New Split Corp., New Issue In Works

Marketting has begun for Global Resource Champions Split Corp.

A red-herring prospectus has been filed on SEDAR (Global Resource Champions Split Corp. Mar 31 2016 17:49:50 ET Preliminary long form prospectus – English PDF 400 K )

It’s another Brookfield move to gain leverage:

Global Resource Champions Split Corp. (the “Company”) is a mutual fund corporation established under the laws of the Province of Ontario. This prospectus qualifies the distribution the “Offering”) of Class A Preferred Shares, Series 1 (the “Series 1 Shares”) of the Company.

The Company’s investment objectives with respect to the Series 1 Shares are:
(a) to provide holders of Series 1 Shares with fixed cumulative preferential quarterly cash distributions in the amount of $ per Series 1 Share to yield % per annum on the original issue price of the Series 1 Shares; and
(b) on or about May 25, 2023 (the “Final Series 1 Redemption Date”), to pay the holders of Series 1 Shares the original issue price of $25.00 per share, through the redemption of each Series 1 Share held on the Final Series 1 Redemption Date.

The Company was created to invest in a diversified portfolio (the “Portfolio”) of large capitalization resource companies that Brookfield Investment Management (Canada) Inc. (the “Manager”) believes are best in class. The Company will invest in the Portfolio in order to generate fixed cumulative quarterly cash distributions for holders of the Company’s preferred shares (the “Preferred Shares”) and to enable the holders of the Company’s capital shares (the “Capital Shares”) to participate in any capital appreciation in the securities that comprise the Portfolio (the “Portfolio Securities”). Under normal market conditions, the Portfolio will be comprised primarily of equity securities. See “Investment Objectives”.

The Series 1 Shares have been provisionally rated Pfd-2 (low) by DBRS Limited.

Initially, the Portfolio will consist of 15 large capitalization resource companies and will be approximately equally weighted on a U.S. dollar equivalent basis. The intention of the Company is to hold these investments to the Final Series 1 Redemption Date and not actively trade the Portfolio; however, the Manager will have discretion to make changes to the composition of the Portfolio that it deems appropriate, subject to the investment restrictions as described herein. See “Investment Restrictions.” It is expected that cash distributions to the holders of the Preferred Shares will be derived from dividends received (net of applicable foreign withholding taxes) on the Portfolio Securities.

The Manager will act as manager and investment manager of the Company. See “Organization and Management Details of the
Company and the Manager”.

The Series 1 Shares and the Capital Shares are being offered separately but will be issued only on the basis that an equal number of Series 1 Shares and Capital Shares will be outstanding. Partners Value Investments Inc. (formerly Partners Value Fund Inc.) (“Partners Value Investments”) will acquire all of the Capital Shares to be issued in connection with the Offering of the Series 1 Shares under this prospectus. The Capital Shares will be issued at a price of $ per share.

The Series 1 Shares may be surrendered for retraction at any time. A holder retracting Series 1 Shares may not receive cash but may instead receive debentures (the “Debentures”) issued by the Company. See “Details of the Offering – Debentures”.

The Company will redeem all outstanding Series 1 Shares on or about May 25, 2023 for a cash amount per share equal to the lesser of (i) $25.00 plus any accrued and unpaid dividends and (ii) the Net Asset Value per Unit (as defined herein). See “Calculation of Net Asset Value” and “Dividend Policy”.

There’s not much point in analyzing this deeply in the absence of information about the coupon, but it’s nice to see another split on the way.

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