PrefBlog

Sentry Select has announced:

that, in accordance with its initial terms, the Trust’s capital units and preferred securities will be delisted from the Toronto Stock Exchange at the close of business on Monday, November 24, 2008. The delisting of the capital units and preferred securities is being done in preparation for the conversion of the Trust into an open-ended mutual fund (the “Conversion”), which is expected to occur on December 2, 2008. The Trust’s preferred securities will mature prior to the Conversion, on December 1, 2008 (the “Maturity Date”). The Manager currently has sufficient cash on hand to repay the preferred securities and any other payment obligations on the Maturity Date.

It is Sentry Select’s current intention to merge the converted Trust with Sentry Select Canadian Income Fund (“CIF”) in early 2009 (the “Merger”). The Merger would be subject to any applicable unitholder and regulatory approvals. Following the Conversion and until further notice, Sentry Select anticipates that the Trust will pay a monthly distribution of $0.027 per unit, which, based on the net asset value per capital unit of $4.13 at the close of business on November 17, 2008, will provide unitholders with a yield of 7.85%. This yield would be similar to the yield of CIF, which was approximately 7.88% as of the close of business on November 17, 2008.

SFO was mentioned on PrefBlog when dividends on capital units were suspended. SFO.PR.A is not tracked by HIMIPref™.

CIX Split Corp. has announced:

that it will seek the approval of its shareholders to change the investment objectives, strategies and restrictions of the Corporation (the “Mandate Change”) to reflect that the Corporation will invest substantially all of its assets in common shares of the corporate successor (“CI Financial”) to CI Financial Income Fund (the “Income Fund”) if the Income Fund is successful in converting to a corporation. On October 15, 2008, the Income Fund announced its intention to convert its structure from an income trust to a corporation at the end of 2008, subject to receipt of all necessary unitholder, court and other approvals.

Currently, the Corporation has invested part of its assets in trust units of the Income Fund and the balance of its assets in a portfolio of common shares of Canadian public companies which, under a forward purchase and sale agreement, the Corporation has agreed to sell to a counterparty for a purchase price calculated by reference to the market value of a reference number of trust units of the Income Fund. As part of the Mandate Change, the Corporation also will complete the early settlement of the sale of its common share portfolio to the counterparty. The Corporation will invest the proceeds from such sale in common shares of CI Financial.

The Mandate Change also will include deleting from the Corporation’s investment objectives respecting its Class A Shares the reference to targeted monthly cash distributions. The Corporation is precluded by the terms of the Class A Shares from paying distributions thereon when the net asset value per unit (one Class A Share and one Priority Equity Share, together) is equal to or less than $15.00. Due to prevailing market conditions, it is no longer realistic for the Corporation to pursue an objective of targeted monthly cash distributions on the Class A Shares.

If the Mandate Change is not approved, the Corporation also will seek the approval of its shareholders to terminate the Corporation on or about December 31, 2008 since the Corporation will be unable to comply with its current investment objectives, strategies and restrictions after the Income Fund completes its reorganization into CI Financial.

A meeting of the shareholders of the Corporation will be held on or about December 23, 2008 to approve either the Mandate Change or the early termination of the Corporation. Shareholders of record at the close of business on November 22, 2008 will be entitled to receive notice of the
meeting. If the Mandate Change is approved and implemented, shareholders who do not wish to continue holding their shares of the Corporation may either dispose of their shares or exercise one of the retraction rights attached to their shares. Shareholders will not have a right under corporate laws to dissent from the Mandate Change.

CXC.PR.A had Asset Coverage of 1.2+:1 as of November 18, according to CI Investments, and closed today at 8.71-00, 1×5, while the capital units closed at 2.52-69.

According to the prospectus:

The following matters require the approval of the holders of Priority Equity Shares and Class A Shares by a two thirds majority vote (other than matters referred to in paragraphs (c), (f) and (g), which require approval of a simple majority vote) at a meeting called and held for such purpose:
(a) a change to the fundamental investment objectives and strategy of the Company;
…
Each Priority Equity Share and Class A Share will have one vote at such a meeting and will not vote separately as a class in respect of any vote taken (except for a vote in respect of the matters referred to in paragraphs (a), (b), (g) and (h) above and any other matters referred to above if a class is affected by the matter in a manner different from the other classes of shares of the Company). Ten per cent of the outstanding Priority Equity Shares and Class A Shares, as a group, or, where shares of a class vote separately, ten percent of the outstanding shares of that class, represented in person or by proxy at the meeting will constitute a quorum. If no quorum is present, the holders of Priority Equity Shares and Class A Shares then present will constitute a quorum at an adjourned meeting.

