<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 19, 1999
SECURITIES ACT FILE NO. 333-73137
INVESTMENT COMPANY ACT FILE NO. 811-09229
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934)
MERRILL LYNCH SENIOR FLOATING RATE FUND II, INC.
(Name of Issuer)
MERRILL LYNCH SENIOR FLOATING RATE FUND II, INC.
(Name of Person(s) Filing Statement)
SHARES OF COMMON STOCK, PAR VALUE $.10 PER SHARE
(Title of Class of Securities)
59021MR 10 2
(CUSIP Number of Class of Securities)
TERRY K. GLENN
MERRILL LYNCH SENIOR FLOATING RATE FUND II, INC.
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(609) 282-2800
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Person(s) Filing Statement)
COPIES TO:
<TABLE>
<S> <C>
FRANK P. BRUNO, ESQ. BRADLEY J. LUCIDO
BROWN & WOOD LLP MERRILL LYNCH ASSET MANAGEMENT, L.P.
ONE WORLD TRADE CENTER P.O. BOX 9011
NEW YORK, NEW YORK 10048-0557 PRINCETON, NEW JERSEY 08543-9011
OCTOBER 19, 1999
(Date Tender Offer First Published,
Sent or Given to Security Holders)
</TABLE>
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
Transaction Valuation: $15,000,000(a) Amount of Filing Fee: $3,000(b)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(a) Calculated as the aggregate maximum purchase price to be paid for 1,500,000
shares in the offer, based upon the net asset value per share ($10.00) at
October 14, 1999.
(b) Calculated as 1/50th of 1% of the Transaction Valuation.
/ / Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: ________________________________________________________
Form or Registration No.: ______________________________________________________
Filing Party: __________________________________________________________________
Date of Filing: ________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Merrill Lynch Senior Floating Rate Fund II,
Inc., a continuously offered, non-diversified, closed-end investment company
organized as a Maryland corporation (the "Fund"). The principal executive
offices of the Fund are located at 800 Scudders Mill Road, Plainsboro, New
Jersey 08536.
(b) The title of the securities being sought is shares of common stock, par
value $0.10 per share (the "Shares"). As of October 1, 1999 there were
approximately 25 million Shares issued and outstanding.
The Fund is seeking tenders for 1,500,000 Shares (the "Offer"), at net asset
value per Share (the "NAV") calculated on the day the tender offer terminates,
less any "Early Withdrawal Charge," upon the terms and subject to the conditions
set forth in the Offer to Purchase dated October 19, 1999 (the "Offer to
Purchase"). A copy of each of the Offer to Purchase and the related Letter of
Transmittal is attached hereto as Exhibit (a)(1)(ii) and Exhibit (a)(2),
respectively. Reference is hereby made to the Cover Page and Section 1 "Price;
Number of Shares" of the Offer to Purchase, which are incorporated herein by
reference. The Fund has been informed that no Directors, officers or affiliates
of the Fund intend to tender Shares pursuant to the Offer.
(c) The Shares are not currently traded on an established trading market.
(d) Not Applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) Reference is hereby made to Section 9 "Source and Amount of Funds"
of the Offer to Purchase, which is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
Reference is hereby made to Section 7 "Purpose of the Offer," Section 8
"Certain Effects of the Offer" and Section 9 "Source and Amount of Funds" of the
Offer to Purchase, which are incorporated herein by reference. The Fund is
currently engaged in a public offering, from time to time, of its Shares. The
Fund otherwise has no plans or proposals which relate to or would result in
(a) the acquisition by any person of additional securities of the Fund or the
disposition of securities of the Fund; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving the
Fund; (c) a sale or transfer of a material amount of assets of the Fund;
(d) any change in the present Board of Directors or management of the Fund,
including, but not limited to, any plans or proposals to change the number or
the term of Directors, or to fill any existing vacancy on the Board or to change
any material term of the employment contract of any executive officer; (e) any
material change in the present dividend rate or policy, or indebtedness or
capitalization of the Fund; (f) any other material change in the Fund's
corporate structure or business, including any plans or proposals to make any
changes in its investment policy for which a vote would be required by Section
13 of the Investment Company Act of 1940, as amended; or (g) changes in the
Fund's articles of incorporation, bylaws or instruments corresponding thereto or
other actions which may impede the acquisition of control of the Fund by any
person. Paragraphs (h) through (j) of this Item 3 are not applicable.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
There have not been any transactions involving the Shares of the Fund that
were effected during the past 40 business days by the Fund, any executive
officer or Director of the Fund, any person controlling the Fund, any executive
officer or director of any corporation ultimately in control of the Fund or by
any associate or subsidiary of any of the foregoing including any executive
officer or director of any such subsidiary, except that within the past 40
business days pursuant to the public offering of its Shares the Fund has sold
approximately 4.4 million Shares at a price equal to the NAV of the Fund on the
date of each such sale.
i
<PAGE>
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The Fund does not know of any contract, arrangement, understanding or
relationship relating directly or indirectly, to the Offer (whether or not
legally enforceable) between the Fund, any of the Fund's executive officers or
Directors, any person controlling the Fund or any executive officer or director
of any corporation ultimately in control of the Fund and any person with respect
to any securities of the Fund (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss, or the giving or
withholding of proxies, consents or authorizations).
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
No persons have been employed, retained or are to be compensated by the Fund
to make solicitations or recommendations in connection with the Offer.
ITEM 7. FINANCIAL INFORMATION.
(a) Reference is hereby made to the financial statements included as Exhibit
(g)(1) hereto, which is incorporated herein by reference.
(b) None.
ITEM 8. ADDITIONAL INFORMATION.
(a) None.
(b) None.
(c) Not Applicable.
(d) None.
(e) The Offer to Purchase, attached hereto as Exhibit (a)(1)(ii), is
incorporated herein by reference in its entirety.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C> <C>
(a)(1) (i) Advertisement to be printed in THE WALL STREET JOURNAL.
(ii) Offer to Purchase.
(a)(2) Form of Letter of Transmittal.
(a)(3) Letter to Stockholders.
(c) Not Applicable.
(d)-(f) Not Applicable.
(g)(1) Unaudited Financial Statements of the Fund for the period
beginning with commencement of operations, March 26, 1999,
and ending on May 31, 1999.
</TABLE>
ii
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
MERRILL LYNCH SENIOR FLOATING RATE FUND
II, INC.
By /s/ TERRY K. GLENN
............................
(Terry K. Glenn,
President)
October 19, 1999
iii
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- ----------
<S> <C>
(a)(1)(i) Advertisement to be printed in THE WALL STREET JOURNAL.
(a)(1)(ii) Offer to Purchase.
(a)(2) Form of Letter of Transmittal.
(a)(3) Letter to Stockholders.
(g)(1) Unaudited Financial Statements of the Fund for the period
beginning with commencement of operations, March 26, 1999,
and ending on May 31, 1999.
</TABLE>
iv
<PAGE>
EXHIBIT (a)(1)(i)
<PAGE>
THIS ANNOUNCEMENT IS NOT AN OFFER TO PURCHASE OR A SOLICITATION OF AN OFFER TO
SELL SHARES. THE OFFER IS MADE ONLY BY THE OFFER TO PURCHASE DATED OCTOBER 19,
1999, AND THE RELATED LETTER OF TRANSMITTAL. THE OFFER IS NOT BEING MADE TO, NOR
WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF SHARES IN ANY
JURISDICTION IN WHICH MAKING OR ACCEPTING THE OFFER WOULD VIOLATE THAT
JURISDICTION'S LAWS.
[LOGO]
NOTICE OF OFFER TO PURCHASE FOR CASH 1,500,000 OF ITS
ISSUED AND OUTSTANDING SHARES AT NET ASSET VALUE PER SHARE
THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE ARE 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, NOVEMBER 15, 1999, UNLESS EXTENDED.
