PrefBlog

Strathbridge Asset Management has announced:

Premium Income Corporation (the “Fund”) is pleased to announce that it is undertaking an overnight treasury offering of Preferred Shares and Class A Shares.

The sales period for the overnight offering will end at 9:00 am EST tomorrow, October 26, 2018. The offering is expected to close on or about November 2, 2018 and is subject to certain conditions including approval by the Toronto Stock Exchange (“TSX”).The Preferred Shares will be offered at a price of $15.00 per Preferred Share to yield 5.75% and the Class A Shares will be offered at an indicative price of $6.60 per Class A Share to yield 12.3%. The trading price on the TSX for each of the Preferred Shares and Class A Shares as at 2:00pm EST on October 25, 2018 was $15.34 and $6.78, respectively.

Since the inception of the Fund, the aggregate dividends declared on the Preferred Shares have been $19.19 per share and the aggregate dividends declared on the Class A Shares have been $24.60 per share, for a combined total of $43.79 per unit.

The Fund invests in a portfolio consisting principally of common shares of Bank of Montreal, The Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and The Toronto-Dominion Bank (the “Banks”). To generate additional returns above the dividend income earned on the Fund’s portfolio, the Fund will selectively write covered call options in respect of some or all of the common shares in the Fund’s portfolio. The manager and investment manager of the Fund is Strathbridge Asset Management Inc.

The Preferred Shares pay fixed cumulative preferential quarterly cash distributions in the amount of $0.215625 ($0.8625 per annum) per preferred share representing a yield of 5.75% on the original issue price of $15.00. The Class A Shares currently pay quarterly distributions in the amount $0.20319 ($0.81276 per annum) per Class A Share.
The syndicate of agents for the offering is being co-led by RBC Capital Markets, CIBC Capital Markets, National Bank Financial Inc. and Scotiabank, and also includes BMO Capital Markets, TD Securities Inc., Raymond James Ltd., Canaccord Genuity Corp., Desjardins Securities Inc., Echelon Wealth Partners Inc., GMP Securities L.P. and Industrial Alliance Securities Inc.

For further information, please contact Investor Relations at 416.681.3966, toll free at 1.800.725.7172, email at info@strathbridge.com or visit www.strathbridge.com

So they’re offering Whole Units at 21.60 (I think; it’s not clear to me what “indicative” means) compared to an October 24 NAVPU of 20.65 – a premium of 4.60%, which is good business.

I am not a big fan of this fund due to the low level of Asset Coverage and the lack of a ‘dividend stopper’ that would halt distributions when Asset Coverage is below a certain level.

Update, 2018-10-30: They raised about 17.2-million:

Premium Income Corporation (the “Fund”) is pleased to announce a successful overnight treasury offering of 795,000 Preferred Shares and 795,000 Class A Shares. Gross proceeds of the offering are expected to be approximately $17.2 million.

The offering is expected to close on or about November 2, 2018 and is subject to certain conditions including approval by the Toronto Stock Exchange (“TSX”).The Preferred Shares were offered at a price of $15.00 per Preferred Share to yield 5.75% and the Class A Shares were offered at a price of $6.60 per Class A Share to yield 12.3%.

This entry was posted on Thursday, October 25th, 2018 at 5:41 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.