PrefBlog

AltaGas Ltd. has announced:

that after having taken into account all conversion notices received from holders of its outstanding Cumulative Redeemable Five-Year Rate Reset Preferred Shares, Series E (the “Series E Shares”) by the December 17, 2018 deadline, less than the 1,000,000 Series E Shares required to give effect to conversions into Cumulative Redeemable Floating Rate Preferred Shares, Series F of AltaGas (the “Series F Shares”) were tendered. As a result, none of AltaGas’ outstanding Series E Shares will be converted into Series F Shares on December 31, 2018.

ALA.PR.E is a FixedReset, 5.00%+317, that commenced trading 2013-12-13 after being announced 2013-12-4. The 2018-11-28 notice of extension was reported on PrefBlog. The issue is tracked by HIMIPref™ but is relegated to the Scraps – FixedReset Discount subindex due to credit concerns.

It will reset at 5.393% effective December 31, 2018. I recommended against conversion.

Brompton’s Life & Banc Split Corp has released its Semi-Annual Report, 2018 in August.

Figures of interest are:

MER: “The MER per unit, excluding Preferred share distributions and issue costs (which were covered by the portfolio’s dividend income), was 0.93% for the first six months of 2018, down from 0.95% for 2017.”

Average Net Assets: We need this to calculate portfolio yield. The Total Assets of the fund at year end was $453.8-million, compared to $413.2-million on June 30, so call it an average of $433.5-million. Preferred share dividends of $5,271,068 were paid over the half year at 0.475 p.a. (boosted to 0.545 after the recent term extension), implying average units outstanding 22.2-million, at an average NAVPU of (20.06 + 18.62)/2 = 19.34, implies net assets of $429.3-million. Say the Average Net Assets are the average of the two estimates, $431.4-million.

Underlying Portfolio Yield: Income received of $8,114,588 divided by average net assets of $431.4-million, multiplied by two because it’s semiannual is 3.76%.

Income Coverage: Net investment income of $6,131,229 (before capital gains) divided by preferred share dividends of $5,271,068 is a very good 116%.

The income coverage calculated is fairly close to “The dividend coverage ratio was about 1.0x.” calculated by DBRS in November 2018.

It will be recalled that FTU.PR.B recently extended term with a dividend boost to 10% – no gift, since the units are underwater. Shareholders had a retraction right:

In connection with the extension, the Company will offer a Special Retraction Right which will allow existing shareholders to tender one or both classes of Shares and receive a retraction price based on the November 30, 2018 net asset value per unit.

I recommended retraction, but it seems that the spirit of giving entered a lot of shareholders’ hearts during the retraction period.

Quadravest has announced:

US Financial 15 Split Corp. (“the Company”) announces a Class A share consolidation for all Class A shareholders of record on December 18, 2018. In connection with the extension of the termination date of the Company, a special retraction right was offered allowing existing shareholders to tender one or both classes of shares and receive a retraction price based on the November 30, 2018 net asset value per unit. In aggregate, more Preferred shares were tendered for retraction than Class A shares. The purpose of the share consolidation is to maintain the requirement that an equal number of Class A shares and Preferred shares remain outstanding.

Immediately after the special retraction payment on December 17, 2018, there will be 1,901,817 Preferred shares and 2,804,666 Class A shares outstanding. In order to restore an equal amount of shares outstanding for each class, Class A shareholders on record as at December 18, 2018 will receive approximately 0.678090368 Class A shares for each Class A share outstanding. The consolidation is a non-taxable event. The impact of the Class A share consolidation will be reflected in the next reported net asset value per unit as at December 31, 2018. Net assets of the Company after the retraction payments will be approximately $14.7 million.

The Class A shares provide for a leveraged return on the portfolio of investments and are entitled to all assets
greater than a $10 net asset value.

The Company’s Preferred shares will begin receiving an increased dividend rate of 10% annually based on the
Company’s net asset value to a maximum of $0.08333 per Preferred Share per month, effective December 1,
2018.

The company had 2,808,191 Whole Units outstanding on November 30.

It will be recalled that LFE.PR.B extended term with a dividend boost

to the greater of, (i) 6.5% based on the $10 original issue price and (ii) the prevailing Canadian Prime Rate plus 2% annually based on the $10 original issue price, to a maximum of 8%.

Shareholders had a special retraction right, but I noted that:

LFE.PR.B is currently trading above its retraction price, however, so in the absence of extortionate transaction costs, holders who want to get out are better off selling.

Quadravest has announced today:

Canadian Life Companies Split Corp. (“the Company”) announces a Class A share subdivision for all Class A shareholders of record on December 18, 2018.

In connection with the extension of the termination date of the Company, a special retraction right was offered allowing existing shareholders to tender one or both classes of shares and receive a retraction price based on the November 30, 2018 net asset value per unit. In aggregate, more Class A shares were tendered for retraction than Preferred shares. The purpose of the share consolidation is to maintain the requirement that an equal number of Class A shares and Preferred shares remain outstanding.

Immediately after the special retraction payment on December 17, 2018, there will be 14,320,344 Preferred shares and 13,641,379 Class A shares outstanding. In order to restore an equal amount of shares outstanding for each class, Class A shareholders on record as at December 18, 2018 will receive approximately 1.0497724607 Class A shares for each Class A share outstanding. The subdivision is a non-taxable event.

The impact of the Class A share consolidation will be reflected in the next reported net asset value per unit as at December 31, 2018. Net assets of the Company after the retraction payments will be approximately $174.9 million.

The issue closed today at 9.95-10, so if you missed the retraction there hasn’t been a lot of harm done! I’m surprised it’s holding up so well given that the November 30 NAVPU was 13.42 (which will now go up a bit due to the consolidation).