PrefBlog

The Toronto Stock Exchange has announced:

SUSPENDED – Nortel Networks Limited (the “Company”) – The Cumulative Redeemable Class A Preferred Shares, Series 5 (Symbol: NTL.PR.F) and the Non-Cumulative Redeemable Class A Preferred Shares, Series 7 (Symbol: NTL.PR.G) will be suspended from trading effective immediately as a result of the Company’s June 19, 2009 news release. Further information will be forthcoming regarding the Company’s expected delisting application.

The last mention of these issues on PrefBlog occurred when the company requested restrictions on trading.

Both issues have been tracked by HIMIPref™, but are relegated to the “Scraps” index on credit concerns. Tracking will cease immediately.

Update, 2009-6-23: The TSX has announced:

CHANGES IN STOCK LIST Nortel Networks Limited (the “Company”) – Further to TSX Bulletin #2009-0795, at the request of the Company, the Cumulative Redeemable Class A Preferred Shares, Series 5 (Symbol: NTL.PR.F) and the Non-Cumulative Redeemable Class A Preferred Shares, Series 7 (Symbol: NTL.PR.G) (collectively the “Shares”) will be delisted at the close of market on June 26, 2009. Trading in the Company’s Shares will remain suspended.

Commerce Split Corp. has announced:

The Company’s total net asset value is approximately $8.85 per unit as at June 18, 2009, consisting of less than 16% common shares of CIBC. The reduced exposure to CIBC will materially limit the future impact of price movements of CIBC shares on the net asset value of the Company and lower the ability of the Company to generate income from
dividends and its covered call option writing program.

The significant price decline of CIBC and the resultant implementation of the Priority Equity Protection Plan have made it extremely difficult to achieve the original stated objectives for both classes of shares. The Company established a normal course issuer’s bid which allows the Company to re-purchase units in the market when trading prices are at a discount to the net asset value.

Subsequent to the unsuccessful shareholder vote on February 5, 2009 of the reorganization proposal, the Company has continued to dialogue with certain larger shareholders to try and establish potential solutions for reorganizing the Company that would be suitable for all shareholders and result in a successful shareholder vote. Outside of certain larger shareholders, the remaining shareholders had voted overwhelmingly in support of management’s latest proposal.

The Company has received several shareholder requests to wind up the Company. In response to this request, the Company would like to remind all shareholders that all such reorganization proposals must receive a 66 2/3 favorable vote by both the Class A shareholders and the Preferred shareholders voting separately by class. This requirement is outlined in the Company’s prospectus and is part of the articles of incorporation of the Company. Under any kind of termination proposal at the current time, Class A shareholders would receive no value for their Class A shares since the net asset value per unit is below $10. The Class A shares have traded in a range between $0.36 and $1.84 since February 5, 2009 and closed at $1.02 on June 18, 2009. As such, the Company does not believe that this proposal is in the best interests of the Class A shareholders and any proposal that would provide no value to the Class A shareholders would ultimately never be approved by Class A shareholders.

The Company will continue to seek solutions that will balance and meet the interests of both Classes of shareholders and also result in a successful vote. The costs of holding a meeting are significant to the Company and, as such, the Company will only bring forward a proposal that has a high probability of being passed by the requisite majorities of each Class of shareholders.

Huh. Providing no value – indeed, taking away value – for the preferred shareholders didn’t seem to stop their last proposal from coming to vote.

XCM.PR.A is currently quoted at 7.20-31, while XCM is at 1.05-18. The company should buy the maximum permitted under its issuer bid when this can be done at or below NAV, remind shareholders of their retraction rights, and propose a wind-up that will pay the common shareholders a nominal sum. Waiving management fees, or a good chunk thereof, would be a good thing too, but I’m not holding my breath!

XCM.PR.A is not tracked by HIMIPref™.

M Split Corp has announced:

This sharp decline in Manulife has resulted in the Company’s net asset value being reduced significantly and as mentioned in previous updates, has required the Company to implement the Priority Equity Portfolio Protection Plan (the “Plan”) in accordance with the prospectus. As a result of implementing the Plan, the Company has been required to sell the vast majority of the Manulife common shares held in the Portfolio and acquire fixed income securities.

The Company’s total net asset value is approximately $8.37 per unit as at June 18, 2009, consisting of less than 1% common shares of Manulife. The reduced exposure to Manulife will materially limit the future impact of price movements of Manulife shares on the net asset value of the Company and lower the ability of the Company to generate income from dividends and its covered call option writing program.