Merrill Lynch Senior Floating Rate Fund II, Inc. (the "Fund") is offering to
purchase 1,500,000 of its issued and outstanding shares of common stock par
value $.10 per share (the "Shares") at a price equal to their net asset value
("NAV") less any applicable early withdrawal charge as of the close of the New
York Stock Exchange on the Expiration Date, November 15, 1999, unless extended,
upon the terms and conditions set forth in the Offer to Purchase dated
October 19, 1999 (the "Offer"). The NAV on October 14, 1999, was $10.00 per
Share. The purpose of the Offer is to provide liquidity to stockholders since
the Fund is unaware of any secondary market which exists for the Shares. The
Offer is not conditioned upon the tender of any minimum number of Shares.
If more than 1,500,000 Shares are duly tendered prior to the expiration of
the Offer, assuming no changes in the factors originally considered by the Board
of Directors when it determined to make the Offer, the Fund will either extend
the Offer period, if necessary, and increase the number of Shares that the Fund
is offering to purchase to an amount which it believes will be sufficient to
accommodate the excess Shares tendered, as well as any Shares tendered during
the extended Offer period, or purchase 1,500,000 Shares (or such larger number
of Shares sought) on a pro rata basis.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 midnight, New York City time, on Monday, November 15, 1999, unless the
Offer is extended, and, if not yet accepted for payment by the Fund, Shares may
also be withdrawn after December 14, 1999.
The information required to be disclosed by paragraph (d)(1) of Rule 13e-4
under the Securities Exchange Act of 1934, as amended, is contained in the Offer
to Purchase and is incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance, for current NAV quotations or for
copies of the Offer to Purchase, Letter of Transmittal, and any other tender
offer documents, may be directed to the Merrill Lynch Response Center at the
address and telephone number below. Copies will be furnished promptly at no
expense to you and also may be obtained by completing and returning the coupon
below to the Merrill Lynch Response Center. Stockholders who do not own Shares
directly should effect a tender through their broker, dealer or nominee. For
example, stockholders who purchased Shares through Merrill Lynch, Pierce, Fenner
& Smith Incorporated should effect tenders through their Financial Consultant.
1-800-MERRILL, EXT. 4302
1-800-637-7455
<TABLE>
<S> <C>
- --------------------------------------------------
MAIL TO: MERRILL LYNCH RESPONSE CENTER,
P.O. BOX 30200, NEW BRUNSWICK, NJ
08989-0200
/ / PLEASE SEND ME MERRILL LYNCH SENIOR FLOATING
RATE FUND II, INC. TENDER OFFER MATERIALS
NAME ADDRESS
- ----------------------- -----------------------
BUSINESS PHONE CITY
- --------------------- -----------------------
HOME PHONE STATE ------------ ZIP
- ----------------------- ------------
MERRILL LYNCH CLIENTS, PLEASE GIVE THE NAME AND
OFFICE ADDRESS OF YOUR FINANCIAL CONSULTANT:
- --------------------------------------------------
4302
</TABLE>
October 19, 1999
[LOGO]
<PAGE>
EXHIBIT (a)(1)(ii)
<PAGE>
MERRILL LYNCH SENIOR FLOATING RATE FUND II, INC.
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
OFFER TO PURCHASE FOR CASH 1,500,000
OF ITS ISSUED AND OUTSTANDING SHARES
AT NET ASSET VALUE PER SHARE
THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON NOVEMBER 15, 1999, UNLESS EXTENDED.
To the Holders of Shares of
MERRILL LYNCH SENIOR FLOATING RATE FUND II, INC.:
The Fund is offering to purchase up to 1,500,000 of its shares of common
stock, par value $.10 per share (the "Shares"), for cash at a price equal to
their net asset value ("NAV"), less any applicable Early Withdrawal Charge, as
of the close of the New York Stock Exchange on November 15, 1999, the Expiration
Date, unless extended, upon the terms and conditions set forth in this Offer to
Purchase (the "Offer") and the related Letter of Transmittal. The Shares are not
currently traded on an established secondary market. The NAV on October 14, 1999
was $10.00 per Share. You can obtain current NAV quotations from your Merrill
Lynch Financial Consultant or the Merrill Lynch, Pierce, Fenner & Smith
Incorporated Response Center (the "Merrill Lynch Response Center") (See Section
1). The Fund presently intends each quarter to consider making a tender offer
for its Shares at a price equal to their current NAV.
If more than 1,500,000 Shares are duly tendered prior to the expiration of
the Offer, assuming no changes in the factors originally considered by the Board
of Directors when it determined to make the Offer, the Fund will either
(1) extend the Offer period, if necessary, and increase the number of Shares
that the Fund is offering to purchase to an amount which it believes will be
sufficient to accommodate the excess Shares tendered as well as any Shares
tendered during the extended Offer period or (2) purchase 1,000,000 Shares (or
such greater number of Shares sought) on a pro rata basis.
THIS OFFER IS BEING MADE TO ALL STOCKHOLDERS OF THE FUND AND IS NOT
CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
IMPORTANT
If you desire to tender all or any portion of your Shares, you should either
(1) request your broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for you or (2) if you own your Shares directly,
complete and sign the Letter of Transmittal and mail or deliver it along with
any Share certificate(s) and any other required documents to the Fund's transfer
agent, Financial Data Services, Inc. (the "Transfer Agent"). If your Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee, you must contact such broker, dealer, commercial bank, trust
company or other nominee if you desire to tender your Shares. Shares held in
your Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch")
brokerage account are registered in the name of Merrill Lynch and are not held
by you directly. Merrill Lynch may charge its customers a $5.35 processing fee
to confirm a repurchase of Shares from such customers pursuant to the Offer.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
STOCKHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES. EACH
STOCKHOLDER MUST MAKE HIS OWN DECISION WHETHER TO TENDER SHARES, AND IF SO, HOW
MANY SHARES TO TENDER.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
FUND AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER. NO
PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND.
<PAGE>
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF
SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Questions and requests for assistance may be directed to your Merrill Lynch
Financial Consultant or other nominee, or to the Transfer Agent at the address
and telephone number set forth below. Requests for additional copies of this
Offer to Purchase and the Letter of Transmittal should be directed to the
Merrill Lynch Response Center.
<TABLE>
<S> <C>
October 19, 1999 MERRILL LYNCH SENIOR FLOATING RATE
FUND II, INC.
Merrill Lynch Response Center Transfer Agent: Financial Data
P.O. Box 30200 Services, Inc.
New Brunswick, New Jersey 08989-0200 Attn: Merrill Lynch Senior Floating Rate
Attn: Merrill Lynch Senior Floating Rate Fund II, Inc.
Fund II, Inc. P.O. Box 45289
(800) 637-7455, ext. 4302 Jacksonville, Florida 32232-5289
(800) 637-3863
</TABLE>
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTIONS PAGE
- --------------------- --------
<C> <S> <C>
1. Price; Number of Shares..................................... 3
2. Procedure for Tendering Shares.............................. 3
3. Early Withdrawal Charge..................................... 4
4. Withdrawal Rights........................................... 5
5. Payment for Shares.......................................... 5
6. Certain Conditions of the Offer............................. 5
7. Purpose of the Offer........................................ 6
8. Certain Effects of the Offer................................ 6
9. Source and Amount of Funds.................................. 6
10. Summary of Selected Financial Information................... 7
11. Certain Information About the Fund.......................... 8
12. Additional Information...................................... 8
13. Certain Federal Income Tax Consequences..................... 9
14. Extension of Tender Period; Termination; Amendments......... 10
15. Miscellaneous............................................... 10
</TABLE>
2
<PAGE>
1. PRICE; NUMBER OF SHARES. The Fund will, upon the terms and subject to
the conditions of the Offer, purchase up to 1,500,000 of its issued and
outstanding Shares which are tendered and not withdrawn prior to 12:00 midnight,
New York City time, on November 15, 1999 (such time and date being hereinafter
called the "Initial Expiration Date"), unless it determines to accept none of
them. The Fund reserves the right to extend the Offer (See Section 14). The
later of the Initial Expiration Date or the latest time and date to which the
Offer is extended is hereinafter called the "Expiration Date." The purchase
price of the Shares will be their NAV as of the close of the New York Stock
Exchange on the Expiration Date. An Early Withdrawal Charge to recover
distribution expenses will be assessed on Shares accepted for purchase which
have been held for less than the applicable holding period (See Section 3).
