DFAN14A 1 p24-1851dfan14a.htm BLACKROCK MUNIYIELD PENNSYLVANIA QUALITY FUND

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

Filed by the Registrant ¨

Filed by a Party other than the Registrant þ

Check the appropriate box:

¨ | Preliminary Proxy Statement
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
¨ | Definitive Proxy Statement
þ | Definitive Additional Materials
¨ | Soliciting Material Under Rule 14a-12

BlackRock MuniYield Pennsylvania Quality Fund

(Name of Registrant as Specified In Its Charter)

Saba Capital Management, L.P.

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

þ | No fee required.
¨ | Fee paid previously with preliminary materials.

¨ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

Affidavit of John Glenn Grau

State of CONNECTICUT | ) |
| ) | ss.:
County of FAIRFIELD | ) |

John Glenn Grau, being duly sworn, deposes and states:

1. I am the founder and Chief Executive Officer of InvestorCom LLC (“InvestorCom”), a proxy solicitation and shareholder engagement firm. This affidavit is based upon my personal knowledge of certain events and events as they have been described to me by my colleague Douglas Jaffe, who is Managing Director of InvestorCom’s Capital Markets Group.

2. InvestorCom was engaged on behalf of Saba Capital Master Fund, Ltd. (“Saba”) as a proxy solicitor and advisor in connection with its nomination of certain individuals for election as trustees of BlackRock California Municipal Income Trust (“BFZ”), BlackRock Innovation and Growth Term Trust (“BIGZ”), and BlackRock ESG Capital Allocation Term Trust (“ECAT,” and together with BFZ and BIGZ, the “BlackRock Funds”) at the 2023 annual meetings of shareholders of each of the BlackRock Funds (the “Annual Meetings” and each an “Annual Meeting” individually).

3. First Coast Results, Inc. (“First Coast”) was designated to serve as the inspector of elections by each of the BlackRock Funds for the respective Annual Meetings. John M. Perlowski was designated by each of the BlackRock Funds to serve as Chairperson of the Annual Meetings. The bylaws of each of the BlackRock Funds provides that a majority of the outstanding shares of the respective funds must be present at the annual meeting (“quorum”) for the Annual Meeting to be held.

4. The Annual Meetings for BIGZ and ECAT were originally scheduled to be convened on July 10, 2023 at 100 Bellevue Parkway in Wilmington, Delaware (the “Delaware Meeting Location”). The Annual Meeting for BFZ was originally scheduled to be convened the following day, July 11, 2023, also at the Delaware Meeting Location.

5. In the days immediately prior to July 10 and July 11, 2023, I and my InvestorCom colleagues were able to view the total vote tabulations for the BlackRock Funds through a service provided by Broadridge Financial Solutions to both Saba and the BlackRock Funds (the “Broadridge Service”). We determined that it was likely that a quorum would be achieved for the Annual Meeting for BFZ, but not for the Annual Meetings for BIGZ and ECAT.

6. On July 10, 2023, I arrived at the Delaware Meeting Location with a representative of Saba and a representative of Saba’s outside legal counsel, Schulte Roth & Zabel LLP (“Schulte”) to attend the BIGZ and ECAT Annual Meetings. I brought with me physical copies of the executed Saba proxy cards and ballots, representing all shares Saba held beneficial ownership over and all other shares it received by proxy from other shareholders, for each of the Annual Meetings (the “Saba Votes”).

7. Jason Graham represented First Coast at the Delaware Meeting Location on July 10, 2023. When I arrived at the Delaware Meeting Location, I spoke with Mr. Graham and made clear that I represented Saba and was in possession of the Saba Votes. I shared all of the Saba Votes with Mr. Graham for his review.

8. As I expected, Mr. Graham, after reviewing all of the Saba Votes and all other votes present, determined that a quorum was not present. In making this determination, Mr. Graham relied on and counted the Saba Votes. Mr. Graham informed Mr. Perlowski that no quorum was present. Because there was no quorum, no vote was taken and no business was transacted. Mr. Perlowski then adjourned the Annual Meetings of BIGZ and ECAT to July 25, 2023 to be held at 1 University Square in Princeton, New Jersey (the “New Jersey Meeting Location”), to allow time for additional solicitation to be conducted in the hopes of reaching a quorum.

9. On July 11, 2023, I returned to the Delaware Meeting Location with a representative of Saba and a representative of Schulte to attend the BFZ Annual Meeting. Mr. Graham was again representing First Coast. I brought with me physical copies of the Saba Votes and shared all of the Saba Votes with Mr. Graham for his review. After reviewing the Saba Votes and all other votes present, Mr. Graham determined that a quorum had been achieved for BFZ’s Annual Meeting. He advised Mr. Perlowski of this, who called the BFZ Annual Meeting to order. The Annual Meeting for BFZ proceeded and all present votes were counted, including the Saba Votes.