The significant price decline of Manulife has made it extremely difficult to achieve the original stated objectives for both classes of shares. The Company established a normal course issuer’s bid which allows the Company to repurchase units in the market when trading prices are at a discount to the net asset value.

Subsequent to the unsuccessful shareholder vote on February 5, 2009 of the reorganization proposal, the Company has continued to dialogue with certain larger shareholders to try and establish potential solutions for reorganizing the Company that would be suitable for all shareholders and result in a successful shareholder vote. Outside of certain larger shareholders, the remaining shareholders had voted overwhelmingly in support of management’s latest proposal.

The Company has received several shareholder requests to wind up the Company. In response to this request, the Company would like to remind all shareholders that all such reorganization proposals must receive a 66 2/3 favorable vote by both the Class A shareholders and the Preferred shareholders voting separately by class. This requirement is outlined in the Company’s prospectus and is part of the articles of incorporation of the Company. Under any kind of termination proposal at the current time, Class A shareholders would receive no value for their Class A shares since the net asset value per unit is below $10. The Class A shares have traded in a range between $0.27 and $0.78 since February 5, 2009 and closed at $0.40 on June 18, 2009. As such, the Company does not believe that this proposal is in the best interests of the Class A shareholders and any proposal that would provide no value to the Class A shareholders would ultimately never be approved by Class A shareholders.

The Company will continue to seek solutions that will balance and meet the interests of both Classes of shareholders and also result in a successful vote. The costs of holding a meeting are significant to the Company and, as such, the Company will only bring forward a proposal that has a high probability of being passed by the requisite majorities of each Class of shareholders.

Huh. Providing no value – indeed, taking away value – for the preferred shareholders didn’t seem to stop their last proposal from coming to vote.

XMF.PR.A is currently quoted at 7.07-28, while XMF is at 0.36-50. The company should buy the maximum permitted under its issuer bid, remind shareholders of their retraction rights, and propose a wind-up that will pay the common shareholders a nominal sum. Waiving management fees, or a good chunk thereof, would be a good thing too, but I’m not holding my breath!

XMF.PR.A is not tracked by HIMIPref™.

A Globe & Mail story highlights a Manulife Financial Press Release that states:

On a separate matter unrelated to prior announcements made today by Manulife Financial Corporation, the Company stated that it received an enforcement notice from staff of the Ontario Securities Commission (OSC) this week relating to its disclosure before March 2009 of risks related to its variable annuity guarantee and segregated funds business. The OSC notice indicates that it is the preliminary conclusion of OSC staff that the Company failed to meet its continuous disclosure obligations related to its exposure to market price risk in its segregated funds and variable annuity guaranteed products. The Company has the opportunity to respond to the notice before OSC staff makes a decision whether to commence proceedings, and the Company intends to cooperate with OSC staff. The Company believes that its disclosure satisfied applicable disclosure requirements.

The prior announcements that the company is so anxious to emphasize are separate and unrelated are retirement of the CFO and Capital Update; the Capital Update trumpets MCCSR but makes no reference to the degree of double leverage inherent in the MFC holdco / insurance sub. structure. They never do, of course, but it is something that preferred shareholders in the holdco (MFC.PR.A, MFC.PR.B, MFC.PR.C, MFC.PR.D & MFC.PR.E) should bear firmly in mind at all times.

With respect to double-leverage, it is of interest to note that Manulife issued $1-billion of 5-Year MTNs at 4.896%, closing 2009-6-2, with the pricing supplement stating:

Approximately $730 million of the net proceeds to MFC from the sale of the Notes will be applied to reduce amounts outstanding under the Credit Facility and the balance of the net proceeds will be utilized for general corporate purposes of MFC.

There are – quite properly – no announcements regarding the enforcement notice regarding disclosure on the OSC website.

The MFC preferreds were last mentioned on PrefBlog when downgraded to A- [Negative Outlook] by Fitch.

BMO.PR.P, the new FixedReset 5.40%+241 announced last week, settled today and traded 889,295 shares in a range of 25.05-19 before closing at 25.09-12, 10×18.

The deal size was 14-million shares (=$350-million) with a 2-million share (=$50-million) greenshoe. It is not clear whether or not the greenshoe has been exercised.

Vital statistics are:

BMO.PR.P has been added to the HIMIPref™ FixedResets subindex.