The Offer is being made to all stockholders of the Fund and is not
conditioned upon any number of Shares being tendered. If more than 1,500,000
Shares are duly tendered prior to the expiration of the Offer, assuming no
changes in the factors originally considered by the Board of Directors when it
initially determined to make the Offer, the Fund will either (1) extend the
Offer period, if necessary, and increase the number of Shares that the Fund is
offering to purchase to an amount which it believes will be sufficient to
accommodate the excess Shares tendered as well as any Shares tendered during the
extended Offer period or (2) purchase 1,500,000 Shares (or greater number of
Shares sought) on a pro rata basis.
As of October 1, 1999 there were approximately 2.5 million Shares issued and
outstanding and there were 3,160 holders of record of Shares (in addition,
Merrill Lynch maintains accounts for 99,789 beneficial owners of Shares). The
Fund has been informed that none of the Directors, officers or affiliates of the
Fund intends to tender any Shares pursuant to the Offer. The Shares currently
are not traded on any established secondary market. Current NAV quotations for
the Shares can be obtained from your Merrill Lynch Financial Consultant or from
the Merrill Lynch Response Center at (800) 637-7455, ext. 4302.
2. PROCEDURE FOR TENDERING SHARES. In order for you to tender any of your
Shares pursuant to the Offer, you may either: (a) request your broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
you, in which case a Letter of Transmittal is not required or (b) if the Shares
are registered in your name, send to the Transfer Agent, at the address set
forth on page 2, any certificates for such Shares, a properly completed and
executed Letter of Transmittal and any other documents required therein. Please
contact the Merrill Lynch Response Center at (800) 637-7455, ext. 4302 as to any
additional documents which may be required.
A. PROCEDURES FOR BENEFICIAL OWNERS HOLDING SHARES THROUGH MERRILL LYNCH OR
OTHER BROKERS OR NOMINEES.
If your Shares are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee, you must contact such broker, dealer,
commercial bank, trust company or other nominee if you desire to tender your
Shares. You should contact such broker, dealer, commercial bank, trust company
or other nominee in sufficient time to permit notification of your desire to
tender to reach the Transfer Agent by the Expiration Date. No brokerage
commission will be charged on the purchase of Shares by the Fund pursuant to the
Offer. However, a broker or dealer may charge a fee for processing the
transaction on your behalf. Merrill Lynch may charge its customers a $5.35
processing fee to confirm a purchase of Shares pursuant to the Offer.
B. PROCEDURES FOR REGISTERED STOCKHOLDERS.
If you will be mailing or delivering the Letter of Transmittal and any other
required documents to the Transfer Agent in order to tender your Shares, they
must be received on or prior to the Expiration Date by the Transfer Agent at its
address set forth on page 2 of this Offer to Purchase.
Signatures on the Letter of Transmittal MUST be guaranteed by an "eligible
guarantor institution" as such is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, the existence and validity of which may be verified by the
Transfer Agent through the use of industry publications. Notarized signatures
are not sufficient.
3
<PAGE>
Payment for Shares tendered and purchased will be made only after receipt by
the Transfer Agent on or before the Expiration Date of a properly completed and
duly executed Letter of Transmittal and any other required documents. If your
Shares are evidenced by certificates, those certificates must also be received
by the Transfer Agent on or prior to the Expiration Date.
THE METHOD OF DELIVERY OF ANY DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE ELECTION AND RISK OF THE PARTY TENDERING THE SHARES. IF DOCUMENTS ARE
SENT BY MAIL, IT IS RECOMMENDED THAT THEY BE SENT BY REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED.
C. DETERMINATIONS OF VALIDITY.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tenders will be determined by the Fund, in its sole
discretion, whose determination shall be final and binding. The Fund reserves
the absolute right to reject any or all tenders determined by it not to be in
appropriate form or the acceptance of or payment for which would, in the opinion
of counsel for the Fund, be unlawful. The Fund also reserves the absolute right
to waive any of the conditions of the Offer or any defect in any tender with
respect to any particular Shares or any particular stockholder, and the Fund's
interpretations of the terms and conditions of the Offer will be final and
binding. Unless waived, any defects or irregularities in connection with tenders
must be cured within such times as the Fund shall determine. Tenders will not be
deemed to have been made until the defects or irregularities have been cured or
waived. Neither the Fund, its investment adviser and administrator, Merrill
Lynch Asset Management, L.P. ("MLAM"), nor the Transfer Agent, nor any other
person shall be obligated to give notice of any defects or irregularities in
tenders, nor shall any of them incur any liability for failure to give such
notice.
D. TENDER CONSTITUTES AN AGREEMENT.
A tender of Shares made pursuant to any one of the procedures set forth
above will constitute an agreement between the tendering stockholder and the
Fund in accordance with the terms and subject to the conditions of the Offer.
3. EARLY WITHDRAWAL CHARGE. The Fund will assess an Early Withdrawal
Charge of 1.0% on Shares accepted for purchase which have been held for less
than one year. The charge will be paid to Merrill Lynch Funds Distributor, Inc.
(the "Distributor"), a wholly owned subsidiary of MLAM and the distributor of
the Shares, to recover distribution expenses. The Early Withdrawal Charge will
be imposed on those Shares accepted for tender based on an amount equal to the
lesser of the then current net asset value of the Shares or the cost of the
Shares being tendered. Accordingly, the Early Withdrawal Charge is not imposed
on increases in the net asset value above the initial purchase price. In
addition, the Early Withdrawal Charge is not imposed on Shares derived from
reinvestments of dividends or capital gains distributions. In determining
whether an Early Withdrawal Charge is payable, it is assumed that the acceptance
of an offer to purchase tendered Shares will be made first from Shares acquired
through dividend reinvestment and then from the earliest outright purchase of
Shares.
In determining whether an Early Withdrawal Charge is applicable to a tender
of Shares, the calculation will be determined in the manner that results in the
lowest possible amount being charged. Therefore, it will be assumed that the
tender is first of Shares acquired through dividend reinvestment and of Shares
held for over one year and then of Shares held for less than one year. The Early
Withdrawal Charge will not be applied to dollar amounts representing an increase
in the net asset value since the time of purchase. The Early Withdrawal Charge
may be waived on Shares tendered following the death of all beneficial owners of
such Shares, provided the Shares are tendered within one year of death (a death
certificate and other applicable documents may be required) or if later,
reasonably promptly following completion of probate, or in connection with
involuntary termination of an account in which Fund Shares are held. At the time
of acceptance of the Offer, the record or succeeding beneficial owner must
notify the Transfer Agent either directly or indirectly through the Distributor
that the Early Withdrawal Charge should be waived. Upon confirmation of the
owner's entitlement, the waiver will be granted; otherwise, the waiver will be
lost.
4
<PAGE>
4. WITHDRAWAL RIGHTS. You may withdraw Shares tendered at any time prior
to the Expiration Date and, if the Shares have not yet been accepted for payment
by the Fund, at any time after December 14, 1999.
Stockholders whose accounts are maintained through Merrill Lynch should
notify their Financial Consultant prior to the Expiration Date if they wish to
withdraw Shares. Stockholders whose accounts are maintained through another
broker, dealer, commercial bank, trust company or other nominee should notify
such nominee prior to the Expiration Date. Shareholders whose accounts are
maintained directly through the Transfer Agent should submit written notice to
the Transfer Agent.
