Category: Issue Comments

R Split III Corp. has announced:

that it has called 559,447 Preferred Shares for cash redemption on May 31, 2010 (in accordance with the Company’s Articles) representing approximately 25.690% of the outstanding Preferred Shares as a result of the annual retraction of 1,118,894 Capital Shares by the holders thereof. The Preferred Shares shall be redeemed on a pro rata basis, so that each holder of Preferred Shares of record on May 28, 2010 will have approximately 25.690% of their Preferred Shares redeemed. The redemption price for the Preferred Shares will be $29.22 per share.

In addition, holders of a further 1,996 Capital Shares and 998 Preferred Shares have deposited such shares concurrently for retraction on May 31, 2010. As a result, a total of 1,120,890 Capital Shares and 560,445 Preferred Shares, or approximately 25.7239% of both classes of shares currently outstanding, will be redeemed.

Holders of Preferred Shares that are on record for dividends but have been called for redemption will be entitled to receive dividends thereon which have been declared but remain unpaid up to but not including May 31, 2010.

Payment of the amount due to holders of Preferred Shares will be made by the Company on May 31, 2010. From and after May 31, 2010 the holders of Preferred Shares that have been called for redemption will not be entitled to dividends or to exercise any rights in respect of such shares except to receive the amount due on redemption.

R Split III Corp. is a mutual fund corporation created to hold a portfolio of common shares of Royal Bank of Canada.

RBS.PR.A is scheduled to mature 2012-5-31. RBS.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-3 by DBRS. RBS.PR.A is not tracked by HIMIPref™.

Brompton Split Banc Corp. has announced:

that it has filed a preliminary prospectus relating to an offering of warrants to Class A shareholders of the Company. Each Class A shareholder will receive one half warrant for each Class A share held on a record date which will be set upon filing of the final prospectus.

One warrant will entitle the holder to purchase a Unit (consisting of one Class A share and one Preferred share of the Company) upon payment of the subscription price, which will be determined as the lesser of: (i) $22.36 (which is the sum of (a) the most recently calculated NAV per Unit prior to the date hereof and (b) the estimated per Unit fees and expenses of the offering), and (ii) the most recently calculated NAV per Unit prior to the date of filing the final prospectus plus the estimated per Unit fees and expenses of the offering. The Company has applied to list the warrants and the Class A shares and Preferred shares issuable on the exercise thereof on the TSX.

Successful completion of the warrants offering will provide the Company with additional capital that can be used to take advantage of attractive investment opportunities and it is also expected to increase the trading liquidity of the Class A shares and Preferred shares and reduce the ongoing management expense ratio of the Company.

A 50% increase in size – if the offering is fully subscribed – will be a welcome addition to the $53-million-odd outstanding at year end according to the fund’s 2009 Annual Report.

SBC.PR.A was last mentioned on PrefBlog when I reported the April 2009 reinstatement of the Capital Units dividend. SBC.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.

Life & Banc Split Corp. has announced:

that it has filed a preliminary prospectus relating to an offering of warrants to Class A shareholders of the Company. Each Class A shareholder will receive one half warrant for each Class A share held on a record date which will be set upon filing of the final prospectus.

One warrant will entitle the holder to purchase a Unit (consisting of one Class A share and one Preferred share of the Company) upon payment of the subscription price, which will be determined as the lesser of: (i) $19.31 (which is the sum of (a) the most recently calculated NAV per Unit prior to the date hereof and (b) the estimated per Unit fees and expenses of the offering), and (ii) the most recently calculated NAV per Unit prior to the date of filing the final prospectus plus the estimated per Unit fees and expenses of the offering. The Company has applied to list the warrants and the Class A shares and Preferred shares issuable on the exercise thereof on the TSX.

Successful completion of the warrants offering will provide the Company with additional capital that can be used to take advantage of attractive investment opportunities and it is also expected to increase the trading liquidity of the Class A shares and Preferred shares and reduce the ongoing management expense ratio of the Company.

If fully subscribed, the 50% increase in issue size will be a very welcome addition to the $100-million-odd reported in the 2009 Annual Report.

LBS.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-3 by DBRS. LBS.PR.A is tracked by HIMIPref™, but is relegated to the Scraps index on credit concerns.

