PrefBlog

In June, 2013, a shareholders’ vote was scheduled:

The purpose of the meeting is to consider and vote upon a special resolution that would allow the merger of STREAMS III into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013 while still allowing any STREAMS III shareholders, should they choose, to retract their shares on the existing scheduled termination date on the same terms as originally contemplated.

A vote FOR the proposal will give you two options at the December 1, 2013 termination date:
1) Capital Yield and Equity Dividend shareholders will be able to have their shares exchanged (based on relative net asset values) for an equal dollar amount of units of Dividend 15 through the merger of STREAMS III into Dividend 15, OR
2) Capital Yield shares would receive $25 per share and Equity Dividend shares would receive the NAV less $25 (to a maximum of $15 per share) under the existing termination formula as originally contemplated.

If this proposal is approved, shareholders will not be required to make a decision on this choice until early in November, 2013 when further information will be provided.

The vote was favourable:

The Board of Directors of Income STREAMS III Corporation (“STREAMS III”) is pleased to announce that Equity Dividend Shareholders voted 97% in favour and Capital Yield Shareholders voted 89% in favour of a proposal that would allow the merger of STREAMS III into Dividend 15 Split Corp. (“Dividend 15”) on December 1, 2013.

Approximate values were announced in November:

Based on the November 15, 2013 net asset value (NAV) exchange ratios (as adjusted for the DFN and DFN.PR.A November declared dividends) and the market value of a Dividend 15 unit (as at November 15, 2013) STQ shareholders would receive the equivalent of $26.17 in market value of Dividend 15 units for each STQ share exchanged. STQ.E shareholders would receive the equivalent of $8.06 in market value of Dividend 15 units for each STQ.E share exchanged.

Precise exchange ratios were announced November 29:

Income STREAMS III Corp. (“IS STREAMS”) provides the final exchange ratio and other details relating to the merger of IS STREAMS into Dividend 15 Split Corp (“Dividend 15”).

All Capital Yield (TSX symbol STQ) and Equity Dividend (TSX symbol STQ.E) shares outstanding on December 1, 2013 will automatically be exchanged into an equal dollar amount of Dividend 15 units based on the November 28 net asset value (NAV) exchange ratios. One unit of Dividend 15 is comprised of one Class A share (TSX symbol DFN) and one Preferred share (TSX symbol DFN.PR.A).

The final exchange ratios are as follows:

1 STQ share will be exchanged into 1.22352296 DFN shares and 1.22352296 DFN.PR.A shares

1 STQ.E share will be exchanged into 0.37682901 DFN shares and 0.37682901 DFN.PR.A shares

(Fractional shares will not be issued)

It is expected that STQ and STQ.E shares will be halted for trading by the TSX before the opening of trading on December 3, 2013 and delisted from the TSX on that day. Any STQ or STQ.E purchased prior to the halt of these shares will receive the applicable number of DFN and DFN.PR.A shares upon settlement. The exchange of STQ and STQ.E into DFN and DFN.PR.A shares will occur automatically and no further action is required by STQ or STQ.E shareholders. This exchange is a non taxable event.

Based on the November 28, 2013 NAV exchange ratios and the market value of a Dividend 15 unit (as at November 28, 2013), STQ shareholders will receive the equivalent of $25.69 in market value of Dividend 15 units for each STQ share exchanged. STQ.E shareholders would receive the equivalent of $7.91 in market value of Dividend 15 units for each STQ.E share exchanged.

Well, the recovery of about $7.91 on STQ.E is a far cry from the par value of $15! STQ.E was last mentioned on PrefBlog when the credit rating was discontinued in February 2008. STQ.E has been tracked by HIMIPref™ but relegated to the Scraps subindex on credit concerns.

This entry was posted on Tuesday, December 3rd, 2013 at 5:13 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.