To be effective, any notice of withdrawal must be timely received by the
Transfer Agent at the address set forth on page 2 of this Offer to Purchase. Any
notice of withdrawal must specify the name of the person having deposited the
Shares to be withdrawn, the number of Shares to be withdrawn, and, if the
certificates representing such Shares have been delivered or otherwise
identified to the Transfer Agent, the name of the registered holder(s) of such
Shares as set forth in such certificates and the number of Shares to be
withdrawn. If the certificates have been delivered to the Transfer Agent, then,
prior to the release of such certificate, you must also submit the certificate
numbers shown on the particular certificates evidencing such Shares and the
signature on the notice of the withdrawal must be guaranteed by an Eligible
Institution. All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by the Fund in its sole
discretion, whose determination shall be final and binding. Shares properly
withdrawn shall not thereafter be deemed to be tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by following one of the
procedures described in Section 2 prior to the Expiration Date.
5. PAYMENT FOR SHARES. For purposes of the Offer, the Fund will be deemed
to have accepted for payment (and thereby purchased) Shares which are tendered
as, if and when it gives oral or written notice to the Transfer Agent of its
election to purchase such Shares.
Payment for Shares will be made promptly by the Transfer Agent to tendering
stockholders as directed by the Fund. Certificates for Shares not purchased (see
Sections 1 and 6), or for Shares not tendered included in certificates forwarded
to the Transfer Agent, will be returned promptly following the termination,
expiration or withdrawal of the Offer, without expense to the tendering
stockholder.
The Fund will pay all transfer taxes, if any, payable on the transfer to it
of Shares purchased pursuant to the Offer. If tendered certificates are
registered in the name of any person other than the person signing the Letter of
Transmittal, the amount of any such transfer taxes (whether imposed on the
registered holder or such other person) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes, or exemption therefrom, is submitted. The
Fund will not pay any interest on the purchase price under any circumstances.
As noted above, Merrill Lynch may charge its customers a $5.35 processing
fee to confirm a purchase of Shares from such customers pursuant to the Offer.
6. CERTAIN CONDITIONS OF THE OFFER. The Fund shall not be required to
accept for payment or pay for any Shares tendered, and may terminate or amend
the Offer or may postpone the acceptance for payment of or payment for Shares
tendered, if: (1) such purchases would impair the Fund's status as a regulated
investment company under the Internal Revenue Code (which would make the Fund a
taxable entity, causing the Fund's income to be taxed at the corporate level in
addition to the taxation of stockholders who receive dividends from the Fund);
(2) the Fund would not be able to liquidate portfolio securities in a manner
which is orderly and consistent with the Fund's investment objective and
policies in order to purchase Shares tendered pursuant to the Offer; or
(3) there is, in the Board's judgment, any (a) legal action or proceeding
instituted or threatened challenging the Offer or otherwise materially adversely
affecting the Fund, (b) declaration of a banking moratorium by Federal or state
authorities or any suspension of payment by banks in the United States or New
York State, which is material to the Fund, (c) limitation imposed by Federal or
state authorities on the extension of credit by lending institutions,
(d) commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States which is material to
the Fund, or (e) other event or condition which
5
<PAGE>
would have a material adverse effect on the Fund or its stockholders if Shares
tendered pursuant to the Offer were purchased.
If the Fund determines to amend the Offer or to postpone the acceptance for
payment of or payment for Shares tendered, it will, to the extent necessary,
extend the period of time during which the Offer is open as provided in
Section 14. Moreover, in the event any of the foregoing conditions are modified
or waived in whole or in part at any time, the Fund will promptly make a public
announcement of such waiver and may, depending on the materiality of the
modification or waiver, extend the Offer period as provided in Section 14.
7. PURPOSE OF THE OFFER. The Fund does not currently believe there will be
an active secondary market for its Shares. The Board of Directors has determined
that it would be in the best interest of stockholders for the Fund to take
action to attempt to provide liquidity to stockholders. To that end, the
Directors presently intend each quarter to consider the making of a tender offer
to purchase the Shares at NAV. The Fund will at no time be required to make any
such tender offer.
8. CERTAIN EFFECTS OF THE OFFER. The Purchase of Shares pursuant to the
Offer will have the effect of increasing the proportionate interest in the Fund
of stockholders who do not tender their Shares. If you retain your Shares,
however, you will be subject to any increased risks that may result from the
reduction in the Fund's aggregate assets resulting from payment for the Shares,
including, for example, the potential for greater volatility due to decreased
diversification and higher expenses. However, the Fund believes that those risks
will be reduced to the extent new Shares of the Fund are sold. All Shares
purchased by the Fund pursuant to the Offer will be retired by the Board of
Directors of the Fund.
9. SOURCE AND AMOUNT OF FUNDS. The aggregate purchase price if 1,500,000
Shares are tendered and accepted for payment pursuant to the Offer will be
approximately $15,000,000. The Fund anticipates that the purchase price for any
Shares acquired pursuant to the Offer may be derived from (i) cash on hand,
(ii) the proceeds of the sale of cash equivalents held by the Fund, (iii) the
proceeds of sales of portfolio investments held by the Fund and/or
(iv) borrowings by the Fund. If, in the judgment of the Directors, there is not
sufficient liquidity of the assets of the Fund, or availability of funds from
borrowings, to pay for tendered Shares, the Fund may terminate the Offer.
The Fund entered into an agreement with The Bank of New York ("BONY"),
providing for an unsecured revolving credit facility (the "Facility"). Unless
otherwise extended, the Facility will terminate on June 20, 2000. The proceeds
of the Facility may be used to finance the payment for Shares tendered in a
tender offer by the Fund and to pay fees and expenses incurred in connection
with the Facility. The Facility enables the Fund to borrow up to $25,000,000 at
a rate of interest equal to, at the Fund's option, the sum of the federal funds
rate (i.e., the rate at which BONY is offered overnight Federal funds by a
Federal funds broker selected by BONY) plus the Applicable Margin (defined
below) or the sum of the Eurodollar rate (based on the rates quoted by BONY to
leading banks in the London interbank eurodollar market as the rate at which
BONY is offering dollar deposits) plus the Applicable Margin (defined below).
The Applicable Margin means 0.50% per annum. Interest on borrowings is
calculated on the basis of a year of 360 days for the actual number of days
elapsed and is payable in arrears on the last day of each month in the case of
borrowings that bear interest at the Federal funds rate, and at the end of the
interest period selected by the Fund in the case of borrowings that bear
interest at the Eurodollar rate. The Fund agrees to pay to the Bank a fee (the
"commitment fee") for the period from and including the effective date to but
excluding the date of the expiration or other termination of the commitment,
equal to 0.08% per annum of the unused portion of the commitment, payable
quarterly in arrears on the last day of each June, September, December and March
of each year and on the date of the expiration or other termination of the
commitment. The commitment fee shall be calculated on the basis of a 360-day
year for the actual number of days elapsed. Each loan must be repaid at the
earlier of (i) 90 days from the borrowing date of such loan and (ii) one
business day prior to the date on which the Fund's next tender offer expires.
Borrowings under the Facility, if any, may be repaid with the proceeds of
portfolio investments sold by the Fund subsequent to the expiration date of a
tender offer.
