A week after closing the Putnam Prime Market Fund (see The MFWire, September 18, 2008), Putnam Investments said it is liquidating the $12.3 billion institutional money fund after 5:00 p.m. Wednesday and investors will receive shares of Federated Prime Obligations Fund on a $1-per-share for $1-per-share basis.
As of September 22, the AAAm-rated Federated fund had $22.1 billion of assets.
"We believe this transaction with Federated is very beneficial to the shareholders of the Putnam Prime Money Market Fund," said Putnam president and CEO Bob Reynolds in a news release issued Wednesday afternoon.
"First, we wanted to be fair and equitable to all shareholders, which is why we closed the fund. Second, in liquidation, we were looking for the best solution possible. The transaction with Federated accomplishes this objective," he added.
Shareholders of the Putnam fund will be entitled to dividends through September 24. The accumulated, but unpaid, dividends will be paid on September 25 by Putnam. Shareholders will be entitled to dividends from the Federated fund starting September 25.
Press Release
BOSTON, PITTSBURGH (September 24, 2008) -- Federated Investors, Inc. (NYSE:
FII) and Putnam Investments today announced that the Putnam Prime Money
Market Fund will liquidate after 5 p.m. today with shareholders receiving
shares of Federated Prime Obligations Fund on a $1-per-share for
$1-per-share basis. The Putnam Prime Money Market Fund will invest its
assets in the Federated Prime Obligations Fund in an in-kind purchase
transaction. The action follows Putnam’s Sept. 18, 2008 announcement that
the Board of Trustees of the Putnam Funds, in response to market
conditions, had voted to close the institutional Putnam Prime Money Market
Fund, effective 5:00 p.m. on Sept. 17, 2008 and to liquidate the fund.
Federated Prime Obligations Fund is an AAAm-rated fund with $22.1 billion
in assets as of Sept. 22, 2008. It is designed for use by fiduciaries and
other institutional investors who have rigorous requirements for safety and
daily liquidity at par.
"We believe this transaction with Federated is very beneficial to the
shareholders of the Putnam Prime Money Market Fund,” said Robert L.
Reynolds, Putnam president and chief executive officer. “First, we wanted
to be fair and equitable to all shareholders, which is why we closed the
fund. Second, in liquidation, we were looking for the best solution
possible. The transaction with Federated accomplishes this objective."
Federated’s money market portfolio managers have thoroughly reviewed the
securities in the $12.3 billion Putnam Prime Money Market Fund. Each
security accepted in this in-kind transaction meets Federated’s rigorous
credit requirements. Federated, through its proprietary credit review
process, examined each security in terms of capital structure, liquidity
structure, management structure and other key factors before accepting
these securities.
"Federated welcomes this opportunity to provide the shareholders of the
Putnam institutional money market fund with a high-quality option for their
institutional cash needs. We believe that this transaction offers
significant benefits for the shareholders of Federated Prime Obligations
Fund," said Deborah Cunningham, chief investment officer for Federated’s
taxable money markets. "Preserving capital, providing liquidity and
competitive yields for clients has been a fundamental strength of our cash
management business for more than 30 years. The transaction further
reinforces our position as an industry leader."
Potential benefits of the transaction for Putnam shareholders include being
part of a large money market fund complex with broad diversification in
terms of clients and securities. Potential benefits of the transaction for
Federated shareholders include owning a larger money market fund with a
more diversified high-quality portfolio and greater diversification of
shareholders.
Putnam Prime Money Market Fund’s liquidation plan will provide its
shareholders with a like amount of Federated Prime Obligations Fund shares
on a $1-per-share for $1-per-share basis. Shareholders of Putnam Prime
Money Market Fund will be entitled to dividends through Sept. 24, 2008.
The accumulated, but unpaid, dividends will be paid on Sept. 25, 2008 by
Putnam. Such shareholders will be entitled to dividends from Federated
Prime Obligations Fund beginning Sept. 25, 2008.
With recent actions taken by the U.S. Treasury and the Federal Reserve
Board designed to help stabilize the financial markets and promote
liquidity, market conditions have improved for money market funds. Of note
for shareholders of Federated Prime Obligations Fund on Sept. 19, 2008, the
fund would expect to participate in the insurance program announced by the
U.S. Treasury when it becomes available.
Putnam Investments was founded in 1937 and is one of the nation's oldest
and largest money management firms. As of August 31, 2008, Putnam manages
$163 billion in assets, of which $96 billion is for mutual fund investors
and $67 billion is for institutional accounts. Putnam has offices in
Boston, London and Tokyo. For more information, go to www.putnam.com.
Federated Investors, Inc. is one of the largest investment managers in the
United States, managing $333.5 billion in assets as of June 30, 2008. With
147 mutual funds and a variety of separately managed account options,
Federated provides comprehensive investment management to more than 5,400
institutions and intermediaries including corporations, government
entities, insurance companies, foundations and endowments, banks and
broker/dealers. For more information, visit FederatedInvestors.com.
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