NOTE: THE LAST TWO PAGES WERE OMITTED FROM THE INITIAL FILING ON
SEPTEMBER 19, 1995
Preliminary Proxy Material
CONSENT SOLICITATION STATEMENT
ROYCE VALUE TRUST, INC.
1414 Avenue of the Americas
New York, New York 10019
September __, 1995
To the Holders of Royce Value Trust, Inc.'s 5 3/4%
Investment Company Convertible Notes due June 30, 2004 (the
"Notes"):
Royce Value Trust, Inc. (the "Fund") is seeking Noteholder
approval of two separate amendments to the Indenture dated as of
June 15, 1994 (the "Indenture") between the Fund and United
States Trust Company of New York, as trustee (the "Trustee"),
which governs the Notes held by you.
The first amendment would give the Fund's Board of Directors
the right to reduce or eliminate the 6.75% escalation of the
conversion price in additional years. This could avoid or
minimize any increase in the conversion price then in effect.
The second amendment would allow the Fund to issue and sell
additional Notes within the limitations already present in the
Indenture.
Neither of these amendments would adversely affect any of
your rights as a Noteholder. Indeed, the first proposed amend-
ment gives the Fund the option of reducing or eliminating
otherwise mandatory increases in the Notes' conversion price.
However, the Indenture needs to be amended to allow the Fund to
take these actions, and these amendments must be approved by a
majority in principal amount of the holders of the $40,000,000
aggregate principal amount of the Notes presently issued and
outstanding under the Indenture. Accordingly, the Fund is
soliciting your written consent to these amendments.
The amendments and more detailed information concerning them
are set forth below.
The Fund's Board of Directors has fixed the close of
business on _______________, 1995 as the record date for the
determination of those Noteholders entitled to vote on the
proposed amendments, and only Noteholders of record at the close
of business on that day will be entitled to vote. On the record
date, there were $40,000,000 aggregate principal amount of Notes
outstanding, of which $_____________ were held of record by Cede
& Co., Inc., nominee for Depository Trust Company, which holds
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securities deposited with it by financial institutions such as
brokerage firms and banks.
Please return your Consent Form promptly. You are urged to
return the enclosed Consent Form within one week after receipt,
but in no event later than _____________, 1995. Such date may be
extended from time to time in the sole discretion of the Fund
until ____________, 1995.
Your consent is important. The Fund recommends that you
vote FOR each of the proposed amendments by signing, dating and
promptly returning the enclosed Consent Form in the postage
prepaid, self-addressed envelope enclosed for your convenience.
Very truly yours,
Charles M. Royce,
President
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PROPOSED AMENDMENTS
1. Reduction or Elimination of Annual Escalator
A sentence in Section 4.06(a) of the Indenture, which covers
the adjustment of the conversion price of the Notes, provides
that with respect to the annual adjustment dates occurring in the
years l997, 1998, 2002 and 2003, the Fund may, at its option,
reduce or eliminate the escalator rate for the year involved.
The annual escalator is 6.75% (subject to possible reset on July
1, 1999), and the Fund would like to increase the number of such
annual adjustment dates when it may be reduced or eliminated. In
order to give its Board of Directors such flexibility, the Fund
is seeking to amend the sentence in Section 4.06(a) to read as
follows:
"Notwithstanding the first sentence of this subsection
(a) to the contrary, with respect to the Annual Adjustment
Dates occurring after 1996, the Company may, at its option,
reduce or eliminate the Escalator Rate for the year
involved."
2. Issuance and Sale of Additional Notes
Under Section 5.12 of the Indenture, the Fund may incur
indebtedness in addition to the Notes, provided that (i) if the
Fund proposed to use the net proceeds of such additional
indebtedness to purchase a portion of the Notes or to refinance a
portion of any indebtedness of the Fund then outstanding or if
such indebtedness constitutes a permitted temporary bank
borrowing, the Fund immediately thereafter has an asset coverage
of at least 300% or (ii) if the Fund proposed to use such net
proceeds for any other purpose, the Fund immediately thereafter
has an asset coverage of at least 500%. (Such additional
indebtedness of the Fund may have different interest rates,
maturity dates and/or conversion and other rights than those
applicable to the Notes.) In addition, the Rating Agency
Provisions of the Indenture, in connection with which the Notes
have been rated Aaa by Moody's Investors Service, Inc.
("Moody's"), generally prevent the Fund from borrowing money,
unless the Fund shall have received written confirmation from
Moody's that such activity will not adversely affect its then
current rating of the Notes.
