As filed with the Securities and Exchange Commission on January 31, 1997
Securities Act File No. 333-7813
Investment Company Act File No. 811-6692
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
/ / Pre-Effective Amendment No. /x/ Post-Effective Amendment No. 1
(Check Appropriate box or boxes)
MUNIYIELD CALIFORNIA INSURED FUND II, INC.
(Exact Name of Registrant as Specified in its Charter)
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(609) 282-2800
(Area Code and Telephone Number)
800 Scudders Mill Road
Plainsboro, New Jersey 08536
(Address of Principal Executive Offices:
Number, Street, City, State, Zip Code)
----------------------
Arthur Zeikel
MuniYield California Insured Fund II, Inc.
800 Scudders Mill Road, Plainsboro, New Jersey 08536
Mailing Address: P.O. Box 9011, Princeton, New Jersey 08543-9011
(Name and Address of Agent for Service)
----------------------
Copies to:
Frank P. Bruno, Esq. Mark B. Goldfus, Esq.
Brown & Wood LLP Merrill Lynch Asset Management
One World Trade Center 800 Scudders Mill Road
New York, New York 10048-0557 Plainsboro, New Jersey 08536
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This Amendment consists of the following:
(1) Facing Sheet of the Registration Statement.
(2) Part C to the Registration Statement (including signature page).
Parts A and B are incorporated by reference from Pre-Effective Amendment No.
1 to this Registration Statement (File No. 333-7813) filed on August 21,
1996.
This Amendment is being filed solely to file as Exhibit No. 12 to this
Registration Statement the private letter ruling received from the Internal
Revenue Service.
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Section 2-418 of the General Corporation Law of the State of Maryland,
Article VI of the Registrant's Articles of Incorporation, Article VI of the
Registrant's By-Laws and the Registrant's Investment Advisory Agreement with
Fund Asset Management, Inc., now known as Fund Asset Management, L.P. (the
"Investment Adviser") provide for indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be provided to directors,
officers and controlling persons of each Fund, pursuant to the foregoing
provisions or otherwise, each Fund has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and, therefore, is
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by a Fund of expenses incurred or paid by
a director, officer or controlling person of the Registrant in connection
with any successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant, unless in the opinion of its
counsel the matter has been settled by controlling precedent, will submit to
a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
ITEM 16. EXHIBITS
1(a) -- Articles of Incorporation of the Registrant(a)
(b) -- Form of Articles Supplementary creating the AMPS(b)
(c) -- Form of Articles Supplementary creating the Series C AMPS
2 -- By-Laws of the Registrant (a)
3 -- Not applicable
4 -- Form of Agreement and Plan of Reorganization between the Registrant
and MuniVest California Insured Fund, Inc.(c)
5(a) -- Form of specimen certificate for Common Stock(d)
(b) -- Form of Certificate for AMPS(b)
(c) -- Portions of the Articles of Incorporation and the By-Laws of the
Registrant defining the rights of holders of shares of the
Registrant(e)
6 -- Form of Investment Advisory Agreement between the Registrant and
the Investment Adviser(a)
7(a) -- Form of Purchase Agreement between the Registrant, the Investment
Adviser and Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") relating to the Registrant's Common Stock(a)
(b) -- Form of Purchase Agreement between the Registrant, the Investment
Adviser and Merrill Lynch relating to the Registrant's AMPS(b)
(c) -- Merrill Lynch Standard Dealer Agreement(a)
8 -- Not applicable
9 -- Custody Agreement between the Registrant and State Street Bank and
Trust Company(d)
10 -- Not applicable
11 -- Opinion and Consent of Brown & Wood LLP, counsel for the
Registrant(c)
12 -- Private Letter Ruling from the Internal Revenue Service
13(a)-- Transfer Agency and Service Agreement between the Registrant and
State Street Bank and Trust Company(d)
(b) -- Form of Auction Agent Agreement(b)
(c) -- Form of Broker-Dealer Agreement(b)
(d) -- Form of Letter of Representations(b)
14(a)-- Consent of Deloitte & Touche LLP, independent auditors for the
Registrant(c)
(b) -- Consent of Deloitte & Touche LLP, independent auditors for MuniVest
California Insured Fund, Inc.(c)
15 -- Not applicable
16 -- Power of Attorney(f)
- --------------------
(a) Incorporated by reference to the Registrant's registration statement on
Form N-2 relating to the Registrant's Common Stock (File Nos. 33-48416
and 811-6692), filed with the Securities and Exchange Commission (the
"Commission") on June 5, 1992 (the "Common Stock Registration
Statement").
(b) Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-2 relating to the
Registrant's Series A and Series B Auction Market Preferred Shares (File
Nos. 33-53602 and 811-6692), filed with the Commission on November 9,
1992.
