Energy Split Corp. II Inc. has announced:
that in relation to its reorganization, the Company has called 186,000 ROC Preferred Shares for cash redemption on December 14, 2007 representing approximately 22.245% of the outstanding ROC Preferred Shares. The ROC Preferred Shares shall be redeemed on a pro rata basis so that each holder of ROC Preferred Shares of record on December 13, 2007 will have approximately 22.245% of their ROC Preferred Shares redeemed. The redemption price of the ROC Preferred Shares will be equal to the lesser of (i) Unit Value as determined on the December 6, 2007 (the “Valuation Date”) and (ii) $25.00. As at the close of business today, Unit Value was $42.76.
Holders of ROC Preferred Shares that are on record for the dividend but have been called for redemption will be entitled to receive dividends thereon which have been declared but remain unpaid up to but not including December 16, 2007.
The Company is redeeming the 186,000 ROC Preferred Shares in order to increase the downside protection on the remaining ROC Preferred Shares to approximately 55%, as of November 30, 2007, in order to maintain the current rating of Pfd-2 (low) on the ROC Preferred Shares. There is no assurance that the rating will be maintained and the redemption and reorganization are not conditional on the rating being maintained. The redemption is taking place in accordance with the approval received from shareholders at the meeting approving the reorganization.
“Downside protection of 55%” has the same meaning as “Asset Coverage of 2.22:1” … as assets worth $2.22 can lose 55% of their value and still be worth $1.00.
This announcement is in accord with the previously announced plan.
EN.PR.A is tracked by HIMIPref™, but is not included in any of the indices due to low average volume. There are a mere 1,209,398 shares outstanding, according to the Toronto Stock Exchange.
[…] In line with the previously noted redemption of EN.PR.A, and the subdivision afterwards: Immediately following the redemption of the ROC Preferred Shares and upon the completion of the reorganization, in order to maintain the ratio of Capital Yield Shares to ROC Preferred Shares of two-to-one, the Company will subdivide the remaining 650,131 ROC Preferred Shares such that there will be approximately 1.82 ROC Preferred Shares outstanding following the subdivision for every ROC Preferred Share outstanding immediately prior to the subdivision resulting in a total of 1,183,343 ROC Preferred Shares outstanding after the subdivision. ROC Preferred Shares are currently redeemable for a cash amount equal to the lesser of (i) $25.00 and (ii) Unit Value. After the subdivision, the outstanding ROC Preferred Shares will be redeemable for a cash amount equal to the lesser of (i) $13.74 and (ii) Unit Value and will be entitled to, effective December 16, 2007, quarterly fixed distributions of $0.1718. On an annualized basis, the new fixed distribution would represent a yield of 5.00% on the redemption price of $13.74. […]