Category: Issue Comments

Dividend 15 Split Corp. announced on March 3:

that it has filed a short form prospectus in each of the provinces of Canada with respect to an additional offering of Preferred Shares and Class A Shares. The offering will be co-led by RBC Capital Markets and CIBC World Markets. The Company will file an amended and restated prospectus shortly outlining the offering prices set forth below.

The Preferred Shares will be offered at a price of $10.00 per share to yield 5.25% based on current distribution policy. The closing price of the preferred shares on March 2, 2010 on the TMX was $10.40.

The Class A shares will be offered at a price of $11.00 per share to yield 10.91% based on current distribution
policy. The closing price of the preferred shares on March 2, 2010 on the TMX was $11.99.

It announced on March 10 that it:

filed a final prospectus for its secondary offering of 2,400,000 Preferred Shares and 2,400,000 Class A Shares of the Company for aggregate gross proceeds of $50,400,000, bringing the Company’s net assets to approximately $273 million.

Finally, it announced on March 16 that it:

completed its secondary offering of 2,400,000 Preferred Shares and 2,400,000 Class A Shares of the Company for aggregate gross proceeds of $50,400,000, bringing the Company’s net assets to approximately $273 million.

DFN.PR.A was last mentioned on PrefBlog when it was reviewed by Larry MacDonald.

DFN.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

The recent slide in PerpetualDiscounts has been particularly hard on insurers – and particularly the lower coupon issues in a continuation of the trend discussed in MAPF: February Performance.

In fact, implied volatility has gone negative:

Click for Big

Click for Big

Both graphs have been prepared using the Straight Perpetual Implied Volatility Calculator and, for purposes of the theoretical curve, setting the implied volatility to 15% / 3 Years.

Brookfield Investment Management (Canada) Inc. has announced:

a proposal to make amendments to the declaration of trust of its fund Brascan SoundVest Rising Distribution Split Trust (TSX:BSD.UN) (the “Fund”), as well as to change the Fund’s manager, and to rename the Fund “Brookfield Soundvest Split Trust”.

The proposal, which requires approval by the capital unitholders of the Fund, would result in a change to the existing investment strategy. It is proposed that the Fund’s investment mandate be expanded to allow investment in a broader set of primarily high yielding equity securities. The investment objectives will remain the same: for holders of preferred securities, to provide fixed quarterly interest payments and repay the original subscription price at maturity; and for holders of capital units, to provide a regular stream of monthly distributions and to maximize long-term total return.

The Manager believes that expanding the investment flexibility of the Fund will permit it to invest in a broader range of securities to off-set the reduction in the number of income trust investments resulting from the Canadian Federal Government’s decision announced on October 31, 2006 to change the way that income trusts are to be taxed, effective January 1, 2011.

Costs of making these changes including the preparation of materials for and the holding of unitholder meetings will be borne by the Manager. If the extraordinary resolutions are approved, then the Fund will bear any costs associated with repositioning its investment portfolio to reflect the amended investment strategies and restrictions.

The Manager has called a meeting of Fund capital unitholders for 10:00 a.m. on April 20, 2010 to consider the extraordinary resolutions being proposed. It is expected that materials for this meeting, which will provide further details on the proposals, will be available no later than three weeks prior to the date of the meeting and will be delivered to investors who hold capital units in the Fund as of the official record date, which is March 12, 2010.

Subject to capital unitholder and regulatory approval, review by the Funds’ independent review committee, and other closing conditions, the changes are expected to be completed by April 30, 2010.

This trust has been most notable for its appalling performance since inception, although the abusive suspension of retraction rights and lackadaisical Normal Course Issuer Bid run a close second and third.

BSD.PR.A was last mentioned on PrefBlog when the semi-annual financials were published. BSD.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

BPO Properties Limited has announced:

that BPP will be shortly mailing its information circular to shareholders containing some modifications to the previously announced proposal to create Canada’s pre-eminent office real estate investment trust (REIT), to be named Brookfield Office Properties Canada. After consultation with a number of interested parties, including the independent committee of the board of directors and its financial advisor, Brookfield Office Properties Canada has agreed to pay $100 million of the purchase price for Brookfield Properties’ interest in Brookfield Place in cash instead of solely through the assumption of debt and units in the new REIT, as originally announced. The remainder of the purchase price will be paid by the assumption of debt and units valued at approximately $20.90 per unit. In light of this change, Brookfield Office Properties Canada will not pay the previously announced special distribution to unitholders on closing of the transaction.