B Split II Corp. has announced:

The Capital Shares and Preferred Shares will be redeemed by the Company on June 1, 2010 (the “Redemption Date”) in accordance with the redemption provisions as detailed in the prospectus dated May 25, 2005. Pursuant to these provisions, the Preferred Shares will be redeemed at a price per share equal to the lesser of $9.75 and the net asset value per Unit. The Capital Shares will be redeemed at a price per share equal to the amount by which the net asset value per Unit exceeds $9.75. The net asset value per Unit was $21.30 as at May 12, 2010.

Holders of Capital Shares who requested to receive their redemption payment in BCE Inc. common shares (“BCE Shares”) and gave notice to this effect and tendered $9.75 for every Capital Share by May 3, 2010 will receive their pro rata share of the BCE Shares. The redemption of Capital Shares and Preferred Shares will constitute a taxable disposition of the Company’s shares at the time of the redemption whether the payment is received in the form of cash or BCE Shares.

A further press release will be issued by the Company in connection with the redemption prices on May 27, 2010. Payment of the amounts due to holders of Capital Shares and Preferred Shares will be made by the Company on June 1, 2010.

BXN.PR.B was last mentioned on PrefBlog when it was downgraded to Pfd-3 by DBRS. BXN.PR.B is not tracked by HIMIPref™.

Update, 2010-5-28: Redemption price announcement.

Brookfield is now the official stalking horse for General Growth:

General Growth Properties Inc., the bankrupt U.S. mall owner, won court approval of a sale process that makes a group led by Brookfield Asset Management Inc. the lead bidder, beating an offer by Simon Property Group Inc.

U.S. Bankruptcy Judge Allan Gropper in Manhattan today approved General Growth’s plan to give Brookfield, Fairholme Capital Management LLC and Pershing Square Capital Management LP warrants to buy stock in the reorganized company in exchange for funding. Testimony at today’s hearing focused on whether the warrants might chill bidding.

General Growth, based in Chicago, said the Brookfield-led bid is intended to serve as a so-called stalking-horse for higher offers or the raising of money from capital markets. Simon said the warrants would dilute General Growth’s value and the Indianapolis-based company would stop bidding if Gropper approved their issue.

The deal has been previously discussed on PrefBlog.

Dominion Bond Rating Service has commented:

In a revision to the offer this week, Brookfield, Fairholme Capital Management, LLC and Pershing Square Capital Management LP (on a several basis) agreed to backstop an additional $2 billion in capital, which includes $1.5 billion of debt and a $500 million equity rights offering. The $1.5 billion is the same amount that had originally been proposed under a new credit facility. With this modification, Brookfield would backstop $600 million of the $1.5 billion in debt issuance and $350 million of the $500 million rights offering.
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DBRS has received comfort from Brookfield concerning its ability to fund its portion of the transaction should it proceed under the current terms, and believes that the Company can create the needed liquidity without materially increasing leverage at the corporate level. If Brookfield further revises its offer going forward, DBRS would review the terms to determine if there were any the rating implications.

DBRS has announced that it has:

upgraded the ratings of preferred shares issued by four split share companies and trusts (the Issuers): Energy Split Corporation, Energy Split Corp. II, SNP Split Corp. and Utility Split Trust.

Each of the Issuers has invested in a portfolio of securities (the Portfolio) funded by issuing two classes of shares – dividend-yielding preferred shares or securities (the Preferred Shares) and capital shares or units (the Capital Shares). The main form of credit enhancement available to these Preferred Shares is a buffer of downside protection. Downside protection corresponds to the percentage decline in market value of the Portfolio that must be experienced before the Preferred Shares would be in a loss position. The amount of downside protection available to Preferred Shares will fluctuate over time based on changes in the market value of the Portfolio.

Today’s rating actions reflect upward trends in the net asset value (NAV) of the respective Portfolios over the past eight months. In its surveillance of split share funds, DBRS reviews the historical trends in downside protection and assigns greater weighting to more recent Issuer NAVs.

DBRS will continue to closely monitor changes in the credit quality of these Preferred Shares. The timing of rating actions will generally follow the surveillance guidelines listed in DBRS’s split share methodology, “Rating Canadian Split Share Companies and Trusts.”

I am sorely tempted to add UST.PR.A to the HIMIPref™ database, but it is scheduled to wind-up 2011-12-31. Maybe if they extend term …

These are total returns, with dividends presumed to have been reinvested at the bid price on the ex-date. The list has been restricted to issues in the HIMIPref™ indices.

Nice to see an end to the Floating Rate hegemony over the Best Performers!

