PrefBlog

Split Yield Corporation (run by Quadravest):

Split Yield Corporation (the “Company”) provides final redemption prices pursuant to the termination of the Company effective February 1, 2012.

As more fully described in the December 6, 2011 press release, the Company’s annual information form,
financial statements and other continuous disclosure documents, the final formula to calculate the termination payment is as follows: Each Class I Preferred share (YLD.PR.A) will be valued at the lesser of (i) $20; and (ii) the Net Assets per unit for the Company on the termination date. Each Class II Preferred share (YLD.PR.B) will be valued at the amount, if any, of the difference between the Net Assets per unit of the Company and $20 (the original issue price of the Class I Preferred shares) subject to a maximum value of $15 per share. Capital shares (YLD) will receive no payment unless the unit value was in excess of $35 per unit at termination date.

The final net asset value per unit as at February 1, 2012 was $18.6989. As a result of the final redemption formula outlined above, a payment of $18.6989 per Class I Preferred share (YLD.PR.A) will be made on February 16, 2012. No payment will be made to Class II Preferred shares (YLD.PR.B) or Capital shares (YLD) as a result of the formula above.

Class I Preferred shareholders have received total dividends of $15.17 per share since inception. The final quarterly dividend of $0.275 to Class I Preferred shareholders was made on January 31, 2012. Class II Preferred shareholders have received total dividends of $10.54 per share since inception. Capital shares have received total dividends of $7.25 per share since inception. Overall, a total of $32.96 per unit in distributions was made since inception.

Payment of the redemption prices as applicable are expected to be made on February 16, 2012 and will be paid to the beneficial holders of such shares through payment to the CDS participant through which such shares are held.

According to DBRS:

DBRS has today downgraded the rating of the 5.5% Class I Cumulative Preferred Shares (the Class I Preferred Shares) issued by Split Yield Corporation (the Company) from Pfd-5 to D and confirmed the rating of the 7.0% Class II Cumulative Preferred Shares (the Class II Preferred Shares) issued by the Company at D.

On December 6, 2011, the Company announced that all of its outstanding Class I and Class II Preferred Shares would be redeemed as scheduled on February 1, 2012 (the Redemption Date), in accordance with the redemption provisions of the shares. Quadravest Capital Management, manager of the Company, began liquidating the portfolio during the latter half of January 2012 in preparation for the final redemption.

On February 1, 2012, all outstanding Class I and Class II Preferred Shares were redeemed. The final redemption prices were $19.00 and $0.005 for the Class I and II Preferred Shares, respectively, which were less than the issue prices of the Class I and Class II Preferred Shares. As a result, the holders of the Class I and Class II Preferred Shares suffered a loss on their principals.

These issues were last mentioned on PrefBlog in the post YLD.PR.A, YLD.PR.B Redemption Announced; Default Almost Certain. YLD.PR.A and YLD.PR.B have both been tracked by HIMIPref™, but have been relegated to the Scraps index on credit concerns.

This entry was posted on Saturday, February 4th, 2012 at 12:24 am and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.