Dividend 15 Split Corp. has announced:
that it will issue rights (“Rights”), to all Class A Shareholders. Each Class A Shareholder will be entitled to receive one Right for each Class A Share held as of the record date of October 21, 2009. Four Rights will entitle the holder to purchase a Unit consisting of one Class A Share and one Preferred Share for $19.75. The Rights will expire at 4:00 p.m. (local time) on November 16, 2009, the expiry date. If all the Rights are exercised the Company will issue approximately 2,509,428 Units and will receive net proceeds of $48,708,375. The net proceeds from the subscription of Units will be used to acquire additional securities in accordance with the Company’s Investment objectives. By raising additional cash through this offering it allows the Company to capitalize on certain attractive investment opportunities that may arise over the next few months.
The exercise price is set at a premium to the most recently published net asset value per Unit. On that basis, if the exercise price remains above the most recently published net asset value, the exercise of the rights would be accretive to existing shareholders on a net asset value basis. In addition, if the full subscription was exercised the offering is expected to increase the trading liquidity of the Company and reduce the management expense ratio.
Both the Preferred Shares and Class A Shares trade on the Toronto Stock Exchange (the “TSX”) under the symbol “DFN.PR.A” and “DFN” respectively. The Rights will be listed on the TSX under the ticker symbol DFN.RT. It is expected that Rights will commence trading on October 19, 2009 and continue trading until 12:00 noon (EST) on November 16, 2009.
The Company was created to provide investors with a high quality portfolio of leading Canadian dividend yielding stocks. The Company invests in: Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Toronto-Dominion Bank, National Bank of Canada, CI Financial Income Fund, BCE Inc., Manulife Financial, Enbridge, Sun Life Financial, TELUS Corporation, The Thomson Corporation, TransAlta Corporation and TransCanada Corporation. Shares held within the portfolio are expected to range between 4-8% in weight but may vary at any time.
The Class A shareholders receive monthly distributions of $1.20 per share annually. The Preferred Share holder receives $0.525 per share annually. The company offers a low management fee and opportunity for growth in the net asset value.
The NAVPU for October 15 has not yet been published; it was at 19.97 on September 30. It is unusual, to say the least, to price a rights offering above the current value; but the liquidity will appeal to some. DFN closed today at 12.38-47, 5×10, and DFN.PR.A closed at 10.12-17, 5×20, so the offering is at a substantial discount to market price. It is very odd that the the Capital Units are trading so high above intrinsic value, but it’s a funny old world.
DFN.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-3(high) by DBRS. DFN.PR.A is tracked by HIMIPref™ but has been relegated to the Scraps index on credit concerns.