Category: Issue Comments

Issue Comments

NBF.PR.A: Capital Unit Dividend Reinstated

NB Split Corp. announced in February that:

The Board of Directors has determined that it will not declare a dividend on the Capital Shares for this quarter. The Board of Directors will review on a quarterly basis whether the Company will declare a dividend on the Capital Shares. Any excess of dividends received by the Company over that required to fund the Preferred Share distributions and operating expenses will be held in cash or cash equivalents by the Company.

… and announced in May

that:

In deciding to reinstate the dividend on the Capital Shares this quarter, the Board of Directors considered, among other things, the improved performance of the Company’s portfolio since the last quarter, the rights attaching to the Preferred Shares, including the priority of the Preferred Shares for the payment of cumulative dividends and return of capital prior to the rights of the Capital Shares, estimated expense levels and the anticipated distributions receivable on the Company’s portfolio. A consideration of these factors, among other matters, resulted in the determination of the Board to suspend Capital Share dividends in the prior quarter and the reinstatement of these dividends in the current quarter.

The Board of Directors will continue to monitor these factors, among others, when deciding on the declaration and payment of dividends in the future and these factors may cause the board to reduce, suspend or increase dividends on the Capital Shares in future periods.

Just trying to keep things up to date! NB Split’s portfolio is entirely comprised of NA common. Asset Coverage as of August 13 was 1.4+:1 according to the company.

NBF.PR.A is not tracked by HIMIPref™ since the issue size is too small. It was last mentioned on PrefBlog when it was downgraded to Pfd-4(low) by DBRS.

Issue Comments

FTN.PR.A, FFN.PR.A, FTU.PR.A: Semi-Annual Financials

Quadravest
SplitShare
Corporations
Ticker Income
Coverage
1H09		 Asset
Coverage
2009-7-31		 Last
PrefBlog
Mention
FTN.PR.A 1.2+:1 1.8+:1 Capital
Unit
Dividend
Reinstated
FFN.PR.A 1.0+:1 1.6-:1 Downgraded
Pfd-5(high)
FTU.PR.A 0.1+:1* 0.6+:1** Preferred
Dividend
Suspended
* For income coverage purposes, the full accumulated dividend is counted, regardless of whether this was actually paid or merely cumulated
** For asset coverage purposes, the cumulated but unpaid dividend is considered a prior claim on assets. The cumulated amount was 17.5 cents per share; which may be considered as belonging to the preferred shareholders in addition to the stated NAV.

As a fascinating aside, the FTN.PR.A financials show a recovery of $20,000 in service fees; sadly, this unusual item is not explained in the note.

Issue Comments

L.PR.A: DBRS Revises Trend to "Stable"

DBRS has announced that it:

has today confirmed Loblaw Companies Limited’s (Loblaw or the Company) long-term debt ratings at BBB and its Cumulative Redeemable Second Preferred Shares, Series A rating at Pfd-3, and revised the trends to Stable from Negative.
…
DBRS believes that the management changes and strategic initiatives made in early 2008 have proved successful in stabilizing the business. Loblaw has been able to keep market share almost level and deliver reasonable revenue growth while improving margins for a full year now. The performance over the past year has led to a significant improvement in key credit metrics – lease-adjusted gross debt-to-EBITDAR for the 52 weeks ending June 20, 2009 is now 2.8 times (x) (compared with 3.1x for 2008, and 3.7x for the 52 weeks ending June 14, 2008), a level that is well within the BBB rating category for Loblaw. With solid performance for four quarters in a row, DBRS is prepared to revise the trend on its long-term ratings for Loblaw to Stable from Negative.

DBRS is prepared to take this action despite the fact that operating performance and credit metrics may actually moderate over the near term due to the effects of food price deflation, a weak economic environment, and intense competition. We believe a more stable Canadian food retailing sector, combined with the initiatives taken by Loblaw over the past year and a half to address its internal problems, have strengthened the Company and positioned it to withstand a more challenging environment within the current rating category. DBRS also acknowledges that Loblaw’s intention to increase its capital budget for the remainder of the year (to $1 billion from previous guidance of $750 million) will use much of the free cash flow that could have been used to reduce net debt further.

L.PR.A was last mentioned on PrefBlog when a bond issue offered a pricing clue last May.

L.PR.A is tracked by HIMIPref™. It is relegated to the “Scraps” index on credit concerns.

Issue Comments

Best & Worst Performers: July 2009

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.

