UNITED STATES
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COMMISSION
Washington, D.C.
20549
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INVESTMENT
GRADE MUNICIPAL INCOME FUND,
INC.
|
|
(Name
of Registrant as Specified in Its Charter)
|
| |
WESTERN
INVESTMENT LLC
WESTERN
INVESTMENT HEDGED PARTNERS L.P.
WESTERN
INVESTMENT ACTIVISM PARTNERS LLC
WESTERN
INVESTMENT TOTAL RETURN PARTNERS L.P.
WESTERN INVESTMENT
TOTAL RETURN FUND LTD.
ARTHUR D.
LIPSON BENCHMARK PLUS
INSTITUTIONAL PARTNERS, L.L.C.
BENCHMARK PLUS
PARTNERS, L.L.C.
BENCHMARK
PLUS MANAGEMENT, L.L.C.
SCOTT
FRANZBLAU
ROBERT
FERGUSON
MATTHEW S.
CROUSE
RICHARD A.
RAPPAPORT
WILLIAM
J. ROBERTS
GARY
G. SCHLARBAUM
ROBERT
A. WOOD
WALTER S.
BAER
LYNN D. SCHULTZ
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Western
Investment LLC Sends Letter to Shareholders of UBS Fund
Western
Investment LLC States: It Strains Credulity That the Funds Investment Adviser
Can Escape the Taint of Alleged Criminality at UBS (NYSE:UBS) Asks Fellow
Shareholders to Boot out Incumbent, UBS Influenced Board of Directors of
Investment Grade Municipal Income Fund, Inc. (NYSE:PPM)
Tuesday
January 6, 2009, 4:00 pm EST
SALT LAKE
CITY--(BUSINESS WIRE)--Western Investment LLC announced today that it is sending
the following letter to shareholders of UBS-led Investment Grade Municipal
Income Fund, Inc.:
IMPORTANT
WARNING TO SHAREHOLDERS OF INVESTMENT GRADE MUNICIPAL INCOME FUND
(PPM)
UBS
DIVISION CEO INDICTED BY FEDERAL GRAND JURY FOR CONSPIRING WITH OTHER SENIOR UBS
EXECUTIVES
Accused
of helping UBS clients hide as much as $20 billion in assets from IRS. The CEO
of UBS’s Global Wealth Management & Business Banking division was recently
indicted by a federal grand jury for conspiring with other senior UBS executives
and thousand of its US clients to hide as much as $20 billion in assets from the
IRS. UBS is the indirect parent of Investment Grade Municipal Fund’s (PPM)
investment adviser.
COMPLAINTS
FILED AGAINST UBS, SWITZERLAND’S BIGGEST BANK, BY THE ATTORNEY GENERAL OF THE
STATE OF NEW YORK
Results
in the payment of $150 million in penalties and the redemption of $19 billion in
Auction Rate Securities. In late July 2008, the Attorney General of the State of
New York filed a complaint against UBS that revealed that UBS’s apparent
solution to the auction rate liquidity crisis was to redouble its efforts to
sell off its inventory of the soon-to-be frozen securities to its own clients. A
mere two weeks after the complaint was filed, UBS agreed to pay a $150 million
penalty and to redeem $19 billion of its auction rate
securities.
UBS
IS ALLEGED TO HAVE CHARGED INFLATED FEES AT AN $11.7 BILLION U.S. REAL-ESTATE
FUND BY OVERVALUING CERTAIN COMMERCIAL PROPERTIES
Managing
Director and head of valuations at a UBS real-estate fund affiliate filed a
complaint under Connecticut’s whistleblower law alleging that its real-estate
valuations were inflated by as much as $100 million. UBS clients were paying for
the management of up to $100 million in illusory assets. This executive states
in court papers that he repeatedly clashed with his bosses over returning fees
to the firm’s clients, which included public pension funds.
ALLEGEDLY
PARTICIPATING IN TAX FRAUD, DUMPING BAD SECURITIES ON CLIENTS, CHARGING PUMPED
UP FEES ON BAD ASSET VALUATIONS - IT STRAINS CREDULITY THAT THE FUND’S
INVESTMENT ADVISER CAN ESCAPE THE TAINT OF ALLEGED CRIMINALITY AT ITS PARENT
COMPANY. IN THE CURRENT UNCERTAIN ECONOMIC CLIMATE, WITH MAJOR INSTITUTIONS
FALLING ON EVERY SIDE, ASK YOURSELF IF YOU REALLY WANT YOUR MONEY IN THIS
MANAGER’S HANDS.
PPM
STOCK PRICE OFF 39% WHILE NAV DISCOUNT HITS WORST LEVELS EVER
Dear
Fellow Stockholder:
PPM share
values have been hit hard by the current economic mess. So have most securities.
But PPM stockholders have been hit with a double whammy: your shares have
recently been trading at discounts of 20% or more to their slumping underlying
value. At these levels, past income you may have earned on your investment in
PPM is illusory – you will give it back and more when you sell. Ask yourself if
you want the current manager, with all the allegations swirling around its
parent, holding your money in this environment. This may be your last chance to
directly address and fix this problem. As a significant stockholder of
Investment Grade Municipal Income Fund Inc. (“PPM” or the “Fund”), Western
Investment LLC, together with the other participants in this solicitation is
seeking your support for the election of our slate of highly qualified nominees
to the Board at the Fund’s upcoming annual meeting. UBS AG (“UBS”), the ultimate
parent of the Fund’s investment adviser, has been indicted and still faces
further charges, the Fund’s performance is down and its discount to NAV is at
its worst levels ever. The current Board nevertheless staunchly supports the
current UBS affiliate manager and the risky status quo.
