PrefBlog

Manulife Financial Corp. has announced:

Manulife Asset Management Limited, the manager (the “Manager”) of Copernican World Banks Split Inc. (TSX: CBW.PR.A; CBW) (the “Fund”), today announced that securityholders have approved a special resolution proposed by the Manager.

By approving the special resolution, securityholders have approved the following:

• Extending the scheduled final redemption date for Preferred Shares and Class A Shares of the Fund from December 2, 2013 to December 2, 2018;
• Providing a special retraction right (the “Special Retraction Right”) to holders of Preferred Shares and Class A Shares of the Fund to enable them to retract their Shares on December 2, 2013 in a manner calculated on the same basis as would have applied had the Fund redeemed all Preferred Shares and Class A Shares in accordance with its existing terms;
• Providing for further extensions of additional terms of approximately five years each, if the Board of Directors of the Fund so determines, and providing holders of Preferred Shares and Class A Shares with a continuing special retraction right (the “Continuing Special Retraction Right”), beginning on December 2, 2018 or on such other date as may be determined by the Board of Directors of the Fund, in connection with such extension;
• Providing a special redemption right to the Fund in connection with the Special Retraction Right and Continuing Special Retraction Right that would permit the Fund to redeem Class A Shares and Preferred Shares on a pro rata basis, or take such other action as the Board of Directors of the Fund so determines, to maintain the same number of Class A Shares and Preferred Shares outstanding;
• Amending the management agreement effective December 1, 2013 for the Fund to provide for a reduction in the management fees paid to the Manager from the current 1.95% per annum of the net asset value (“NAV”) of the Fund (plus applicable taxes) to 1.65% per annum of the NAV of the Fund (plus applicable taxes);
• Broadening the investment strategy and removing an investment restriction for the Fund; and
• Permitting the Fund to be terminated prior to any scheduled final redemption date if the Preferred Shares or Class A Shares are delisted from the Toronto Stock Exchange or if the NAV of the Fund declines to less than $5 million for a period of 60 consecutive business days.

The fund has a NAVPU of $4.56 to cover a preferred share liability of $10.00 and furthermore sports a management fee of 1.65% as disclosed in the press release. Then there’s expenses on top of that, of about 2% p.a. according to a quick glance at their semi-annual report (the manager did absorb some expenses, essentially refunding their fee).

It’s not worth it. Two-points-plus is not worth it for what is essentially a mutual fund with a cap placed on possible gains (as the Capital Unitholders will get all value in excess of $10). I recommend holders exercise their retraction rights – but be quick! There’s not much time! According to the Management Information Circular (SEDAR, 2013-10-16):

To participate in the Special Retraction Right, Preferred Shares and Class A Shares must be surrendered during the period beginning on November 18, 2013 and ending on November 25, 2013 (the “Special Retraction Notice Period”) for retraction by the registered Shareholder to Computershare Investor Services Inc. in Toronto, Ontario (“Computershare” or “Transfer Agent”), as registrar and transfer agent, subject to the Funds’ right to suspend retractions (described below)

CBW.PR.A was last mentioned on PrefBlog when the term extension was proposed. CBW.PR.A is not tracked by HIMIPref™.

This entry was posted on Saturday, November 16th, 2013 at 4:09 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.