FIG.PR.A : Partial Redemption

Woo-hoo! You know what I like? I like redemptions at prices that exceed the market, that’s what I like! Redemptions are not always unfavourable!

FIG.PR.A closed today at 9.81-85, 4×9, after trading 20,437 shares in a range of 9.80-90. The sponsor, Faircourt Asset Management, has just announced:

that $30,000,000 of aggregate principal amount of preferred securities will be redeemed.
    Given the challenges facing global equity markets and resulting volatility, the Manager believes that to maintain appropriate balance in the fund between the Trust Units and Preferred Securities, redemptions are necessary. Therefore, the Manager announces that $30,000,000 in aggregate principal amount of the Trust’s 6.25% outstanding Preferred Securities (the “Preferred Securities”) will be redeemed on March 2, 2008 (the “Redemption
Date”). The scheduled Redemption Date of March 2, 2008 falls on a Sunday and payment will therefore be made in full on the next business day, March 3, 2008.
    Proceeds from the Preferred Securities redemption will amount to $10.1062 for each $10.00 principal amount of Securities, being equal to the aggregate of (i) $10.00 (the “Redemption Price”), and (ii) all accrued and unpaid interest hereon to but excluding the Redemption Date (collectively, the “Total Redemption Price”). The notice date of the Preferred Securities redemption is February 1, 2008. The Total Redemption Price for all Preferred Securities being redeemed is $30,318,600
    The Preferred Securities are being redeemed pursuant to the terms of the Trust Indenture governing the Preferred Securities, which permit a partial redemption at such time as the principal amount of the Preferred Securities exceeds 40% of the Total Assets of the Trust.

Assiduous Readers with extremely good memories will recall that there was also a redemption last August. The TSX states that 17,464,308 shares are outstanding, therefore the redemption proportion is a bit more than one-sixth.

Asset coverage on January 31 was 2.0+:1 according to the company. This redemption should bring coverage up to 2.4+:1.

FIG.PR.A is tracked by HIMIPref™ and is part of the Interest Bearing subindex. The issue has recently been removed from the S&P/TSX Preferred Share Index.

3 Responses to “FIG.PR.A : Partial Redemption”

  1. Shakespeare says:

    Just because the price is favourable doesn’t mean a hole hasn’t been left in your allocation. Which leaves you with reinvestment risk.

    Best-laid plans, etc. 😉

  2. jiHymas says:

    True enough … I tend to forget that not everybody is at least looking at the market every day and routinely has a sizable cash position (debit or credit) while legging a trade.

    But still … geez, I can’t help but consider redemptions above market as being a total bonus!

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