PrefBlog

Quadravest has announced:

the filing of a preliminary prospectus for a proposed new offering. The offering is an investment in common shares of TMX Group Inc. which is the company resulting from the combination of TSX Group Inc. and Montreal Exchange Inc. The Company will offer two investment choices: Class A Shares (a capital share) and Priority Equity Shares (a preferred share).

XTM Split’s Class A Shares offer regular monthly cash dividends targeted to be 5.00% per annum. The Class A Shares will also provide holders with any capital appreciation or dividend growth achieved in its shares of TMX Group Inc.

XTM Split’s Priority Equity Shares offer fixed, cumulative preferential monthly cash dividends at a yield of 5.25% per annum, with the objective of repaying their original issue price ($10) upon termination on December 1, 2015.

Prospective purchasers may acquire shares by either paying cash for the Priority Equity Shares or Class Shares, or by exchanging freely tradeable common shares of the TMX Group Inc. for a full or partial tax-deferred rollover for Canadian tax purposes.

According to the preliminary prospectus:

Based on the current dividends paid by TSX Group and MX on their common shares (and assuming that TMX pays dividends in an equivalent amount), the Company is expected to generate dividend income of approximately 3.72% per annum which, after deduction of expenses and net of taxes, will be distributed to shareholders. The Company would be required to generate an additional return of approximately 2.88% per annum, including from dividend growth, capital appreciation and option premiums, in order for the Company to maintain its targeted distributions and maintain a stable net asset value, plus approximately an additional 0.55% per annum to increase the Company’s net asset value to an amount sufficient to permit the Company to return the original issue prices of the Priority Equity Shares and the Class A Shares on the Termination Date.

I have not looked very carefully at this issue because …

The Priority Equity Shares have not been rated by any rating organization.

I won’t do it, guys! Maybe I’m good, maybe I’m bad (take your pick!) but I want a second opinion on credit quality and I want to know you’ve lifted your skirts for at least one interested party! I also want there to be public pressure for you to clean up your act, should your act ever need cleaning up.

This entry was posted on Monday, May 5th, 2008 at 11:49 pm and is filed under New Issues. 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.