(c) Previously filed with Pre-Effective Amendment No. 1 to this N-14
Registration Statement on August 21, 1996.
(d) Incorporated by reference to Pre-Effective Amendment No. 2 to the Common
Stock Registration Statement filed with the Commission on October 23,
1992.
(e) Reference is made to Article V, Article VI (sections 2, 3, 4, 5 and 6),
Article VII, Article VIII, Article IX, Article X, Article XI, Article
XII and Article XIII of the Registrant's Articles of Incorporation,
filed as, Exhibit 1 (a) to the Common Stock Registration Statement; and
to Article II, Article III (sections 1, 3, 5 and 17), Article VI,
Article VII, Article XII, Article XIII and Article XIV of the
Registrant's ByLaws, filed as Exhibit 2 to the Common Stock Registration
Statement.
(f) Included on the signature page of the Registrant's Registration
Statement on Form N-14 filed on July 9, 1996 and incorporated by
reference herein.
ITEM 17. UNDERTAKINGS
(a) The Registrant undertakes to suspend offering of the shares of
Common Stock covered hereby until it amends its Prospectus contained herein
if (1) subsequent to the effective date of this Registration Statement, its
net asset value per share of Common Stock declines more than 10 percent from
its net asset value per share of Common Stock as of the effective date of
this Registration Statement, or (2) its net asset value per share of Common
Stock increases to an amount greater than its net proceeds as stated in the
Prospectus contained herein.
(b) The Registrant undertakes that: (1) for the purpose of determining
any liability under the Securities Act, the information omitted from the form
of prospectus filed as part of a registration statement in reliance upon Rule
430A and contained in the form of prospectus filed by the Registrant pursuant
to Rule 497 (h) under the Securities Act shall be deemed to be a part of the
registration statement as of the time it was declared effective; and (2) for
the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
SIGNATURES
As required by the Securities Act of 1933, this Post-Effective Amendment
to the Registration Statement has been signed on behalf of the Registrant, in
the Township of Plainsboro and State of New Jersey, on the 30th day of January
1997.
MUNIYIELD CALIFORNIA INSURED FUND II, INC.
(Registrant)
By /s/ GERALD M. RICHARD
---------------------------------------
(Gerald M. Richard, Treasurer)
As required by the Securities Act of 1933, this Post-Effective Amendment
to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
ARTHUR ZEIKEL/*/ President (Principal
- ----------------------------- Executive Officer)
(Arthur Zeikel) and Director
GERALD M. RICHARD/*/ Treasurer (Principal
- ----------------------------- Financial and
(Gerald M. Richard) Accounting Officer)
Director
JAMES H. BODURTHA/*/ Director
- -----------------------------
(James H. Bodurtha)
HERBERT I. LONDON/*/ Director
- -----------------------------
(Herbert I. London)
ROBERT R. MARTIN/*/ Director
- -----------------------------
(Robert R. Martin)
JOSEPH L. MAY/*/ Director
- -----------------------------
(Joseph L. May)
ANDRE F. PEROLD/*/ Director
- -----------------------------
(Andre F. Perold)
/*/By: /s/ Gerald M. Richard January 30, 1997
- -----------------------------
(Gerald M. Richard, Attorney-in-Fact)
EXHIBIT INDEX
EXHIBIT
NUMBER
- -------
12 -- Private Letter Ruling dated October 15, 1996 from the Internal
Revenue Service to Registrant and MuniVest California Insured Fund,
Inc.
EXHIBIT 12
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
Index Number: 0368.03-00 Washington, D.C. 20224
0368.09-00
Thomas A. Humphreys Person to Contact:
Brown & Wood LLP Cheryl M. Peterson
One World Trade Center Telephone Number:
New York, New York 10048-0557 (202) 622-7770
Refer Reply to:
CC:DOM:CORP:2 PLR 03261-96
Date: October 15, 1996
Acquiring = MuniYield California Insured Fund II, Inc.
EIN: 22-3194459
Target = MuniVest California Insured Fund, Inc.
EIN: 22-3229820
State X = Maryland
State Y = California
Date B = October 31
C = Auction Rate Market Preferred Stock
Dear Mr. Humphreys:
This letter responds to your letter dated June 7, 1996 requesting
rulings about the federal income tax consequences of a proposed transaction.
Additional information was submitted on August 1, 1996 and September 25,
1996. The information submitted for consideration is summarized below.
Acquiring is a non-diversified closed end management company organized
as a corporation under the laws of State X. Acquiring uses the accrual
method of accounting and is on a fiscal year ending Date B. Acquiring has
elected and qualified pursuant to section 851 to be treated for federal
income tax purposes as a regulated investment,company ("RIC"). Acquiring
currently has three classes of stock: one class of common stock and two
series of voting C preferred stock. Acquiring's investment objective is to
provide as high a level of current income exempt from federal and State Y
income taxes as is consistent with its investment policies and prudent
investment management.
