SBC.PR.A Announces Term Extension Details

Brompton Split Banc Corp has announced:

At a special meeting held on March 29, 2012, shareholders of Brompton Split Banc Corp. (the “Fund”) approved a special resolution to allow the Board of Directors to extend the term of the Class A Shares and the Preferred Shares for up to 5 years and to determine the distribution rates for the extended term. The Board of Directors is pleased to announce that it has approved a 5 year extension to the term of the Class A Shares and Preferred Shares to November 29, 2017. The Fund was originally scheduled to terminate on November 30, 2012. The distribution rate for the Fund’s Preferred Shares for this new 5 year term which commences on December 1, 2012 will be $0.45 per annum paid in equal quarterly amounts. The new Preferred Share distribution rate is based on current market rates for preferred shares with similar terms. The Preferred Share distribution for the quarter ended December 31, 2012 is expected to be $0.12493 per Preferred Share which takes into account the new distribution rate for December and the previous distribution rate for October and November. In addition, the Fund intends to maintain the targeted monthly Class A Share distribution at $0.10 per Class A Share.

The extension allows shareholders to continue to enjoy the benefit of the Fund’s portfolio of common shares of six Canadian Banks: Bank of Montreal, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada, The Bank of Nova Scotia and The Toronto-Dominion Bank. Canadian banks have stood out amongst their global peers as examples of stability over the long term and through the credit crisis. Canadian banks continue to have attractive dividend yields and return on equity. As well, the extension of the term of the Fund is not a taxable event and enables shareholders to defer potential capital gains tax liability that would have otherwise been realized on the redemption of the Class A Shares or Preferred Shares until such time as such shares are disposed of by shareholders.

In connection with the extension, those shareholders who do not wish to continue their investment in the Fund, may retract their Preferred Shares or Class A Shares on November 30, 2012 pursuant to a special retraction right and receive a retraction price that is calculated in the same way that such price would be calculated if the Fund were to terminate on November 30, 2012. The notice expiry for the special retraction is October 31, 2012 at 5:00 p.m. (Toronto time).

The favourable vote for the extension was reported on PrefBlog. SBC.PR.A was last mentioned on PrefBlog in connection with its semi-annual report for 12H1. The issue was recently confirmed at Pfd-3 by DBRS.

SBC.PR.A is tracked by HIMIPref™ but is relegated to the Scraps index on credit concerns.

One Response to “SBC.PR.A Announces Term Extension Details”

  1. […] SBC.PR.A recently announced the details of their term extension. […]

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