Highland Income Fund Announces Proposal to Convert Fund to Diversified Holding Company

Business Change Intended to Increase Shareholder Value, Provide Potential to Reduce Discount to NAVFund’s Board and Independent Trustees Unanimously Approve Proposal, Recommend Shareholders Vote “FOR” Business Change

DALLAS, June 14, 2021 (GLOBE NEWSWIRE) -- The Highland Income Fund (NYSE: HFRO) (“HFRO” or the “Fund”), a closed-end fund managed by Highland Capital Management Fund Advisors, L.P. (the “Adviser”), today announced the filing of a preliminary proxy statement with the Securities and Exchange Commission (the “SEC”) for a special meeting of shareholders (“Special Meeting”) in connection with its proposal to convert the Fund from a registered investment company to a diversified holding company (the “Holding Company”).

The proposal to change the Fund’s business from a registered investment company to a diversified holding company and to amend certain fundamental investment restrictions (the “Business Change Proposal”) aims to increase shareholder value and better position HFRO in the current and future market environment.

The Holding Company would primarily pursue controlling interests—and, to a lesser extent, minority interests—in companies and other assets in four core sectors/focus areas where the Adviser has relevant expertise.¹

At the Special Meeting, shareholders are being asked to vote upon the Business Change Proposal and, if approved, to approve the amendment and restatement of the Fund’s Agreement and Declaration of Trust (the “Amendment Proposal” and, together with the Business Change Proposal, the “Proposals”).

Information on the Proposals can be found at www.hfroconversion.com.

The Fund’s Board of Trustees (the “Board”), a majority of the members of which are not interested persons of the Fund (the “Independent Trustees”), reviewed the Proposals at length, and believes they are in the best interest of shareholders.

Adoption of the Business Change Proposal is expected to provide several benefits, including the following:

• Potential to provide investors with a superior risk adjusted return compared to public equity, fixed income, and distressed debt markets^2;
• Better positioning for HFRO in the current and future environment, enabling HFRO to transition to assets away from credit, where high yield spreads are at all-time lows, into those with better growth potential and thus better potential for shareholder returns; and
• Potential for HFRO to trade at a premium to book value in line with comparable diversified holding companies, which historically have traded at a premium, while closed-end funds have historically traded at a discount to net asset value (“NAV”).

Additionally, the Business Change Proposal would expand access to the Adviser’s platform, enabling HFRO to pursue opportunities where the Adviser has unique expertise and resources that it can apply to unlock potential value.