivers and/or Expense Reimbursements (3)(4) |
(1) | Total offering expenses, which will borne by the Advisor and not the Fund or Common Shareholders, are estimated to be $132,068 in the aggregate, or approximately 0.06% of the estimated Subscription price, which assumes that the Rights offering is fully subscribed. |
(2) | |
(3) | |
(4) | The Fund and the Advisor have entered into a fee waiver agreement (the “Fee Waiver Agreement”), pursuant to which the Advisor has contractually agreed to waive the management fee with respect to any |
portion of the Fund’s assets attributable to investments in any equity and fixed-income mutual funds and exchange-traded funds managed by the Advisor or its affiliates that have a contractual management fee, through June 30, 2024. In addition, pursuant to the Fee Waiver Agreement, the Advisor has contractually agreed to waive its management fees by the amount of investment advisory fees the Fund pays to the Advisor indirectly through its investment in money market funds managed by the Advisor or its affiliates, through June 30, 2024. The Fee Waiver Agreement may be terminated at any time, without the payment of any penalty, only by the Fund (upon the vote of a majority of the Directors who are not “interested persons” (as defined in the Investment Company Act, of the Fund (the “Independent Directors”)) or a majority of the outstanding voting securities of the Fund), upon 90 days’ written notice by the Fund to the Advisor. |
(5) | $214,544,369, based on the estimated Subscription Price per Common Share of $8.77 (95% of the average of the last reported sales price of the Fund’s Common Shares on the NYSE on September 16, 2022 and each of the four (4) preceding trading days), assuming all new Common Shares offered are sold and that the expenses related to the Rights offering estimated at approximately $132,068 are paid by the Advisor. |
(6) | Reflects leverage, in the form of a credit facility, in an amount equal to approximately 30.6% of the Fund’s Managed Assets as of December 31, 2021. The interest expense borne by the Fund will vary over time in accordance with the level of the Fund’s use of leverage and variations in market interest rates. Interest expense is required to be treated as an expense of the Fund for accounting purposes. |
1 Year |
3 Years |
5 Years |
10 Years | |||||
Total expenses incurred |
$ |
$ |
$ |
$ |
* | The example should not be considered a representation of future expenses. The example assumes that the estimated “Other expenses” set forth in the Estimated Annual Expenses table are accurate and that all dividends and distributions are reinvested at NAV. Actual expenses may be greater or less than those assumed. Moreover, the Fund’s actual rate of return may be greater or less than the hypothetical 5% return shown in the example. |
Actual (unaudited) |
As Adjusted (unaudited) |
|||||||
Shareholders’ equity applicable to Common Shares: |
||||||||
Common Shares, no par value |
122,317,200 | 146,780,640 | ||||||
Paid-in surplus* |
1,551,509,936 | 1,766,054,305 | ||||||
Distributions in excess of net investment income, net realized gain on investments, futures contracts, and foreign currency transactions |
0 | 0 | ||||||
Accumulated Gain/(Loss) |
(142,304,169 | ) | (142,304,169 | ) | ||||
Net unrealized appreciation |
(253,174,426 | ) | (253,174,426 | ) | ||||
Net assets applicable to Common Shares |
1,156,031,341 | 1,370,575,710 |
* |
As adjusted paid-in surplus reflects the issuance of 24,463,440 Common Shares issued in the primary subscription at the estimated Subscription Price of $8.77. |
NYSE Market Price Per Common Share |
NAV per Common Share on Date of Market Price |
Premium/ (Discount) on Date of Market Price |
Trading |
|||||||||||||||||||||||||
During Quarter Ended |
High |
Low |
High |
Low |
High |
Low |
Volume |
|||||||||||||||||||||
June 30, 2022 |
$ | $ | $ | $ | ( |
)% | ( |
)% | 24,910,668 |
|||||||||||||||||||
March 31, 2022 |
$ | $ | $ | $ | % | ( |
)% | 30,947,672 |
||||||||||||||||||||
December 31, 2021 |
$ | $ | $ | $ | % | ( |
)% | 19,474,596 | ||||||||||||||||||||
September 30, 2021 |
$ | $ | $ | $ | % | ( |
)% | 20,231,911 | ||||||||||||||||||||
June 30, 2021 |
$ | $ | $ | $ | % | ( |
)% | 21,432,936 | ||||||||||||||||||||
March 31, 2021 |
$ | $ | $ | $ | ( |
)% | ( |
)% | 25,244,337 | |||||||||||||||||||
December 31, 2020 |
$ | $ | $ | $ | ( |
)% | ( |
)% | 21,156,937 | |||||||||||||||||||
September 30, 2020 |
$ | $ | $ | $ | ( |
)% | ( |
)% | 25,012,993 | |||||||||||||||||||
June 30, 2020 |
$ | $ | $ | $ | ( |
)% | ( |
)% | 43,349,102 | |||||||||||||||||||
March 31, 2020 |
$ | $ | $ | $ | ( |
)% | ( |
)% | 65,363,656 |
• | the offered Common Shares are being sold at less than their current NAV; and |
• | the number of Common Shares outstanding after the Rights offering will have increased proportionately more than the increase in the amount of the Fund’s net assets. |
Scenario(1) | ||
NAV(2) |
$9.23 | |
Subscription Price(3) |
$8.77 | |
Reduction in NAV ($) |
$(0.13) | |
Reduction in NAV (%) |
(1.36)% |
(1) |
The example assumes the full primary subscription the over-subscription privilege are exercised. Actual amounts may vary due to rounding. |
(2) |
For illustrative purposes only. It is not known at this time what the NAV per Common Share will be on the Expiration Date. |
(3) | For illustrative purposes only; reflects an estimated Subscription Price of $8.77 based upon 95% of the average of the last reported sales price of the Fund’s Common Shares on the NYSE on September 16, 2022 and each of the four (4) preceding trading days. It is not known at this time what the Subscription Price will be on the Expiration Date. |
• | The value of a Right will not be includible in the income of a Common Shareholder at the time the subscription Right is issued. |
• | The basis of a Right issued to a Common Shareholder will be zero, and the basis of the share with respect to which the Right was issued (the old share) will remain unchanged, unless either (a) the fair market value of the Right on the date of distribution is at least 15% of the fair market value of the old share, or (b) such Common Shareholder affirmatively elects (in the manner set out in Treasury regulations under the Code) to allocate to the Right a portion of the basis of the old share. If either (a) or (b) applies, such Common Shareholder must allocate basis between the old share and the Right in proportion to their fair market values on the date of distribution. |
• | The basis of a Right purchased in the market will generally be its purchase price. |
• | The holding period of a Right issued to a Common Shareholder will include the holding period of the old share. |
• | No loss will be recognized by a Common Shareholder if a Right distributed to such Common Shareholder expires unexercised because the basis of the old share may be allocated to a Right only if the Right is exercised. If a Right that has been purchased in the market expires unexercised, there will be a recognized loss equal to the basis of the Right. |
• | Any gain or loss on the sale of a Right will be a capital gain or loss if the Right is held as a capital asset (which in the case of a Right issued to Record Date Shareholders will depend on whether the old share is held as a capital asset), and will be a long term capital gain or loss if the holding period is deemed to exceed one year. |
• | No gain or loss will be recognized by a Common Shareholder upon the exercise of a Right, and the basis of any Common Share acquired upon exercise (the new Common Share) will equal the sum of the basis, if any, of the Right and the subscription price for the new Common Share. The holding period for the new Common Share will begin on the date when the Right is exercised (or, in the case of a Right purchased in the market, potentially the day after the date of exercise). |