Calls on Board to Respect Shareholders’ Wishes and Terminate PPM’s
Relationship with UBS
Western Investment LLC today commented on what it believes to be the
recent departure of three senior [asset managers] from UBS AG
(NYSE:UBS), the ultimate parent corporation of the investment adviser of
Investment Grade Municipal Income Fund Inc. (NYSE:PPM). Western
Investment believes that three of UBS’s senior municipal bond investment
managers recently left UBS, leaving UBS with what Western Investment
believes to be few senior managers with experience managing investments
concerning municipal obligations, which make up substantially all of
PPM’s underlying assets.
Arthur D. Lipson, the managing member of Western Investment, stated,
“Given that UBS closed its municipal bond department [over a year ago/in
May 2008], we believe these departures further deplete UBS of managers
with experience in the municipal bond space. That is why we are so
concerned that PPM’s Board has taken no action, to our knowledge, to
prevent shareholders from being stuck in what we believe to be the worst
case scenario – a municipal bond fund managed by an investment adviser
with little to no meaningful experience with municipal obligations.”
Mr. Lipson continued, “We are also surprised that after shareholders
expressed clear support for terminating PPM’s relationship with UBS at
PPM’s 2009 Annual Meeting, the Board has, to our knowledge, taken no
action in response to shareholders’ clear vote. Now, due to the Board’s
apparent disregard of shareholders’ wishes, PPM has an asset manager
with a declining knowledge in PPM’s asset class. At this point, we call
on the Board to immediately take all steps necessary to terminate PPM’s
relationship with UBS and find an appropriate asset manager for PPM. We
believe such action is the first step in repairing any damage to
shareholders’ investment in PPM and restoring shareholders’ faith in
this Board.”
Mr. Lipson concluded, “The situation PPM finds itself in is just the
latest in a string of events involving UBS that we believe have
negatively affected PPM and its shareholders. UBS’s actions over the
past year include, among other things, charges of tax evasion,
real-estate value inflation and $150 million in penalties stemming from
its conduct related to auction rate securities. Adding to this cloud
hanging UBS is the fact that on January 14, 2009, a US District Judge
declared Raoul Weil, an ex-UBS senior executive, a fugitive from
justice. Further, as result of allegations by the U.S. government that
UBS helped 20,000 wealthy American clients evade taxes with false
documents used to hide billions of dollars in assets, UBS entered into a
“deferred prosecution” agreement on charges of conspiring to defraud the
United States by impeding the Internal Revenue Service. As part of the
agreement UBS paid $780 million in fines and handed over the names of
some of those clients. It is our hope that, in the face of strong
shareholder support for ending PPM’s relationship with UBS, as well as
continued issues regarding UBS, this Board will finally listen to
shareholders and cut ties with UBS.”
For Western Investment:
Innisfree M&A Incorporated
Michael
Brinn, 212-750-8253
mbrinn@innisfreema.com
