PrefBlog

DBRS has announced that it:

has today downgraded the Preferred Shares issued by Brompton Oil Split Corp. (the Company) to Pfd-3 from Pfd-3 (high). On February 24, 2015, the Company issued 2,800,000 Preferred Shares and 2,800,000 Class A Shares at an issue price of $10.00 per Preferred Share and $15.00 per Class A Share for a total of $70,000,000 in gross proceeds. Both classes of shares are scheduled to mature on March 31, 2020.
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Net proceeds from the offering were used to invest in common shares of at least 15 large capitalization North American oil and gas issuers (the Portfolio) selected from the S&P 500 Index and the S&P/TSX Composite Index. In addition, the Company may also invest up to 25% of the Portfolio value in the common shares of issuers listed on the S&P 500 Index or the S&P/TSX Composite Index that satisfy its investment criteria, operating in energy subsectors including equipment, services, pipelines, transportation and infrastructure.
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Dividends received on the Portfolio are used to pay a fixed cumulative quarterly distribution to holders of the Preferred Shares of $0.1250 per Preferred Share ($0.50 per annum or 5.0% per annum on the initial issue price of $10.00 per Preferred Share). Holders of the Capital Shares are expected to receive a regular monthly non-cumulative cash distribution of $0.10 per Class A Share ($1.20 per annum), subject to the asset coverage test which does not permit any distributions to holders of the Class A Shares if the net asset value (NAV) of the Company falls below $15.00.

As of February 5, 2016, the dividend coverage ratio is 1.36. The downside protection available to holders of the Preferred Shares is approximately 37%. Since the initial rating in February 2015, the oil and energy equity markets have experienced a decline in prices which is reflected in the Company’s NAV. The level of downside protection currently available to the Preferred Shares and the asset coverage test to permit distributions on the Capital Shares support the Pfd-3 rating on the Preferred Shares.

As of February 11, the NAVPU of OSP / OSP.PR.A was 15.08. The issue commenced trading 2015-2-24 after being announced 2015-1-7.

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

This entry was posted on Friday, February 12th, 2016 at 8:24 pm 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.