LCS.PR.A: Capital Units Suspend Distribution

Brompton Funds has announced:

In accordance with its articles of incorporation and the Class A Share Provisions, the regular, non-cumulative, monthly distribution for the month of January will not be paid on the class A shares of Brompton Lifeco Split Corp. The net asset value per unit as at January 15, 2015 was $14.95. Under the articles of incorporation, no cash distribution may be paid on the class A shares, if after payment of the distribution by the Fund, the net asset value per unit (consisting of one class A share and one preferred share) would be less than $15.00. The Fund will re-evaluate the payment of class A share distributions in each subsequent month with the expectation that normal monthly distributions will resume and a press release will be issued if the net asset value per unit meets this requirement.

In accordance with the Preferred Share Provisions, regular quarterly preferred share dividends will continue to be paid.

This follows a rather sharp drop from $16.45 on December 31, a decline of 9.1% in unit value – rather a steep drop, but the insurance industry, with all its reinvestment risk, hasn’t had a particularly pleasant time of it during the recent plunge in yields:

Ticker Price
GWO 33.59 31.45 -6.4%
MFC 22.18 19.93 -10.1%
SLF 41.92 37.50 -10.5%
IAG 44.43 40.26 -9.4%

The Capital Units paid five monthly dividends of $0.075 in 2013 commencing in August as NAV improved throughout the year, and all twelve in 2014.

LCS.PR.A was added to the HIMIPref™ database in October 2014, following its term extension and treasury offering earlier in the year. The issue is relegated to the Scraps index on credit concerns.

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