PrefBlog

Great-West Life Assurance has announced:

that it intends to redeem all of its outstanding 5.55% Series O Preferred Shares (GWL.PR.O) on October 31, 2010. The redemption price will be $25.00 for each Series O Preferred Share plus an amount equal to all declared and unpaid dividends, less any tax required to be deducted and withheld by the Company. The paid-up capital of the Series O Preferred Shares is $17.26 per share.

A formal notice and instructions for the redemption of the Series O Preferred Shares will be sent to shareholders in accordance with the rights, privileges, restrictions and conditions attached to the Series O Preferred Shares.

Holders should very carefully examine the sentence about paid-up capital! When the issue is redeemed, holders will be taxed as if there is a capital loss from their purchase price to the paid-up capital of $17.26, with a deemed dividend equal to the difference between the $25.00 paid and this paid-up capital, or $7.74 (in addition to the dividends paid that actually look like dividends, of course). There will be many holders who hold it on the redemption date without knowing this, and there will be a great wailing and a gnashing of teeth when they do their taxes.

GWL.PR.O was last mentioned on PrefBlog when I discussed its particulars. GWL.PR.O is tracked by HIMIPref™ and is currently a member of the PerpetualPremium index.

Update, 2010-9-15: Bolding above is a correction to a stenographical error.

This entry was posted on Friday, September 3rd, 2010 at 1:46 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.