The impact of the above cash payment is a reduction in the number of units outstanding by approximately five million to 93 million and an increase in expected funds from operations available to unitholders on an annualized basis in 2010 to $1.27 per unit from $1.20 per unit. In addition, Brookfield Office Properties Canada’s monthly distributions commencing on closing of the transaction as modified will increase to $0.07 per unit, or $0.84 per unit on an annualized basis.

On closing of the transaction, Brookfield Properties and its affiliates, which currently hold approximately 89.7% of BPP’s common equity, will hold in aggregate an equity interest in Brookfield Office Properties Canada of approximately 90.6%, including the consideration Brookfield Properties is receiving for the sale of Brookfield Place.

As a result of Brookfield Properties’ ownership of equity interests in the REIT of more than 90%, under applicable Canadian securities laws it would be possible for Brookfield Properties to initiate a privatization of the REIT and certain related party transactions without seeking the approval of the minority unitholders. Recognizing this, Brookfield Properties has agreed that following closing it will not initiate any such privatization or related party transaction without minority approval. This undertaking will terminate in the future if Brookfield Properties and its affiliates hold in aggregate an equity interest in Brookfield Office Properties Canada of 75% or less for a period of 12 months.

The independent committee appointed by the board of directors of BPP to consider the proposed transaction has received an opinion from its financial advisor, Macquarie Capital Markets Canada Ltd., that the transaction as modified is fair, from a financial point of view, to shareholders of BPP other than Brookfield Properties and its affiliates. The board of directors, on the unanimous recommendation of the independent committee, has determined that the proposed transaction as modified is in the best interests of BPP and is unanimously recommending that shareholders vote in favour of the transaction at the meeting.

An information circular describing the modified transaction is anticipated to be mailed shortly, but at least prior to April 1, 2010 and will be available on BPP’s website and at www.sedar.com at that time. The meeting of shareholders to consider the transaction is now expected to take place on April 27, 2010. If shareholders approve the transaction at the meeting, and the requisite court approval is obtained, it is anticipated that the transaction will be completed on or about April 30, 2010.

The plan of arrangement has been discussed on PrefBlog.

BPP has three issues of preferreds outstanding: BPP.PR.G, BPP.PR.J and BPP.PR.M. It is not yet clear whether they will vote as a class on the transaction.

Navina Asset Management Inc. (formerly Lawrence Asset Management Inc.) has announced:

that in accordance with a proposal to amend the articles of the Corporation (the “Articles”) approved at a Special Meeting of Shareholders held on February 25, 2010, HI PREFS will be terminated as of market close on March 12, 2010 (the “Termination Date”) and the Series 1 Shares (TSX:HPF.pr.a) and Series 2 Shares (TSX:HPF.pr.b) will be delisted from the Toronto Stock Exchange.

In accordance with the terms of the amended Articles, HI PREFS will redeem all of the outstanding Series 1 Shares, Series 2 Shares and Equity shares of the Corporation on the Termination Date. Shareholders are not required to take any action to cause their shares to be redeemed. Redemption proceeds calculated in accordance with the Articles will be paid to Computershare on March 12, 2010 for distribution to shareholders.

Each holder of Series 1 Shares will receive an aggregate payment equal to $27.80 for each Series 1 Share held by them, such amount representing (a) the original investment amount of $25.00 paid in respect of each Series 1 Share, plus (b) the amount of all declared but unpaid dividends payable to holders of the Series 1 Shares and any dividends accrued up to the Termination date of March 12, 2010.

Each holder of Series 2 Shares will receive an aggregate payment equal to $16.46 per Series 2 Share, such amount representing (a) the original investment amount of $14.70 paid in respect of each Series 2 Share less $0.28 per share (such amount representing one-half of the costs, on a per share basis, to wind up and terminate the Corporation early), plus (b) the amount of all declared but unpaid dividends payable to holders of the Series 2 Shares and any dividends accrued up to the Termination date of March 12, 2010.

From and after the Termination Date, Shareholders will cease to be entitled to any dividends of HI PREFS and will not be entitled to exercise any of the rights of shareholders of HI PREFS unless payment of the redemption amount in respect of the shares is not duly made by the Corporation. For more information please visit www.lawrenceasset.com.

These issues will not be missed.

HPF.PR.A and HPF.PR.B were last mentioned on PrefBlog when the approval for early wind-up was announced. HPF.PR.A and HPF.PR.B were tracked by HIMIPref™, but were relegated to the Scraps index on credit concerns.

TransCanada Corp. has announced:

that it has completed its public offering of cumulative redeemable first preferred shares, series 3 (the “Series 3 Preferred Shares”). As the underwriters fully exercised their option to acquire an additional two million Series 3 Preferred Shares, the size of the offering increased to a total of 14 million shares resulting in gross proceeds of $350 million.