The terms of the Facility may be modified by written agreement of the
parties thereto. The Facility requires the Fund to maintain a Borrowing Base
(defined as the sum of the value of all securities held by the Fund (less
liabilities) plus the debt outstanding under the Facility, less non-performing
assets) of not
6
<PAGE>
less than 300% of the outstanding principal balance of borrowings under the
Facility and accrued interest. During the term of the Facility, the Fund may not
incur indebtedness except for indebtedness incurred under the Facility, in
hedging transactions, for purchases of securities on short-term credit as may be
necessary for the clearance of sales or purchases of portfolio securities and
for overdrafts extended by the custodian. Additionally, during the term of the
Facility, the Fund is restricted with respect to the declaration or payment of
dividends and the repurchase of shares pursuant to tender offers. Pursuant to
such agreement, as long as certain defaults have not occurred and are not
continuing under the Facility, the Fund may (i) make its periodic dividend
payments to shareholders in an amount not in excess of its net investment income
(and net realized capital gains not previously distributed to shareholders) for
such period, (ii) distribute each year all of its net investment income
(including net realized capital gains) so that it will not be subject to tax
under the Federal tax laws and (iii) repurchase its shares pursuant to tender
offers.
Under the Investment Company Act of 1940, as amended, (the "1940 Act"), the
Fund is not permitted to incur indebtedness unless immediately after such
incurrence the Fund has an asset coverage of 300% of the aggregate outstanding
principal balance of indebtedness. Additionally, under the 1940 Act the Fund may
not declare any dividend or other distribution upon any class of its capital
stock, or purchase any such capital stock, unless the aggregate indebtedness of
the Fund has at the time of the declaration of any such dividend or distribution
or at the time of any such purchase an asset coverage of at least 300% after
deducting the amount of such dividend, distribution, or purchase price, as the
case may be.
10. SUMMARY OF SELECTED FINANCIAL INFORMATION. Set forth below is a
summary of selected unaudited financial information for the Fund for the period
beginning with the commencement of operations, March 26, 1999, and ending May
31, 1999. More comprehensive financial information is included in such reports
(copies of which have been filed as exhibits to the Schedule 13E-4 filed with
the Securities and Exchange Commission (the "SEC") in connection with the Offer
and may be obtained from the Transfer Agent) and the summary of selected
financial information set forth below is qualified in its entirety by reference
to such documents and the financial information, the notes thereto and related
matter contained therein.
7
<PAGE>
SUMMARY OF SELECTED FINANCIAL INFORMATION
(IN 000'S EXCEPT PER SHARE DATA AND RATIOS)
<TABLE>
<CAPTION>
FOR THE PERIOD
BEGINNING
MARCH 26, 1999*
TO
MAY 31, 1999
(UNAUDITED)
-----------------
<S> <C>
INCOME STATEMENT
Investment income......................................... $ 1,246
Total expenses before reimbursement....................... 360
Reimbursement of expenses................................. 330
Total expenses after reimbursement........................ 30
--------
Investment income--net.................................... $ 1,216
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS--NET
Realized gain (loss) on investments--net.................. $ (10)
Unrealized appreciation on investments--net............... $ 124
FINANCIAL HIGHLIGHTS (AT END OF PERIOD)
Total assets.............................................. $159,925
Total liabilities......................................... 16,100
--------
Net assets................................................ $141,825
Net asset value per share................................. $ 10.01
Shares of common stock outstanding........................ 14,170
PER SHARE
Investment income--net.................................... $ .10
Dividends from net investment income to common
shareholders............................................ $ .10
RATIOS
Expenses, net of reimbursement, to average net assets..... .16%**
Total expenses to average net assets...................... 1.92%**
Investment income--net, to average net assets............. 0.47%**
</TABLE>
- ------------------------------
* Commencement of Operations.
** Annualized.
11. CERTAIN INFORMATION ABOUT THE FUND. The Fund was incorporated under
the laws of the State of Maryland on February 9, 1999 and is a non-diversified,
continuously offered, closed-end management investment company registered under
the 1940 Act. The Fund seeks as high a level of current income and such
preservation of capital as is consistent with investment in senior
collateralized corporate loans ("Corporate Loans") made by banks and other
financial institutions. The Corporate Loans pay interest at rates which float or
reset at a margin above a generally-recognized base lending rate such as the
prime rate of a designated U.S. bank, the Certificate of Deposit rate or the
London InterBank Offered Rate. MLAM, an affiliate of Merrill Lynch, acts as
investment adviser and administrator for the Fund.
There have not been any transactions involving the Shares of the Fund that
were effected during the past 40 business days by the Fund, any executive
officer or Director of the Fund, any person controlling the Fund, any executive
officer or director of any corporation ultimately in control of the Fund or by
any associate or subsidiary of any of the foregoing including any executive
officer or director of any such subsidiary, except that within the past 40
business days pursuant to the public offering of its Shares the Fund has sold
approximately 4.4 million Shares at a price equal to NAV on the date of each
such sale.
The principal executive offices of the Fund are located at 800 Scudders Mill
Road, Plainsboro, New Jersey 08536.
12. ADDITIONAL INFORMATION. The Fund has filed a statement on Schedule
13E-4 with the SEC which includes certain additional information relating to the
Offer. Such material may be inspected and copied at prescribed rates at the
SEC's public reference facilities at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; Seven World Trade Center, New York, New York 10048; and
Room 3190, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material may also be obtained by mail at prescribed rates from the
Public Reference Branch of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. The SEC maintains a web site (http://www.sec.gov) that contains the
Schedule 13E-4 and other information regarding the Fund.
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion is a
general summary of the Federal income tax consequences of a sale of Shares
pursuant to the Offer. You should consult your
8
<PAGE>
own tax adviser for a complete description of the tax consequences to you of a
sale of Shares pursuant to the Offer.
The sale of Shares pursuant to the Offer will be a taxable transaction for
Federal income tax purposes, either as a "sale or exchange," or under certain
circumstances, as a "dividend." In general, the transaction should be treated as
a sale or exchange of the Shares under Section 302 of the Code, if the receipt
of cash (a) is "substantially disproportionate" with respect to the stockholder,
(b) results in a "complete redemption" of the stockholder's interest in the
Fund, or (c) is "not essentially equivalent to a dividend" with respect to the
stockholder. A "substantially disproportionate" distribution generally requires
a reduction of at least 20% in the stockholder's proportionate interest in the
Fund after all shares are tendered. A "complete redemption" of a stockholder's
interest generally requires that all Shares directly owned or attributed to such
stockholder under Section 318 of the Code be disposed of. A distribution "not
essentially equivalent to a dividend" requires that there be a "meaningful
reduction" in the stockholder's interest, which should be the case if the
stockholder has a minimal interest in the Fund, exercises no control over Fund
affairs and suffers a reduction in his proportionate interest in the Fund.
If the sale of your Shares meets any of these three tests for "sale or
exchange" treatment, you will recognize gain or loss equal to the difference
between the amount of cash received pursuant to the Offer and the adjusted tax
basis of the Shares sold. Such gain or loss will be a capital gain or loss if
the Shares sold have been held by you as a capital asset. In general, capital
gain or loss with respect to Shares sold will be long-term capital gain or loss
if the holding period for such Shares is more than one year. Under recent
legislation, the maximum capital gains rate applicable to such a sale of Shares
would be 20%.
If none of the Code Section 302 tests is met, you may be treated as having
received, in whole or in part, a dividend, return of capital or capital gain,
depending on (i) whether the Fund has sufficient earnings and profits to support
a dividend and (ii) your tax basis in the Shares. The tax basis in the Shares
tendered to the Fund will be transferred to any remaining Shares held by you. In
addition, if the sale of Shares pursuant to the Offer is treated as a "dividend"
to a tendering stockholder, a Code Section 305(c) constructive dividend may
result to a non-tendering stockholder whose proportionate interest in the
earnings and assets of the Fund has been increased as a result of such tender.
Accordingly, the differentiation between "dividend" and "sale or exchange"
treatment is important with respect to the amount and character of income that
tendering stockholders are deemed to receive. In addition, while the marginal
tax rates for dividends and capital gains remain the same for corporate
stockholders, under the Code the top income tax rate on ordinary income of
individuals (39.6%) will exceed the maximum tax rates on capital gains (20%).
