]> Franklin Templeton Limited Duration Income Trust Announces Refinancing of Certain Auction Preferred Shares
tagline

Franklin Templeton Limited Duration Income Trust Announces Refinancing of Certain Auction Preferred Shares

From: Franklin Advisers, Inc.
Contact: Franklin Templeton Investments
Telephone:(800) 342-5236

San Mateo, CA, May 21, 2008 – Franklin Templeton Limited Duration Income Trust [AMEX:FTF], a closed-end investment company managed by Franklin Advisers, Inc., announced today its intention to refinance approximately $100 million of its auction preferred shares (APS), representing approximately 53% of the Fund’s outstanding APS.  Franklin Templeton Limited Duration Income Trust (the “Fund”) is the only fund within Franklin Templeton Investments that has outstanding APS.    

Approved by the Fund’s Board of Trustees, the alternate form of leverage, principally through the use of mortgage dollar rolls, is expected to lower the cost of leverage for common shareholders.  It is also expected that this action will provide liquidity, at the liquidation preference per share, for a portion of the APS held by the Fund’s preferred shareholders.  Franklin Advisers believes that this financing option is in the best interest of the Fund’s common shareholders and holders of APS.   Franklin Advisers presently believes that mortgage dollar rolls provide an attractive and available source of financing.  However, Franklin Advisers can make no assurance that any alternative forms of leverage, including mortgage dollar rolls, used by the Fund can be entered into or will not become more expensive or unavailable in the future.

Following this proposed refinancing, the Fund will continue to meet the asset coverage requirements mandated by the Investment Company Act of 1940 and the appropriate rating agencies.   Franklin Advisers, as the Fund’s investment manager, continues to work with the underwriters of the APS and other financial institutions to explore alternative financing options that could be in the best interests of the Fund’s common shareholders and the holders of the remaining APS.

The Fund intends that this partial redemption of the APS will be implemented on a pro rata basis across the Fund’s three outstanding series of APS, beginning on or about June 9, 2008.  The Depository Trust Company (DTC), the securities’ holder of record, will determine how a partial series redemption will be allocated among participant broker dealer accounts.  Each participant broker dealer will decide how to allocate redeemed shares among its underlying beneficial owners.  The Fund anticipates that the refinancing will be completed by June 12, 2008.   As of May 20, 2008, the Fund had total assets of approximately $548 million, of which approximately $121 million are in U.S. government agency mortgage-backed securities.  Upon completion of the proposed refinancing, it is expected that the Fund will have $100 million in mortgage dollar rolls outstanding and $90 million of APS.   Going forward, the Fund will treat such mortgage dollar rolls as indebtedness or a borrowing of the Fund and will comply with the related asset coverage requirements of the Investment Company Act of 1940 and the Fund’s fundamental investment restrictions relating thereto.  The Fund will no longer segregate liquid assets with respect to the mortgage dollar rolls.   For a brief period of time while the redemption of the APS is being processed, the total leverage of the Fund represented by the mortgage dollar rolls and the APS will exceed 38% of the Fund's managed assets.   However, upon completion of the redemption, the Fund's total leverage will again fall below such 38% target limit.

Franklin Advisers, Inc., is a wholly owned subsidiary of Franklin Resources, Inc. [NYSE:BEN], a global investment management organization operating as Franklin Templeton Investments.  Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams.  The San Mateo, CA-based company has more than 60 years of investment experience and over $617 billion in assets under management as of April 30, 2008.  For more information, please call 1-800/DIAL BEN® or visit franklintempleton.com.