MFS funds wrap tenders for auction-rate preferreds; others extended

By Susanna Moon

Chicago, Sept. 7 - MFS High Yield Municipal Trust accepted tenders for 2,841, or 94.7%, of its auction-rate preferred shares, and MFS Investment Grade Municipal Trust accepted 1,917, or 98.3%, of its auction-rate preferreds.

Tender offers for the securities ended at 8 a.m. ET on Sept. 7.

Meanwhile, MFS California Municipal Fund, MFS High Income Municipal Trust and MFS Municipal Income Trust extended the tender offers for their outstanding auction-rate preferreds to 8 a.m. ET on Sept. 12 from 8 a.m. ET on Sept. 7, according to a press release by Boston-based MFS Investment Management.

As of the original offer expiration, investors had tendered 98% of MFS California's preferreds, 93.8% of MFS High Income's preferreds and 93.3% of MFS Municipal Income's preferreds.

Each fund is tendering for the auction-rate preferreds at 95% of the liquidation preference of $25,000 per share, or $23,750 per share, plus accrued dividends through the expiration date of the tender offer, according to a previous release. The offers began Aug. 9.

As previously noted, each tender offer is conditioned on the receipt of tenders for at least 70% of that fund's outstanding auction-rate preferreds, the private placement of new preferred shares and the approval by holders of an amendment to each fund's bylaws to replace Standard & Poor's with Fitch as a rating agency for the preferreds.

The funds announced the tender offers for the auction-rate preferreds on July 6 after receiving the approval of the board of trustees of each fund.

Meetings adjourned

The three funds that extended their tender offers, MFS California Municipal Fund, MFS High Income Municipal Trust and MFS Municipal Income Trust, also adjourned the meetings for holders to 12:30 p.m. ET on Sept. 11.

The meetings were adjourned to permit the continued solicitation of additional votes, according to the press release on Sept. 7.

The purpose of the special meetings is for the auction-rate preferred holders of each adjourned fund to vote on whether to amend each fund's bylaws to replace S&P with Fitch as a ratings agency for the fund's auction-rate preferreds, the release noted.

Questions about the tender offers can be directed either to Warren Antler at AST Fund Solutions, the information agent for the tender offers, at 212 400-2605, or Justin Miller of MFS at 800 343-2829, ext. 57702.

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