In the event that the sale of Shares by a corporate stockholder pursuant to
the Offer is treated as a dividend, the corporate stockholder may be entitled to
claim a "dividends received deduction" on the cash received, which ordinarily
would be 70% of such dividend. However, corporate stockholders should consult
their tax advisers about certain provisions of the Code that may affect the
dividends received deduction.
The Transfer Agent will be required to withhold 31% of the gross proceeds
paid to a stockholder or other payee pursuant to the Offer unless either: (a)
the stockholder has provided the stockholder's taxpayer identification
number/social security number, and certifies under penalties of perjury: (i)
that such number is correct, and (ii) either that (A) the stockholder is exempt
from backup withholding, (B) the stockholder is not otherwise subject to backup
withholding as a result of a failure to report all interest or dividends, or (C)
the Internal Revenue Service has notified the stockholder that the stockholder
is no longer subject to backup withholding; or (b) an exception applies under
applicable law and Treasury regulations. Foreign stockholders may be required to
provide the Transfer Agent with a completed Form W-8, available from the
Transfer Agent, in order to avoid 31% backup withholding.
Unless a reduced rate of withholding or a withholding exemption is available
under an applicable tax treaty, a stockholder who is a nonresident alien or a
foreign entity may be subject to a 30% United States withholding tax on the
gross proceeds received by such stockholder, if the proceeds are treated as a
"dividend" under the rules described above. Foreign stockholders should consult
their tax advisers regarding application of these withholding rules.
14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS. The Fund reserves
the right, at any time and from time to time, to extend the period of time
during which the Offer is pending by making a public
9
<PAGE>
announcement thereof. In the event that the Fund so elects to extend the tender
period, the NAV for the Shares tendered will be determined as of the close of
the New York Stock Exchange on the Expiration Date, as extended. During any such
extension, all Shares previously tendered and not purchased or withdrawn will
remain subject to the Offer. The Fund also reserves the right, at any time and
from time to time up to and including the Expiration Date, to (a) terminate the
Offer and not to purchase or pay for any Shares, and (b) amend the Offer in any
respect by making a public announcement. Such public announcement will be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date and will disclose the approximate number of
Shares tendered as of that date. Without limiting the manner in which the Fund
may choose to make a public announcement of extension, termination or amendment,
except as provided by applicable law (including Rule 13e-4(e)(2)), the Fund
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement, other than by making a release to the Dow Jones News
Service.
15. MISCELLANEOUS. The Offer is not being made to, nor will tenders be
accepted from, stockholders in any jurisdiction in which the Offer or its
acceptance would not comply with the securities laws of such jurisdiction. The
Fund is not aware of any jurisdiction in which the Offer or tenders pursuant
thereto would not be in compliance with the laws of such jurisdiction. However,
the Fund reserves the right to exclude stockholders from the Offer in any
jurisdiction in which it is asserted that the Offer cannot lawfully be made. The
Fund believes such exclusion is permissible under applicable tender offer rules,
provided the Fund makes a good faith effort to comply with any state law deemed
applicable to the Offer. In any jurisdiction the securities laws of which
require the Offer to be made by a licensed broker or dealer the Offer shall be
deemed to be made on the Fund's behalf by Merrill Lynch.
MERRILL LYNCH SENIOR FLOATING
RATE FUND II INC.
October 19, 1999
10
<PAGE>
EXHIBIT (a)(2)
<PAGE>
LETTER OF TRANSMITTAL
TO BE USED TO TENDER SHARES OF
MERRILL LYNCH SENIOR FLOATING RATE FUND II, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 19, 1999
-------------------
THE EXPIRATION DATE AND THE WITHDRAWAL DEADLINE IS 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, NOVEMBER 15, 1999, UNLESS EXTENDED
-------------------
TRANSFER AGENT:
FINANCIAL DATA SERVICES, INC.
ATTENTION: MERRILL LYNCH SENIOR FLOATING RATE FUND II, INC.
P.O. BOX 45289
JACKSONVILLE, FLORIDA 32232-5289
TELEPHONE INFORMATION NUMBER: (800) 637-3863
DELIVERY TO AN ADDRESS OTHER THAN THAT SHOWN ABOVE DOES NOT CONSTITUTE VALID
DELIVERY.
THIS LETTER OF TRANSMITTAL IS TO BE USED ONLY IF THE STOCKHOLDER IS A RECORD
OWNER OF SHARES WHO DESIRES TO EFFECT THE TENDER OFFER TRANSACTION HIMSELF OR
HERSELF BY TRANSMITTING THE NECESSARY DOCUMENTS TO THE FUND'S TRANSFER AGENT AND
DOES NOT INTEND TO REQUEST HIS OR HER BROKER OR DEALER TO EFFECT THE TRANSACTION
FOR HIM OR HER. A STOCKHOLDER WHO HOLDS SHARES IN A MERRILL LYNCH ACCOUNT OR
THROUGH ANOTHER BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE
IS NOT THE RECORD OWNER AND SHOULD INSTRUCT HIS OR HER MERRILL LYNCH FINANCIAL
CONSULTANT OR SUCH OTHER NOMINEE TO EFFECT THE TENDER ON HIS OR HER BEHALF.
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby tenders to the Merrill Lynch Senior Floating Rate
Fund II, Inc., a closed-end investment company incorporated under the laws of
the State of Maryland (the "Fund"), the shares described below of its common
stock, par value $.10 per share (the "Shares"), at a price equal to the net
asset value per Share ("NAV") calculated on the Expiration Date (as defined in
the Offer to Purchase), in cash, less any applicable Early Withdrawal Charge,
upon the terms and conditions set forth in the Offer to Purchase dated
October 19, 1999, receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer").
The undersigned hereby sells to the Fund all Shares tendered hereby that are
purchased pursuant to the Offer and hereby irrevocably constitutes and appoints
the Transfer Agent as attorney in fact of the undersigned, with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to present such Shares and any Share certificates for
cancellation of such Shares on the Fund's books. The undersigned hereby warrants
that the undersigned has full authority to sell the Shares tendered hereby and
that the Fund will acquire good title thereto, free and clear of all liens,
charges, encumbrances, conditional sales agreements or other obligations
relating to the sale thereof, and not subject to any adverse claim, when and to
the extent the same are purchased by it. Upon request, the undersigned will
execute and deliver any additional documents necessary to complete the sale in
accordance with the terms of the Offer.
The undersigned recognizes that under certain circumstances set forth in the
Offer to Purchase, the Fund may not be required to purchase any of the Shares
tendered hereby. In that event, the undersigned understands that, in the case of
Shares evidenced by certificates, certificate(s) for any Shares not purchased
will be returned to the undersigned at the address indicated above. In the case
of Shares not evidenced by certificates and held in an Investment Account, the
Transfer Agent will cancel the tender order and no Shares will be withdrawn from
the Account.
The check for the purchase price for the tendered Shares purchased will be
issued to the order of the undersigned and mailed to the address indicated in
the "Description of Shares Tendered" table below.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and the obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
<PAGE>
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4)
<TABLE>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY THE NAME(S) IN WHICH SHARES ARE SHARES TENDERED
REGISTERED) (ATTACH ADDITIONAL SCHEDULE IF NECESSARY)
NO. OF SHARES
CERTIFICATE LISTED NO. OF SHARES
NO.(S)* ON CERTIFICATE* TENDERED**
<S> <C> <C> <C>
Account No. Total Shares Tendered..........
</TABLE>
* Need not be completed by stockholders whose Shares are not evidenced by
certificates.
** To be completed by all tendering stockholders, whether or not your Shares
are evidenced by certificates. If you desire to tender fewer than all
Shares held in your account or evidenced by a certificate listed above,
please indicate in this column the number you wish to tender. Otherwise all
Shares evidenced by such certificate or held in your account will be deemed
to have been tendered.
