WFS.PR.A: Warrants to be Offered to Capital Unitholders

World Financial Split Corp. has announced:

that it has filed a preliminary short form prospectus relating to an offering of Warrants to holders of Class A Shares of the Fund. Each Class A shareholder of record on the record date will receive one Warrant for each Class A Share held. Each Warrant will entitle its holder to acquire one Class A Share and one Preferred Share upon payment of the subscription price. The record date and the subscription price will be determined at the time the Fund files its final prospectus for the offering. The Fund has applied to list the Warrants and the Class A Shares and the Preferred Shares issuable upon the exercise thereof on the Toronto Stock Exchange. The exercise of Warrants by holders will provide the Fund with additional capital that can be used to take advantage of attractive investment opportunities and is also expected to increase the trading liquidity of the Class A Shares and the Preferred Shares and to reduce the management expense ratio of the Fund.

The Fund invests in a portfolio that includes common equity securities selected from the ten largest financial services companies by market capitalization in each of Canada, the United States and the rest of the world (the “Portfolio Universe”). In addition, up to 20% of the NAV of the Fund may be invested in common equity securities of financial services companies that are not in the Portfolio Universe but meet certain market capitalization and credit rating thresholds. To generate additional returns above the distributions earned on its securities, the Fund may, from time to time, write covered call options in respect of some or all of the securities in its portfolio. The Fund may also, from time to time, write cash-covered put options in respect of securities in which the Fund is permitted to invest. The Fund’s investment portfolio is managed by its investment manager, Mulvihill Capital Management Inc.

The preliminary prospectus does not yet appear to be available.

WFS.PR.A has an Asset Coverage of 1.4-:1 as of September 30 and is scheduled to be wound-up 2011-6-30; I suspect that a term extension is in the works.

WFS.PR.A was last mentioned on PrefBlog with the reminder that the Capital Unit dividend was still suspended – it cannot be paid unless Asset Coverage of the preferreds is greater than 1.5:1. WFS.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.

One Response to “WFS.PR.A: Warrants to be Offered to Capital Unitholders”

  1. […] was last mentioned on PrefBlog when the intent to issue warrants was announced. WFS.PR.A is tracked by HIMIPref™ but is relegated to the Scraps subindex on credit […]

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