Given that monthly retraction rights are:

Holders retracting a Priority Equity Share on a Monthly Retraction Date will be entitled to receive an amount per Priority Equity Share equal to the lesser of: (i) $10.00; and (ii) 96% of the amount, if any, by which the net asset value per Unit on the relevant Monthly Retraction Date exceeds the cost to the Company of acquiring a Class A Share for cancellation. The cost of acquiring a Class A Share will include the price of the Class A Share, commission, and such other costs, if any, related to the partial ettlement of the Forward Agreement to fund such retraction.

… it is clearly in the interest of the preferred shareholders to vote no, have the company wound up and (almost certainly? very probably?) receive par value for their shares.

CXC.PR.A was last mentioned on PrefBlog when distributions to capital unitholders were suspended. CXC.PR.A is not tracked by HIMIPref™.

Faircourt Asset Management has announced:

that the Trust has received a receipt for the final short form prospectus in each of the provinces of Canada in connection with the previously announced distribution of rights to its unitholders (the “Rights Offering”).

Under the Rights Offering, holders of units of the Trust as of November 25, 2008 (the “Record Date”) will receive one right for each trust unit held. Each right will entitle the holder thereof to purchase one trust unit at a price (the “Subscription Price”) of $3.00 per trust unit, being 86.0% of the net asset value of a trust unit as at November 14, 2008 and 93.2% of the volume weighted average price of a trust unit on the Toronto Stock Exchange (the “TSX”) during the five trading days ended November 14, 2008 (both rounded to the nearest cent). The rights may be exercised for a period commencing on November 26, 2008 and ending at 4:00pm (Toronto time) on December 19, 2008.

The Rights will be listed on the TSX under the symbol FIG.RT and will commence trading on November 21, 2008.

Each holder of rights who subscribed for all of the trust units to which the holder is entitled under the basis subscription privilege may subscribe for any number of additional trust units, if available, at a price equal to the Subscription Price for each additional trust unit, subject to
availability.

The Trust will use the net proceeds of this issue to increase capital for investment and reduce leverage associated with the preferred securities of the Trust.

The NAV of the Fund’s Capital Units was $3.07 as of November 17, and there were 0.71 Capital Units per Preferred. Successful completion of the entire offering – by no means a given – would imply asset coverage of 1.4+:1 for the preferreds – still not very good!

Very strange. I’ve received two inquiries from investors recently via intermediaries regarding Quebecor World preferred shares (IQW.PR.C & IQW.PR.D). There are probably others who are wondering … so I’ll review the situation:

I regret that I must advise that the Quebecor World preferred shares are almost certainly worthless.

Dividends on the preferreds were suspended in November 2007. They entered bankruptcy protection in January after defaulting on an interest payment to senior bonds; an auction held on Credit Default Swaps referencing that debt indicated that the market valued senior bonds at 41.25 cents on the dollar.

The company continues to operate. The next date of interest is December 5, when all claims from creditors must be received but continues to have a negative net worth of about $1-billion.

The company notes:

In light of the Insolvency Proceedings, it is unlikely that the Company’s existing Multiple Voting Shares, Redeemable First Preferred Shares and Subordinate Voting Shares will have any material value following the approval of a Plan. There is a risk such shares could be cancelled.

HIMIPref™ no longer tracks IQW.PR.C or IQW.PR.D, as the low price was causing “sanity checks” in the programming to indicate errors.

Gatehouse Capital has announced:

Standard & Poor’s Ratings Services lowered the rating of Global Credit Pref Corp.’s (TSX:GPA.PR.A) preferred shares to P-5 on November 14 and they remain on CreditWatch with negative implications. The rating on the preferred shares of Global Credit Pref Corp. mirrors the lowering of the rating on the $48,031,000 fixed-rate static portfolio credit linked note issued by The Toronto-Dominion Bank to CCC Watch/Neg.

The Company has exposure to the credit linked note issued by The Toronto-Dominion Bank and held by Global Credit Trust, the return on which is linked to the credit performance of 124 reference entities.

The preferred shares are listed for trading on the Toronto Stock Exchange under the symbol GPA.PR.A

GPA.PR.A was placed on Watch-Negative following the WaMu Credit Event. There are 1.5-million shares outstanding, closing at 2.53-95 today. The NAV was $4.38 as of October 31 according to Gatehouse; shares outstanding are down slightly from the 1,537,267 reported June 30. According to the prospectus:

Preferred Shares may be surrendered at any time for retraction but will be retracted only
on the last day of the month (a “Valuation Date”) commencing October 31, 2005. Preferred Shares surrendered for retraction by a Holder at least five Business Days prior to a Valuation Date will be retracted on such Valuation Date and such Holder will receive payment on or before the tenth Business Day following such Valuation Date. On a retraction, Holders will be entitled to receive a retraction price per share (the “Preferred Share Retraction Price”) equal to 95% of the net asset value per Preferred Share determined as of the relevant Valuation Date, less $0.75.

GPA.PR.A is not tracked by HIMIPref™.