July 2009
Issue Index DBRS Rating Monthly Performance Notes (“Now” means “July 31”)
BAM.PR.K Floater Pfd-2(low) -3.23% Was the third-worst performer in June.
PWF.PR.J OpRet Pfd-1(low) -0.27% Now with a pre-tax bid-YTW of 3.37% based on a bid of 25.76 and a softMaturity 2013-7-30 at 25.00.
CM.PR.A OpRet Pfd-1(low) +0.19% Now with a pre-tax bid-YTW of –13.74% based on a bid of 25.91 and a call 2009-8-30 at 25.50. Since dividend is $1.325 and CM saves $0.25 p.a. on the redemption price, it will probably survive until softMaturity 2011-7-30, when it will have realized a yield of 3.42% … but you’re taking your chances!
BAM.PR.H OpRet Pfd-2(low) +0.28% Now with a pre-tax bid-YTW of 5.17% based on a bid of 25.50 and a softMaturity 2012-3-30 at 25.00.
MFC.PR.A OpRet Pfd-1(low) +0.71% Now with a pre-tax bid-YTW of 3.82% based on a bid of 25.54 and a softMaturity 2015-12-18 at 25.00.
… … … … …
SLF.PR.C Perpetual-Discount Pfd-1(low) +9.25% Now with a pre-tax bid-YTW of 6.16% based on a bid of 18.31 and a limitMaturity.
SLF.PR.D Perpetua-lDiscount Pfd-1(low) +9.62% Now with a pre-tax bid-YTW of 6.15% based on a bid of 18.35 and a limitMaturity.
CIU.PR.A Perpetual-Discount Pfd-2(high) +9.92% Now with a pre-tax bid-YTW of 5.81% based on a bid of 20.17 and a limitMaturity. Was the fourth-worst performer in June.
BNA.PR.C SplitShare Pfd-2(low) +10.65% Now with a pre-tax bid-YTW of 9.15% based on a bid of 17.76 and a hardMaturity 2019-1-10 at 25.00. Was the best performer in June.
TRI.PR.B Floater Pfd-2(low) +10.93% Moved to Scraps at July rebalancing on volume concerns. Was the worst performer in June.
Issue Comments

FBS.PR.B: Capital Unit Dividend Reinstated

5Banc Split Inc. has announced:

that it has declared a quarterly dividend on its Preferred Shares of $0.11875 per Preferred Share and on its Capital Shares of $0.05 per Capital Share. The Capital Share dividend has been reinstated due to improved market conditions for the underlying portfolio securities. The dividends on both the Preferred Shares and Capital Shares are payable on September 15, 2009 to holders of record on August 31, 2009.

Capital Unitholders have missed two dividends, the dividend suspension was announced in January. The NAV of the company was reported to be $15.74 as of July 23.

FBS.PR.B was last mentioned on PrefBlog when it was downgraded to Pfd-4 by DBRS as part of the February mass-downgrade. It is tracked by HIMIPref™, but has been relegated to the Scraps index on credit concerns.

Issue Comments

FIG.PR.A: Rights Offering on Capital Units

Faircourt Asset Management has announced:

the final terms of the distribution to its unitholders of rights (the “Rights”) exercisable for units (“Units”) of the Trust (the “Rights Offering”). Each Unit consists of one trust unit of the Trust (a “Trust Unit”) and one transferable warrant to acquire a Trust Unit (a “Warrant”). Each Warrant entitles the holder thereof to purchase one Trust Unit on, and only on, June 25, 2010 at a subscription price of $4.00. The distribution is being made pursuant to a short form prospectus dated July 14, 2009. TD Securities Inc. is the dealer manager for the Rights Offering.

Under the Rights Offering, holders of the Trust Units as of the close of business on July 22, 2009 received one Right for each Trust Unit held as of the record date. Each Right will entitle the holder thereof to purchase one Unit at a subscription price of $2.30. The Rights will expire at 4:00 pm (Toronto time) on August 27, 2009.

The Rights Offering included an additional subscription privilege under which holders of Rights who fully exercise their Rights will be entitled to subscribe for additional Units, if available, that were not otherwise subscribed for in the Rights Offering.

The Trust will use the net proceeds of this issue to increase capital for investment.

As of July 24, the NAV of each Capital Unit was $3.96 and as of Dec. 31, 2008:

the Trust had 5,344,946 Trust Units Fund Performance outstanding and trading at $0.80 per Trust Unit, a discount to the underlying NAV of 59%. Closed end trusts may trade above, at or below their NAV per unit.

As at December 31, 2008, the Trust had 9,964,308 Preferred Securities outstanding representing a total liability of $99.64 million.

Income coverage of the FIG.PR.A distribution in 2008 was 1.4-:1; asset coverage at year-end was originally reported as 1.1-:1, and adjusted later. Assuming there have been no changes in outstanding shares, asset coverage (from the NAV provided) is currently 1.2+:1 before giving effect to any rights subscriptions.

FIG.PR.A was last mentioned on PrefBlog when it was downgraded to Pfd-5 as part of the February Massacre; a planned rights offering was cancelled last November.

FIG.PR.A is tracked by HIMIPref™ but was relegated to the ‘Scraps’ index as part of the February 2009 rebalancing on credit concerns.