PrefBlog

M-Split Corp. has announced:

that it plans on holding a special meeting of shareholders in December 2009 to vote on a reorganization proposal for the Company.

The reorganization proposal will allow shareholders to vote on an alternative structure going forward. This proposal is designed to address the impact that the significant decline in price of the Company’s underlying holding of Manulife common stock and the resultant activation of the Priority Equity Protection Plan has had on the ability of the Company to meet some of its original investment objectives.

Many of the characteristics of this new proposal will be similar to the previous shareholder proposal that was contained in the December 23, 2008 Management Information Circular. This previous proposal, although not passed, did receive overwhelming support, outside of certain larger shareholders. If this proposal had been implemented at that time, both classes of shareholders would have experienced significant improvement in the value of their investments.

The Company, subject to all necessary Board and regulatory approvals, expects to send out the full details of this proposal to all shareholders through a Management Information Circular in November, 2009 with a shareholder vote to follow in December, 2009.

The Company believes this reorganization proposal will be in the best interest of all shareholders.

Presumably the company has managed to get support of some of the larger shareholders who scuttled the last attempt; in the last press release reported on PrefBlog, the company claimed to be maintaining a dialogue.

The NAV as of Sept. 15 was $8.51, with less than 1% exposure to MFC as of June 18, 2009.

Of note is the upcoming special retraction:

Shareholders who concurrently retract a Priority Equity share and a Class A share (together, a “unit”) in the month of October in each year will be entitled to receive an amount equal to the transactional net asset value per unit on the last day of October.

Note that the company does not appear to be putting any money into its issuer bid:

On March 2, 2009, the Company announced the acceptance of a Normal Course Issuer bid that could allow the Company to purchase, from time to time, up to 10% of the public float of the shares. The Company plans on utilizing this only in situations where the combined trading prices of the Priority Equity shares and Class A shares are at an excessive discount to net asset value of the Company.

XMF.PR.A closed today at 7.79-90, 198(!)x27, while XMF closed at 0.52-56, 3×12; my guess is that arbitrageurs have moved in, given that the NAV is dependent almost entirely on five-year strips. Note that:

Any accrued or declared and unpaid dividends payable on or before a Retraction Date in respect of Priority Equity Shares tendered for retraction on such Retraction Date will also be paid on the Retraction Payment Date.

The prospectus is not explicit on the disposition of accrued dividends on the exercise of an October retraction.

XMF.PR.A is not tracked by HIMIPref™.

This entry was posted on Friday, September 18th, 2009 at 8:49 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.