US Financial 15 Split Corp. has announced:

the reinstatement of the regular monthly distribution of $0.04375 for each Preferred share ($0.525 annually) effective for the month of April as well as a dividend of $0.05 representing a portion of the accrued dividends in arrears. Both dividends will be payable on May 10, 2010 to Preferred shareholders on record as at April 30, 2010.

Management believes that the strong recovery in the US financial services companies held in the portfolio from the March 2009 lows combined with the current level of dividend income and option premiums from the covered call writing program presents the necessary conditions to reinstate the monthly dividend and to begin the process of making payments on the accrued dividends.

The 14 months of cumulative accrued dividends from February 2009 to March 2010 totaling $0.6125 per Preferred share are currently recorded as a liability of the Company and are accrued to the benefit of the Preferred shareholders. The accrued liability will decrease to $0.5625 per Preferred share after the payment of the $0.05 dividend. The timing and amount of any future payments of the cumulative dividends will be reviewed by the Board on an ongoing basis and will be based on market conditions, the level of the net asset value and income realized in the portfolio.

Regular monthly dividends of $0.04375 will continue each month and will be payable to Preferred shareholders on record on the last business day of each month.

The net asset value per unit as at April 15, 2010 was $7.17.

FTU.PR.A was last mentioned on PrefBlog when they published the 2009 Semi-Annual Financials. FTU.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

Dividend Growth Split Corp. has announced:

that it has completed its treasury offering of 1,115,000 class A shares and 1,115,000 preferred shares for aggregate gross proceeds of $22,021,250. Shares will continue to trade on the Toronto Stock Exchange under the existing symbols DGS (class A shares) and DGS.PR.A (preferred shares).

Dividend Growth Split Corp. invests in a portfolio of common shares of high quality, large capitalization companies, which have among the highest dividend growth rates of those companies included in the S&P/TSX Composite Index.
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The preferred shares were offered at a price of $10.00 per share. The investment objectives for the preferred shares are to provide their holders with fixed cumulative preferential quarterly cash distributions in the amount of $0.13125 per preferred share to yield 5.25% per annum on the original issue price, and to return the original issue price at the time of redemption on November 30, 2014.

The class A shares were offered at a price of $9.75 per share. The investment objectives for the class A shares are to provide their holders with regular monthly cash distributions targeted to be $0.10 per class A share, and to provide the opportunity for growth in net asset value per class A share.

The offering was placed through a group of agents co-led by RBC Capital Markets and CIBC World Markets Inc., and included National Bank Financial Inc., TD Securities Inc., BMO Nesbitt Burns Inc., Scotia Capital Inc., HSBC Securities (Canada) Inc., Mackie Research Capital Corporation, Raymond James Ltd., Canaccord Financial Ltd., Dundee Securities Corporation, Desjardins Securities Inc., Macquarie Capital Markets Canada Ltd. and Wellington West Capital Markets Inc.

DGS.PR.A was last mentioned on PrefBlog when the offering was announced. It is not tracked by HIMIPref™ as it is too small an issue to trade efficiently (slightly over 2-million shares outstanding on 2009-12-31, according to the 2009 Annual Report) … but the addition of 1.1-million-odd shares brings it closer!

BNS Split Corp. II has announced:

that its Board of Directors has approved a proposal to reorganize the Company. The reorganization will permit holders of Capital Shares to extend their investment in the Company beyond the scheduled redemption date of September 22, 2010 for an additional five years. The Preferred Shares will be redeemed on the same terms originally contemplated in their share provisions. Holders of Capital Shares who do not wish to extend their investment and all holders of Preferred Shares will have their shares redeemed on September 22, 2010.

The reorganization will involve (i) the extension of the originally scheduled redemption date, (ii) a special retraction right to enable holders of Capital Shares to retract their shares as originally contemplated should they not wish to extend their investment and (iii) the issuance of a new class of preferred shares in order to provide continuing leverage for the Capital Shares.

A special meeting of holders of the Capital Shares will be held on July 5, 2010 to consider and vote upon the proposed reorganization. Details of the proposed reorganization will be outlined in an information circular to be prepared and delivered to holders of Capital Shares of record on May 20, 2010 in connection with the special meeting and will be available on www.sedar.com. Implementation of the proposed reorganization will also be subject to applicable regulatory approval including the Toronto Stock Exchange.

BSC.PR.A was last mentioned on PrefBlog when the company announced it was considering extending term. BSC.PR.A is not tracked by HIMIPref™ …. but if they extend term and maybe up the size just a little, its successor might be.