Upcoming Reverse Stock Splits for Virtus Funds
HARTFORD, Conn. — The Virtus Convertible & Income Fund (NYSE: NCV) and the Virtus Convertible & Income Fund II (NYSE: NCZ) have announced a significant announcement for their shareholders. A 1-for-4 reverse stock split of the issued and outstanding shares for each fund will take effect as of the start of trading on Monday, February 10, 2025. This strategic move was pre-approved by each Fund's board, aimed at enhancing shareholder value.
Details of the Reverse Stock Split
With the reverse stock split, each existing shareholder will receive one new share for every four outstanding common shares of NCV and NCZ. This means if a shareholder owns four shares prior to the effective date, they will own one share afterward. Importantly, the funds will retain their trading symbols, however, they will be assigned new CUSIP numbers effective on the split date: NCV has been assigned 92838X805 and NCZ has been assigned 92838U801.
Impact on Shareholders
The primary goal of the reverse stock split is to increase the market price per share of each fund. The anticipation is that a higher market price will broaden the appeal of the shares to potential investors and could potentially enhance the liquidity in the market. In addition to improving the market for each fund, this move could lower per-share transaction fees and reduce various administrative costs, including stock exchange listing fees for both funds.
Fractional Shares and Cash Payments
As with any reverse stock split, there will be some implications for shareholders holding fractional shares. Shareholders will receive cash for any fractional shares resulting from the reverse stock splits, with one exception: those participating in the Automatic Dividend Reinvestment Plan will receive fractional shares. As a result, following the split, shareholders of record will maintain the same percentage of ownership they had prior to the splits.
Tax Considerations Post-Split
While the reverse stock splits themselves should not result in any taxable events, the cash received for fractional shares may lead to realized gains or losses for certain shareholders. This could create tax obligations depending on individual tax circumstances. It's always advisable for shareholders to consult with a tax advisor regarding implications after the split.
Anticipated Dividend Adjustments
Following the reverse stock splits, the dividend rates for both funds are expected to adjust accordingly. For example, the Virtus Convertible & Income Fund’s dividend distribution will reflect the new one-for-four ratio. Shareholders can anticipate these changes in their next dividend payments and are encouraged to watch their investment portfolios closely.
Fund Information and Goals
The Virtus Convertible & Income Fund and Virtus Convertible & Income Fund II aim to provide a combination of capital appreciation and high current income for investors. Each fund utilizes different strategies to fulfill this objective, and they are managed by Virtus Investment Advisers, Inc. It's critical for investors to review each fund’s annual report to understand investment objectives, strategies, and risks.
For those looking for more personalized assistance, shareholders can reach out to the shareholder services team via phone to seek guidance and information tailored to their investment needs. Contact details are available on the company’s official resources.
Frequently Asked Questions
What is a reverse stock split?
A reverse stock split is a corporate action that reduces the number of a company’s outstanding shares, effectively increasing the share price proportionally.
How will the reverse stock split affect my shares of NCV and NCZ?
Your ownership percentage will remain the same, but the number of shares you own will decrease by a factor of four for NCV and NCZ.
Will I receive cash for fractional shares after the split?
Yes, shareholders will receive cash for any fractional shares resulting from the reverse stock splits, except for those in the Automatic Dividend Reinvestment Plan.
Are there any tax implications from the reverse stock split?
The reverse stock splits themselves should not trigger a taxable event, but exchanging fractional shares for cash could result in taxable gains or losses.
What should I do if I have more questions about my investment?
You can contact Virtus's shareholder services for further assistance or refer to the official resources provided by the company for more information.