As of June 30, 1995, the Fund had $40,000,000 of Notes
payable and could have issued and sold senior securities
representing additional indebtedness of up to $_____________ and
having an asset coverage of 500%. As set forth above, any such
issuance and sale would also have required Moody's to confirm
that such activity would not adversely affect its then current
rating of the Notes.
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The Fund issued and sold only $40,000,000 aggregate
principal amount of the Notes in June 1994, and the Indenture was
not drafted so as to permit the Fund to incur otherwise permitted
additional indebtedness by issuing and selling additional Notes.
In order to correct this oversight, the Fund is seeking to expand
the Section of the Indenture which allows certain amendments and
supplements to the Indenture or the Notes to be made without the
consent of Noteholders by adding the following sub-section to
Section 10.01 (Without Consent of Holders) at the end thereof:
"The Fund and the Trustee may amend or supplement
this Indenture or the Securities without notice to or
consent of any Securityholder ...
"(e) to provide for the issuance and sale by the
Fund, at any time or from time to time, of Securities
in addition to the $40,000,000 aggregate principal
amount of Securities issued and sold by the Fund on or
about June 22, 1994, subject to and in compliance with
the 500% asset coverage test of Section 5.12 and, if
then applicable, Section 11.05, provided that (i) all
such additional Securities shall be issued and sold to
the initial Holders thereof for a price equal to the
principal amount thereof, (ii) all such Securities
shall be dated as of the date on which they are issued
and sold by the Fund to the initial Holders thereof and
(iii) all of such Holders shall, concurrently with
their purchase of such Securities, pay to the Fund an
amount equal to interest accrued thereon from the then
most recent date on which interest on the Securities
was paid by the Fund through the day immediately
preceding the day on which such Securities are issued
and sold to them."
Vote Required
Under Section 10.02 of the Indenture, the written consent of
the holders of a majority in principal amount of the Notes
outstanding as of _______________, 1995, the record date, is
required to approve each of the amendments.
Noteholders at the close of business on the record date will
be entitled to one vote for each $1,000 principal amount of the
Notes then held. The proposed amendments will be deemed to have
been approved when the Fund has received the written consent to
the proposed amendments from Noteholders representing a majority
in principal amount of the outstanding Notes. The Fund and the
Trustees will execute and deliver a Supplemental Indenture
setting forth the amendments as soon as practicable after their
approval.
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ADDITIONAL INFORMATION
Quest Advisory Corp., located at 1414 Avenue of the
Americas, New York, New York 10019, serves as the Fund's
investment adviser.
The Fund's Annual Report to Stockholders for the year ended
December 31, 1994 was previously mailed to Noteholders, and
copies of it are available upon request, without charge, by
writing to the Fund at 1414 Avenue of the Americas, New York, New
York 10019 or calling toll-free at 1-800-221-4268.
The cost of soliciting consents will be borne by the Fund,
which will reimburse brokerage firms, custodians, nominees and
fiduciaries for their expenses in forwarding the consent solici-
tations to the beneficial owners of the Notes. Some officers and
employees of the Fund, Quest Advisory Corp. and/or Shareholder
Communications Corporation may solicit consents personally and by
telephone, if deemed desirable.
PLEASE FILL IN, DATE AND SIGN THE WRITTEN CONSENT AND RETURN IT
IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE.
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ROYCE VALUE TRUST, INC.
1414 Avenue of the Americas
New York, NY 10019 WRITTEN CONSENT
This Written Consent is solicited on behalf of the
Board of Directors. You are asked below to vote
either "YES", to approve, or "NO", to not approve, the
amendments (the "Amendments") set forth in the Consent
Solicitation Statement of the Fund dated _____________,
1995. Approval of each of the Amendments requires the
consent of the holders of a majority in aggregate
principal amount of the outstanding Notes.
1. AMENDMENT TO SECTION 10.01 OF THE INDENTURE
(Issuance and Sale of Additional Notes)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. AMENDMENT TO SECTION 1.01 OF THE INDENTURE
(Increasing December Conversion Period)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on other side)
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(Continued from other side)
This Written Consent when properly executed will be voted in the manner
directed by the undersigned Noteholder. If no direction is made, this
Written Consent will be voted for Proposals 1 and 2. Please sign exactly as
name appears below. When Notes are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
DATED:____________________, 1995
______________________________________________________
Signature
____________________________________________
PLEASE MARK, SIGN AND RETURN THE WRITTEN CONSENT
PROMPTLY, USING THE ENCLOSED ENVELOPE
______________________________________________________
Signature if held jointly
