R Split III Corp. has announced:
that holders of its Class A Capital Shares (“Capital Shares”) have overwhelmingly approved a share capital reorganization (the “Reorganization”) allowing holders of Capital Shares, at their option, to retain their investment in the Company after the scheduled redemption date of May 31, 2012. The Reorganization will permit holders of Capital Shares to extend their investment in the Company beyond the redemption date of May 31, 2012 for up to an additional 5 years. The Class A Preferred Shares will be redeemed on the same terms originally contemplated in their share provisions and have been called for redemption on May 31, 2012. In order to maintain the leveraged “split share” structure of the Company, the Company expects to create and issue a new series of Class B preferred shares on or about May 31, 2012.
Holders of Capital Shares electing to retain their investment in the Company will continue to enjoy the benefit of a leveraged participation in the capital appreciation of the Company’s portfolio of common shares (the ‘‘Royal Bank Shares’’) of Royal Bank of Canada (‘‘Royal Bank’’).
Holders of Capital Shares who do not wish to continue their investment in the Company after May 31, 2012 must give notice that they wish to exercise their special retraction right and how they wish to be paid for their shares on or prior to April 3, 2012. Holders of Capital Shares who retract their Capital Shares will be paid on May 31, 2012. The Reorganization will become effective provided that holders of at least 1,405,000 Capital Shares retain their Capital Shares and do not exercise the special retraction right.
RBS.PR.A was last mentioned on PrefBlog when the reorganization proposal was announced. RBS.PR.A is not tracked by HIMIPref™.
Thoughts on a Potential YLO Preferred / Common Conversion
March 15th, 2012As we all know, YLO.PR.A is convertible at the option of the company into common commencing March 31. We also know that YLO.PR.B is similarly convertible (with a premium) commencing June 30.
But Assiduous Reader JY tells me:
So the idea is: the conversion value of the preferreds includes accrued but unpaid dividends; therefore, conversion of YLO.PR.A will involve giving value for the accrued but unpaid dividends; therefore, they won’t be able to convert YLO.PR.A or YLO.PR.B without bringing the dividends on YLO.PR.C and YLO.PR.D up to date.
However, there’s a section in the 2009-9-15 prospectus for YLO.PR.D (and probably the others as well – I didn’t check) that states:
So … given that there’s an exemption available for “stock dividends”, which is not a defined term, could YLO claim that paying the conversion price in common shares make the dividend count as a stock dividend, which will not trigger mandatory payment of the other outstanding dividends? I will leave that one for the lawyers.
The YLO preferreds (YLO.PR.A, YLO.PR.B, YLO.PR.C & YLO.PR.D) were last mentioned on PrefBlog when S&P downgraded them to C. All the issues are tracked by HIMIPref™ but are relegated to the Scraps index on credit concerns.
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