SIGNATURE FORM
--SIGN HERE--
(SEE INSTRUCTIONS 1, 5 AND 8)
Social Security No.
or Taxpayer Identification No. ................
Under penalty of perjury, I certify (1) that the number set forth above is
my correct Social Security No. or Taxpayer Identification No. and (2) that I
am not subject to backup withholding either because (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject thereto as a result of failure to
report all interest or dividends, or (c) the IRS has notified me that I am
no longer subject thereto. INSTRUCTION: You must strike out the language in
(2) above if you have been notified that you are subject to backup
withholding due to underreporting and you have not received a notice from
the IRS that backup withholding has been terminated.
...........................................................................
...........................................................................
(SIGNATURE(S) OF OWNER(S) EXACTLY AS REGISTERED)
Date ................ , 1999
Name(s) ....................................................................
Address(es) ................................................................
(PLEASE PRINT)
Telephone Number ( ) ................
Signature(s) Guaranteed ....................................................
....................................................
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a member firm of a registered national securities
exchange, or a commercial bank or trust company having an office, branch or
agency in the United States. This Letter of Transmittal is to be used only if
you may effect the tender offer transaction yourself and do not intend to
request your broker or dealer to effect the transaction for you.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates for all
tendered Shares, together with a properly completed and duly executed Letter of
Transmittal, should be mailed or delivered to the Transfer Agent on or prior to
the Expiration Date at the appropriate address set forth herein and must be
received by the Transfer Agent prior to the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER.
3. INADEQUATE SPACE. If the space provided is inadequate, the certificate
numbers and number of Shares should be listed on a separate signed schedule
attached hereto.
4. PARTIAL TENDERS. If fewer than all of the Shares in your Investment
Account or evidenced by any certificate submitted are to be tendered, fill in
the number of Shares which are to be tendered in the column entitled "No. of
Shares Tendered." If applicable, a new certificate for the remainder of the
Shares evidenced by your old certificate(s) will be sent to you as soon as
practicable after the Expiration Date of the Offer. All Shares represented by
certificate(s) listed or in your Investment Account are deemed to have been
tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, AUTHORIZATION AND ENDORSEMENTS.
(a) If the Letter of Transmittal is signed by the registered holder of the
Shares tendered hereby, the signature(s) must correspond with the name(s) in
which the Shares are registered.
(b) If the Shares are held of record by two or more joint holders, all such
holders must sign this Letter of Transmittal.
(c) If any tendered Shares are registered in different names it will be
necessary to complete, sign and submit as many separate Letters of Transmittal
as there are different registrations of Shares.
(d) When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and, if applicable, of the certificates transmitted hereby, no
endorsements of certificates or separate authorizations are required.
(e) If this Letter of Transmittal or any certificates or authorizations are
signed by trustees, executors, administrators, guardians, attorneys in fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and must submit proper
evidence satisfactory to the Fund of their authority so to act.
6. TRANSFER TAXES. The Fund will pay all the taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If tendered
certificates are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any transfer taxes (whether
imposed on the registered holder or such other person) payable on account of the
transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted.
<PAGE>
7. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of any tender of Shares will be
determined by the Fund, whose determinations shall be final and binding. The
Fund reserves the absolute right to reject any or all tenders determined by it
not to be in appropriate form or the acceptance of or payment for which would,
in the opinion of counsel for the Fund, be unlawful. The Fund also reserves the
absolute right to waive any of the conditions of the Offer or any defect in any
tender with respect to any particular Shares or any particular stockholder, and
the Fund's interpretations of the terms and conditions of the Offer (including
these instructions) will be final and binding. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Fund shall determine. Tenders will not be deemed to have been made until all
defects and irregularities have been cured or waived. Neither the Fund, Merrill
Lynch Asset Management, L.P. nor the Transfer Agent, nor any other person shall
be obligated to give notice of defects or irregularities in tenders, nor shall
any of them incur any liability for failure to give any such notice.
8. IMPORTANT TAX INFORMATION. Under Federal income tax law, a stockholder
whose tendered Shares are accepted for payment is required by law to provide the
Transfer Agent (as payer) with his correct taxpayer identification number, which
is accomplished by completing and signing the Signature Form.
<PAGE>
EXHIBIT (a)(3)
<PAGE>
MERRILL LYNCH, PIERCE,
FENNER & SMITH
INCORPORATED
RESPONSE CENTER
P.O. BOX 30200
NEW BRUNSWICK, NJ
08989-0200
[LOGO]
Dear Stockholder:
As you requested, we are enclosing a copy of the Merrill Lynch Senior
Floating Rate Fund II, Inc. (the "Fund") Offer to Purchase dated October 19,
1999 (the "Offer to Purchase") 1,500,000 Issued and Outstanding Shares (the
"Shares"). The Offer to Purchase is for cash at Net Asset Value ("NAV") per
share as of the expiration date of the Offer, less any Early Withdrawal Charge.
Together with the Offer to Purchase we are sending you a Form Letter of
Transmittal (the "Letter") for use by holders of record of Shares which you
should read carefully. Certain selected financial information with respect to
the Fund is set forth in the Offer to Purchase.
If, after reviewing the information set forth in the Offer to Purchase and
Letter, you wish to tender Shares for purchase by the Fund, please either
contact your Merrill Lynch Financial Consultant or other broker, dealer or
nominee to effect the tender for you or, if you are the record owner of the
Shares, you may follow the instructions contained in the Offer to Purchase and
Letter.
Neither the Fund nor its Board of Directors is making any recommendation to
any holder of Shares as to whether to tender Shares. Each stockholder is urged
to consult his or her broker or tax adviser before deciding whether to tender
any Shares.
The Fund's annualized distribution rate for the period August 24, 1999
through September 20, 1999, based on the amounts actually distributed by the
Fund, was 7.37%. The Fund's NAV on October 14, 1999 was $10.00 per Share. The
Fund publishes its NAV each week in BARRON'S. It appears in the "Investment
Company Institute List" under the sub-heading "Loan Participation Funds" within
the listings of mutual funds and closed-end funds.
Requests for current NAV quotations or for additional copies of the Offer to
Purchase, the Letter and any other tender offer documents may be directed to the
Merrill Lynch Response Center at (800) 637-7455, ext. 4302.
Should you have any other questions on the enclosed material, please do not
hesitate to contact your Merrill Lynch Financial Consultant or other broker or
dealer or call the Fund's Transfer Agent, Financial Data Services, Inc., at
(800) 637-3863. We appreciate your continued interest in Merrill Lynch Senior
Floating Rate Fund II, Inc.
