OSP.PR.A Suffers 75%+ Preferred Share Retraction

Brompton Group has announced:

Brompton Oil Split Corp. (the “Fund”) announces a pro-rata redemption of class A shares will be required (the “Class A Shares”) to maintain an equal number of preferred shares (the “Preferred Shares”) and Class A Shares outstanding. In connection with the extension of the Fund’s term for an additional three years, holders of both Class A Shares and Preferred Shares had a special retraction right. Preferred shareholders retracted 2,416,132 more shares than Class A shareholders. As a result, unless Preferred Shares are withdrawn from the retraction, the Fund will be required to redeem 2,416,132 Class A Shares on a pro-rata basis pursuant to the Fund’s constating documents which is a reduction of approximately 75.269% of each Class A shareholders’ holdings. Each Class A shareholder of record on March 31, 2020 will receive a redemption price equal to the greater of: (i) the net asset value per unit (each unit consisting of 1 Class A Share and 1 Preferred Share) minus the sum of $10.00 plus any accrued and unpaid distributions on a Preferred Share, and (ii) nil. The redemption payment will be made on or before April 15, 2020.

The Fund invests in a portfolio of equity securities of large capitalization North American oil and gas issuers, primarily focused on those with significant exposure to oil.

Extension details were announced in January following the March, 2019, notice of extension. In the former post, I strongly recommended retraction of the preferreds. As of 2020-2-28, the fund had only $8.38 in assets for every $10.00 of preferred share obligations.

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