PrefBlog

Mulvhill Premium Split Share Corp. has announced:

its shareholders have approved a reorganization permitting the Company to extend the life of the Company for an additional 5 years to February 1, 2013. As part of the reorganization, the Preferred Shares will be renamed “Priority Equity Shares” and the Company will adopt a portfolio protection plan for the benefit of the holders of such shares. The dividend entitlement of the shares will remain unchanged at 5.50% per annum (on the $15.00 original issue price). Class A Shareholders will continue to benefit from a unique, highly leveraged investment in a blue-chip portfolio, and will receive distributions initially set at approximately 10% per annum on the net asset value of the Class A Shares.

Holders of Class A Shares and Preferred Shares will retain their annual and monthly retraction rights originally provided to them. In addition, under the reorganization, shareholders will be given a special retraction right to cause the Company to redeem their Class A Shares at net asset value of a Class A Share and Preferred Shares for $15.00 per share on January 31, 2008. The reorganization will only be implemented if holders of at least 2,000,000 Class A Shares elect not to retract their shares under the special retraction right.

Note that the Prefs will be renamed Priority Equity Shares and no longer rated by DBRS:

The change of name of the Preferred Shares to Priority Equity Shares is intended to more accurately describe the attributes of such shares and to more closely align them with similar shares recently offered in the market. The Priority Equity Shares will not be rated by DBRS and the Company will no longer be subject to DBRS’ additional requirements relating to the investments it may acquire and hold.

The Company proposes to adopt a strategy (the ‘‘Priority Equity Portfolio Protection Plan’’) to protect holders of the Priority Equity Shares in order to assist the Company to pay in full the original issue price of $15.00 per share (the amount so required to effect such payment from time to time being the ‘‘Priority Equity Share Repayment Amount’’) on the final redemption date of February 1, 2013 (the ‘‘Final Redemption Date’’).

The Priority Equity Portfolio Protection Plan provides that if the net asset value of the Company declines below a specific level, the Company will liquidate a portion of its portfolio and use the net proceeds to acquire (i) qualifying debt securities or (ii) certain securities and enter into a forward agreement (collectively, the ‘‘Permitted Repayment Securities’’) in order to cover the Priority Equity Share Repayment Amount in the event of further declines in the net asset value of the Company. To qualify as Permitted Repayment Securities, debt securities must have a remaining term to maturity of less than one year and be issued or guaranteed by the government of Canada or a province or the government of the United States, or be other cash equivalents with a rating of at least R-1 (mid) by DBRS or the equivalent rating from another rating organization.

The HIMIPref™ database has been updated with a reorgDataEntry reflecting a 1:1 transformation from securityCode A43200 to A43201.

The new security has the following characteristics representing my interpretation of the current investment terms:

• listed as “Not Rated”
• Callable 2008-01-31 at $15
• Maturity 2013-2-1 at $15.00

Update: I have uploaded the current SplitShare index after having given effect to the change. Note that MUH.PR.A will remain in the index until the December month-end rebalancing.

This entry was posted on Thursday, December 13th, 2007 at 6:04 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.