NexPoint Strategic Opportunities Fund (NYSE:NHF) ("NHF" or the "Fund"), a closed-end fund managed by NexPoint Advisors, L.P. (the "Adviser"), today announced its plan to conduct an issuer tender offer pursuant to Rule 13e-4 under the Securities Exchange Act of 1934 (the "Exchange Act") for up to 15 million of its common shares ("Shares"), at a maximum aggregate purchase price of $150 million, in exchange for consideration consisting of approximately 80% preferred shares ("Preferred Shares") and 20% cash (collectively, the "Exchange Offer"). The Preferred Shares are expected to be rated by a nationally recognized statistical rating organization and listed on the New York Stock Exchange ("NYSE").[1]

NexPoint Strategic Opportunities Fund (NHF) to Conduct $150M Tender Offer with Preferred Shares and Cash

The Fund's Board of Trustees (the "Board") authorized the Exchange Offer on October 13, 2020. The Exchange Offer is expected to commence the week of October 19, 2020, or as soon thereafter as practicable.

Information on the Exchange Offer and "Modified Dutch Auction" Procedure

The Fund will conduct the Exchange Offer through a procedure called a "Modified Dutch Auction." For a common shareholder choosing to participate in the Exchange Offer, this procedure allows the shareholder to select a price, within a set price range, at which they are willing to sell their Shares. The proposed price range for the Exchange Offer is $10.00-$12.00 per Share. After all tendering shareholders indicate their respective sale prices, the Fund will pay the lowest price indicated that will permit the Fund to purchase as many Shares as possible, up to the maximum aggregate purchase price of $150 million.

For example, if the lowest price indicated is $10.00 per Share, the Fund will purchase 15 million Shares. Conversely, if the lowest price indicated is $12.00 per Share, the Fund will purchase 12.5 million Shares. The maximum aggregate purchase price for all Shares will be $150 million, regardless of the actual purchase price per Share.

NHF will purchase all Shares at the same purchase price, as required by Exchange Act rules; however, the Exchange Offer is conditioned on, among other things, shareholders validly tendering (and not properly withdrawing) Shares representing an aggregate purchase price of at least $75 million, regardless of the purchase price per Share, prior to the offering's expiration date.[2] The Exchange Offer will only be made to NHF's current shareholders.

Exchange Offer's Potential Benefits to Shareholders

Both the Adviser and the Board believe the Exchange Offer is in the best interest of all shareholders, for the following reasons:

Use of Preferred Shares, Other Exchange Offer Details

While Modified Dutch Auction tender offers are typically satisfied in cash payment, the Preferred Share component of the Exchange Offer supports the REIT conversion process that is currently underway. The issuance of Preferred Shares will allow NHF to retain liquidity necessary to transition its assets to comply with REIT tax status and ultimately convert to a diversified REIT.

The Exchange Offer supersedes the repurchase program that was announced on April 24, 2020. Accordingly, no further repurchases will be made under the repurchase program.