LMP Corp. to redeem auction rate preferreds

LMP Corporate Loan Fund Inc. of New York, a closed-end fund from Legg Mason Inc. of Baltimore, today announced plans to “restructure” the fund’s leverage and add liquidity. LMP Corporate Loan intends to redeem about $50 million of its $80 million outstanding borrowings in Series A and Series B auction rate preferred shares under a new credit facility “to be entered into with a major domestic bank,” according to a Legg Mason statement. “The amount of the redemption was determined based upon management’s assessment of current market conditions and asset coverage requirements mandated by the Securities and Exchange Commission” the statement said. However, future liquidity is far from certain if the fund is unable to obtain a credit facility, the statement cautioned. “While management of the fund expects to reach definitive agreement with the bank to secure this loan shortly, there can be no assurance that the fund will enter into a definitive credit facility or that the ARPS will be redeemed.”