10. In the days immediately prior to July 25, 2023, the adjournment date for the BIGZ and ECAT Annual Meetings, I and my colleagues at InvestorCom again determined through the Broadridge Service that it was unlikely a quorum would be present for the BIGZ and ECAT Annual Meetings on July 25, 2023.

11. Nevertheless, on July 25, 2023, Mr. Jaffe traveled to the New Jersey Meeting Location and brought physical copies of the Saba Votes with him. Mr. Jaffe was accompanied by a representative from Saba and a representative from Schulte. At the New Jersey Meeting Location, First Coast was represented by Hank Warnke. Mr. Jaffe spoke with Mr. Warnke upon his arrival at the New Jersey Meeting Location and made clear he represented Saba and had physical possession of the Saba Votes, exactly as I had done with Mr. Graham on July 10, 2023 and July 11, 2023. Mr. Jaffe shared all of the Saba Votes with Mr. Warnke for his review.

12. As expected, Mr. Warnke, after separately reviewing all of the Saba Votes and all other votes present, determined that a quorum was not present for either of the BIGZ and ECAT Annual Meetings. In making this determination, Mr. Warnke relied on and counted the Saba Votes. Mr. Warnke informed Mr. Perlowski that no quorum was present. Once again, there was no quorum, no vote was taken and no business was transacted. Mr. Perlowski adjourned the BIGZ and ECAT Annual Meetings to August 7, 2023, to allow time for additional solicitation to be conducted in the hopes of reaching a quorum, again to be held at the New Jersey Meeting Location.

13. In the days immediately prior to August 7, 2023, I and my colleagues at InvestorCom again determined through the Broadridge Service that it was unlikely a quorum would be achieved for the BIGZ and ECAT Annual Meetings on August 7, 2023.

14. Nevertheless Mr. Jaffe again travelled to the New Jersey Meeting Location on August 7, 2023 and he was again accompanied by a representative of Saba and a representative of Schulte. Mr. Jaffe again brought physical copies of the Saba Votes with him. Once again, Mr. Jaffe, the Saba representative, and the Schulte representative knew that it was unlikely the BIGZ and ECAT Annual Meetings would be convened, but made sure they and the hard copies of the Saba Votes were physically present in the event the BIGZ and ECAT Annual Meetings were actually convened.

15. After arriving at the New Jersey Meeting Location on August 7, 2023, Mr. Jaffe spoke with Mr. Warnke, who was again representing First Coast, and made clear he represented Saba and had physical possession of the Saba Votes, exactly as I had done with Mr. Graham on July 10, 2023 and July 11, 2023. Mr. Jaffe shared all of the Saba Votes with Mr. Warnke for his review.

16. As expected, Mr. Warnke, after separately reviewing all of the Saba Votes and all other votes present, determined that a quorum was not present for the BIGZ and ECAT Annual Meetings. In making this determination, Mr. Warnke relied on and counted the Saba Votes. Mr. Warnke informed Mr. Perlowski that a quorum was not present for the BIGZ and ECAT Annual Meetings. Once again, because there was no quorum, no vote was taken and no business was transacted.

17. However, Mr. Perlowski did not adjourn the BIGZ and ECAT Annual Meetings to allow for additional solicitation time to reach a quorum. Instead, Mr. Perlowski declared a failed meeting for both of the BIGZ and ECAT Annual Meetings, as quorum was not reached, even accounting for the presence of the Saba Votes reviewed by Mr. Warnke.

18. Any statement or suggestion that Saba and InvestorCom were the cause of any failed meeting is false. At the appointed location for each of the scheduled Annual Meeting dates for each of the BlackRock Funds, a representative of Saba, Schulte and InvestorCom, in possession of all of the Saba Votes, were physically present, and these votes were shared with the First Coast representative and were counted in determining whether there was quorum. The BIGZ and ECAT Annual Meetings were not held because a quorum was not reached after First Coast’s review of the Saba Votes and all other votes present. Indeed the BIGZ and ECAT Annual Meetings were never held thereafter because Mr. Perlowski made the decision to not adjourn the meetings to allow for further solicitation in the hopes of reaching quorum.

Saba Capital Management, L.P. posted the below to https://www.heyblackrock.com/ (the “Website”).

The Website contains a link to the following article.

Activist Boaz Weinstein says BlackRock funds are ‘crushing shareholder rights’

CNBC

By Rohan Goswami

May 17, 2024

· | Boaz Weinstein’s Saba Capital detailed its plan for change at 10 BlackRock closed-end funds that trade at a steep discount to net asset value and are underperforming their peers.
· | Saba is seeking to oust management at six of those funds.
· | The activist fund wants to offer investors the chance to sell out of the funds at the price their shares are worth, and to institute broader governance changes.