Yours truly,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
<PAGE>
EXHIBIT (g)(1)
<PAGE>
<TABLE>
<CAPTION>
Senior Floating Rate II May 31, 1999
SCHEDULE OF INVESTMENTS (IN US DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIES S&P MOODY'S FACE SENIOR SECURED FLOATING COST VALUE
RATING RATING AMOUNT RATE LOAN INTERESTS*
<S> <C> <C> <C> <C> <C> <C>
Automotive & B Ba3 $2,750,000 Accuride, Term C, due 1/21/2007 $2,743,206 $2,763,750
Equipment - 8.6% NR+ NR+ 500,000 Americanbump, Term B, due 10/31/2002 498,753 498,750
Collins & Aikman Corp.:
BB- B1 2,480,000 Term B, due 6/30/2005 2,486,200 2,472,250
BB- B1 1,500,000 Term C, due 12/31/2005 1,496,271 1,501,875
NR+ Ba2 3,000,000 Federal-Mogul Corp., Term B,
due 2/24/2005 3,011,250 3,004,688
BB B1 2,000,000 Johnstown America Industrial, Inc.,
Term B, due 4/29/2005 1,997,528 2,001,250
------------ ------------
12,233,208 12,242,563
Chancellor Media Corp.:
Broadcasting Radio BB- Ba2 971,897 Revolving Credit, due 1/31/2003 971,897 951,244
& Television - 1.7%
BB- Ba2 444,965 Term A, due 1/31/2003 425,607 442,184
NR+ NR+ 1,000,000 Quoram Broadcasting, Term B,
due 9/30/2007 997,519 1,001,875
------------ ------------
2,395,023 2,395,303
Cable Television BB- Ba1 5,000,000 Charter Communications, Term B,
due 3/18/2008 5,000,000 5,011,719
Services - 7.1%
NR+ NR+ 5,000,000 TW Fanch-One Co., Term B,
due 12/31/2007 5,031,250 5,007,813
------------ ------------
10,031,250 10,019,532
Chemicals - 3.6% Ba2 NR+ 5,000,000 Lyondell Petrochemical Co., Term E,
due 5/17/2006 4,993,770 5,050,000
Fairchild Semiconductors Corp.:
Computer Related NR+ Ba3 1,000,000 Term, due 4/30/2006 998,024 1,006,250
Products - 1.8%
BB- B+ 1,500,000 Term B, due 4/12/2007 1,497,035 1,509,375
------------ ------------
2,495,059 2,515,625
Diversified - 3.9% NR+ NR+ 2,500,000 Bridge Information, Term B,
due 5/29/2005 2,510,000 2,506,250
Thermadyne:
NR+ NR+ 1,488,750 Term B, due 5/22/2005 1,492,472 1,489,215
NR+ NR+ 1,488,750 Term C, due 5/22/2006 1,492,472 1,489,215
------------ ------------
5,494,944 5,484,680
------------ ------------
Drug/Proprietary B+ B1 2,468,750 Duane Reade Co., Term B,
due 2/15/2005 2,464,191 2,459,492
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Senior Floating Rate II May 31, 1999
SCHEDULE OF INVESTMENTS (IN US DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIES S&P MOODY'S FACE SENIOR SECURED FLOATING COST VALUE
RATING RATING AMOUNT RATE LOAN INTERESTS*
<S> <C> <C> <C> <C> <C> <C>
Stores - 1.7%
Electronics / B+ B1 2,000,000 DD Inc. Term B, due 10/31/2003 1,970,511 1,960,000
Electrical
Components - 4.9%
B+ Ba3 5,000,000 Superior Telecom, Term A,
due 5/27/2004 5,000,000 5,006,250
------------ ------------
6,970,511 6,966,250
Specialty Foods, Inc.:
Food & Kindred NR+ Ba3 734,114 Revolving Credit, due 1/31/2000 734,114 734,114
Products - 1.4%
NR+ Ba3 1,262,625 Term, due 1/31/2000 1,262,625 1,263,414
------------ ------------
1,996,739 1,997,528
Grocery - 1.4% B B2 2,000,000 Grand Union Co., Term, due 8/17/2003 2,005,000 2,003,750
Hotels & Motels - NR+ Ba1 5,000,000 Starwood Hotels & Resorts Trust,
3.5% Term, due 2/23/2003 5,000,000 5,009,375
WEC Company:
Manufacturing - NR+ NR+ 1,166,667 Term B, due 9/30/2005 1,165,228 1,163,750
1.4%
NR+ NR+ 833,333 Term C, due 9/30/2006 832,303 831,250
------------ ------------
1,997,531 1,995,000
Metals & Mining - NR+ Ba3 3,000,000 UCAR Global Enterprises, Term B,
2.1% due 12/31/2002 3,007,500 3,007,500
Packaging Co.:
Packaging - 2.0% BB NR+ 1,407,025 Term B, due 4/12/2007 1,401,812 1,418,017
BB NR+ 1,407,025 Term C, due 4/12/2008 1,401,801 1,418,017
------------ ------------
2,803,613 2,836,034
Paper - 3.5% B+ Ba3 2,487,500 Jefferson Smurfit Company/Container
Corp. of America, Term B,
due 3/24/2006 2,487,500 2,495,274
B+ Ba3 2,407,322 Stone Container Corp., Term E,
due 10/01/2003 2,407,322 2,413,341
------------ ------------
4,894,822 4,908,615
Pharmaceuticals - NR+ NR+ 2,000,000 Express Scripts, Term B,
1.4% due 3/31/2007 2,000,000 1,997,750
Printing & NR+ Ba3 1,243,142 Penton Media, Term B, due 5/31/2006 1,241,594 1,240,034
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Senior Floating Rate II May 31, 1999
SCHEDULE OF INVESTMENTS (IN US DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
INDUSTRIES S&P MOODY'S FACE SENIOR SECURED FLOATING COST VALUE
RATING RATING AMOUNT RATE LOAN INTERESTS*
<S> <C> <C> <C> <C> <C> <C>
Publishing - 0.9%
Wireless B B1 2,000,000 Nextel Communications Inc., Term C,
Telecommunications due 3/31/2007 2,000,000 2,007,500
Services - 3.5%
NR+ NR+ 2,000,000 PowerTel PCS, Inc., Term B,
due 2/06/2003 2,000,000 1,995,000
NR+ B1 1,000,000 Tritel Holdings, Term B,
due 12/31/2007 987,654 1,005,000
------------ ------------
4,987,654 5,007,500
TOTAL SENIOR SECURED FLOATING
RATE LOAN INTERESTS - 54.4% 77,012,409 77,136,531
</TABLE>
<TABLE>
<CAPTION>
FACE SHORT-TERM SECURITIES COST VALUE
AMOUNT
<S> <C> <C> <C> <C>
Commercial Paper** - $3,000,000 American Express Credit Corporation,
28.4% 4.85% due 6/07/1999 $2,997,575 $2,997,575
5,000,000 Block Financial Corp., 4.85%
due 6/25/1999 4,983,833 4,983,833
5,000,000 CSW Credit Inc., 4.79%
due 6/07/1999 4,996,008 4,996,008
5,000,000 First Data Corporation, 4.80%
due 6/22/1999 4,986,000 4,986,000
General Electric Capital Corp.:
1,392,000 4.93% due 6/01/1999 1,392,000 1,392,000
5,000,000 4.79% due 6/09/1999 4,994,678 4,994,678
6,000,000 General Motors Acceptance Corp.,
4.94% due 6/01/1999 6,000,000 6,000,000
5,000,000 Newell Company, 4.79% due 6/14/1999 4,991,351 4,991,351
5,000,000 Paccar Financial, 4.79%
due 6/03/1999 4,998,669 4,998,669
------------ ------------
40,340,114 40,340,114
Federal Home Loan Mortgage Corporation
Participation Certificates:
US Government Agency 4,890,000 4.72% due 6/02/1999 4,889,361 4,889,361
Obligations** - 14.7%
7,500,000 4.76% due 6/21/1999 7,480,167 7,480,167
4,000,000 4.75% due 7/02/1999 3,983,639 3,983,639
Federal National Mortgage Association:
1,446,000 4.75% due 6/10/1999 1,444,283 1,444,283
3,000,000 4.75% due 7/02/1999 2,987,729 2,987,729
------------ ------------
20,785,179 20,785,179
TOTAL SHORT-TERM SECURITIES - 43.1% 61,125,293 61,125,293
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Senior Floating Rate II May 31, 1999
SCHEDULE OF INVESTMENTS (IN US DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL INVESTMENTS - 97.5% $138,137,702 $138,261,824
OTHER ASSETS LESS LIABILITIES - 2.5% 3,563,113
------------
NET ASSETS - 100.0% $141,824,937
------------
------------
</TABLE>
* The interest rates on senior secured floating rate loan interests are
subject to change periodically based on the change in the prime rate of a
US Bank, LIBOR (London Interbank Offered Rate), or, in some cases,
another base lending rate.
** Commercial Paper and certain US Government Agency Obligations are traded
on a discount basis; the interest rates shown reflect the discount rates
paid at the time of purchase by the Fund.
+ Not Rated.
