BSD.PR.A Hypothetical Preferred Special Retraction Right: 44% Tender

Brookfield Soundvest Capital Management Ltd. has announced (although not yet on their website):

that holders of 1,779,807 Preferred Securities have given notice to the Trust that they wish to exercise the Preferred Special Retraction Right in the event that the extraordinary resolution to extend the term of the Preferred Securities for additional five year renewal terms following the scheduled maturity date of March 31, 2015 is approved at the upcoming meeting of holders of Preferred Securities and holders of trust units on March 27, 2015. Holders of trust units (the “Units”) have until 5:00pm (Toronto time) on March 20, 2015 to give notice to the Trust if they wish to exercise the Unit Special Retraction Right in order to provide the Trust with the ability to maintain an equal number of Units and Preferred Securities outstanding (if the extraordinary resolutions are approved). To vote at the meeting, securityholders must ensure that their voting instruction forms are received no later than 5:00pm (Toronto time) on March 25, 2015.

In addition, the Trust also announced today that the annual redemption right available to holders of Units (whether alone or together with an equal number of Preferred Securities) in November of each year will no longer be suspended in circumstances where the asset coverage on the Preferred Securities is less than 1.4 times. Although quarterly distributions on the Capital Units will remain suspended if the asset coverage continues to be below 1.4 times, recent changes in applicable securities laws have resulted in the Trust terminating the suspension of the annual redemption right in these circumstances (for the upcoming November redemption).

According to TMXMoney there are currently 4,030,225 shares outstanding, so 1,779,807 is a little over 44%.

The directors of the manager, Kevin Charlebois, George Myhal, Gail Cecil, Audrey Charlebois and Gabrielle Lenz, approved a term extension proposal for the fund that was pretty sleazy. It’s a pleasure to note that 44% of the preferred shareholders have managed to jump through their ridiculous hoops and tender to an offer that does not yet exist.

And perhaps there will be another whack of retraction attempts submitted to the company by Friday, in connection with the equally hypothetical Unit Special Retraction Right.

And with a bit of luck the term extension proposal will fail and the trust dissolved. We can hope. This manager should lose all its business.

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

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