The Pacholder High Yield Fund, Inc. (NYSE ALTERNEXT US:PHF) announced it has suspended the payment of the previously declared (November 12, 2008) dividend on the Fund's common shares scheduled for payment on December 9, 2008, in accordance with the requirements of the Fund's Articles Supplementary for Auction Rate Cumulative Preferred Stock and the Investment Company Act of 1940, as amended.
The Fund is not permitted to set apart for payment or pay a dividend on its common shares unless the Fund's auction rate preferred shares ("ARPS") will have a minimum asset coverage of 200% after payment of the common share dividend. The asset coverage for the ARPS is less than 200% today, prohibiting the Fund from setting aside amounts necessary to pay the dividend declared on November 12. Accordingly, shareholders of record on November 28, 2008 will not receive the dividend of $0.075 per share on December 9, 2008. The Fund is posting a Q&A on the Fund's website at www.phf-hy.com that is intended to provide shareholders with additional information about the asset coverage requirements, the impact that such requirements have on the ability to declare and pay dividends, and possible alternatives for satisfying the asset coverage requirements.
The Q&A indicates that the Fund is currently exploring alternatives to allow the Fund to resume declaring and paying monthly dividends, including possible redemption of a sufficient amount of ARPS to satisfy the asset coverage requirements. To the extent that the market conditions improve or the Fund redeems a sufficient amount of ARPS such that the Fund is able to satisfy the asset coverage requirements and resume the declaration of dividends, public notice will be provided including posting on the Fund's website.
The Fund is a closed-end diversified management investment company with a leveraged capital structure. Its investment objective is to provide a high level of total return through current income and capital appreciation. Under normal circumstances, the Fund invests at least 80% of the value of its assets in high yield securities. The Fund invests primarily in fixed income securities of domestic companies. The Fund's common stock is traded on the NYSE ALTERNEXT US under the symbol "PHF".
Statements made in this release that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such risks and uncertainties include, without limitation, the adverse effect from further declines in the securities markets and in the Fund's performance, a general downturn in the economy, competition from other companies, changes in government policy or regulation, inability to attract or retain key employees, inability to implement its operating strategy and/or acquisition strategy, and unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations. The Fund's ability to maintain leverage and to declare and pay dividends to common shareholders is subject to the restrictions in its governing documents.