CHICAGO, May 8 /PRNewswire-FirstCall/ -- The Boards of Directors of DNP Select Income Fund Inc. (DNP) and Duff & Phelps Utility and Corporate Bond Trust Inc. (DUC) approved a proposal by the Funds' investment adviser, Duff & Phelps Investment Management Co., to proceed with securing a syndicated bank loan facility to enable both Funds to redeem their outstanding preferred stock. The action taken today reflects the Boards' continued efforts to address the lack of liquidity in the auction securities market for the Funds' preferred shareholders. The Funds' management believes that the current preferred stock auction and remarketing process may not provide liquidity for an extended period of time, if ever, and that the best near-term solution to the liquidity crisis is to obtain secured credit facilities from a commercial bank. The Boards concurred with management's recommendation that two of the three funds advised by Duff & Phelps Investment Management Co. redeem their outstanding preferred stock and replace most of it with debt financed leverage. Management is in talks with a commercial bank about securing a facility that would provide liquidity for preferred stock shareholders. The portion of preferred stock not redeemed with a credit facility would be redeemed with the proceeds from asset sales, resulting in a reduction in the amount of leverage used by DNP and DUC. A reduction in leverage is necessitated by a requirement under the Investment Company Act of 1940 to maintain higher asset coverage for debt than for preferred stock. Management and the Boards of Directors believe that a reduction in leverage outstanding and the costs associated with securing a credit facility are necessary given market conditions, and are in the best long-term interests of the common and preferred shareholders. Prior to implementing the above actions, there are several hurdles that will have to be overcome. DNP Select Income Fund Inc. (DNP), in its original 1987 prospectus, established certain fundamental investment restrictions that govern its investment activities, including a limit on aggregate borrowings by the Fund to 15% of the fund's total assets. Unless and until this limitation is modified, the Fund can utilize debt-financed leverage to replace some, but not all, of the Fund's preferred stock. Under the Investment Company Act of 1940, any change to a fundamental investment restriction requires shareholder approval. Replacing the Fund's preferred stock with debt financed leverage will therefore require approval by the Fund's shareholders of an increase in the percentage of debt financing that the Fund may utilize. The DNP Board of Directors has called a special shareholder meeting for June 30th to hold a vote. In the meantime, the DNP management team plans to proceed with the syndication of the secured credit facility. Once the credit facility is in place, the Board has authorized management to do a partial call of the preferred stock, with the redemption process and required asset sales to be completed after receiving shareholder approval to modify the fundamental investment restriction. The Fund is hopeful that it can start the redemption process in June with the goal of completion in the third quarter of this year. Duff & Phelps Utilities and Corporate Bond Trust Inc. (DUC) has a fundamental investment restriction on debt of 33 1/3%, which would allow the Fund to replace its preferred stock with debt financed leverage without a shareholder vote. The DUC Board of Directors encouraged management to move forward with the syndication of the bank facility and authorized the redemption of the preferred stock and required asset sales once the bank facility is in place. The Fund is hopeful that it can start the redemption process in June with the goal of completion in the third quarter of this year. DTF Tax-Free Income Inc. (DTF) has the same dilemma as all municipal closed-end funds employing preferred stock leverage. Municipal closed-end funds seek to pass through tax-exempt income to shareholders, and income generated from debt financing is generally taxable, with the result that debt leverage is generally a less advantageous form of leverage than preferred stock. Currently, regulatory authorities and industry associations are considering various proposals as industry-wide solutions to the liquidity crisis. The DTF Board of Directors and management continue to review these and other potential alternative structures for the DTF preferred stock but have not yet arrived at a workable solution. The DTF Board has directed Fund management to continue its efforts to develop and evaluate potential solutions that would be in the best interests of all of the Fund's shareholders. Any potential solution will be subject to execution risk and dependent on both economic and market factors beyond management's control. The Boards of Directors and management of the Funds remain committed to fulfilling their obligations to both preferred and common shareholders. We believe that DNP and DUC are in the process of implementing a solution that will create the desired liquidity for their preferred shareholders while at the same time allowing for the use of leverage for the benefit of the Funds' common shareholders. Although there remain many forces outside the control of the Boards and management that may still impact the Funds' ability to implement the above strategy, the Boards and management believe that they will ultimately succeed in achieving these goals. Management will implement the proposed refinancing of the preferred stock on a fund-by-fund and tranche-by-tranche basis. The implementation of any refinancing described above will depend on a variety of factors, including challenging financial market conditions and regulatory, market and economic factors. Management cannot be certain that it will be able to refinance any specified portion of its Funds' preferred stock, that credit facilities or other mechanisms can be entered into or that it will be able to take all the necessary actions within the specified time frame. There can be no assurance that any alternative forms of leverage used to refinance the Funds will not become prohibitively expensive or unavailable in the future. DNP Select Income Fund Inc. is a closed-end diversified investment management company. The Fund's primary investment objectives are current income and long-term growth of income. The Fund seeks to achieve these objectives by investing primarily in a diversified portfolio of equity and fixed income securities of companies in the public utilities industry. For more information, visit the Fund's website at http://www.dnpselectincome.com/ or call the Fund at (800) 864-0629. DATASOURCE: DNP Select Income Fund Inc. CONTACT: Joseph C. Curry, Jr., +1-502-588-8602, or Dianna P. Wengler, +1-502-588-8603, or Timothy P. Riordan, +1-502-588-1786, all of DNP Select Income Fund Inc. Web site: http://www.dnpselectincome.com/

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