Target is a non-diversified closed end management company organized
under the laws of State X. Target uses the accrual method of accounting and
is on a fiscal year ending Date B. Target has elected and qualified pursuant
to section 851 to be treated for federal income tax purposes as a RIC.
Target currently has two classes of stock: one Class of common stock and one
series of voting C preferred stock. Target's investment objective is to
provide as high a level of current income exempt from federal and State Y
income taxes as is consistent with its investment policies and prudent
investment management.
For what are represented to be valid business reasons, the taxpayer has
proposed the following transaction:
(i) Target will transfer all of its assets and liabilities to Acquiring
in exchange for its voting common stock and voting C preferred
stock ("Acquiring Shares") and Acquiring's assumptions of Target's
liabilities.
(ii) Target will liquidate and distribute the Acquiring Shares to its
shareholders. Each Target common stock shareholder will be
entitled to receive a proportionate number of shares of Acquiring
common stock equal to the aggregate net asset value represented by
the Target common stock owned by such shareholder on the exchange
date. Each Target C preferred shareholder will be entitled to
receive a number of shares of Acquiring C preferred stock having a
liquidation preference equal to the liquidation preference of the
Target shares owned by such shareholder on the exchange date.
The following representations have been made in connection with the
proposed transaction:
(a) The fair market value of the Acquiring stock received by each Target
shareholder will approximately equal the fair market value of Target's
stock surrendered in the exchange (calculated for the common stock, with
reference to the net asset value rather than the trading price and, for
the Acquiring C preferred shares, according to liquidation preference,
as described above).
(b) There is no plan or intention by target's shareholders who own five
percent or more of the stock of Target, and there is no plan or
intention on the part of any of the remaining Target's shareholders to
sell, exchange or otherwise dispose of a number of shares of Acquiring
stock received in the transaction that would reduce the ownership by the
shareholders of Target of the stock of Acquiring to a number of shares
having a value, as of the date of the transaction, of less than 50
percent of the value of all of the formerly outstanding stock of Target,
as of the same date. For purposes of this representation, shares of
Target stock exchanged for cash or other property, surrendered by the
dissenters, or in exchange for cash in lieu of fractional shares of
Acquiring stock will be treated as outstanding Target stock on the date
of the transaction. Moreover, shares of Target stock and shares of
Acquiring stock held by Target shareholders and otherwise sold, redeemed
or disposed of prior or subsequent to the transaction will be considered
in making this representation.
(c) Acquiring will acquire at least 90 percent of the fair market value of
the net assets and at least 70 percent of the fair market value of the
gross assets held by Target immediately prior to the transaction. For
purposes of this representation, amounts paid to Target dissenters,
amounts used by Target to pay its reorganization expenses, amounts paid
by Target to shareholders who receive cash or other property, and all
redemptions and distributions (except for regular, normal dividends)
made by Target immediately preceding the transfer will be included as
assets of Target held immediately prior to the reorganization.
(d) Acquiring has no plan or intention to reacquire any of its stock issued
in the transaction, except in the ordinary course of its business.
(e) Acquiring has no plan or intention to sell or otherwise dispose of any
of the assets of Target acquired in the transaction, except for
dispositions made in the ordinary course of business.
(f) Target will distribute the stock, securities and other property of
Acquiring that it receives in the transaction, and its other properties,
pursuant to the plan of reorganization.
(g) The liabilities of Target assumed by Acquiring and the liabilities to
which the transferred assets are subject were incurred by Target in the
ordinary course of business.
(h) Following the transaction, Acquiring will continue the historic business
of Target or use a significant portion of Target's historic assets in a
business.
(i) Target, Acquiring and the shareholders of Target will bear the burden of
their respective expenses, if any, incurred in connection with the
transaction.
(j) There is no intercorporate indebtedness existing between Target and
Acquiring that was issued, acquired, or will be settled at a discount.
(k) Both Acquiring and Target qualify as regulated investment companies
under section 851 and thus should be treated as regulated investment
companies for purposes of sections 368(a)(2)(F)(i) and (iii).
(l) Acquiring does not own, directly or indirectly, nor has it owned during
the past five years, directly or indirectly, any stock of Target.
(m) The fair market value of the assets of Target transferred to Acquiring
will equal or exceed the sum of the liabilities assumed by Acquiring,
plus the amount of liabilities, if any, to which the transferred assets
are subject.
(n) Cash is being distributed to shareholders of Target in lieu of
fractional shares of Acquiring solely to save Acquiring the expense and
inconvenience of issuing and transferring fractional shares, and such
cash does not represent separately bargained for consideration in the
transaction. The total cash consideration that will be paid instead of
issuing fractional shares of Acquiring stock will not exceed one percent
of the total consideration that will be issued to Target shareholders in
exchange for their shares of Target stock. The fractional share
interests of each Target shareholder will be aggregated and no Target
shareholder will receive cash in an amount equal to or greater than the
value of one full share of Acquiring stock.