Boaz Weinstein, the hedge fund investor on the winning side of JPMorgan Chase’s $6.2 billion, “London Whale” trading loss in 2011, is now taking on index fund giant BlackRock.

On Friday, Weinstein’s Saba Capital detailed in a presentation seen by CNBC its plans to push for change at 10 closed-end BlackRock funds that trade at a significant discount to the value of their underlying assets compared to their peers. Saba says the underperformance is a direct result of BlackRock’s management.

The hedge fund wants board control at three BlackRock funds and a minority slate at seven others. It also seeks to oust BlackRock as the manager of six of those ten funds.

“In the last three years, nine of the ten funds that we’re even talking about have lost money for investors,” Weinstein said on CNBC’s “Squawk Box” earlier this week.

At the heart of Saba’s “Hey BlackRock” campaign is an argument around governance. Saba says in its presentation that BlackRock runs those closed-end funds the “exact opposite” way it expects companies to run themselves.

BlackRock “is talking out of both sides of its mouth” by doing this, Saba says. That’s cost retail investors $1.4 billion in discounts, by Saba’s math, on top of the management fees it charges.

BlackRock, Saba says in the deck, “considers itself a leader in governance, but is crushing shareholder rights.” At certain BlackRock funds, for example, if an investor doesn’t submit their vote in a shareholder meeting, their shares will automatically go to support BlackRock. Saba is suing to change that.

A BlackRock spokesperson called that assertion “very misleading” and said those funds “simply require that most shareholders vote affirmatively in favor.”

The index fund manager’s rebuttal, “Defend Your Fund,” describes Saba as an activist hedge fund seeking to “enrich itself.”

The problem and the solution

Closed-end funds have a finite number of shares. Investors who want to sell their positions have to find an interested buyer, which means they may not be able to sell at a price that reflects the value of a fund’s holdings.

In open-ended funds, by contrast, an investor can redeem its shares with the manager in exchange for cash. That’s how many index funds are structured, like those that track the S&P 500.

Saba says it has a solution. BlackRock should buy back shares from investors at the price they’re worth, not where they currently trade.

“Investors who want to come out come out, and those who want to stay will stay for a hundred years, if they want,” Weinstein told CNBC earlier this week.

Weinstein, who founded Saba in 2009, made a fortune two years later, when he noticed that a relatively obscure credit derivatives index was behaving abnormally. Saba began buying up the underlying derivatives that, unbeknownst to him, were being sold by JPMorgan’s Bruno Iksil. For a time, Saba took tremendous losses on the position, until Iksil’s bet turned sour on him, costing JPMorgan billions and netting Saba huge profits.

Saba said in its investor deck that the changes at BlackRock could take the form of a tender offer or a restructuring. The presentation noted that BlackRock previously cast its shares in support of a tender at another closed-end fund where an activist was pushing for similar change.

At the worst-performing funds relative to their peer group, Saba is seeking shareholder approval to fire the manager. In total, BlackRock wants new management at six funds, including the BlackRock California Municipal Income Trust (BFZ), the BlackRock Innovation and Growth Term Trust (BIGZ) and the BlackRock Health Sciences Term Trust (BMEZ).

“BlackRock is failing as a manager by delivering subpar performance compared to relevant benchmarks and worst-in-class corporate governance,” the deck says.

If Saba were to win shareholder approval to fire BlackRock as manager at the six funds, the newly constituted boards would then run a review process over at least six months. Saba says that in addition to offering liquidity to investors, its board nominees would push for reduced fees and for other unspecified governance fixes.

A BlackRock spokesperson told CNBC that the firm has historically taken steps to improve returns at closed-end funds when necessary.

“BlackRock’s closed-end funds welcome constructive engagement with thoughtful shareholders who act in good faith with the shared goal of enhancing long-term value for all,” the spokesperson said.

Weinstein said Saba has run similar campaigns at roughly 60 closed-end funds in the past decade but has only taken over a fund’s management twice. The hedge fund sued BlackRock last year to remove that so-called “vote-stripping provision” at certain funds and filed another lawsuit earlier this year.

BlackRock has pitched shareholders via mailings and advertisements. “Your dependable, income-paying investment,” BlackRock has told investors, is under threat from Saba.

Saba plans to host a webinar for shareholders on Monday but says BlackRock has refused to provide the shareholder list for several of the funds. The BlackRock spokesperson said that it has “always acted in accordance with all applicable laws” when providing shareholder information, and that it “never blocked Saba’s access to shareholders.”

“What we want is for shareholders, which we are the largest of but not in any way the majority, to make that $1.4 billion, which can be done at the press of a button,” Weinstein told CNBC earlier this week.

Boaz R. Weinstein posted the below message to his X account.