We
believe it is imperative that stockholders act now to elect directors who will
promptly act to protect their investment and maximize value for all
stockholders.
We are
concerned that this Board endorses the continued employment of UBS Global Asset
Management (Americas) Inc. (“UBS Global”), the Fund’s investment advisor, even
as UBS remains the subject of a criminal indictment for allegedly helping its
American clients evade paying taxes on up to $20 billion in assets. Just this
past summer, UBS paid $150 million in fines in settlement of a State of New York
complaint regarding abusive sales practices in connection with sales of auction
rate securities. This is on top of the numerous actions by UBS that have come to
light over the course of investigations into UBS’s activities, including
allegations that UBS charged inflated fees at an $11.7 billion U.S. real-estate
fund by overvaluing certain commercial properties. Do you want to support
Switzerland’s largest bank in its alleged efforts to cheat American taxpayers
out of billions of dollars? More importantly, do you want a manager overseeing
your money that claims that it has no connection at all to the improprieties and
alleged criminal activities UBS is charged with?
The
Board would have you believe that UBS is some remote affiliate of the Fund’s
investment adviser with little or no effect on the Fund. In fact, UBS controls
your Fund’s investment adviser. The uncertainty and risk this connection
generates concerns us since they hold the future of your investment in their
hands. If elected, we can do something about that.
Your vote
at the upcoming Annual Meeting is extremely important. As you are aware, the
Fund recently traded (on October 10, 2008) at a 28.8% discount to net asset
value, or NAV. At this level, stockholders would see an immediate gain of nearly
40% if shares traded at NAV, their true value. We believe such a discount is
unacceptable. Where is the Board that the Fund’s prospectus says will “consider
taking action to attempt to reduce or eliminate any discount” and will annually
consider “action either to repurchase shares of
common stock in the open market or to make a tender offer for shares of common
stock at their net asset value.” To our knowledge, directors have not
ordered the repurchase of a single share of common stock despite the fact that
repurchases would have been strongly accretive to NAV and earnings per
share.
We
believe this Board, by asking stockholders to approve a new management contract
with UBS Global while simultaneously failing to address the Fund’s discount to
NAV, is putting UBS’s interests above those of the stockholders, and seems more
interested in taking actions that maximize the fees for the Fund’s adviser than
in taking actions that maximize value and minimize risk for stockholders.
Accordingly, we have proposed an alternative slate of qualified individuals with
the dedication, skills and expertise the Fund needs. We need your support to
elect them and urge you to vote the enclosed GOLD proxy today, by phone,
internet or mail. Do your part to see independent and experienced governance
brought to the Fund. Stockholders deserve better leadership than this Board has
provided.
The
Fund’s performance has been mediocre for many years and particularly horrible in
2008. As you are aware, the Fund’s stock price is off 39% from last summer’s
highs, its discount to NAV has soared, and the Fund’s preferred stockholders
have seen their investment locked up since last February. Any benefit common
stockholders may have received in dividends over the years has effectively been
wiped out. The fact is, the depth and impact of the current credit crisis has
been magnified by the very same leverage that has been condoned by the Fund’s
board. Common stockholders until recently paid higher fees for a leveraged asset
base that included the outstanding preferred stock. However, this very leverage
has magnified the Fund’s recent stock price collapse. UBS Global collects hefty
fees to do more than just trade portfolio securities. They are paid to manage,
and managing risk is part of their job. The chart below depicts the total return
on an investment in the Fund and in an unleveraged, open-end municipal bond
fund. The Board could have directed the adviser to reduce or eliminate leverage,
although this decision would have lowered management fees received by the fund
adviser. We wonder if director fees of up to $235,000 a year influenced this
decision.
Western
Investment has a long history of acting to benefit all shareholders, and most
recently was instrumental in permitting shareholders of Pioneer Municipal and
Equity Income Trust to obtain full NAV for their shares. Our interests are
aligned with yours. Western Investment believes that there are other well
qualified advisers readily available who would provide superior service for a
lower fee. Unlike members of the current Board, who stand to collect
$235,000/year from UBS for their service on other boards in the UBS fund complex
and own no shares of stock of the Fund, we benefit only if all stockholders
benefit. We have no affiliation with UBS and hold no directorships in any other
UBS fund. Our nominees bring a commitment to good governance and provide an
ownership representation in the boardroom that assures an engaged advocacy for
stockholders and effective oversight of the manager. They have the talent,
expertise and experience needed to make the hard choices required. Our goal is
simple: to deliver to PPM stockholders the full value of their
investment.
You have
a choice. We urge you to vote your shares today by phone or internet, or by
signing, dating and returning the enclosed GOLD proxy in the envelope
provided.
Thank you
for your support.
Regards,
Arthur D.
Lipson
Western
Investment LLC
January
5, 2009
IF
YOU HAVE ALREADY RETURNED A WHITE PROXY TO THE FUND’S MANAGEMENT, EITHER
DIRECTLY OR OVER THE PHONE OR INTERNET,
YOU
HAVE EVERY RIGHT TO CHANGE YOUR VOTE.
WE
URGE YOU TO VOTE YOUR GOLD PROXY TODAY.
IF
YOU HAVE ANY QUESTIONS ABOUT
HOW
TO VOTE YOUR GOLD WESTERN INVESTMENT PROXY, PLEASE CONTACT THE FIRM ASSISTING US
IN THIS SOLICITATION:
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YOU
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