The offering was first announced on March 4, 2010 when TransCanada entered into an agreement with a syndicate of underwriters in Canada led by Scotia Capital Inc. and RBC Capital Markets.

The net proceeds of the offering will be used to partially fund capital projects, for general corporate purposes and to reduce short term indebtedness of TransCanada and its affiliates, which short term indebtedness was used to fund TransCanada’s capital program and for general corporate purposes.

TRP.PR.B is the new FixedReset 4.00%+128 announced March 4. TRP.PR.B traded 437,233 shares in a range of 24.83-95 before closing at 24.88-90, 48×2.

Vital statistics are:

The issue will be tracked by HIMIPref™. It has been added to the FixedReset sub-index; at some point this index will be split into Premium and Discount moieties, similarly to the Straight Perpetuals, as the behaviour of Premium and Discount issues in response to yield shocks will be different.

Brookfield Renewable Power Fund has announced:

the closing of the previously announced public offering of 10 million Class A Preference Shares, Series 1 (the “Series 1 Preferred Shares”) of Brookfield Renewable Power Preferred Equity Inc., at $25.00 per share for gross proceeds of $250 million. The offering was made on a bought deal basis through a syndicate of underwriters led by Scotia Capital Inc., CIBC, RBC Capital Markets and TD Securities Inc.

The Series 1 Preferred Shares commence trading on the Toronto Stock Exchange today under the symbol BRF.PR.A.

This is a FixedReset, 5.25%+262, announced February 18 and upsized to $250-million after announcement. The issue traded 388,252 shares in a range of 24.79-07 (the low price was the opening) before closing at 25.05-07, 3×20.

Vital statistics are:

Great-West Lifeco has announced:

the closing of its previously announced offering of 6,000,000 Non-Cumulative First Preferred Shares, Series M through a syndicate of underwriters co-led by BMO Capital Markets, RBC Capital Markets and Scotia Capital to raise gross proceeds of $150 million. The shares will be posted for trading on the Toronto Stock Exchange under the symbol “GWO.PR.M”.

The Series M Shares were priced at $25.00 per share and carry a 5.80% annual dividend. The net proceeds will be used by the Company to fund the redemption of the Non-Cumulative First Preferred Shares, Series D on March 31, 2010.

The issue traded 160,180 shares in a range of 24.50-70 before closing at 24.62-65, 50×11. It is 5.80% Straight announced February 23.

Vital statistics are:

Comparables are:

Lynx-eyed Assiduous Readers will note that prices of comparators has dropped since the announcement, but yields have barely changed. These issues all went ex-Dividend on March 1; the Power Group likes to announce new straight issues shortly prior to the ex-Date so that comparators will be full of dividend and hence have a lower Current Yield.

It is worth noting that not only is GWO.PR.M still expensive when priced as a perpetual annuity, but also that there is basically no allowance for Implied Volatility in the group prices – which makes it more expensive still.

Sixty Split Corp. has announced:

that it has called 64,750 Preferred Shares for cash redemption on March 15, 2010 (in accordance with the Company’s Articles) representing approximately 10.402% of the outstanding Preferred Shares as a result of the special annual retraction of 129,500 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 March 12, 2010 will have approximately 10.402% of their Preferred Shares redeemed. The redemption price for the Preferred Shares will be $25.00 per share.

In addition, holders of a further 100,234 Capital Shares and 50,117 Preferred Shares have deposited such shares concurrently for retraction on March 15, 2010. As a result, a total of 229,734 Capital Shares and 114,867 Preferred Shares, or approximately 17.0784% 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 March 15, 2010. Payment of the amount due to holders of Preferred Shares will be made by the Company on March 15, 2010. From and after March 15, 2010 the holders of Preferred Shares that have been called for redemption will not be entitled to dividends or to exercise any right in respect of such shares except to receive the amount due on redemption.

SXT.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-2 by DBRS. SXT.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on volume concerns.

BNS Split Corp. II has announced:

that its Board of Directors has retained Scotia Capital to advise the Company on a possible extension and reorganization of the Company. There is no guarantee that after such review an extension will be proposed or if proposed, will be approved by shareholders.

BNS Split Corp. II is a mutual fund corporation created to hold a portfolio of common shares of The Bank of Nova Scotia.

BSC.PR.A is scheduled to wind up in September:

The Capital Shares and the Preferred Shares may be surrendered for retraction at any time and will be redeemed by the Company on September 22, 2010 (the ‘‘Redemption Date’’).

BSC has an NAVPU of $48.31 providing Asset Coverage of 2.3+:1.

BSC.PR.A was last mentioned on PrefBlog when it was upgraded to Pfd-2(low) by DBRS. 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.