PrefBlog

Globalbanc Advantaged 8 Split Corp. has announced:

a distribution of $0.07 per Preferred Share for the quarter ending December 31, 2008. The distribution will be paid on January 13, 2009 to holders of record on December 31, 2008. No distribution will be paid on the Class A Shares for the quarter ending December 31, 2008.

The Company has determined that, as a result of anticipated changes in the dividend payments to be paid by the banks included in the Bank Portfolio, future dividend payments to be received by the Company may not generate sufficient yield to pay in full the fixed cumulative quarterly dividends in the amount of $0.1125 per Preferred Share (as established by the share conditions relating to the Preferred Shares) and the expenses of the Company. Accordingly, the Company has determined to pay during 2009 a quarterly dividend amount of one-quarter of the Bloomberg Dividend Forecast of the dividends to be paid by the banks comprising the Bank Portfolio in the upcoming 12 months, less an estimate of the expenses of the Company. The Board of Directors will monitor these estimates and may revise the amount of dividends paid on the Preferred Shares in the future, up or down, to take in to account changes in these estimates and changes in the Company’s expenses.

Assuming dividends are paid by the Bank Portfolio at least consistent with these estimates over the coming 12 months, the Company will maintain sufficient cash flow to make dividend payments in accordance with the revised dividend policy and to fund current operating expenses. If the Company were to pay dividends and incur operating expenses in excess of these cash flows it may be necessary to dispose of a portion of the securities comprising the Bank Portfolio. The Board of Directors believes it is in the best interests of the Company to pay dividends at a level which avoids a sale of assets at this time.

The shortfall below the prescribed amount of the Preferred Share dividend will accumulate and, in accordance with the terms of the Preferred Shares and the Class A Shares, will be paid in priority to any payments on the Class A Shares.

In response, DBRS announced:

has today placed the Preferred Shares issued by GlobalBanc Advantaged 8 Split Corp. (the Company) Under Review with Negative Implications following the Company’s announcement of a revised dividend policy.

The Preferred Shares are entitled to fixed cumulative quarterly dividend payments of $0.1125 per share, yielding 4.5% per annum on the initial share price of $10. The Company has reduced the December 31 distribution to $0.07 per Preferred Share. For 2009, the Company plans to pay a quarterly dividend amount of one-quarter of the forecasted dividends to be received by the Company less an estimate of the expenses of the Company, in order for the Company to avoid a sale of assets to pay Preferred Share distributions.

As a result of the deterioration of the Company NAV and the decision by the Company to reduce the Preferred Shares dividend, DBRS has placed its rating of Pfd-5 (low) on the Preferred Shares Under Review with Negative Implications.

Asset coverage is 0.5+:1 as of December 18, according to the company.

GBA.PR.A was last mentioned on PrefBlog when DBRS downgraded it to Pfd-5(low). GBA.PR.A is not tracked by HIMIPref™.

This entry was posted on Friday, December 19th, 2008 at 6:35 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.