Company: MYI
Filing Date: 2025-07-16
Form Type: N-14 8C
Source: 0001193125-25-159991
Chunk: 179

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-07-16
Form: N-14 8C
Chunk 179
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 payment of principal and interest on the
bonds to the TOB Trust by a credit enhancement provider. The TOB Trust would be responsible for the payment of the credit enhancement fee and MVT, as a TOB Residual holder, would be responsible for reimbursement of any payments of principal and
interest made by the credit enhancement provider.

84

The TOB Residuals held by MVT generally provide MVT with the right to cause the holders of a
proportional share of the TOB Floaters to tender their notes to the TOB Trust at par plus accrued interest. Thereafter, MVT may withdraw a corresponding share of the municipal bonds from the TOB Trust. As a result, a tender option bond transaction,
in effect, creates exposure for MVT to the entire return of the municipal bonds in the TOB Trust, with a net cash investment by MVT that is less than the value of the municipal bonds in the TOB Trust. This multiplies the positive or negative impact
of the municipal bonds’ return within MVT (thereby creating leverage). The leverage within a TOB Trust depends on the value of the municipal bonds deposited in the TOB Trust relative to the value of the TOB Floaters it issues.

MVT may invest in highly leveraged TOB Residuals. A TOB Residual generally is considered highly leveraged if the principal amount of the TOB
Floaters issued by the related TOB Trust exceeds 75% of the principal amount of the municipal bonds owned by the TOB Trust.

The leverage
attributable to MVT’s use of TOB Residuals may be “called away” on relatively short notice and therefore may be less permanent than more traditional forms of leverage. The TOB Trust may be collapsed without the consent of MVT upon the
occurrence of termination events, as defined in the TOB Trust agreements. Upon the occurrence of a termination event, a TOB Trust would be liquidated with the proceeds applied first to any accrued fees owed to the trustee of the TOB Trust, the
remarketing agent of the TOB Floaters and the TOBs Liquidity Provider. Upon certain termination events, the holders of the TOB Floaters would be paid before the TOB Residual holders (i.e., MVT) whereas in other termination events, the holders
of TOB Floaters and the TOB Residual holders would be paid pro rata.

TOB Trusts are typically supported by a liquidity facility provided
by a