NB Split Corp. announced today (via CCN Matthews) that “it has filed and received a receipt dated January 30, 2007, from the securities regulators of all the Canadian provinces, for the final prospectus for the initial public offering of Capital Shares and Preferred Shares of the Company”.
This is not an issue that I intend to add to the HIMIPref™ database as I do not think the preferred shares will be tradeable for long. This is irritation, because NB Split has a spiffy website, but the terms of the prefs are not quite so spiffy.
They carry a 4.75% annual dividend and have been provisionally rated Pfd-2(low) by DBRS. Closing of the offering should be on or about February 22, 2007, and the company intends to wind up Feb 15, 2012. So far so good.
BUT there is an annual redemption at par in order to match the number of Capital Units retracted as a “Special Annual Retraction”. And there are no provisions to halt (admittedly skimpy) distributions to the Capital Unitholder Scum if asset coverage declines below a threshold.
Given the high coupon attached to these things, I suggest that immediately upon issue they will rise in price to a premium above par that will leave the currentYield at an attractive level while leaving the yieldToWorst at an unattractive level. They will, at such levels, contain a huge amount of call risk – great to hold, as long as they don’t get called!
Mind you, anybody able to sweet-talk their broker into giving them an allocation of the prefs at par without having to buy Capital Units should make some good money from the flip. Send me the name of your broker!
So, unless captured by a band of marauding clients and tortured, I do not intend to add these shares to the HIMIPref™ database.