(o) Target and Acquiring have elected to be taxed as RICs under section 851
and, for all of their taxable periods, (including the last short taxable
period ending on the date of the transaction, for Target) have qualified
for the special tax treatment afforded RICs under the Code, and after
the transaction, Acquiring intends to continue to so qualify.
(p) Target is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of section 368(a)(3)(A).
Based solely upon the information and representations set forth above,
we hold as follows:
(1) The acquisition by Acquiring of substantially all of the assets of
Target solely in exchange for Acquiring voting stock and Acquiring's
assumption of liabilities followed by the distribution by Target of
Acquiring Shares to the shareholders, in complete liquidation, will
constitute a reorganization within the meaning of section 368(a)(1)(C).
For purposes of this ruling, "substantially all" means at least 70
percent of the fair market value of the gross assets and at least 90
percent of the fair market value of the net assets of Target.
Additionally, Acquiring and Target will each be "a party to the
reorganization" within the meaning of section 368(b).
(2) Target will recognize no gain or loss on its transfer of substantially
all of its assets and liabilities to Acquiring in exchange solely for
Acquiring voting stock and Acquiring's assumption of liabilities
(Section 361(a) and 357(a)). Also, Target will recognize no gain or
loss on the distribution to its shareholders of the Acquiring stock that
Target will receive in the transaction (Section 361(c)(1)).
(3) Acquiring will not recognize any gain or loss on the receipt of Target's
assets in exchange for shares of Acquiring voting stock (Section
1032(a)).
(4) Acquiring's basis in the assets of Target received in the reorganization
will equal Target's basis in the assets immediately before the transfer
(Section 362(b)).
(5) Acquiring's holding period in the assets received in the reorganization
will include the period during which Target held the assets (Section
1223(2)).
(6) Common and voting C preferred stock shareholders of Target will
recognize no gain or loss on their receipt of common and voting C
preferred stock of Acquiring in exchange for their Target stock, except
to the extent that Target common shareholders receive cash representing
an interest in fractional shares of Acquiring in the reorganization
(Section 354(a)(1)).
(7) The basis of the Acquiring stock received by the Target shareholders in
the reorganization will equal the basis of the Target shares surrendered
in exchange therefor (Section 358(a)(1)).
(8) A Target shareholder's holding period of the Acquiring stock received in
the reorganization will include the period that the shareholder held the
Target stock exchanged therefor, provided that the shareholder held such
stock as a capital asset on the date of the exchange (Section 1223(1)).
(9) The payment of cash to Target shareholders in lieu of fractional shares
of Acquiring will be treated as though the fractional shares were
distributed as part of the transaction and then redeemed by Acquiring.
The cash payment will be treated as a distribution in full payment for
the fractional shares deemed redeemed under section 302(a), with the
result that such Target shareholders will have short-term or long-term
capital gain or loss to the extent that the cash distribution differs
from the basis allocable to such fractional shares (Rev. Rul. 66-365,
1966-2 C.B. 116).
(10) The taxable year of Target will end on the effective date of the
proposed transaction (Section 381(b)(1)). Acquiring will succeed to and
take into account the items of Target described in section 381(c),
including the earnings and profits, or deficit in earnings and profits,
of Target as of the date of the transaction (Section 381(a) and Section
1.381(a)-1(a) of the Income Tax Regulations). Any deficit in earnings
and profits of Target will be used only to offset earnings and profits
accumulated after the effective date of the proposed transaction
(section 381(c)(2)(B)). Acquiring will take these items into account
subject to the conditions and limitations specified in sections 381,
382, 383 and 384 and the regulations thereunder.
We express no opinion about the tax treatment of the proposed
transaction under other provisions of the Code and regulations or about the
tax treatment of any conditions existing at the time of, or efforts resulting
from, the proposed transaction that are not specifically covered by the above
rulings. Specifically, no opinion was requested, and none is expressed,
about whether Acquiring or Target qualifies as a RIC that is taxable under
Subchapter M, Part I of the Code.
This ruling letter is directed only to the taxpayers who requested it.
Section 6110(j)(3) provides that it may not be used or cited as precedent.
Each affected taxpayer must attach a copy of this letter to their
federal income tax return for the tax year in which the transaction covered
by this ruling letter is consummated.
Sincerely yours,
Assistant Chief Counsel
(Corporate)
By /s/ Richard Osborne
----------------------------
Richard Osborne
Senior Technician Reviewer
Branch 2
cc DD -- Newark, New Jersey
Chief, Examination Division
Donald C. Burke
Vice President
MuniYield New York Insured Fund, Inc.
800 Scudders Mill Road
Plainsboro, NJ 08536
