Following the shareholder approval of the term extension and during the DBRS Credit Review-Developing, Financial 15 Split Corp. has announced:
a Class A share consolidation for all Class A shareholders of record on September 12, 2008.
The purpose of the share consolidation is to maintain an equal number of Class A shares and Preferred shares outstanding.
As a result of the successful vote to extend the termination date of Financial 15 to December 1, 2015 at the recent Special Meeting of Shareholders held on July 23, 2008, both Class A shareholders and Preferred shareholders were given a special retraction right. This special retraction right allowed both classes of shareholders to tender one or both classes of shares and receive a retraction price based on the August 29 net asset value per unit. In aggregate, there were more Preferred shares tendered for retraction than Class A shares. Since Financial 15 is required to maintain an equal number of shares outstanding for each Class as per the prospectus, the Company must reduce the Class A shares proportionate to the reduction in the Preferred shares.
Immediately after the special retraction payment on September 12, 2008, there would be 7,788,104 Preferred shares and 9,791,021 Class A shares outstanding. In order to restore an equal amount of shares outstanding for each Class, Class A shareholders will have each Class A share consolidated into 0.795432879 Class A shares. In addition the monthly Class A share dividend will be increased from 10 cents per share ($1.20 per annum) to 12.57 cents per share ($1.5084 per annum) in order to maintain the same pre consolidation dividend rate.
The consolidation of the Class A shares has no impact on the intrinsic value of the Class A shares since the net asset value per unit attributable to the Class A shares would increase proportionate to the reduction in the number of Class A shares.
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The impact of the share consolidation will be reflected in the next reported net asset value per unit as at September 15, 2008.
This implies that the August 29 asset coverage of about 2.0:1 will increase to about 2.5:1.
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FTN.PR.A Asset Coverage to Improve Following Capital Share Consolidation
Following the shareholder approval of the term extension and during the DBRS Credit Review-Developing, Financial 15 Split Corp. has announced:
This implies that the August 29 asset coverage of about 2.0:1 will increase to about 2.5:1.
This entry was posted on Friday, September 12th, 2008 at 12:39 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.